Consumer Decision-Making - External Factors - Coursework Example

Consumer Decision-making – External influences Your name Student number Name of the unit Name of the unit coordinator Consumer Decision-making - External Factors Consumer decision making is a consumer behavior that focuses on an individual’s way of making decision regarding how to spend their available resources such as time, effort, and money on items that are related to consumption (Schiffman and Kanuk, 1997). Consumer decision making involve activities such as selection, purchasing, evaluating, using, as well as the disposing of products and services in efforts to satisfy the desires and needs. The decisions are influenced by bot the internal as well external factors. The purpose of this paper is to articulate the external factors that influence the consumer decision making. As mentioned earlier, the consumer decision making process is influenced by several factors among them the environmental and marketing factors, the psychological and personal factors, the situation, and also the social factors such as the family, reference group, culture and social class. Having discussed the internal or the individual factors that affect the consumer’s decision making, heading straight to the external factors is the main objective. The dimension of the external factors that will be the focal point of this research paper are the family, reference groups, social class, and also the cultural and sub-cultural aspects. Businesses usually try to figure out people’s trend so as to have the people who are most likely going to buy their product and in the most effective way possible. In this regard, they try to influence the behavior of the customers using the things that they can control the things being the store layout, grouping, music, making the products readily available and the most common methods being pricing as well as advertising. These factors considered, some of these influences can be temporary while others are long-lasting. The factors can affect the way in which a buyer behaves whether influencing them to make a purchase, buy nothing at all, or buy additional products. For this essay as mentioned above, the objective is to discuss the external factors that influence the consumer’s decision making process in more detail. The factors Reference groups; The reference groups can be defined simple as one or more persons to whom any one individual reaches out to as their basis for comparison. This is usually in regard to the beliefs, behaviors, as well as their feelings. It is regarded as one of the great influences in the consumer’s decision making process. A consumer is capable of having several/ various reference groups, this may include their family, their workmates, their friends, and above all the famous people the consumer maybe willing to emulate. All these groups affect in a major way the buying decision that the consumer is likely to make. The following are the ways that the groups affect the decision; Providing reinforcement by rewarding for specific buying decisions Offering information, this is where one is giving information regarding a given product, for instance, in efforts to buying a smartphone friends will surely assist in offering information as to what phone is trending and with an exceptional performance. This information will come in handy as the consumer reaches a decision. Consumer’s image enhancement. The reference groups will directly provide information to consumers directly through one on one conversation or even directly through observations. Take for instance a friend who has an upcoming interview and they need an ultimate interview winner suit, they will reach out for their friends as to where they can get a nice suit. But also from the previous conversation with family, this person may remember their fashionista cousin who have on their fingertips where to find whatever wear one needs which may just solidify the attitude and decision to head to a given shopping complex. Moreover, some reference groups influence the decision through rewards. They reward the behavior that matches their approval wile on the other hand chastising that which does not. Take for instance the situation smokers find themselves in, they are often ostracized by their fiends to smoke I restricted areas or asked to smoke outside. This will lead to them deciding to not smoking at all. In the third aspect mentioned above, consumers will identify and be affiliated with the reference groups that far and large enhance, create, or maintain their self-image. Take for example the customer who wish to be seen as high fashion, they will hit he shopping outlets and buy the Christian Louboutin shoes. Moreover, the aloof employees are usually encouraged to put on the latest apparel and by so doing, they serve as living mannequins for emulation. The family Family is one of the major factors affecting consumer consumption. It will usually form an environment of socialization where and individual evolves, shapes his personality and acquires values. Family changes the perception of brands and what one buys. The family is responsible for all the socialization process that involves passing down of norms and values to children. Children will often learn by watching their parent’s consumption patterns and will mostly shop in a similar pattern. Decision making roles among the family members will vary significantly depending on the types of items bought. The family members assume different roles in the purchase process. Marketers are therefore encouraged to consider family purchase situations together with distribution of consumer and decision maker roles in the family. Firms must put into consideration how family members make their purchases decisions and the influence different family members have. When making decisions on what to consume, family members consider all the needs for each and every family member. For example when choosing a vacation destination, the children and their parents may come with ideas of different destinations but will base their final decision depending on the majority liking. Family habits and perception will have a strong influence on the consumer purchasing behavior. Family members will have a tendency to keep the same habits and perception as those acquired from other members of the family. Different family members play an increasingly important role in buying decisions. Children and adolescents in America spend approximately $200 billion annually on different commodities such as toys, snacks, drinks and entertainment. They also indirectly influence spending on such items as recreation vacations, technology or even a family car. They also influence the older age group like their grandparents. Grandparents have contributed to the economy as they have purchased items for their grandchildren. Firms will always be interested in which family members have the most influence on certain commodities. In most cases children will always have a huge influence when it comes to consumer consumption. Marketing to children is one way to target this particular audience. It is however come under a lot of scrutiny since many critics accuse firms of manipulating children deliberately. This leads to children nagging their parents for a certain kind of commodity. Children have become more and more equal within the family, in fact, they have a wider knowledge as their parents have. They have increasingly become consumer-purchasers much earlier as they did years ago. However, it must be noted that their parents will always play a primary role when it comes to the process of how children become and develop to consumers, they are responsible in the facilitation of their children to appear in the market as potential buyers and decision makers by financially supporting them. Over time close emotional bonds are evolved among family members and this will have an influence in the decision making process and its output. Therefore, purchase decisions have serious emotional implications and different emotional strategies are used by family members and this will always have an effect on other emotional aspects of family life. Social class Most of the societies around the world have got a social class system. The group of people who are considered who are considered as being equal in community esteem or status and who regularly socialize among themselves whether informally or formally and share by a great extent in their behavioral norms make up this group referred to as social class. Social class can also defined as a relatively permanent and homogeneous groups in a society by which people sharing similar values, behaviors an interests fall into. There are several determinants of this grouping among them being; Their source of income Education occupation The social class is identified as a basis for identifying as well as for reaching particularly to the good prospects of goods and services. This is where we find that the upper class groups is a high target by various companies so that they can buy specific products. Things such as financial investments, the purchase of the expensive cars for example the launching of a Lamborghini model always targets the people who belong up the ladder. They are the same people who are best targets for evening wears, this is because of the regard the market gives them and the possibility of having them purchase those products is relatively high for the mere fact that they associated better with products while at the same time the fact they can afford them more comfortably. Moreover, the social class one belongs to may have them result to living in a given style. A style that squarely fits that social class they belong to. Take for example the decision by a Chief executive to have a business meeting in a classy five star hotel, they are most likely to have a meeting scheduled there than if the class they represent was not the affluent upper class. The same case applies to the decision to buy the highly fancied sports car, it remains the domain of the upper class. The middle class groups as well as the lower class will not consider the decision to purchase the million dollar machines in the name of a car. This clear explains why social class is an influential factor as far as the consumer decision process is concerned. Cultural and sub-cultural aspects; Among the factors that exert the deepest and broadest influence on the consumer decision making is the cultural factor. This forces marketers to understand the people’s way of life by understanding their culture not forgetting their accompanying values, as well as their subculture’s influence on their buying behavior. To get a clear understanding, it is important to understand what culture is; culture is the society’s essential character that distinguishes it from other cultural groups. Culture has underlying elements that are known as the values, language, customs, myths, rituals, and laws that is set to shape the cultural behaviors. Culture is the shared meanings, orals, values, beliefs, and customs of a given group of people. Moreover, there exists artifacts materials or products that are transmitted from one generation to the other. In essence culture can be said to be pervasive. How people dress, what they eat, their eating habits, there is the way people of a certain cultural group think, the language they speak make up the dimensions of culture. Culture encompasses all the things that the consumer does sub consciously; without choice. Mostly because their cultural values, the customs, as well as their rituals are embedded deeply in their daily habits. In the narrow aspect of how culture influences the consumer decision making, emphasis can be placed on the dimensions of culture that make it influential when it comes to the consumer’s decision making process. Being the total of values, learned behaviors, attitude that serve, guide and direct the behaviors of consumers in any given society (Schiffman and Kanuk, 1997). The views of the people are passed down through the generations and they keep the influence upon the buying behavior. According to Page (1995) the behavior that we have when it comes to buying is highly determined by our culture. This he added can be affirmed by observing two separate cultures to understand more the influence culture has on the consumer habits. Consider the fact that culture includes an existing set of learned beliefs, attitudes and values, they result to a situation whereby the beliefs and values are an accumulation of the feelings and priorities the individuals in this culture have about things as well as possessions. They are descriptive thoughts that the people of this given culture hold in regard to something. This means that they are the standards, principles that direct the behaviors and this includes a person’s knowledge and the way they make assessment of products and services. With this, we can say that the values and the beliefs that come with the culture are mental images that in a wide range affect the specific attitudes which as a result influence an individual is likely to behave in a given situation. Take for instance the purchasing of new clothes, from the evaluation and choosing from the alternatives to ultimately paying for the clothes chosen. This is largely the function of the cultural beliefs as well as the beliefs (Kotler, 2000). They shape and also color the beliefs and behaviors that are found in everyday life more specifically. According to Hofstede (1980) there are other cultural dimensions that exist and make culture a powerful influence to consumer buying behavior. These influences according to him are the, power distance, masculinity/ femininity, uncertainly avoidance and also the longtime orientation dimensions. Power distance is an outright influence for it involves the extent to which the less powerful adhere to the authority and accept the prevailing standards in the society. People in this form of culture are comfortable with the members who rank top and they are often influenced to behave in manners that are conforming. The other aspect of uncertainty avoidance is the situation whereby the people of a given society appear threatened by orientation and ambiguity. This will in most occasions force them to do certain things that determine their behaviors as consumer which are driven by the fact that they live within a given culture. For example, it is within the America cultural components that we find that it is a custom to bath daily. With that, the consumer here is obliged to by soap and or shampoo as their bathing agent. This will influence them to factor in soaps every time they go for shopping since it is a custom for them to take a bath daily. The eating habits of the America people is on the other hand culturally embedded and this is where McDonaldization is based on. McDonalds as an entity is firmly based on the American eating habits. They made hay from the fact the American eating habits setting up just what many Americans can associate with more when food is mentioned. That highly influences the choice of most consumers when it comes to food. And here the culture was accepted by the Americans and spreading to other parts of the world pretty fast. Cultures like reference groups influence he consumer behavior and ultimately their decision making. For instance, a particular college/ university may have a fashion conscious culture. This by a great extent will influence the way most students dress, where they shop, and how they spend. From the characteristics of culture being that it is functional, it brings order in the society. Such that you find that people in a given region drive Porsche vehicles will resort to a situation where everyone else who grows up there will most definitely go for the same kind of vehicle. The culture in which we live in dictates t us the decision we make towards acquiring or disposing a given product. This why a person in Asia has a different shopping behavior than a person in Africa this is because culture has a unique touch of socialization to its members. Subcultural aspect Marketers are also concerned with subcultures. A subculture is a social group that exhibits the characteristic behavior patterns that are enough to distinguish it from the rest of the people in main culture or society. Despite the fact that the sub cultural groups share the meaning with the greater society’s culture, their sub cultural has got distinctive meanings which are also unique. They can for instance share emotional meanings, beliefs, values, and goals not forgetting that they can have similar traditions, customs, languages, rituals and lifestyles too. A good example is the youth group. They are part of a major target of fast food outlets such that despite the fact that it is their parents who pay the bills, a lot of advertising done by the food outlets is directed mostly towards the subculture that is the youths. Research has it that in most occasions, the children influence the decision on where to go to for a family dinner anytime the adults are making the decision to dine out. Influence diffusion of innovations has on consumer behavior, Diffusion of innovations is another factor that’s has a tremendous influence on the consumer behavior and therefore the consumer’s decision making process. Products are always believed to go through a lifecycle. This starts with a product being introduced and at this period its price is usually highly and affordable to only those who are better informed on matters technology leaving those who do not keep in touch with technology not going for the products. Along the way, the product reaches a growth phase and many people adopt the technology and as a result of this acceptance, there is a great increase in the sales of this product[Way10]. A good example is the microwave innovation of the 1970s or the emergence of the color TV. With these two products, it is documented that very few sales were made in their initial stages in the market and this is attributed to the fact that people still were hesitant of the technological step and were waiting for acceptance by others so as to embrace the technology and adopt the products. The diffusion of innovations influence the consumer decision making process in various ways but of importance is the factor of if this product is something the customers perceives as a daily requirement[Way10]. An example of the ATM machines, when they were introduced they registered a quick spread and this is attributed to the fat that the cards were used in public and the people who did not have the card could see for themselves how much convenience is derived from the use of the cards. The ATM innovation shows that consumer’s decision will be influenced by the diffusion of innovations if they are able to derive the importance of that product in their daily life. Moreover, the diffusion of innovation depends on several factors among tem modernity; this is the extent to which a given culture is receptive to the new innovations means that they will quickly rush for the new products, but if they are not they will not be moved by the innovations. Diffusion of innovations also depends on homophily; this means that if the members of a given culture are similar to each other, they are more likely to be influence by a given innovation[Way10]. For instance, what would one expect for the group that resides in Silicon Valley? They are continuously evolving and adopting whatever technology that they initiate there, it goes without saying that whatever they bring out as an innovation has a market within the same region before it becomes widespread in other regions. Take for instance an application that allows one to use their smartphone as a remote car alarm system, this s highly adopted by the culture since the people there are the same Geeks”. And while this is the case, the perceived good a certain product is given by the consumers also influences their decision making process, take the baby formula adopted in developing nations for instance, this innovation may have more harm than good according to many and this will mean that may not consider the product for purchase and any other product falling under that category[Way10]. Relevance of the opinion leaders Another influence that has an impact on the decision of consumers on buying any given products comes from the opinion leaders. The opinion leaders play an important role when people look for products to purchase, consume/use, or on the evaluation before they can make a purchase or dispose of anything in the search to satisfying the needs and wants. We have seen that the family, relatives as well as other occurrences have a given influence on the consumer decision to purchase or to dispose of anything. The next in that line is the word of mouth that emanates from the opinion leaders considering the fact that they are first people who are influential on the second person through the giving of their opinion on a given product. The consumer receives the knowledge from the opinion leader, the opinion leaders for this matter are the people who go out there and look for new products and in the process, and they seek out information (Schiff man & Kanuk, 2007). It is not just the influencing that the opinion leaders have on the consumer decision but also that they are able to give the consumer advice and over and above factual information regarding he product. This helps the consumer purchase a higher quality product since they are empowered with knowledge to even tell the difference. With the increasing market for products that look similar the same, such as smartphones opinion leader will tell the consumer what to look out for in the smartphone that is original and moreover, they will go ahead and tell them the outlet with the original and quality product. In conclusion, the opinion leaders play an important role in the consumer decision making process through offering encouragement for communication among them (opinion leaders) and their followers in the consumption process. This means that marketers need to importantly learn how to put into use this relationship by using the opinion leaders to drive forward their marketing techniques, tis the should do in order to reach out t the consumers in a short span of time and also to be able to build a customer base not forgetting retain in custom loyalty. References Hofstede, G. (1980) Cultural dimensions in Management and Planning, Asia Pacific Journal of Management, 1 (2) 81-91 Kacea, J.J. & Lee, J. A. (2002). The Influence of culture on Consumer Impulsive buying Behaviour. Journal of Consumer Psychology: 12(2). (163-175) Schiffman, L.G., & Kanuk L.L., (1997). Consumer Behaviour. NJ. Upper Saddle River, Prentice-Hall, Inc. Way10: , (Wayne D. Hoyer, 2010), Read More