The Influence of Different External Factors on a Consumers Decision-Making Process for Smartphones - Term Paper Example

The Influence of Different ‘External Factors’ on a Consumer’s Decision-Making Process for Smartphones (4,060 words – excluding the executive summary) Table of Contents Table of Contents ii Executive Summary This assignment is based on the influence of the external environment on the decision-making process of consumers. The focus is on examining how different factors of the external environment affect the way consumers make decisions when purchasing smartphones. There are several aspects of the consumer decision-making behaviour that are examined in the essay. To begin with, a brief outline of the different models of consumer behaviour is presented. From the model, it is seen that the decision-making process which consumers undergo when making purchases can be explained in terms of a complex input and output process. From both the external and internal environment, consumers are influenced by different factors into developing their self-image and personality. The outcome of the process is in the form of the decision-making process which consumers go through when making purchases. There are several factors in the external environment which affect the way consumers make decisions when buying smartphones. First, reference groups influence the way consumers make decisions during the time of buying smartphones. Second, the family setup in which individuals were brought up influences their general consumption patterns. This is reflected in the way they make decisions when buying smartphones. Third, diffusion of innovations influences the way consumers make decisions when buying smartphones. This is because the level of innovativeness associated with smartphones provides consumers with the chance to use them for different purposes other than those associated with traditional mobile phones. Fourth, the consumer decision-making process with regard to the purchase of smartphones is influenced by the social class of individuals. This is because the roles and status of individuals in the society influence their consumption behaviour and patterns. Lastly, the culture of consumers as well as the age subculture to which the consumers belong influence the way they go through the decision-making process when buying smartphones. This is due to the point that different cultural values affect the behaviour of individuals with regard to the way they make their purchases. Introduction In this assignment, the influence that various factors of the external environment have on the decision-making process of consumers when buying smartphones is presented. Although there are several external factors that influence the consumer decision-making process in general, special focus is on those factors that are of greatest relevance to consumers of smartphones. These factors affect the way consumers go through the various stages of the entire process of purchasing smartphones. The decision to focus on smartphones has been influenced by several factors. In general, smartphones are unique and innovative products in that they have created a huge global sensation in terms of consumer demand and overall development of new technological features. Although smartphones developed as discontinuous innovations from the original mobile phones, their ease of use, growing demand and advanced applicability has made them define the overall mobile phone market in the world. The essay is divided into several sections as follows. First a brief explanation of the consumer decision-making process is provided. The process is explained in terms of models that emphasise on the input and output aspects of the process. In the second section, a comprehensive examination of how external factors influence the decision-making process of consumers with regard to the purchase of smartphones is presented. The section is divided into several subsections, each one of them dealing with how specific external factors affect the way consumers make decisions when purchasing smartphones. The factors which are discussed include the following: social class of individuals, cultural factors, diffusion of innovations, the role of opinion leaders and subcultures. Consumer Decision-Making and Behaviour In general, there are several theories which have been developed to explain the complex nature of consumer behaviour in general and the process by which consumers make decisions when buying goods and services in particular. The concept of consumer behaviour can be explained in terms of how consumers respond to different factors in their environment when making decisions about their purchase and consumption of goods and services. The environment in which a buyer operates is made up of two sets of factors: those that result from marketing and those that result from other sources (Tyagi & Kumar, 2004, p. 54). Marketing factors such as information about the product, its price, placement in the market and the promotional activities that are used affect the way consumers make purchase decisions. In the same way, technological, cultural, political and economic factors influence the way consumers make decisions throughout the process of making purchases. From this, it can be seen that the behaviour of consumers takes place as a process that entails input of different factors and output in the form of different decisions. This process involves a complex interaction between the marketing stimuli on one hand and the response of consumers on the other. Input is received in the form of various marketing and non-marketing stimuli. Information from these stimuli is in turn influenced by the characteristics of the individual buyer as well as the decision-making process to produce a series of different responses as output. The responses include specific choices about the product, the brand, the dealer and the specific time and amount of money to be spent on the purchase of the product or service (2004, p. 55). On the other hand, the influence of external factors on the way consumers make decisions about buying smartphones can be understood in terms of the Hawkins, Best and Coney model of consumer behaviour (Sharma & Singh, 2006, p. 97). In this model, consumer behaviour generally has three distinct components: the influence, experience and acquisition. Under influence, consumers are affected by several factors which originate from their internal and external environments. The external environment is made up of factors such as the family, the social class of the consumers, cultural values, reference groups and the marketing activities (Botha, Bothma & Geldenhuys, 2008, p. 155). On the other hand, the internal environment of consumers is composed of unique personal factors such as perception, attitude, motives and personality. These factors act as internal influencers to the decision-making process. The interaction of internal and external factors produces an experience of needs and desires within consumers. This arises from the self-concept that is partly developed as a result of interaction with different factors in the external and internal environment (Sharma & Singh, 2006, p. 98). The acquisition component of consumer behaviour is made up of the decision-making process. This process includes several interlinked steps like recognising the need for a product, searching for information about the product, evaluating all other available alternatives and finally carrying out the actual purchase. The Influence of External Factors There are several external factors that influence the decision-making process of consumers in general. These factors; which can be categorised into cultural, social and economic ones, vary with different kinds of goods and services under consideration. When buying smartphones in general, consumers are affected by different types of external factors. These are discussed in the sections that follow. References groups Buyers of smartphones are heavily influenced by reference groups when making their purchasing decisions. This happens in several ways. To begin with, the ability of reference groups to act as external sources of influence on consumers when making purchase decisions arises from the knowledge that the group serves as a point of reference or comparison for individual members when forming their values, attitudes and general behaviour (Kumar, 2009, p. 239). In general, reference groups may either be normative or comparative in nature. Whereas normative reference groups function by influencing the general behaviour and values of individuals, comparative reference groups function by working as benchmarks against which individual members measure their specific values, attitudes and general behaviour. This way, the habitual, real and impulsive decisions that are made by the consumers are influenced by the reference groups to which the individuals are attached (Strydom, 2005, p. 55). There are two specific types of reference groups that are applicable in influencing the behaviour and general purchase decisions of consumers of smartphones: contractual and aspirational reference groups. Essentially, in contractual reference groups, the behaviour of members is directly influenced by their contact with the group and direct membership in the group. The interaction of individuals with the other members of the group has a positive influence on individuals’ behaviours, values and attitudes. On the other hand, the decision-making process of consumers when buying smartphones is influenced by aspirational reference groups. Such groups are characterised by an indirect influence on the behaviour and values of individuals. Although they may not be direct members of the groups, individuals are influenced in their decision-making processes as a result of indirect and symbolic association with the values of the group. One way in which these groups affect the way consumers make decisions when purchasing smartphones is that through them, consumers are able to form virtual groups known as brand communities. By associating with or aspiring to be part of a group of individuals who share particular values espoused by a particular brand, consumers are inspired to own particular brands of smarthphones so as to be part of the brand community. The second way is through internet-based consumer groups. Through online interaction, individuals are influenced by the opinions and values shared by the other members of the groups who share particular interests and activities with them. Through such virtual groups, consumers either directly belong to them or are influenced by their symbolic membership to such reference consumer groups. As a result, their decisions with regard to buying smartphones are influenced by such virtual groups. Family In general, the influence of the family on consumer behaviour is felt in terms of actual consumption of products and the way individuals make decisions about their purchases. To begin with, families, which act as the basic social institutions, influence the future decisions of a consumer through the socialisation process that they subject children to (Raju, 2004, p. 13). The socialisation process that individuals are subjected to by their families during their childhood stages has a direct influence on the consumption norms, values and behaviours that are be adopted in the future. Therefore, depending on the consumption patterns of the parents, children assimilate specific behaviours and values which they develop with and exhibit later on in their adult lives (Raju, 2004, p. 14). These behaviours develop through the process of observing the consumption patterns of parents, making requests to parents, making selections for different products, making assisted purchases and making fully independent purchases in their adulthood (Blythe, 2013, p. 249). Secondly, families influence the consumption behaviours of individuals in general and their decision-making process when purchasing specific products in particular, through the different roles that they play in the lives of individuals. For example, by functioning as the source of a suitable lifestyle and comfort for its members, the family plays a role in influencing the consumption pattern of individuals who belong to it (Blythe, 2013, p. 250). This is because the kind of lifestyle that is established by the family determines the types of goods and services that are purchased by the members. This pattern is reflected in the consumption behaviour of the children later when they become adults. When applied to the way individuals make decisions when purchasing smartphones, it can be seen that families have a significant level of influence. This happens in several ways. To begin with, members of a family can influence the way individuals make decisions when purchasing smartphones. This is because family members having information about the product may share the information with others, thus influencing them in the way they make decisions during the entire purchasing process. Secondly, the influence of the family on the consumer decision-making process may be felt in the form of specific members of families making the final decisions about products, brands and prices of the products to be purchased. In such instances, the decisions on the need for a product, what product to buy and the specific timing about the purchase are made by family members. Lastly, family members can influence the way individuals make decisions about purchasing smartphones by initiating the entire decision-making process. By controlling the kind of information that is available to the individuals, members of a family may initiate the process of need recognition and the search for information within others. This influence may be felt throughout the decision-making process for the purchase of smartphones. Diffusion of innovations The impact of diffusion of innovations as an external factor on the consumer decision-making process with regard to the purchase of smartphones can be understood in terms of the Rogers adoption or innovation curve (Hoyer, MacInnis & Pieters, 2013, p. 423). This curve explains the sequence of events by which different categories of users adopt new innovative products over the course of time. The process of adopting such technologies occurs in the form of varying proportions of users fully adopting the innovation in the course of time. The first category is made up of the innovators. This is a small group of individuals who are the first ones to use new innovations and technologies that are released to the market. The second category is made up of the early adopters who follow in the footsteps of the innovators. Members of the early and late majority categories, who make up the majority of the population of consumers, are individuals who adopt the new technology after long after it has already been established in the market (Hoyer et al., 2013, p. 424). When making decisions about adopting the technologies, consumers make several decisions beforehand. These are as follows. First, they are exposed to the product and are aware of the technical details of the product that has been released to the market. Second, after they have developed interest in the innovation, they deliberately search for information about the potential advantages and disadvantages about it. This is meant to help them make the decision on the relative value of owning the product (Reinders, 2010, p. 6). Third, after evaluating and making their conclusions about the product, they obtain it and use it for a specified period of time. This serves as a trial period during which consumers use the product for a limited time before full adoption. There are several ways in which this curve influences the way consumers make decisions when buying smartphones. To begin with, when purchasing smartphones, consumers go through a sequence of events and decisions that is similar to what happens in the process of adopting new innovations. Since smartphones embody new innovative technologies in the form of technical features and innovations, consumers go through the stages of awareness, interest, evaluation and trial before fully adopting the innovations by purchasing them. The second way in which the consumer decision-making process with regard to the purchase of smartphones is affected by the process of adoption of innovativeness occurs in the form of use-innovativeness. Essentially, use-innovativeness is a concept that is used to explain different ways in which a product is used by consumers (Hawkins, Motherbaugh & Mookerjee, 2010, p. 705). This concept is applicable to smartphones in that consumers are able to use the phones for multiple other purposes apart from the traditional functions that phones are used for (Park & Lee, 2011, p. 444). It then follows that consumers, when deciding whether or not to buy smartphones, are influenced by the number of different other uses that they may subject the phone to. Thirdly, the development and marketing of smartphones is based on their characteristics as product-oriented innovations and targets the consumer innovators category of adopters. Discontinuous innovations included in the product such as the touch screen and different applications appeal to the members of the consumer innovators category of adopters. This way, the decision-making process of consumers is influenced by the motivation to own the devices and utilise their different features and properties for different purposes (Suki, 2013, p. 237). Lastly, diffusion of innovations influences the decision-making process of consumers when buying smartphones by determining the rate of adoption of the devices which are seen as new products in the market. Theoretically, a new product will be quickly adopted in the market if the early clients perceive it as having the following characteristics: relative advantage, ability to be tested for a limited period of time and producing observable results (Kumar & Prommathed, 2006, p. 10). Social class Theoretically, social class refers to the notion of members of the society being divided into different distinct categories (Haynes & O’Dougherty, 2007, p. 42). The categories are defined by several social, economic and cultural factors. Also, members of different social classes have specific roles and status in the society which arises from differences in wealth, power and prestige. One way in which social class influences consumers during the process of buying smartphones is through the influence of the demands of roles and status of members of different societies. Since individuals belonging to different social classes have different statuses in the society, their purchasing behaviour is affected by the demands that come with their statuses in the society. This way, the decision-making process of consumers is influenced by the need to buy smartphones, which are regarded as cultural artefacts that are used to reflect their status in the society (Shin, 2012, p. 567). Another way in which social class influences the way consumers make decisions when buying smartphones arises from the roles played by individuals in the society. By belonging to different social classes, individuals play different roles at different times within the social setup. By virtue of these roles, their general consumption behaviour is modelled on the need to fulfil their different roles in the society. Apart from the roles and status played by different individuals in the society, social class affects the decision-making process of consumers of smartphones in the form of different market segments which are developed as a result of social and geographical clustering. Essentially, socio-economic factors interact with geographical settings to create different market segments for products and services. The resulting market segments can be described in the form of the behaviour and consumption patterns of the individuals who are included in them. For example, individuals belonging to the class of affluent consumers are influenced to purchase expensive products and brands (Rosenbloom, 2011, p. 246). The need to own expensive brands is taken as a reflection of their class and status in the society. This is because of the high level of disposable income that they have when compared to consumers in other categories as well as the need to maintain their status in the society. On the other hand, individuals belonging to the middle-class consumer category exhibit different consumption patterns as result of the amount of disposable income that they have as well as their status in the society. These factors influence the way different consumers make decisions throughout the process of buying smartphones. Culture and subcultures Culture, which is the sum total of the customs, values and beliefs that have developed over the course of time in a society, plays a key role in determining the overall consumption behaviour of individuals (Burrow, 2008, p. 170). In general, individuals get exposed to different cultural values and norms, which in turn get revealed in their subjective behaviour and actions. There are three ways in which cultural values are subjectively revealed in the behaviour of individuals. First, this may occur in the form of subjective cultural values and differences that are evident across national borders. The second way is through national cultures which are seen in the form of specific values that are shared by individuals of particular nationalities. Lastly, subjective cultural differences may be seen in the form of cultural values that are shared by members of a particular group in the society. One way in which cultural values influence the way smartphone consumers make decisions during the purchase process is through the influence of consumer materialism. In cultures where owning material possessions is highly encouraged, the consumption patterns and general behaviour of individuals are affected by the need to conform to this practice. Also, the consumption patterns of individuals are affected by the importance that their cultures attach to shopping in general. In cultures where shopping is held in high esteem, individuals embrace the practise as a popular pastime that is used to create and maintain values in their lives. Therefore, such cultural values influence the perceptions of consumers towards shopping in general and owning material possessions in particular. This in turn influences the way consumers make decisions with regard to buying smartphones. Apart from cultural values, the decision-making process of smartphone consumers is affected by subcultures. Theoretically, a subculture can be seen in terms of a distinct cultural group which exists within the context of a large multicultural society (2008, p. 172). Such groups are identified by their shared aspects like the unique set of beliefs among the members, the language used with the group and the self-identity image that is shared by members within the groups. There are different aspects of the subculture that affect the way consumers make decisions when buying smartphones. For instance, the decision-making process with regard to owning a smartphone is largely a function of the family life cycle aspect of different age subcultures. In addition to this, the way individuals make decisions during the five stages of the consumer decision-making process is a function of different age cohorts to which the individuals belong. For example, individuals who belong to the age cohort of GenerationY are defined by their openness to change, high level of technological sophistication and disloyalty to brands (Kardes, Cronley & Cline, 2014, p. 454). Therefore, the way they make decisions about the need to own a smartphone, the particular brand and time of making the actual purchase are influenced by these characteristics. On the other hand, individuals belonging to the Baby Boomers age cohort are characterised by their ability to make important consumer purchase decisions thus placing them at the apex of affluence, high level of inherited wealth and closeness to the retirement age (2014, p. 451). These characteristics influence the way individuals belonging to this age cohort decide during the process of buying smartphones. Cross-cultural consumer behaviour There are several ways in which cross-cultural factors affect the way consumers make decisions when buying smartphones. For instance, many smartphones brands are global in nature in that their development, branding and marketing has been done with a target on the global market. As such, the appeal for smartphones has transcended cultural and regional differences. This has been further engendered by the effects of globalisation which have created the need for truly global brands. Another way in which cross-cultural factors influence the decision-making process of consumers with regard to the purchase of smartphones can be explained in terms of the cognitive and emotional models of consumer decision-making. Under the cognitive model, consumers are seen as active participants throughout the purchasing process. As rational problem solvers, consumers actively look for information about the products and services they wish to purchase, evaluate the information and actively make decisions about the best brands, products and places of purchase based on the processed information. On the other hand, the emotional model of the consumer decision-making process focuses on the role that feelings and emotions play in influencing the consumers to make particular decisions (Botha, Bothma & Geldenhuys, 2008, p. 157). Because of this, individuals have an emotional attachment to their products, which serve as memories of the past as well as transitional objects in their lives. These factors influence the consumer decision-making process with regard to the purchase of smartphones in several ways. For example, some companies, in recognition of differences in cultural and regional groups, have developed specific brands that target specific socio-cultural segmentations. Opinion leaders The last factor of the external environment that influences the decision-making process of consumers when buying smartphones is the effect of opinion leaders. In general, opinion leaders are a group of highly influential individuals who, by virtue of their ability to be among the first individuals to adopt new technologies, influence a large number of would-be consumers in the market. Their ability to influence others arises from their interest in new product categories as well as their social characteristics which make them to be socially accepted and involved (Tyagi & Kumar, 2004, p. 115). Because of their extensive media usage, they are able to provide information and general advice about different products to other consumers. It is this function that influences the way individual consumers go through the decision-making process during the process of buying smartphones. Also, the influence of opinion leaders on smartphone consumers may be felt in every stage of the process. From need recognition to making specific decisions about the purchase, individuals are influenced by the information and advice received from opinion leaders. Conclusion In conclusion, several factors of the external environment affect the consumer decision-making process with regard to the purchase of smartphones. This influence is felt through all the five stages of need recognition, information search, evaluation of alternatives, making purchase decisions and post-purchase activities that consumers go through when buying smartphones. To begin with, families play a key role in influencing the way individuals make decisions when purchasing smartphones because of the consumption habits that they instil in individuals through the socialisation process. Also, family members may act as sources of information, influencers and decision makers in the consumption behaviour of individuals. This way, the family affects the decisions that consumers make when purchasing smartphones. Secondly, individuals are influenced by reference groups when purchasing smartphones. This is because their relationship with and aspiration to be like the members of the groups shape their overall consumption behaviour. In the same manner, the demands for roles and status that individuals hold in the society affect the decisions that they make when buying smartphones. This is because individuals belong to different social classes and are required to play different roles that are associated with their classes. Apart from the social class, family and references groups, other factors in the external environment such as the opinion leaders and culture influence the decision-making process of consumers with regard to smartphones. 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