Specific Factors Influencing Toyota Camry's Consumer Behaviour - Term Paper Example

Table of Contents Particulars Page No. 1.0 Executive Summary 2 2.0 Introduction 3 3.0 Understanding Consumer Behaviour 4 4.0 External Factors Influencing Consumer Behaviour 4 4.1 Cultural Impact on Consumer Behaviour 5 4.2 Sub-culture 6 4.3 Social Class 8 4.4 Impact of Reference Group on Consumer Behaviour 10 4.5 Role of Family and Family Life-cycle 10 4.6 Role of Cross-Culture 11 5.0 Specific Factors Influencing Consumer Behaviour 12 5.1 Opinion Leaders and Diffusion of Innovation 12 5.2 Public Policy, Consumer Protection and Legislation 14 5.3 Advertising, Pricing and Consumer Ethics 15 6.0 Conclusion 15 7.0 References 17 7.0 1.0 Executive Summary This report has been drafted in a comprehensive manner to provide readers with an understanding of the various external factors which influences the consumer patterns and consumer behaviour. The report includes a throughout example of Toyota Camry and the external factors influencing the purchase decision of the same for easy and better understanding of the entire topic. The report divides the external factors influencing consumer behaviour into two major segments which includes the societal external factors and more specific external factors. The societal external factors make a complete discussion on the various elements like how culture, sub-culture, cross-culture, family life cycle, social class and reference groups impacts the consumer behaviour in context to Toyota Camry. Furthermore the report than looks upon specific external factors such as opinion leadership who acts as major influencers in providing valuable information about the products or services and can influence and persuade consumers to make a final purchase decision along with a discussion on how diffusion of innovation can affect consumer in their purchase decision. The report also looks upon other external factors such as public policies, consumer protection, pricing, legislation etc and their impact and influence on consumer consumption pattern and consumer behaviour. Finally a conclusion is provided to ensure that the report looks to provide both theoretical and practical understanding of the entire discussion under study. 2.0 Introduction This report has been drafted in a synchronised and comprehensive manner to focus on the main subject of “what external factors affect consumer behaviour.” The aim of the report is to make a comprehensive study of the external factors which affect the actual purchase decision of consumers while purchasing a Toyota Camry. The report ensures to make an easy understanding for the readers chooses the product Toyota Camry as it has been new in the market and a clear response from the consumer behaviour criteria shall be an interesting topic to know. Furthermore Toyota has its own market presence in the field of automobile industry and is a name trusted and preferred by many loyal consumers for its comfort and luxuries four wheelers which are specifically designed to target the different segments of the customer pyramid. The report looks to initially focus on the general concept of consumer behaviour so as to enable readers with an understanding of what the topic focuses on. The major external factors affecting consumer behaviour in context to Toyota Camry is then explained with external factors being divided into societal external factors which includes impact of cross-culture, culture, sub-culture, family, social class and reference groups affecting the consumer behaviour. The report then highlights more specific external factors impacting consumer behaviour in terms of a clear and comprehensive discussion on various topics like impact of opinion leader on consumer behaviour along with concept of diffusion on innovation and various other external factors exerting pressure on consumer behaviour such as consumer protection, legislation, public policies, pricing etc. 3.0 Understanding Consumer Behaviour This segment of the report looks to provide a brief understanding of the concept of consumer behaviour so as to make the report more understandable and easier for readers to focus on the main topic of how and which external factors have an influence on the consumer decision making process of the product Toyota Camry in general and on other products in specific. Consumer behaviour is a comprehensive study of how consumers are influenced by various resources and factors while making a purchase decision and how they respond to the same. The heterogeneity among different individual’s or consumer along with rising competition on the domestic and international market makes it important for marketers to learn the concept of consumer behaviour. There are many internal and external factors which affect the consumer’s decision making process and marketers look to design marketing strategies to influence more of consumers towards its own specific products or services offered. Business often tries to influence consumer behaviour with activities that can be controlled by them. While some influences may be temporary others may have a longer impact (Stewart, 2010). There are different internal and external factors which influence the buyer’s behaviour of whether to purchase a product, buy additional products, or buy nothing. Let us have a look at the external factors which affects and impacts the consumer decision making process. 4.0 External Factors Influencing Consumer Behaviour Consumer behaviour is influenced not just by internal factors during the purchase decision but is equally influenced by various external factors. These external factors are exerted by external environment and looked upon by marketers as an opportunity to influence consumers towards their products or services offered. These external factors can be categorised into two major headings which are the societal external factors which includes factors such as culture, sub-culture, reference groups, family life style, social class and cross-culture impact on consumer behaviour. Furthermore there is another set of more specific external factors which has an impact on the consumer behaviour and includes factors such as influence of opinion leaders along with diffusion of products and many more specific factors like consumer protection, legislation, pricing, public policies etc (The Economist 2010). Let us first look the societal external factors which have an impact or influences consumer behaviour in context to Toyota Camry. 4.1 Cultural Impact on Consumer Behaviour Culture holds a dominating position in influencing consumer behaviour and had always been eyed upon by marketer to ensure that culture in no sense of a customer is negatively impacted by any of their marketing strategies. Culture in a broad sense is defined as the pattern of behaviour and social relations which governs a society and separates individuals from one another. Culture comprises of various values, attributes and ideals which on a continuous basis help an individual to communicate with one another. Furthermore, culture is not something which is innate in an individual and is a learned set of arbitrary values during the lifetime of an individual which is almost invisible during the daily routine life. Culture has a great significance in consumer behaviour and affects or influences a consumer purchase decision to a considerable extent (Ravald and Grönroos, 2006). For example, purchase of a luxuries Toyota Camry car certainly exhibits a culture belief of high status and standard of living in the Asian region particularly in India. The influence of culture can be clearly witnessed in dressing style and food habits of an individual. Culture has a direct impact on the communication (language), values and differing attitudes which influences the buyer behaviour. For instance the normal attitude of individual to ensure a future security and prosperity can be witnessed by his/her actions of saving and consuming. Cars especially Toyota Camry can be seen as in India and its subcontinents as a reflection of high culture like the Maharaja’s and the Raja’s of ancient India. Different use of colours, symbols, languages and message are all different sources reflecting and targeting culture. It is for this reason that Toyota Camry comes in exclusive colours which are more vibrant and in differing shades than the usual cars to express a culture of prosperity, livelihood and new generation culture among its targeted audience. It has been seen in the fast that many automobile companies have used their logos and messages to adapt to a country’s culture. For instance the Honda Company has an exclusive logo symbol of “H” which is due to cultural target of its product in Indian Subcontinent as the same resembles “Henna”, a local craft in India for paintings one hand during the season on wedding and the same resembles true Hindu culture and its own norms and believes. Furthermore Toyota looks to adapt to the Indian culture by targeting Indian customers and their culture by offering heavy discounts during festive seasons so as to be associated and be a part of its customer’s culture. It can be sensed that the main tone of many multinational corporation and giants is to tone their messages as per the cultural norms and beliefs of their specific targeted country. Thus we can sense that how culture has an influencing role in the buyer behaviour and the same is looked upon as an opportunity by the marketers to attract more of potential customers towards its offerings and boost up sales and revenue of the company. 4.2 Sub-Culture Each culture can be subdivided into more specific and customised sub-cultures that look to provide more identification and socialisation for its exclusive members. Sub-culture in broader sense can be identified as a set of common beliefs shared by the members of a sub-group of the main culture and includes similarity in their nationality, religion and ethics, geographic locations and racial groups. Sub-culture in marketing sense can be important for many marketers and they need to develop marketing strategies accordingly to satisfy the need and wants of a specific sub-culture. It is to be further noted though most of the sub-culture shall share similar beliefs and attitudes of the main culture of which it is a part, there may be odds in contrast to what is seen or witnessed in the main group. For example, Indian’s are normally orthodox in nature and prune to basic cars but however there may be sub-culture group among the main Indian group who do not hesitate to buy expensive and luxuries cars like Toyota Camry. Another example can be Indian Culture is mostly collective in nature and look for big cars whereas there may be an urban educated upper class who shall look upon status and comfort cars like Toyota Camry over the natural cars in the market. There are three major aspects of subculture which are ethics, religion and regional differences which influences consumer behaviour. Ethics and religion can be strongly linked to one another owing to customs, beliefs and attitudes derived from the particular religion. However, looking at the Toyota Group as a all, it also segments its customers on basis of sub-culture predominantly on basis of region. For example, Toyota has introduced the Toyota Camry for developed countries where consumers are well above poverty line and can afford such cars as a status and luxury symbol whereas it also develops low budgeted cars for developing and underdeveloped countries. It is important here to have a look at the age, gender and household sub-cultural impact on the consumer behaviour. Among the age groups the first category are the teens who are always the future decision makers. The Generation X groups consists of individuals who are more mobile and smart and love technology and innovations. This is certainly the group that Toyota Camry looks to target upon as they are more fascinated about expensive and luxurious cars and possess ability and potential to be the largest segment of expensive cars. Baby Boomers on the other hand are more developed in a fast and rapid dynamic environment which has a direct impact on their freedom and individualism and also constitute a small segment which Toyota Camry looks to target upon. The next come the old age group above 50 who are more inclined towards saving and better future of their families and does not constitute a major segment. Gender is another segment which is stagnant and static all throughout the lifetime of a consumer and influences consumer behaviour. For example, men are more fascinated towards cars than women. Men look upon expensive cars not just as a means of comfort but depict their position and status in the society. Households also influences consumer behaviour in the sense that different members play different role in the purchase decision like gatekeepers, decision makers, influencers, buyers and the actual users of a product or service. Further the husband-wife relationship influences consumer behaviour to a considerable extent as it is the working husband or the wife in cases a joint decision made by both to buy the Toyota Camry. However, it is noted that generally wives are more reluctant to such expensive cars and act as gatekeepers whereas a husband may both acts as an influencer or decider to purchase the car. 4.3 Social Class Consumer behaviour is determined to a considerable extent to the social class which they belong. The classification of socioeconomic groups is thus an important factor influencing consumer behaviour. Social class can be understood as relatively a permanent and ordered segment in the society whose participants share similar interests, attributes and values. There are various basis on which social class can be defined the most prominent among which are division on basis of income level into upper, middle and lower level income group which are further subdivided into upper-upper income group, upper-middle and upper lower income group and similarly for other groups respectively. However, it is wrong to conclude that social class are just divided on basis of income various other factors such as occupation, education, power, authority, lifestyle, consumption patterns etc play an important role in the classification of social groups. Let us look at an example of how Toyota designs its cars for various social groups and develop marketing strategies accordingly to make an impact and influence its consumer behaviour pattern. Class Product Marketing Strategy Upper Income Group Luxury Vehicles like Toyota Camry Cars are designed for higher comfort with advanced and automatic features with an aim to reflect high standard of living in the society Middle Income Group Commercial Vehicles like Toyota Ranz Cars are designed with normal comfort with more variants so as to target the mass population and boost up sales and revenue. Lower Income Group Engine Motorcycles like Toyota Scion Products are designed to meet the basic needs and wants of consumers with little innovations in the same Thus we see how social class can act as an influencing factor in consumer decision making process and how organizations and companies develop differing marketing strategies to convey messages and target their audience to influence more consumers on their purchase decision of their particular product. 4.4 Impact of Reference Groups on Consumer Behaviour Reference groups are external societal factor which have a direct impact on the buyer behaviour pattern. A reference group can be regarded as a group of people with whom an individual associates himself. The reference group strongly influences the values, beliefs and attitudes of an individual either directly or indirectly. There are various kinds of reference groups which can be categorised as primary reference groups comprising of family and close friends and secondary reference groups which comprises of schoolmates, neighbourhoods, office colleagues and others. It is to be noted that classification may vary on individual basis. Reference groups gains much importance in influencing the consumer behaviour in cases of conspicuous in nature and a buyer may look to seek advice as to what is acceptable to the reference group before making the final decision of buying a product or a service (Kotler, 2003). Looking at the automobile industry reference group plays an important role as a consumer keep looking for advice and information from the reference group to decide upon the various cars available in the market and select the most appropriate as per its status and needs. Furthermore, Toyota Camry is a latest and new launch of Toyota which has been successful in creating an impact upon various reference groups which can be looked upon by marketers as an initial gear-up to boost upon its sales. 4.5 Role of Family and Family Life-cycle In continuation of the discussion in the previous paragraph, family acts as an important reference group as the family exerts a deep impact and influence on an individual’s lifestyle, attitude, beliefs, norms and consumption patterns. The role family play and its member acts differently in different situation have an influence on buyer’s behaviour. For example, the interaction between a husband and wife and the number and age of children all acts as a major influencers while making a purchase decision on basis of the current needs and wants of the family. For instance a nucleated family may preferably look for a small car then a luxurious and comfortable SUV car. Similar to family the family-life cycle plays an important role in consumer behaviour as most family follows an orderly sequence of various stages which comprises of young bachelors, followed by newly married, couples with dependent children and then independent children. Consumer behaviour also varies accordingly. For instance during the young bachelor stage the consumer may be more inclined and fascinate about cars and wish to purchase a car like Toyota Camry which might not be the case for a married couple with dependent children who may look to save more and invest more on securities than buying an expensive car like Toyota Camry. 4.6 Role of Cross-culture Another societal factor which has an influence on the consumer behaviour is the cross-culture impact and cross-culture differences. Cross-culture is important for marketers as it enables them to identify and determine the extent to which consumers from two or more regions or nations have similar or different attitudes, beliefs, cultures and values and design marketing strategy accordingly. For instance, the launching of Toyota Camry in Australia and United States was due the major influence of cross-culture similarity where the upper class income group were more fascinated for expensive and luxuries cars and always preferred Toyota as a group who shall meet their needs and wants in a more specific and comprehensive manner. There are a lot many problems during a cross-culture analysis in context to buyer behaviour as the behaviour of consumers may vary greatly in different nations and a marketing strategy which had scored success in one culture may completely fail in another country due to cross-culture differences and its impact on the consumer behaviour. The major problems in cross-culture marketing for Toyota Camry in the Australian and Asian region due to cultural differences may be listed as consumer’s perception on the selection of the product, promotion and marketing communication, pricing issues and selection of appropriate distribution channels (Fombrun, 2006). Furthermore different cultures have their own set of values, attributes and beliefs which may be different from other culture. For example, it may be culturally believed for individuals from Asian region particularly in India to have Toyota Camry as a status symbol in the society whereas the same in Australian culture may be regarded more as a comfort and luxuries car designed not just for upper class income group but equally for middle-income group who can purchase the car in easy instalments available by the company itself. 5.0 Specific Factors Influencing Consumer Behaviour The above discussed portion of the report has much focused on the societal external factors which have an influence on the buyer’s behaviour however there are other specific factors which are external in nature and can be designed by marketers or self-evolutionary in nature and play a major role in influencing the consumer behaviour. Let us have a look at the same in more comprehensive manner to understand the impact of each of such specific external factors in influencing the role of consumer behaviour. 5.1 Opinion Leaders and Diffusion of Innovation Opinion Leadership is the latest buzzword in the study of consumer behaviour. Let us first understand the concept of opinion leadership. Opinion leadership is a systematic approach where a person with strong influencing characteristics and refereed as Opinion leaders provides and seek help and advice to an individual in terms of a purchase decision made by the other who is more generally known as the opinion receiver. The communication is more inclined towards an informal behaviour with mouth-to-mouth communication system. The opinion leaders are generally gracious people and are credible source of information for the buyer and directly impact the consumer behaviour to persuade him/her to actually make an instant purchase decision, buy additional products or not buy a product at all. In context to Toyota Camry there can be many Opinion leaders for instance the consumers who were the early birds and purchased the car during its launch may act as the same and help and provide valuable information along with their own experience to a potential buyer to influence him to actually purchase the car or not to purchase the same. Salesman in the showrooms of Toyota Camry may also acts as an Opinion leader to provide all necessary information and valuable feedbacks from the existing customers to influence the purchase decision of a potential customer. Furthermore, internet, company website, brochures and pamphlets may also in many cases acts as opinion leaders and impact the purchase decision of the prospective consumer during its decision making process. Diffusion of Innovation is another external specific factor which is closely linked with opinion leaders and can significantly influence the consumer behaviour during the purchase decision of a particular product or service. The diffusion of innovation generally refers to the tendency of new products, ideas or practices to be spread across and absorbed by the society and its people. Usually when a new idea or concept is product is developed it is accepted by a few people and may later spread to be absorbed by larger mass or may eventually fail during the very inception (Fill, 2006). Thus, there is always a high degree of risk associated for innovation which is rewarded in terms of high prices for the new products or services offered to the customers. For example, rap music became popular in the urban group at a quicker pace due to low cost of recording and later spread to others suburban youths. Innovation further comes in different stages. A continuous innovation involves slight improvements in the product or services overtime. For instance innovation in automobile industry has been very slow as the concept and driving forces in automobile industry has been same in 1950 as it is today although advanced features had come but diffusion of the same had taken a lot more time than the expected one. Automatic cars are still rare to be found in developing countries whereas its existence is almost nil in the underdeveloped country making the market shorter and impacting consumer behaviour patterns to a great extent. Furthermore some culture and consumer tend to adopt new products more quickly and likely than others because of external factors such as modernisation, homophily, smaller distance between the innovation and its market place and lastly strong role played by Opinion leaders who are valued and respected and are more likely to spread the acceptance of new innovation. The style of opinion leadership also influences the consumer behaviour for diffusion of innovative products for instance in less developed countries or under developing countries opinion leaders may act more conservative and slow the process of diffusion of new innovative products, services, ideas and concepts. 5.2 Public Policy, Consumer Protection and Legislation Public Policy also have an impact on the consumer behaviour to a considerable extent for instance Accutane a near miracle for cure of acne was introduced in the market but however unfortunately the same had a negative impact on the consumer behaviour as it was found that Accutane may have several birth defects if consumed by a pregnant women which lead to the consumers a belief of boycotting the product and ultimately imposing heavy fines and penalties on the company producing and selling such products. Public policies are being designed to ensure a sense of consumer protection to the consumers which impact the sense of security among the consumer and its consumption patterns (Dawar and Pillutla, 2000). For instance marketing efforts may encourage excess consumption of a product or service which a consumer may not required for example, extensive marketing by Toyota Camry may boost up sales of the car even in the class of customers who may later find it difficult to maintain and pay instalments of the car. Furthermore, marketers may engage in deceptive practices which are much common in nutritional products who claim their products to be healthy although the same may be much harmful to the consumers. Government though continuously ask for such products to be labelled with correct information as a means of public policy and consumer protection may not be followed by manufactures. For instance many cars advertise their products as the highest mileage to the consumers which in reality may fail to do so affecting the consumers negatively and may harm the sales of the product in near future. 5.3 Advertising, Pricing and Consumer Ethics Advertising acts as an important external factor affecting consumer behaviour as it influences the consumers to actually buy a product to a considerable extent. Marketers use advertising to promote their products and services and provide necessary information to the buyers and also to compare why their products are better than offered by the competitors. It influences consumer to actually purchase the product for example, many food and snack advertisements are placed at late evenings so as to grab more attention of the consumers and influence them to instantly buy the products (Berry, 2000). Similarly pricing and consumer ethics influences consumer behaviour. For instance Toyota Camry is a brand of Toyota which is highly attractive due to the company’s brand presence however pricing here may significantly affect the consumer behaviour as Toyota Camry is targeted for upper-class income group and may be negatively criticised by middle and lower level income group consumers. 6.0 Conclusion This report aims to focus on the various external factors which influence the buyer behaviour during the purchase decision. Toyota Camry has been selected as an exclusive product throughout the report for easy and better understanding of the entire report. The report looks to subdivide the external factors affecting consumer behaviour in terms of societal external factors which includes factors such as culture, sub-culture, cross-culture, social class, family life cycle and reference groups and other specific external factors affecting consumer behaviour and includes elements such as opinion leaders, diffusion of innovation, consumer protection, public policy, price and legislation. The report thus aims to ensure both theoretical and practical understanding of the entire topic under study. 7.0 References Berry, L. L. (2000), “Cultivating service brand equity”, Journal of the Academy of Marketing Science, Vol.28, No.1, pp.128-137. Dawar, N. and Pillutla, M.M. (2000), “Impact of product-harm crises on brand equity: The moderating role of consumer expectations”, Journal of Marketing Research, Vol.37, No.2, pp.215-226. Fill, C. (2006), “Marketing Communications: Interactivity, Communities and Content” (4th Edition), Pearson Education, Harlow, England. Fombrun, C. (2006), “Reputation: Realising value from the corporate image”, Harvard Business School Press, Boston, MA. Kotler, P. (2003), “Marketing management” (11th edition), Upper Saddle River, NJ: Prentice Hall. Ravald, A. and Grönroos, C. (2006), “The value concept and relationship marketing”, European Journal of Marketing, Vol. 30, No.2, PP.19-30. Stewart, J.B. (2010), “Common Sense: Toyota Recall Should Warn Investor Away”, Wall Street Journal (Eastern edition), New York, N.Y.: Feb.3, 2010, pg.D.2 The Economist (2010), “Business: No quick fix; Toyota’s troubles deepen”, London: Feb 6, 2010, Vol.394, Iss.8668, pg.71. The Economist (2010), “Leaders: Accelerating into trouble; Toyota”, London: Feb 13, 2010, Vol. 394, Iss. 8669; pg. 14. Read More