Consumer psychology is the study of why consumers purchase certain products and services, taking into account a range of personal experiences as well as external influences such as media campaigns.
Researchers refer to this as mental accounting; rather than looking at their spending in broad categories like food, clothing and bills as they do with traditional budgeting systems, these consumers organize them nested categories instead.
Personality
Personality, broadly defined as an interwoven set of behavioral, cognitive and emotional patterns, has long been linked with consumer spending habits. This can include everything from purchasing products at full price or on sale as well as how much a particular item costs them.
Recent research found that Big Five personality traits could predict impulsive, compulsive and panic buying behaviors. For example, those with higher levels of neuroticism were more likely to engage in compulsive shopping behaviors as well as experience greater emotional instability during stressful events and engage in panic buying behavior more frequently.
Studies show that factors like situational influences and cultural background also impact purchasing decisions; however, these new findings emphasize the significance of understanding personality in consumer purchasing behaviors. Businesses can use personality predictions to target specific customers with tailored marketing messages designed specifically to encourage them to make purchases now – for instance impulsive shoppers could receive messages encouraging them to buy now.
Social Influence
Social influence is an influential force that can have an effect on consumer spending habits. Consumers may be influenced by friends, family members and online influences such as celebrities or influencers – or by their own perceptions and attitudes.
Research on conformity has yielded several principles that marketers can employ when targeting individuals to conform with them. Individuals tend to copy behaviors of others they see as similar and this process is known as vicarious learning.
Individuals can be heavily impacted by the opinions and behaviors of their reference groups – whether formal associations like professional associations or clubs, or informal networks like friends and family. Influences from these reference groups may include formal organizations such as professional associations or clubs; informal networks like friends or family; this can influence consumption patterns by instilling the desire for conformity within groups as a desire for acceptance from such peers can impact consumption patterns; studies have also demonstrated how wanting to fit in can influence prosocial behaviors like spending money on products or services that support environmental causes – these effects are seen when individuals will willingly spend money for example on eco-friendly products or services from those willingly spending on such products or services that contribute towards environmental protection.
Payment Methods
Paying with cash has an outsize influence on consumer spending habits, as the tangible experience of counting out and receiving change makes people aware of how much their investment amounts to.
Researchers have also discovered that how prices are presented to consumers has an effect on whether or not a person purchases more of an individual product. One study demonstrated this by showing if product prices were presented with higher differential prices than what a buyer has available (i.e., high differential price), they would likely decline purchasing it; conversely a lower-priced presentation would increase acceptance likelihood.
Companies can employ pricing strategies to encourage or dissuade consumption, for instance by offering seasonal or annual payment plans for products like Red Sox season tickets and health club memberships. Furthermore, alternative payment methods like pre-loaded payment accounts that allow users to preload funds they won’t exceed can help limit spending — known as budgeting.
Environment
Environment refers to our immediate surroundings – everything from noise and crowds in cities to our personal bedrooms or the vast and stunning natural landscape can all form part of this environment. Be it an office, an open field, or even just a beautiful lake, our surroundings have an enormous effect on both psychological wellbeing and how we live our lives and operate.
As the economy recovers from COVID-19, consumers remain positive about their personal financial future and budget-conscious spending habits. Price remains the primary purchasing criterion across product categories.
Consumers are prioritizing products that are healthy and good for them (Health and Wellness First). Gen Z shoppers particularly place greater importance on brand transparency, ethical conduct, diversity and social responsibility than other generations do. Incentivization may also play an effective role in encouraging sustainable consumption; research found that showing online shoppers other people were purchasing eco-friendly items led to an increase in purchases of 65% for these items by just telling them others had already purchased these goods!
