Topic 2.2 Notes – Consumer Behavior

What Consumer Buying Decisions Are

A need is something necessary or important. A want is the preferred way to satisfy that need.

If you need transportation, you might want the option that is fastest, cheapest, most private, or most convenient. That is why many different products can compete for the same customer.

A rival good is a different product that meets the same or a similar need or want. Businesses care about rival goods because different customer groups choose differently, even when the underlying need is the same.

Transportation rivals

Transportation is a good example because one need can be met in many ways.

One need, five rival goods: each option competes for the same customer for a different reason

When consumers choose among rival goods, four influences show up again and again:

• Price
  What the consumer must give up to buy it. Price matters, but it does not decide everything by itself.

• Differentiated product features
  These are qualities that make one product different from another, such as quality, design, reliability, size, convenience, customization, and customer service.

• Availability
  Whether the product is there at the right place and time. A great option that is out of stock often loses.

• Advertising
  Advertising creates awareness, shapes perception, and can make a product more desirable or easier to remember.

Gong cha works as a clean example. A customer might choose Gong cha or another drink seller based on price, flavor options, toppings, convenience, location, speed, advertising, and prior experience. That list tells you something important for the test. Consumers may choose a higher-priced option if it feels better, faster, safer, more trusted, or easier to get.

Types of Consumer Decision Making

Some decisions are slow and systematic. Others are repeated with almost no thought. Most test questions want you to tell which pattern fits the scenario.

Rational decision making

This shows up more with purchases that are expensive, unfamiliar, risky, consequential, or hard to reverse.

The process usually looks like this:

1. Identify the need or problem
2. Set constraints and criteria
3. Gather information
4. Compare alternatives
5. Choose and purchase

Rational decision-making process

A used car is a classic example of moving through those steps. So is a home purchase. You might set a budget, require certain features, compare choices, read reviews, and check reliability.

What makes this “rational” is the systematic comparison, not perfect knowledge. Students often miss that. Rational decision making still has costs:

• time
• effort
• incomplete information
• conflicting information

Its benefit is a better fit with your needs, wants, and budget.

Habitual or routine decision making

This fits small, frequent, familiar purchases. Think buying coffee on the way to work or ordering the same Gong cha drink from your usual location.

Routine choices happen because they save mental effort and often come from prior satisfactory experience or convenience.

Routine buying can lead to:

• loyalty for the business
• stable demand
• missed better alternatives for the consumer

Routine is not automatically irrational. If the search costs are bigger than the likely benefit, repeating the same choice can make sense.

A decision can move along a continuum. If prices rise, income changes, or new quality or safety information appears, a routine decision can become much more rational and deliberate.

What Shapes Consumer Choices

Test questions love asking you to classify why a customer made a choice. These four categories are the key.

Personal factors

These are about who the consumer is and what they can afford.

• Age
• Sex
• Education
• Income level
• Budget
• Occupation
• Lifestyle

One easy distinction matters here. Income is money received. Budget is the spending plan built from income, obligations, savings, and priorities. Two people with the same income can make very different choices because their budgets differ.

Psychological factors

These are internal.

• Values and beliefs
• Perceptions
• Learning from prior experience
• Individual motivations

The same ad can affect two people differently because perception differs. A positive prior experience with a product can create a learned preference. That is why prior experience matters so much in scenarios.

Social and cultural factors

These come from other people and shared norms.

• Peers
• Family
• Social status
• Cultural norms
• Media

If a friend recommends a drink, that is social. If media makes a product feel trendy or acceptable, that also fits here.

Situational influences

These are temporary conditions around the purchase.

• Store design such as noise, lighting, organization
• Timing
• Product availability

A long line, a rushed lunch break, a missing topping, or a well-designed store can change the choice in that moment.

Gong cha examples by category

• Personal: budget, lifestyle
• Psychological: positive memory from a prior drink
• Social/cultural: friend recommendation, social media trend
• Situational: long line, time of day, missing topping, store atmosphere

Purchasing Patterns and What Changes Them

A purchasing pattern is a consumer’s typical routine for making purchases. It includes:

• Timing = when purchases happen
• Frequency = how often they happen
• Quantity = how much is bought at one time

These patterns are shaped by where someone lives and works, income level, family routines, and friends’ routines.

Legal and technological changes can shift those patterns fast.

• Legal influences affect what consumers can buy and when or where they can buy it. Examples include age restrictions, sales through licensed providers, rules about times or places of sale, and bans on unsafe or prohibited products or materials. Consumer protection laws also help prevent fraudulent or unsafe purchases. If access is restricted, consumers may switch to substitute products.

• Technological influences change access to products, information, payment, delivery, and entertainment. The internet in the 1990s expanded online search and shopping and created new ways to access entertainment. Smartphones in the 2010s made shopping, ordering, comparing, paying, and accessing entertainment possible almost anywhere.

Technology can change all three parts of a purchasing pattern. It can make timing more flexible, frequency higher, and quantity different because delivery and fast fulfillment change what is convenient. Reviews and comparison tools can support rational choices, but one-click ordering and notifications can also increase routine or impulse buying.

Cialdini’s Principles and Sales Tactics

These are psychological tendencies, developed by psychologist Robert Cialdini, that make people more likely to comply with a request.

The seven principles are:

• Scarcity
  Limited-time offer, only one left, limited edition, countdown to create a sense of urgency

• Authority
  Experts, doctors, licenses, certifications, credentials

• Consensus
  Reviews, testimonials, bestseller claims, “most customers choose”

• Liking
  Relatable or well-liked people, friendly rapport

• Reciprocity
  Free trials, samples, gifts, helpful information that make the recipient feel obligated or compelled to buy something in return

• Consistency
  Appeals to identity or small prior commitments

• Unity
  Shared membership, brand community, cocreation, exclusive groups

The tricky distinctions:

• Authority means expertise
• Liking means relatability or affection
• Consensus means many others approve
• Unity means “we are part of the same group”

To evaluate a tactic, connect five things:

1. the exact tactic
2. the matching principle
3. how it works psychologically
4. why it fits the target customer and purchase type
5. any weakness, bad fit, pressure, deception, or trust risk

Gong cha examples line up well:

• seasonal limited drinks = scarcity
• reviews = consensus
• samples = reciprocity
• relatable ads = liking
• community or cocreation = unity
• health or customization identity messaging = consistency