Shaping the Decision of the Consumer - Research Paper Example

Executive Summary The study to find the variable which has an effect on the consumer decision while looking towards choosing a particular airline was analyzed both through primary and secondary data usage. To find out the perception of people towards the different variables interviews were conducted which highlighted that price is one of the most relevant factor which influences the consumer while picking a particular airline. This was followed by service, past experience and timing of the flights. This thereby also helped to ensure that apart from other factors like social status, family and reference group other factors have a determining role in shaping the decision of the consumer. This brought forward some important implications for the managers which are as Ensure that the price offered to the customers are competitive as price is the most important determinant and while charging a particular price stress should be aid to ensure that the service quality doesn’t suffer as it will lead towards affecting the business Look towards multiplying the experience of the customer so that the customer becomes loyal towards the airline and have a pool of loyal customers Table of Contents Introduction 3 Objective of the Study 3 Significance & Limitations of the Study 4 Research Methodology Used 4 Different Findings 5 Factors that affect purchasing habit 9 Implications for managers 12 Conclusion 13 References 15 Appendix 17 Introduction The increase in the number of commuters using airlines have increased with changing times as more and more people prefer airlines due to the emergence of low cost airlines and faster and safer mode of transport. This is backed by the growth in the number of airlines, airline operators and people using the services. In addition to it the development of new routes and ensuring better transport facility shows the manner in which the demand for airlines has grown over time. The increase in the demand for airlines can be also gauged on the backdrop that the disposable income has reduced as inflation is rising and economies are experiencing a downturn. The different factors affecting airlines differently has increased the role of all the departments as they have to ensure that the different factors which has a relevance on customer choosing a particular airline is laid emphasis on (Hooper, 2004). Especially the growth in the low cost airline operator has increased the importance of identifying the different reasons which will help them to build their services and ensure that the airlines are able to provide complete satisfaction to the customers. Objective of the Study The objective of this paper in to identify the different factors which influences the customer buying behavior especially in situation when the customers looks to choose an airline. To identify the different factors interview is conducted among the customers who have used the services so that primary data can be gathered. This has been backed by previous studies and factors so that the different factors which has a role in shaping the buyer behavior while choosing an airline can be better identified. Based on the findings different implications are drawn for the managers of airlines which will help them to improve their quality of service and ensure that they have a regular flow of customers who are loyal. This will help the airlines to develop their services so that better customer satisfaction strategies can be developed and the overall experience of the customers can be magnified. Significance & Limitations of the Study The significance of the study increases as the study proposes to use primary method for data collection. This is done through the process of conducting interviews so that the views of the people who have travelled by the airlines can be identified. This will also help to understand the different factors which has relevance on the consumer buying behavior and gathering data directly from the customers will help to increase the validity of the research. In addition to it the research also uses past data and information which will help to identify the factors in a better way. In addition to it the research will help to identify different factors which when the airline company works on will help to improve the validity of the findings and will provide a direction in which the airline can work at. The study is limited to the fact that the information has been gathered from the sample relating to domestic airlines and might not be correct for international airlines. Further the sample size used in the process of interview is small and might not represent the actual population which might result in the actual finding to be skewed and might not help to determine the actual factors correctly. Research Methodology Used The study has used a mix of both primary and secondary data. The main objective here is to use primary data so that the factors which have an influence of the customer buying decision can be identified. To find out the factors that have an effect on consumer purchasing habits customers are interviewed and different factors which have led them towards choosing a particular airline is arrived at. Further, this method of primary data looks towards ascertaining that the information gathered is directly from the customer so that the relevance of the study can be improved (Productivity Commission, 1998). This has been backed by secondary findings and different factors which also influence the consumer buying habits. Using both the primary and secondary method has helped to collect important information pertaining to consumer decision making which will help the managers to use the factors in a manner that helps them to ensure an opportunity to work on this factor and lure customers towards their airlines (Taghizadeh & Tari, 2007). Different Findings The comparison of the findings of different people interviewed shows different factors as each customers looks towards presenting his own factors based on which the airline has been chosen. Since, the final decision to choose particular airlines lies with the customers and it is his whims and desires that determine the airline the customer will choose has resulted in identifying various factors which have relevance on different customers. The complexity of the problem increases when people belonging to all class, age, sex, behavior are included together as different traits makes a person response in a different manner which leads towards making it difficult to identify the factors clearly. This has helped to identify the customers as The above five category of customers has different reasons for choosing an airline and being able to identify and integrate those factors together will ensure that the managers are able to take better decisions. This will also help to bring a change in the perception that people have and will ensure that the factors that are identified ensures better results as the decision making process based on it will increase (Network Economic Consulting, 2004). Moving ahead with the interview result which has been conducted over different respondents of varied age group have been clubbed into four main factor so that based on it the different influencing variables on consumer buying behavior can be identified. The findings from the excerpts of the interview are Variables Interview 1 Interview 2 Interview 3 Price 1 1 1 Service 2 3 2 Flight Timing 4 4 3 Past Experiences 3 2 4 To find out the manner in which the different factors influence the consumer purchasing habits the total rank provided is summed and divided by the number of respondents. This helps to highlights that Price is 1, Service is 2.33, Flight timing is 3.67 and past experience is 3. Now ranking the different factors based on their corresponding ranks it is seen that the first most influencing factor is Price followed by Service, past experience and timing respectively. The detail description of the different factors has been further presented. The findings from the interview suggest that price or the fare charged by the airlines is given top most priority while choosing airlines. This has resulted in the growth of low cost airlines as lower fares ensure that certain section of the society who were unable to use the services of airlines are able to do so. This has varied implications for the managers as they need to ensure that based on the findings they charge the fare to customers which are competitive and low. This will help in attracting more people towards the airline and ensure better opportunities in the future (Solomon, 2009). The next factor influencing the consumer decision making regarding choosing a particular airline is the service. This has a very important role as seen from the findings as good service further accumulates towards improving the past experience. Having good services ensures that the airline is able to use the strategy of spreading awareness about the airlines through word of mouth. The finding shows the manner in which services have to be developed and ensure that the customer experience of flying multiplies so that more and more people look toards using the services again and again (Tafler & Tafler, 2004) The next factor which influences the consumer decision making is the past experience. This is a factor which influences a person over a period of time and their past association with the company. Customers while looking to choose a particular service or brand look towards the past services they have undergone. This has a relevant influence in making their decisions as the past factor and experiences guides the customers in choosing a particularly brand over another. This is a factor which the airlines needs to consider properly as working and developing it will help to ensure better opportunities in the future. The last factor which has been identified important is the timing of the flights. It has been seen that some section of the society has a preferred timing like they prefer late night flights or early morning flights whereas other prefer something else. This is an area which has been highlighted by the finding as makes it important for the managers to use it so that they are able to develop designated services and airlines on certain sectors which will help to multiply the number of customers and will help to shape the manner in which the decision in the airline industry is taken (Tretheway, 2004). The overall pattern as depicted by the different findings brings forward one important notion that the airlines have to look towards building trust and look towards ensuring that they are able to make people prefer the airlines so that service component which has an important relevance can be looked into. This is further demonstrated by the chart below The above chart highlights the importance of building trust and delivering the services that has been promised so that long term relationship can be developed and the business based on it is able to provide correct direction to the way customers will be dealt with. This will help to find out the different factors and the manner in which they will affect the airlines business thereby providing an important direction to work on. Factors that affect the purchasing habit It has been identified in previous carried out research as well as the present research that there are numerous factors which has relevance on the business outcome as the consumer decision to choose a particular airline gets affected by different factors. This has been shown in the chart below (Forsyth, King, Rodolfo and Trace, 2004) The above chart highlights that there are numerous other factors which also have an influence on the consumer decision towards choosing a particular airlines. Being able to incorporate the additional factors with the factors that has been identified through the interview will help to work on a larger aspect and will ensure that the business is able to develop on different parameters through which the airlines will be able to ensure better chances of having a pool of loyal customers. The different factors are as Social Status: Some section of the population doesn’t prefer low cost airlines and look towards the services of regular airlines. This is primarily due to the fact that those sections of the population have a sense of social status and don’t want to indulge in acts which will hamper their social status. This is important that airlines understand it and look towards having it in their planning process so that different section of the people based on their social status are attracted (Franke, 2004) Family Groups: Some section of the population while reserving tickets on airlines look to the number of members commuting together. This might result in a situation where an increase in the family size might result in choosing low cost airlines whereas in other situations a regular airline is preferred. This is as aspect of the consumer buying process which is greatly influenced when a consumer looks towards choosing an airline and is an area for the managers to work on (Najda, 2003). Reference Group: Some section of the society purchasing habit gets influenced due to the reference group. This makes the person look towards matching the standards that other persons have set. The increased reference pressure makes them purchase tickets of certain airlines which they might have other wise avoided. Thus, the reference group acts as a point which influences the consumer purchasing habits Security: Consumers also lay importance to safety and security and prefer airlines which have limited or no casualties. Since, accidents cannot be controlled fully but consumers while looking to choose particular airlines looks towards weighing the different alternatives associated with security and after determining the safest option looks towards choosing an airline so that the other aspect of their life has been looked at (Raisi, Javadi & Nikghadam, 2008). Price: Price is another factor and the most relevant factor as identified through the primary finding. It shows that people are price conscious and look towards choosing airlines which are cheap and will ensure minimum possible cost. This has a major role in making people prefer a particular airline over another and has resulted in the growth of low cost airlines and has made different business organizations to look towards ensuring price as an important determinant (Peer & Olson, 2009) Thus, there are various secondary factors apart from the primary factors which have been identified and influence the decision making of consumers. These factors have their relevance and needs to be analyzed by the managers in complete details so that proper strategy to counter those can be made which will help to increase consumer experience. Implications for Managers The findings based on both the primary research and secondary research brings forward different points which has relevance when a consumer makes a decision regarding choosing a particular airline (Samadi, 2007). These findings provide important implications for the managers which need to be worked into so that better services and experience can be provided to the customers which will ensure better productivity for the airlines. This brings forward some very important implications which are as Firstly, the managers of the different airline operators need to ensure that look towards ensuring competitive rates to attract more people as highlighted by the fact that price is the most important determinant. This is one of the prime reasons which have made airlines use JIT so that customers who book their seats early are offered lower dates and when the departure date comes near the fare of the flights increases (Bowen, 2000). The managers need to understand the importance of this and while making strategies have to ensure that they look towards charging competitive prices (Windle and Dresner, 2009). Secondly, the managers’ even looking after low cost airlines have to ensure that the quality of services doesn’t get affected due to the price charged by them. Providing quality service will help them to develop a brand image which will help them multiply the experience of the customers (Jetstar, 2004). This will thereby help them to ensure that the other factors which influence the customers are also looked into. Providing quality services will also help to increase the penetration through marketing as good services will transform into word of mouth popularity and will help to spread awareness about the airlines to others. Thirdly, the managers have to ensure that the experience of the customers increases from the first time the customer comes in contact with the airlines. This requires that the airlines look towards meeting all the expectations of the customers which is possible. This will ensure that the customer while choosing the airline will be influenced by his past behavior and that will influence his decision making (Findlay and Goldstein, 2004). This will thereby help the managers in ensuring that they are able to develop a pool of loyal customers which will help their business especially in situation of crisis. Lastly, the manager has to ensure that the flights are scheduled on time which will ensure maximum customers. This will help in two ways as it will ensure that the flights are packed and the customers also find their favorable time to travel. Special efforts in this regard need to be laid on special dedicated lines where the flights have to be scheduled in such a manner that they are able to attract maximum customers and ensure an opportunity of growth for the business (Hansson, Ringbeck and Franke, 2003) The different implications based on the primary research bring forward the different areas that the managers need to work on so that service quality improves and the airline is able to attract more people towards their airline. Conclusion The research carried out to find out the different factors which have an influence on the consumer purchasing habits highlights important findings which when worked upon will help to improve the business opportunities for the airlines. The findings show that cost is one of the most dominant factors which influence a consumer decision to purchase a airline ticket. This is followed by service, past experience and timing which has an influence on the consumer decision regarding the airlines which is chosen. This requires that the managers look towards ensuring that the different findings are inculcated in the work environment so that better strategies can be developed which will look towards working on the different factors which influences consumer decision regarding choosing a particular airlines. This will help to build the required framework through which the airlines will be able to provide quality service and maximize the experience of the customers. References Bowen, J. (2000). Airline Hubs in Southeast Asia: national economic development and nodal accessibility. Journal of Transport Geography, 8, pp. 25–41 Franke, M. (2004). Competition Between Network Carriers and Low Cost Carriers—retreat battle or breakthrough to a new level of efficiency? Journal of Air Transport Management, 10, pp. 15–21. Findlay, C. and Goldstein, A. (2004). Liberalization and Foreign Direct Investment in Asian Transport Systems: the case of aviation. Asian Development Review, 21(1), pp. 37–65 Forsyth, P., King, J., Rodolfo, C.L. and Trace, K. (2004). Preparing ASEAN for Open Sky, AADCP Regional Economic Policy Support Facility Research Project 02/008, ASEAN–Australia Development Cooperation Program, ASEAN Secretariat, Jakarta. Hooper, P. (2004). The Competitive Positioning of Southeast Asia’s New and Evolving Airlines, Paper No. 54, presented at the Air Transport Research Society Conference, Istanbul Hansson, T., Ringbeck, J. and Franke, M., (2003). Flight for Survival: a new business model for the airline industry. Strategy + Business, 31, pp. 78–85. Jetstar. (2004). Queenslanders Celebrate New Careers with Jetstar. Media Release, Retrieved on Aug 26, 012 from http://www.jetstar.com.au/pdf/news/20040830.pdf. Najda, C. (2003). Low-Cost Carriers and Low Fares: competition and concentration in the US airline industry, Department of Economics, Stanford University, Stanford. Network Economic Consulting, (2004). Value Based Airlines, Paper presented at the ANU/NECG Conference on the Performance of Air Transport Markets, Canberra Productivity Commission, (1998). International Air Services, Productivity Commission Report No. 2, AusInfo, Canberra. Peer, P. & Olson, J. (2009). Consumer Behavior and marketing strategy, Mc graw-hill. New York. Raisi, S., Javadi, M. & Nikghadam, N. (2008). Psychology and selection of the airlines. 5th Chapter, no.17, pp.19-26. Samadi, M. (2007). Consumer behavior, Ayish Publication,Tehran. Solomon, M. (2009), Consumer Behavior: A European Perspective, Prentice- Hall, New Jersey. Tafler, A. & Tafler, H. (2004). Toward new civilization, translated by Mohammad Reza Jafari, Simorg Publication, Tehran. Taghizadeh, H. & Tari, G. (2007). Research methodology graphic pattern in humanity sciences, Hafiz Publication, Tehran. Tretheway, M. (2004). Distortions of Airline Revenues: why the network airline business model is broken. Journal of Air Transport Management, 10, pp.3–14. Windle, R. and Dresner, M. (2009). Competitive Responses to Low Cost Carrier entry. Transportation Research, Part E, 35, pp. 59–75. Appendix Interview No 1 Respondent Demographic, Psychographic, Geographic and Behavioral Characteristics The person chosen was a student aged 22 years, male and was going back home for his vacations. He has used airlines quite often and looks to choose airlines based on his pocket requirements When did they travel by the airline? The last time the student had used the airlines was 20 days back when we was travelling back home for his vacations. Which of the recent airlines did they travel with? Since, the student has a fixed pocket income the student prefers to use low cost airlines and the last time the airlines that was used was Jetstar Airlines What factors played major roles in choosing this domestic airline? The most important factor which influenced the student in choosing the airlines was the cost of the tickets. This was followed by the services and other facilities that the flight provides. After this another factor influencing the decision making was the past experiences and finally the timing was given importance to What are their good and bad experiences of travelling with this airline? The overall experience was not great as the student was using the Jeststar Airlines the first time and has travelled by Virgin Airlines on previous occasion. The inability to get the tickets at a lower price forced him to take this flight. The flight on the first instance was late and the ground staff was impolite. The staffs on board were fine but the first impression was bad. This was matched by delay in releasing the luggage which consumed a lot of time. The food served was ok type but the overall experience was not very pleasant. What they would be looking forward if they select the same airline next time? I won’t prefer this airline if I find a similar airline in the same budget as the past experience that I had with the airlines was terrible and would look towards choosing Virgin Airlines if the cost permits as I had a good experience on all the previous occassions but cost has to be looked at the first instance. Interview No. 2 Respondent Demographic, Psychographic, Geographic and Behavioral Characteristics The person interviewed was a business women aged 37, female. She uses airlines frequently for business purposes as she has to travel to the different offices spread over Australia When did they travel by the airline? The last time the business women had used the airlines was 5 days back when she had to travel on a business trip. Which of the recent airlines did they travel with? The last time the business women had used Jetstar Airlines and has been using the services of both Jetstar and Virgin Airlines based on availability and other requirements What factors played major roles in choosing this domestic airline? The most important factor that has a role in determining the factors which affects her choosing is the price of the tickets. This was followed by the past experiences she had with the same flight. This was followed by service of food and other things that were provided in the airlines and finally the timing at which the flight used to fly. What are their good and bad experiences of travelling with this airline? The overall experience was satisfactorily as being a frequent customer I know what to expect of low cost airlines. The service level was good and both the ground and on board staffs was nice. The food served was also luke warm and the staff were very polite. The overall experience was pleasant and satisfactory What they would be looking forward if they select the same airline next time? As I have already told that I am a frequent flier and use both Jetstar Airlines and Virgin Airlines so depending on the availability of seats I will look towards choosing the flight. It has to be seen that the prices of the tickets are low as we are offered a budget under which we have to plan out travel expenses Interview 3 Respondent Demographic, Psychographic, Geographic and Behavioral Characteristics The respondent was an aged person in the 50 and was of 55 years of age, male. They were couple and both were travelling to a destination as they were on a vacation and were looking towards enjoying their time When did they travel by the airline? Both the couples had traveled around 30 days back Which of the recent airlines did they travel with? The couple had travelled by Virgin Airlines as the seats in Virgin Airlines was cheaper in comparison to Jetstar and looking at the budget the couple preferred a low cost airlines What factors played major roles in choosing this domestic airline? The most important factor that determined their decision to choose a lower cost airline was cost of the tickets. This was followed by the service as the old couple also looks towards comfort. This was followed by the timings of the scheduled flight and finally was the past experience which had a relevance in choosing their airlines What are their good and bad experiences of travelling with this airline? The overall experience for both the old couple was satisfactory. The ground staff helped the old couple throughout and ensured that they felt comfortable. The on board staff also ensured that the couple were directed to their seats and also provide courteous services to both. The food was also served in a proper manner and the overall experience for the couple was such that they were satisfied with the services. What they would be looking forward if they select the same airline next time? The couple would love to travel by the same airlines because of the fact that the tickets fitted their pocket. In addition to it the quality of services was very high and all efforts were made by the airlines to ensure that the couple didn’t have any sort of problems and our queries were all sorted out. I would definitely look towards using the same services again in the future. Read More