P: ISSN No. 2394-0344 RNI No.  UPBIL/2016/67980 VOL.- VIII , ISSUE- III June  - 2023
E: ISSN No. 2455-0817 Remarking An Analisation
The Effect of Income Changes in Consumer Behavior in India - Special Reference to Delhi and Haryana
Paper Id :  17701   Submission Date :  09/06/2023   Acceptance Date :  13/06/2023   Publication Date :  16/06/2023
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DOI:10.5281/zenodo.10450756
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Akhilesh Meena
Research Scholar
Department Of Economics
Central University Of Haryana
Mahendergarh,Haryana, India
Abstract The present research article particularly determines the change in the aspects of income determines the proper ability that disburses the extra money in addition to the stipulation of the essential products and services. The main objective of this study is analyzing various kinds of income factor that affect the consumer behavior in India. The lowering of income is inversely proportional to the demand of consumers. In this research article, both the primary quantitative and primary qualitative data collection procedure has been followed. For the primary data collection, there has been survey has been conducted, in which the 31 participants has been contributed. The major findings of this research article are due to the enhancement of the income among customers, people desire to expend more capital. Furthermore, the study indicates that the influences of income generally state the price and services. Moreover, the conclusion of this research article is it has been determined that the consequences of income generally provide the indifference curves that operate the stability of price. The study typically describes the major effect of income that changes the purchasing behavior of consumers, specifically in Delhi and Haryana.
Keywords Indifference Curves, Law of Demand, Consumer Choice Theory, Liquid Assets, Consumer Confidence, Interest Rate.
Introduction
An increase in income is the capacity to disburse more money consequences in a stipulation of more goods and services. On the other hand, a decline in the income is consequences the opposite of an increase in income. Generally, incomes are decreasing indicating fewer expenses and many businesses are deteriorating due to its effects. Due to the increase in consumers’ incomes, individuals tend to spend more money. These syndicates that demand of many services and goods will eventually increase as consumer tends to spend extra money due to their increase in income. They may buy an advanced version of products that they already have or will be taking a luxurious holiday. Put in simple words it can be said that as a person’s income increases, they will start to demand more services and goods. The effect of income stated that after the price decrease, the consumer might buy the same products as before, and still they have some money extra to purchase more products or goods. A decline in price resulted in an enhancement of the quantity demand; this is an adverse effect on income. Changes in some of the factors such as average preferences and income can result in an entire curve of demand to change position from right to left. This consequences lowers or higher quantity being required at a specified price. The curves of demand are linked to the quantities and prices demanded presuming no other changes of factors. The effects of income resulted in “indifference curves” moving down or up. It stated that when the price of the product reduces, consumer real income enhances and the “indifference curve” will further move upwards and also vice versa. The effects of substitution happen due to a reduction in one good’s price and on the other hand another good’s price will remain same. There are different types of income effects which are both indirect and direct. The direct income effects can occur at a time consumers select to develop changes to the way they like to spend due to the income change [2]. As per example, it can be said that consumers might choose to pay less on specific goods due to their income has decreased. In this particular research article further will be discussed on impacts of income changes on consumer choices, the impacts of price changes on consumer choices, and income factors that influence consumer behavior. Changes in consumer behavior due to income and price changes can be seen more in the rural and urban states of India such as Delhi and Haryana. The consumer in the state of Haryana is little established when compared to the other states as the maximum number of people living here are from rural areas [3]. On the other hand, consumers in the state of Delhi are more established when it comes to spending as a maximum number of people living here are from urban areas.
Aim of study 1. To know the impacts of income changes in consumer behavior 2. To determine the changes in purchasing behavior of consumers due to the aspects of income 3. To identify the significant Factors of Income that influence consumer behavior
Review of Literature

Impacts of Income Changes on consumer choices

The equilibrium of consumers is the combination of services and goods that will increase the utility of consumers depending on the preferences and tastes of consumers. The effects on income in microeconomics are the possible changes in the stipulation of services and goods caused by a decrease or increase in a real income or purchasing power of income. As one person’s income increases, the effects of income predict that consumers will initiate to demand more or vice-versa. The effects of income define the way an increase in income might change the “quantity of the good” that purchasers will demand. This also expresses those changes in relative incomes and market prices impacted on consumption pattern of consumer services and goods. The substitution effects and income effects are linked to economic concepts within the theory of consumer choice. The effects of income define the change of preferences of consumers’ purchasing power. On the other hand, the effect of substitution defines the changes in related prices that can alter the consumption pattern of products which are substituted for each other. Alteration in real income cans outcomes from changes in nominal income, currency fluctuations, and price changes. At the time the nominal income enhances without any price changes, this indicates consumers have the ability to buy more products at the same cost. At the time all costs of products fall, this defines as deflation and “nominal income” remains the same then customers will buy more products.


Figure 1: Preferences of consumers due to the impact of income [2]

The consumers in some of the megacities of Delhi are occupied with spending on merry-making, entertainment and shopping. Consumers of these megacities stated that they choose malls, cares or brands either due to their friend groups doing that or to represent their social status. The income changes impact on their consumption of different goods categories. They disburse a large portion of their income on “high-frequency items” such as products of personal care, cars, foods, and entertainment.  This resulted that the consumer of the upper-middle class in the megacities of India being driven by the acceptance of credit cards and ownership of the higher vehicle. From this, it can be apprehended that as income rises, consumers get much more brand-conscious and open-handed and desire the products that help to make their everyday life comfortable and easier.

Impacts of price changes on consumer choices

The effect of price is a total concept that considers the impacts of market prices on the demand of consumers. The effect of price can be a significant business analysis to set the offered price of services and goods. The spending of consumers has a significant role in the growing GDP of India. The structure and rate of economic development of India after liberalization have greatly changed and also changed the consumer pattern.

Changes in purchasing behavior of consumers due to the aspects of income

Supply and demand are major determinants of the exact amount of proper products and services. The enhancing income generally provides the outcomes in addition to the demand with respect to the products and services. The lowering of income particularly results in decreasing the demand among consumers for the products.


Figure 2: Changes in purchasing behavior of consumers due to changes in income [8]

Therefore, the outcome of the effect with respect to income for the derivatives particularly enhances the change of positive income that specifically causes a customer to purchase the normal products. Therefore, it has been noted that the impact of income specifically states that the income and consumption of customers increases, that increases their satisfaction.    

Significant Factors of Income that influence consumer behavior

Consumer buying behavior primarily indicates to consumption, purchase, and selection of an goods besides services for their satisfaction. However, there are various kinds of procedures are consists of consumer behavior. A massive amount of characteristics, specificities, and factors mainly encourage any individual and their overall decision-making procedure and their behavior towards the purchasing habit, shopping habit, or brands they buy. Aside from this, consumer behavior is largely affected through the various kinds of income factors in Delhi and Haryana. There are some of the major income behavior that massively influences consumer behavior which is consumer credit, a liquid asset of consumers, savings, income expectations, family income, and personal income.

Family income

Family income primarily refers to the overall aggregate income among all family members. However, family income greatly influences and provides an impact on any individual’s family buying behavior. Family bonds and communication are much stronger and healthier compared to any other group of members in India. In this case, all family members form a particular single decision for getting any kind of common consumption services and for purchasing products. Each and every member of a family within India majorly influences consumer behavior which could be understood by examining their roles, life cycle stages, and family dynamics. Thus, it can be claimed that family income provides a crucial impact on all consumer behavior.

Personal income

The personal income of any individual is a primary determinant of his or her consumer behavior. However, a person's gross income involves two major factors which are discretionary income and disposable income. Personal disposable income mainly denotes the actual income after the remaining final income after deducting some aspects such as taxes and another sort of mandatory deductible items through the gross income [4]. An enhancement in disposable income leads to an overall increase of expenditure among the various items. On the other hand, discretionary personal income indicates the remaining balance after consuming basic life necessities. An individual primarily utilizes this income for his or her personal necessities. An increase in discretionary income accelerates the expenditure on luxuries and goods shopping.

Income expectations

Income expectations are one of the important and crucial factors which determine all over-buying behavior. Put in simple words, whether an individual expects any sort of income increment, he or she might have the tendency to spend more for buying luxury brands, durable goods, and shopping goods. On the contrary, any sort of income decrement might fall his or her future income.


Figure 3: Significant Economic factors that impact on consumer behavior [4]

Liquid assets

Liquid assets indicate those particular assets that could be converted towards cash rapidly without having any loss. The liquid assets involve marketable securities, bank balance, and cash in the hands. Liquid assets further provide a major impact on the overall consumer behavior of any individual.

Consumer credit

Consumer crest denotes the whole credit facilities that are available to consumers desirous of purchasing durable comforts besides luxuries. It is actually made available through the seller either indirectly or directly through any kind of financial institution or bank. Direct or indirect bank loans, installment purchases, and hire purchases are the major ways through which credit could be available to consumers [5]. Increment or decrement in consumer credit could change individuals' living standard or their buying behaviors. Hence, it could be said that changes of consumer credit provide a major impact and influence consumer behavior.
 

Methodology
Research methodology as a primary section research article majorly assists in defining the most suitable approach and pattern that would be adopted in the research article. A particular concept and pattern that would be adopted in the research methodology help to gain a better and deeper analysis of the subject matter. Besides, theimplementation of research methodology assists to have a better understanding of the adopted procedure [6]. However, an approach to the study of the subject matter is essential and required for the required format could be revealed. Aside from this research approach, there are two sorts of research approaches which are the inductive and deductive approaches. In this research article, the inductive approach and the deductive approachwill be adopted. The inductive approach is mainly adopted in the subject matter when there is not enough information and data are not available. The initial and first stage of the “inductive approach” is proper observation and scrutinization, which could assist in obtaining relevant data and information for building a proper research path [7]. The major benefit of the inductive approach is that it primarily allows flexibility and helps to attend closely to context for supporting new theory. On the other hand, research design assists to elaborate a framework of the research article, which would help to select an analysis and collection pattern. Furthermore, the research has generally applied the "Interpretivism Research Philosophy” that is completely based on the major principles. The application of “Interpretivism Research Philosophy” defines the proper method that helps the researcher in collecting the validated response and accurate overview [8]. Therefore, it has been understood that this research philosophy is based on the correct assumptions that are specifically subjective, numerous and socially assembled. On the other hand, the present study will be particularly utilized the “Descriptive Research Design” for collecting scientific information. The utilization of the “Descriptive Research Design” helps the entire research in gathering systematic information that generally describes the correct phenomenon and situation [9]. Hence, it has been understood that the utilization of this research design assists the research in collecting the major variables and hypotheses. Furthermore, the study will be used the “primary quantitative data collection method” and “secondary qualitative data collection method” to describe the research article. The application of the “Thematic Data Analysis Method” is considered the correct approach that allows the whole research to become flexible [10]. For conducting the primary data collection methodstudy will conduct a survey with 31 participants.Hence, it has been understood that the utilization of this effective method assists the research in analyzing the correct statement and defining the major developmental factors. Furthermore, the thematic analysis is determined as the significant tool that can thoroughly identify the correct associations between the major information and the other variables. Moreover, it has been stated that the application of thematic analysis provides the proper approach that also helps in finding out the proper statement, views, ideas, perspectives and experiences with reference to the research. Therefore, the thematic analysis, primary and secondary data analysisprovides the essential elements, including the development of proper codes, reviewing and defining the themes and locating the exemplars.
Result and Discussion

It has been found that extensive income determines the sufficient ability to spend and purchase the derivatives and essential services. The effect of income recognizes the change in addition to the demands of customers for products and services that depend on income [11]. Therefore, it has been understood that the demand for the products generally increases due to the enhancement of income. Similarly, the demand for the products particularly decreases due to the decline in income. Furthermore, the enhancement of income is the capability to expend additional money that results in proper services and derivatives, especially in Delhi and Haryana. Besides, the impact of income typically describes the effective pattern for increasing income that can alternate the product quality that customers may demand [12]. Thus, it has been understood that the consequence of income defeats the effect of substitution and directs customers to buy additional products. It has been found from the above major analysis that income is literally connected to consumption and conserving. Similarly, it has been estimated that a reduction in the level of income may lead to a drop in consumption and the level of savings.

On the other hand, it has been demonstrated that the impact of income is the essential component of the "Consumer Choice Theory” that generally connects the major choices of the expenditures of consumption. Besides, the impact of price change is frequently categorized into two influences on the equilibrium choices of consumers [13]. Hence, it has been known that the consequences of price change determine the substitution impact and the consequences of income with regard to the price change. The effect of substitution defines as the alteration in demand for the products that provide the outcome for indicating the change in addition to the relative price of the products and services in Delhi and Haryana. The “law of demand” particularly defines the major necessities of the products, the more elevated expenditure and decreasing demands that decline the sales [14]. Therefore, it has been demonstrated that the changes in the rates of price define the changes in “supply” and “demand”.

Moreover, it has been estimated that the effect of income typically identifies the purchasing behavior of consumers. A higher income specifically provides a more elevated purchasing capacity to customers [15]. Hence, it has been found that extensive and disposable income helps in providing the probable opportunity for consumers to spend on elegant products. The purchasing ability of individuals is most contrived by the rate of inflation due to the enhancement of the inflation rate and nominal value with regard to money [16]. Furthermore, it has also been found that there are numerous factors that significantly impact the behavior of consumers. It has been estimated that "self-interest", "barriers", "perception", "demographics", and “culture” are the major factors that influence consumer behavior [17]. Besides, it has been stated that financial determinatives are defined as the subjective income that indicates the purchasing power of individuals and family income that indicates the entire purchasing ability of the family. Therefore, it has been understood that consumer behavior assists organizations in understanding the major necessities and requirements of customers and can offer effective derivatives and services.


Figure 4: Data about age of participants

From the above figure data about the age of participants has been elaborated. The age range of participants is 18-25, 26-33, 34-41, 42-49, and 49-56. From the above figure it has been observed that the mean value is 5, standard error is 0, and the median is 5.


 Figure 5: Data about participants’ gender

From the above figure, it has been observed that the mean value of the data set is 3, the standard error is 0, and the median is 3. This questionnaire denotes the participants’ gender.


Figure 6: Impacts of price changes

The above data figure denotes different impacts of price changes on the customer choice. From the above figure it has been observed that the mean value is 5, the standard error is 0,a nd the median value is 5.

 

Figure 7: Influences of income change

The above data figure denotes the questionnaire that is change in income have a great influence on the purchasing behavior of customer. The data set presents that the mean value is 5, the standard error is 0, and the median is 5.

 

Figure 8: Both family and personal income provide a significant impact

The above data figure denotes the question which is both family income and personal income provide a significance impact on consumer behavior. From the above data set it has been observed that the mean value is 5, the standard error is 0, and the median value is 5.


Figure 9: Income factors affect the purchasing behavior

The above data set denote the question which is different income factors affect the purchasing behavior of consumers. From the above data set it has been seen that the mean value is 5, the standard error is 0, and the median value is 5.  


Figure 10: Price reduction causes rise in the product demand

The above data figure indicates the question which is price reduction causes incensement in the product demand. From the above data set it has been seen that the mean value is 5, the standard error is 0, and the median value is 5.


Figure 11: Product demand directly influence the market

The above figure indicates the question that is an increase of income further enhances the product demand which directly influence the market. From the above data set it has been observed that the mean value is 5, the standard error is 0, and the median value is 5.


Figure 12:Increment of income further lead increased rate of product consumption

The above data set indicates the question that is an increase in income further leads to an increase rate of product consumption. From the above data set it has been observed that the mean value is 5, the standard error is 0, and the median value is 5.


Figure 13: Price increment reduce the overall product and service quantity

The above data figure denote the question that is increases in price additionally reduce the overall quantity of service and product that demanded by customer. From the above data set it has been observed that the mean value is 5, the standard deviation is 0, and the median value is 5.

Author

Year

Aims& Objectives

Main Findings

Outcomes

Conclusions

Wang et al.

2015

Technology gives convenient access that helps to increase the business of the existing market.

Shopping through mobile has been increasing rapidly which is significant in retailing and marketing.

This helps different brands to understand the demands and needs of consumers as mobile phones record past history of shopping.

Due to convenience purposes demanding of shopping via mobile is increasing.

Cantallops and Salvi

2014

Modernization of IT and the communication have guided to essential changes within the behavior of consumers.

The decision of purchase is depending on different variables such as WOM which influence the choice of consumers for specific services and products.

Consumers choose their services and products depending on their needs, price as well as income.

Communication between consumers and producers has great impact on the purchasing behavior of consumers.

Herforth and Ahmed

2015

The product environment with the existing markets’ signals and constraints customers on what to buy.

It mainly varies with the desirability, convenience, affordability, and availability of the product. 

The impact of income changes on product consumptions is all-time differentiate by the availability.

Consumers like to spend extra income on the good value of products depending on their choices and interests. Additional income has extraordinary significanceto modify the market.

Sarmento et al.

2019

Economic crisis or recessions severely impacted on the purchasing behavior of consumers and eventually hurt the market from its core.

Any type of recessions pressured customers to take more “rational trade-offs” due to the diminished resources.

At the time economic crisis is prolonged and deeper there is a huge chance of profound changes within consumer behavior.

It is important to know how customers reassess their priorities, redefine value, reallocate funds, and switch brands.

Rapp et al.

2015

Consumers tend to switch their shopping location or brands as per the price changes. Same product with discount attracts them more than anything.

Consumers take benefits of retail stores to gather information and decided from where to purchase the same product less amount.

Customers prefer to visit “brick-and-mortar” shops to assess the value of the products.

The behavior of sales persons and producers also influence the purchasing patterns and choices of consumers. 

Muniady et al.

2014

Personal characters of customer such as personality, economic situations, and lifestyle impacted the consumer behavior.

Products and services cannot be sold except prioritizing the requirements of consumers.

The main reasons behind all of these are frequent changes in the “competitive global business market environment”.

Present days, decision making becoming more complicated and this is also considered much more significant for consumer’s segmentation.

Discussion

It has been discussed that the income of consumers is actually the money that a customer can earn from their work and investment, including dividends. Furthermore, the effect of negative income particularly describes a proper scenario that indicates that product demand usually declines due to declines in consumer income. It has been portrayed that the expectations of income are determined as one of the significant features or determinants that impact on purchasing manners of individuals. Therefore, the functional connection between income and expenditure is generally described with the application of the “law of demand”. Furthermore, the demand curve typically displays that the expenditures and quantity are contrary to proportional and inversely related. On the other hand, it has been discussed that the enhancement of expenditures generally decreases the demand for the products. Besides, it has been portrayed that the demand enhances and directs to the improvement of the supply. The factors of “costs and expenses”, “supply and demand”, consumer perceptions and “competition” specifically impact the preferences of consumers. Moreover, price is significant as it can determine the actual value with regard to the product and the proper utilization of consumers. The pricing decisions are defined as the major preferences that set up the prices with respect to the major products and assistance. 

On the other hand, it has been discussed that the purchasing capability of income of an individual is mostly affected by the rate of inflation. Income significantly affects the expensive derivatives and the resource of customers, including the capital. Furthermore, it has been demonstrated that the consequences of consumer manners are multidisciplinary and engage in different features that impact the procedures of decision-making among consumers. There are certain economic factors that significantly impact the demand with respect to the goods of consumers, such as "employment", "salaries", "inflation or expenditures", "interest rates", and “consumer confidence”. Similarly, it has been commented that economic determinatives are described as subjective earnings that demonstrate the purchasing ability of people and family revenue that suggests the whole purchasing capability of the family. Cultural factors maintain a strong impact on the buying behavior of consumers and these factors include the fundamental perspectives, requirements, necessities, preferences, understanding and behaviors.

Furthermore, it has been illustrated that the pieces of information with regard to the organization and performance are defined as the major factors that impact the market price. Besides, it has been demonstrated that the performance of the industry, investor sentiment and financial factors are also considered significant characteristics that majorly impact the price of marketing. Therefore, the major decisions of price are actually the major choices that help in building the effective abilities for the business to make significant decisions with regard to the price of goods. Similarly, it has been portrayed that the strategy of competitive pricing generally provides outcomes that specifically indicate the conversion rate. Furthermore, the application of the “Consumer Choice Theory” typically associates the major preferences of the expenses of expenditure. Likewise, the consequence of the change in cost is often classified into two impacts on the stability options of customers. Hence, it has been stated that purchasing ability is defined as the proper measurements with respect to products and services.            

It has been found that in present days maximum number of people liked to do shopping via mobiles due to lack of time as well as great purchasing value. On the other hand, as different websites tends to track the preferences of consumers, retailers also able understand the growing demand of any specific product. Producers and sellers also attract many consumers by giving them different variability of any product. Interaction between retailers and consumers also have positive or negative over any business. The buying decision of consumers always varies with the changing demand and price of the product. Present trends as well as the status of economic condition signals the consumers on what to buy as well as from where to buy. The effects of income changes always vary with the product consumption and product availability. At the time customers have some extra money; they tend to spend that on good value of product which helps them to maintain their high standards. This trend of consumers always helps the existing business market to boost. It also has been found that whenever any economic crisis or recessions happened, this always negatively impacted on the exiting business. The profit of business tends to go downward as consumers spend less and try to save more. It is quite significant to producers and retailers to know how consumers reassess their reallocate funds, priorities, and switch brands. It is essential for the retailers and producers always up-to-date with the changing market and changing preferences of consumers. Customers always attracted to the place where they can get maximum discount, this is the reason they always tend to change their shop priorities as well as product preferences with the changing price. The maximum number of consumers likes to do purchasing through online sites though they prefer to visit their local shops to evaluate the value of the same product. After comparing the price of the product customer purchase that product where they can get at minimum price. Various personal factors as economic condition, lifestyle, and personality of consumers impacted on the buying behavior of consumers. The important segmentation of market has to be understood by the sellers that any kinds of products cannot be sold without specification or prioritizing the needs of consumers. The up and down of the existing business can be happened due to the income changes and the changes in the environment of competitive global business.

Conclusion Based on the above discussion, it can be concluded that the impact of income typically recognizes the alternations in the demand of customers with reference to the products and services. Correspondingly, personal features impact the behavior of consumers that controls their purchasing behavior, including financial perspectives, lifestyle, age, personality, profession and self-concept. On the other hand, the effect of income is the alteration in addition to the consumption of proper products and services that are completely dependent on income, specifically in Delhi and Haryana. Besides, the perception of the consumer is determined as the major feature that impacts consumer behavior. Furthermore, consumer perception is considered the major procedure that impacts consumer behavior. Similarly, the level of income is referred to as one of the most substantial features of consumption that directly impacts expanding the ability of a household. A customer particularly determines the essential requirements with respect to the commodity and it depends on proper utility and satisfaction. Furthermore, it has been noted that the application of the effective theory of consumer choice helps in determining the correct decisions. Moreover, it has been stated that organizations can invest properly in determining the proper behavior of consumers and implements effective strategies that also assist in retaining customers. There are specific economic characteristics that particularly impact the direction with regard to the interests of customers, such as occupation, wages, enlargement or payments, interest rates and customer trust. Likewise, it has been remarked that monetary determinatives are represented as subjective payments that indicate the buying ability of individuals and household revenue that signifies the entire capability of purchasing with respect to the family. On the other hand, it can also be concluded that the utilization of the “law of demand” specifically describes the significant conditions with regard to the outcomes, the more eloquent price and dropping demands that decrease the deals. Consequently, it has been explained that the evolutions in the rates of expense represent the transformations in reserves and directives. Therefore, it has been defined that the significance of income dominates the consequence of exchange and requires customers to purchase additional creations. It has been discovered from the major findings that revenue is directly linked to utilization and conservation. Likewise, it has been assessed that a deduction in the level of remuneration may lead to a decline in depletion and the status of conserving. Furthermore, the impact of negative payment particularly represents an accurate scenario that demonstrates that product demand normally decreases due to drops in customer revenue. It has been illustrated that the anticipations of income are contrasted as one of the powerful characteristics or necessities that influence on buying methods of individuals. Changes in income has been greatly influenced the purchasing behaviors of consumers in India. The existing business market in India is rapidly growing and always changes its features. This is the main reasons that every seller has to be up-do-date about the market changes and the changes according to the customers’ needs.
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