Consumer Values And the Importance of Store Attributes - Case Study Example

Application of Theory of Consumer Behavior: Case of South Korea Name Institution Application of Theory of Consumer Behavior: Case of South Korea Introduction Consumers and sellers compete to reach their varying goals. Consumers pursue high quality products, at the lowest cost possible. Suppliers, on the other hand, strive to minimize production costs, but at the same time meet customer needs in the best way possible. Consumers purchase decisions are guided by many factors. Some of these include price of item, level of income, attitude and perceptions, tastes and preferences, market information, availability of substitutes, social class among others. Marketers attribute variations in consumers’ behavior to different social values held by consumers in a particular country (Erdem, Oumlil & Tuncalp 1999). Different methods have suggested for measuring social behavior in order to assist them make marketing decision. The primary goal of a consumer is to attain real value for his/her money. Suppliers employ different methods to persuade consumers to buy. One of these is to make the product as affordable as possible to the consumer by lowering its price. This improves the consumers’ ability to purchase the product and shields off competitors. In more sophisticated marketing, persuasion is more than lowering price. Another strategy applied in the price bargaining is assessing the buyer’s perception about quality. Where a customer wants to rock prices at a very low level, a prudent move applied is by suggesting a different model of the item by the company that can fit the deal suggested. The move prompts the buyer to reason in terms of quality by making a belief to grow within the customer that the price quoted for the product is actually relatively higher owing to the higher quality of that particular product. Consumers who are highly egoistic would be reluctant to take a low quality product with a higher quality one on offer (Ozer, 2005). This is a wise strategy especially for luxurious or high priced products. Background South Korean market is frequently undifferentiated from many Western managers but it differs considerably in terms of cultural and socioeconomic environment. One general attribute of the people of Asia is that they are relatively collectivistic in their social values compared to people in Western world (Hostede 1984). It has been noted that there are substantial cross-national differences in socioeconomics and culture and this explains vast differences in consumer behavior among Asian markets. South Korean socioeconomic developments are above Asia’s average. In fact South Korea has a higher GNP than, Asia’s largest economy China. In world statistics, South Korea ranks as the 12th largest GNP (Director 1997). Korean consumers have been exposed to foreign consumer products thanks to liberalization policies for travelling abroad, improved income and standard of living as well as opening domestic markets for imports. There has also been a rising rate of imports of luxury consumer products which has further enhanced South Koreans experience with foreign products. Korean consumer markets represent a wealthy consumer base. Consumer behavior is significantly socioeconomic conditions of market such as media access, income and mobility. Both per capita income and disposable income are good indicators of the amount of resources consumers allocate to consumer goods. For example, consumers are likely to be concerned with price and performance attributes in making product evaluations and buying decisions, when they are confronted with limited resources. However, as more resources become accessible, buyers may desire more emotional image attributes in products or brands. Trends that differentiate Consumers in South Korea from those in Australia Customers in South Korea exhibit certain trends that are different from those experienced in Australia. Learning and tracking down these trends would help a prospective exporter from Australia to adopt measures that would make products designed in Australia likeable in South Korea. It would be important to acknowledge the rising competition in retail market in South Korea. Conglomerates control the market and have placed discount stores and hypermarket stores in almost all parts of the country (Kim 2008). Sellers with poor brand recognition and supported with little capital would suffer as a result of dominance of these stores, hence the importance to understand the market, consumer perceptions and buying behavior. One unique attribute of consumers in South Korea is variability on consumer’s needs. According to Korean consumers, consumption is not only a means to satisfy needs or meet wants but also a means to express themselves (Kim 2008). In this respect, the needs of consumers are highly differentiated. There is a strong feeling that when a person buys a product, that product goes doing to giving identity to that person or rather places him/her to a certain social class. Due to this consumers are highly sensitive to product quality. They would rather pay relatively higher for a product than spend on a cheaper substitute product, the quality of which they cannot ascertain. Products quickly reach their climax in terms of sales and drop quickly as people try to spend on most recent products. Consumers are generally responsive to fashion and are thrilled by products that carry unique features. It is, however, not common to see a large group of consumers who line up for similar products. The tastes as preferences of different people are highly fragmented. Meeting the needs of masses would, therefore, require the company to come up with different designs of the same product or a similar design with different versions. One emerging trait among consumers in Australian market is emotional consumption. Aesthetic factors such as brand, corporate image and product design have strong influence on buying behavior. Basic factors of price and quality are secondary to a customer’s choice of product. Shopping experience for them is meant to bring fun in addition to emotional satisfaction. Shopping to the South Koreans is not a chore or duty per se but a hobby or kind of leisure activity. Consumers of ages between twenty years and thirty years are frequent visitors to shopping malls, substantially spend higher proportion of their income on recurrent items and have almost enough income to meet their shopping needs. Symbolic meaning of consumption among South Koreans is visible in the market. This is because many consumers in this country consider their consumption pattern as an efficient tool for expressing their income level, lifestyle and even profession. For example, the trend to consider buying overpriced items as a potential standard measure of class and social status has spread to lower-class income bracket and to younger generation. Due to this trend, suppliers have responded by increasing the prices of said products. Since the year 2001, sales of beauty accessories and high-priced fashion items have been increasing by almost 50%. Annual expenditure on these items reached over KRW4 Trillion in 2002 and has been on increase (PWC, 2006). There has been a tremendous increase in the number of income earners under the age of 30 years. Most of these are workers with relatively strong purchasing power have already acquired their profession but have no family commitment yet. This group exhibit high levels of self consumption. This is demonstrated by their desire to buy items for self satisfaction regardless of cost. The market has responded appropriately by availing products and services that are reserve of these consumers. For instance, products Olivier (a luxurious hair accessories brands and high priced spa), aesthetic and massage services are readily offered in the market (Kim 2008). This younger group of consumers tends to express individual character and pursue highly specialized individual products. Copycat or herd consumption behavior is common in South Korea (Kim 2008). This is a case where many domestic consumers seem to spend along a particular line of lifestyle mostly as a result of peer influence, friend’s hobby and leisure life. As a result of this pattern of consumption, it takes relatively shorter period of time for specific products to be fully polarized in the market. This trend is further emphasized by media influence and development of media industry. One’s consumption behavior hence leads to formation of group. For example, in the class of luxuries, a small number of people strive to be different from others by buying expensive products, most of which are brand name imports. Opportunities for Australian Exporter There are nomadic tendencies without South Korean population. This allows an opportunity business to bring hybrid high touch. This could be a good response to the settlement phenomenon by the consumers. They constantly demand products that with multiple applications that enable them realize more comfort. Australian exporter could take this opportunity to design and supply high touch and high-tech products. Consumers in this country would prefer to buy a single product that can execute a number of functions, as opposed to separate units of products that are with specialized applications. In most cases, price is not a determining factor to buying decisions (Kim 2008). It means that companies could have the lease of setting prices relatively high and maximize on profits. In so doing, they would need to do a thorough feasibility study to ensure that the products they design meet (or exceeds) the expectations of customers and best serves their needs. Buying patterns of consumers in South Korea have high emotional attachment. Their buying decisions are highly based on smart consumption and each consumer is potentially searching for the most valuable product on offer (Kim 2008). Customers will quickly switch brands if they realize a new high quality brand is on offer in the market. Entities exporting to this country therefore need to engage in high value marketing. Under this approach, companies develop high value products. They take measures to enhance and promote brand image and brand salience for the company and their products. They do so by ensuring that their brand is of high quality, the design of product is unique and almost unmatched and that the organization has a strong corporate image. Customer relationship management framework and supply chain management should be highly effective and efficient (Chosun 2008). This ensures that the company does not only produce high quality products but offers high value placement services. By so doing the entity would be able to appeal to rational and emotional needs of the consumers. Another viable approach to marketing in South Korea would be mass customization. This would serve as a good response to herd consumption patterns as well as individually unique ones (Crawford & Benedetto 2006). In this strategy companies would involve customers in the process of developing products and services in order to address their individual needs and at the same time appeal to a wide spectrum of needs. Through such an approach, customers can get differentiated, low cost products with their input and organizations make higher returns by selling such unique products. This is somewhat customer driven production and marketing. Another area that exporters can capitalize on is the high purchasing power of consumers. This, together with sophisticated taste of Korea’s huge consumer base offers enormous advantages to foreign investors. This is particularly so considering, copycat consumption behavior where consumers of ‘luxury race’ identify themselves with imported high-priced products. In 2003, South Korea was ranked world’s twentieth largest importer (PWC, 2006). Conclusion Going by the discussion ensuing, it is safe to state that South Korean market is defined by unique but definite customer behavior patterns. These unique features represent enormous opportunities for exporters of Australia with interest in the market. What these need to do to succeed in this market is to devise ways and means of sourcing customers in a competitive and changing environment. Rather than focusing primarily on new acquisition, special attention should be paid to creating customer loyalty so making it possible to retain them. This has to follow a quality service framework where customers get real value for their money. After sale services aside, other lucrative rewards may be offered to customers to instigate their continued relationship with the seller. As a strategic move to this market, the exporter may opt to establish a specific market niche (Roth 1995). This would be a prudent way of operating in a market that is as fragmented as one in South Korea. This is because, as stated earlier, consumers use their purchase behavior to express their social status, lifestyle and class. References Blackwell, R., et al., 2001, Consumer Behavior. 9th ed. Orlando, Harcourt. Chosun 2008, ‘Masquerade of cows and helpless consumers’, Chosun Economy Newspaper B1, 18 June 2008. Crawford, M & Benedetto, AD 2006, New Products Management, Boston, MA: McGraw Hill. Director, 1997, ‘South Korea: Seoul-searching’, Vol. 50 No. 7, pp. 21-6. Erdem, O, Oumlil, AB & Tuncalp, S 1999, ‘Consumer values and the importance of store attributes’, International Journal of Retail & Distribution Management, Vol. 27 No. 4, pp. 137-44. Hofstede, GH 1984, Culture's Consequences. Sage Publications, Beverly Hills, Kim, RB 2008, ‘Transformation of an emerging economy to a knowledge-based economy: Korean case,’ Global Business Review, Vol. 9, no.1, pp. 149–156. Ozer, M 2005, ‘Factors Which Influence Decision Marking in New Product Evaluation,’ European Journal of Operational Research, Vol.163, pp. 784-801. PriceWater House Coopers, PWC, 2006, ‘From Beijing to Budapest: Winning Brands, Winning Formats,’ Research Report. Roth, MS 1995, ‘The effects of culture and socioeconomics on the performance of global brand image strategies,’ Journal of Marketing Research, Vol. 33, pp. 163-75. Read More