Factors Influencing Consumer Behaviour - 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 Role of Culture on Consumer Behaviour 5 4.2 Sub-culture 6 4.3 Social Class 7 4.4 Reference Groups 8 4.5 Role of Family and Family Life-cycle 9 5.0 Specific Factors Affecting Consumer Behaviour 9 5.1 Opinion Leaders and Diffusion of Innovation 9 5.2 Public Policy, Consumer Protection and Legislation 10 6.0 Conclusion 11 7.0 References 12 1.0 Executive Summary The report has been presented and designed in a synchronized manner to discuss on the various external factors affecting consumer decision making process where Toyota Camry has been selected as an exclusive product to ensure easy and better understanding. The report initially makes a discussion on societal external factors affecting consumer decision making process where discussion along with relevant example have been made to smaller factors like culture, sub-culture, social class, family life cycle and reference groups impacting consumer decision making process. All factors affecting consumer decision making process have been explained in detail. The report than shifts to specific external factors where it looks to make a detailed study of factors like Opinion leaders, diffusion of innovation and other factors like public policies, legislation and consumer protection impacting consumer decision making process in context to Toyota Camry in specific and other products or services in general. Finally a conclusion is provided to ensure all topics all correctly covered and the report meets its desired aim of providing both theoretical and practical understanding of the entire topic under study. 2.0 Introduction This report has been drafted to focus on the topic “External Factors Affecting Consumer Decision Making Process”. To ensure a better and easy understanding of the topic the report looks to focus on the external factors affecting consumer decision making process in context to Toyota Camry as the product is new in the market and it shall be interesting to investigate responses of consumers in context to the product. The report has been further drafted in a comprehensive manner where a clear understanding of what consumer behavior actually is discussed in details and then the report looks to make a discussion on the external factors affecting consumer behavior. The major external factors affecting the consumer decision making process in context to Toyota Camry has been divided into two exclusive segments where initially the report makes a clear discussion of the societal factors which includes sub-factors such as social class, culture, sub-culture, role of family and reference groups and then looks towards specific factors such as the impact of opinion leaders on the consumer behavior along with discussion on diffusion of innovation and role of public policies and consumer protection on consumer buying behavior. Finally a conclusion is provided to develop concrete outcomes of the entire topic under review. 3.0 Understanding Consumer Behavior Before looking into the main area of study it is important to understand the concept of consumer behavior. Consumer behavior is one of the most important perspectives which a marketer looks to evaluate and take it to his advantage. Consumer behavior in simple terms implies the study of how consumers are influenced and persuaded through the means of various resources and factors while making a purchase decision and how consumers respond to such factors. Different attitudes and perspective of consumers along with rising competition makes consumer behavior an important field of study in today’s marketing environment (Solomon & Rabolt, 2004). Consumer behavior is affected and guided by many internal and external factors which the marketer constantly looks to evaluate and design specific strategies accordingly so as to gain sustainable competitive advantage over rivals. Let us now have a look at the external factors affecting consumer behavior of Toyota Camry in specific and other products in general. 4.0 External Factors Influencing Consumer Behavior Consumer behavior is not just influenced by internal factors but there are many external factors which are on a continuous basis exerted by external environment and provide a marketing opportunity for marketers to use them to their own advantage. This external factors can be broadly classified or segmented into two broad categories which are the societal external factors which includes sub factors such as culture, sub-culture, social class, reference groups and family life cycle and another group or segment consists of more specific external factors affecting consumer decision making process and includes a discussion on the role of opinion leaders, diffusion of innovation and other specific factors such as public policies, consumer protection, pricing , legislation etc. Let us now have a look at the external factors affecting consumer decision making process in context to Toyota Camry in specific and other products in general. 4.1 Role of Culture on Consumer Behavior Different consumers differ in homogeneity and their culture which acts as an important external factor affecting consumer decision making process. Marketer in today’s competitive environment always looks to ensure that culture of any consumer in no sense in negatively impacted as the same may result in complete dissatisfaction of consumers and ultimate failure of products. Culture in a nutshell can be identified as a set of behavior, attitude, attributes and social relations which governs the society and separates one individual from other. Culture comprises of differing values, attributes and ideals which help an individual to communicate with one another. Culture is not something which is imbibed or can be learnt within a day but however is developed throughout the life cycle of an individual and is almost negligently visible in daily life (Rath, Bay, Petrizzi & Gill, 2008). Culture further has great significance in the consumer decision making process and is one of the most important societal external factors impacting consumer behavior. For example, purchase of a luxuries motor vehicle like Toyota Camry in specific parts of the globe particularly in Asian countries like India exhibits a cultural believe of high standard of living and monetary status in the society. Culture can further be largely witnessed in the dressing style, food habits, languages etc. For instance, the Toyota Camry comes in different and exclusive vibrant colors to reflect upon the cultural prosperity, livelihood and new innovative generation culture. Further logos are specifically designed to reflect or adapt to a specific culture. Toyota looks to use cultural factors to its own advantage by offering seasonal and heavy discounts during festive seasons so as to be a part of the cultural festivals of its customers. 4.2 Sub-culture Sub-culture is more specific subdivision and customization of the larger culture dominance. In simple terms a sub-culture implies a set of some common beliefs shared between members of the same culture which may be in terms of their nationality, religions, ethics, values, attributes, geographical locations or racial groups etc. Sub-culture is again an important external societal factor which is eyed upon by marketers to persuade consumers towards their specific products and services offerings. It is to be noted that sub-culture usually bears the same values and attributes of the primary dominant culture however there may be certain odds to the main culture (Manning & Reece, 2001). For example, Indians are generally orthodox and hesitant to purchase of expensive cars however there may be a group of individuals within the same culture who are more directed towards luxurious cars like Toyota Camry which the company need to target upon. Another example could be a set of individuals looking for bigger cars which offers more sitting capacity however another bunch of consumers would prefer more of luxurious and comfort cars like Toyota Camry. Sub-culture is characterized with three major aspects which are religion, ethics and regional differences which influences the consumer decision making process. While ethics and religion are strongly linked in terms of beliefs, customs and attitude related to a particular religion (Sheth, Mittal & Newman, 2009). Toyota clearly uses sub-culture to influence its customers on basis of regional differences as its new luxurious Toyota Camry is designed and targeted towards those set of consumers from countries with better growth and economy than countries whose majority of the residents are below poverty level. Age, gender and generation are other important aspects of sub-culture which acts as influencing external factors affecting consumer decision making process. For instance it has been clearly visible through recent surveys that men are more fascinated towards cars than women. Men look towards luxurious cars like Toyota Camry not for just its better comfort but depicting a societal status of better living standards. 4.3 Social Class Social class can be understood as relatively a permanent segment of group within the socioeconomic society whose members possess similar interests, attributes, beliefs and attitudes. One of the basic aspect in which social class are sub-divided is on the basis of income levels where social class is divided into three major groups which are upper-income group, middle-income group and lower-income groups which are again further subdivided into upper-upper income group, upper-middle income group and upper-lower income group levels (Cateora, Mary & Graham, 2009). However it is to be noted that division of social class on basis of income is not the only factor while dividing society into different classes there are other factors like occupation, power, authority, education etc which plays equal dominance. Let us have a look at the various social groups in context to Toyota and how the company looks to differ its marketing strategies accordingly to ensure maximal convertibility of its potential customers into real customers. Class Product Marketing Strategy Upper Income Group Toyota Camry (Luxurious Category) Cars are designed wit use of latest technology to ensure maximal comfort and up-gradation facility, specifically designed as a symbol of high status in the society Middle Income Group Commercial Vehicle like Toyota Ranz Cars are designed to target the higher mass with lesser comforts than the luxurious segment and come in different variants and sizes. Lower Income Group Engine Motors like Toyota Scion Products are designed to meet basic customer needs and wants with little or no innovations Thus we see products are specifically designed to meet the specific need so customers belonging to specific social class so as to ensure better positioning and targeting of the products. 4.4 Reference Groups Reference groups are external societal factors which impacts consumers buying pattern. Reference groups are groups with whom the buyer closely associate with and are strongly influenced by their values, attitudes, beliefs and attributes. Reference groups can be broadly classified into two major categories which are Primary comprising of family and close friends and Secondary comprising of neighbors, relatives, colleagues etc. It is to be noted that classification may vary on individual basis (Chew, Cheng & Petrovic-Lazarevic, 2006). Reference Groups gain acceleration during conspicuous purchases and where the buyer seeks to look for advice during his final purchase decision. In context to automobile industry, reference groups play an important role in the consumers buying pattern as they constantly look to gather more information due to higher number of alternatives available in the market and select the most appropriate one. Furthermore, Toyota Camry is a new product and marketers may look upon reference groups as an important external factor to boost up its initial sales. 4.5 Role of Family and Family Life Cycle Similar to Reference Group, Family acts an important external factor influencing consumer decision making process. Family generally guides and builds the beliefs, attitude, values and consumption pattern in an individual. Size of family, interaction between family members all acts as a combined external factor affecting consumer decision. For instance, nucleated family may prefer more of smaller cars than luxurious SUV’s available in the market. Family life cycle usually follows a sequential order which consists of young bachelors, newly married, couples with dependent children and later independent children and finally the old age groups (Cohen, 2006). Consumer behavior pattern may differ greatly in all situations for instance a young bachelor or newly married may be more fascinated and lured towards comfort and luxurious cars like Toyota Camry whereas couples with dependent children may look to invest more in securities with higher returns than on expensive cars like Toyota Camry. 5.0 Specific Factors Affecting Consumer Behavior Unlike already discussed societal external factors there are more specific external factors affecting consumer decision making process which has been discussed in context to Toyota Camry as under. 5.1 Opinion Leaders and Diffusion of Innovations Opinion Leaders are individuals who have strong influencing power to persuade consumers towards their advice. Opinion leaders are referred by consumers to gather more information about a product or service due to their better knowledge and experience towards the products. They are gracious people and credible source of information and largely impact the decision making process of the actual buyer. In context to Toyota Camry there could be a series of Opinion Leaders. For instance the early bird purchasers could act as opinion leaders to share their views, ideas and experience to new potential buyers. Furthermore Salesmen in showrooms may act as opinion leaders to provide valuable feedbacks and information about Toyota Camry to convert potential buyers into real one. Company websites, pamphlets, internet, brochures etc may also as opinion leaders to influence and persuade consumers towards the product. Diffusion of Innovation is yet another external factor affecting consumer buying pattern and is strongly linked with opinion leaders. Diffusion of innovation in simple sense implies new ideas and practices to be spread across and absorbed by the society. Innovation is generally characterized with higher market risk but is equally awarded with premium prices and better profit bookings (Czinkota & Ronkainen, 2004). Innovation further varies during different life stage of a product life cycle. For instance, innovation in automobile industry has been slow however more advanced features had been added to the products like automatic cars, better luxury and safety etc. The new Toyota Camry is designed with latest innovation featuring fully automatic engines and driving however there is always an associated risk of market failure due to changing consumer buyer pattern where many consumers may prefer semi-automatic cars over fully automatic cars. 5.2 Public Policy, Consumer Protection and Legislation Public Policy, consumer protection and legislation are other external factors affecting consumer buying pattern. For instance, Accutane was a product designed for complete care of Acne and was largely successful unless consumers witnessed that the product has harmful side effects and was completely removed from the market with heavy fines and penalties on the manufacturer. Public policies are becoming more stringent to ensure consumer safety and protection with new laws and policies being drafted to ensure fair and transparent dealings with consumers (Best, Coney & Hawkins, 2004). For instance, extensive marketing may boost up the sales of Toyota Camry where consumers may purchase the product but may later find it difficult to pay its installments. To ensure such mishaps government continuously engages in drafting new policies and legislation. Another example could be labeling or advertising the products with correct information. Cars being advertised with highest mileage and later fails to do so may be brought to consumer courts where the company may suffer heavy fines and penalties. 6.0 Conclusion The report looks to highlight upon the external factors affecting consumer decision making process where the discussion is segmented into two categories comprising of external societal factors and specific factors affecting consumer decision making process. The report is further drafted with proper examples and current market scenarios to ensure both practical and theoretical understanding to all readers. 7.0 References Best, R., Coney, K., & Hawkins, D. (2004). Consumer behavior: Building marketing strategy (9th ed.). New York: McGraw-Hill/Irwin. Cohen, M. (2006). Why customers do what they do: Who they are, why they buy, and how you can anticipate their every move. New York, NY: McGraw-Hill Companies. Czinkota, M.R. & Ronkainen, I. A. (2004). International Marketing, 7th edn. South-WesternPublishing:Australia. Cateora, P.R. & Mary, C. G. & Graham, J.L. (2009). International Marketing, 14th edn. Irwin: McGraw-Hill. Chew, M.M.M., Cheng, J.S.L. & S. Petrovic-Lazarevic, (2006). Managers’ Role in Implementing Organizational Change, Journal of Global Business and Technology, 2 (1), 13-34 Manning, G., & Reece, B. (2001). Selling today: Building quality partnerships (8th ed.). Upper Saddle River, NJ: Prentice-Hall, Inc. Rath, P., Bay, S., Petrizzi, R., & Gill, P. (2008). The why of the buy: Consumer behavior and fashion marketing. New York: Fairchild Books, Inc. Sheth, J., Mittal, B., & Newman, B. (2009). Customer behavior: Consumer behavior and beyond. Mason, OH: Thomson South-Western. Solomon, M., & Rabolt, N. (2004). Consumer behavior in fashion. Upper Saddle River, NJ: Prentice Hall. Read More