Let's say the newest iPhone just came out and you really want an upgrade. But right now it's 12.15 and the bell just rang for lunch. As you wait in line, all you can think about are the cookies in the cafeteria.
Why is it that at this moment you're more concerned about the cookies than the new phone you've been wanting for months? And how can businesses take advantage of that? This is the first video in Unit 7, Consumer Behavior.
This is a bonus unit, meaning this topic isn't explicitly included on the official DECA exam breakdown, but it is a foundational concept you should know for both exams and role plays. Hello and welcome! This is lesson 7.1, Influences on Consumer Purchasing. Now let's get to work, team. In this video, we'll review B2C, or business-to-consumer market.
Then we'll cover psychological, social, and situational influences on consumer buying behavior. We make that distinction because consumers and businesses have very different motivations behind their purchasing decisions. For that reason, we'll dedicate this video exclusively to B2C markets and consumer behavior. Consumer behavior refers to actions taken by people that fulfill their needs and wants. And market research has found that a few things consistently influence consumer behavior.
By tapping into these behaviors, you can more efficiently deliver value to your customers and make sales. The number one influence is psychological. This is a big category, including physical needs, security, love and acceptance, esteem, and self-actualization.
People buy things for all kinds of psychological reasons. Humans have so many complex needs and wants. Physical needs are required for survival.
They include food, water, and air. In our example, our physical hunger for those cookies overrode our want for a new phone. Consumers also want security, which is a need for safety from any physical harm or financial dangers, including house alarms or passwords. Another need is love and acceptance from family and friends, because it makes a person feel appreciated. Esteem refers to a person's self-confidence and ability to be respected by others.
And the last influence is self-actualization, which is the need to express a person's true self through personal achievement and charity. Now, if you notice that some of these needs are more important than others, you're not the first one. In the 1950s, Abraham Maslow organized all of these human needs into his hierarchy of needs, as shown here.
As you may notice, physical needs and security are at the bottom, whereas esteem and self-actualization are at the top. top. Why is that?
Maslow theorized that each step of the pyramid must be completed before moving on to the next. For example, all security needs must be achieved before someone moves on to focusing on attaining love and acceptance. Psychologists love the hierarchy of needs, but business people can use it too. The physical needs tier is so much larger than all the others because every single person needs to eat and drink.
But not everyone is at the point of needing self-actualization. Most people around the world can barely afford the first tier of the hierarchy. This means that the markets for physical needs and security are much larger. From a marketing standpoint, you can promote a product as a way to meet multiple tiers of Maslow's hierarchy, so that you can tap into a bigger market.
For example, smartphone companies can promote the safety features of their phone to resonate with folks in the security tier, they could show a family using a new group text feature to appeal to people who need love and acceptance, or they could promote the social status of those unnamed white headphones to resonate with folks who want esteem. Some companies will roll out multiple promotions at once to show off all these features, allowing them to resonate with people of different needs. And here's a more detailed breakdown of how Maslow's Hierarchy of Needs can play out with regards to consumer buying behavior.
Feel free to pause the video here and read through the information. Make sure you know this concept, because Maslow's Hierarchy of Needs shows up on exams frequently. Even Roleplace will ask you to discuss consumer buying behavior, and you can use Maslow's Hierarchy of Needs to hit all the KPIs in your presentation.
Okay, so how do consumers actually turn those needs into wants? For example, people need transportation. It allows them to get to work so they can earn money and afford food and security.
Now a bus or train fulfills the needs of the consumer. that need, but people still buy Lambos. They need transportation, but they want the status of driving a nice car. When a person has a need, they turn that need into a buying motive. It's the reason that a customer seeks out a product or service.
Knowing what motivates customers can help marketers appeal to those motives and show customers that their product fulfills that need. Now consumers are also motivated by social influences like their culture, family, and peers. These outside influences form a reference group, which are people who influence your buying decisions. For example, many people consciously choose to dress and act like they're a woman. their favorite celebrities.
This first type of social influence is culture, which is a huge category itself. Identities like your ethnicity and social class can impact your purchase decisions. Cultural influences may come from TV, movies, and social media. When I was a teenager, I was into skateboarding and punk culture.
At the time, and this is like 2003, all the energy drink companies like Red Bull and Monster were starting to market in the US and advertise themselves as the sports drink for extreme sports culture. Gatorade was for jocks. Monster was for those of us in the skate parks, and this totally worked. It got me to buy energy drinks even though they tasted terrible.
The next social influence is family. Parents pass on things like religion and values, which affect how their children will act as consumers. Many children buy the same brands as their parents or ask them for product recommendations.
The last type of social influence is your peer group. Peers are incredibly influential because humans have an innate desire for social acceptance. This is most prominent at school, where the popularity of certain brands greatly influence where students shop.
Peer circles also have the advantage of word of mouth advertising, which is when people people have informal conversations about products or services. For example, if you had a great experience at a gym and you tell all your friends, they're more likely to consider going there too. This kind of publicity is super powerful since people trust their peers more than social media ads, which means word of mouth advertising can either be positive or negative. Finally, situational influences come from the environment. For example, the weather, the location of the store, and the time of day all influence consumer buying decisions.
Other situational influences include the mood of the buyer, their financial situation, or their future. physical abilities. For example, if you walked into a store and noticed it started to rain while you were shopping, you might be more inclined to buy an umbrella at the store than usual.
Now that we've gone over all the content, it's time to test your knowledge with a real DECA question. Pause the video and try to answer. The answer is C.
Maslow's Hierarchy of Needs is the motivational theory that classifies human needs by level of importance. And here are the sources we used for this video. Feel free to check them out if you still have any questions. Alright, that pretty much sums up Lesson 7.1, Influences on Consumer Purchasing.
Great work team and we'll see you in the next video.