Consumer Behaviour - Luxury Items, Food Products, Technological Items, and Clothing - Coursework Example

Consumer Behaviour Name Institution Table of Contents Executive Summary 1 Introduction 2 How Reference Groups Affect Consumer Behaviour 3 How Family Affects Consumer Behaviour 4 How Social Class Affects Consumer Behaviour 6 How Culture Influences Consumer Behaviour 7 How Subculture Influences Consumer Behaviour 9 Consumer Decision Making 10 Relevance of Public Policy, Legislation, Advertising, Pricing, and Consumer Ethics 12 Consumer Protection 14 Conclusion 15 References 16 Executive Summary The paper is divided into two sections, the first of which deals with how a number of external factors influence consumer behaviour. The following factors are discussed in detail: reference groups, family, social class, culture, and subculture. All the aforementioned factors influence consumer behaviour at different levels. The family unit, in particular, exerts more influence on consumer decisions than the remaining factors. Culture and subculture were the other factors that were found to have a significant influence on consumer behaviour. The second section of the paper deals with different regulations concerning consumer protection. This section is divided into four subsections: 1. Consumer decision making 2. Opinion leaders and innovation 3. Public policy, legislation, advertising, pricing, and consumer ethics 4. Consumer protection In this section, I discuss all major laws and legislation dealing with consumer behaviour and protection. Throughout this paper, I use examples to illustrate some of the ideas discussed. The paper then concludes with a summary of the main ideas presented. Introduction Many external factors influence consumer behaviour on various levels. Electronic devices, which are the most common consumer items currently in circulation, have a short life cycle. When a company develops a new item or model, it sells many units in the first few months of the item’s release before sales quickly fizzle out. In contrast, the service industry has a much longer life cycle. This industry, which deals with providing services to consumers, remains largely the same over an extended time period. Improvement and progress in the service industry are measured on a repeat basis. This means that a service is only said to be successful after customers repeatedly use it. Improvement in the technological industry is based primarily on consumer feedback. Consumers continually purchase new products and services; therefore, legislators have created a number of laws to regulate the consumer market. Both consumers and suppliers must be protected from any unfair treatment from either side. For this reason, many laws and regulations dealing with consumer protection have been formulated. This paper deals with a number of consumer items—such as luxury items, food products, technological items, and clothing—and how these are influenced by various factors. How Reference Groups Affect Consumer Behaviour A reference group can be defined as a specific group of persons who behave in a certain way (Blythe, 2013, p. 50). Therefore, a reference group consists of people who share the same opinions and ideas. It can also be defined as a group of people who idolise a certain person or persons who then influence their behaviour (Blythe, 2013, p. 51). According to Hoyer and Macinnis (2008), “This is the reason why sometimes athletes, musicians, or movie stars serve as reference groups, influencing how people evaluate information and the choices they make” (p. 15). Through socialisation, reference groups significantly affect consumers’ purchase of luxury items. People of the same reference group interact with others who behave in a similar manner. In this way, reference groups influence the social behaviour of their members. Through socialisation, members of a single reference group develop similar attitudes and behaviours towards the same consumer products. Research shows that members of the same reference group purchase luxury items that other members in their reference group use, thus effectively influencing each other’s consumer decisions (Hoyer & Macinnis, 2008). To be capable of such influence on consumer behaviour, a reference group is defined by certain characteristics. The first characteristic is that it must provide information to its members (Blythe, 2013, p. 100). The reference group dictates the luxury items that its members use, which creates a uniform set of beliefs among all the members of the same group. The second characteristic of a reference group is that it provides a chance for comparison (Blythe, 2013, p. 150). A reference group usually gives all its members an opportunity to compare their beliefs with those of the rest of the group; it provides a focal point of comparison for its members. This ensures that group members have a uniform point of comparison, thus remaining united. A uniform comparison standard and a set of rules regarding what to choose ensure that the interests and viewpoints of all the members of a reference group are considered. The third characteristic of a reference group that gives it its unique ability to affect consumer behaviour is its significant influence on its members. Tyagi and Kumar (2004) noted that “a reference group must influence the individual to adopt attitudes and behaviour that are consistent with the norms of the group” (p. 172). This illustrates how a reference group changes consumer behaviour. Finally, a reference group ensures legitimisation among its members (Blythe, 2013, p. 170). This means that by enforcing a public image supported by its famous members, the reference group ensures that each and every one of its members uses the same products. It is for this reason that advertising companies use celebrities to market their products. This gives reference groups the most influence on luxury items, such as music, vehicles, and electronics, because the consumer is seduced by the allure of using the same products as a celebrity. How Family Affects Consumer Behaviour A family can be defined as two or more people, related by blood, marriage, or adoption, who reside together in the same household. Members of a family share almost the same ideas about consumer behaviour, which is influenced by their interactions. Different families influence consumer behaviour in diverse ways. For instance, a couple-only family will exhibit consumer behaviour that differs from that of a two-parent family. The family is one of the most important units in society because it is the first group that influences the way in which people acquire skills, knowledge, attitudes, and preferences. In turn, the family is considered to be the first contact for consumers and products. A family influences consumer behaviour through its different functions, such as socialisation—child consumer socialisation and adult consumer socialisation. Socialisation can be defined as a process through which people acquire and learn the norms, behaviour, and social skills appropriate to their social position (Hoyer & Macinnis, 2008, p. 120). Since the family is the main unit in society that does this, it clearly affects consumer decisions, mainly in regard to the purchase of food products. The family’s greatest influence on consumer behaviour is felt in the choice of food products. One of the ways in which the family unit influences consumer behaviour is through child consumer socialisation, which helps children develop their consumer behaviour. A family teaches its children behaviour through the norms and standards it maintains. For example, authoritarian parents assert strict control over their children, thus forcing them to conform to their beliefs (Haynes & O’Dougherty, 2007, p. 80). At the other extreme, permissive parents strive to remove as many restraints from their children’s lives as possible in an attempt to encourage them to be independent and develop a sense of freedom, including in their consumer behaviour (Haynes & O’Dougherty, 2007, p. 85). Falling somewhere between the previous two parenting styles, democratic parents strive to encourage a sense of freedom in their children, while maintaining some form of control over their actions (Haynes & O’Dougherty, 2007, p. 89). A family uses the same food products over time, thus establishing a particular pattern. Through this continued influence, the family unit also impacts adult consumer behaviour. A person who grows up in a family that prefers certain food products will be predisposed to consuming the same products, even in adulthood. Therefore, the family exerts a great deal of influence on the consumer behaviour of its members. In most cases, the family has a single authoritative leader who decides on the items that are used by its members, and, unbeknownst to the remaining family members, they develop the same attitude towards consumables. Children in a family are forced to use the toys that their parents recommend, teenagers are forced to use the products recommended by their parents, and the same trend is likely to continue into adulthood. For example, if parents from a certain family consistently use a brand like Sony for all the electronics in the house, it is very likely that the members of the family will lean towards the same products. How Social Class Affects Consumer Behaviour Social class defines the way in which people are subdivided in society, focusing on their financial independence. According to Hoyer and Macinnis (2008), “The concept of social class implies that some people have more power, wealth, and opportunity than others do, a situation that makes a difference in what and how consumers buy” (p. 123). A social class is made up of people who have the same status in society. Different social groups have different consumer behaviour based on their wealth. Since social classes are subdivided at the financial level, they are among the biggest influencers of consumer action. Social class affects a variety of products, ranging from the most expensive to the cheapest. Cheap and easily affordable products, such as foodstuff, are most affected by social class. Researchers have divided social classes in a variety of ways, ranging from a two-category to a nine-category classification (Tyagi & Kumar, 2004, p. 364). The best subdivision to use is the five-category classification since it conclusively covers all society’s social groups without going into excessive detail (Haynes & O’Dougherty, 2007, p. 200). This classification defines the lower, working, lower-middle, upper-middle, and the upper social classes. The lower social class has very little spending power and is, thus, the category with the least influence on consumer behaviour. Even though members of the lower social class may want to spend more on other products, they are limited by their spending ability. The working class has a little more spending power than the lower class. Therefore, compared to the lower social class, the working class has a little more influence on the consumer scene. As indicated by Blythe (2013), “The working class consists of people who are gainfully employed and thus, they can spare a little money to entertain themselves” (p. 209). As opposed to the lower social class, whose members spend the little money they have on food and other basic amenities, those in the working class can afford to buy electronic goods such as the latest mobile phones and other household appliances. The lower-middle class falls in between the rankings. People in the lower-middle class spend on products that they deem essential to their survival. Since this class does not have the highest spending power, it spends exclusively based on its survival and continuity. Therefore, this class prioritises spending money on food items, clothing, and shelter. Some of the members of this class spend money on motor vehicles to aid in their movement. Generally, this class has moderate spending power but a wider range of spending options. The upper-middle social class has a little more spending power than the preceding groups. People in this class spend more on luxury and recreational facilities and services than on any other products (Haynes & O’Dougherty, 2007). Finally, the upper social class has the most resources to spend but the least number of people. According to Noel (2009), members of “the upper social class have a high influence on the consumer market but on a very limited scale” (p. 73). People in this class can spend any amount of money on ludicrous purchases that the lower classes cannot afford. Therefore, whereas their influence on the consumer market is immense, it is felt on a very limited scale because this class has very few people. How Culture Influences Consumer Behaviour Culture can be seen as the sum of total of learned beliefs, values, and customs shared by certain people living in the same locality (Tyagi & Kumar, 2004, p. 120). Therefore, culture has a tremendous influence on consumer behaviour since it directs the consumer decisions of a particular society. Culture affects consumer behaviour at society’s supranational, national, and group levels. Beliefs are defined as a large number of mental or verbal statements that reflect an individual’s knowledge and assessment of an idea (Cseres, 2005, p. 38). Product and brand images are based on these beliefs, upon which people act. For example, a certain culture may hold the belief that particular products from certain places are taboo. Since this belief is shared by all members of that culture, they then avoid purchasing those products. For example, the people of India believe that the cow is a sacred animal; therefore, the consumption of beef products goes against their cultural beliefs. The values of a culture serve as a guide for acceptable and appropriate behaviour (Cseres, 2005, p. 50). Values are relatively few in number but are difficult to change. Products and services that are seen to contradict cultural values are ignored by the people of that culture; however, values rarely dictate the avoidance or love of specific items. Values are quite general and are, therefore, not very influential in the consumer world. However, the few products that seem to contradict the values of a culture cannot survive in that culture. Finally, culture defines the customs that its members must follow. According to de Mooij (2010), “Customs define the modes of behaviour that are acceptable in different situations in a certain culture” (p. 217). Based on different situations, culture will influence the ways in which people decide to spend their money, thereby influencing consumer behaviour. Customs mostly affect the purchase of clothes. Clothes are closely related to people’s behaviour. People who dress in skimpy attire are viewed as ill-mannered and reckless, whereas people who cover most of their body are viewed as well behaved. Therefore, different cultures force people to buy certain types of clothes based on the customs they uphold. Cultures also exert consumer influence based on three main regional levels. The first level is supranational culture, which defines cultural norms across national boundaries (Cseres, 2005, p. 90). Supranational cultures are bound by ethnic and racial compositions, language, and symbolisms. People from the same ethnic group or race have the same bias towards different products (Cseres, 2005, p. 95). People who speak the same language also have the same bias towards similar products. Language influences consumer behaviour through marketing and advertisement. Marketers are able to target people who speak the same language more easily than people who speak different languages. For example, although Samsung phones are Korean, marketing in English-speaking nations is very successful since the company uses English to advertise the phone. The second level is national. People of the same nationality share the same ideas regarding certain products (Samli, 1995, p. 300). For example, Americans will most likely spend their money on an iPhone, as opposed to any other phone brand (Samli, 1995, p.100). Finally, groups play an important role in consumer decision making. Cultural divisions or groupings, such as families, shopping groups, and online discussion forums, affect consumer behaviour in different ways (Blythe, 2013). How Subculture Influences Consumer Behaviour Cseres (2005) explained that “A sub culture is a distinct cultural group that is formed as a splinter group within a larger, more complex multicultural society” (p. 30). A subculture is made up of groups of people who share unique beliefs and cultural themes regardless of individual cultural beliefs. A subculture is primarily a means of self-identification. The first subculture group is based on ethnicity. According to Samli (1995), “Ethnic subcultures include the Non-English Speaking background subculture, Asian-Australian consumers, sojourners and indigenous subcultures” (p. 223). All these subcultures based on ethnicity have different consumer behaviours since their varied beliefs and practices affect their consumer decisions in different ways. For example, all the subcultures defined above prefer different food products, such as Chinese food, Indian food, and so on. Other subcultures are based on religion. The largest single religious group is Catholic-Christians. Other subcultures based on religious classification include Jewish and Muslim adherents. Based on their beliefs, members of religious subcultures prefer certain products and avoid others. Despite the influential nature of religion, most people do not consider it to be the main factor determining their consumer decisions (Blythe, 2013, p. 246). Age subcultures play an important role in influencing consumer behaviour. The age subculture, which borrows ideologies from the family life cycle, defines age cohorts such as Generation Y, Generation X, Baby Boomers, and the elderly. Generation Y members were born between 1977 and 1994. This age cohort is open to change and is technologically sophisticated (Noel, 2009, p. 345). The members of Generation Y do not subscribe to a single brand, although most of their consumer behaviour is influenced by their peers. Generation Y is deemed to be focused and ambitious. Generation X consists of persons born between 1965 and 1979. It is considered the most educated generation and one that spends substantially on recreational activities (Noel, 2009, p. 290). For this group of persons, job satisfaction is more important than salary and they spend based on brand names. For example, electronic products with brand names that are considered successful, such as Sony, feature more in this age group. Consumer Decision Making Although the previously discussed factors influence the decision-making process to varying degrees, consumers also make decisions based on their financial freedom. These different types of decisions include basic purchase decisions, channel purchase decisions, and payment purchase decisions. Consumers’ differing views of the decision-making process affect how they make their purchase decisions. The four basic models of consumer decision making are: economic, passive, cognitive, and emotional (Haynes & O’Dougherty, 2007). All four models define ways in which the consumer market can be affected by different decisions, which are influenced by various factors. The economic model views the decision-making process as rational (Tyagi & Kumar, 2004, p. 20). This type of consumer avoids committing to a product unless he/she has all the relevant information about it. A consumer employing the economic model of thinking considers all the options before making any purchase decision. However, this model is quite unreliable and unrealistic because consumers have differing levels of knowledge about the product they want to buy. It is applicable only to very limited situations and thus not very effective, especially in the technological field. Electronic items like mobile phones feature many technological advancements that most buyers do not understand. The other decision model that many consumers employ is the passive model. In this model, the consumer responds to the marketer’s or advertiser’s demands without considering personal bias (Gallouj & Djellal, 2011, p. 430). It is one of the most widely accepted consumer decision models used by both marketers and advertisers. In this case, the consumer is seen as an irrational and impulsive buyer. The major limitation of this model is that it fails to recognise personal bias. Impulsive shoppers are more likely to buy clothing items and fashion accessories than other consumer products. Another consumer decision-making model is the cognitive model. In this case, the consumer is considered to be a person seeking to solve his or her problems and will thus make decisions geared towards a resolution (Gallouj & Djellal, 2011, p. 459). According to this model, consumers seek products that they consider will be most useful to them as opposed to making decisions based solely on advertisements and marketing gimmicks. This consumer model primarily affects the motor vehicle industry. Many car buyers gravitate towards vehicles they have seen on TV, as opposed to other car models. The last group of consumers, which falls under the emotional model, makes decisions based entirely on emotions. These consumers make purchase decisions based solely on how the products make them feel emotionally (Haynes & O’Dougherty, 2007), and will make future purchase decisions based on how certain products made them feel in the past. This affects the service industry; for example, consumers will visit the same hotels that they feel gave them good service in the past. Relevance of Public Policy, Legislation, Advertising, Pricing, and Consumer Ethics Durkin and Staten (2002) noted that “Public policy is a form of government control measure to assert control over the consumer market” (p. 5). Public policy is formulated mostly to protect consumers and rarely market leaders. Governments engage in consumer protection through policy initiation. When the market rates seem to be too high for the consumer, the government can intervene. This intervention can take many forms—namely, regulation, consumer education, encouragement of industry self-regulation, incentives, and the handling of complaints (Howells & Weatherill, 2005, p. 67). Markets that have the fairest consumer protection laws have confident consumers who spend on many products. The government can regulate the market by controlling, or demanding the reduction of, the prices of certain commodities. These actions are intended to help protect the consumer from unfair treatment by the market. The government can also protect consumers by carrying out education programs to enlighten them on what to do and what not to do (Howells & Weatherill, 2005, p. 67). Sometimes, the markets exploit consumers by taking advantage of their ignorance. The government can take the initiative to educate its citizens so that they are able to avoid such situations. Governments also encourage industry self-regulation, which prompts industries to devise ways to monitor and control their own activities in order to ensure that society’s acceptable levels are met (Howells & Weatherill, 2005, p. 90). Although self-regulation is not the best method to employ, it is still quite effective in managing the market. As a countermeasure to self-regulation schemes, governments usually create avenues for consumers to complain and express their feelings. The government also protects the consumer from corporations by monitoring advertisements. Some companies use exaggerations and lies to sell their products to unsuspecting consumers. To avoid this kind of situation, most governments step in to ensure that the advertisements contain some acceptable level of truth (Durkin & Staten, 2002, p. 32). This regulation occurs through the establishment of advertising standards and codes that set the limits of acceptable advertising behaviour. The government does not protect only the consumers; sometimes, it also finds it necessary to protect suppliers from consumers (Lamb, Hair, & McDaniel, 2011, p. 56). This happens when the suppliers complain of an unfair market created by hostile consumers. Hostile consumers can be defined as customers who knowingly or unknowingly participate in actions that are beneficial for them but leave the market at a disadvantage. It is important to protect these corporations from such consumers since the losses of the former reflect negatively on the economy of the country (Noel, 2009). Consumer ethics defines the way in which consumers behave in the marketplace and how they should interact with brands in order to maintain a positive relationship. Ethical consumer strategies demand that they do the right thing. Consumer Protection Consumer protection plays an important role in society since it exists to act as a corrective measure to deal with disparities in the consumer–supplier dynamic. As indicated by Coteanu (2005), “Consumer protection involves policies, institutions, laws and structures that work to protect the interests of the consumer” (p. 103). Examples of bodies tasked with consumer protection include the United Nations (UN), which issues guidelines; consumer protection organisations; consumer protection entities; and consumer redress institutions. Howells and Weatherill (2005) explained that “The consumer needs to be protected on many levels all the way from manufacturing, transportation and finally the selling point” (p. 144). Consumer protection defines various activities and laws put in place to protect the consumer at the market level. This protection may include controlling consumer information, product safety, consumer credit, and insurance, among other factors (Coteanu, 2005, p. 200). Consumer protection also requires the availability of education, the provision of utilities, and the sustainable consumption of available commodities (de Mooij, 2010). If the available commodities are insufficient for the market, consumer protection dictates that such a situation be remedied by asking the responsible company to produce more. Consumer protection must ensure that there is some form of equality between consumer and supplier. In case of disparity between the interests of the two groups, consumer protection ensures that such problems are alleviated as soon as possible (Hoyer & Macinnis, 2008). According to Cseres (2005), “There are four basic widely accepted consumer rights that were first championed by John F. Kennedy to Congress in 1962” (p. 360). The first is the right to safety, which ensures that end products are not harmful. The right to be informed encourages the flow of information between the consumer and the supplier and demands that no party hold any information that may be relevant for safety. The right to choose affords the consumer a variety of choices in the market. Finally, there is the right to be heard, which is an important consumer right since it demands that any party with any complaint be heard, and establishes that efforts to silence such an aggrieved party are considered criminal and punishable under the law. This law is important since it encourages the afflicted to speak out so that the information provided can then be used to regulate the situation. Additional consumer rights are included as more issues emerge. Government agencies, industry associations, and consumer organisations are some of the groups charged with the responsibility of ensuring consumer protection. When properly implemented, consumer rights can help the society benefit from the available institutions so as to achieve their maximum potential. Conclusion Many internal factors affect consumer behaviour. The influence of internal factors on consumer behaviour is considered to be higher than the effect of external factors; still, many external factors affect consumer behaviour to differing degrees. Consumers are protected by numerous laws and legislation that help to keep the industry in check. Consumer legislation helps tame both suppliers and consumers and ensures that they conform to certain rules and regulations. References Blythe, J. (2013). Consumer behaviour. London: Sage Publications. Coteanu, C. (2005). Cyber consumer law and unfair trading practices. Burlington: Ashgate Publishing. Cseres, K. J. (2005). Competition law and consumer protection. The Hague: Kluwer Law International. de Mooij, M. (2010). Consumer behaviour and culture: Consequences for global marketing and advertising. New Jersey: SAGE. Durkin, T., & Staten, M. (2002). The impact of public policy on consumer credit. Massachusetts: Springer. Gallouj, F., & Djellal, F. (2011). The handbook of innovation and services: A multi-disciplinary perspective. Cheltenham: Edward Elgar Publishing. Howells, G., & Weatherill, S. (2005). Consumer protection law. Burlington: Ashgate Publishing. Hoyer, W., & Macinnis, D. (2008). Consumer behaviour. New Jersey: Cengage Learning. Lamb, C., Hair, J., & McDaniel, C. (2011). Essentials of marketing. Ohio: Cengage Learning. Noel, H. (2009). Basics marketing 01: Consumer behaviour. Rue des Fontenalles: AVA Publishing. Onkvisit, S., & Shaw, J. (2004). International marketing: Analysis and strategy. New York: Routledge. Samli, C. (1995). International consumer behavior: Its impact on marketing strategy development. Westport: Greenwood. Tyagi, C. L., & Kumar, A. (2004). Consumer behaviour. New York: Atlantic Publishers and Distributors. Read More