Models of Consumer Behavior - Essay Example

Consumer Behavior Name Institution Date Consumer Behavior Introduction Consumer behavior can be broadly defined as the behavior displayed by consumers in the search, purchase, use, evaluation and disposal of products or services that satisfy their needs (Peter, 2008). Consumer behavior involves factors that influence the decisions that buyers make in regard to how they choose to spend resources at their disposal. Such resources include money, time and effort. The decision making process involves several steps in consideration of whether to make a purchase or not. Factors that influence the decision making process are broadly grouped into two categories, external and internal. The first section of this discussion will provide a brief analysis of theories and concepts that have been advanced to explain consumer decision making process. This will be followed by an evaluation of the external factors that influence consumer decision making process. In conclusion, this discussion will provide a brief summary of the key concepts highlighted in the discussion. The focus of this discussion is to provide an analysis of the external factors that influence buying decisions in the fast food industry. The modern workplace is characterized by an increase in the pressure of longer working hours and subsequent time constraints. This has resulted in the increase in the number of people that prefer to have their meals in fast food outlets. With limited time to prepare meals at home, more people are finding it more convenient to consume fast food at work, in their cars, or on the trains (Armstrong at al., 2004). The trend has also been necessitated by effects of recent societal development. Previously, women were obliged to stay at home and prepare meals for their households. Women in the 21st century have become more financially independent, resulting in the increase in the need for them to find remunerated work. The concept of a meal which essentially referred to sharing of food has in modern times been replaced by short eating breaks. This trend is further compounded by the fact that most consumers of fast food are typically young people who have irregular eating habits and times. The concept of the traditional breakfast, lunch and dinner is steadily loosing significance (Peter, 2008) An evaluation of several key concepts and theories is thus essential in contextualizing external aspects that influence consumer behavior (Baggozi, 1990). Consumer behavior applies to two entities of consumption: the organizational consumer and the personal consumer. Organizational consumers purchase goods and services for the purpose of running organizational functions and processes, whereas personal consumers purchase goods and services for household use. Several theories or models have been advanced to explain the behavior exemplified by consumers in the purchase, use, evaluation and disposal of products and services. The next section of this discussion provides a brief analysis of some of these models. Models of Consumer Behavior Models of consumer behavior are essentially frameworks that represent and explain the variables that influence buying decisions. These models have been broadly categorized into sociological models, economic models and information processing models. In the model advanced by Engel and Blackwell, consumer purchasing decisions are made through a series of stages. 1. Recognition of the problem; 2. Information search and analysis; 3. Evaluation of options; 4. The purchase decision; 5. Post purchase appraisal. Recognition of the problem The problem recognition stage pertains the needs, motivations and impulses that drive a consumer to want to purchase a product or service. The impulse to make purchase is much more precise when an individual perceives that the desired result or situation is far from their reach, or when there is divergence between the individual’s expectation and the real situation. This conflict consequently manifests itself as tension, which then compels or motivates an individual to take action. Several theories have been advanced to explain the psychology of motivation. They include: the theory of hierarchy of needs, the theory of equilibrium, and the theory of the concept of self (Ferrel, & Hartline, 2005). Theory of hierarchy of needs The theory of the hierarchy of needs was advanced by Maslow. According to this theory, human needs present themselves in a form of hierarchy; here the consumer seeks to satisfy first those needs that are lower in the hierarchy before those that are more elevated. In this hierarchy, physiological needs such as hunger and thirst are often of more priority and are accorded urgent attention. After taking care of physiological needs an individual shifts attention to security needs such as protection. In third place is affection or social needs such as the need to be family and friends. Esteem needs such as self-respect, success, prestige and assuredness come forth. Last in this hierarchy are need of actuality, efflorescence and satisfaction. The theory of equilibrium This theory is founded on the assumption that human beings are in constant search for some form of harmony or stability that is often referred to as homesostacy. In search of this equilibrium of harmony, individuals avoid changes that are brutal and contradict their inherent beliefs thereby casing disequilibrium. The environment that an individual lives in is the main source of disequilibrium. A common coping mechanism in the event of unfavorable environmental circumstances is for individuals to adjust their perception of reality, opting to reject environmental factors that are in conflict of their beliefs. Several other forms of the Equilibrium theory have been advanced, they include; a. The psychological field theory by Kurt Lewis Lewis’ argument is based on the assumption that an individual’s behavior is determined by psychological factor in the context of the situation where this behavior is manifested. His perspective is that behavior is largely influenced by individual’s inherent feelings, beliefs and external factors that emanate from the environment. Individuals therefore function within a psychological field that is generated by social forces that the individual interacts with. Tensions that result in impulsive behavior are hence generated in this psychological fields, and in effort to attain equilibrium, individuals are moved to take action that they deem is appropriate to eliminate tension. b. The congruence theory The argument in this theory borrows a great deal on the one advanced in the Psychological field theory, that individuals are in constant search of unity of mind or harmony. The individuals therefore employ some sort of selective perception of information, whereby they deliberately discard information that creates conflict and disharmony, while embracing information that supports their values and beliefs. c. Cognitive Dissonance theory The underlying argument in this theory is that individuals will find themselves in a state of cognitive dissonance or discord when they embrace behavior that is not in agreement with their opinions and attitudes. An individual is hence obliged and motivated to take action in an initiative to eliminate this disagreement or dissonance. To this end, an individual modifies personal attitudes and opinions to justify behavior. Information search and analysis This is the second stage of the consumer decision-process. In the event that consumers perceive a need that can be satisfied by purchasing a product or service, they go forth to get relevant information that can enable them make a purchase decision that best meets their needs. The initial stage of searching information involves recollection of information on past purchasing experiences, or reference to the knowledge they already have regarding different purchasing options at their disposal. This is often referred to as internal searching. External searching in contrary involves getting information from personal sources such as relatives and friends. External sources of information may also include commercial sources controlled by marketers such as the internet, advertising, salespeople and displays at the point-of-purchase. Consumers could also get helpful product and service information from publications such as magazines and newspapers. They could also get valuable knowledge and information from personally experiencing the use of the product through handling and examination, or tasting. The type and the number of external sources of information to be employed in making purchasing decision is subject to several factors such as: the significance of the purchasing decision to be made, the effort required in acquisition of information, the value of relevant past experiences, and the time at the consumers disposal to undertake the search before arriving at a decision. Perception Of significant importance to marketers in formulation of marketing and communication strategies is the knowledge and understanding of how and where consumers get and use external information. Of interest to marketers in this regard is how consumers are able to tell where to get relevant or useful information, the consumers attention to different sources of external information, the interpretation by consumers of this information and the significance attached to it, and how the consumers choose and are able to retain this information. These processes are essentially aspects of perception, which involves the process by which a consumer is able to receive information, attend to it, interpret it and finally store it for future reference. Perception is however a very personal experience, and is depended on an individuals beliefs, needs and expectations. The processes of perception is to a large extend influenced by physical stimulus such as color, size and intensity, besides the context in which the information is sought and attained. With the rapid innovation in technology and technology, consumers are exposed to diverse and intricate marketing stimuli that require the consumer to employ some sort of selective perception to successfully filter this information to a level where it is useful in making a buying decision. Process of selective perception happens in four stages: selective exposure, selective attention, selective comprehension, and selective retention. Manifestation of the process of perception happens through a response of the five senses i.e. taste, touch, smell, sight and hearing. The role of markets in studying consumer reception is to understand how consumers physically react to marketing stimuli. Selective exposure to information is largely dependent on the consumers themselves, as they determine whether to have access to information or not. Television viewers for instance can easily switch channels in the event of commercial breaks that they detest or deem insignificant. The attention and significance accorded to marketing stimuli is also depended on personal psychological aspects such as the personality of the e consumer, their needs and motivations, and their experiences and expectations. Individuals typically tend too focus on aspects of the environment that are of significance or value to them and filter out information they regard to be less meaningful. Selective perception happens in the event a consumer decides to give attentions to some marketing stimuli while neglecting others. Previous research done on selective selection indicated that a consumer is exposed to approximately 1,500 advertisements in a single day, but only notices and is able to vividly recall only 76 of them. This indicates what up hill task marketers have in reaching their targeted audience. Timing and location considerations are therefore critical in marketers trying to reach targeted consumers. After getting the attention of the consumer, the second phase of the perception process s involves categorizing, organizing and interpreting of the information. This is to a large extent an individual experience as it is depended on individual psychological factors. In order to get the attention of consumers, the massage in advertisement must be unambiguous, objective and straight forward. It is however not guaranteed that consumers will give advertisements the intended interpretation. Selective comprehension is a situation where a consumer’s interpretation of information is influenced by personal attitudes, experiences, motives and beliefs. Information retention is the last phase of a successful perception process. At this point the consumer either deliberately or unknowingly takes note of specific aspects of an advert which they can easily recollect and employ in purchase decision making. Selective retention refers to a situation where a consumer despite having given attention to certain marketing stimuli, is not able to recollect important information that was contained in the advert. An important consideration that marketers must pay keen interest to is to develop adverts that easily convey the message and framing the message in a way that will enhance the consumers ability to recollect the contend. To this end, marketers can use mnemonics such rhymes, symbols, images and association s that enhance the learning and memory processes. Evaluation of options An analysis and evaluation of the variable alternatives is the third stage in a consumer’s decision making process. In this phase the consumer has a critical and comprehensive assessment of the attributes of all the options at their disposal. This is essentially in consideration of the ability of the product or service to satisfy the consumers need or motives. Consumers evoked set refers to all the brands that the consumer has identified as possible purchase options. The significance of the evaluation stage is essentially to downsize the number of available option s to a manageable figure. The size of evoked set is depended on factors such as time at the disposal of consumer to compare and contrast available options, and the importance of the purchase to the consumer. In the face of increased competition in virtually all product and service categories, the primary objective of marketing strategies employed by marketers is to get their brand on the list of consumers’ evoked lists. Evaluation of the available options is a significant phase of the consumer’s decision making process. This is the stage that determines whether the consumer will make the right decision in regard to the product or service that will satisfy their need, or they will make a wrong decision that they will regret. Evaluation of alternatives is essentially based on the criteria that the consumer deemed best suited to lead to a right making decision. This is typically in consideration of the product or service attributes, and the cost of purchase. Of priority to the consumer are the benefits of the product or service to be purchased. Benefits can either be functional, experiential or psychological. Functional benefits are the tangible or concrete outcomes that satisfy the consumers need, such as taste of potato chips or a soft drink. Experiential benefits refer to the feeling that a customer gets in the process of consuming or using the product. Experiential benefits are largely emotional, such as feelings of joy or happiness. Psychological benefits refer to the status attained by virtue of consuming or using a given brand. Impact of attitudes to the evaluation process The study of attitude is a critical component of consumer behavior. Attitude refers to predispositions that are learned and influence the way individuals respond to situations or objects. Marketing strategies are nowadays developed in consideration of the attitudes that consumers have towards certain objects. Objects in this context refer to individuals such as Michael Jordan and Tiger woods, or brands, company’s retail stores, and product categories. In consideration of the apparent link between attitudes and behavior, promotions and advertisements that are developed by marketers seek to develop positive consumer attitudes towards new products and services, reinforcing favorable attitudes, and change negative ones The purchase decision Before consumers decide to make a purchase, they first develop a purchase intention which basically refers to a successful matching of product attributes with the expected outcome or benefit. A purchase intention is in essence the end product of motivation, attitude formation and perception. Purchasing decisions are particularly easy to make in situations where consumers have already developed a brand loyalty for a product or service. Marketers attempt to sustain brand loyalty by maintaining prominent displays and shelf positions in stores, and running regular promotions and activations to discourage consumers from exploring other options. Of critical significance to the purchase decision making process is the manner in which consumers merge several brand characteristics in a process referred to as the integration process. Post purchase evaluation The level of satisfaction derived in consuming or using a given product is a significant determinant of future purchasing decisions that consumers make. The significance of post purchase evaluations is that they shape the attitudes that consumers have towards products and services. In some instances consumers will seek to justify the purchasing decisions they made by distorting or denying information that is not in support of their decisions, or try to find information that may support their decisions. External factors that affect the decision making process in the fast food industry. The microeconomic theory of consumer behavior that was developed by Alfred Marshall is particularly relevant to the fast food industry. The theory was founded on the assumption that consumers are rational buyers and are perfectly informed about the market. In this theory, Marshall points out that consumers have full knowledge regarding the needs that are of priority to them and can therefore make rational decisions on how to satisfy them. This description best fits the market environment evident in the fast food industry. Consumers in the industry exemplify similar purchasing behavior, and buying decisions are typically logical processes that are focused on optimizing the value obtained from money spend. The underlying assumption in Marshall’s economic model is that consumers purchase goods and services that provide the greatest level of satisfaction. A significant dimension of consumer behavior analysis is the relationship between consumer demand and variation in prices. The fast food industry is not a monopolized market controlled by one entity. The industry is known to have the highest number of players across the world. Apart from internationally recognized fast food brands such as McDonald, there are many local fast food places located in the many cities across the world. This is largely attributed to the nature of the products offered by fast food places that are more or less substitutes capable of satisfying similar needs. These products are differentiated by the type of branding that outlets employ, but the products are very much similar in content. External factors that influence the decision-making process are grouped into two main categories, socio-cultural influences and organizations marketing initiatives. Socio-cultural influences are factors that come into play in determination of consumer behavior by virtue of the consumer’s interaction with the external environment. The next section provides an analysis of various social cultural influences that include: social class, culture, households and reference groups. Culture Culture refers to adaptive frameworks of action and interpretation that enable individuals to identify with and coexist as people who share common values, beliefs, myths, rituals and traditions. Cultural influences refer to inherent norms, values, beliefs and customs that stipulate the code of conduct of a society. Societies are formed by smaller subcultures consisting of individuals with a common ethnic origin, customs and values. They hence manifest similar behavioral patterns. Consumption of fast food has become more popular due to cultural diversity in major cities across the world. Many communities with different cultural orientations are based in major cities. Major cities are also prominent tourist destinations, thus resulting in an integrated mix of many cultures. These multicultural customer bases have compelled fast food marketers to incorporate in their menus foods that that meet the tastes and expectations of multicultural customers. McDonald outlets for instance have to this end developed a culturally differentiated menu. The fast food giant has recently lunched a Chinese food promotion and the Indian chicken tikkka wrap in most of its outlets especially in China and India(Armstrong, Hemphill, Saeed, & Methvin-Terry, 2004). Social class As defined by Schiffman and Kanuk (2004), social class refers to the division of members of a society into status classes where each class has members of the same status and members of other classes have a higher or lesser status. Social classes are differentiated on the basis of occupation, income, education, affiliation and ownership. The significance of social class variation to organizations is that people from different social classes tend to portray different behavioral attributes. Knowledge of social class attributes can be essential in enabling an organization to identify and segment its target market and to envelop marketing strategies that are best suited for specific target markets. In reference to Alfred Marshall’s microeconomic theory of consumer behavior, price has a significant influence on buying decisions. Marketing strategies that target members of social class that are in the lower income bracket must be in consideration of the impact of changes in price on the demand of a product. This is particularly true of the fast food industry where the product offered by different outlets is more or less similar and thus, the price of the product is likely to have a significant impact on the demand of the product. Marshall in his theory points out the impact on consumer behavior of the substitution effect, which in this context refers to the extra fast food product purchased when there is a fall in price, and therefore more affordable in comparison with other substitutes in the market. He also refers to the income effect, which is the increase in real income or purchasing power of consumers in the event the price of some commodities that are purchased by the consumer decreases, and thus the consumer has extra real income to purchase more of the fast food product that has a lower price. Reference groups An individual’s interaction with other members of a society implies that their behavior can be influenced. An individual’s consumer behavior is to a large extending influenced by the people with whom they interact and share information on regular basis. Reference groups in this regard refers to group’s attitudes, perspectives or behavior that individuals refer to, and which influence the decisions they make in regard to purchasing. An individual’s reference group may be his or her family, friends, teachers or any group of people that has a direct influence on them. McDonalds has recently partnered with Nintendo to promote the use of the portable Nintendo Ds in its outlets. This is meant to attract the many teens who are game lovers to the outlets. Introduction of the Wi-Fi concept has also been effective in attracting students to the outlets, and with availability of free internet, this provision is meant to help students make savings from the money they spend on the internet elsewhere(Armstrong, Hemphill, Saeed, & Methvin-Terry, 2004). An organizations marketing mix An organizations marketing mix refers to the range of activities that the organization employs in reaching out to consumers in an effort to inform and influence them to purchase or use its products or services. Organizations make deliberate attempts to influence consumer purchasing decisions through a marketing mix that is tailored to meet the needs of a target market. A marketing mix is composed of a combination of factors that include price, type and quality of service, product attributes, distribution channels, and the people involved in delivery of the product or service (Solomon, 2006). With modern developments in technology, the lifestyles of people have also been modified in adaptation to these changes. This is also reflected in the production and packaging of fast food products. Technological innovation has enabled fast food outlets to venture into tech savvy machine made food which consumers find to be more attractive. Technological systems are increasingly being used in interactive transactions with customers. Technology has also enabled outlets to offer an expanded marketing mix involving services such as order booking, free food deliveries, take away, automated billing and payments. In an effort to attract tech savvy consumers, fast food outlets provide sleek and more stylish fashion accessories, furniture and entertainment gadgets. McDonald for instance is now providing free internet access for all customers that visit their outlets. McDonalds’' pricing strategy is well tailored to influence its customers’ decision making process through emphasis on the benefits that the customer buys. The companies pricing rationale is essentially linked to the value, volume and revenue of the product. In the event that the company has had to reduce product prices, the quality of the product has remained steady and uncompromised. Macdonald has however been reluctant to reduce prices as a strategy of increasing market share. The company’s management holds that a reduction in the price of a product sends the wrong message to the consumer that the quality of the product has also been reduced to mitigate the effects of reduced prices. Conclusion Consumer behavior analysis is based on a market oriented objective which is to satisfy customer needs in an initiative to secure competitive advantage (Solomon, 2006). This is of essence when marketers have to develop a marketing mix that best suits their customer’s needs and expectations. The study of consumer behavior has a significant impact on marketing decisions such as market segmentation, brand positioning, new product development and product distribution. It is important to note that more often than not marketers fail to distinguish between product attributes and benefits. In as much as marketers like to emphasize products attributes, it’s worth noting that in contrary, consumers attach more significance to the benefits of this attributes. Attributes are thus a means to an end, whereas what customers need are the outcomes or consequences of these attributes. References Ajzen, I., 1991. The theory of planned behavior. Organizational behavior and human decision making, 50, 179-211 Armstrong, D., Hemphill, C., Saeed, M., & Methvin-Terry, J. (2004). McDonald's corporation case study. Minot State University Human Resource Management [BADM 537] course case study assignment. Bateman, T. S., & Snell, S. A. (2004). Management: The new competitive landscape [2nd Ed.]. 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