A Significant Influence of External Factors on Consumer Decision-Making and Behaviour - Term Paper Example

Consumer decision making process-External factors Executive summary Consumer behaviour is the core pillar in marketing, and all marketing strategies stem from understanding consumer behaviour. There is therefore a significant need to understand consumer behaviour in order to not only to create value for customers but also to understand the various factors that influence consumer behaviour. This way, a marketer can influence a consumer choice of products by aligning the various products to suit the consumer’s needs and march the consumer’s selection criterion. Consumer behaviour can therefore be defined as the processes through which a consumer will undergo before making a purchase. These processes will include the processing of information regarding a product and the evaluation of the various alternatives. This is however a very difficult process as marketers can only watch a consumer’s behaviour but they cannot observe the thoughts behind a consumer’s actions. Marketers must therefore probe further and look deeper in order to fully understand the consumer behaviour. It is in this attempt to understand a consumer’s thinking patterns and consequently their behaviour that led to the development of various conceptual consumer behaviour models and theories, which, although they do not give accurate projections of the consumer behaviour, they provide frameworks that guide the path in understanding the dark and critical aspects of the consumer behaviour and directing marketing strategies. This paper seeks to expound more on the applicability of external factors in understanding and influencing consumer behaviour through a keen look at how various external factors will influence the purchase of cosmetics, handsets and cars. This is an ideal choice of products because they are ubiquitous, universal and not limited to particular geographical and economical regions; therefore, the information obtained regarding these products can be extrapolated to other products of a similar nature. Consumer behaviour models There are many models that explain consumer behaviour but the most successful model is the buyers black model. This model comprises of three stages; the stimuli response stage, the buyer’s black model and finally the buyers response. The first stage involves the use of stimuli, which invokes the consumer’s need that he or she might not have been previously aware of through the use of the right marketing mix; product, price, place, and promotion (Smith and Taylor, 2004). An attractively packaged product whose cost value is friendly and the product is accessible serves as stimuli to purchase a particular product. Economic, technological, political and cultural factors can also act as a stimulus. The buyer’s black model analyses how the consumer will interpret the stimuli and the buyer’s response will depend on his or her characteristics, which include social, cultural, personal and physiological characteristics. The decision of whether to buy or not will comprise of problem recognition, seeking information regarding the product, evaluation and comparison of the available alternatives and if based on these three factors, the products meets the mark the consumer will make a purchase (Ruternberg, 2008). Consumer behaviour theories and concepts There are several theories that explain consumer behaviour. They include the theory of hierarchy of needs, Fred’s theory of psychodynamic approach, the theory of self-concept and the theory of planned behaviour. Maslow’s theory of hierarchy of needs states that consumers have various needs, which can be categorised into either psychological, safety, social, esteem and self-actualisation (Koontz and Weihrich, 2008). Physiological needs include the basic needs and therefore will naturally occupy the lower hierarchy and must first be met before progressing further into the next category of needs. Self-actualization needs occupy the highest rank in the hierarchy and are therefore met once all the other needs have been met. This theory is important in explaining the conspicuous spending of consumers and other consumption patterns of consumers depending on the level of needs in the hierarchy that they are trying to fulfil (Bray, n.d). According to Fred’s theory of psychodynamic approach, a person’s thoughts, feelings and behaviours are unconsciously determined by interactions of physiological processes; therefore, the individual cognition and environmental stimuli has little or no effect on a person’s behaviour. Unconscious needs will therefore shape a person’s personality as he undergoes the transition from id, ego and superego stages of personality development. The implication is that individual cannot understand the motivation that prompts their behaviours. This implication is of consequence on the applicability of this model in the analysis of consumer behaviour in that it is very difficult to measure an individual’s motivations therefore limiting the application of this theory to a very small extent (Rabuntu and Boncea, 2007). The theory of self-concept is of significance in explaining consumer behaviour. According to this theory, a consumer self-concept can be termed as a person’s identity that mainly stems from a person’s perception regarding oneself, which is greatly influenced by the environmental factors surrounding the person (Bray, n.d). This theory is relevant in understanding consumer behaviour in that it provides insight on a person’s self-concept and how it is reflected in the person’s choice of products. However, at the heart of consumption decisions is a person’s lifestyle and self-concept from which steps and needs will stem from thereby paving way for the influence of the just stated factors. Lifestyle can be defined as the way people interact with their environment and it involves a person’s opinions and spending patterns. A person’s lifestyle will be shaped by the consumer’s past experience, innate characteristics and the consumer’s present situation. Lifestyle can be viewed as the interlinking factor between external influences and consumer behaviour. This is mainly because it influences the rationale and logic of consumers. Consequently lifestyle can be termed as the sum of the influence of both the internal influences and external factors on a consumer’s purchasing pattern. Consumer involvement The concept of consumer involvement cannot be ignored in analysing consumer behaviour because it has a direct impact on the consumer’s choice of purchase. Consumer involvement can be defined as the information and level of interest that a consumer possesses in regards to a particular product prior to making a purchase. High involvement goods are the products with low frequency of purchase mainly because they serve a long term purpose, they are also expensive and once a purchase has been made it cannot be revoked. These products include handsets and automobiles among others. On the other hand, low involvement products are products that are purchased frequently, and they are relatively cheap. A consumer can therefore afford to experiment with various brands and alternatives (Schiffman, 2010). Cosmetics generally fall under this category. External factors influencing consumer behaviour Consumer behaviour is influenced by both internal and external factors. The external internal factors include culture, subculture, social stratifications, reference groups, demographics, family and households. Culture can be defined as the shared values, knowledge, beliefs, language and traditions that characterise a particular society. Culture draws distinct boundaries on the thinking patterns of consumers thereby resulting to norms and the consumers in the particular society are expected to conform to those norms. Culture is mainly acquired through learning from family and other institutions, such as the church or through observation from a person’s surrounding environment. Culture affects the consumer behaviour’s unconsciously and most consumer are not aware of the effect of culture on their consumption patterns (Smith, Terry and Manstead, 2008). Consumer behaviour must indicate that he or she is in step with the rest of the society and therefore his consumption pattern will reflect his or her culture. Despite the fact that culture is deeply embedded, it is adaptive and with time culture must evolve to take into account economic, social and technological changes. The adaptive nature of culture is of interest to the consumer in that a product that is considered essential today may after a while be regarded as obsolete and inadequate in meeting the needs and challenges of that particular time. In the wake of globalisation, cultural borrowing is becoming a common practice and especially from cultures that are deemed to be superior. Culture can therefore be viewed as being comprehensive and enveloping many aspects of consumer behaviour because it determines how a consumer interacts with his or her social environment and ultimately influencing their buying decisions (European Commission, 2010). The core values in culture can be grouped into three categories; self-oriented, environmental oriented and other related values. Self oriented values include hard work or leisure, active or passive, postponed gratification or immediate gratification, material or non-material things. Environmental values include performance/status, risk taking/security; this will determine whether a culture has high or low uncertainty avoidance. In this context, uncertainty avoidance can be termed as the way the people in that culture perceive and tolerate risks and ambiguity therefore determining whether they are willing to take on risks or if they are risk aversive. Other values include youth/age, extended/limited family, and masculinity/femininity, individualistic/collective and cooperative/competitive (Monthathip, Panos and Catherine, 2010). A culture can also be termed as either being individualistic culture or a collectivistic culture. A collectivistic culture is a culture where the group goals take precedence over the individual goals (Monthathip, Panos and Catherine, 2010). In this kind of culture consumer behaviour can be predicted from the social norms and obligations. In an individualistic culture, Consumer behaviour can be predicted based on attitudes and other internal factors. Individualism-collectivism is a wide scope and in order to determine its influence on consumer behaviour, it must be narrowed down into either vertical or horizontal individual/collectivism (Monthathip, Panos and Catherine, 2010). The latter consists of inequalities and disparities thereby resulting to hierarchy in the society. People will then act in accordance to a behaviour code that conforms to their hierarchy in society. Horizontal individual-collectivism deems it a free society and therefore a consumer’s behaviour does not reflect any existing hierarchies in society (Monthathip, Panos and Catherine, 2010). There are many factors that are considered in the purchase of a car with one of them being culture. Most people will purchase a car to meet the basic psychological needs. Basically, consumers consider the technical attributes of the car such as performance, safety and reliability. Culture will also play an important role in determining the model that the consumer finally settles for. However, an automobile is a product that is highly noticeable and therefore the purchase of a car can also be viewed as symbolic consumption in order to show affiliation to a particular class or a lifestyle. A luxury car is expensive with limited availability. It also has attributes that distinguish it from the rest of cars. It is mainly associated with high income earners and people in high society classes. A consumer from a high collectivism culture considers the brand and model before making a purchase. This is mainly because in high collectivism culture, group concerns normally override an individual’s desires and also a consumer is more concerned about how the rest of society will perceive him based on his car model or make. In line with the hierarchy of need theory, the highest hierarchy of need in such a culture is the social need. The consumer will therefore purchase a car model that is perceived to be prestigious in order to gain recognition and admiration from the rest of the society thereby meeting his or her social need (Anurit, n.d). In a high individualism culture, the highest hierarchy of needs are the personal needs. A consumer in this category may therefore purchase a model that he or she perceives to be indicator of the person’s self-image (Monthathip, Panos and Catherine, 2010). In doing so, the individual seeks self-gratification whilst paying little (if any) attention to how the rest of the society perceives him or her. This does not mean that the individual does not opt for luxurious model, he or she does but the consumer will not allow social needs to outdo his or her personal needs. Mobile phones have shifted from being simple tools that facilitate communication to social object that facilitate social interactions. Acquiring a mobile phone therefore indicates that a consumer is at par with the rest of society. However, the various motivations that prompt a consumer to purchase a mobile phone will vary depending on the culture. In a collectivistic culture, consumers are prompted to buy a phone in order to conform to the society’s expectations. In a collectivistic culture, social acceptance will motivate a consumer to acquire a handset and hedonism will affect the consumer’s choice of phone based on feature appearance. In the individualistic culture, the consumer’s decision to purchase a mobile phone is mainly out of self-direction, variety with the only similar motivating factor to a collectivistic culture being hedonism. Marketers can appeal to the consumers in the former category using collective messages that are group oriented while marketing strategies in the latter category should be personalised (Biljon and Kotzé, 2008 & Monthathip, Panos and Catherine, 2010). Culture and society dictates what is perceived to be beautiful and attractive. It is these cultural norms that compel most women to purchase cosmetic products in order to meet the societal demands regarding beauty. In the wake of globalisation, most people are purchasing global cosmetic products that are considered to be cross culture since they are deemed to be of superior quality. Culture also has an impact on the use of cosmetic products. Social changes that are extending the use of cosmetic products to include men too who must adapt to culture to take into account these changes. However, a culture with clear distinct boundaries on masculinity and feminity may be slow in adapting to these changes as they are perceived to be contrary to the acceptable norms (HemaPatil and Bakkappa, 2012). Social stratification and Subculture Social stratifications can be viewed as order divisions of people who share similar values, interests, lifestyle and behaviours and they are mainly moulded by occupation, wealth, income and education. Subculture can be defined as a smaller portion of culture with values and beliefs that clearly distinguishes them from the rest of the culture. It may take various forms, such as racial, lifestyle, age groups income or even religion. Marketers are now using generational marketing strategies that aim at targeting the various generation gaps. These generations include baby boomers, generation X, generation Y and elderly consumers (European Commission, 2010). Baby boomers are consumers who are in their forties. They represent a large portion of the workforce and most of them are therefore earning. Baby boomers are therefore a significant part of the consumer market and naturally their consumption patterns indicate that they are receptive to products which that them feel younger. Generation X consists of people who are in their thirties. People in this category are racially and ethnically diverse (European Commission, 2010). They are also diverse and pragmatic and will therefore take up activities such as retirement planning and financial planning. They are also less loyal to brands and will easily switch products with the determining factor being the information that they possess. This generation represents the new parents of today as the baby boomers slowly shift into grandparenthood. People in this generation are involved in all purchasing decisions right from their childhood. In generation Y, the consumers are brand conscious and will associate brand with the company that manufactures the products. They are as a result loyal to brands and more likely to purchase a product due to the symbolic meaning they attach to various brands (European Commission, 2010). A car can serve dual purposes of both meeting the basic purpose; transportation needs and also the symbolic purpose of associating a consumer to a particular class of people. Consumer’s level of income, age group and occupational status will determine the make or model that the consumer decides to purchase.The cost of a car includes both the purchase price and the running costs such as fuelling. A person with a low income will adopt a pragmatic approach in selecting a suitable vehicle. The consumer will assess the cars technical performance and its mileage to determine whether it meets his or her basic needs and whether it is economical given his or her financial status. The consumer then settles for a practical car whose cost price and maintenance costs are low. A consumer with a higher level of income will purchase a car based on both the technical and non-technical attributes of a car. The technical attributes will include the performance, state of art technology and the car’s design. The non-technical attributes will include the car’s elegance, whether it’s a luxury brand, image, prestige and status. The consumer will settle for a car with a price premium, which has the aforementioned characteristics. A luxury car serves to affirm and cement his place in the society. Consumers in the baby boomer’s generation will purchase a car based on its quality brand and perceived safety. These are the major influencing factors and the price of the car has little influence on their choice so long as the car meets their standard mark. Consumers in generation X will largely be influenced by the information they possess regarding a car. This generation is market savvy and has little attachment to brands it is therefore willing to try out new car models given they meet their standards. Consumers in generation X have large discretionary income especially the young working singles. They will therefore opt for a luxurious car model and they are also brand loyal and will therefore pay much attention to the car’s brand. This consumer behaviour is very similar in the purchasing of mobile handsets. Mobile handsets are a technology push market with the development of products being based on a consumer’s likely future needs. Income and education enhances the adoption of mobile phone in a society. People will therefore purchase mobile phones in order to be at par with the technological advancements. A person’s age group and level of income will largely affect whether a consumer purchases a mobile handset that serves the basic purpose of communication or one that offers a means of interaction through wireless internet services and media services (Mallenius, Rossi and Tuunainen, 2012). People in the low income bracket will only purchase a low cost handset to serve the basic purpose of communication. Consumers with higher income levels will evaluate the handset’s product attributes such as the phone’s design, its connectivity and multimedia services and its brand. Consumers in this category will settle for a mobile handset with the latest technological advancements. A consumer’s occupation will also influence the type of mobile handset he or she acquires. Mobile handsets are becoming powerful tools in business transactions and networks with features such as email. Social influence is also exerting pressure on individuals to acquire mobile handsets based on the perceived usefulness, benefits and the ease of use. This is especially the case in the old generation where most people are hesitant to embrace new technology. People in the younger generations, X and Y, will acquire mobile phones both for its technological advancements and as a fashion statement thereby paying much attention to its features and appearance. The cosmetics industry is also affected by the social stratifications and sub culture. Most cultures consist of subcultures as a result of racial differences. The population of once perceived minority groups are also increasing rapidly to form a significant part of the consumer market. The increase in the number of working women has led to the economic empowerment of women and an increase in their disposable income thereby leading to a shift in their choice and preference of cosmetic products. An increase in the level of education is allowing most women to assess the safety and efficacy of cosmetics products as opposed to the blindly purchase of cosmetic products (Yeop et al., 2012). The aging population is also willing to pay a premium for cosmetic products that lend them a youthful appeal such as the anti-aging cosmetic products. Marketing strategies must therefore target women of different colours and textures. Reference groups Reference groups can be defined as groups of people who share similar lifestyles, behavioural norms or common values therefore forming a basis from which an individual can draw their behaviour from. People normally associate with reference groups with the purpose of developing a sense of self identity, to obtain rewards or avoid punishments or even to gain knowledge. Groups can be categorised into either primary, secondary, aspirational or dissociative. Primary groups include family and friends, and have a great influence on an individual because they entail a lot of face to face interactions which occur on a daily basis. Secondary groups involve limited interactions and also will have a limited influence on an individual. These kinds of groups include religious and community organisations. Associative groups are groups with desirable and perceived positive attributes and therefore most people will draw their behaviour from these groups. Dissociate groups are ones that are associated with negative attributes and people will therefore shun any kind of behaviour that links them to that particular group. Reference groups can be further categorised into either informational, utilitarian or value expressive. Utilitarian reference groups are normative groups that influence a person’s behaviour in that a person will act in accordance to the group’s acceptable behaviour in order to gain acceptance and approval from the rest of the group. This is especially so where there are rewards to be gained by belonging to that particular kind of group such as symbols of esteem. This behaviour normally entails actions that are salient and conspicuous actions that are noticeable. Informational reference groups are groups that an individual perceives as credible and reliable sources of information and will therefore draw there his or her behaviour and opinions from. The group is of great significance in influencing an individual’s choice in the assessment of a product and the various alternatives. Value expressive groups are identification groups that influence an individual’s behaviour as he or she tries to fit in the particular group. This could be an attempt to satisfy psychological associative needs and built a person’s sense of self identity by associating with groups that a person deems to be desirable (European Commission, 2010). Reference groups are of a higher significance in influencing consumer behaviour where the activity, product or brand is highly visible and noticeable, in young consumers or people with low self-confidence. Reference groups have an effect on a consumer’s cognitive and affective processes and therefore reference groups are of interest to marketers. This creates a need to identify the various social processes that are responsible for infusing cultural meaning to various products. Marketers must determine the shared meaning of various reference groups such as behavioural norms. Based on a group’s meaning and values, marketing strategies will associate a particular product with certain attributes that are salient features of a particular reference group. The extent to which a reference group influences the choice of products depends also on whether the product is deemed to be a luxury or a necessity and whether the product is conspicuous. Products can therefore be categorised into either private luxuries or public luxuries and private necessities or public necessities. Cars and mobile phone handsets fall in the category of either public luxury or public necessities. In the purchase of these products, value expressive and utilitarian influence greatly comes into play. A consumer will purchase a car based on the functional brand image. He or she may settle for a luxurious car with a brand that exudes elegance and affiliates him or her to a particular lifestyle. This will also serve to cement and assert his membership in a group such as the one consisting of the elite people in society and also distinguish him from the rest of society. A consumer may also indulge in conscipicous consumption mainly for pecuniary emulation. This is normally the case for middle income earners who buy luxurious cars in order to try and associate with particular groups of people. Similarly, consumers will purchase mobile phones with the motive of affiliating with particular groups. These groups may include the technological savvy people, the affluent people in society or groups that are considered to be cool (Zhang, Rhou and Zhou, n.d). Cosmetic products can be classified as either private necessities or private luxuries. Consumers may decide to purchase their cosmetics in exclusive markets as opposed to mass markets, especially in the purchase of fragrance cosmetic products. Cosmetic products that are excusive usually are of premium prices. A consumer will therefore opt to buy from this category in order associate with a particular group and also develop self-concept from the group’s association. Marketers have realised the impact of reference groups on consumer behaviour and they have adopted marketing strategies that associate products with various reference groups. They include use of celebrities in the endorsement of products. Families and households A family is an important unit of analysis in understanding consumer behaviour. Families in this context include both families consisting of people related by blood relations, marriage or adoption. Non families normally referred to as households comprise of non-related people living together. Family influences on consumer behaviour stem from three main sources mainly the family, life cycle, customer socialization and the family decision making unit. Customer socialization can be referred to as the various processes through which children acquire knowledge and information regarding the various products and services. This is however not restricted to children, one spouse can also learn from the other spouse on information regarding a particular product. Customer socialisation is important to marketers because recent research shows that most adults will tend to follow their parents’ choice of products and their consumption patterns; therefore, the concept of customer socialization can be used to instil brand loyalty (Zhang, Rhou and Zhou, n.d) Family life cycle can be defined as the various stages that a family will move through since the creation of the family until retirement where the children have already left. However, demographic and social changes such as delayed marriages, childless marriages, high rates of divorce and working women has greatly changed the traditional lifecycles paving way for many marketing opportunities. The family cycle must therefore take into account single parents whom though they possess low income, are growing in number. Family cycles are therefore important in identifying the various family segments and accordingly develop market segments that target the various family segments. The family decision making unit mainly comprises of an influencer, a gatekeeper, deciders, buyers and users. The final decision on whether to make a purchase or not will depends on the husband or wife. The husband wife involvement will however vary on the product class and among families. This type of decision can either be spouse dominant or joint decision making. Influencers provide the required information regarding the particular products that include children while the gatekeepers control the nature and type of information that the influences gives regarding the product. The decider chooses whether to make a purchase or not while the buyer executes the action of purchasing. The users are the family members who utilise the particular product. In the purchase of a car, the family must take into account safety concerns, the income level and the cost of maintenance and whether the car is practical in meeting the family needs. The family must also reach a consensus on the model or even colour of the car especially where the various family member are involved in the decision to purchase a car. This is however not the case in the purchase of handsets and cosmetic products which are for individual use. Family members will serve the role of providing the information regarding these products and the consumer settles on a particular choice based on the family’s level of income and information. Successful marketing strategies stemming from the decision making unit include ensuing that the product is not confined to use by only one family member but also includes other family members, therefore facilitating family joint use to reduce any conflict that may occur in deciding whether to make a purchase or not. Marketers must also identify the various influencers in the decision making unit and therefore select advertising strategies that particularly target and appeal to the influencers. Conclusion Based on the above discussion, it is clearly evident that external factors have a significant influence on consumer behaviour. The factors are interlinked, and therefore their effects on consumer behaviour are roughly to an equal extent. Both external and internal factors may not represent the motivation behind every consumer’s behaviour; they however provide a clearer picture regarding consumers’ wants and needs. References Anurit, J. (n.d). An Investigation into Consumer Behaviour towards the Purchase of New Luxury Cars in Two Culturally Distinct Countries: The UK and Thailand. Accessed on May 20, 2013 from ondocsfiles.com/pdf_luxury_consumer_behaviour.html‎ Bray, J. (n.d). Consumer Behaviour Theory: Approaches and Models. Accessed on May 27, 2013 from eprints.bournemouth.ac.uk/.../Consumer_Behaviour_Theory_-_Appr... Biljon, J. & Kotzé, P. (2008). Cultural Factors in a Mobile Phone Adoption and Usage Model. 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