Samsung - External Factors Affecting Consumer Behaviour - Case Study Example

TABLE OF CONTENTS Particulars Page No 1.0 Executive Summary 2 2.0 Introduction 3 3.0 Consumer Behaviour 4 4.0 External Factors Affecting Consumer Behaviour 4 4.1 Culture 4 4.2 Sub-Culture 4 4.3 Social class 5 4.4 Reference Groups 7 4.5 Family Life Cycle 8 5.0 Other External Factors Affecting Consumer Decision Making Process 8 5.1 Role of Opinion Leaders 9 5.2 Diffusion of Innovation 9 5.3 Public Policy and Consumer Protection Affecting Consumer Behaviour10 6.0 Conclusion 10 7.0 References 12 1.0 Executive Summary This report looks to highlight upon the significance of external factors affecting consumer behaviour of which Samsung Refrigerators has been taken as an exclusive example to ensure better and easy understanding of the readers. The report divides the discussion into two exclusive parts where initially it discusses about the societal external factors affecting consumer decision making process along with a discussion of what actually consumer behaviour is and how the same is affected form societal external factors which includes minutely detailed analysis of factors such as culture, sub-culture, role of family, social class and reference groups. The report then looks to make an analysis of specific external factors affecting consumer behaviour where a discussion is made on opinion leaders like salesmen, internet, websites, brochures and pamphlets influencing consumers during their decision making process. The report also makes a discussion on how diffusion of innovation and other factors such as public policy and consumer protection impact the consumer decision making process. Finally a conclusion is provided to ensure readers are equipped with both theoretical and practical understanding of the entire topic under study. 2.0 Introduction This reports looks to highlight an understanding of how external factors affect consumer decision making process or consumer behaviour. For ensuring a deeper and clear understanding of the entire topic the reports looks to minutely evaluate the external factors affecting consumer behaviour in context to purchase decision made with regards to Samsung refrigerators. Samsung Refrigerators has been exclusively selected for the purpose of this study as the product is a renowned one and is largely used in daily life. Samsung Electronics is a South Korean based company which was established in the year 1969 and is a name preferred, trusted and largely used in the electronic goods segment globally with different products for varying needs like refrigerators, mobile phones, television, washing machines etc largely used in daily life. The report looks to minutely address the external factors like role of family and social class on consumer behaviour, impact of reference group on the consumer’s buying behaviour, cultural, sub-cultural and cross cultural impact on consumer behaviour in context to Samsung Refrigerators along with a discussion on broader external factors like diffusion of innovation, public policy, consumer protection etc on the buying pattern of consumers. 3.0 Consumer Behaviour Before looking into the main discussion of the topic of how external factors affect consumer behaviour it is important to understand what consumer behaviour is and its relevance to today’s marketers. Consumer behaviour is not an isolated activity but revolves round a series of process which includes need recognition, choice or selection, actual purchase made, consumption of the desired goods or products and ultimate satisfaction of consumer needs and wants. The entire process includes differing activities which are usually carried in a sequential manner towards the final purchase of a product (Mullins, Walker, & Boyd, 2008). This study on a broader terms looks to evaluate the external factors affecting consumer behaviour which has been elaborately discussed as under in context to Samsung Refrigerators for a simple and better understanding. 4.0 External Factors Affecting Consumer Behaviour Unlike internal factors which have a direct impact on consumer decision making process there are external factors which exert equal impact on the consumer behaviour. There are certain societal external factors which comprise of smaller fragments like culture, sub-culture, social class, family and reference groups and forms part of external factors affecting consumer decision making process. Other external factors include role of opinion leaders, diffusion of opinions, consumer protection, public policies etc which in context to Samsung Refrigerators have been elaborately discussed as under. 4.1Culture Culture acts as an important external factor affecting consumer decision making process. Culture in a nutshell refers to the taboos, traditions, beliefs, values and attitude of a particular group of society towards a specific product or service. Culture is developed at a tender age in almost all individuals during their childhood and is almost negligently visible in daily behaviour. Culture as an external factor plays a dominant role in buying behaviour pattern, for example, culture in Asian countries particularly Indian culture are more pruned towards purchase of refrigerators which are in contrast to the paint colour of their kitchen for which Samsung manufactures different variants in their refrigerators segment to meet the desire needs of their potential consumers. Culture can be largely viewed in food habits, languages and dressing style of an individual. For instance consumers generally possess an attitude towards future savings and security which has a direct impact on the propensity to save and consume. It is for the dominance of this cultural factor which affects consumer decision making process that Samsung looks to develop refrigerators in varied sizes and prices so as to gain competitive edge over their rivals (Chew, Cheng & Petrovic-Lazarevic, 2006). Symbols, logos and colour have a direct impact on the culture and it is because of this reason that different marketers looks towards building upon the same to associate themselves with local mass and ensure higher returns. Samsung for Asian countries look to utilize culture by developing various promotional and festive offers during different festivals celebrated in different regions. 4.2 Sub-Culture Sub-culture forms a smaller segment of culture which consists of group of individuals from the same cultural background but differing attributes from their primary or dominant culture. However it is to be noted that sub-culture has many attributes which are common to the primary culture like religious beliefs, vocational jobs, geographic locations or ethnic backgrounds. Sub-culture is generally characterised with three major aspects which are regional, ethnic and religious differences which widens the consumer pattern and behaviour of a sub-culture form the dominant culture (Cateora, Mary & Graham, 2009). For instance, Samsung refrigerators are designed to meet specific needs of different regional sub-culture. It manufactures its products with zero-degree advance cooling feature for hot and humid regions whereas for specific consumers who are more pruned towards health. Samsung designs its refrigerators with bio-technology to ensure higher and better longevity of the products kept inside the refrigerators. Age, gender and household of a sub-culture again act as important external factors affecting consumer behaviour. For instance, Samsung refrigerators are marketed with heavy and bulky discounts during off-seasons and festive time to attract more of Generation X and baby boomers whereas for gender, the products are more directed towards women and household wife as they are more likely to make the final purchase decision and advertisements are targeted to attract more of such customers than looking to target the smaller segment of men consumers buying refrigerators. 4.3 Social Class Social Class again acts an important external factor affecting consumer decision making process. A social class generally refers to distinct groups or divisions within a society with similar attributes and societal status. One of the most common ways of distinguishing social class is through income levels however it is to be noted that determining social class on basis of income levels to adjudge similar attributes or consumption patterns may not always be true and might differ greatly. Segmentation on basis of income levels had been largely used by marketers to develop different marketing strategies so as to ensure better positioning and target of the desired customer. For instance let us have a look at the marketing strategy of Samsung refrigerators on basis of income segmentation of a particular social class. Class Specific features of Samsung Refrigerators Upper Class Income Group Highly developed advance features like dual doors, instant cooling, eco-technology and go-green concepts. Middle Class Income Group Refrigerators with single or dual door facility with focus on low energy consumption with effective cooling Lower Class Income Group Basic refrigerators with single door and small sizes. 4.4 Reference Groups Reference Group is another external factor affecting consumer behaviour as it consists of individuals or group of people who exert some common attributes to influence others towards a particular thing. Friends and Family in context to influencing others are usually regarded as primary reference groups whereas secondary reference groups consists of other formal and informal groups like colleagues, schoolmates and other acquaintances (Finlay, 2000). Reference Groups gains dominance in situations where a buyer is confused and consumption is conspicuous in nature as the buyer than look towards the product which is more acceptable to a particular reference group with which the buyer is more closely related (Roger, Hartley, Barkowitz & Rudelius, 2006). Refrigerators are commonly placed as necessity goods for higher and middle income group consumers however the same may constitute as a luxury good for the lower income group. They fall under the conspicuous category of goods and are generally preferred upon their rivals in terms of brand recognition by the reference groups. It is to be further noted that Samsung cannot in any sense develop strategies to influence a particular reference group however, its brand recognition, reputation, trusted customers and valuable and reliable feedbacks helps its products to be more attractive towards a particular reference groups. 4.5 Family Life Cycle Family can be regarded as one of the most influential reference groups as a consumer’s consumption pattern may highly be dominated and guided through the beliefs, attitudes, values and existing consumption pattern of the family. Interaction between husband and wife along with size of the family can have a direct impact on the consumer behaviour (Czinkota & Ronkainen, 2004). For instance, a joint family may look towards the purchase of large refrigerators than nucleated families who may consider smaller variants of refrigerators. A family usually consists of a final decision maker, which for different families and products may be the husband or wife. It has been surveyed that for refrigerators it is usually the wife who make the final decision and so the advertisements are more targeted towards them. Furthermore families generally follow a sequential manner with varying stages like the young bachelors, newly married stage, couples with dependent or independent children and the old age groups (Stephanie & Timothy, 2005). Samsung refrigerators look to target the married couples with dependent or independent children as it is during this stage that refrigerators becomes more of necessity than of luxury good. 5.0 Other External Factors Affecting Consumer Decision Making Process The report already had made a discussion on the various societal external factors which affects the consumer decision making process. Let us now have a look at more specific external factors affecting consumer behaviour in context to Samsung Refrigerators. 5.1 Role of Opinion Leaders Opinion Leadership is a complete process where an individual who is regarded as the Opinion Leader informally influences the attributes and actions of another individual who is regarded as the Opinion Receiver. Opinion Leaders generally possess distinct features as they are liable source of information for different buyers and carry a lot more experience and tend to be consumer innovators. The role of opinion leaders for Samsung Refrigerators is played by the Salesmen in the showroom who motivate and persuade consumers to buy Samsung refrigerators by educating potential consumers about the unique features of the desired product and its superiority in terms of price, quality, durability and longevity offered by rivals (Berkman & Gilson, 2001). Another form of opinion leader for Samsung refrigerators is its official website which is designed in a user-friendly manner and posses distinct comparison features to educate consumers why Samsung refrigerators are better than the similar products offered by rivals. Brochures and pamphlets further can act as opinion leaders to persuade and educate consumers towards specific products. 5.2 Diffusion of Innovation Consumers constantly look towards new advanced and innovative products, however the real question lies towards the marketer of when and how to infuse innovation in its existing products and design new products as there is always a considerable higher risk of failure or acceptance associated with new innovations. Innovation plays a crucial role in the life stage or the product life cycle. As for instance the old television box which gradually reached its declining stage were revived through new innovations in terms of LCD or LED televisions to new advanced high definition television sets which greatly affected and influenced the consumer decision making process. In context to Samsung Refrigerators which lies in the category of consumer goods segment, diffusion of innovation acts as an important external factor affecting consumer behaviour. Samsung Recently launched its concept of “Go Green” where the refrigerators where designed to support environment friendly products with latest advanced technology for effective cooling with less consumption of electricity (Alvarez & Casielles, 2005). These innovations have associated risk along with them as consumers may completely discard their old refrigerators and prefer a new advanced product or stick to their old refrigerators making the new innovation inclined towards market failure. 5.3 Public Policy and Consumer Protection Impacting Consumer Buying Behaviour Public policies and Consumer protection are other external factors which has significant impact on the consumer buying decision process. In context to Samsung Refrigerators, they usually come with guarantee and warranty of parts or the entire refrigerators. This additional feature along with easy accessibility of service centres are usually considered by consumers while making a final purchase of the refrigerators. Furthermore, Public policies like taxes, duties, subsidies etc have a direct impact on the pricing criteria of Samsung Refrigerators. Public policies may differ from country-to-country. For instance there may be a limit on the export of refrigerators to a specific country so as to promote domestic manufacturers in such case the consumer behaviour may vary greatly due to non-availability of other alternatives in the market. 6.0 Conclusion The report looks to make a detailed discussion on the external factors affecting consumer decision making process where Samsung Refrigerators has been selected as an exclusive product to ensure better understanding to the readers. The report looks to sub-divide the discussion in the form of societal external factors affecting consumer decision making process and other external factors affecting consumer decision making process. Furthermore the report aims to deliver comprehensive understanding of both practical and theoretical exposure to the topic under study. 7.0 References Alvarez, B. & Casielles, R. (2005). Consumer evaluations of sales promotion: the effect on brand choice, European Journal of Marketing, 39 (1/2), 54-70. Berkman, H. & Gilson, C. (2001). Consumer Behavior Concepts and Strategies, Kent, Boston Czinkota, M.R. & Ronkainen, I. A. 2004. International Marketing, 7th edn. South-WesternPublishing:Australia. Cateora, P.R. & Mary, C. G. & Graham, J.L. 2009. International Marketing, 14th edn. Irwin: McGraw-Hill. Chew, M.M.M., Cheng, J.S.L. & S. Petrovic-Lazarevic, 2006. Managers’ Role in Implementing Organizational Change, Journal of Global Business and Technology, Vol. 2, No. 1 Finlay, P.N. (2000). Strategic Management: An Introduction to Business and Corporate Strategy. Financial Times: Prentice hall Mullins, J. W., Walker, Jr., O. C., & Boyd, H. W. (2008). Marketing management: A strategic decision making approach (6h ed.). Boston: McGraw-Hill Irwin. Roger, A., Hartley, W., Barkowitz, N., Rudelius, W. (2006). Marketing, 8 edition. New York. New York: The McGraw-Hill Companies Stephanie, C. & Timothy, G. (2005). Customer Retention is Not enough. 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