The Effects of the Recession on Behaviour of the Consumer in the United Kingdom Electronics Industry - Research Proposal Example

Marketing Research Proposal Dilini Lakmali Dissanayake London School of Marketing Number: 11036 MA in Marketing and Innovation  MARKETING RESEARCH PROPOSAL Introduction The global financial crisis and the succeeding economic recession in 2008/2009 had a profound effect on the spending behaviour and patterns of consumers around the world, including in the UK. Originating from the mortgage market collapse, a collapse in the property market, spread quickly to other sectors of the UK economy, resulting in an economic recession whose effects continue to be felt across the UK economy (Verma, 2013: p20). One of the sectors that felt the repercussions of the financial sector’s near collapse was the electronics industry, especially due to banks becoming more vigilant about lending loans to consumers. Therefore, even those consumers who wished to purchase electronics faced restrictions in doing so since there was limited credit. This resulted in huge losses for electronics companies, including Blackberry, Motorola Mobility, and Nokia, evidencing the significant effects the recession was having on the electronics industry. The research paper will seek to evaluate the effects of the recession on behaviour of the consumer in the UK electronics industry, particularly with regards to the smartphone industry. Understanding the response of consumers to the economic downturn with regards to their buying behaviour is imperative for companies seeking to ensure future success (Chakrabarti, 2011: p56). While signs show that the UK economy is stabilizing, leading to questions about this research’s relevance, the changes to consumer behaviour by recessions tend to last for a long time. Therefore, even as economists signal the end of the recession and beginning of recovery, this is unlikely to be reflected immediately by consumers in their buying behaviour. Research Aims This research study will seek to evaluate the buying behaviour of consumers, as well as the process of decision-making, for UK consumers in the electronics industry during the recession. Research Objectives Specifically, the research study will seek to satisfy several objectives. These are: To assess whether processes of decision making for buying behaviour change when the economy is in a recession for the electronics industry. To assess the main factors influencing purchasing behaviour for consumer electronics during a recession To assess the most important factors influencing electronics consumers. To assess the underlying needs that drive electronics consumers. To assess how the consumers choose between different electronics brands. To assess the characteristics of electronics products that keep consumers loyal to those electronics companies that have been successful during the recession, such as Apple. Research Question What effect has the economic recession of 2008/2009 had on the UK consumer’s buying behaviour and purchase decision-making process in the UK electronics industry? Literature Review This literature review will seek to provide a strong foundation in order to understand various widely used consumer behaviour models, which is important in investigating current buying behaviour and decision-making process of consumers in the UK. Consumer behaviour accounts for every decision and action taken by individuals during the purchase of services and goods. According to Dees & Soares (2013: p5), studying the behaviour of consumers is important since for firms to be successful, they should understand the forces that drive consumers to make decisions about purchasing a product, while also helping determine why they choose one brand over another, how they come to these decisions, and how this information can be used for value creation. Foxall (2013: p99) defines consumer behaviour as the study of those processes through which groups or individuals select, buy, dispose, or use services, products, experiences, or ideas aimed at satisfying their desires and needs. Consumer Buying Behaviour Consumer behaviour models are essential for marketing since they can help the trader comprehend the reasons why consumers buy or fail to buy specific products. According to Howard (2009: p19), the most important models include the personal variable model, the black box model, and the comprehensive model, all which possess particular focus. While the personal variable model is focused on the consumer’s internal stimuli and the black box model deals with the consumer’s external stimuli, the comprehensive model concentrates on the two stimuli in combination. These models vary with regards to complexity of the studied behaviour and Kopetz et al (2012: p214) contends that it is important to use them in combination because marketers are better able to comprehend consumers and target them more effectively when constructing marketing strategies. The marketer can choose to construct correlations between consumer response and advertising, although the question on the specific factors that persuade individual consumers to buy products cannot be defined using one model. Rajagopal (2010: p38) also refers to the black box model as the stimulus-response model, which can be conceptualized as referring to the consumer’s brain region, which is in charge of making decisions on purchases. Culture, technology, economics, and other environmental stimuli combine with stimuli from marketing, such as promotion, price, and product in the decision-making black box. However, Romaniuk & Nenycz-Thiel (2013: p69) claims that this model tends to ignore consumer variables; instead focusing on environmental and marketing variables required for the appropriate response and champions the personal variable model. Unlike the black box model, this specific model mainly focuses on the internal factors, rather than external stimuli, which affect the purchasing decisions and behaviour of consumers. This model focuses mainly on the internal psychological variables, including personality, motivations, and lifestyle. In addition, it also concentrates on the individual process of decision-making, including alternative evaluation, problem recognition, and post-purchase behaviour. Finally, Von Hippel et al. (2012: p1673) contends that the comprehensive model is the best model since it takes into account both the internal and external environmental stimuli during the study of consumer buying behaviour. Due to the number of variables integrated in this model, it is of great benefit, as it is the only one, which can study the interaction of different stimuli, as well as how the stimuli react to different demographical and personality types. However, it has also been contended that it is difficult to determine the conclusions’ accuracy because the variables are numerous and diverse. Stages of the Consumer’s Decision Making Process According to Sheth et al (2009: p23), a consumer usually goes through five phases when making their purchase, which are also connected to normal human psychology. The first phase is the recognition of needs or problems, in which the consumer recognizes the presence of a problem and, therefore, identifies the type of product that they require to satisfy their needs. The second phase is defined as the information search phase. Here, the consumer begins to look for a product that should satisfy their problem or need as has been recognized during the first stage. The third phase is referred to as the evaluation of alternatives, which Sheth et al. (2009: p23) contends is the phase that, the consumer evaluates various alternatives that they have identified as being able to fulfil their needs during the second phase. In general, during this phase, the consumer will encounter a number of products and has to evaluate them and comprehend the best product that suits their identified needs or solves their problem. The fourth phase is what Ozaki & Sevastyanova (2011: p2221) refers to as the purchase phase, in which the consumer, after making an evaluation of the choices present before them and having the intention to purchase one of the products, can only undergo a change in decision by unforeseen circumstances and what their peers think concerning the product. In this case, the foreseen circumstances could include financial losses or lack of credit due to banks becoming more vigilant, leading the consumer to stop any purchase of the product. The final phase is referred to as post-purchase behaviour. Following a successful purchase where none of the factors identified in the previous phase dissuade the consumer from buying, the consumer could undergo a post-purchase dissonance. In this condition, the consumer feels that purchasing another alternative would have been the best idea. Firms should be careful about this stage because, not only does it ensure that the consumer will spread god words about the product, but that it will also improve the potential of the consumer making a repeat purchase of the product (Massy et al, 2010: p62). Effects of Recession According to Parker (2013: p34), output in the UK still remains low and has not risen above the level at which it was in prior to 2008, compared to other countries like France and Germany that have higher levels of GDP in comparison to before the economic recession. This means that the UK has recovered much slower than other comparable recession recoveries with wages also being below the level that they were at in 2008. Therefore, in spite of manufacturing figures and government-stimulated housing improvements reflective of a modest improvement in economies around Europe, a new economic era has not yet dawned in Europe. Voinea & Fillip (2011: p16) contends that the UK economy is still weak with relatively high levels of consumer debt. Nevertheless, there are also visible signs that consumers are re-evaluating their purchasing habits with at least 59% of UK consumers contending that they are more concentrated on enjoying what they have, rather than trying to improve it substantially. These shifts were also in evidence prior to the recession, which could indicate that the “recession consumer” will continue in the UK for a while yet. In a survey tracking consumer purchasing attitudes in Ireland and the UK following the recession, Hampson & McGoldrick (2013: p833) found that the most important factor that continues to affect consumers in the UK and Ireland is exposure to debt. Fisher (2010: p63), on the other hand, goes on to identify three main groups within the UK consumer market. The first of these groups is referred to as the “choppy water” group, which makes up 41% of all UK consumers who have dependent children and increasing financial commitments. While this group still has debt, the levels are manageable as long as there are no more economic surprises. The second group is defined as the “all hands on deck” group, which makes up at least 25% of UK consumers and possesses chronic debt experiences that dominate their buying behaviour (Cynamon et al, 2013: p65). This group also has dependent children and financial commitments. The third identified group was defined as the “plain sailing” group that is much older and has lower debt exposure and fewer financial responsibilities. While the first two groups are generally similar, and a little younger compared to the latter group, it is equally possible for the affluent in these groups to take up more debt as it is for the less affluent (Cynamon et al, 2013: p65). However, buying attitude differences among the three groups are significant with the attitude gradient being evidently steep from the financially secure to the financially exposed. Methodology Type of investigation Philosophy The research as proposed will be guided by a positivist philosophy, which holds that the world is made up of regularities that are empirically observable and that scientific research should be restricted to the description of these regularities as falsifiable and objective propositions. Approaches The proposed research’s approach will be exploratory, which is relevant in that it will allow for the development of ideas and deep insight concerning the underlying nature of recessionary effects on consumer behaviour in the electronics industry and, in turn, lead to the generation of a hypothesis. Data Collection Method This exploratory design will collect data via secondary and primary sources. The secondary data will be collected by conducting a study of previous research in the form of a more extensive and focused literature review. In conducting this review, the research study will utilize the six steps of literature review, which include general reading to define the research topic, location of fundamental themes and establishment of the research topic scope, and the refining of literature search objectives. In addition, it will also involve the establishment of a planned literature search structure, a plan on the sources for reading, and reading of the sources selected for inclusion. The main sources for the literature review will include marketing textbooks, as well as peer reviewed and professional journal articles. Primary data will be collected via the use semi-structured and in-depth interviews with various consumers. The interview outlines will be designed based on the literature review, consisting of open-ended questions investigating recessionary consumer buying behaviour in the UK with special focus on electronics. An in-depth interview with consumer will provide for profound and versatile knowledge concerning the subject, while also allowing for additional rationalization, clarification, and description of enumerated responses. These kinds of interviews are widely recognized as well suited in attaining increased insight about the value perception of the consumer. In addition, they are also flexible and enable the interviewer to use follow up questions for clarification. In addition, the research will also rely on data from the websites of major electronics retailers in the UK. Research Methods In order to accomplish the objectives of the research study as stated, the study will adopt a qualitative method of data collection with the use of semi-structured questionnaires to collected information and data from the consumers. This will allow for in-depth understanding of consumer buying behaviour, as well as the factors underlying their purchasing behaviour. Sampling Method Non-probability sampling This research paper will use non-probability sampling to gather the required sample for the semi-structured questionnaire. This is because there are limitations of workforce and time, as well as money, which makes the use of random probability sampling difficult. It will also allow the sample to be selected based on their accessibility, as well as the researcher’s purposive judgment. Specific Sampling Technique The current research study will use purposive sampling, in which it will have a specific pre-defined group, in this case electronics consumers, in mind for study. The sample selected will meet the criteria for being present, i.e. probable consumers of electronics in the UK; meaning, they will be between the ages of 18 and 55. This technique is especially useful in quickly accessing a targeted sample, while it is also not primarily concerned with proportionality. Accessibility Issues Issues during Data Collection Some of the respondents may be too busy or unwilling to conduct the interview, while some malls and retail outlets may not be willing to allow an interview to be conducted on their premises. In addition, a dearth of information exists regarding studies into post-recession UK consumer behaviour, while the available sources are expensive. How they will be managed It will be important to first notify the management of the outlets that the interviews will be carried out in, while the researcher will also have to convince the potential research participants by showing that the outlets have allowed the study. In addition, the study will only use freely available research studies. Ethical Issues Relevant Ethical Issues It may be necessary to get permission from management of several retail outlets that the interviews will be held in, while there may also be emotional distress caused to some of the interviewees by some questions regarding financial ability. In addition, the participants may be concerned about the anonymity of the research study and may not be willing to participate if their names will be used in the research report. Solving the Ethical Issues In this research study, the interviewees will have to be assured of confidentiality and anonymity by not asking for their names. Consequently, the interview will be abandoned if the interviewee becomes uncomfortable. In addition, the interviewee will be assured of their right not to answer questions they feel uncomfortable about and to terminate the interview should they want to. Finally, consent of both the management of the establishments and the interviewee must be sought. Data Analysis Plan The interview responses will be carefully studied in order to make conclusions concerning the buying behaviour of UK consumers in the electronics industry during and after the recession. The data collected from participants will also be coded and fed into SPSS sheets, after which it will be analyzed using various statistical tools. Correlations between various the various variables will also be examined using the Pearson correlation coefficient. Research Limitations While data collected via the in-depth interviews was thorough, it is expected that the number of participants will be low. Furthermore, it is also imperative to note that some participants could be in a hurry and given short answers or answers, while others may be unwilling or incapable of articulating what they truly felt about their buying habits. For instance, some of the participants could contend that they have changed their buying behaviour due to the recession while they have not and are unaware of changes in their buying behaviour or are afraid of judgment. Some participants could also be apathetic towards the research study, while some could give short, incomplete answers to speed the process along. Timetable This research study will be completed in three and a half months as shown in the Gantt chart below. Activity April 2014 May 2014 June 2014 July 2014 August 2014 Week Commencing 13th 20th 27th 4th 11th 18th 25th 1st 8th 15th 22nd 29th 6th 13th 20th 27th 3rd 10th Preparation of research Proposal Reading Literature Selection of final topic and Introduction Literature Review Research Methodology Preparation of questionnaires Collection of data Data Processing Data analysis and interpretation Analysis of Findings Conclusion Presentation of first draft Draft Review Making the final Draft Submission of final research paper References Balgobin, R., & Pandit, N. (2011). Stages in the turnaround process: The Case of IBM UK. European Management Journal. 19(1), 301-316. Bauer, R.A. (2010). “Consumer behaviour as risk taking”, en Hancock, R. (Eds.), Dynamic Marketing for a Changing World: Proceedings of 43rd Conference, (pgs. 389-398), American Marketing Association, Chicago, IL. Bunn, P., & Ellis, C. (2012). Examining the Behaviour of Individual UK Consumer Prices. 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