External Factors and Their Effects on the Consumer Behaviour of Car Buyers - Literature review Example

Running Head: CONSUMER DECISION-MAKING – EXTERNAL FACTORS Consumer Decision-Making – External Factors Name Course Tutor’s Name Date Table of Contents Table of Contents 2 Executive Summary This paper discusses the influence of external factors (reference groups, family, social class, sub-culture and opinion leaders) on consumer decision-making. This paper uses the example of car buying, since purchasing a car is usually a high-involvement and complex process. The paper has an introduction part that underlines why cars are a common consumer item. The body of the paper discusses different external factors that influence car purchases and also includes examples of such influences. The paper concludes by noting that as a high-involvement item, cars are purchased after the consumer engages in detailed information search. The external factors hence provide some of the sources of the much needed information by the consumer. Introduction Cars are a common mode of transport. Consequently, most people who have the means to purchase them do so. However, car purchase is not a regular undertaking for most people. One car can last a person up to 10 years if carefully used and serviced. Additionally, a car is relatively expensive, and as a result, consumers often spend time in the consumer decision making process in order to ensure that their choices are right. As Griskevicius, Tybur and Van Den Bergh (2010) note, consumer behaviour prior to a car purchase is characterised by a person identifying the need to own a car. Next, the would-be consumer considers the cost of the car, its performance, the car model, its fuel usage, and its environmental credentials. Additionally, consumers also consider their lifestyles or social status before making a final purchase decision. External Factors and their Effects on the Consumer Behaviour of Car Buyers Reference groups Pentina, Prybutok and Zhang (2008) broadly define reference groups as real or imagined individuals, institutions, or groups that are thought to have considerable relevance on an individual’s aspirations, evaluations or behaviour. The three authors further explain that a reference group can either be a group where one belongs to, or an aspiration group, which a person looks up to (Pentina et al., 2008). Reference groups which one belongs to are characterised by physical proximity and hence, a consumer can always seek opinions or guidance when intending to buy a car. A group of male friends can for example act as a source of valuable information about different cars, based on their understanding on the performance of different car models, performance and fuel usage. Such men would probably discourage their friend against buying a car that is not ‘manly’ or ‘trendy’ enough. Groups also lead to dissociation, which also influences consumer behaviour. For example, a family is considered a reference group, but children in that family may have their consumer behaviours inspired by a desire to be different from their parents. No matter how fuel-efficient, affordable or functional a car is, a daughter in the family may categorically refuse to own the car simply because the mother or any older member of the family owns a similar car. An aspiration reference group on the other hand, is devoid of physical proximity. In that case, a consumer’s decision to purchase a specific car is influenced by a person they would like to compare themselves with. For example, a consumer may be influenced into purchasing a specific car just because one of their favourite athletes drives a similar car. In a study done in India, Gupta (2013) found out that reference groups – most especially family and friends – had a major influence on consumer behaviour related to car purchases. Family According to Rani (2014), the family is a major source of influence for a consumer. First, the family represents the major socialising factor for an individual. Consequently, if one was socialised to believe that important decisions (such as car buying) requires wider consultations with family members, they will always consult before making a purchase decision. On the other hand, if someone is socialised to believing that men understand cars better than women, they will always consult men before making a purchase decision. Men socialised in the same family environment will on the other hand act more confidently when making a purchase decision and may not consult as widely as the women would do before purchasing a car. Secondly, the family life cycles influence the purchase decisions that one makes (Rani, 2014). For example, as a daughter, a woman will probably buy a car based on its affordability, fuel efficiency and aesthetic value. When the same woman gets married, her car purchase decision may be influenced by affordability, fuel efficiency and functionality. Specifically, the woman may now start looking for a car that can accommodate all her children and all the shopping that can cater for a family. As an aged woman, the same person may be interested in just buying a simple functional car. The third influence that family has on consumer behaviour is as a result of collective decision-making (Rani, 2014). A married couple, for example, may have to consider their financial status before evaluating the different cars that they can afford, either for themselves or for their children. Other considerations that may involve collective decision-making in a family may include the fuel efficiency of a car and the car’s safety rating. Social class Rani (2014) defines social class as groups that are more or less homogenous and categorised to a type of social hierarchy. Generally, most societies are divided into three social classes namely: the lower class, the middle class and the upper (affluent) class. Rani (2014) notes that the social classes reflect people’s ability to afford specific products or services in life. The upper class for example comprises the affluent members of a particular society, and as a result, their consumer behaviour may be influenced by the need to live up to a certain lifestyle expected of people in their class. When purchasing cars, for example, they will most probably purchase top of the range cars without considering their affordability, durability or even fuel efficiency. The middle class on the other hand may purchase cars based on affordability, functionality, longevity potential, and fuel efficiency. People on the lower class segment may consider the practicability of the car and its fuel efficiency. Instead of buying new cars, people from the latter class may even consider purchasing used cars. In other worlds, the different social classes determine whether one is purchasing a product based on necessity, usefulness, or on the sheer want to own more. Rani (2014) holds the opinion that social class affects the consumer’s focus on the different attributes of a product. A consumer from the upper class, for example, will most possibly consider buying a Lamborghini, not only because they can afford it, but because it gives them the social status that comes with such top of the range cars. Griskevicius et al. (2010) observe that some people make purchases not because they have much use for a particular product or service, but because making the purchase gives them the reputation or class they desire. In the above example for instance, the consumer may be interested in not just any Lamborghini, but the latest model of the car. According to Rani (2014) the affluent consumers also consider the features and the latest innovations in the desired products or services before making a final purchase decision. If a person in the middle class had the same amount of money required to buy a Lamborghini, they would probably spend it by investing in one hardy vehicle, and probably spend the remaining money in other investments. Arguably, such a person would not place much importance on the social benefit that acquiring a ‘hardy’ car would give them. Instead, they would be considering the practical benefits of owning such a car. Subculture Subcultures exist in larger cultures and encompass groups of people who are distinct from others based on their interests, ethnicity, gender, geography, age or economic status (Jandt, 2012). From the age category for example, there is a youth subculture that is based on a person’s youthfulness. Subculture is an important influence in the car market. As noted by Gartman (2004), there is an unwritten rule that men do not look good driving specific cars. Some other car models are considered too ‘masculine’ for female owners. Still, some car models are considered too ‘outdated’ for the youth market or too ‘hippy’ for the older car owners. Gorman-Murray and Hopkins (2014) give the example of male-targeted vehicles being framed to appeal to the male gender. The authors note that a car such as the Range Rover Sport, which is manufactured by Jaguar Land Rover, has the frame that amplifies toughness and physical strength (Gorman-Murray & Hopkins, 2014). Such characteristics are more likely to appeal to the male buyers. On the other hand, the Toyota Vitz and Yaris have small bodies, and come in different colours that include pink. Clearly, the manufacturer (Toyota) knew that the small-sized cars would appeal to more female consumers. The Vitz can especially be said to be targeted at female buyers. The subculture that differentiates between male and female products is according to Blakemore and Centres (2005) based on how girls and boys are socialised from a young age. In most households, boys have ‘masculine’ toys while girls’ toys are more feminised. For example, most girls have dolls for toys while their male counterparts have toy cars, guns and toy bikes. Gartman (2004) adds that from the early days in the automobile industry, different cars were gendered and classified as being more suitable for the male or female gender. Some models however, could be driven by anyone, and consequently, appealed to consumers who did not want to have a different cars for the men and women who would need to use the car at different times. Opinion leaders An opinion leader is defined as someone whose views are greatly valued and used by others to assist in decision-making across a wide range of situations (Chaudhry & Irshad, 2013, p. 16). Opinion leaders mainly voice their knowledge about a product or service they have used before, and are also keen followers of any new developments concerning a specific product or service (Chaudhry & Irshad, 2013). In the car market, car reviews are some of the platforms where opinion leaders offer their advice. Notably, opinion leaders do not have to be renowned. Rather, they can be people of influence in small, medium-sized or large communities. A well-known mechanic can, for example, act as an opinion leader to potential car buyers. The mechanic’s years of expertise handling different cars, may be perceived by many potential consumers as an avenue that allows them to understand the functionality of different cars. As Richins and Root-Shaffer (1988) note, willingness to talk about a product is an essential characteristic in an opinion leader. To qualify as an opinion leader therefore, the mechanic in the aforementioned example must be willing to speak about their experiences with different cars, and which among the many cars they prefer. Additionally, they must also be willing to give reasons for their preferences. The example above fits into Feick and Prince’s (1987) explanation of opinion leadership, where the two authors state that opinion leaders are inspired to talk about a product due to their connection with it. Gifting; relationship marketing As Schiffman, O’Cass, Paladino and Carlson (2014) note, gifting behaviour occurs between a giver and a receiver. Some gifts are given out of the giver’s own will, while others are given out of obligation. Most parents, for example, are obligated to buy their children (aged 17 years and over), their first cars. Buying a car out of obligation for someone else may mean that the parents look out for the cheapest, fuel-efficient and safe car there is in the market. This however depends on how much they are willing to spend or please the recipient. As Schiffman et al. (2014) note, gifting is full of meanings, some of which may be interpreted as love or regret. Relationship marketing on the other hand depends on the trust to thrive, since the product owner promises to deliver specific attributes to the consumer. The consumer, on the other hand, provides goodwill, loyalty and repeat purchases to the product/service owner. In the car business for example, car manufacturers have service centres, websites, and even price offers, all targeting their customers. Car customers on the other hand provide brand loyalty, and in some cases, positive word-of-mouth. Conclusion This paper has discussed the influence of external factors on consumer behaviour related to car purchase. Reference groups, family, social class, subculture and opinion leaders are the main factors that have been identified. The paper has noted that buying a car is a high-involvement decision, and as a result, the consumer may engage in detailed information search. Arguably, all the external factors identified in this paper are viable sources of information for a car buyer. References Blakemore, J. E., & Centres, R. (2005). Characteristics of boys’ and girls’ toys. Sex Roles, 53(9/10), 619-633. Chaudhry, S., & Irshad, W. (2013). Opinion leadership and its role in buyer decision making. Academy of Contemporary Research Journal, VII (I), 16-23. Feick, L. F., & Prince, L. L. (1987). Conceptual and methodological perspectives on involvement. Educators Proceedings of the American Marketing Association, 184-187. Gartman, D. (2004). Three ages of the automobile: the cultural logics of the car. Theory Culture Society, 21(4/5), 169-195. Gorman-Murray, A., & Hopkins, P. (2014). Masculinities and place. Burlington, VT: Ashgate Publishing. Griskevicius, V., Tybur, J., & Van den Bergh, B. (2010). Going green to be seen: Status, reputation and conspicuous conservation. Journal of Personality and Social Psychology, 98(3), 392-404. Gupta, S. (2013). A study of buying decision influencers for passenger car segment in New Delhi. International Journal of Business and Management Invention, 2(12), 64-71. Jandt, F. E. (2012). An Introduction to intercultural communication. London: Sage. Pentina, I., Prybutok, V. R., & Zhang, X. (2008). The role of virtual communities as shopping reference groups. Journal of Electronic Commerce Research, 9(2), 114-136. Rani, P. (2014). Factors influencing consumer behaviour. International Journal of Current Research and Academic Review, 2(9), 52-61. Richins, M., & Root-Shaffer, T. (1988). The role of evolvement and opinion leadership in consumer word-of-mouth: An implicit model made explicit. Advances in Consumer Research, 15, 32-36. Schiffman, L., O’Cass. A., Paladino, A., & Carlson, J. (2014). Consumer behaviour (6th ed.). 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