AP Business 2.2: Consumer Behavior

Predict first

An online store sells a $60 rain jacket. One week the product page says "In stock." The next week, with nothing else changed, it says "Only 3 left at this price." What do you expect?

Why people buy, and how carefully they choose

Consumers buy goods and services to meet basic needs and wants. When rival goods meet the same need or want, four things sway the choice: prices, differentiated product features, availability and advertising. Two pairs of earbuds both play music. One costs $25. The other costs $180 but cancels noise. The cheap pair is on the shelf in front of you, and you have seen ads for the expensive pair before every video you watched this week.

How carefully people choose depends on the stakes. Consequential decisions, like buying a home or a first car, often get a rational process: systematically evaluating the alternatives before choosing. Many smaller decisions, like grabbing a coffee on the way to work, are habitual or routine. Nobody compares five coffee shops every morning.

A rational process helps you find the product that best meets your needs and wants, but it has costs, including the time spent gathering information. Ten hours comparing $3 pens is a bad trade. Ten hours comparing $12,000 used cars could save you a lot of money.

Four kinds of factors that shape a buying decision
Kind of factor	Examples	How it shapes the decision
Personal	Age, sex, education, income level, budget, occupation, lifestyle	Influences what the consumer needs and wants, and what they can afford
Psychological	Values and beliefs, perceptions, learning (associations developed through prior experience), individual motivations	Influences the consumer's attitude toward a product and willingness to buy it
Social and cultural	Peers, family, social status, cultural norms, media	Influences what is acceptable, desirable or appropriate to buy
Situational	Store design (noise, lighting, organization), timing, product availability	Creates temporary conditions that encourage or discourage buying

All four can push on a single purchase. Marcus, 17, has $120 from his summer job for basketball shoes, which rules out the $200 pair (personal: his budget). He trusts one brand because his last pair from it lasted two seasons (psychological: learning from experience). Everyone on his team wears that brand (social: his peers). And the store is loud and packed, so he grabs that brand's first pair in his size and leaves without trying on anything else (situational: store design).

Sort it

Tap each influence on a shopper, then tap the kind of factor it is.

Personal

Psychological

Social and cultural

Situational

Purchasing patterns

A purchasing pattern is a consumer's typical routine for making purchases: the timing, frequency and quantity of what they buy. Where someone lives and works, their income level and the purchasing patterns of their family and friends all help determine it.

Dana lives in a rural county 25 minutes from the nearest supermarket, so she drives in every other Saturday and fills the cart. Theo lives in a Chicago apartment above a corner market and picks up a few things every day or two. Over a year they might buy the same groceries on completely different routines, and a store that wants both as customers has to serve both patterns.

How laws and technology change the pattern

Laws influence purchasing patterns when they regulate what consumers can buy, and when and where they can buy specific items. Federal law, for example, sets 21 as the minimum age to buy tobacco products. Consumer protection laws are designed to help people avoid products that are fraudulent or may be unsafe for them.

Laws can also give rise to substitute products, as consumers find new ways to meet their needs and wants when existing products are harder to get. When a city bans single-use plastic checkout bags, shoppers start buying reusable bags.

Technology and innovation make new products accessible, and that changes purchasing patterns as well. The internet in the 1990s and smartphones in the 2010s each opened new ways of shopping, finding information and getting entertainment. A shopper who once drove to three stores to compare TV prices now compares them on a phone in a minute, and a family that once bought movies on DVD now streams them.

Cialdini's principles of influence

Psychologist Robert Cialdini described principles of influence: psychological factors that cause people to comply with a request. Marketers build sales tactics on them to motivate consumers to buy. Knowing them makes you a sharper marketer, and a harder customer to push around.

Cialdini's principles of influence, and how marketers apply them
Principle	What it states	How marketers apply it
Scarcity	The rarer an item seems, the more people tend to want it	Phrases such as "limited-time offer" or "only one left at this price" create a sense of urgency
Authority	People tend to obey or follow authority figures	Expert spokespeople, such as doctors, endorse the product, or ads stress a provider's credentials
Consensus	People tend to follow social-group norms	Promoting positive customer feedback creates a sense that most consumers like the product
Liking	People are more likely to be influenced by people they like or relate to	Ads feature people who look and act like the target customer, and salespeople build personal rapport
Reciprocity	People feel obligated to reciprocate when given something of value	Free trials, samples and gifts make the recipient feel compelled to buy something in return
Consistency	People tend to repeat behavior that aligns with their self-image	Appealing to identity, such as promoting a product as something health-conscious consumers buy
Unity	People who feel part of a group are more likely to be influenced by the group	Building a community: an exclusive online group, or inviting customers to cocreate products

Worked exampleEvaluating and developing a sales tactic

Summit Climbing Gym wants more teens to buy its $45-a-month membership. Its target customers are 14- to 18-year-olds who like trying new sports with friends. The manager's ideas: a poster of the head coach's climbing titles, a free first visit for any teen who brings a friend, and a teen "Summit Crew" whose private group chat votes on the gym's new climbing routes. Evaluate them and develop one tactic.

Name the principles. The coach's titles use authority. The free visit uses reciprocity: the gym gives something of value first. The Summit Crew uses unity, an exclusive group whose members help create the product.
Test each one against the target customer. Titles may impress serious climbers, but these teens are beginners looking for something to do with friends. The free visit and the crew both build on friends and belonging.
Develop the tactic. A teen who brings a friend climbs free the first time, and teens who join that month get into the Summit Crew. Reciprocity gets them in the door, and unity gives them a reason to stay.

Answer.

Combine reciprocity and unity: a free first climb with a friend, then a place in the route-voting Summit Crew.

Check your understanding

1

Priya spends two weeks comparing 14 laptops on price, battery life and weight before buying one for college. Her friend buys a laptop from the brand he has always used, in ten minutes. Which statement is accurate?

2

Luis refuses to buy headphones from one brand because his last pair from that brand broke within a month. Which kind of factor is shaping his decision?

3

A sneaker brand invites customers to join a members-only online group, where members vote on the colors of next spring's shoe. Which of Cialdini's principles is the brand using?

4

A bakery wants a sales tactic built on the consensus principle. Which tactic fits?

5

A state bans the sale of new gas-powered leaf blowers. Over the next year, sales of battery-powered leaf blowers in the state rise sharply. Which explanation fits best?