Consumer Behavior - Assignment Example

CONSUMER BEHAVIOR of the of the Introduction The study shall focus on various aspects of consumer behaviour. Consumer behaviour is usually denoted as the study of organizations, individuals or groups. This kind of study is aligned with utilization of products or services in order to satisfy needs. Consumer behaviour also has a significant impact on society and consumer. It combines wide array of components such as social anthropology, psychology, marketing, economics and sociology. Consumer behaviour reflects upon decision making process undertaken by consumers and affect of emotions on buying decision. Individual’s wants are analyzed on basis of behavioural variables and demographics. There are other influential factors in decision making approach like reference groups, family, society, friends, etc. The report would not only be confined to evaluating approach of consumer behaviour but shall encompass related issues. Basic issues to be addressed in this report are whether customers are concerned about measures adopted while delivering products. This concept is also known as ethical consumerism. The study would even highlight degree to which consumer decision making process is affected by ethical issues. Secondary sources shall be utilized in this study in order to understand the concept of ethical consumerism and its affect on real world organizations. Business sources and critical literature review have been included in this particular report. The findings of this study indicate that ethical consumer is largely witnessed in real time scenario. Ethics centred towards product manufacturing or service delivery is prime focus of many customers. This in turn is also an area of concern for companies implementing marketing strategies. Main Body As per Prothero and Fitchett (2000), ethical consumerism can be defined as a form of personal consumption. In this approach buyer’s decision making is based on human rights, animal or environmental welfare and social justice. Moral standards or principals have significant impact on consumer behaviour of groups or individuals. Ethical consumers are more focused on purchasing products through sensitivity. Ethical consumption behaviour is mostly driven by values but when ethics are taken into consideration positive outcome might not result always. Moral standards, principles or values guide consumer behaviour to dispose, acquire or utilize products or services. Ethical purchasing is viewed as a moral judgement on consumer end which is reflected in their purchase behaviour. The main essence of ethical consumption is based on deliberate and conscious decision of consumption. Personal moral values and beliefs are key factors behind ethical consumption (Prothero and Fitchett, 2000). Ethical consumption eventually leads to acceptance of certain products whereas rejection of others. For instance, customers often prefer to purchase those detergents which are considerably low in bleach level. Gasoline being produced by Esso was not purchased by customers since it caused great deal of global warming. Ethical customers are simultaneously concerned about animal welfare, pollution or waste, and are focused on developing world. They are even highly concerned about improved workplace conditions and fair wages. However ethical consumerism has led to significant growth and development of many business organizations. Positive demand in context of ethical products has increased due to increasing awareness on social and environmental impact of consumption. Fair trade brands are gaining importance in real world scenario. In Britain, Co-Op has taken a recent decision to utilize fairly traded ingredients in block chocolate or their coffee products. The main indicator of ethical consumption is aligned with consumer society framework. Ethical consumption cannot be isolated since ethical attributes would be analyzed by customers along with influencing factors. Behavioural model incorporates the concept of ethical consumerism in decision making process. Ethical consumerism is also adopted as an innovative strategy for marketing activities. It appears to be tool for companies in terms of promoting their fair trade practices. This literature emphasizes more on dimensions of ethical consumerism that are witnessed in real time circumstances. According to Ferrell, Fraedrich and Ferrell (2002), the trend of consumer decision making process is changing over time. It has resulted into a new concept of ethical consumerism. Ethics is all about morals or values possessed by customers. The approach of new consumer has been elaborated in figure 1. Figure 1: Soul of New Consumer (Ferrell, Fraedrich and Ferrell, 2002) As per figure 1, the quest towards authenticity forms the basis of new consumer characteristics. In current scenario we observe there is scarcity of time, attention and trust. People have less time to undertake purchase decisions are greatly influenced by relationships or family. There is a high need for delivering simple messages which can be understood appropriately by customers. Ethical consumerism comes into play due to scarcity of attention. Ethical messages or featuring ethical products are a key to drive attention of customers. There lies lesser scope of trust from customer’s viewpoint on manufacturer. Increasing levels of dissatisfaction influences a company to portray value addition in their product line. These scarcities have structured four kinds of customers like involved, individualistic, informed and independent. The authenticity aspect plays a critical role for retailers as it enhances degree of self-actualisation. There exist four distinct metaphors to classify consumption process. Consumption can take place as classification, experience, play and integration. Integration outlines combining recent consumption techniques with ethical choices. Ethical consumption in context of integration metaphor can be represented in the form of hedonistic satisfaction, aesthetic appreciation, love and distinction. The four dimensions associated with integration metaphor have resulted into green consumption (Ferrell, Fraedrich and Ferrell, 2002). Green consumers are also portrayed as rational decision maker in the entire process. It can be argued that valued consumption process is a reflection of consumer identity. Integration metaphor is automatic when customers are directly participating with consumption objects such as photography but is difficult when mass production of consumption objects is involved. On the contrary, there are certain ethical goods which form alternatives for mass produced items. Customers might purchase products based on ethical consciousness but their rejection or selection of good indicates their personal identity. Fair trade labelling is an indicator for customers to understand which products are being traded fairly. As stated by Harrison, Newholm and Shaw (2005), there are different perspectives of ethical consumerism. The popularity towards decision making process is highlighted through various theoretical models. Complexity prevalent in consumer behaviour process can be reduced through commonality of interests. All behavioural models represent the basic stages of buyer behavioural process. Ethical intensity should be incorporated in decision making process so as to analyze stages of ethical consumerism. Ethical significance or ethical behaviour is an essential component in this kind of behavioural model. A theoretical model representing all important aspects of ethical consumerism is elaborated in figure 2. Figure 2: Integrated Model (Source: Harrison, Newholm and Shaw, 2005) Evaluation process in ethical consumerism is inspired by three important factors such as contextual factors, moral intensity and individual factors. Moral connotation, responsibility issues and dishonesty are combined together to form moral intensity. Social control of an individual, behavioural opportunity or social situation is well represented by contextual factors. On the other hand, individual factors relate to consumer norms or role, moral maturity, etc., which directly or indirectly influences evaluation procedure. Rules or intention plays a significant role in purchase evaluation process. The final decision of a customer represents two aspects – future behavioural contexts and life-style of consumers. Moral intensity is usually determined through moral maturity or moral sensitivity, and social-situational perspectives. It is observed that customers spend more time on selecting gifts rather than purchasing less socially visible products for oneself. Purchase decision rules are of varied types like compensatory, disjunctive, eliminative, conjunctive and lexicographic. These rules encompass different moral intensity and have been highlighted in figure 3. Figure 3: Moral Intensity (Source: Harrison, Newholm and Shaw, 2005) Moral intensity varies across these purchase decision rules and is observed during consumption of particular product or service. Compensatory rule type dominates market place where an individual compromises on moral values to choose competing products (Harrison, Newholm and Shaw, 2005). Moral acceptability is high in case of lexicographic purchase rule and this influences companies like Nestle, Proctor and Gamble, etc., to focus on fairly traded products. Ethical consumerism also pressurizes firms to adopt best practices in terms of indulging into fair trading. Supermarkets in many countries follow proper quality management techniques throughout their supply chain activities. They even identify those firms from where meat or eggs originate. In certain products like branded chocolates, their specific ingredients are outlined in order to inform customers about their quality standard and raw materials being utilized. As per Hira and Ferrie (2006), ethical consumerism is not only associated with social aspects but also involves economical and political perspectives. It can be stated that customers are also concerned about processes being undertaken while developing a product. Employees working hours or fair workplace practices play a key role in purchase decision making process. This aspect is responsible for creating brand preference or brand rejection by customers. Ethical consumerism is closely knitted with the concept of ecolabelling. This signifies that proper measures have been adopted by a firm while delivering or manufacturing products. Ethical customers are indeed a profitable target market segment for many firms. The approach of ethical consumerism has facilitated growing trend organic products. Organic agricultural products are used in many countries to gain attention of customers and upgrade quality level. Companies believe customers are more determined to pay higher value for all those products that are ethically right. Corporate social responsibility is aligned with ethical consumerism. It is a tool to convince consumers regarding implementation of ethically right business practices. This in turn motivates customers to purchase products from that company and even recommend it to other family members or friends. Implied warranty or credit worthiness is regarded as an important aspect of any purchase decision. Products are disqualified on basis of non-price criteria and this is governed by moral intensity. Shopping can be regarded as a disposition of money. As highlighted in many literatures, ethical consumerism is linked with purchasing products based on moral decisions. However this form of behaviour can be contradicted in real world circumstances where customers purchase products based on their interests. In such circumstances where demand is high, ethical considerations are not emphasized on by customers. Customers are also hypocrites as they often purchase products from those parties who are involved in destruction process and cause negative impact on society and environment. There are organizations that have targeted ethical customers and gained desirable profit margins (Hira and Ferrie, 2006). Large corporations are usually observed to position themselves as ethical, moral or principled firms. It carries different set of meanings for different group of people. McDonald’s in order to address concern of animal welfare incorporated various types of salads in their menu along with implementing CSR practices. Ethical consumerism is more of a marketing approach which helps in outlining significant changes in business practices. Environmental impact is the primary area of concern for all large organizations but treatment towards workers does not gain much significance. This change takes the form of an issue which is communicated across all mainstream customers. According to Wertenbroch (2002), marketing strategies are strongly correlated with approach of business ethics. Marketing continuum as defined in figure 4 is useful in evaluating relation between ethics and marketing approaches. Figure 4: Marketing Ethics Continuum (Source: Wertenbroch, 2002) At one end of the continuum more focus is given on producer’s interests rather than consumer interests. In this zone inclination is towards profit maximization rather than adopting best industrial practices. Industry practice zone on the continuum shifts alignment towards best practices in order to meet consumer interests and also target ethical consumers in the marketplace. Industry or professional codes are effectively denoted in ethics code zone. On the other hand, consumer sovereignty aspect relates to delivering capability, choice or information to customers. The other end of this continuum signifies caveat venditor. It is basically associated with customer satisfaction. Higher levels of customer satisfaction can be achieved through incorporating ethical aspects and reflecting them in wide array of business practices. Customers should be informed that no unethical measures are entertained in business organization so as to deliver products or services (Wertenbroch, 2002). As it has been stated earlier, ethical customers are a profitable segment for a company. This is simply because satisfaction level is related with favouring interest of customers rather than producers’. Marketers focus on ethical maxims in order to satisfy long term interests or goals of an organization. Ethical customers have eventually derived as a profitable segment for many organizations. Recommendations Ethical consumerism has gained significance in current scenario. There are many theoretical frameworks which govern the concept of ethical consumerism. Ethics represent personal morals, values or beliefs which are incorporated within consumer decision making process. Consumer ethics play a key role during strategy formulation of many companies. This form of ethical structure denotes operational procedure to be undertaken by companies so as to deliver appropriate outcomes. Firstly any retail organization is recommended to have specific product lines which are able to address needs and wants of customers. On the other hand, ethical customers are highly concerned about ingredients used or sources from where products are being acquired by retail firms. Ethical consumerism can form the basis of success for this retail organization. This approach would enable the organization to gain more significance in the market place. Ethical consumerism in the form of green activities or selling ecolabelled products shall be beneficial for customers as well as company. Ecolabelling is a recommended aspect for the retail organization since it helps to achieve long term competitive advantage in the industry. Consumer market segment differentiate retailers on basis of high quality products and competitive prices. Ethical consumerism would prove to be an effective strategy for an organization since customers would feel that company is more inclined towards customer interests in comparison to business interests. It is also recommended that internal business practices are highlighted by the retail organization. This can be done through engaging employees in their marketing campaign where they demonstrate ethically driven ways to address consumer market demand. Employees shall even reveal fair workplace practices that are undertaken by retail firm. This would ensure customers about best practices adopted by the organization even in context of maintaining employee relationships. Recommended marketing mix for the organization shall be centred towards ethical ideas or approaches. Products should be ecolabelled along with ingredient or source specification. This would even encompass avoiding those products which are not easily recyclable or causes immense environmental impact. It would communicate a message that fairly traded practices have been implemented by retail organization. The next element in marketing mix is price and it needs to be classified company is not profit oriented but focuses on ethical interests of customers. Price factor will be based on cost plus pricing strategy. This indicates that maximum profit margins shall be shared with customers excluding operating costs. Distribution or place is also expected to highlight ethical consumerism. It would denote ethical consumerism through utilizing environmental friendly items and maintaining ethical trade practices with all suppliers, distributors, etc. Promotion plays a critical role in terms of addressing ethical consumerism. This mechanism shall communicate ethical issues taken into consideration by the retail organization. Promotion would be done using traditional and digital media. Social media will prove to be most productive medium since it will convey ethical message of retail organization to wider base of audience. It is recommended that promotional campaign shall encompass different ways utilized by the firm in order to sustain ethical values in all possible operational dimensions. References Ferrell, O.C., Fraedrich, J. and Ferrell, L. (2002). Business ethics: Ethical decision making and cases. Boston: Houghton Mifflin. Harrison, R., Newholm, T. and Shaw, D. (2005). The ethical consumer. London: Sage. Hira, A. and Ferrie, J. (2006). Fair trade: Three key challenges for reaching the mainstream. Journal of Business Ethics, 63 (2), pp. 107-118. Prothero, A. and Fitchett, J. A. (2000). Greening capitalism: opportunities for a green community. Journal of Macromarketing, 20 (1), pp. 46-55. Wertenbroch, K. (2002). Hedonic interactions between choice and consumption. Advances in Consumer Research, 29 (2), pp. 105-107. Read More