Factors Affecting Spending Behavior of Young Adults | PPT

Factors affecting
Spending
Behavior of Young
Adults
Name of the Student
Name of the University
Author Note

Introduction
 The buying behavior of consumers is a subject of great
interest among international business researchers
because this is seen to vary from customer to customer.
 Buying behavior is seldom known to remain static and
how it manifests is something that depends greatly on the
type and category of the target audience that a specific
business is seen to cater to (Dunn and Norton 2014).
 When customers take the decision to spend their money
on a purchase, they usually tend to think long and hard
before they actually go ahead and buy what they want, so
that they do not end up regretting what it is that they buy
(Dunn and Norton 2014)

Introduction (contd…)
 This assignment engages in an investigation of the factors that
are seen to influence the spending behavior of people who are
in their youth, and whose idea of financial planning is quite poor.
 . In order to gain a thorough understanding of the topic, the
main objectives or aims of the study are drawn up, a number of
key research questions are raised, an in-depth review of
literature is undertaken, the research methods are properly
detailed and outlined and the findings of the study are discussed
and analyzed.
 The study then concludes with a number of important and useful
recommendations that the youth of today ought to take into
consideration if they want to make wiser and useful choices with
regard to their purchases and if they wish to plan their finances
well enough.

Review of Literature
 According to Xiao, Chen and Chen (2014), changing values of the consumers
has been influencing the buying behavior of the consumers. Today, young
consumers undertake an ‘age-defying’ attitude to the consumers.
 The purchasing power of the young people has increased which have
influenced spending among them. They have a greater autonomy,
concerning their buying decisions and purchasing behavior.
 As per the opinion of Taft et al. (2013), in today’s scenario, the young
consumers develop brand loyalty and conscious at a younger age. This trend
has expanded the consumer base. According to Xiao, Chen and Chen (2014),
they mainly focus on values and aspirations. Additionally, it has been stated
by Pappas (2016), that the changing family values and changes in family
structures have also influenced spending behavior among the consumers.
 According to Kim and Chatterjee (2013), the young people prefer living along
for studies and other reasons. These trends spade the spending behavior of
the consumers. Since they live alone, they prefer manufactured or packaged
food items as per the needs and requirements of the consumers.

Review of Literature
 According to Lee and Hanna (2015), the young people of
this generation are highly career oriented, they have less
and patience to indulge in different responsibilities or
household chores.
 The young people mostly engage themselves in fitness,
person grooming, nutrition, and entertainment.
 For example, rather than making their own food, they
prefer having their meal from outside restaurants.
 As per Muniady et al. (2014), hence, lack of time among the
consumers also enables them to make a purchasing
decision. Most importantly, they are being increasingly
conscious about their looks and grooming, health and
fitness which influencing their spending.

Problem Statement
 The literature that exists on the
spending behavior of customers is one
that is seen to focus a great deal on the
types and categories of products and
services that can influence the purchase
of customers.
 It also points out the fact that the age of
the customer can have a role to play in
impacting the type of purchase
decisions that they are seen to make

Problem Statement (contd..)
 The literature also points to the fact that people who are in their
youth tend to be more rash or carefree about the way they spend
their money on a purchase compared to people who are in their
middle age or who are older than that.
 What the literature on consumer behavior does not highlight in
particular is the specific factors that can lead to indiscriminate
spending among people who are in their youth and the factors
which can actually cause poor financial planning among people who
are in their youth.
 This gap in the review of literature is something that will be
addressed in the current project, which will identify such factors and
then recommend ways by which poor financial planning among the
youth can be addressed as can their spending habits, leading them
to make better purchases in the long or the short term.

Research Aims
 1.3. Key Research Aims and Objectives
 Some of the key research aims and objectives are as follows –
 • To gain an understanding of the factors that influence the
buying behavior of customers in general
 • To arrive at an understanding of the factors that determine
buying behavior of youthful consumers in particular
 • To determine the factors that can cause poor financial
planning among the youth of today
 • To determine the positive ways by which the youth of today
can be influenced into making better or more careful purchases
with their money
 • To determine the ways and means by which the youth of
today can be encouraged to plan their finances in an organized
and constructive manner

Research Methods
 3.6. Sample Size
 The sample size of this study is one that has been restricted to 20
participants, with the participants comprising of customers falling in the age group
of 20 to 35 years, who come to regularly shop at Tesco in London. A limited sample
size has been selected for the sake of brevity and also because of the fact that this
study had to be undertaken in a limited span of time. With greater availability of
time, the sample size could have been increased or extended to include more
participants or members.
 3.7. Sampling Technique
 The sampling technique is a term that refers to the specific technique that is
made use of in order to create the respondent population that was subjected to the
online survey. As such, a non-probabilistic and convenient sampling technique was
made use of with the participants in the research process being selected on the
base of ease of access and availability. Such a sampling technique was also chosen
because of the quick span of time in which the study had to be undertaken. If more
time had been given for conducting this study, then a more sophisticated sampling
technique or method would have been made use of in order to create the sample
for the study.

Results and Findings
 The results of this study have shown that purchasing power, social
status, peer pressure and the opinion or role of the family are all factors
that have an influence on the poor financial planning of young adults, or
people who fall in the age group of 20 to 36 years.
 The results of the study have shown that high purchasing power, the
desire to seek social approval and peer pressure all lead a young adult to
spend way more money than usual, and as a result, such people tend to
save less.
 The family can have a positive impact or negative impact on financial
planning of young adults. While the primary research findings indicate
that young adults can possibly save money at the behest of their family
members and because they value their suggestions of their family
members when it comes to saving money, secondary research shows
that the family is certain to have a positive impact in this respect only if
this family is one where saving and conserving money or resources has
always been a shared value or a priority.

Conclusion
 For the most part, what the results of the research happen
to reveal is that purchasing power and peer pressure have
a significant impact on the spending behavior of an
individual.
 Purchasing power if it is high is something that can induce
a person to spend a lot of money in a given span of time,
regardless of whether or not such a person needs to be
spending so much money in the first place.
 The fact that purchasing power or capacity is high
indicates that the young adult is aware of the fact that he
or she will have the income to buy what he or she wants
without feeling a pinch in the pocket in order to be able to
do so.

Conclusion (continued)
 The peer pressure is also seen to have a strong impact on the spending
patterns of young adults.
 The results of this research, both secondary as well as primary, have
shown that people who are young adults are individuals who are likely to
be influenced to a considerable degree by their friends and their peers
and what they spend their money on as well as how much they spend it is
something that is based a lot on what their peers have to say about this.
 More often than not, it has been pointed out in the study that peer
pressure can force an individual to buy things or items that he may not
need but which he decides to go and buy anyway because other people
are also seen to be making a purchase of it, and more importantly his
peer circle would be one that viewed him favorably were he seen to go
ahead and buy the things that were desired of him by his peer group.
 Hence peer pressure is something that exercises a significant impact on
the type of spending behavior that young adults are seen to engage in.

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