Influence of External Factors on Consumer Decision-Making - Case Study Example

Influence of External Factors on Consumer Decision-Making Name Name of Institution Influence of External Factors on Consumer Decision-Making Introduction SportUNE was established in 1938 with its mission being to contribute to the wellbeing of students at the University as well as the neighbouring community. The non-profit organisation offers exercise and health programs and has invested in major sporting facilities that are among the best in the country. The facilities provided by SportUNE include a gym, indoor pool, playing fields, café, climbing wall, and a range of indoor and outdoor courts. While the café caters to a human need for food, the other facilities provide services that are not necessary but which students and the neighbouring community desire. This essay explores the influence of external factors in the decision-making process that led to an engagement with the SportUNE Gym. The paper begins by describing the different views on consumer decision making and the consumer decision-making model. This is followed by a discussion on the influence of external factors on the decision-making process that led to an engagement with the SportUNE gym. Views on Decision Making SportUNE offers various membership duration options that range from 1, 3, 6, 9, and 12 months. The fees for the above durations are $75, $160, $250, $360, and $440 respectively. Alternatively, students can pay $41.05 per month when they opt for a minimum of 12 months’ membership (SportUNE, 2017). The fees charged by the organisation are significant as they help to determine the level of decision making that will be used by potential members. Consumer decision making has three tiers that are tied to product involvement and factors like price (Szmigin & Piacentini, 2014). The purchase of everyday products like groceries involves minimal costs and risks that eliminate the need for conscious decision making. On the other hand, the acquisition of SportUNE membership carries costs that are significant, and there is a risk that busy schedules might prevent the use of the facilities. Evidently, the decision to become a SportUNE member will involve conscious decision making, but the problem solving will be limited. A potential member might go to the SportUNE website and research on the benefits of membership. Other options include visiting the facilities or seeking the advice of existing members, family, and friends. Extensive problem-solving or high involvement is reserved for products that have very high prices and which carry significant risks (Szmigin & Piacentini, 2014). Relevant examples include the process that a student would go through when deciding on his/her first car purchase. In addition to the levels of decision making, there are models that look at how consumer behave when making decisions. The economic model views consumers as rational decision makers while the passive model views customers as people who are submissive to the schemes of marketers. Both models have limitations that limit the applicability to the SportUNE decision (Schiffman et al., 2013). The emotional model argues that feelings and emotions play a pivotal role in consumer decision making (Schiffman et al., 2013). This might apply to becoming a gym member where dissatisfaction with fitness levels or weight gain can lead to purchase decisions. The most relevant model that applies to the decision to use the gym facility is the cognitive model. Under this model, the consumer is a logical thinker who seeks products that satisfy needs and is willing to collect information about alternatives before making a decision (Schiffman et al., 2013). The cognitive model is relevant to the decision to become a SportUNE member because the decision came after gathering information and evaluating the impact of several external factors like culture, family, and opinion leaders. Consumer Decision Making Process Having determined that the cognitive model applies to the SportUNE membership and gym engagement decision, it is necessary to look at the decision-making process that would be used by a thinking problem solver. The consumer decision-making process has five stages, with the first being the need recognition stage (Hutter et al., 2013). This phase arises from the difference between the current state and the state which a customer seeks to attain. The second step in the process is a pre-purchase stage where a buyer finds as much information about a product or service as possible (Lamb, Hair & McDaniel, 2011). A critical examination of alternatives comes in the third step, with the consumer leveraging some set criteria. A purchase decision follows the three initial steps. Finally, the buyer goes through the post-purchase evaluation where he/she determines whether a product or service meets the initial expectations (Lamb, Hair & McDaniel, 2011). As stated, the SportUNE membership falls under the limited problem-solving level. Therefore, each of the five steps will be relevant in the decision-making process. At the same time, a myriad of external factors will have a role at each of the steps in the consumer decision-making process. External Factors A fundamental assumption in marketing is that businesses do not operate in a vacuum but that they work in an environment that witnesses constant change. The implication is that firms should consider external factors like politics, the economy, and technology when making decisions (Lamb, Hair & McDaniel, 2011). In the same way, consumers are affected by external factors that will influence their decision making. The external factors that affect consumer behaviour include reference groups, social class, culture, and sub-culture (Longenecker et al., 2013). Reference groups include neighbours, friends, and family who are in a position to influence consumer behaviour (Longenecker et al., 2013). Friends and relatives have been the primary source of influence from the reference group category. It has been accepted that while education should be the key objective in university, there is also the need to maintain health and overall well-being. The availability of some of the best gym facilities at SportUNE has also increased the pressure to ensure that they are utilised when they are still within easy reach. Another source of influence has been family concern that it is important to enter into habits that prioritise physical fitness before entry into the busy working life. It is evident that family has focused on the need recognition phase of the decision-making process. The influence of friends and relatives also extends to the evaluation of alternatives and the purchase decision as they consider the use of the gym that can be easily accessed at SportUNE as an obvious choice. Culture refers to the entirety of learned values, beliefs, and customs in society (Longenecker et al., 2013). In evaluating the influence of culture, the shared values, beliefs, and customs in Australia will be examined. A 2015 review of Australians found that the nation had an obsession with gyms. The annual spending on gym memberships and sports equipment in 2015 was $8.5 billion, which translates to $2,340 per household (Elsworth, 2015). It is arguable that opinion leaders like sports personalities and celebrities have played a role in creating the obsession with gyms and other fitness fads. The obsession points to Australia’s shared values of seeking achievements, stimulation, and self-discipline. Unlike the reference group, the influence of culture is limited to the need recognition stage of the decision-making process. While culture looks at shared values, beliefs, and customs of an entire society, subculture concentrates on segments of the larger society (Schiffman et al., 2013). The segment could be limited to New South Wales or the UNE community. The more intimate connection with the subculture means that it is a factor that will have a greater influence on consumer decision making. For example, SportUNE’s existence from 1938 to the present is a testament to students and the surrounding community identifying a need for wellness. The shared concern for health and well-being is evident in the nonprofit model adopted by SportUNE and continuous investment in facilities. Thus, subculture plays a leading role in all the stages of the decision-making model. It also applies to the post-purchase step as gym members have the opportunity to make suggestions to improve satisfaction. Social Class, a division of society into a distinct status classes, also affects consumer decision making (Schiffman et al., 2013). The unique categories can be determined by levels of education, income, occupation, wealth, and residence. A university education and originating from the middle class are the factors that have influenced the decision to be an active user of the SportUNE gym. The middle class tends to prioritise luxuries like gym membership which is often used as an indicator of high social status. In the same way, enrollment at UNE is a path to a social class that can be easily targeted by organisations like SportUNE. When it comes to the decision-making process, social class has had a considerable impact on need identification, information search, alternative evaluation, and the eventual purchase decision. Conclusion SportUNE allows students and members of the university to access some of the best sporting facilities in the region. The costs and risks associated with the membership lead to the conclusion that a purchase decision would lead to limited problem-solving. The behavioural model that would apply to such a decision would, therefore, be the cognitive model. The paper examines the decision-making process and examines the influence of external factors on the five steps. It is found that reference groups affected the need recognition step where it was argued that health and well-being are as important as education. Family and friends also advocated for selecting the gym offered by SportUNE due to the convenience. Culture and opinion leaders had a more limited influence that was limited to the need recognition step. The paper concludes that the subculture at UNE and social class were the most significant external factors that informed the decision-making process that led to a significant engagement with the SportUNE gym. References Become a member. (2017). SportUNE PTY LTD. Retrieved from http://sportune.com.au/become-a-member/ Elsworth, S. (2015). Australians spend $8.5 billion a year on gym memberships, sports equipment, fitness fads. News Limited. Retrieved from http://www.news.com.au/lifestyle/fitness/australians-spend-85-billion-a-year-on-gym-memberships-sports-equipment-fitness-fads/news-story/d0092769eaea24b59aa1b32d86999c98 Hutter, K., Hautz, J., Dennhardt, S., & Füller, J. (2013). The impact of user interactions in social media on brand awareness and purchase intention: the case of MINI on Facebook. Journal of Product & Brand Management, 22(5/6), 342-351. Lamb, C. W., Hair, J. F., & McDaniel, C. (2011). Essentials of marketing. Cengage Learning. Longenecker, J., Petty, J., Palich, L., & Hoy, F. (2013). Small business management. Nelson Education. Schiffman, L., O'Cass, A., Paladino, A., & Carlson, J. (2013). Consumer behaviour. Pearson Higher Education AU. Szmigin, I., & Piacentini, M. (2014). Consumer behaviour. Oxford University Press, USA. 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