The document discusses consumer buying behavior and the factors that influence it. It provides definitions of consumer behavior and discusses the need to study consumer behavior to satisfy customer needs, understand consumer psychology, motives, choices, and preferences. It then describes different types of consumer buying behavior including complex, dissonance-reducing, habitual, and variety seeking behaviors. The stages of the consumer buying decision process are outlined as well as psychological, social, cultural, personal, and economic factors that influence consumer decisions.
Meaning and nature of buyer behavior, differences between consumer buying and organizational buying in terms of characteristics and process, Strategic use of consumer behavior knowledge in marketing and public policy decisions. Modern Consumerism and the global consumer movement
A consumer is the ultimate user of goods and services. Thus everyone is a consumer in one-way or the other. Every buyer may not be user of that product thus all buyer are consumer of something but all consumer are not necessarily buyer of that product.
Meaning and nature of buyer behavior, differences between consumer buying and organizational buying in terms of characteristics and process, Strategic use of consumer behavior knowledge in marketing and public policy decisions. Modern Consumerism and the global consumer movement
A consumer is the ultimate user of goods and services. Thus everyone is a consumer in one-way or the other. Every buyer may not be user of that product thus all buyer are consumer of something but all consumer are not necessarily buyer of that product.
Strategies Affecting Consumer Behavior:
Consumer behavior refers to the selection, purchase and consumption of goods and services for the satisfaction of their wants. There are various factors influencing the purchases of consumer such as social, cultural,economic, personal and psychological.
1. Social Factors
Social factors also impact the buying behavior of consumers. The important social factors are: reference groups, family, role and status.
a)Reference Groups
Reference groups have potential in forming a person attitude or behavior. The impact of reference groups varies across products and brands. For example if the product is visible such as dress, shoes, car etc .
b) Family
Buyer behavior is strongly influenced by the member of a family. Therefore marketers are trying to find the roles and influence of the husband, wife and children. If the buying decision of a particular product is influenced by wife then the marketers will try to target the women in their advertisement. Here we should note that buying roles change with change in consumer lifestyles.
c) Roles and Status
Each person possesses different roles and status in the society depending upon the groups, clubs, family, organization etc. to which he belongs. For example a woman is working in an organization as finance manager. Now she is playing two roles, one of finance manager and other of mother. Therefore her buying decisions will be influenced by her role and status.
2. Cultural Factors:
Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture, and social class.
Culture
Basically, culture is the part of every society and is the important cause of person wants and behavior. The influence of culture on buying behavior varies from country to country therefore marketers have to be very careful in analyzing the culture of different groups, regions or even countries.
Subculture
Each culture contains different subcultures such as religions, nationalities, geographic regions, racial groups etc. Marketers can use these groups by segmenting the market into various small portions. For example marketers can design products according to the needs of a particular geographic group.
Social Class
Every society possesses some form of social class which is important to the marketers because the buying behavior of people in a given social class is similar.
3. Economic Factors:
Consumer behaviour is influenced largely by economic factors. Economic factors that influence consumer behaviour are as: personal income, family income ,savings ,consumer credit and other economic factors.
a) Personal Income:
The discretionary personal income refers to the balance remaining after meeting basic necessaries of life. This income is available for the purchase of shopping goods, durable goods and luxuries. An increase in the discretionary income leads to an increase in the expenditure on shopping goods, luxuries etc. which improves the standard of living
The Howard Sheth Model is an approach for analyzing the combined impact of the social, psychological and marketing factors on the buying behaviour or preference of the consumers and the industrial buyers into a logical order of information processing.
Consumer Behavior
1. Howard Sheth Model
2. Extensive problem solving
3. Limited problem solving
4. Routinized response behavior
5. Inputs
6. Perceptual construct
7. Learning construct
8. Consumer Usual Buying Behavior
9. Dispose
Consumer behaviour is the study of how individual customers, groups or organizations select, buy, use, and dispose ideas, goods, and services to satisfy their needs and wants
A reference group involves one or more people whom someone uses as a basis for comparison or point of reference in forming effective and cognitive responses and performing behaviors.
Strategies Affecting Consumer Behavior:
Consumer behavior refers to the selection, purchase and consumption of goods and services for the satisfaction of their wants. There are various factors influencing the purchases of consumer such as social, cultural,economic, personal and psychological.
1. Social Factors
Social factors also impact the buying behavior of consumers. The important social factors are: reference groups, family, role and status.
a)Reference Groups
Reference groups have potential in forming a person attitude or behavior. The impact of reference groups varies across products and brands. For example if the product is visible such as dress, shoes, car etc .
b) Family
Buyer behavior is strongly influenced by the member of a family. Therefore marketers are trying to find the roles and influence of the husband, wife and children. If the buying decision of a particular product is influenced by wife then the marketers will try to target the women in their advertisement. Here we should note that buying roles change with change in consumer lifestyles.
c) Roles and Status
Each person possesses different roles and status in the society depending upon the groups, clubs, family, organization etc. to which he belongs. For example a woman is working in an organization as finance manager. Now she is playing two roles, one of finance manager and other of mother. Therefore her buying decisions will be influenced by her role and status.
2. Cultural Factors:
Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture, and social class.
Culture
Basically, culture is the part of every society and is the important cause of person wants and behavior. The influence of culture on buying behavior varies from country to country therefore marketers have to be very careful in analyzing the culture of different groups, regions or even countries.
Subculture
Each culture contains different subcultures such as religions, nationalities, geographic regions, racial groups etc. Marketers can use these groups by segmenting the market into various small portions. For example marketers can design products according to the needs of a particular geographic group.
Social Class
Every society possesses some form of social class which is important to the marketers because the buying behavior of people in a given social class is similar.
3. Economic Factors:
Consumer behaviour is influenced largely by economic factors. Economic factors that influence consumer behaviour are as: personal income, family income ,savings ,consumer credit and other economic factors.
a) Personal Income:
The discretionary personal income refers to the balance remaining after meeting basic necessaries of life. This income is available for the purchase of shopping goods, durable goods and luxuries. An increase in the discretionary income leads to an increase in the expenditure on shopping goods, luxuries etc. which improves the standard of living
The Howard Sheth Model is an approach for analyzing the combined impact of the social, psychological and marketing factors on the buying behaviour or preference of the consumers and the industrial buyers into a logical order of information processing.
Consumer Behavior
1. Howard Sheth Model
2. Extensive problem solving
3. Limited problem solving
4. Routinized response behavior
5. Inputs
6. Perceptual construct
7. Learning construct
8. Consumer Usual Buying Behavior
9. Dispose
Consumer behaviour is the study of how individual customers, groups or organizations select, buy, use, and dispose ideas, goods, and services to satisfy their needs and wants
A reference group involves one or more people whom someone uses as a basis for comparison or point of reference in forming effective and cognitive responses and performing behaviors.
Without an understanding of consumers, how they think, and the reasons for how they behave, it is very difficult for a business to give them exactly what they want.
The study of consumer behaviour improves decision-making as some of the guesswork is removed.
Through a better understanding of consumer behaviour, businesses can make better choices with their marketing to attract more of their target customers.
What is Consumer Behaviour?
Consumer behaviour is the study of consumption. It aims to have a better understanding of consumer actions and processes used in their purchase decisions, as well as the usage of products and services and how they are disposed of.
Exploring how the consumer’s emotions, attitudes and preferences affect buying behaviour, consumer behaviour draws upon ideas from several fields including psychology, sociology, anthropology, biology, marketing and economics.
An underlying motivation drives a consumer to act and purchase. These motivations fit under the problem recognition phase discussed above.
This motivation can be either positive or negative. A positive motivation could be a pleasure – having dinner a nice restaurant or a night on the town. A negative motivation could be the avoidance of unpleasantness such as purchasing toothpaste to minimise tooth decay, getting toothaches and having to visit a dentist.
The chapter comprises of Meaning and Characteristics, Importance, Factors Influencing Consumer Behaviour, Consumer Purchase Decision Process, Buying Roles, Buying Motives, Buyer Behaviour Models.
Consumer behaviour is the study of how individual customers, groups or organizations select, buy, use, and dispose ideas, goods, and services to satisfy their needs and wants.
It refers to the. actions of the consumers in the marketplace and the underlying motives for those actions.
Consumer behaviour is the study of how people make decisions about what they buy, want, need, or act in regards to a product, service or company.
It is a study of the actions of the consumers that drive them to buy and use certain products. Understanding consumer buying behavior is most important for marketers as it helps them to relate better to the expectation of the consumers.
a) Consumer behavior is the part of human behavior: This cannot be separated. Human behavior decides what to buy, when to buy etc. This is unpredictable in nature. Based on the past behavioral pattern one can at least estimate like the past he might behave.
b) Learning the consumer is difficult and complex as it involves the study of hum beings: Each Individual behaves differently when he is placed at different situations. Every day is a lesson from each and every individual while we learn the consumer behavior. Today one may purchase a product because of its smell, tomorrow it may vary and he will purchase another due to some another reason.
c) Consumer behavior is dynamic: A consumer's behavior is always changing in nature: The taste and preference of the people vary. According to that consumers behave differently. As the modern world changes the consumer's behaving pattern also changes.
d) Consumer behavior is influenced by psychological, social and physical factors: A consumer may be loyal with a product due to its status values. Another may stick with a product due to its economy in price. Understanding these factors by a marketer is crucial before placing the product to the consumers.
1. To design production policies: This is the first importance of consumer behaviour and it means that all the production policies have designed taking into consideration the consumer preference so that product can be successful in the market.
2. Know the effect of price on buying: This is the second consumer behaviour importance and it means that consumer behavior can help in understanding the effect of price on buying. Whenever the price is moderate on cheap more and more customer will buy the product.
After the time of production, there comes a time in which the company has to decide what the price of our product will be because it helps to divide the categories of the customer and also helps to attain more sales.
3. Exploit the market opportunities: This is the third importance or significance of consumer behaviour and it means that the change in consumer preference can be a good opportunity for the marketing
Consumer behavior and advertising researchZaibunnisa73
Consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.
Consumer behavior is “the study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of goods and services.
Consumer behaviour consists of how the consumer's emotions, attitudes, and preferences affect buying behaviour”.
Memorandum Of Association Constitution of Company.pptseri bangash
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A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
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Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
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Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
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Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
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2. Consumer Behaviour
• Philip Kotler defines Consumer behaviour as “the study of how individual,
groups and organisation select, buy, use and dispose of goods and
services, ideas or experiences to satisfy their needs and wants.”
• Consumer buying behaviour is the study of individuals, groups, or
organizations and the processes they use to select, secure, use, and
dispose of products, services, experiences, or ideas to satisfy needs and
the impacts that these processes have on the consumer and society.
3. Need for studying consumer
behaviour
The study of consumer behavior helps the
marketer to-
• Satisfy need of customers
• Understand consumer psychology
• Understand consumer motives
• Understand consumer choices
• Understand consumer preferences
4. 1. To satisfy need of customers-Consumers respond favorably while evaluating the products
that best satisfy their needs. A marketer studies how consumers spend their available
resources on the consumption of related items. It includes the study of what they buy,
when they buy it, where they buy it and how often they use it. So, a knowledge of
consumer behavior will be of immense help to the marketer which will help to satisfy
their needs. He can understand the consumer’s reaction to a firm’s marketing strategies.
It would help in planning and implementing marketing strategies.
2.Helps to understand consumer psychology-The study of consumer behavior enables the
marketer to understand the psychology of consumers. Consumer psychology is based on
his knowledge, attitude, intention and motive. The psychology of customer develops on
the basis of knowledge he has. Sales promotion plays an important role to provide the
knowledge of the product to consumers. Attitude is a state of mind or feeling. Attitude
explains behavior. Intention means a desire to do something. A marketing programme is
formulated only after understanding the intention of consumers. Motive is the integral
state which directs the behavior of a person.
3. Helps to understand consumer motives-A study of the behavior of a consumer is
essential to understand his/her buying motives. A motive is an urge for which an
individual seeks satisfaction. In the words of R.S. Davar a motive is an inner urge that
moves or prompts a person to action. Consumers have several motives. All these
motives may not have the same intensity of purchase. Only a few motives prompt the
consumer to buy a product or service. The study of consumer behavior involves both
motives and purchases.
5. 4. Helps to understand consumer choices- It is important for the marketer to
understand how consumers make their choices. Human beings are usually
very rational. They make systematic use of information available to them
before they buy. A marketer studies the behavior of the customer and
accordingly alter his presentation, enticing the customer to go for the
product.
5. Helps to understand consumer preferences-A business firm which is
ignorant of consumer preferences cannot succeed in the market place.
According to Peter F. Drucker “It is the consumer who determines what a
business is” Adam Smith has stated that consumption is the sole end and
purpose of all production. So, a firm must plan its production and
distribution to suit the needs of consumers. Thus, the extent of consumer
understanding determines the effectiveness of marketing mechanism.
7. 1. Complex buying behavior
• Complex buying behavior is encountered particularly when consumers are
buying an expensive product. In this infrequent transaction, consumers are
highly involved in the purchase decision. Consumers will
research thoroughly before committing to invest.
• Consumer behaves very differently when buying an expensive product or a
product that is unfamiliar to them. When the risk of buying a product is very
high, a consumer consults friends, family, and experts before making the
decision.
• For example, when a consumer is buying a car for the first time, it’s a big
decision as it involves high economic risk. There is a lot of thought on how it
looks, how his friends and family will react, how will his social status change
after buying the car, and so on.
• In complex buying behavior, the buyer will pass through a learning process. He
will first develop beliefs about the product, then attitudes, and then make a
thoughtful purchase choice.
• For complex buying behavior customers, marketers should have a deep
understanding of the products. It is expected that they help the consumer to
understand their product. It is important to create an advertising message in a
way that influences the buyer’s beliefs and attitudes.
8. 2. Dissonance-reducing buying behavior
• In dissonance-reducing buying behavior, consumer involvement is very
high. This might be due to high prices and infrequent purchases. In
addition, there is low availability of choices with fewer significant
differences among brands. In this type, a consumer buys a product that is
easily available.
• Consumers will be forced to buy goods that do not have too many choices
and therefore consumers will be left with limited decision making. Based
on the products available, time limitations, or budget limitations,
consumers buy certain products without a lot of research.
• For example, a consumer who is looking for a new collapsible table that
can be taken for camping quickly decides on the product based on a few
brands available. The main criteria here will be the use and the feature of
the collapsible table and the budget available to him.
• Marketers should run after-sale service camps that deliver focused
messaging. These campaigns should aim to support consumers and
convince them to continue with the choice of their brand. These marketing
campaigns should focus on building repeat purchases and referrals by
offering discounts and incentives.
9. 3. Habitual buying behavior
• Habitual Buying Behavior is depicted when a consumer has low involvement in
a purchase decision. In this case, the consumer is perceiving only a few
significant differences between brands.
• When consumers are buying products that they use for their daily routine,
they do not put a lot of thought. They either buy their favorite brand or the
one that they use regularly – or the one available in the store or the one that
costs the least.
• For example, when a consumer buys an energy drink, he tends to buy the
flavor/taste that he likes without actually putting in a lot of research and
time. Many products fit into this category. Products such as chocolates, cakes,
juices, etc., all fit into this product category.
• Consumers just go for it and buy it – there is no brand loyalty. Consumers do
not research or need information regarding the purchase of such products.
• Habitual buying behavior is influenced by radio, television, and print media.
Moreover, consumers are buying based on brand familiarity. Hence marketers
must use repetitive advertisements to build brand familiarity. Further to
initiate product trial, marketers should use tactics like price drop promotions
and sales promotions.
• Marketers should attract consumers using visual symbols and imagery in their
advertising. Consumers can easily remember visual advertisements and can
associate with a brand.
10. 4. Variety seeking buying behavior
• In variety-seeking consumer behavior, consumer involvement is low. There
are significant differences between brands. Here consumers often do a lot
of brand switching. The cost of switching products is low, and hence
consumers might want to try out new products just out of curiosity or
boredom. Consumers here, generally buy different products not because
of dissatisfaction but mainly with an urge to seek variety.
• For example, a consumer likes to buy a cookie and choose a brand without
putting much thought into it. Next time, the same consumer might choose
a different brand out of a wish for a different taste. Brand switching occurs
often and without intention.
• Brands have to adopt different strategies for such types of consumer
behavior. The market leader will persuade habitual buying behavior by
influencing the shelf space. The shelf will display a large number of related
but different product versions.
• Marketers avoid out-of-stock conditions, sponsor frequent advertising,
offer lower prices, discounts, deals, coupons, and free samples
to attract consumers.
12. Factors Influencing Consumer Buying Decisions
Here are 5 major factors that influence consumer behavior:
Psychological Factors
Social Factors
Cultural Factors
Personal Factors
Economic Factors
1. Psychological Factors
• Human psychology is a major determinant of consumer behavior. These
factors are difficult to measure but are powerful enough to influence a
buying decision.Some of the important psychological factors are:
13. i. Motivation
• When a person is motivated enough, it influences the buying behavior of the person. A person has many
needs such as social needs, basic needs, security needs, esteem needs, and self-actualization needs. Out of
all these needs, the basic needs and security needs take a position above all other needs. Hence basic
needs and security needs have the power to motivate a consumer to buy products and services.
ii. Perception
• Consumer perception is a major factor that influences consumer behavior. Customer perception is a
process where a customer collects information about a product and interprets the information to make a
meaningful image of a particular product.
• When a customer sees advertisements, promotions, customer reviews, social media feedback, etc. relating
to a product, they develop an impression about the product. Hence consumer perception becomes a great
influence on the buying decision of consumers.
iii. Learning
• When a person buys a product, he/she gets to learn something more about the product. Learning comes
over a period of time through experience. A consumer’s learning depends on skills and knowledge. While
skill can be gained through practice, knowledge can be acquired only through experience.
• Learning can be either conditional or cognitive. In conditional learning the consumer is exposed to a
situation repeatedly, thereby making a consumer to develop a response towards it.
• Whereas in cognitive learning, the consumer will apply his knowledge and skills to find satisfaction and a
solution from the product that he buys.
iv. Attitudes and Beliefs
• Consumers have certain attitudes and beliefs which influence the buying decisions of a consumer. Based
on this attitude, the consumer behaves in a particular way towards a product. This attitude plays a
significant role in defining the brand image of a product. Hence, marketers try hard to understand the
attitude of a consumer to design their marketing campaigns.
14. 2. Social Factors
• Humans are social beings and they live around many people who influence
their buying behavior. Humans try to imitate other humans and also wish to
be socially accepted in the society. Hence their buying behavior is influenced
by other people around them. These factors are considered as social factors.
Some of the social factors are:
i. Family
• Family plays a significant role in shaping the buying behavior of a person. A
person develops preferences from his childhood by watching family buy
products and continues to buy the same products even when they grow up.
ii. Reference Groups
• A reference group is a group of people with whom a person associates
himself. Generally, all the people in the reference group have common buying
behavior and influence each other.
iii. Roles and status
• A person is influenced by the role that he holds in the society. If a person is in
a high position, his buying behavior will be influenced largely by his status. A
person who is a Chief Executive Officer in a company will buy according to his
status while a staff or an employee of the same company will have different
buying pattern.
15. 3. Cultural factors
• A group of people is associated with a set of values and ideologies that belong
to a particular community. When a person comes from a particular
community, his/her behavior is highly influenced by the culture relating to
that particular community. Some of the cultural factors are:
i. Culture
• Cultural Factors have a strong influence on consumer buying
behavior. Cultural Factors include the basic values, needs, wants, preferences,
perceptions, and behaviors that are observed and learned by a consumer
from their near family members and other important people around them.
ii. Subculture
• Within a cultural group, there exists many subcultures. These subcultural
groups share the same set of beliefs and values. Subcultures can consist of
people from different religion, caste, geographies and nationalities. These
subcultures by itself form a customer segment.
iii. Social Class
• Each and every society across the globe has the form of social class. The social
class is not just determined by the income, but also other factors such as the
occupation, family background, education and residence location. Social class
is important to predict the consumer behavior.
16. 4. Personal Factors
• Factors that are personal to the consumers influence their buying behavior. These
personal factors differ from person to person, thereby producing different perceptions
and consumer behavior.
• Some of the personal factors are:
i. Age
• Age is a major factor that influences buying behavior. The buying choices of youth differ
from that of middle-aged people. Elderly people have a totally different buying behavior.
Teenagers will be more interested in buying colorful clothes and beauty products.
Middle-aged are focused on house, property and vehicle for the family.
ii. Income
• Income has the ability to influence the buying behavior of a person. Higher income gives
higher purchasing power to consumers. When a consumer has higher disposable income,
it gives more opportunity for the consumer to spend on luxurious products. Whereas
low-income or middle-income group consumers spend most of their income on basic
needs such as groceries and clothes.
iii. Occupation
• Occupation of a consumer influences the buying behavior. A person tends to buy things
that are appropriate to this/her profession. For example, a doctor would buy clothes
according to this profession while a professor will have different buying pattern.
iv. Lifestyle
• Lifestyle is an attitude, and a way in which an individual stay in the society. The buying
behavior is highly influenced by the lifestyle of a consumer. For example when a
consumer leads a healthy lifestyle, then the products he buys will relate to healthy
alternatives to junk food.
17. 5. Economic Factors
• The consumer buying habits and decisions greatly depend on the economic situation of a country or a market.
When a nation is prosperous, the economy is strong, which leads to the greater money supply in the market and
higher purchasing power for consumers. When consumers experience a positive economic environment, they are
more confident to spend on buying products.
• Whereas, a weak economy reflects a struggling market that is impacted by unemployment and lower purchasing
power.
• Economic factors bear a significant influence on the buying decision of a consumer. Some of the important
economic factors are:
i. Personal Income
• When a person has a higher disposable income, the purchasing power increases simultaneously. Disposable
income refers to the money that is left after spending towards the basic needs of a person.
• When there is an increase in disposable income, it leads to higher expenditure on various items. But when the
disposable income reduces, parallelly the spending on multiple items also reduced.
ii. Family Income
• Family income is the total income from all the members of a family. When more people are earning in the family,
there is more income available for shopping basic needs and luxuries. Higher family income influences the people
in the family to buy more. When there is a surplus income available for the family, the tendency is to buy more
luxury items which otherwise a person might not have been able to buy.
iii. Consumer Credit
• When a consumer is offered easy credit to purchase goods, it promotes higher spending. Sellers are making it easy
for the consumers to avail credit in the form of credit cards, easy installments, bank loans, hire purchase, and many
such other credit options. When there is higher credit available to consumers, the purchase of comfort and luxury
items increases.
iv. Liquid Assets
• Consumers who have liquid assets tend to spend more on comfort and luxuries. Liquid assets are those assets,
which can be converted into cash very easily. Cash in hand, bank savings and securities are some examples of
liquid assets. When a consumer has higher liquid assets, it gives him more confidence to buy luxury goods.
v. Savings
• A consumer is highly influenced by the amount of savings he/she wishes to set aside from his income. If a
consumer decided to save more, then his expenditure on buying reduces. Whereas if a consumer is interested in
saving more, then most of his income will go towards buying products.
18. The basic difference between needs and wants is that the wants are more
sophisticated and require more effort to obtain. Examples of human wants include
having money, having internet, having a Mercedes car, or being married. When
backed by buying power, want becomes a demand. Staying in star hotels, owning
multiple real estate properties, buying luxury cars like BMW or a Mercedes can be
considered as an example of demand. Demand is the force that helps society
progress. When demand is satisfied, people feel better about themselves and this
feeling increases their desire to work hard for what they want and that achieve
status symbol