Outer Factors Affecting Clients' Behavior - Example

Table of Contents Particulars Page No 1.0 Executive Summary 2 2.0 Introduction 3 3.0 Consumer Behavior 4 4.0 External Factors Affecting Consumer Behavior 4 4.1 Culture 5 4.2 Sub-Culture 6 4.3 Social Class 8 4.4 Reference Groups 9 4.5 Family Life Cycle 10 4.6 Impact of Cross-Culture on Consumer Behavior 11 5.0 Other External Factors Affecting Consumer Behavior 12 5.1 Relevance of Opinion Leader 13 5.2 Diffusion of Innovation 14 5.3 Public Policy and Consumer Protection impacting Consumer Behavior 15 6.0 Conclusion 16 7.0 References 17 1.0Executive Summary This report has been designed to provide readers with a complete understanding of the external factors affecting consumer behavior of which Samsung refrigerators had been taken as an exclusive product to make the understanding more comprehensive and easier for understanding. The report initially explains what consumer behavior is all about and how the same has got significance in today’s marketing field. The report then focuses on its main body which includes a detail study of the various societal external factors affecting consumer behavior. It includes the impact of culture and sub-culture on consumer behavior and how the same can be used by marketers for their own added advantage. It also includes an explanation of the other societal factors such as social class, reference groups, family life cycle and cross-culture impact on consumer behavior in context to Samsung refrigerators. The report then moves forward to explain more specific external factors which impacts consumer behavior and includes a discussion of opinion leaders where salesmen or internet or brochures and pamphlets can act as opinion leaders influencing and providing detailed information of the products to the consumers for making their ultimate purchase decision. The report then explains how innovation to diffusion can act as an important external factor impacting consumer behavior along with public policies and consumer protection. Finally a conclusion is provided to ensure that the readers are not just equipped with theoretical knowledge but lay emphasis on practical understanding of the entire topic under study. 2.0 Introduction This report has been designed in a comprehensive manner to focus on the external factors which affect consumer decision making process (Consumer Behavior). To ensure a better understanding of the same, the report focuses on the external factors affecting consumer behavior in context to purchase decision made with regards to Samsung Refrigerators. The product here has been selected are Samsung Refrigerators as it is largely used in daily life to meet the basic consumer needs and wants so as to reflect the entire study in a more synchronized and comprehensive manner. Samsung Electronics was founded in the year 1969 and is a South Korean based electronic company having its presence all across the globe and is the name trusted and preferred by consumers in electronic goods segment comprising of products such as Television, Air-conditioners, Washing Machines, Refrigerators, Mobiles etc. This report looks to cover the various aspects of consumer behavior in terms of Samsung Refrigerators and the external factors affecting the same. The report focuses on external factors such as the influence of reference group on the buying behavior of consumers, the role of family and social class on consumer behavior, impact of cross culture consumer behavior and cultural and sub-cultural impact, the relevance of opinion leaders and diffusion of innovations along with importance of public policy and consumer protections in terms of consumer behavior and in context to Samsung Refrigerators. 3.0 Consumer Behavior Consumer behavior is a broad terminology often used in the marketing field. Consumer behavior evolved after second world war where the entire paradigm shifted from manufacturer’s attention from product to consumer and led to development of consumer behavior. Consumer behavior refers to a series of processes which includes need recognition, selection, actual purchase, consumption of goods and services for the satisfaction of their wants. There are a lot of differing processes involved in the buying decision which is usually carried on in a sequential manner. The study of consumer behavior basically looks to study upon the various behaviors or factors which have a direct or indirect impact on the purchase decision. This study looks to focus upon the external factors which affects the consumer behavior in context of Samsung Refrigerators which has been discusses as under. 4.0 External Factors Affecting Consumer Behavior Besides internal factors which have a direct impact on the consumer decision making process, there are many external factors which affects consumer behavior. These external factors unlike the internal factors are not individualistic and are exerted upon the consumer by external forces in the environment. There are many societal external factors which have a direct impact on consumer behavior like culture, sub-culture, social class, reference group and family. Along with the same there other external factors such as opinion leaders, diffusion in innovations, consumer protection, public policy etc which have an influence on the consumer behavior and the same in context to Samsung Refrigerators have been discussed as under. Let us first have a look at the societal external factors affecting consumer behavior 4.1Culture Culture is an important dominant external factor affecting consumer behavior. Culture in a sense refers to the traditions, taboos, beliefs, attitudes and values of the entire society towards an individual and his life-style. Culture is basically associated with a certain nationality or religious identity of a particular individual. The norms of culture are learnt during the development of a child from his/her childhood and the influence of the same is so ingrained in an individual that it is almost invisible in daily behavior. The culture factor affects consumer behavior to a large extent for example, there is a culture in Asian counties particularly Indian Culture to buy a refrigerator which is in contrast of their painted color of their kitchen for which Samsung looks to develop its refrigerators in more variants and colors for the Indian market. Culture influences can be largely seen in the food habits and dressing style of an individual. It has a direct impact on the languages, attitude, values and beliefs of the individual which influences their consumption pattern. For instance the attitude towards future savings and security affects the propensity to consume and save. It is for this reason that Samsung refrigerators come in varied sizes and prices to ensure that the cultural factor affecting consumer buyer decision is more inclined towards the refrigerators offered by Samsung and ensure higher sales in contrast to their rivals (Midgley & Dowling, 2008). Use of colors, symbols, logos and messages all reflects culture to a large extent and many renowned brand in differing industry use the same to associate themselves with the local public. For instance, Honda, A Japanese Brand in the automobile industry specially of two wheelers to ensure their communication of being associated and large presence in India uses their brand logo in Mehendi (Henna, a local craft of painting one’s hand is culturally believed by Indians as a sign of trust and love), furthermore Samsung uses popular Indian festivals to indicate its Indian culture adaption while developing marketing strategies for India, Pillsbury a food brand uses the concept of a mother serving hot and delicious food to its child to indicate a mother’s love for her child (Indicating the role of mother in Indian culture) etc. The main discussion here focuses on how major multinational and local brands use culture as an effective tool to influence more consumers to their products and services offered than offered by its competitors. 4.2 Sub-Culture Similar to culture, sub-culture acts as an external factor affecting consumer decision process. Sub-culture is a group or segment of individuals within a particular culture who differ from their dominant culture but however has many attributes or interests common to one another like jobs and vocations, religious beliefs, ethnic background or geographic locations. The three major aspects of sub-culture which are regional, ethnic and religious differences have a major impact on consumption pattern and consumer behavior. For example, Samsung Refrigerators designs different marking strategies for different regions like for hot and humid areas its products are developed with latest technology to ensure a zero degree cooling affect all year round whereas for consumers who prefer more of healthy products its products come with bio-technology to ensure a higher longevity of food products kept inside the refrigerators. The different ethnic groups and population trend is more likely to alter the demographic pattern of a particular country (Rook & Hoch, 2005). The very diverse Asian American sub-culture is very diverse with young population and placing strong value on family and brand loyalty for which Samsung Refrigerators look to gain its brand equity from its very renowned and trusted brand name not just in refrigerators but in the electronic goods section. Age, gender and household of a sub-culture are other important factors which influences consumer behavior. Among the four age groups, teens are the prospect future consumers and play an important role in purchase decision. The Generation X consists of smart and cynical consumer who looks to witness the marketing attempts made by different brands offering similar products. Baby boomers on the other hand grew up in a fast and dynamic environment which affects their individualism and freedom. For instance, Samsung Refrigerators are offered at heavy discounts during off-seasons and festive seasons to target more of Generation X consumers than baby boomers. Another group of people aging 50 and above are again the one who doesn’t like to considered as old. Samsung targets them by displaying advertisements where the relevance of Samsung Refrigerators show the importance of its products and specific features specially designed for the old age group. Gender is consistent throughout lifetime which influences consumer values and preferences. For example, women prefer more of refrigerator in their household for ensuring fresh and packaged foods whereas men may consider the same as a machine used for serving chilled beers. Household also exerts importance influence on the acquisition and consumption pattern of consumers as the household members play differing roles in the decision process like gatekeepers, influencers, decider, buyers and users which all play a significant role in developing strategies for any brand or company. Secondly husbands and wives vary in their influence in the decision process on account of different situation like husband dominating, wife dominating, syncratic or autonomic. Research in the field of refrigerators show that wives are more likely to make a final decision of purchase in context to refrigerators it is for that reason that most of the Samsung Refrigerator advertisements are aimed towards housewives and influence their purchase decision to buy a Samsung refrigerator than offered by its rivals. 4.3 Social Class Social class refers to the hierarchical arrangement of society which is divided into various distinct groups or divisions each of which have similar attributes and signifies social standing or status similar to one another in a particular social class. Social class is an important external factor affecting consumer behavior in terms of consumption patterns, lifestyles, similar activities, media patterns and similar interests of consumers. Though there are differing manners of distinguishing social class the most popular and prominent among them are social class on basis of income differences (Ackerman & Tellis, 2011). However the same may not be true for instance there may two consumers having the same income status and differ greatly in terms of their consumption pattern where one consumer occupies a dominant position in a large company with highest educational qualification and the other may be self employed with basic schooling. Segmentation on basis of income level has been largely used to distinguish different social classes of people and strategies are developed accordingly. Social class on basis of income level consists of upper class, middle class and lower class which are further subdivided into upper-upper class, middle-upper class and lower-upper class respectively for all three levels. Let us have a look at the products or marketing strategy of Samsung Refrigerators on basis on income group segmentation. Class Refrigerator Product with Specification of Samsung Upper Class Income Group Advanced Refrigerators with dual doors and eco-technology along with focus on go green concept and smart refrigerators. Middle Class Income Group Refrigerators with single and dual door facility with energy saving equipments to ensure low cost with better cooling. Lower Class Income Group Refrigerators with basic features usually small in sizes and single door. Thus we see how Samsung develops differing variants of refrigerators on basis of segmentation of social class and how the same varies with consumption pattern, lifestyle and consumer behavior of differing social groups in a particular market segment. 4.4 Reference Groups Reference groups are regarded as group of people which influence’s an individual’s attitude and behavior towards a particular thing. Individuals rely upon this reference group to learn different attitudes, beliefs and behavior and adapt the same in their living style. Family and friends are two such important reference groups which exerts external pressure on the beliefs and attitudes of an individual and have a direct impact on the consumer behavior and hence are regarded as primary reference groups. Secondary reference groups included various other formal and informal groups in the nature of schoolmates, neighborhood, colleagues and other acquaintances (Lysonski, Durvasula & Zotos, 2006). Reference groups gain importance in the context that they influence an individual’s product and brand purchases particularly in situations when the consumption is conspicuous in nature as when a brand or product may be conspicuous in nature a buyer may perceive it as what is acceptable to the reference group. Refrigerators are more commonly regarded as necessity in upper income groups and middle income group whereas it might be a luxury good for the lower income group. They fall under the conspicuous category of goods which have a great influence on the reference groups and are usually purchased on basis of the particular brand referred by the reference group. In the similar context nothing much can be done by Samsung to influence a reference group towards its refrigerator however, the brand loyalty and brand preference of Samsung in electronic goods segment all across the globe with reasonably pricing strategies and good customer feedback helps Samsung Refrigerators to be popular among various reference groups and ensure better growth and sales in contrast to its competitors. 4.5 Family Life Cycle One of the most important and significant reference groups for an individual is the family. A consumer’s family has a deep influence on the beliefs, attitudes, values and consumption pattern of a particular product or service. The interaction between husband and wife along with the age and number of children may have a direct impact on the consumer behavior. For instances, a joint family may look to buy a large refrigerator so as satisfy their needs and wants whereas a nucleated family may be more inclined towards a smaller variant of the refrigerator.. One important aspect in understanding the consumer behavior is to understand and identify the decision maker for the purchase of a particular product (i.e. Refrigerators in this case). In some cases the husband may be dominating or it may be the wife who holds a dominant position or a joint decision is made. It is to be noted that the store choices for food and household items which includes electronic goods like refrigerators is more often the wife’s decision (Shane, 2002). Most families pass through an orderly sequence of stages which comprises of the young bachelor stage, newly married stage, young married couples with dependent children and old married couples with independent children’s. Each of these stages is characterized with differing buying behavior. Samsung Refrigerators mainly look to target the married couples with dependent or independent children as it is through this stage that the use of refrigerators becomes more of necessary than luxury. 4.6 Impact of Cross-Culture on Consumer Behavior Cross-culture marketing is an effort made by marketers to identify and determine the extent to which consumers of two or more nations are different or similar in certain characteristics and then plan strategies accordingly to ensure effective coverage of both the markets. A study of cross-culture requires marketer to discover the viable markets and then study the culture in which the company intends to establish its business (Calder & Burnkrant, 2007). There are lots of problems that a company may encounter during a cross-culture analysis like problem related to product selection, promotion and marketing communication problems, pricing issues and selection and distribution of products and services. Samsung Refrigerators are sold on a global basis and it is of most importance for the company to make a cross-culture consumer analysis. For example, designing and selling refrigerators in United States may be completely different from the requirements in Asian region due to cultural differences. However, Samsung looks to make a cross-culture analysis to identify both similarities and differences in the culture of the two regions so as to develop refrigerators which are intended for maximum customer satisfaction and ensure better growth and sales of its products. Cross culture analysis also plays an important role in determining the mode of entry to a foreign market (Malhotra, Hall, Shaw & Oppenheim, 2004). Let us have a look at how cross-culture impacts consumer behavior of two different countries namely Japan and America and different strategies are developed by Samsung in context to its refrigerators. Japanese Cultural Traits American Cultural Traits They are more homogenous They exhibit a diverse range Groups are more important Individualistic They look for more specific products They look for more general products Process-oriented Result driven Nonverbal communication is the key to success Verbal communication takes a dominant position Interested in who is speaking More focused on what is spoken Thus we see there are cultural differences in both the regions, and Samsung develops marketing strategies accordingly like for example, advertisements of Samsung refrigerators are done through prominent names in Japan whereas the company takes a casual approach in America by advertising its products for the general mass (Kacen & Lee, 2002). Furthermore, Samsung develops specific refrigerator with advance features for Japanese market like bio-technology, instance cooling, 2 minutes ice cooling etc whereas in case of American market refrigerators of Samsung are more inclined towards its basic use. 5.0 Other External Factors Affecting Consumer Behavior As we have already discussed upon the various societal external factors affecting consumer behavior in general. Let us now look at the other specific external factors affecting consumer behavior in context of Samsung Refrigerators. 5.1 Relevance of Opinion Leaders To understand the concept of how opinion leaders have an impact on consumer behavior. Let us first understand what opinion leaders are. Opinion leadership is a process in which a person who is generally referred to as the Opinion Leader informally influences the actions or attitudes of another person who is referred as the Opinion Receiver. There is more of an informal opinion related influence between two or more individuals via a mouth-to-mouth communication means (Bao, Zhou & Su. 2013). These opinion leaders are generally part of social groups and also have social communication network. Opinion leaders generally possess the following characteristics like they are the source of information for the buyers, they are gracious people and have lot of experience, they provide unbiased information and advice and tend to be consumer innovators. In context to Samsung Refrigerators, salesmen in showrooms may prove to an effective opinion leader motivating the customers for making a purchase decision of Samsung refrigerators through educating the customers about the latest features in the product and its respective strengths in comparison to similar refrigerators offered by the rivals. These opinion leaders shall look to provide the consumers with all detailed information of the refrigerator and further help the consumers in persuading to buy a Samsung refrigerator as per the price and quality criteria of the consumer. Internet for Samsung also acts as an important opinion leader as its website is designed in a manner to allow consumers seek all necessary information about the Samsung refrigerator and make a comparison of the two similar products offered by its competitors or offered by Samsung itself but with a difference in their price tags (McAlister & Pessemier, 2002). Furthermore brochures and pamphlets can act as opinion leader as they provide detailed information in a formal manner about the products and its distinguishing features. 5.2 Diffusion of Innovation As a consumer we constantly look for new innovative ideas, products or services. The firm on the other hand is always stuck with a basic question of how quick shall the innovation of diffusion take place? (i.e. to say there is always a risk element involved in innovation). Consumer behavior is largely affected by new innovations as the same has a direct impact on the purchase decision made. Further a firm will introduce a new concept or new idea with new innovations only after a critical understanding of the consumer behavior towards that innovation. Products range in different categories of its product life cycle for example there may be a color television in every household in United States and the product lied in its declining stage however with new concepts and ideas of LCD and later LED Televisions the products revived in its introduction and growth stage which was on account of diffusion of innovation which affected the consumer behavior towards the purchase of new television sets (Ahuvia & Wong, 2008). There had been a large number of innovative products manufactured by Samsung which has been largely accepted by the consumers like vacuum cleaners, utensil cleaner cake, high definition cameras, mobile phones etc. Thus we see diffusion of innovation is an important factor affecting the consumer behavior. In context to Samsung refrigerators the company has recently launched a “Go Green” concept with its refrigerators aimed towards environmental friendly products further its refrigerators now come with latest innovative technology of instant cooling and effective cooling for 8-10 hours in cases of power failure. This are all new innovative ideas in the refrigerator business which still has a risk involved of success due to diffusion of innovation and how consumers belief the same shall be for their betterment and make a purchase decision of the new advanced refrigerators so as to replace their old obsolete refrigerators or in cases purchase a complete new one for the first time. 5.3 Public Policy and Consumer Protection impacting Consumer Behavior Consumer Behavior is also affected by external factors such as public policies, consumer protection, legislation, advertising, price and consumer ethics. Though advertising and prices are more of internal factors in context to firm as the same is developed specifically for each product or service offered. Consumer protection acts as an important factor affecting the consumer purchase decision as Samsung refrigerators come with guarantee and warranty of free replacement of parts or the entire refrigerator in cases on its products not functioning properly. This additional features along with service centre for repairing acts as important tools for consumers while evaluating and selecting the brand for which they are likely to make a purchase of the refrigerators. Furthermore public policy like taxes, duties, subsidies has a direct impact on the price of refrigerators along with import and export of the products which again impacts the consumer behavior and decision making process (Shane, 2002). Public policies are mostly driven by legislation and may differ from country to country. There may be a ban of import of refrigerators in some countries to promote the domestic manufactures in such cases the consumer behavior may vary greatly for the products offered in the market due to limited alternatives available. 6.0 Conclusion This report has been designed in a comprehensive manner to focus on the external factors affecting consumer behavior and decision making process in context to Samsung refrigerators. The report initially describes the concept of consumer behavior and then focus on the societal external factors impacting consumer behavior which has been explained through various factors such as cultural and sub-cultural influence on consumer behavior, the influence of reference groups which includes both primary and secondary reference groups who influence the consumers in context to brands available for different refrigerators. The influence of social class, family and cross-cultural impact on consumer behavior in context to Samsung refrigerators has been discussed in detail. Furthermore the report highlights other external factors which influence’s consumer behavior in context of Opinion leaders, diffusion of innovation, public policy, legislation and consumer protection affecting consumer behavior. The report in a nutshell has been drafted to ensure that readers are equipped with both theoretical and practical understanding of the entire topic under study which clearly focuses on the external factors affecting consumer behavior in context to Samsung refrigerators. 7.0 References Ackerman, D. T., & Tellis, G. (2011). Can culture affect prices? A cross-cultural study of shopping and retail prices. Journal of Retailing, 77 (1), 57 —82. Ahuvia, A. C., & Wong, N. Y. (2008). Personal taste and family face: Luxury consumption in Confucian and Western societies. Psychology and Marketing, 15 (5), 423-441. Bao, Y., Zhou, K. Z., & Su. C. (2013). Face consciousness and risk aversion: Do they affect consumer decision-making? Psychology and Marketing, 20 (8), 733-755. Calder, B., & Burnkrant, R. (2007). Interpersonal influence on consumer behavior: An attribution theory approach. Journal of Consumer Research, 4 (1), 197-207. Kacen, J. J., & Lee. J. A. (2002). The influence of culture on consumer impulsive buying behavior. Journal of Consumer Psychology, 12 (2), 163-176. Lysonski, S., Durvasula, S., & Zotos, Y. (2006). Consumer decision-making styles: A multi country investigation. European Journal of Marketing. 30 (1 2), 10-21. Malhotra, N. K., Hall, J., Shaw, M., & Oppenheim, P.P. (2004). Essentials of Marketing Research: An Applied Orientation. Prentice Hall. French’s Forest NSW: Prentice Hall. McAlister, L., & Pessemier, E. (2002). Variety seeking behavior: An interdisciplinary review. The Journal of Consumer Research, 9 (3), 311-322. Midgley, D. F., & Dowling, G. R. (2008). Innovativeness: The concept and its measurement. Journal of Consumer Research, 4 (4), 229-242. Rook, D. W., & Hoch, S. J. (2005). Consuming impulses. in Advances in Consumer Research, 12. Holbrook, M. B. & Hirschman, E. C. Provo, UT: Association for Consumer Research. Shane, S. (2002). Cultural influences on national rates of innovation. Journal of Business Venturing, 8 (1), 59-73. Read More