External Factors Influencing Consumer Decision Making Process - Essay Example

External Factors Influencing Consumer Decision Making Process Name: Institution: Tutor: Registration No: Date of Submission: External Factors Influencing Consumer Decision Making Process Introduction Consumer’s behaviour with regard to a product tends to be influenced by various factors. For a company dealing with certain products, it is important to know what these factors are, how they work and what needs to be done in order to meet the preferences or expectations of their customers. This understanding enhances a companies marketing strategy as well as helping in attaining a competitive edge (Del et al. 2001). Coca Cola for instance is a global brand manufactured by the Coca-Cola Company, an American multinational beverage corporation and manufacturer that also retails and markets its beverages. (Vault 2012) it has a strong brand image and its acquisitions of various brands such as minute maid has expanded the market share of Coca Cola Company by a great margin. According to Vault, Coca cola sells its products to bottlers, distributors, retailers and wholesalers. It has its operations in more than 200 countries and it produces almost four hundred brands. The target of Coca-Cola consists of basically adults, young adults and shoppers who shop at convenient stores and groceries. Keeping costs low while providing quality products is part of their secondary goals together with increasing the consumer per capital growth. (Vault 2012) This paper will look at how varying external factors influence the decision making process of a customer with regard to coca cola. These factors dictate how a consumer reacts; they assist the company in establishing the motivations and aspirations that guide a consumer and why he or she would opt for a certain product in place of another. For a company to accomplish its commercial objectives, it has to be in a place to control these factors in the decision making process of a consumer. Through the appropriate use of the available tools to marketers, they can be able to influence the social environment (Subruto, 2005). These factors are as discussed below; Cultural factors Culture generally refers to aspects such as traditions, taboos, values and basic attitudes of a society where one is from. It can be related to an individual’s nationality or religion and its learning process begins from childhood to adult hood, even though its influence cannot be visible in someone’s daily behaviour. It is through an individual’s culture that he can define wrong or right and one can also know what norms are acceptable in the society. Culture affects the running of a business as well as the consumer behaviour hence underlining its importance in a businesses’ marketing strategy (Schiffman, 1993). For an individual to cohesively understand the needs and behaviours of an individual consumer, there is the need to put in to consideration the culture of the said individual. It is common for any specific consumer to be influenced by his family, his culture, his friends, as well as the common behaviours or preferences that are associated with his culture or his society. For a product or a certain brand such as coca cola, it is of essence to fully come into terms with cultural factors intrinsic to varying market segmentations so as to adapt its marketing strategy and product in line with the culture of the market segment. This in turn enhances the perception of the consumers with regard to the product in addition to the habits and consumer expectations and behaviour. For instance, in the western countries, it is normal for an individual to invite friends over for dinner or for some drinks at home while in other places like Japan on the other hand, such an action contradicts with the local customs and culture. They prefer to do this in a restaurant or hotel outside away from the homes. In such a case, there exists a cultural gap that any company or marketer such as Coca Cola should consider before rolling out its marketing strategy with respect to the two or more differing cultures (Maciejoysky, 2012). This can be integrated into the company’s promotional methods. For instance, such that the images or the message sent through its advertisements does not contradict the expectations of the market with regard to their culture. Another reason why the culture of a targeted market segment should be put in consideration is that there is a wide disparity in usage and time of usage in varying societies on some products in the market such as drinks or snacks. This applies to alcoholic drinks and non alcoholic drinks too for example, Coca cola. Some communities and sections of the market have the believe that consumption of carbonated drinks such as sodas could lead to certain diseases such as obesity among others, thereby advocating for more healthier drinks such as fresh fruit or vegetable juice. In targeting such markets, a Company like Coca Cola should take that into account so as to adopt a marketing strategy that does not infuriate the target market but rather convince them otherwise hence changing their perception. An example of how culture can influence the consumer’s behaviour according to Del et al (2001) is explained n the case of McDonalds. In meeting the preferences and needs of varying market groups, the fast food outlet understands the importance of meeting the tastes and preferences of consumers with varying cultures. This is highlighted in their offers in different countries such as the McBaguette in France which contains French baguette and Dijon mustard, highly preferred by people from this culture. This is also seen with the Chicken maharaja Mac and masala grill chicken in India which includes Indian spices, as well as Mega Teriyaki Burger with teriyaki sauce in Japan. The fast food giant in an attempt to fully satisfy the consumer expectations in each country has put into consideration the cultures of the specific communities hence intergrating them into their products as per expectations and interests of the target community. This is in the same manner that McDonald cannot offer any foodstuffs with bacon or pork in Arabic and Muslim countries. It is also important to note that there is existence of different sub-cultures within the same culture. People in the same sub culture have common values based on shared experiences or same lifestyles. The subcultures can be categorized for instance into; nationalities, religion, ethnicity, age variables, or gender of an individual among others. Daniel (2002) notes that for a brand such as coca cola, these subcultures are important and should be taken into account while segmenting the target markets so as to put in place a communication strategy that is in line with the values or the expectations of a certain segment in its marketing strategy. Social Classes The social class of a consumer is another external factor that can influence his or her decision making process with regard to a certain product or service A social class is defined as the differentiation factor of different groups of people differentiated by a form of social hierarchy. Individuals in the same social class tend to have equivalent values, lifestyle as well as preferences and behaviour. The social class of an individual can be defined in three categories namely, lower class, middle class and upper class (Foxall, 2005). Individuals from varying social classes tend to have differing interests and also different patterns of consumption. They also have a difference in their purchasing power, behaviour as well as buying habits as indicated by some researchers. People from different social classes prefer different products, and in most cases tend to go shopping for their products in different stores. Coca cola in enhancing its market position should be able to address the consumer needs and desires of differing social classes. This can be addressed by ensuring availability of the product in different stores despite the store serving the upper class, middle class or lower class consumers. Again, there should be disparity in the pricing of the product so as to enhance affordability by consumers from all the social classes. This is as seen by most of the Coca cola drinks such as the coca cola soda in that, the packaging has been done in different sizes with varying prices. This way a customer can buy his preferred choice depending with his financial position or social status. It is also paramount to note that the perception individuals have with respect to a product in a social context can also influence the behaviour and the decision of a consumer on whether to buy or not. Consumer behaviour tends to be affected by the social class in that, whereas a consumer from the lower class is more concerned with the price, their counterparts from the upper class tend to be more concerned with other product features such as the quality, innovation or even the social benefit attainable from the product (Foxall, 2005). Impact of the cross cultural consumer behaviour These are the trends followed by a vast number of people and are made more augmented by meeting and complying with the social pressures and their popularity. A trend that is being followed by many people is likely going to attract more people into following it (Loudon, 1988). These habits influence the behaviour and the shopping patterns of consumers and may enhance brand innovation or have something to do with the release of new products. An example of the impact of cross-cultural trend can be explained by the popularity of the social networking sites such as Facebook or twitter. These social networking sites have grown extensively to the extent that one must have an account especially with the young generation, or they will be the odd ones out. This is the same case with other brands or products such as tablets which have in recent years become a global cultural trend thereby leading to more and more people buying them. It is of essence for brands such as Coca-Cola to be aware and pay attention to the emerging trends so as to be part of the new markets created and also be up to date with the upcoming technologies and trends. This can be done for instance by creating and running pages and accounts on the different social media platforms. Reference groups Reference groups, family and social roles are also other factors that influence the consumer behaviour in decision making process. They fall under the category of social factors but they still are external/environmental factors affecting consumer behaviour. Reference groups are groups in which an individual is a member or aspires to be a member and from which they tend to refer for their decision making purposes. Schiffman (1993) notes that, these groups can be based on an individual’s social origin, age, where they reside, work groups, or hobbies among others. Reference groups can be primary or secondary. Close friends and family members comprise the primary reference group of an individual while classmates, neighbors, workmates and other friends make up the secondary reference group. The level of influence from a reference group can vary depending on the individual or the group, however, it has been established that members of a specified group tend to have the same trends of consumption and taste of products and services. These groups also influence the behaviour and image that an individual has of himself. This is irrespective of whether there is membership to a group or not as one can be influenced by a group in which he or she is not yet a member but wishes to join, also known as aspirational group. They give an individual a point of comparison regarding his or her behavior, lifestyle, preferences and his consuming habits (Maciejoysky (2012). This affects a consumer behaviour in that, one being in a group or wishing to join a certain group will want to look like the members in that group hence buying the same products. For instance, a board skating beginner may want to purchase skate boards and guards that are more advanced such as those in use by experienced skaters, this is even if he or she does not need them. The same way a student may want to buy a brand of clothes, shoes or a phone that is used by a group of students in their school that he or she wishes to join. A reference group is deemed to have people with different roles according to Maciejoysky (2012). This includes the initiator; this is the person who comes up with the idea of buying a product or a service. The influencer on the other hand is the one person whose opinion influences the buying decision of other group members. This may be a person outside the group but acts as a role model for the group members. There is also the decision maker who is basically the consumer but in some instances it may be the group leader or someone assigned with the responsibility of making a decision for the group. For instance, a group of fans in need of a team support uniform that would define the group will have one person decide on the design or the color of the uniform. Finally, there is the buyer who in most cases tends to be the final consumer. Most products however, tend to target the opinion leaders in this case the initiator or the influencer who through their influence, would enhance spreading the use and hence the purchase of a product in a social group. This is as seen from the many sponsorship deals or partnerships with the influencer such as a musician, actor or athletes. Coca cola in this essence can also sponsor or partner the influencers whose influence would enhance the use and purchase of their products. For instance, by sponsoring a popular foot ball team whose fans have replica t-shirts as those wore by the team. In such an instance the company would benefit highly from such a partnership as they would address a large number of consumers at a go and also send out the message intended for such a group. They would also increase their income from the many fans who would buy the team’s jersey. Opinion leaders are those individuals from whom a consumer seeks advice or information with respect to a certain product in the process of decision making. Opinion leadership can arise from passive exchange of information in a group or information that is actively being exchanged. Information exchange through the word of mouth can highly benefit a marketer if it’s positive while negative passive information can destroy the brand image. Through the use of word of mouth, marketers are able to create a buzz regarding a certain product thereby catching the attention of the targeted market system (Del et al, 2001). Family For an individual consumer, the family is the most influencing factor in his decision making process. This is because an individual grows and develops around a family hence his or her personality being shaped and the necessary values instilled. An individual also develops opinions and attitudes regarding varying subjects as well as his consumer behaviour. This enables one to have a certain perception about the products or brands he buys (Foxall, 2005). It is very rife that one will have or acquire similar consumer habits and patterns to those that have been there in the family. Hence the family has a very strong influence on the buying behaviour of a consumer. For instance, if one has grown up in a family where they don’t take Coca cola with a perception that it has a lot of sugars and unfit for health purposes, the chances of one buying it when he is grown up are still minimal. This would not be the case with another person who has grown up drinking Coca cola from child hood to adult hood. It is therefore important to integrate the family in a brand in a successful manner so as to enhance strong loyalty from consumers across the whole family set up. To influence the consumer decision making process, a brand should be able to position itself as a family brand so as to make it and develop consumer habit for the whole family. A consumer who possesses considerable influence, assist in spreading new innovations within a society. This implies that, innovations diffuse depending on how information flows not only from the media, but also among the consumers. Subruto (2005) insists that it is paramount for a marketer to identify these types of consumers and understand how their behaviour changes and also how they purchase new brands before a marketing strategy is established. The process through which a consumer adapts has different stages namely; awareness, comprehension attitude, legitimating, and trial and adoption. It starts with a consumer finding out about a product that he or she has very little or no idea about its existence. After acquiring the necessary information they then develop a positive or negative behavioural inclination about the product. If the attitude developed at this stage is negative, then the adoption process can end at that point. However, if the consumer has the feeling that the brand or product should be adopted, the process is legitimated. At this stage, the consumer having already developed a positive attitude may use the information already available to him or even look for more information even if it calls for a trial or test of the product to establish its usefulness. Diffusion basically entails the process of new products and services being adopted over time by consumers in a social context or when a new product is innovated. The process of diffusion is the mode through which innovation spreads throughout a market. Regardless of the innovation under study or the social group involved, the process of diffusion tends to assume a similar pattern over a period of time and is key in changing the consumer behaviour in the decision making process (Schiffman, 1993). Theories Learning is a continuous process that is through action. It highlights a change in behaviour gained from experience. On learning, an individual is more knowledgeable hence most likely to change his or her behaviour. It is therefore adamant for a company or specific brands to implement learning theories in their marketing strategy. This is as noted by Howard and Sheth (1986) that one can create a good image and elevate the demand of a product by relating it with constructive back up or rather associating a bad image with an unconstructive reinforcement. The learning process occurs willingly for instance when a problem is noticed and new information is acquired with regard to a product which might help solve the identified problem. Being wary of the learning principles can be of assistance in understanding how consumer’s taste is developed as well as how motives are created. For example, one might not be well conversant with the diet coke, in such a case learning that diet coke is better for people with health problems advances the consumer’s knowledge such that instead of overlooking coca cola soda all the time even when hanging out with friends, an individual can avoid the carbonated one since he has acquired new knowledge. According to Tobias (2012), any company’s marketing goals focus on making the brand the preferred choice, and attaining total customer satisfaction as well as increased sales. This can be achieved through a well blended mix of the marketing elements aimed at meeting the customer expectations and needs. To achieve this, a brand marketer needs to consider and understand these factors that may change the consumer behaviour in his decision making process. Strategy is a key theory in the survival and constant growth of any business. This theory applies to the managers of the business as well as other stakeholders. Strategy is the result of the urge and need to make the best decisions and coming up with solutions that would enhance the realization of the business goals. Strategy management is part and parcel of management and achievements of the objectives of Coca- Cola Company which is a leader in non-alcoholic drinks production, distribution and marketing (Vault, 2002). The utility theory of consumer behaviour states that individuals make their purchasing decisions in relation to what their anticipated outcomes are. Howard and Sheth (1986) note that, according to this theory consumers re rational in their decision making and they only care about their own interest. However contrary to this suggestion, recent research on consumer behaviour indicates there is a broad array of aspects influencing the consumer behaviour. The theory of human behaviour on the other hand provides a complicated intergration of different social, psychological and marketing influences on the choice of an individual into an articulate series of processing information. This theory is in line and also draws from the learning theory. This theory has however faced criticism from various sections as noted by John and Jagdish (1969) that the theory is unsuitable in explaining joint decision making. The implications of this limitation has grown over time since the publication of the theory in 1969 as a result of disparity and variations in markets and consumer practices and these projects the probability of more issues coming up with regard to the theory. The model is built around a seven point decision process. These resolutions are influenced by two core aspects. Among theses two factors is the external or factors associated with the environment. A major strength of this theory however, is that it has been developing over time hence adapting to changing environments and consumer habits. The theory provides a clear picture of the consumption process that makes it easier to understand. The consumer decision theory after a series of revisions agrees to some extent with the consumer behaviour. However, this theory’s structure differs with regard to presentation ( John & Jagdish, 1969). Conclusion There are many factors as discussed that influences a consumer in his decision making process, purchase patterns, purchasing behaviour and the products he or she prefers. Before a consumer makes the final decision, he has to consider more or less these factors. Each and every consumer has to take into account and follow his culture, his subculture, reference groups, his family, social class among others factors. By establishing and coming into terms with he factors that influence customer’s decision making, a company or a brand is better placed to come up with a marketing strategy that sends out a message that is in line with the interests and needs of the targets consumers. With this understanding, a product is much better placed to meet the customer expectations while also making larger volume of sales. The European Union consumer policy strategy 2007-2013 highlights the importance of consumer empowerment, as a central driver of innovation, competition and productivity. However, consumers tend to be influenced by various factors in their decision making process. This shows that consumers are not always independent and rational; rather, they are highly interdependent on various factors. Through appropriate brand positioning, companies such ac coca cola are able to create an image in the minds of their target market segment in regard to their product, brand and the organization as noted by Subruto, (2005). Through an effective and appropriate brand positioning consumers will enjoy deeper connections with the company and brand hence enhancing customer loyalty. References Daniel, L. (2012). Brand development of Coca Cola Company(UK): Exploring new branding opportunities for Coca Cola Company (UK). GRIN Verlag. Del, H., Roger, J. & Kenneth, A. (2001), Consumer behaviour building marketing strategy, New York: McGraw-Hill Irwin. Foxall, G. (2005.) Understanding Consumer Choice. Baingstoke. Palgrave Macmillian Howard, J., & Sheth, J.N. 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