Principles of Marketing - External Factors on Consumer Decision-Making Process - Coursework Example

External Factors on Consumer Decision Making Process Name Date Affiliation Introduction External Factors on Consumer Decision Making Process When customers are making decisions concerning buying a certain product and services, they normally gather relevant information which help them in the process of making the decision. Decision making process is vital for the customer and also for the seller since it determines which product or service he or she tends to buy. External factors are known to highly influence the choice that many customers make in the endeavor of making the purchases in their daily lives (Grewal, Cline, & Davies,2003).Customers are influenced by the minor things that are happening in the society and such factors can prompt them to buy a certain product or even deter them from buying such a product. The conglomerations of all the factors that lie” outside the customer” are known as external factors and they are known to cause changes in the customer decision making process concerning purchases(Grewal, Cline, & Davies,2003). The type of purchase should also be taken into account more especially when buying the products and services. There are highly involvement purchases and such purchases include personal risk, and commonly involve the following; buying a house, buying a car or making huge investments. The low involvement purchases include buying soft drink, choosing the breakfast cereals and such purchases are not highly affected by the external factors. The external factors will influence behavior pattern, feelings and even acceptance in the society. In the high involvement decisions, the marketer usually provides a good deal of information about the positive consequences that the customer will get upon buying a certain product. Generally, there are several factors that will govern why an individual will decide to buy a given product while leaving out another product and such factors which are found outside an individual are known as external factors (Grewal, Cline, & Davies, 2003) Culture and decision making process of a consumer. According to (Hoyer & MacInnis 2007), Culture, refers to the characteristics of a particular group of people in terms of religion, language, cuisine, social habits arts and music. Many countries today are cosmopolitan and they have highly influenced the ways of life of the people living there. For instance, the city of Canberra is cosmopolitan and therefore, integration of different cultures hence the customers who are ion that particular city will have different tastes owing the fact that they come from different ethnic communities. The different cultures will have impact on their purchasing power hence affirming that culture is paramount in determining the consumer decision making process (Hoyer & MacInnis,2007). Normally, culture influences the consumers through the values and norms which are established in the society in which they live in. it’s usually the widest and most concrete environmental factor that will affect the way in which the consumers behave. Culture is usually inculcated and it is passed down from one generation to the other through established institutions such as families and religion. Normally culture evolves and it is possible to associate the benefits of a product or a brand with the new values that are coming up or those which are necessary to change the product if the value of the product is no longer gratifying the need of that particular society. For instance, the movies, the TV series should manage to satisfy the needs of entertainment in line with the requirements of society. These movies should be educative and at the same time conforming to morals that are in that particular society. If they do not conform to needs of that particular society it is possible that customers who are members of that particular society will not buy the product citing the violation of products with their culture and way of life(Hoyer & MacInnis, 2007). For instance, in a normal Christian home, most of the movies and advertisements which are found in the media are not in line with teachings of the gospel and therefore, the Christian families will not buy such products and movies since the y do not conform to the teachings of the word of God. Culture is complex as a whole and it involves a set of beliefs, morals, arts and other customs that are acquired by the members of the society. It’s worth noting that culture is invented and it cannot be viewed as something that just exists and it’s waiting to be discovered. People are generally responsible for inventing culture directing what they should do and what they should not do. In this relation, it’s important to note that culture is learnt and it is not biological as some may try to postulate. The process though which an individual gets to learn the cultural values usually begin at an early age through social interactions amongst families and friends (Kotler, & Armstrong,2012). Moreover, culture is shared and this aspect ensures that certain group of people will buy a certain commodity or they will not buy. For example, the Muslims will not buy pork since it is against their religious belief which forms part of their culture. Moreover, the women among the Muslims will not buy other clothing which is in fashion simply because their culture dictates that they should not wear such clothes. Therefore, one will find that women from those particular groups will not buy such commodities since their culture prohibits them to wear them (Grewal, Cline, & Davies, 2003). Culture satisfies the needs of the people who are involved and this makes it possible for them to purchase the goods and products that are in line with the goals. The Needs will only be satisfied culturally only when the available alternative for the service or goods is in line with the requirements of that particular need. In the same breath, it worth noting that culture offers order required for one to overcome the challenges associated with purchasing the goods and services. It recommends the goods and services which will be bought in attempt to ensure that culture is maintained and at the same time all the standards are followed to letter. However, it should be noted that culture is not static and it is dynamic in the sense that what society’s culture dictates its good in a given period may not be the same for the other society in given period. All these influencers the purchasing and decision making abilities for the clients (Kotler, & Armstrong, 2012). Subcultures and the consumer decision making process Sub cultures are usually a segment within culture that normally shares set of meanings, values and activities that differ in various respects from that of the entire and overall culture. Sub culture analysis usually enables the marketing managers to focus on the beliefs, customs and values which are shared by a particular subgroup and ultimately making them desirable for marketing attention. Normally, sub-culture can be defined as the distinct group of culture that exists within a given complex society and it is identified through customs and beliefs that are distinct from others in that particular culture. The sub culture just as culture will ensure that the individuals in this particular context have bought some goods while leaving out others and this contributes to the part of decision making in purchasing goods and services. Moreover, one will find that some individuals in the subculture group will prefer some goods to others though the entire population or culture does not prefer them (Kotler, & Armstrong, 2012). For instance, in Canberra city, there are different people from different origins and their habits influence the market. In an area where Arabs are many, it’s possible to find the market for bitter herbs and cuisines are many compared to the entire population where such goods may not be sold (Grewal, Cline, & Davies,2003).Therefore, the food providers and other businessmen will take advantage of the opportunity and increase the supply of good and other relevant services hence increasing the purchasing power of the consumers. Other examples of the subcultures include; culture geography, culture profession, culture by age and culture by gender. For example, there is that commodity that only women are likely to buy and if they do not buy no other group of people will buy. They influence each other and that becomes part of marketing the product. For example, women will buy products like shoes, makeup among other products which go hand in hand with the current status of the society. Moreover, the age also creates another subculture that is evident in the cases whereby men and women buy different things at a particular age. For example, men are likely to buy particular product in a given age and upon passing that particular, they cannot buy that product. For example, women will buy only buy products relating to beauty when they are at a particular age and upon passing that age, they will not involve themselves again with beauty products (Levy, 2012). Moreover, religion forms other subcultures just as it was discussed above. For instance, a group of people from a particular organization or religion will only conform to their culture which dictates that they should a particular thing and they should not do the other thing. For example the Hindu will not feed on beef simply because their religion prevents them from doing that. On the other hand, the Muslims will not eat the pork simply because the religion prohibits them from doing that. Therefore culture influences highly what people will do and what they will buy and what they will not buy (Rotenberg, 2004). Family and consumer decision making process Family is also part of culture and it highly influences the type of product or goods an individual is likely to buy.The family is the most common reference that many people will look in their endeavor to seek what to buy and what to leave. For example a family with young children is likely to be buying some consumable goods such as Wetabix, diapers, milk among other products which are essential for a young child. On the other hand, a family which has old people will not buy such goods since they are of no use in the household (Grewal, Cline, & Davies, 2003). For example, they will not buy diapers and wetabix though they may buy milk. In such a family trey are likely to be buying other commodities which are of value and importance to them for a particular time and moment (Rotenberg, 2004). Moreover, the financial set up of the family will also determine the kind of goods and services which these people will be buying. A family which has good financial foundation is likely to be shopping expensive products compared to the families which lack stable financial foundation. Through such foundations, the consumers will only buy the products and services which are in line with their financial ability. This aspect of culture will also determine the decision making process pertaining the kind of products that customers are likely to buy at a given period of time (Rotenberg, 2004). Religious foundation of the family will also determine what will be and what will be left out. Families which have Christian foundation will only products which conform to Christianity just in the case of other religion. They will also go for the service which is in line with Christian teaching hence affirming that family religion is fundamental in determining the type of consumer goods and services that customers will buy upon getting a chance (Grewal, Cline, & Davies, 2003).More also, in the family set up it is paramount to note that parents highly influence what children are likely to purchase and more also the non consumable goods such as clothes and shoes. They influence both directly and indirectly through verbal advice and also through amount of money that they give to their children (Schiffman, & Kanuk,2004). Social class and consumer decision making Social class is also known to influence the way in which consumers buys products and services. According to (Schiffman & Kanuk, 2004) social class refers to the social stratification which occurs in societies throughout the human existence. A consumer social class refers to the position in which a particular individual holds in a particular society. Social class is determined by various factors including education, income occupation among other crucial factors. However, income is the most important factor in indicating social class though the parameter has been erroneous (Sedgwick, &Pokorny, 2012). Under normal circumstances, social class refers to the division of members of a given society into hierarchy or distinctive classes in such a way that each and every member have relatively the same status and the other members have neither less or more status (Sedgwick, &Pokorny, 2012). Consequently, social class as per the current parameter is measured on the basis of wealth power and the prestige. The people who are on the upper class have high value for quality goods and services which are expensive in return. Moreover, they are likely to be thrilled at things which are valuable and expensive in the long run. For example, they may buy art works at very expensive rates simply because they are thrilled by the fact that its art The middle class also value things which decent and depicting social esteem such as nice clothing among others. These individual are more or less the same with the upper class though the spending habit is a bit lower (Sedgwick, &Pokorny, 2012).The working class also depicts a certain characteristic on sporting events and new appliances which are introduced ion the market. Finally, the lower class is highly oriented on neighborhood and the food materials which are readily available. Through the description, it is evident the social class will highly influence the type of good that families and even individuals are likely to buy. In as much as money counts, social class has an upper in determining what to be bought and what not to be bought (Solomon, 2002). Opinion leadership and the consumer decision making process Opinion leadership also counts when it comes to determining what they will buy or what them not buy. The opinion leadership is that group of individuals who are able to influence an individual concerning buying a given product within a given time. They influence others using the word of mouth and their efforts usually lead ton withdrawal or even massive buying of such products or services (Sedgwick, &Pokorny, 2012). These people include the elderly people, the parents and also people who have close and direct link with such people. As posited above may affect the individuals either positively or negatively depending on the circumstances and the attitudes which are associated. Reference groups are known to have influenced people to buy certain products through their words advice and even ridicule. This group shows their response through verbal messages or non verbal such as the word of mouth (Solomon, 2002). Cross cultural and consumer decision making process Cross cultural consumer analysis determines whether and the likelihood of entering a foreign market is viable for a company selling a particular product or service. It is the effort of determining the extent at which consumers of two or more nations are different or similar or different in terms of taste and preference ().The analysis usually provides marketers with clear understanding of the psychological, cultural and social factors relating to foreign consumers which they desire to get. Through this, they are able to design effective marketing strategies so that specific national markets can be involved (Sedgwick, &Pokorny, 2012). The basic research issues in the cross-cultural differences in a language and meaning are paramount such as restroom differences in market segmentation opportunities. For instance, when buying a car the car differences in terms of fuel consumption should be taken into across the cultures. Differences in the perceived benefits should also be taken into account more especially in the case of quality of a product. How does a particular group of people perceive yogurt milk? Is it good or bad ion the long run? (Solomon, 2002). Diffusion and the adoption of innovation The diffusion and the adoption of innovations are mainly based on the acceptance of new products in the market and more especially by the consumers in several societies and also how they may be different. According to the personality traits, of the available consumers it is possible to analyze the things and also fight for ones beliefs (Sedgwick, &Pokorny, 2012). Researchers have embarked on understanding the closely related aspects which include the diffusion process and also the adoption process. Adoption process is much wider term which is concerned with spreading of the new product from the main sources to the consuming public. Adoption is a micro process stage which focuses on the stages through which an individual consumer will follow when deciding to accept or reject a particular; product. A new product means that it must be real, convenient and also integrated within the culture (Solomon, 2002). A new product means that it must be accepted by the consumers if it has the required qualities to meet the needs of the customers. Many times customers will not buy new products more especially if they are from new companies (Sedgwick, &Pokorny, 2012).They will buy such products which they are used to and those whose quality is known. Innovation must be done and for it to be successful appropriate information, dispersal must be done to ensure that consumers are aware of the product and they can use the product effectively (Solomon, 2002). Importance of public policy and consumer protection aspects The public policy on consumer protection law usually provides a way in which individuals can fight back on abusive business practices which violate the consumer rights. The laws are designed to hold the sellers of the goods and services accountable when they are seeking profit and also taking advantage of the consumer lack of sufficient information and the bargaining power. Some of the conducts which are addressed by the consumer may be very high and demanding but the main course of action is to ensure that they are defending the consumer. These public policies on consumer protection usually guarantee the consumer that whatever he or she is buying is worth (Sedgwick, &Pokorny, 2012).The products in the markets must have been passed by the consumer protection rights and if the customers or consumers affirm that, it is possible for them to buy in abundance. However, if any product is not passed by the consumer protection right, it will ultimately fail the customers will not trust its credibility (Hoyer & MacInnis, 2007). The above discussed external factors that are the most important when considering the case of decision making and consumers. External factors may be many but the above discussed are the most important taking into account that they affect the consumer directly (Hoyer & MacInnis, 2007).They normally affect the consumer at a close range and therefore, it is paramount to discuss them. Moreover, there are still other causes such as politics, weather, geographical environment, and politics among others though they do not affect the individual decision on a given product. However, these factors do affect the consumer in the long run. Concepts and theories influencing consumer decision process on goods and services There are different theories and which usually influence the process of consumer decision making process and research posits that they are highly involved in interfering with such practices. Utility theory is among the consumer theories that were postulated by Neuman Morgenstern and it posits that consumers usually make decisions based on the outcomes which they expect. In this particular model, the consumers were viewed as rational actors who would be able to estimate the probable outcomes of the uncertain decisions and also select the outcome which maximized their well being (Sedgwick, &Pokorny, 2012). However as one might expect, consumers are generally and typically incomplete in terms of rationales or even aware of the various elements that may enter into the decision making process. Moreover, consumers may be good at estimating the relative frequencies of the events and this means that they typically have difficulties when it comes to translating these frequencies into the probabilities. Although utility model had been seen as a dominant decision for quite a long time, it had various shortcomings which could not explained using the model (Hoyer & MacInnis, 2007). The Nobel Laureate Hebert Simon proposed an alternative and simpler model and it was known as the satisficing model in which the consumers would approximately go where they wanted to go and also stop the decision, making process. For example this would be in search of a new apartment or house. Under this utility, the theory of consumers managed to evaluate each and every apartment in the market from a perspective of a linear equation based on all the pertinent variables and finally selecting the apartment which had the ultimate qualities (Hoyer & MacInnis, 2007).The good in this case is variable and upon getting the good the satificing policy says that they should stop. The theory though it was robust enough to encompass many shortcomings, it still left significant room for the improvement in areas of prediction. If the marketing officer would not manage to predict the behavior of the consumer, then the decision making paradigm would not be of use. Simon and other have gone to extend the area through investigation of the field bounded with rationality. The efforts of Simon, some additional efforts were made in order to develop a clear understanding of the consumer decision making process which extends beyond the mathematical optimization of the utility theory and also unsatisfying the satificing theory. In late 1970, leading psychologist by the name Daniel Kahneman and Amos Tversky managed to develop the prospect theory which went ahead and expanded on the utility theory and satisficing theory hence bringing a far much better theory. The prospect was in a position to solve most of the challenges that existed in the above mentioned theories due to its advanced approach and strategies (Hoyer & MacInnis, 2007). Major elements that were added by Kahneman and Tversky were the concepts of value which replaced utility in the utility theory and endowment which affirms that an item is more important if an individual owns compared to a situation where another person owns it. Normally value provided reference point for both gains and the losses from a given reference point.Additionally, the gains and losses usually have a marginal decreasing increase from the reference point. For instance, there is much greater value for the incremental gain from a given reference point compared to the subsequent gains. These theories and concepts have been pivotal, in enhancing consumer decision making strategies and continuous application of such theories will ultimately lead to successful consumer decision making process (Levy, 2012). Conclusion In conclusion, it’s evident that consumers are affected by various external issues which include, culture, social status, sub-cultural aspects, and the impact of cross cultural, leadership opinion among other vital external factors. Moreover, the consumer decision making theories such as utility theories, prospect theory among others should be taken into account when one is evaluating the process. It should be noted that only the above discussed external factors which have significant effect on the consumer behavior. Other external factors such as environment and politics might play a role but not as significant like that in the above mentioned factors. References Grewal, R., Cline, T., & Davies, A. (2003). Early-Entrant Advantage, Word-of-Mouth Communication, Brand Similarity, And The Consumer Decision-Making Process. Journal of Consumer Psychology, 13(3), 187-197. Hoyer, W. D., & MacInnis, D. J. (2007). Consumer behavior (4th ed.). Boston: Houghton Mifflin Co. Kotler, P., & Armstrong, G. (2012). Principles of marketing (14th ed.). Boston: Pearson Prentice Hall. Levy, K. (2012). Consumer decision making and word of mouth communication. Waterloo, Ont.: University of Waterloo. Rotenberg, R. H. (1974). The role and importance of non-commercial sources of consumer information as an input in the consumer decision making process. Ann Arbor, Mich.: University Microfilms International. Schiffman, L. G., & Kanuk, L. L. (2004). Consumer behavior (8th ed.). Upper Saddle River, NJ: Pearson Prentice Hall. Sedgwick, J., & Pokorny, M. (2012). Film consumer decision-making: The Philadelphia story, 1935-36. Journal of Consumer Culture, 12(3), 323-346. Solomon, M. R. (2002). Consumer behavior: buying, having, and being (5th ed.). Upper Saddle River, N.J.: Prentice Hall. Read More