The top 5 influences on consumer behavior

Chances are if you’re looking to understand consumers, there’s a behavior — or set of behaviors — you want to get a good grasp on. 

This could be the choices they make online, in store or with your competitors. In other words, consumer behavior is a big deal — and so are the factors that influence it.

John F. Tholen, Ph.D., author of "Focused Positivity: The Path to Success and Peace of Mind," spoke to us about five major influences on consumer behavior.

What is consumer behavior?

In order to truly understand what factors influence consumer behavior, you need to know what consumer behavior is.

“The term 'consumer behavior' refers to all the decisions we make about spending — whether to spend, when to do it, which products or services to purchase and where and how to make those purchases,” Tholen said. “Consumer behavior is of great importance to every company that hopes to influence consumers to spend more on their products or services.”

Consumer behavior isn’t all that different from how humans are in other situations. Similar to other aspects of their daily lives, consumers base their actions on their needs, priorities and best interests.

“Like all human behavior, each consumer’s spending decisions represent a reaction to the thoughts that occupy the greatest focus of the individual’s attention. Although it seems that the choices we make result directly from the events and circumstances we encounter, they are instead reactions to our self-talk — the internal monologue that streams endlessly through our waking consciousness, interpreting whatever we experience and creating our perspective,” said Tholen.

The 5 major influences on consumer behavior 

In simple terms, consumer behavior is a response to how customers perceive their customer journey. Will it be worth their while to engage further or should they cut their losses and try again later?

Tholen says the five most important factors influencing consumer spending all involve perspective:

1. Perspective regarding discretionary income - How much money do I/we have in comparison to my/our necessary expenditures?

2. Perspective regarding future financial prospects - How much additional money do I/we expect to receive before credit payments are due?

3. Perspective regarding the future values and costs - How much is this product or service likely to cost next month?

4. Perspective regarding the likely payoff of the product or service - How much is this purchase likely to enhance my quality of life?

5. Perspective regarding the degree to which the product or service would fulfill psychological needs - How strong is my need for the attention/approval of others and how likely is this product or service to fulfill that need?

Scientific research has confirmed that perspective is critical when it comes to human feelings and motivations. 

“Research has shown that whether we feel rich or poor depends on (1) where we stand with respect to our peers, (2) how our financial status has recently changed and (3) whether we are comparing ourselves to those who are worse off or better off,” said Tholen. “Olympians who win bronze medals are usually more pleased than those who win silver because they compare themselves to the many contestants who won no medal, whereas the second-place finishers compare themselves to the gold-medal winner. Our reference point often plays a greater role in determining our thoughts and motivations than reality.”

Think of consumer behavior as a signal to your brand telling you how to best adjust your marketing to take better advantage of current perspectives. Let’s say there’s a stall in the amount of customers who are buying products. You may want to make your prices more affordable and enhance the message about how that product or service is likely to improve quality of life or result in the approval of others.

Consumer behavior is no small topic, but knowing what it is and what factors influence it is a good start. Remember that the customer’s outlook will determine their actions. Once a customer’s perception of your brand has been determined, so is their behavior.