The Main Factors Which Influence Customer Buying Decision Essay

The Main Factors Which Influence Customer Buying Decision - Essay Example A fall in the price of a product will result to an increase in the quantity of a product purchased, however these depends on the price elasticity of a product. If a product is price elastic and this means that the price elasticity of the good is more than one, then the products demand will rise at a greater proportion than the rise in price. If the price elasticity of a product is less than one then the demand for the product will not rise at a greater proportion than the price. 1 The price of substitutes also play a major role in determining the consumers purchasing behaviour, in a situation where a substitute of a product is less expensive, then the consumer will purchase the substitute example margarine and butter are substitutes, if the price of butter goes up then the consumer will purchase margarine. Under the price of a product we will also consider the risk associated with buying a certain product, the more expensive a product is the higher the risk and the higher the consequ ences of making the wrong decision, buyers will also consider the scrap value of and mostly this is associated with vehicle and machinery product, products with very high prices and low scrap value will be less preferred. Another consideration is the price of the complimentary good, if the price of the complementary good is hi... tary good, if the price of the complementary good is high then a consumer will be less likely to purchase the product, a good example is petroleum products and vehicles, if the price of petroleum products is too high then the consumer will less be likely to purchase a vehicle, this can associated with the running cost of the product to be purchased will be high and therefore a rational consumer will not purchase the product with high running cost.2 Future expectations about changes in prices will also influence the buying decisions of consumers, if consumers expect a rise in price in the future for a certain product then they will tend to purchase that good in large quantities to avoid high prices of the product in the future, example if a consumer expects the price level of sugar to rise in the near future then he will purchase the sugar in large quantities today to avoid the future rise in price. Therefore the price of a product is a factor that influences the consumer buying decision, the consumer will purchase goods rationally to optimise on his real income and also maximise his utility, prices of substitute and complementary goods play a role in consumers decision making on what to buy and in what quantity.3 INCOME: Income is also another major factor that influence the buying decisions of consumers, the consumers disposable income play a major role in determining what to buy and in what quantities, however this depends on the income elasticity of a certain product, if the consumers disposable income increases and that the income elasticity of demand for that good is greater than one then the proportional rise in the demand for t hat product is greater than the rise in income levels.