Consumer Psychology in the Housing Industry - Term Paper Example

Executive Summary To understand customer or consumer behavior in their purchases is to understand how different people interact with marketing mix. The psychology of each consumer or customer in the housing industry considers the product on offer in relation to their own attitude, culture, personal perception and previous learning. The customer or consumer will then decides whether to buy or not, when to purchase, the type of house he/she prefer, and other choices that are available in the market. Table of Contents Introduction……………………………………………………………………………………..p.4 Accommodation List…………………………………………………………………………….p.5 Evaluative Criteria List……………………………………………………………………….....p.7 Decision Matrix……………………...………………………………………………………….p.7 Analysis of Choices……………………………………………………………………………..p.9 Conclusion………………………………………………………….………………………….p.13 References………………………………………………………………..……………………p.14 Introduction Consumers are unique and this uniqueness can be reflected in their consumption process and pattern purchase. Findings from many studies have revealed that consumers from one another in their purchase. Consumers will receive stimuli from the environment around them and the specifics of the marketing strategies that companies employs in selling their products. And consumers will respond to these stimuli that have been employed in terms of either buying the product or not buying the product. In between the stage of receiving the stimuli and responding to it, a consumer usually goes through the process of making his/her decision. Consumer’s decision making process is made up of six basic steps: stimulus; problem awareness; information search; evaluation of alternatives; purchase; and post purchase behavior. A consumer may use routine, limited or extended decision making, and will depend on the degree of search, frequency of purchase, level of prior experience, time pressure and perceived risk associated with the purchase. In limited consumer decision, a consumer is able to involve each step in the buying process but the consumer will not waste time on any of the steps. In extended consumer decision, a consumer will utilize all the steps in decision making process. And in routine consumer decision, a consumer will buy out of habit but he/she will skip the steps that are involved in decision making process. Accommodation List Buying a 3 bedroom house at Peachester Cl for $250,000 Buying a 4 bedroom apartment at Baldivis, WA 6171 at $350,000 Buying a 5 bedroom maisonette house in Attunga Drive, Torquay for $ 450,000 Renting a 3 bedroom House in East Maitland for $ 2,000/Month Renting a 2 bedroom House in Keysborough for $2,500/Month Renting a 4 bedroom at St Clair, NSW 2759 for $ 3,000/month Evaluative Criteria List Price Location Number of occupants Hobbies City vs. Suburb vs. Rural School Proximity to work Security Proximity to friends and family Proximity to Leisure activities Decision Matrix Decision Matrix also know as decision grid, Pugh matrix, selection grid or matrix, problem matrix, opportunity analysis, criteria rating form, or solution matrix (Loudon and Della 1993). Decision matrix is a quantitative technique that is used rank many options that are available to a consumer. In other words, it will help a person to evaluate and prioritize a list of options available to a person. The person involved in decision matrix will first establish a list of weighted criteria and then evaluate each option, decomposed, scored, and summed to gain total score which can then be ranked accordingly. The advantage of using decision matrix approach is that subjective opinions will be made about one alternative versus another option can be made in an objective manner. The second advantage that can be realized from decision matrix is that the approach is that sensitivity studies can be performed, for example, a person opinion might change in order for a lower ranked alternative to out rank a competing alternative. Other benefits of using decision matrix are: the person decision will fit with his/her priorities; a person is able to understand why and how he/she choose one option over another; a person is able to get a chance to think about what he/she really want; and a person is able to use logic rather than emotion to make the decision (Loudon and Della 1993). FACTORS OPTION 3 bedroom house at Peachester Cl for $250,000 4 bedroom apartment at Baldivis, WA 6171 at $350,000 5 bedroom maisonette house in Attunga Drive, Torquay for $ 450,000 Renting 3 bedroom House in East Maitland for $ 2,000/Month Renting a 2 bedroom House in Keysborough for $2,500/Month Renting a 4 bedroom at St Clair, NSW 2759 for $ 3,000/Month Price 5 3 1 5 5 1 Location 1 3 5 1 3 5 Number of occupants 3 5 5 5 1 5 Hobbies 5 5 1 1 1 1 City vs. Suburb vs. Rural 3 3 5 1 1 3 School 5 5 5 5 5 3 Proximity to work 5 3 1 5 1 1 Security 3 3 3 3 3 3 Proximity to friends and family 1 1 1 3 1 3 Proximity to Leisure activities 3 5 3 3 3 3 Total 34 36 28 32 24 29 Scoring: 5 = High 3 = Medium 1 = Low Analysis of Choices Most of participant who were involved in this report are married, between 28 to 45 years old, have one to three children and monthly expenses between 3000 to 5000 Australian dollars. They work in private or public companies or organization and have high qualification, such as: diplomas and bachelor education. According to Schiffman and Kanuk (1997) they defined consumer behavior as “those activities that are involved in consuming, obtaining, and disposing of products or services. And this includes decision processes that precede and follow these actions. Moreover, Engel, Blackwell and Miniard (1995) defines consumer behavior as those behaviors that customers will display when searching for using, purchasing, disposing or evaluating of products or goods and which a consumer expect to satisfy his/her needs (Schiffman and Kanuk 1997). In our report, consumer behavior has been seen as an important factor in influencing decision making process when consumers want to purchase a house. Moreover, this report has found that buying behavior among the consumers in their choices on house purchases has been influenced by both external and internal factors. The internal factors that influence the consumer’s purchases comprised of perception, motivation, knowledge, consumer resources, values and lifestyle, personality, attitudes (Schiffman and Kanuk 1997). The report also found that reference group could be categorized into three elements or a component, which are friends, family and colleagues. Kotler (1996) argue that consumer decision making process passes through 5 stages, which is: first, need recognition which is influenced by external or internal stimuli (Schiffman and Kanuk 1997). Second, is information search, which involves searching a house from several sources such as commercial, personal, experimental and public sources. In our case, consumers used brochure, sales people and advertisement in real agent websites to search for information on the houses, while others used personal sources such as family and friends (Schiffman and Kanuk 1997). Third is evaluation of alternatives; fourth, purchase decision; and fifth, post purchase behavior (Engel, Blackwell and Miniard 1995). In the report, buyers mentioned that they were looking for a house which was in strategic location that had good access to schools, healthcare facilities, had good security and that the house was near social amenities such as shopping malls and parks. This is supported by Kartajaya (1994) who mentioned that a house that is found or located in a strategic area such as near schools, healthcare facilities, and social amenities and so on will attract buyers. Moreover, good building quality and pleasant environment will enhance the attraction of a house. all participant in the this research stated that not only availability of the public transport was important but also access road is the very essential facility. All of these houses are accessible, at a strategic location and have good environment (away from noise pollution, sound pollution and air pollution). Furthermore, the houses are close to healthcare facilities, shopping malls and schools and have a very good access road (Kotler and Amstrong 1996). In the report, most participants were able to make a checklist of the points below and thereafter were able to weightage on the relevancy of the points to the buyers. The things they considered included: how far is the doctor’s facility and hospital; daily market facility (how far is the market from the house; educational facility (what type of college and schools facility is available in the vicinity of the house and how far is the distance from the new house; public transportation facility (how far is the railway station or bus stop from the house; are there any garbage disposal or is the house near a treatment facility; Day Care and Crèche center facility ( because most participants were working and had school going children); and lastly, how was the neighborhood, was it safe place to raise the children (Engel, Blackwell and Miniard 1995). This report has find out who is influenced to make buying decision, major sources of information and who is the decision-maker. Most of participant in this report stated that colleagues and friends are the most important sources of information (45 per cent). Although the wives had a hand in influencing the decision making process, the report found that the husbands were the main decision-makers. Sources of Information Percentage (%) Brochure 19 Friends/ colleagues 45 Sales persons 16 Newspaper/ publications 6 Family 6 Others 8 Total 100 Once the participants finished in deciding on the location, most of them identified builders on their projects as a factor. In selecting the builders, participant in the report considered the following points:- prior projects, participants were able to check on other projects which were done by the real estate or builders such as is the builder had a sanctioned plan with all requisite local authority and government approvals (Kotler and Amstrong 1996). The finding from this report suggests that renting has advantages for the participant’s lives. This especially true to the participants who are starting out on their own as young and single adult fresh from college. The reasons given for renting a house or apartment is that it involves no responsibility for maintenance, repairs, and other factors of house ownership that can be both time-consuming and costly. Most rental houses or complexes are located near a town center and also have recreational facilities participants would like, such as basketball court and swimming pool. Rental houses or apartments often provide laundry facilities, which would save a person from initial expense of buying laundry equipment (Blackwell, Miniard, and Engel 2006). Another factor which makes most people to consider renting houses or apartments is the flexibility or mobility that comes up with such arrangement. Most young people or fresh graduates are more likely to move more frequently due to family changes and job changes such as having children and getting married (Kotler and Amstrong 1996). It is easier for a young person to move quickly to another job when he/she stays in a rental house than owning one and because leases for rental houses are easier to get out of than having to sell an apartment or a house. Sometimes selling or disposing off a house or apartment is usually a longer process which may take weeks or sometimes months. The length of time depends on many factors such as availability of demand and supply for houses in a particular area. Another factor why most people prefer renting a house or apartment is that it doesn’t require much cash. Most rental houses or apartments require a security deposit, but that is much less than down payment that is required when a person is on the process of buying a house or apartment (Blackwell, Miniard, and Engel 2006). Conclusion The participants in this report are very satisfied with the safe, clean and beautiful environment. Most of real estate companies have been able to keep up with these factors as an important selling point. Moreover, participants are satisfied with the schools and public amenities. This report has found out that most of real estate developers have reach a great success in encounter the consumer expectation, especially the utilities and environment components. This report has found out that linkage and physical components are not as important as utilities and environment for the participants. Moreover, the buyers or customers are expecting to have better accessibility to houses or apartments. Furthermore, the participants in this survey are young people having young families or their careers are young. Consequently, real estate companies should therefore construct houses that have facilities for children such as sport and playground facilities. References Blackwell, R, Miniard, P and Engel, J.F 2006, Consumer behavior, Thomson/South-Western Publisher, London. 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