Consumer Behavior Buying, Having, and Being - Coursework Example

Consumer Decision Making: External Factors (Authors Name) (Institutional Affiliation) Consumer Decision Making: External Factors Introduction Consumer decision making is the process by which a consumer makes a logical choice of a product or a service depending on all the available options. This is a rational process that involves the consumer evaluating the available products or services and making a decision based on his/her wants and needs (Loudon, 2002). The choice of the product or service however is also dependent on its ability to meet the consumer’s needs and wants. The process of consumer decision making involves five steps which include the problem identification, search process, evaluation of alternatives, selection and finally evaluation of decision. The problem identification is initiated by the consumer who feels that there is a need that he/she urgently needs to address. The consumer upon careful identification of the problem then advances to searching for the product or service that will satisfy his/her needs. The consumer uses various means to search for that information including the internet, print media, advertisements, and word of mouth from close friends and relatives (Schiffman, 2004). The consumer after a successful search is able to now evaluate the alternatives. The consumer is aware of all the different brands that are available in the market and therefore proceeds to analyzing the strengths and weaknesses of the alternatives with an aim of determining the one which will satisfy his/her need. After careful evaluation of the alternatives the consumer then goes ahead to purchase the product or service. The consumer has already done extensive risk management and is sure of their decision. This stage however is influenced by factors such as the ability of the consumer to afford the product or service and sometimes the opinions of family and friends. The last step to the consumer decision making process is evaluating his overall decision referred to as the post-purchase stage. The consumer analyses if the product or service has indeed satisfied his/her need (Peter 2005). The purpose of evaluating his/her decision is in order to influence future decisions about the same product or service in relation to the need. Consumer decision making process however is influenced by various external factors. The purpose of this essay thus is to analyze the influence of external factors on the choice of a car. These external factors include reference groups mainly the family, social class, cultural and sub cultural elements to consumer decision making process in purchasing a car. The most relevant and important factors that influence the decision of the consumer are the family and social class. Culture also plays an important role because it guides the consumer in choosing the car the most relevant being the age sub culture. The essay however also examines the impact of cross-cultural consumer behavior, relevance of opinion leaders, diffusion of innovations and the influence of public policy and consumer protection in relation to the consumer’s choice of a car. External Factors Reference groups It is a common human characteristic to have an individual or a group who they look up to or simply compares himself to them. These groups of individuals who people look up to are referred to as their reference group. These groups of individuals usually have a great influence on the consumer’s behavior. The consumer looks up to the person or group because he/she needs information before making an important purchase (Carlson, 2010). There are two different broad classifications of reference groups which are the normative and the comparative reference group. The normative reference group has great influence on the general value and behavior of the individual thus influencing his/her consumer behavior. This group is mainly comprised of the immediate family members and close relatives. The family plays a tremendous role in guiding the individual through the society’s value system. The family generally shapes the manners, the eating habits and the general behavior of the individual (Wells, 2006). Children for example greatly influence the choice of a car for their parents. Choosing a car thus depends on safety and reliability. A parent considers the questions what are the safety ratings? Is there enough space for the children? Comparative reference group on the other hand defines the consumer behavior by setting up norms and values that serve as benchmarks for the individual. The group therefore serves as a point of comparison to the individual. This group is comprised of the individual’s friends, neighbors and other sources of reference. They influence factors such as the lifestyle, customs and even traditions (Wells, 2006). An individual will thus prefer to buy a car due to its design, speed and performance qualities that appeal to his/her friends. Reference groups however may further be classified into four different groups in relation to whether they have a positive or negative influence on the consumer behavior they include; a. Contact group This group is characterized by individuals holding memberships. It involves face-to-face meetings between the group members and constant interaction. The members in this group adhere to the values and norms that are popularly acceptable amongst the members. This group thus is considered to have the most influence on the individual’s consumer behaviors. The group can thus influence factors such as the make, shape and color of the car an individual purchases. b. Aspirational group This group is characteristic of the fact that the individual does not have a membership but aims at becoming a member of such a group. The values and norms exerted by this group have a positive impact on the individual’s consumer behavior. This group is secondary to the consumer but has a great impact to his/her self-concept. An individual will thus buy an expensive luxury car in order to feel part of the upper class in society, a group that he/she aspires to be part of. c. Disclaimant group The individual does not trust and believe in the values and norms of the group regardless of the fact that he/she is a member. The individual thus opposes the suggestions and the lifestyle associated with the group. The individual can be described as inter-directed and aims at setting his/her own norms and values to guide his consumer behaviors. This group however has little influence on the choice of a car as the consumer is mostly concerned with the value he/she derives from the car rather than it affiliation to the group. d. Avoidance groups The individual in this case does not have membership and strongly disapproves the behaviors, values and norms relating of this group. The individual is quick to adopt values and norms that are completely different from this group. Membership Non-membership Positive influence Contact group Aspirational group Negative influence Disclaimant group Avoidance group Figure 1.1: Influence of different groups on consumers behavior Factors affecting the impact of reference groups There are various factors that impact the consumer behavior in relation to reference groups they include a. Information and experience The knowledge and experience of the individual and the ability of the individual to possess such knowledge determines the extent through which the reference group has on him/her. For example a person who has knowledge of the car’s and its service offerings does not seek advice from the group. The person is also least influenced by the group. b. Power, credibility and trust The influence and impact of the group is also influenced by its power, credibility and trustworthiness. An individual in search for relevant information about a product or service is greatly influenced by the credibility and trustworthiness of the group. The person may also aim at being accepted as a member of such a group. c. Social approval An individual in pursuit of social conformity or social approval readily accepts the information given by that particular group. This is due to the fact that the individual also seeks identification as part of the group members. d. Product conspicuousness and visibility A product which has visible and conspicuous service offerings which relate to the individuals needs are bought by the consumer without advice from a group. The individual purchases the product in order to satisfy his/her self esteem. The Family A family is defined as a group of people who are closely related by blood or by marriage and who live together as parents and their children. The family is the basic social institution that has the most effect on the consumer behavior of individuals at large. The family can therefore, be described as the normative reference group. There are three major identifiable and socially recognizable types of families that include the couple-only family comprised of only a man and his spouse, the two parent family where a man lives with his wife and children, one-parent family that is comprised of either the father or the mother living alone with the children (Panikkos, 2008). The family plays several functions that are important in influencing the consumer behavior of individuals they include: Consumer socialization This can be defined as the activities that are undertaken by the members of the family to develop certain skills, knowledge, attitude and preferences which define the consumer behavior of an individual in the family. Parents are basically responsible for educating their children about the basic values and the nodes of behavior in a society. They further provide their children with religious teachings, interpersonal skills, and simple factors such as dressing manners, appropriate speech and career choices. This process is defined to as child consumer specialization. Young consumers are most likely to buy a car that the parents recently bought (Soren, 2013). For example if your parents bought an SUV you are more likely to buy the same. The study found out that car preference is a learned behavior amongst individuals. Child consumer socialization however is influenced by four key family and parenting types that include the authoritarian parents who assume total control of the actions and behaviors of their children. This approach encourages independence of the children but still ensuring that there are controls to the behaviors and actions of the children. The other type is neglecting parents who are uninterested in controlling the behaviors of their children. Santrock (2007) found out that this type of parenting is characterized by the fact that the parents do not care about the emotional aspect of their children and are also not keen on their thoughts and opinions. The democratic parents on the other hand aim at creating a balance between the roles which the parent must play at the same time according the children the right to make their own choices and influence their own behavior and finally the permissive parents also referred to as indulgent parenting which involves the parents demanding less from their children. It is characterized by the nature of the parents being immature and having low expectations for their children. The effect of permissive parenting is that children normally lack self-discipline, are demanding and generally anti-social (Santrock, 2007). Adult consumer socialization is described as an ongoing process throughout the individual’s entire lifestyle. For example newly married couples decide to live together as part of the ongoing socialization process. Adult consumer socialization thus affects purchasing decisions of products and services such as a car that fits to their social life. Intergenerational socialization on the other hand usually affects the loyalty towards a certain brand of product or service that has been transferred from one generation to the next one. This transfer of preferences is referred to as “intergenerational brand transfer”. For example Japanese families transfer the brand of the car Isuzu to the next generation. The socialization process in the family is moreover influenced by the family decision making types such as the tactical family where decision is made through an open forum of discussion with the parents controlling the situation, the easygoing family where the parents most of the time agree to the children’s requests, the autocratic families where the parents exercise their authority over decision making and the children have little influence on decisions and finally the malleable families where the children are the key deciders of choices due to the fact that they receive what they ask for. Soren (2013) the decisions that a family makes in the purchase of a car are transferred throughout generations and thus tactical families where decision are made jointly are likely to influence more the choice of a car of an individual in the family. Economic well-being The family economic well being is the situation where a family’s economic status is capable of ensuring that they live comfortably in the society. Economic well being of the family is thus measured the income, expenditure and wealth of the family. It is therefore important for the family to make consumer decisions that ensure their economic well being in relation to security and prosperity. Emotional support Emotional support is an extremely important aspect in individuals and thus it is the role of the family to provide it. Emotional support is important because it ensures a healthy functional family. It encourages the family members to make decisions for the overall well being of the family (Travis, 2000). Provision of family lifestyle The key family members who are the parents are responsible for ensuring that the family’s lifestyle is the one expected by the children or by the society at large. They can achieve this by simply making sound and informed decisions that ensure that they maintain their economic well being and at the same time acquire necessary products to maintain their lifestyle as well. Although the family is considered as a single decision making unit there is also the effect that a single member in the family who is believed to be the major decision maker has on the choice of products and services that a family chooses. The norms and values of this single person shape the choice of products and services of the entire family. Consumer behaviors however in the family are often influenced by some of the roles played by members of the family which include the influencers who avail information to the other family members concerning a particular product or service in the market, the gate keepers who function as the overall controllers of the information available to the family about a product or service, the deciders who possess the power to determine which product or service will be purchased for use within the family, the buyers who provide the actual money for the purchase of the product or service, the preparers who ensure that the product is ready for use within the family, the users who consume the readily made product, the maintainers who keep the product or service functioning over a period of time and eventually the disposers who are responsible for the discontinued use of a particular product or service. Social Class Social class can be defined as the classifications of individuals into groups that have similar economic positions in the society. Social classes vary in wealth, prestige, possessions of materials, power and authority. This therefore, means that the occupation that an individual holds in society is very important in determining the social class of the individual. The occupation of the individual accords him power which is the defined as the ability to rule, authority which is the ability of an individual to control certain circumstances, financial stability and healthcare. Social class is a hierarchical phenomenon that ranges from a high to a low status. The various social classes that are evident in society include the upper class also known as the elite who are comprised of institutional leaders and heads of the major corporations of the country. The class is also comprised of educational institution heads. The members of this class own the factors of production which are land and capital Secondly it is the upper middle class which is comprised of individuals who possess scientific and technical knowledge. They include individuals who are knowledgeable in the fields of engineering, accountancy, management, architecture and other major disciplines. The members in this class are financially stable and boast high social prestige. Lower middle class is comprised of individuals who offer support management services and earn above minimum wage that is set by the state. They include administrative heads, paralegals, bank tellers, sales personnel and basically individuals who assist professionals in their different fields. Working class is comprised of laborers who are employed for wages and are mostly found in the manual and industrial sector. The members of this class rely mainly on income that they derive from the labor market. They are mainly comprised of the rural works in most parts of the world. The poor is the last class and is comprised of people who live below the stated poverty line. This class is comprised of people who depend on the state for provision of services and work for low wages. There are various measures to social class which include the subjective measure in which the individuals themselves are asked to define their social class. It is a direct approach but however it is disadvantage by the fact most individuals place themselves on social classes that meet their expectations. The reputation measure involves the individuals measuring their social class according to their reputation. It is an important measure due to the fact that it enables us to understand the major divisions that are evident in society. The objective measure is the most commonly used measurement and it involves the researcher using demographical aspects such as income, occupation and prestige to classify individuals in their respective social classes. This method is scientific implying that other researcher can employ the same methods to verify the findings. The rise or fall from one social class to the other is referred to a social mobility. Social mobility can either be upwards or downwards or can be intergenerational or intragenerational. Intergenerational mobility can be expressed by children rising above the social class which their parents were part of. Intragenerational can be expressed by a member of the current generation rising above his/her current social status. Social mobility however is dependent on the nature of the society at large. Societies exhibiting a closed class system pose considerable difficulties for the individual to move from one class to the other. Open class systems however are characteristic of greater ease in mobility and thus are able to recognize the achievements of the individual. Culture and Sub-culture Culture is defined as shared knowledge amongst a large group of people. It is the accumulated beliefs, values, attitudes, religion and meanings that have been developed through time within a large group of people. In relation to consumers culture is defined to as an accumulation of values learned beliefs and customs that guide the consumer’s behavior in society. Culture is a very important determinant of consumer purchasing behaviors. Beliefs are notions and assumptions accepted to be true regarding certain products or services. They affect the decision by individuals to purchase a particular product. Values on the other hand represent the society’s perception of what is right and just. Values range from power, success to wealth in different communities. The conflict theory evaluates how values in societies differ amongst cultures. The theory places its emphasis on class struggle as the main source of inequality within social groups. The functionalism theory on the other hand indicates shared values within a particular culture. Functionalism views society as a whole and thus shares elements which include the norms, customs, traditions and its institutions. The elements work together in the proper functioning of the society at large (DeRosso, 2003). The effect of culture is difficult to compute due to its hidden nature. It is natural and ingrained within individuals making it and thus not readily noticeable. Individuals are encultured from childhood due to the fact that is part of the overall social experience (Travis, 200). Culture therefore plays a role in guiding the consumer in making his purchase decisions. Individuals develop their culture through both formal and informal learning. It is communicated to them through a language that they understand and also through shared symbols. Marketers exploit the ability of individuals to accept and process symbols when developing their marketing strategies. There are three levels of subjective culture that are available they include supranational level that is a combination of different cultures from different societies, the national level that are nationally shared values, customs and beliefs within the citizens and the group level which is characteristic of culture shared amongst members of different reference groups. The most important aspect about culture in consumer behaviour is that it satisfies the need of individuals. Culture has the ability to guide individuals in solving the various problems thy experience in the society which may be psychological, economical or simple social problems. Culture is adhered to because they provide insight on suitable products in relation to the situation an individual is part of. It is due to this reason that individuals continue to follow them as long as they satisfy their overall needs and wants (Solomon, 2009). There are various measurements to culture that include content analysis which places emphasis on verbal and written communication. It is an objective means of evaluating cultural changes and thus is employed by marketers and public policy makers in analyzing the nature of marketing strategies that are most relevant to targeting a particular target group Consumer fieldwork method involves researchers examining the culture of a specific community by constituting a sample group which the careful observe their behaviors. The observations from the sample group guide the researchers to understanding the imminent values and beliefs that are evident in the group. This method is unique due to the fact that it is employed in the natural environment, it is conducted without the knowledge of the subjects on the exercise and it is mainly focused in assessing the behavior of the individuals. Value measurement survey instruments have been employed by anthropologists to provide insight on the most dominant values in a society. It involves the anthropologists posing questions on subjects concerning their feelings about aspects such as the right to freedom, security and peace. The various value instruments that are commonly used include the Rokeach Value Survey, the List of Values (LOV) and the Values and Lifestyle (VALS). Subculture A subculture is defined as a group of individuals who exist and share cultural practices that are detached from a larger culture in the society. Their beliefs, values and customs differ considerable with those of the members of the larger culture in society. The distinct elements of sub cultures include the fact that they possess unique beliefs, customs and values that are specific to the members of that group. The core cultural traits of the group are shared by a vast number of individuals regardless of the sub cultural group they are part of. There are different types of sub culture that include ethnic, religious sub cultures, geographical and regional subcultures, racial subcultures and age subcultures. The most significant sub culture in the choice of a car is the age sub culture. This subculture is divided into generation Y, generation X, baby boomers and the elderly. The Y generation is characteristic of individuals born between 180 and 1994. They readily accept change are technologically sophisticated and do not have loyalty to any particular brand. They are confident and focused on their careers however they are also greatly influenced by decisions made by their fellow peers. These individuals are attracted by new technological aspects of the car for example the introduction of the new turbo engine that is faster and consumes less fuel. Generation X consists of individuals who are born around 1965 to 1979. They are considered as the most educated individuals and due to the income they have acquired throughout their lives they spend a lot of money on recreation. They are loyal to brands and thus purchase products that have credible brand names. These individuals generally buy cars because of the strength of the brand and its ability to meet their overall needs. Baby boomers are generally young individuals with sustainable income and make the largest age category. They are at their peak of financial freedom and thus they make most of the important purchase decisions. These individuals decision to the choice of a car are influenced by their children. They consider aspects such as safety and space The elderly are individuals who have reached retirement age. They are growing faster than the overall national population and thus their purchase decisions are influenced more by the ability of the product to satisfy their needs and the right presentation in advertising. These individuals are more concerned about comfort of the car and the brand. Cross-cultural consumer behavior The cross cultural consumer analysis is an evaluation of the similarities and differences that are evident amongst different individual consumers of different cultures. The analysis is used by research technique that is employed by marketers to help understand the value types of the different consumers. Cross cultural analysis guides the marketer in developing the best marketing strategy that clearly states the value additions of the product that clearly relate to his target audience (Kotler, 2009). Diffusions of innovations Diffusion of innovations is a theory that aims to explain the absorption of new ideas and technological advancements by different cultures. Rogers (2003) describes diffusion “as the process by which innovation is communicated through certain channels over time amongst members of a social system”. The main elements behind the success of diffusion of innovations theory and which are considered as the most influential factors in spreading new technological advancements to the society are the innovation itself, effective communication, time and the overall social system. This thus implies that for diffusion of innovation to be successful there should be adequate use of human capital. Innovation is an idea that new to the society, communication channels are the means that are used to relay the message to the public and the social system is are a combination of units in the society that seek to solve a particular problem (Rogers, 2003). Diffusion of an innovation in society involves four major steps that include the knowledge where the individual becomes aware of the existence of the product in the market, the persuasion step which involves the consumer conducting an active research on the product due to the fact that he/she is interested, the decision making step where the individual weighs the pros and cons of the innovation and decides on whether to favor it or reject it, the implementation step that is characteristic of the individual making full use of the innovation in his/her daily affairs and finally the confirmation step where the individual makes the decision to continually use the brand (Wejnert, 2002). The role of opinion Leaders Opinion leaders are popular individuals who have the power to spread negative or positive information about a product, service or innovation. In diffusion of innovation opinion leaders are most relevant during the evaluation stage when consumers are still unsure about the new innovation. Opinion leaders typically have access to mass media and are thus capable influencing the opinions and views of consumers about a particular product (Oskamp, 2005). The most relevant opinion leader in the car industry in Australia is the reality T.V show called Top Gear. This show basically criticizes different cars at the same time and as a result influences the consumer’s choice of vehicles. References Loudon, D.L. and Bitta A.J. Della. (2002). Consumer Behavior, Fourth Edition, Tata McGraw-Hill, New Delhi Peter, P.J. and Olson, J.C. (2005). Consumer Behavior and Marketing Strategy, Seventh Edition, 2005, McGraw-Hill Higher Education Schiffman, L.G. and Kanuk, L.L. (2004). Consumer Behavior, Eight Edition, Prentice Hall, India. Carlson, Neil R. (2010) Psychology: the Science of Behaviour. Toronto: Pearson Education Canada. 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