What makes us buy what we buy?
Image © Emma Lövgren (EEA Waste•smART)
What determines consumer behaviour?
There are external and internal factors determining our behaviour as consumers. External factors involve accessibility, availability and affordability — what products are available, and whether we can afford them… In some cases, for example, you might have the means to afford more expensive organic products, but they might be unavailable where you live.
Internal factors relate to motivations, one’s own set of preferences and needs, which are in turn determined by many influences. Commercial communication is one of these influences, but not the only one. Most of our consumption is determined by what others around us do. Recent neurological studies show that we are much less rational, less disciplined when it comes to buying.
According to some studies, up to 90 % to 95 % of the choices we make in a store are determined by impulse, emotions and habit. We mainly buy what we know. Only a small percentage of our purchases are made based on a cognitive decision.
Certainly, the findings might vary depending on the group. Youth seems to be more influenced by commercial communication.
(c) Emma Lövgren / EEA Waste•smART
Has our consumption behaviour changed over time?
In some ways, the basics have remained the same. We are influenced by what others around us do. In other ways, it has changed considerably. It has become much more sophisticated. More products and more choice are available on the shelves.
Online shopping has taken this to another level. We can now order more or less whatever is available on the global market, and expect it to be delivered to us. These developments have naturally changed consumer behaviour. There is less self-regulation.
The structure of household expenditure has also changed to some degree. In Europe, we are spending more on communications, information and technology, travel and housing. Technological developments have influenced our consumption choices. A few decades ago, not every household owned a television set. Now, in the EU and other developed regions, many households have more than one set.
Another difference concerns our savings. In Europe, people tend to save a smaller share of their incomes. They are actually more likely to take on consumer credit for travel and gadgets. Some of these trends are picked up on by Eurobarometer surveys.
Is it all about more and impulsive consumption?
Not at all! We can also see a strong development around sustainable and collaborative consumption — affecting not only individuals, but also the companies producing the consumer products and services.
In some business sectors, such as textiles, construction and the financial sector, we can see more and more resource-efficient products and services. In the construction sector, for example, energy efficiency and better use of materials input has become part of the mainstream. One of the projects I am involved in looks at how the fashion industry can become more sustainable, not only from an environmental, but also from a social point of view.
In many ways, these new trends are closely linked to, and resulting from, consumers’ demands and expectations. In Europe, there is a segment of society that is questioning their overall well-being and happiness. It might include families with kids, or individuals with a certain level of education, income or awareness. For these groups, it is becoming increasingly important to live in a healthy environment or to know who produces the products they are buying, and how. And they are often willing to take action. In wealthier nations, they are becoming a market force.
Unsurprisingly, the support for such sustainability movements is much more limited in lower income groups in Europe, and similarly in developing countries. The affordability element in the ‘accessibility, availability and affordability’ triangle weighs in.
Policy interventions: can policies influence behaviour?
Policies can certainly influence consumer behaviour. We have to bear in mind that in democratic societies, policies need the backing of voters. Imposing taxes on unsustainable options would increase the price, and price is an important factor for many when buying goods and services.
Public authorities are also buyers — a market force for some products. For example, a decision to buy only organic food or fair trade coffee for all public institutions, or to favour sustainable vehicles for public services, can boost the market share of sustainable products and services.
Public policy also plays a role in transforming the infrastructure, to offer more sustainable options. This goes back to the question of accessibility and availability. If there are no bicycle paths, one cannot expect extensive use of bicycles as a transport mode. The key to public policy’s success is to offer healthy and sustainable defaults along with the freedom to opt out.
(c) Gülcin Karadeniz
When is behaviour more likely to change?
Information campaigns can help raise awareness. But for any kind of behaviour change to happen at a large scale, the offer has to be accessible, reliable and easy to use. Some car-sharing schemes are extremely successful. Well-designed and organised schemes, like the ‘Car-to-Go’ scheme in Stuttgart, Germany are very successful, even in a car-producing city like Stuttgart.
There are some biases that are hardwired. For example, we are interested in our own relative status compared to our peers. We are also social imitators. When designing an initiative or a policy, we should not try to change the hardwiring. On the contrary, the best results are achieved when we take these elements into account and work with them. If the offer is attractive, and your peers are doing it, you are more likely to get on board.
I am involved in an EU-funded research project looking at how to develop user‑integrated innovation as well as collaborative consumption. What are the user needs? How can sustainable choices be promoted? How can initiatives where communities share resources be applied more extensively? How can nudging be used to promote healthier food among the youth?
There are many good ideas out there for sharing resources, be it borrowing clothes from fashion libraries or borrowing tools from neighbours. Upscaling such niche-ideas might require facilitation or support by public bodies.
Lucia Reisch is a professor of consumer behaviour and consumer policy at Copenhagen Business School, Denmark. As a consumer researcher, she contributes to several EU-funded research projects.