Consumer Decision-Making - Internal Factors - Literature review Example

Consumer Behaviour Name Institution Date Executive summary This paper discusses the consumer behaviour in great detail, focusing on the effect of the different internal factors on the consumer’s decision making process. The paper first focuses on the steps undertaken by the consumers when making purchase decisions. Here, five significant steps have been discussed, and these include: need or problem recognition, information search, evaluation of alternatives, purchase and post purchase behaviour. The paper then discusses the luxury products, and the behaviour of consumers for these products. As will be seen later in the paper, these products are associated with unique marketing strategies and consumer behaviours that may not be seen with other products. Also discussed are the internal factors that influence the consumer’s purchasing decision making and how these factors are relevant in the foregoing discussion. The paper also recognizes how the decision making process contributes to learning for the individual and how this learning influences future decision making. Introduction Consumers will always be faced by the need to make a decision about what they should buy. They will always be faced with this need given the marketing environment and the choices available in the market. Researchers have therefore sought to investigate the consumer behaviour (Lamb, Hair & McDaniel, 2004) and how these consumers use their available resources on personal and household services and products in an effort to satisfy their specific needs (Schiffman & Kanuk, 2000). This paper seeks to discuss consumer behaviour and the influence of the internal factors on the decision making process. Consumer decision making process While researchers have identified three types of consumer decision making, namely, limited decision making, routine decision making and extensive decision making (Howard, 1994; Solomon, 2002; Lamb et al, 2004), most of them agree that the decision making process for the consumers involves five steps. These steps include need or problem recognition, information search, and evaluation of alternatives, purchase and post-purchase behaviour (Kotler, 2000; Lamb et al, 2004; Sheth & Mittal, 2004). Lamb et al (2004) argues that the consumer will first be faced by an imbalance between the desired state and the actual state. The actual state will be that which the consumer is currently experiencing while the desired state is that situation that the consumer wants to be in. The consumer therefore realises the need to purchase (Lamb et al, 2004). After these needs have been recognised by the consumers, they go into the next stage where they look for information about their needs and seek alternative ways in which they can solve the problem they are faced with (Sheth & Mittal, 2004). The consumers will begin the information search when they perceive a need that could be satisfied by the purchase and subsequent consumption of a given product or service. Solomon (2002) describes the information search as the process by which consumers survey their environment for any data that they could use to make a reasonable decision. The information search may be characterised by three elements during the decision making process. These elements include information source, strategies employed in the search and the amount of the information search (Sheth & Mittal, 2004). Need recognition and information search will lead the consumer to evaluation of available alternatives. As Boyd & Walker (1990) discusses, evaluation of alternatives may be done in three ways: shifting focus on familiar brands as opposed to considering all possible brands, evaluating each brand within the familiar brands on a restricted number of dimensions and attributes of the product, and a combination of evaluations of each brand across different attributes and a comparison of these attributes. Once these alternatives have been adequately analysed, the consumer would make the choice of whether to purchase the product, avoid buying the specific product, postpone the purchase of the product or not purchase at all (Du Plessis et al, 1994). If the consumer is satisfied with the information he has collected and analysed regarding the product, he will go ahead and make the purchase. After the purchase, the consumer is likely to evaluate his experience and find out whether or not he is satisfied with the product or service (Lamb et al, 2004). This is the fifth step in the decision processes that consumers will go through, and may be used by the consumer in future decision making. Luxury goods Consumers of luxury goods are not different either. They are faced with specific needs that they need to satisfy. Again, most of these consumers will have the money to spend, but they will also have access to as much information about the products as can be found. The luxury crocodile handbag for women is one such product (picture shown in the appendix). As CSG (2009) explains, in the luxury retail segment, generally, price is not the turnkey to higher sales. In this segment, product prices are rarely discounted. The segment targets the wealthy consumers. And as is point out by CSG (2009), the wealthiest are never facing a personal liquidity crisis, and in every year or holiday, they expect to spend more than they did in the previous years. Hunt & Arnett (2004) believe that market segmentation and targeting are very important if businesses aim to achieve competitive advantage. The authors further state that firms should identify segments of demand, target the specific segments and then develop specific market mixes for each of the targeted segment. The luxury crocodile handbag firms have effectively focused on the wealthy and high class consumers, most of who do not care about the prices of the bags but are out to spend more and more money. According to Alvarez, Kemanian & Malnight, (2004), competition in luxury markets has changed over time. Nowadays, entrepreneurs have increasingly targeted consumers with concept-and-experience based luxury, and have created charismatic and stylish personality brands (Alvarez et al, 2004). For the luxury goods, the segmentation is to a great extent psychographic. Psychographic segmentation will usually divide the market into different groups based on lifestyle, social class and personality traits. Consumers for these handbags are the absolute high class that are high spenders. The crocodile handbags have maintained their exclusive aura. This exclusivity has been maintained through limited distribution and production, brand communication as well as high price tags. To further heighten its uniqueness, the Hermes Birkin bag, for example, has an opening price of about $6000. The top prices of about $85,000 have also been witnessed for those who like crocodile leather and gold closures that are adorned with diamonds (Alvarez et al, 2004). In addition to the psychographic characteristics, luxury business segmentation has also focused on consumer behaviours in terms of attitude, knowledge, use of the product and response to the experience. Internal factors Maslow posited that beings have needs that are arranged in some hierarchy (Koltko-Rivera, 2006). Maslow (1943) believes that once man has satisfied desires relating to hunger and the belly, other higher needs immediately emerge. He argued that once these needs emerge, rather than physiological hungers, they become dominant in the organism’s life. When these become satisfied, new needs again emerge and so on. With this argument, Maslow concluded that human needs are organised into a hierarchy of relative prepotency (Koltko-Rivera, 2006). In addition to the physiological needs, humans will have needs for safety, belongingness and love, esteem, and self-actualization, all these in ascending order in Maslow’s hierarchy. The presence of these needs is great motivation for consumers to make decisions about what they will buy. It is obvious that consumer behaviour will also be greatly influenced by the consumer’s personality. Different personalities lead consumers to different desires and therefore influence their decision making. As described in the big five personality theory, researchers have identified five dominant traits about an individual’s personality. The model is a hierarchical organization of personality traits into five basic dimensions. These include: Agreeableness, Extraversion, Openness to Experience, Neuroticism and Conscientiousness (Goldenberg, 1981). Conscientiousness means that the individual is organised, controlled, dependable, thorough and decisive while agreeable describes the tendency of the individual to be trusting, conforming, nurturing and accepting. Consumers of luxury goods are likely to exhibit conscientiousness since they want to remain organised and controlled. With luxury products like the crocodile leather bag, such consumers are able to reassure and therefore look dependable and thorough. Again, Openness significantly describes characteristics that could be linked to luxury consumers. These individuals are curious, informed, insightful and creative. Luxury goods enable them satisfy their desires to remain creative by keeping in touch with the latest trends in luxury goods and therefore satisfying their curiosity. Since openness in linked with the ability to access and gather information, such consumers can successfully keep in touch with the latest entrants in the luxury market. Other big five traits like Neutroticism and Extraversion represent individuals with tendencies to be anxious, depressed, insecure, hostile and vulnerable, and those that have the tendency to be sociable, assertive and with positive energy respectively (Bligh, 2011). Luxury goods have been associated with a selected few and marketing strategies have been crafted to ensure that the products remain unique. To ensure that the consumers find satisfaction in the uniqueness of these products, many brands will try to ensure that the perception that the goods are scarce is maintained. As Arora (2013) says, over-revelation and distribution of these brands may cause dilution of character. Public figures have also been used in the marketing mix for luxury products (Arora, 2013). Those selected, however, must be held highly in the society and the marketing done in a way that is distinctly different in the manner in which the celebrity role is crafted and executed and strategically used. This is because luxury goods consumers want to be associated with the top class in the society. By using these luxury products, the consumers enjoy the fact that they become associated with wealth and class, to the level that is not accessible to the common citizens. The concept of self is another determining factor which influences consumer decision making. With the ideal self, individuals have the feeling that there is some ideal person that they want to become. Individuals may want to be seen as good mannered, moral and well respected. If there exists a big gap between the ideal self and the actual self, then the consumer may have the need to acquire a product or service that will help them towards achieving the ideal self. However, the ideal self-desired should be realistic and achievable. Luxury products consumers will usually want to be seen as among the wealthy and high class of the society. Their decisions to purchase may therefore be based on the desire to maintain class and status. In their effort to maintain class, consumers for luxury goods will not care about prices. As CSG (2009) explains, luxury consumers have money to spend and they are likely to spend more money each holiday than they did on the previous holiday. For these products therefore, emphasis will be put upon market competition but pricing strategies will majorly relay upon the specific product. Consumers will be willing to pay unimaginably high prices if the product is unique and of high quality. Kotler (2000) further suggests that the individual’s purchasing decision may be influenced by learning, but may again contribute to the learning process. The process of learning will influence the extent to which considerations are made in future purchases, and the extent to which the individual seeks information. Consumer decision making has been found to differ depending on the strength of the attitude towards the available product brands, which is again governed by the consumer’s familiarity and knowledge of the product class (Howard & Sheth, 1973). When customers lack strong attitudes, they engage in Extended Problem Solving (EPS) where they seek information actively in an effort to reduce brand ambiguity. The customers will therefore engage in longer deliberations before making the decision to purchase. This is common for luxury goods consumers. Given the huge funks of money used to acquire these goods, consumers thoroughly deliberate on their decisions. Deliberations for purchasing the crocodile leather hand bag usually include the effect of the specific crocodile skin patterns that are associated with different crocodile breeding locations. As the consumer familiarizes with the product, the process tends to be undertaken less conscientiously and the consumer switches to Limited Problem Solving (LPS) and then Routine Problem Solving (RPS) (Foxall, 1990). Conclusion As has been seen in the discussion above, consumers are always faced with the need to make a decision regarding the products that they purchase. The purchasing process in, however, initiated by existence of a need that would be satisfied by the purchase and use of the product. The decision making process has therefore been described as a sequence on five different stages. Several internal factors have also been found to influence the decision making process. These factors influence the needs of the individuals and greatly contribute to the final decision about the purchase. As has been seen in the discussion, the factors and their influences may depend on the product type or product category. Individual attitudes and learning have also been found to influence the purchasing decision making. References Bligh M.C. (2011). Personality Theories of Leadership. Encyclopedia of Group Processes & Intergroup Relations. Beverly Hills, CA: Sage Publications Koltko-Rivera M.E. (2006). Rediscovering the Later Version of Maslow’s Hierarchy of Needs: Self-Transcendence and Opportunities for Theory, Research, and Unification. Review of General Psychology: Vol. 10, No. 4, 302–317 Goldenberg L.R (1981). 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