Influence of External Factors on Consumer Decision Making Process - Coursework Example

Influence of External Factors on Consumer Behaviour Student’s Name: ID Number: Date: Influence of External Factors on Consumer Decision Making Process Consumer behaviour refers to set of character that consumers portray when acquiring a service or a product from the market. It is the study of individual character or groups of individuals and the criteria they apply in selecting or acquiring products or services and how this criteria impact the consumer (East, Wright, & Vanhuele, 2013). The knowledge and clear understanding of consumer behaviour is vital to a marketer in that he or she is able to deliver satisfaction in the best way possible. It improves the way marketers reach consumers effectively hence better marketing outcome. Adequate knowledge on consumer behaviour calls for thorough understanding on various aspects that influence the decision in the process of making the purchase (Ferrell, Fraedrich, & Ferrell, 2011). This paper aims at examining influence of various external factors on consumer decision making process on buying a smart phone. External factors are those elements that consumer cannot control. They are aspects that are not within his power and tend to influence decision making process. Note that there are several external factors that influence the consumer decision making process. These include the family, social class, cultural and sub-cultural aspects, opinion leaders, diffusion of innovation and public policy among others. Each of these factors has a certain degree of influence on decision making hence determining the outcome the process. To understand the concept of consumer behaviour, it is important to analyse each factor critically and evaluate its relevance on decision-making process. Family is one of the most influential external factors on personal decision making. As a basic social unit within the society, the family defines individual character and shapes behaviour. The family acts as a channel through which one adopts different attributes including likes and dislikes. In most cases, one adopts what he finds in the family hence forming certain behaviour. It is therefore one aspect that has potential to influence individual decision on what to eat, what to wear and how to spend money on buying. It is a trend that individual learns from childhood until he or she becomes independent. However, the choices he makes depend mainly on family values. Once the marketer understands individual family background, he is able to deliver variety of products that are likely to satisfy his needs. The choice of smartphone in this case depends on family income level. If the family has adequate income to cater for different needs, then the consumer is likely to purchase this type of a mobile phone. Note that these phones are usually expensive due to their sophisticated features. It requires an individual to have sufficient money to acquire one from the market. In this regard, family income plays a central role in determining whether one buys it or not. In addition, the family may affect one’s perception and interest on sophisticated phones hence influence the decision to acquire smart phone. Parents or older siblings play crucial role in transmitting values and shaping individual perception towards certain products or services. Family aspect is therefore a critical external factor that influences consumer decision making process than any other element due to aspect of strong ties among family members. Social class is another external factor that influences decision making process of a consumer. People always like to associate themselves with certain social class within the society. Social class refers to subset of individuals with similar characteristics. People of the same social class influence each other in terms of buying behaviour. Due to strong attachment they have towards each other, individuals tend to adopt the same values which determines behaviour in terms of what and where to purchase. As the social class grows, individuals within that class may end up having the same attitude towards certain products and services. They usually consult each other before making the purchase and in most cases, prospective buyer end up purchasing what his colleagues in the social class suggest. The force behind social class is that it comprises of people who come together willingly and voluntarily. It is kind of informal group which comes up automatically in the process of social interaction in the society. Individuals of the similar character tend to form a group hence creating attachment. People chose to join and leave at will whenever the group becomes of no value to them. However, social class provides a sense of belonging in the society and individuals identify themselves with it proudly. In reference to purchase of smart phone, social class has significant influence. Social class is all about status in the society and members usually possess relatively equal status (Johnson, & Grier, 2013). If the people in this class are of high calibre in terms of income, they may have expensive items such as cars or even mobile phones. In order to match the social class, consumer may opt to purchase one. In case he or she seeks suggestion from colleagues in this social class, possibility of acquiring expensive phone just like them is very high. Culture is an essential external factor that has great influence on individual buying behaviour. It refers to set of values and customers that determine the consumption pattern of members of particular society. Culture creates and directs consumer behaviour which tends to conform to acquired values and customs. Basically, cultural aspect plays a crucial role in consumer behaviour since it determines individual perception and attitude towards certain products. It differentiates one society from another such that buying behaviours of the two societies are totally distinct (Malhotra, & Dash, 2010). Even if the two societies have similar need, they use different items in satisfying that need. For example, a person who is hungry in Australia may use a totally different product from a hungry person in Ethiopia to satisfy that hunger. The only aspect that differs among the two people having the same need but located in different countries is culture. For an individual who want to acquire a smart phone from the shop, cultural aspect plays a critical role in consumer decision making process. The general purpose of a mobile phone is enhancing communication. However, cultural aspect differs from one society to another. Some value technology and efficiency while others do not even care about such factors. In this case, a consumer in Ethiopia may be comfortable with simple gadget as long as he communicates. On the contrary, Australian considers detailed features of the mobile phone before making the purchase decision. To such a person, sophisticated smart phone is ideal gadget for communication. Nowadays, some people defy cultural values due to different levels of exposure. In this case, you may find someone in remote places in Ethiopia with sophisticated mobile phone which is against cultural values. Although it retains significant relevance in determining customer behaviour, it has no strong influence these days (Carrington, Neville, & Whitwell, 2010). The aspect of cross-cultural consumer behaviour has great impact on individual decision making process. Such aspect arise when certain product become popular in different society with similar cultural values (Malhotra, & Dash, 2010). A popular product in New Zealand or United Kingdom may do well in Australian market. People in these countries tend to possess similar customs and values thus influencing each other on what to buy (Mooij, & Hofstede, 2011). In the case of smart phones, these products have high demand in these markets due to common culture. They all value technological advancement hence adopt sophisticated products. In addition, most people spend time chatting with friends online and a good mobile device such as smart phone becomes a necessary tool for communication. Opinion leaders also form part of external factors that influence consumer decision-making process. Society usually has high regard for opinion leaders and takes their views on certain product as final approval. Marketers use celebrities and various professionals to endorse products with an aim of attracting buyers (Malhotra, & Dash, 2010). For example, young ladies may be attracted to body lotions with endorsement from Beyoncé or Rihanna. These are figures with great influence and drive people’s emotions and attitudes. Using the power of influence, they are able to determine buyers’ choice thus shaping consumer behaviour. In the same way, men may be attracted by products with endorsement from Ronaldo or Rooney due to their perception towards these sports personalities. Popular dentist may also influence people on which toothpaste or tooth brush to use. As a professional dentist, he is an opinion leader with power of influence hence determining what people buy. In the case of smart phone, opinion leaders and celebrities plays a great role in influencing consumer decision making process. Samsung is a good example of a smart phone which sells due to use of sporting celebrity. Just recently, Samsung utilised Didier Drogba, English Premier League super striker by then in its adverts. The main target market was African football fans and section of European market. In this particular period, Samsung was able to record high sales volume. Drogba’s endorsement plays a significant role in their sales even today. A prospective buyer who is a football fan is more likely to purchase a Samsung smart phone due to the endorsement from popular soccer player. However, the choice of celebrity or a professional in endorsement may affect the sales negatively. For the people who are soccer fanatic for different club from that of a player, he may reject the product on the basis of team’s rivalry. There are other external factors that marketers consider in the study of consumer behaviour. These include diffusion of innovation, public policy and consumer protection. Diffusion of innovation implies consumer’s preference on the basis of continuous product improvement. Public policy and consumer protection are concerned with issues of legal requirement and safety of the final consumer in different dimensions. Since these aspects influence consumer decision-making process, it is important to understand how they operate. Currently, these three factors have high relevance in consumer’s decision on what and where to buy. Diffusion of innovation is about improving product quality over time. It implies adoption of ever-changing technology in improving products’ quality in order to meet current market demand and expectation. The firm retains the brand but makes adjustment in product components and several features. The process aims at producing more sophisticated product which matches demand for a certain target market (Malhotra, & Dash, 2010). Some marketers prefer making several adjustments to the existing product while others may just produce totally new product. They use the belief that new products are always better than existing one. New products tend to change people’s attitude and perception thus attracts more customers. The approach is applicable when the previous product is of low quality and its demand is also low. To change this attitude, the marketer comes up with new product to compete with others in the market. The concept of diffusion of innovation is applicable in production of smart phones. Companies keep improving their products from time to time with an aim of utilising latest technology in improving product’s quality and capability (Venkatesh, Thong, & Xu, 2012). Unlike before, latest smart phones can browse through internet and perform all functions of a computer. Phone users believe that these new models are of high quality than old ones. Availability of the latest model in the market is an aspect that attracts prospect buyers hence influencing their behaviour. Besides producing new products, firms may also make few adjustments to the existing one to have more sophisticated product. This is applicable in popular products with high demand just to ensure competitors do not overtake them. To sustain the current market, manufacturer produces the same product with ‘new & improved’ features to enhance satisfaction (Rogers, 2010). Some marketers abuse this concept by producing products with ‘new & improved’ label just to brainwash consumers’ attitude and win them. People always believe that these new products are better hence buying them. It is a marketing approach whenever the firm want to utilise the same customer to make a repeated purchase on the same item (Thøgersen, Jørgensen, & Sandager, 2012). Smart phones manufacturers are very good at applying this concept in their marketing strategy. To ensure marketers do not manipulate the consumer, regulatory authority comes up with public policy to act as a legal standard for all products in the market. The public policy regulates products entering the market. It issues both qualitative and quantitative measures for the firms to adhere with before reaching the final consumer. Any firm or a manufacturer that tend to comply with public policy attracts prospective buyers hence creating reliable market. To achieve this end, the relevant government agencies play a crucial role. They protect consumers through issuance of licences among other methods. Consequently, these agencies curb any possible element of consumer manipulation through sub-standard goods and unfair prices. The government ensures fair play in marketing field by controlling quality and preventing any harmful practice in the market. Presence of consumer federations is also essential factor in ensuring adherence to consumer protection policy. They mainly engage the public in providing accurate information concerning products in the market. They do this by organising and facilitating consumer education thus equipping them with reliable information. They also educate consumers on their right to quality products and value of money. As a result, consumers are able to push manufacturers and demand better products. In response to such demands, mobile phones manufacturers are able to produce quality and sophisticated devices. Companies such as Samsung have quality products that are able to meet and exceed market demand. By complying with consumer protection policy, Samsung smart phones are able to record high sales volume. Due to such aspect of legal and social compliance, any prospective buyer is more likely to purchase Samsung smart phone. Social responsibility is also another factor that influences consumer buying behaviour. Firms are currently adopting corporate social responsibility as a marketing tool for their products. Consumers on the other hand are more sensitive on firms that are not socially responsible. The element of corporate social responsibility implies creating a shared value whereby the society becomes part of the firm’s interest. Companies take active role in addressing the needs and aspirations of the society. Some provide funding for community activities such as sports in order to nurture and develop talents. Through such approach, consumers respond by buying their products in large quantity hence making it a campaign strategy (Young, et al, 2010). Another form of public policy and consumer protection is handling of complaints. The government provides guidelines that companies follow in ensuring they address consumer complaints adequately. In case the firm is not able to address customer’s issues, the government may intervene directly by punishing the respective firm. Nowadays, this factor has great influence on consumer decision making process. The company avoids any incidence of customer abuse or mishandling in order to retain good public relation. Failure to address customer complaint may amount to bad relations which affects performance of its products in the market (Inderst, & Ottaviani, 2013). Such trend contributes towards provision of perfect customer service as well as availability of high quality products in the market. Mobile phone manufacturers are sensitive on the issue of public policy especially on handling customer complaints. They establish outlet centres in most major cities and towns for the sole purpose of receiving and addressing complaints from customers. In case of any genuine concern with the product, they address it immediately to avert any negative publicity. This strategy attracts and retains customers hence creating sustainability. It provides confidence to the prospective buyer about the quality of smart phones they supply. The government plays essential role in ensuring compliance to consumer protection policy. It establishes minimum standards to be met by all producers in its jurisdiction to ensure consumers are properly protected against substandard products and services (Bar-Gill, 2011). It also considers consumer safety while using the product or service. Unless the business organisation adheres to the consumer protection policy, it cannot operate in that market. Most smart phones manufacturers adhere to government regulation on quality in order to attract potential customers. In respect of this, total compliance to public policy on consumer protection attracts customers (Inderst, & Ottaviani, 2013). It has become a major issue in marketing where marketers cite compliance as an advantage to the product. The study of consumer behaviour and factors that influence decision making process is important in reaching the target market. The knowledge on these factors and how they operate within the market ensures that marketer is able to realise his goals efficiently. Marketer is also able to produce the product that meets customer needs hence facilitating satisfaction. It is important for smart phone marketers to understand all these factors when implementing marketing strategies. They are driving forces that customers cannot control thus giving a marketer an advantage to influence consumers and realise the target without much struggle. The major aim of understanding these factors is to create the market and sustain it for long period (Young, et al, 2010). Some smart phone manufacturers such as Nokia and Samsung are good in utilising external factors thus generating revenue out of high sales volume. Ignoring these factors leads to frustration and subsequent failure. Even if the product is doing well currently, the marketer should know that environment keeps on changing. Market demand goes hand-in-hand with ever changing technological aspects. In addition, consumers are becoming more aware of their rights to quality products (East, Wright, & Vanhuele, 2013). Once the marketer fails to respond to such demands, consumers have wide range of products to choose from. They simply switch to another product from a competitor hence making the previous one collapse. However, adherence to market demand is not costly compared to benefits underneath. Customer satisfaction generates more sales thus high revenue and sustainable market. Making use of these factors creates strong brand with high popularity and stable market base. The management and entire business leadership has a role to play in order to ensure these factors work in favour of the particular enterprise. Leaders should develop proactive and strategic marketing plan that considers all these factors. They should also seek professional advice in the process of strategic marketing plan development so that it may reflect the target market while incorporating organisational objective (Malhotra, & Dash, 2010). Note that the major focus should be the target consumer and the overall environment. Whatever affects the consumer always impact on product performance in the market. In respect of this, the management should concentrate on ensuring the marketing approach is based on consumer interest hence creating enabling environment for the product to thrive. Consistent study of consumer behaviour is essential in ensuring that these external factors do not affect the performance of the product negatively. To engage the market effectively, the organisation need to stay updated on ever-changing consumer demands. As technology changes, consumers adjust their demands to match the current trends. The same case should apply to marketers in order to satisfy their target customers. Marketers should stay on top of things and report what is happening in the market to the business leadership for quick deliberation. Unless this happens, marketers may find themselves behind the market thus failing to address impact of external factors on consumer behaviour. Currently, businesses are becoming more proactive in their operation by incorporating the target market in designing their marketing plans. These external factors form the basis of marketing approach and marketers should identify each of them and try to respond through innovation. For example, smart phones manufacturers should always try to consider cultural aspects of the society and changing technological innovations in developing products that respond to market demand. In this regard, external factors affecting the particular target market or consumers have become of greater interest to business community. Reference Bar-Gill, O. (2011). Competition and Consumer Protection: A Behavioral Economics Account. SWEDISH COMPETITION AUTHORITY, THE PROS AND CONS OF CONSUMER PROTECTION, Forthcoming, 11-42. Carrington, M. J., Neville, B. A., & Whitwell, G. J. (2010). 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