Samsung Galaxy Note 3 - Determining the Consumer Decision Making Process - Case Study Example

Executive summary Consumer behaviors are actions that a person takes in purchasing and using products. Consumer behavior comprises the study of individuals or group of individuals and the process that they use to select and secure products to satisfy their needs. Consumer behavior has its foundation on consumer buying behavior with the customer playing the important roles if user, buyer and payer. In most circumstances, consumer decision making process is influenced both by internal and external factors. Internal factors are those factors that can be controlled by the consumer when making buying decisions while external factors comprise of the situations that consumers do not have control over. These external factors include, culture, family, price of the commodity, sub-culture, income and social class. This paper mainly focuses on external factors that influence consumer decision making. Table of co contents Executive summary……………………………………………………..1 1.0. Introduction……………………………………………………………….3 1.1. The product…………………………………………………….4 1.2. Background information…………………………………..….5 2.0. External factors…………………………………………………………..5 2.1. Family…………………………………………………………….5 2.2. Culture……………………………………………………………7 2.3. Point of purchase………………………………………….……..8 2.4. Income and social class…………………………………….……9 2.5. Religion…………………………………………………………10 2.6. Opinion leadership……………………………………..………….11 2.7. Marketing activities…………………………………….…………12 2.8. Reference group…………………………………………..……..…..13 2.9. Accessibility and availability………………………………………..14 Conclusion………………………………………………………………………….16 References………………………………………………………………………….17 Introduction In addition to internal factors, consumer decision making is influenced by external factors. External factors are not individualistic, but rather eternal to the consumer. External factors are those that consumers have no say in, but directly affect their buying decisions. They include social class, culture, subculture, family and reference group influence. It is worth noting that external factors are associated with the group that the consumer belongs to or/and interacts with. The figure below shows a simple model for consumer decision making process. Source: Engel , Blackwell, and Miniard,(1995) page No 95 This study aims at determining the external factors that influence the consumer when making purchase decisions in the market. These will include social class, culture, subculture, family and reference group influence and many more. In addition, consumer decision theories will be considered in relation to consumer decision making process. Most importantly, the study shall come up with a reliable conclusion in relation to external factors that affect the consumer spending decisions and habits, information that can add to the body of knowledge that already exists in the field of economics. The product The product that will be used in this analysis is Samsung Galaxy Note 3. Samsung Galaxy Note 3 was released in September 2013 and it is the latest in the Samsung Galaxy series. The 3rd generation of the Note is the most significant upgrade yet and the 1st note device. That is, the Note 3 is characterized by bigger 5.7-inch full HD screen; revamped S Pen features and S note app; huge processor speed bump; a thinner, lighter chassis; and a built-in news app powered by Flipboard technology. Because of the brighter and sharper screen, Samsung Galaxy Note 3 is fantastic in watching all sorts of the visual content. The Galaxy Note 3 comes with Android 4.3 “Jelly Bean” and Samsung’s propriety Touch-Wiz user interface and software. Within the 1st month of its introduction in the market, Samsung has sold 5 million units of the Galaxy Note 3 and broke 10 million units’ sales in just 2 months. Background information A consumer is primarily a person who is the final user of the product. In this case, the consumer is the ultimate user of the Samsung galaxy note3 phone. Every consumer is rational and they all aim at deriving the maximum satisfaction and/or utility from the goods or service and, therefore, are very keen when making purchases on such products (Pride & Ferrell, 1989). The main focus is the choices that the consumer makes based on his or her preference of a good or service. It is worth noting that in each and every market, the societal beliefs and practices are very important in shaping up the quality, marketability and other characteristics of the product in the market. Before making any decision, a consumer will go through an external information search so as to evaluate the alternatives and narrow the list of their choices. Therefore, Samsung galaxy note 3 is produced by Samsung Company which is well aware of the consumer tastes and preferences in the product market. Factors that influence the consumer’s decision making The consumer aims at maximizing his or her satisfaction from the product based on what they know think, see or have been told (Strydom, 2004). Most decisions arise from what they believe about the product, a fact that makes them become brand loyal to some products over the others. These are majorly the internal factors which make the consumer behave in certain ways (Hall, 1990). However, the study is focused on the external factors that may make the consumer behave in the same way too. To develop an effective way of addressing the topic of study, the paper summarizes the factors affecting the consumer’s decision making when buying a product in the following factor outlines: Family The family is most considered as the best reference group for any person. In this case, it becomes the ultimate consumption unit in terms of consumer goods and services (Pride & Ferrell, 1989). Immediate families, which are considered as a group of two or more people living under one roof and are related through birth, adoption or marriage, have a strong influence on how the consumer makes the decision when making some purchases (Strydom, 2004). Family has the greatest influence on an individual when it comes to busying behavior, specifically in terms of consumer socialization, family decision making and family life cycle. Consume socialization: family is core to the process through which individual acquire skills, knowledge and attitude. These attributes are important when operating in the marketplace. For instance, attitude and knowledge will influence the brand of phone an individual buys since there are several brands of Samsung phones. Family decision making: family decision making is characterized by two types namely; joint decision making or spouse-dominant. There is a paradigm shift in the role children plays in the decision making process. As much as Samsung products focus majorly on adult consumers, some of their strategies are also focused on the child consumer which is tremendously becoming a significant part of a global market (Strydom, 2004). Family life cycle: life cycle is process that every individual has to undergo. Each stage in the lifecycle influences different purchasing behaviors. It is also very imperative to ascertain that the family life cycle stage (stage of the family includes the newly married, couples, singles, old married, etc.) also determines the final decision of the consumer’s spending behavior. In this case, the purchasing behavior of the newly married people tends to be biased because it encompasses making accommodative purchase for the two. This cannot be the same to the buying behavior of a person whose marriage has lasted for long or to a person who is single as well. This means that marital status can also dictate what one buys in the market. The buying behavior roots from what the parent’s behavior and transferred to the consumer during growth and when it comes buying as well (Hoyer & McInnis, 2001). What an individual observes from the parent’s characteristic or style behavior become more of a culture to that individual, especially from his or her childhood thereby becoming a habit. The major economic characteristic of the family is that it dictates the economic, interpersonal well-being of an individual skills and behavior in terms of spending (Deaton & Muellbauer, 1980). These are very important values when it comes to spending because they determine what the customer is likely to buy and not to buy i.e. the consumer preference and choice of the product. Moreover, the family may determine the ethical lifestyle values and particular social relationships (Hoyer & McInnis, 2001). Market is a social stage of exchanging goods and services between the buyer and the seller, and, therefore, social relationships and values of the consumer directly affect their decision making in the market (Hoyer & McInnis, 2001). Culture Cultural is important when it comes to understanding the needs and behaviors of consumers. Culture refers to the beliefs, values, traditional and attitudes of the society. These attribute stipulate how people live and how they purchase as well. Culture is linked to a certain nationality or religious identity of an individual. Through an individual’s existence, he/she will be influenced by his friends, family, cultural environment or society that will teach him/her values in addition to behaviors as the culture demands. Culture teaches an individual the appropriate norms of behavior hence the right and the wrong things. An individual that swerves from accepted norms are exposed to certain sanctions. Cultural the way business are being conducted as well as the consumption behavior of consumers. It influences attitudes, languages, and values that in the long run influence consumption behavior of individuals. For instance, culture will influence the type of phone that an individual uses in that; several people might be separated by different languages hence the needed to differentiate the phones to suits different consumers. Culture influences are noticeable in communication messages. The utilization of symbols, colors, messages and language sources are true reflection of culture. Therefore, decisions made during buying process of a consumer may be largely dependent on the cultural background of the consumer (Taylor and Lee, 2007). Many companies associate their messages with the country’s culture to adapt their messages. This is mainly aimed at selling their brands to their respective customers according to the cultural specifications of various regions that they do business (Deaton & Muellbauer, 1980). It is with no doubt, therefore, that the culture plays a vital role in influencing the decision of a consumer who wants to buy Samsung galaxy note3. Therefore, Samsung as a company has to produce their products according to the culture of the target market (Taylor and Lee, 2007). Subculture A society comprises of numerous sub-culture through which individuals can identify themselves. Basically, subculture can be described as groups of people who are characterized by similar values based on common lifestyle or similar experience. Subculture includes religions, nationalities, age groups, ethnic groups, gender of a person and many more. Many companies use subculture to segment their markets so as to adapt a product or communication strategy to the needs of this target market. For instance, the segment of mobile phones has witnessed tremendous expansion in the recent years. Mobile phone industry has been produced in a manner that they are more suited for different groups of individuals in relation to their religion, gender, language and many more. It is Samsung’s brand positioning coupled with a well-defined target market in the industry that makes Samsung Galaxy note3 to sell appropriately. It is worth noting that brands quite often communicate in several ways and to more advanced ways create specific products for the same type of product so as to satisfy the segment of the market in relation to sub-culture. Consumers become receptive to products and marketing strategies that target them. Point of Purchase and decorations variables and their influence on consumer behavior Point of purchase and decorations variables refer to all those factors located at the point of sale in the store which may influence customer’s purchases and loyalty to the store. They include point of purchase (POP) displays, pictures, price displays, wall decorations and permanent product displays. There is always a positive reaction to the point of purchase by consumers. Most consumers are attracted to enticing point of purchase and are also encouraged by worthy advertisements for the product. Customers of Samsung Galaxy note3 prefer price displays that are clear and conveniently large to be read far and accurately match their projected budget for buying the product. Income and Social class Social class is the hierarchical arrangement of the society into several divisions. These divisions represent social status or standing of the society. For instance, in most circumstances the society is divided into high, middle and low classes. In terms of consumer behavior, social status represents one of the greatest influencers of consumer consumption patterns. Social class affects consumers’ consumption patterns, media patterns, lifestyle, activities and interest of consumers. An income difference contributes to social class differences but is not a sole determinant in the differences in consumption patterns and lifestyles. For instance, two consumers might be earning the same amount of income but their consumption patterns might be different due to individual tastes and preferences. In economic terms, high income individuals mostly associate themselves with expensive products irrespective of the type of the good (Deaton & Muellbauer, 1980). They associate quality with price which in most cases is not true. On the other hand, middle and lower class individuals go for either quality or compare the price of the product with an alternative, through the processes of decision making. Educational status gives an individual social class i.e. the individual tends to associated with the members of his or her status. This status may be influential on what the individual might buy in the future. In this case, the decision to purchase the product will be based on whether it would suit that status (Green, 1976). There are variations in terms of product and brand purchase, interest in pursuit of various leisure time activities and media consumption patterns that influence consumer decision making. For instance, a consumer might decide to attend a function simply because there are high profile individuals at the occasion. A more practical example is in the case of Samsung products. An individual might decide to buy Samsung galaxy note3 because it is expensive and owning it will make him/her attain some social status. It is no doubt that everybody can buy Samsung phone but it is for sure that not every consumer can afford Samsung galaxy note3. It is for this reason that it is appropriate to claim that Samsung galaxy note3 is developed to focus on some specific target group in terms of social class and income (Deaton & Muellbauer, 1980). Religion Just like culture, religion represents the shared beliefs, customs, behaviors, practices and attitudes which a more common to a specific religious community. Religion is the belief that grows within an individual based on the practices and teaching of the religion and is introduced to by the parents or friends. The religious background of an individual, therefore, may affect what the consumer purchases and what not to purchase. More importantly, certain products are not consumed by some religious groups thereby affecting the attitude of the consumer towards that product (Hoyer and McInnis, 2001). Religious values provide some consumers with some forms of acts and spiritual rituals in addition to standards of behavior and general view of the world. In a nutshell, it is clear that religion offers the foundation of how an individual choses to live his/her life. Some religions if not all have sets of laws that affect daily purchase and habits of their followers. The fact that degree to which an individual adheres to religious to religious beliefs does not mean that their taste and preferences are not affected by the religious beliefs. On the contrary religious norms and customs have significant influence on the purchase behavior of an individual. Despite the fact that religion can be one of the factors that may influence the buyer’s decision to purchase the product, it is within the producer’s power to make the product in such a way that they suit the requirement of almost all the religious groups. Opinion leadership Opinion leaders are individuals to whom an opinion seekers consult before making purchase related decisions. They give the desired information to the opinion seekers in order to influence their decision to make purchases (Green, 1976). Opinion leadership is characterized by credibility, two flow of information and advice and exchange of information. It is worth noting that opinion leaders are knowledgeable about some core information of the product hence they tend to give their advice based on that knowledge (Green, 1976). Opinion leaders offer word of mouth advices that tend to affect the buying attitude of the consumer. They advise on which product to buy, for which purpose or for which occasion (Green, 1976). It is therefore important that opinion leaders give more relevant information. If the opinion leader gives a wrong and/or low information or opinion of the product, automatically the consumer’s decision will be affected negatively. On the other hand, if the opinion of the opinion leader embraces the product, the consumer’s decision will be affected in a positive way. Therefore, the opinion leader of a product determines to some extent the decision that a consumer makes when buying a product (Green, 1976). Marketing activities Extensive marketing activities may influence the decision making process of the consumer. This is because they increase the appeal of the product, thereby increasing the chances of the consumer to purchase the product. It is, therefore, that the seller in the market increases the marketing activities if the aim of the seller is to maximize sales and increase the profit margins. This includes expanding the product mix so as to improve the suitability of the concerned product in the market (Sokolowski, 2011). Direct marketing is a sure way of reaching the target audience which is the business people across the globe. Through direct marketing, the company can sell specification to Samsung Galaxy note3 to it’s a business (Green, 1976). One of the marketing objectives of the campaign is to help the users stay on top of their busy life, as well as being great entertainer thanks to the phone’s wide 5.7” full HD screen. In this regards, direct marketing will ensure that the business class stays on top of their busy life with the benefits that they will derive from using Samsung Galaxy note3. Reference group behavior A reference group acts as a blueprint for an individual and influences the way he/she behaves. Reference groups are generally categorized into several ways such as; normative and comparative reference group; indirect and direct reference group; and positive and negative reference group (Sokolowski, 2011). A reference group has a significant influence on consumer’s consumption behavior. It is worth noting that a reference group might range from family to a nation or a culture. However, groups such as friends, work groups, shopping groups, brand communities, virtual communities and consumer action groups can also be influential on consumer buying behavior (Sokolowski, 2011). Each and every consumer wants to buy a product that is approved by the group that he/she is identified with (Solomon, 1995). The reference group is the foundation of comparison of an individual in terms of values, style and preferences. During a buying decision process, these attributes become demonstrated in an individual’s choice of the product, which tend to reflect that of the group (Robertson, 1970). The attitude of the group might affect the psychological behavior of the consumers hence influencing what to buy (Green, 1976). In addition, the frequency of interactions and cohesiveness between the group members may influence the decision of one of the members of what to buy. For instance, an individual might convince a workmate to buy Samsung galaxy note3 due to its good features and performance. Accessibility and availability Accessibility and availability deficits with iniquitous distribution have resulted to high prices for basic goods. As a result, there is existence of various alternatives in the quest for satisfaction of basic needs. Some consumers claim that, as much as the goods they purchase are low-priced, sometimes they might be forced to go for high priced substitutes because of accessibility and availability (Schiffman & Kanuk, 1978). In other words, the concept of opportunity cost can be adopted, whereby the consumer goes for the next best alternative. This concept applies to Samsung Galaxy note 3 where consumers go for the phone because of its accessibility, as opposed to the price of the phone. That is Samsung galaxy note 3 customers are will willing to pay more in order to have their needs satisfied efficiently. However, being a rational consumer he has to evaluate all the alternatives and goes for the best product that will satisfy his need considering price and his level of want (Schiffman & Kanuk, 1978). Rationality derived from marketing of the product There is considerable evidence that many decisions originate from significantly rational expected-value models of choice. According to the Prospect Theory, there are several departures from strict rationality (Engel, Kollat & Blackwell, 1968). The rational consumer tends to be relatively indifferent to small risks involved during the shopping process. If the consumer predicts a retailer considered to be high-low to offer products of lower or average costs that he/she typically purchases; he/she will prefer this shopping outlet compared to an alternative outlet which offers lower on-sale prices (Engel, Kollat & Blackwell, 1968). Some consumers of Samsung galaxy note3 are willing to shop with certainty that while they might not be subjected to the best available price on the prevailing market conditions, the price they pay for the phone is likely being significantly less as compared to those that the competing firms offers in the market, relatively unpredictable periods in time (Engel, Kollat & Blackwell, 1968). This is a fact because many sellers strongly indicate in their adverts that while no retailer can provide the lowest price on all times, they provide the lowest price on the market. Therefore, the variable is the interest of the rational consumer. Considering all these factors, some consumers argue that their decision to buy a phone is influenced by level of satisfaction that Samsung marketing strategies impose on them (Engel, Kollat & Blackwell, 1968). Conclusion Several models have been developed to determine the consumer’s decision making process. Decision making is always accompanied with complexities and they make the consumer behave in a particular way which is common amongst all the consumers (Sokolowski, 2011). As discussed above, there are numerous internal and external factors that influence consumer buying decisions. This has become an area of interest of marketers that have developed enhanced marketing strategies to tap in the market in regards to consumer behavior taste and preferences. However, the fundamental understanding of the consumer’s rationality through the ability to make critical decisions gives the consumer the power to come up with his or her optimal choice (Sokolowski, 2011). At the same time, consumers are often faced with some constraints, which can be income, pride, among others, but in the end, the choice of the product that he or she will make will go a long way satisfying his or her utility. References: Deaton, A., & Muellbauer, J. (1980). Economics and consumer behavior. 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