Factors That Determine Consumer Behavior - Coursework Example

CONSUMER LOYALTY Introduction In this era of ever increasing competition in the fast food market, success depends on the percentage retention done by any fast food business. So, service improvements in the fast food business are the only way of survival. In order to achieve success in different countries, fast-food businesses must change themselves according to local preferences (Qin, Prybutok and Zhao, 2010). In this globalised world, people have varying needs and perceptions. Although there may be some general causes of dissatisfaction and satisfaction, there may be variations owing to different cultural backgrounds. So, it is extremely important for any fast food provider to identify the specifics of different cultural backgrounds where the provider wants to establish business. Many academic studies emphasis that there is an effect of culture (Hofstede, 1991) on perceptions of consumers and this suggests that service offerings are required to be adapted by fast food providers (Furrer, Liu and Sudharshan, 2000; Hoare and Butcher, 2008). To offer services according to needs and perceptions of consumers leading to success of any fast food business, it is necessary to understand how customers evaluate services (Laroche, Ueltschy and Mark and Yannopoulos, 2004). Adapting to local tastes and preferences of consumers is one of major steps taken towards providing superior service quality. Customer satisfaction is strongly linked to customer loyalty and consumer retention, which in turn depends on the way service and meal quality are perceived by local consumers. Several authors have suggested that satisfaction is an antecedent of loyalty (Cronin and Taylor, 1992; Kandampully and Suhartanto, 2000). As pointed by Bowen and Chen (2001), there are three different approaches whereby we can define as customer loyalty, which are behavioural, attitudinal and composite. Service quality is directly correlated to customer satisfaction and inversely to customer loyalty (Lovelock and Wright, 2002; Hong and Goo, 2004). Even so, there are many other factors, which determine success of a fast food business like, fair prices, quality of meals and infrastructure etc., based on perception of customers in their local environment and national culture. Main Discussion Due to tough competition among multiple players in the fast food market, consumption and buying decisions of prospective consumers is of immense importance for success of any fast food provider. The marketing strategies have to be designed according to economic conditions of the local environment, health related trends towards fast foods, changing lifestyle and behaviours and changing preferences of consumers. Some of the studies that help to understand various aspects of consumer behaviour and different considerations affecting the fast food industry are as follows. Jekanowski, Binkley and Eales (2001) pointed out that fast food items are readily available near residential complexes, in shopping malls and other public places. Due to this, expenditure made by customers for travelling to places to eat at lesser price with respect to other types of restaurants is low. Thus, upper middle class consumers opt for fast food quite frequently. Fanning, Marsh and Stiegert (2005) concluded from their study on socioeconomic and demographic factors affecting fast food spending by consumers that both factors vary directly with income and number of family members and are inversely related to age and education. Ritzer (2001) pointed out that consumers are not able to visit upscale restaurants due to recession in the economy. So, average fast food joints providing edible and tasty food are preferred. He also concluded that the staff at fast food joints are always smiling, greeting each customer by their name and also informing them about latest offers available to make their choice. The same service may be available in other kinds of restaurants but at a higher price or scarce in number. This attribute affects decision making to a large extent. Furthermore, he also concluded that type of ambience that fast food joints provided to customers is a big incentive for customer loyalty and customer retention. Many fast food joints have play area to let kids to enjoy; this feature helps to increase brand loyalty of couples with kids. Some fast food joints offer toys and gifts along with child meals, which have a strong pull-effect on children. Consumer expectation concerning service quality is important for success of any firm as it is linked to customer loyalty (Parasuraman, Zeithaml, and Berry, 1985). Many models are formulated to measure service quality of businesses. The most famous is SERVQUAL. Parasuraman, Zeithaml and Berry (1985) developed SERVQUAL instrument that measures customers’ perception of the service received as well as gap in client’s satisfaction. SERVQUAL is composed of five dimensions, which are reliability, assurance and confidence, responsiveness, tangibles and empathy. Some of the factors affecting brand loyalty of children with respect to fast food market are: Firstly, children lack experience. According to Schiffman and Kanuk (2004, p. 145), experience is an important factor affecting brand loyalty, which is emphasized by “the power of a brand resides in the consumer’s mind from both lived (purchase and usage) and mediated (advertising and promotion) experiences”. Secondly, children have a tendency to experiment with their identity through self-staging. Children generally utilize brands to define themselves and establish their own identity. For children, brands they endorse to fulfil their needs reflect the way in which they perceive themselves and also the way they want others to perceive them. A brand in itself signifies various lifestyles, norms and values present in identity of children. So, children who want to paint a health conscious picture of themselves in front of peers will stay away from fast food brands, which are infamous for non-healthy diets; whereas, others who want to spend time with friends and present an easy-going image will revisit a youth-centric fast food joint. Thirdly, children have access to and are entirely informed of the interactive media. They expect to be attended round-the-clock through different channels. They are exposed to new and innovative brands with advanced features. Hence, children are more impatient and demanding compared to their elder counterparts and equally difficult to satisfy. Fourthly, according to study conducted by Brand Child, children are exposed to more than 8,000 brands per day (Lindstrom and Seybold, 2003). Due to such high level of information, children are aware of a large number of opportunities, possibilities and alternatives available to them. Thus, it is difficult for fast food businesses to meet their satisfaction level and increase brand loyalty due to presence of alternatives. Finally, children are more perfidious than adults because they often are subjected to and make their decisions due to peer pressure. Children generally tend to have a herd instinct and a strong urge to belong to and be associated with a particular community (Lindstrom and Seybold, 2003). Children prefer certain brands because group or community that an individual child belongs to uses that particular brand. If few children change their brand preference, the group quickly follows suit. Hence, brand preferences of children are very complex and change very fast (Lindstrom and Seybold, 2003). Limitations to ensure customer loyalty of kids with respect to fast food business Since the switching cost for fast food providers is low, children can easily opt for other providers, leading to loss of revenue and reduction in profit margin. Any expenditure made for rendering the fast food business children friendly will be wasted if children do not connect with the brand (Ball, Coelho and Machas, 2004; Gerzema, and D’Antonio, 2011). Such wasteful expenditure can be detrimental to bottom line of the fast food business. Due to herd mentality, children can switch to other fast food providers. So, customer loyalty of kids is difficult to achieve. Heavy expenditure is made to create an appealing ambience for a fast food joint, so that children can connect with the brand. However, this expenditure might be wasted owing to rapid changes in trends and tastes of children. Similar expenditure is needed for communication of the fast food brand through print, visual and social media so as to appeal to children who can affect profit margins of fast food businesses (VanAuken, 2007). The fast food brands have to indulge in price, service and communications conflicts with competitors for ensuring customer loyalty of children as they are well aware of services and offers of competitor brands. Opportunities for enhancing customer loyalty of kids with respect to fast food business Since children have less experience, fast food brands can use innovative and low cost means to position the brand in a way that would generate maximum profit. They can influence children to endorse the brand and turn them into loyal customers. Based on local culture, the menu can be designed to easily attract children to consume local delicacies. This can be an add-on feature to the menu, which can improve profit margins of the fast food brand. The word-of-mouth propagation of children is quite high, which saves advertising cost. Children generally influence their peers and parents while selection of their fast food brands. The herd mentality of children helps to increase customer loyalty through endorsements made by few children who in turn influence others to follow suit (Okazaki, Katsukura and Nishiyama, 2007). Children are very conscious about the brand they choose; so, if they consider a fast food brand as one that conforms to their trend and style, then turn into loyal customers. This way amount of expenditure made to form loyal customers becomes low. Since children have considerable influence on their parents, customer loyalty of children turns numerous parents into loyal customers. This increases footfall in the fast food joints as well as enhances profit margins of fast food business. Marketing Recommendations for increasing customer loyalty of a fast food business Children often choose fast food brands depending on preferences of peers and tend to be loyal to brands associated with their group or community that they belong to. Price plays a major part in ensuring customer loyalty, so group discounts or endorsing the group of kids with brand specific goodies can be a good way to increase loyalty among children. Due to herd tendency, children will end up being loyal customers once a popular group endorses a fast food brand. Promotion is another tool to enhance customer loyalty among children. The fast food business can give children a good experience by providing special offers and ensuring that they are entertained while waiting for their meals through game centres. These experiences will help children evaluate the fast food brand with respect to other brands with similar offerings (Vargo and Lusch, 2008). Product is the main consideration, which determines choice of restaurant for children or their parents. Hence, fast food joints can include healthy food to their menu, which can transform image of fast food brand to one that is health conscious. Therefore, children who consider the brand that they are loyal to as an extension of their own personality can connect with a fast food brand, which is both health conscious and appealing. Place is another critical factor that influences customer loyalty of children. The fast food joint should be strategically located to provide easy access to most customers (Walter, Cleff and Chu, 2013). Conclusion Fast food businesses can utilize customer loyalty of children to improve their bottom line and enhance value proposition to their customers. The fast food business is a very fast moving sector, which should always remain updated with latest trends in the society. Fast food business should understand needs of children and adhere to changing trends prevalent among children. The fast food business can give superior service to children who are highly demanding through modern technology like, online ordering and mobile applications to make reservations. Fast food business should also keep cognizance of the services provided by other players in business so as to understand prevailing competition and assure that their value proposition is highly attractive to children, thereby turning them into loyal customers. This is most important as children are aware of other fast food providers and only become loyal customers of brands, which provide superior service. Therefore, recognizance of changing times and adapting to new trends in society can only secure customer loyalty in the fast food segment. Reference List Ball, D., Coelho, P. S. and Machas, A., 2004. 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