Consumer Behaviour and Social Class - Essay Example

Question Various social influences were covered in your materials including lifestyles, households, sub-cultures, social and reference groups. Laypeople sometimes confuse these influences. Write an essay to compare and contrast these five influences. Ensure you explain the theories in your own words and use original examples (real or hypothetical) to illustrate your arguments. Within your essay highlight which influence you personally feel is most useful to marketers and justify your choice. A consumers purchase is influenced by a lot of factors, both external and internal. And some of these external factors include social influences such as lifestyles, households, sub-cultures, social class, and reference groups. While these influences are often remain undistinguished and mixed by laypeople, the distinction between each group is important in order to know up to what extent these groups influence an individual as regards her purchase decisions. One of these influences include sub-cultures. A culture usually pertains to a set of norms among a larger group, usually a country or a geographical region that has been shared and strengthened through traditions. It is the same for sub-cultures, a set of norms or a set of behaviours and beliefs that are acceptable within a given group, only that the group is a smaller one than a country or a geographical territory. Regions, organisations, clubs, and other smaller groups within the society have their own set of norms, their own cultures. These norms comprise what are called the sub-culture. A sub-culture is said to be more relevant to culture because these norms have more immediate effect to an individual. In terms of reference to an individuals identity, sub-cultures are also closer for them to associate their identity with. Therefore, a sub-culture, when an individual feels strongly being a member of a certain social group is a potent social influencer in terms of the individuals decision, including consumer purchase decisions. Another social influence is lifestyle. In contrast to sub-culture which is dependent on a larger groups norms and beliefs where the individual is a member of, lifestyle is the sum of the activities that define how an individual lives her life; a lifestyle is a certain way of living. Some examples of an active lifestyle include active lifestyles, where an individual pursues more engaging physical activities such as sport and other recreation, or passive lifestyle where activities include less physical activities such as music, etc. These lifestyles however cannot be confined according to one activity, these are a set of activities which are rooted in the individuals preconceived values and beliefs. There are individuals who engage in sport; there are those who have more active night life spent on partying; there are those who choose to spend their time in travel. In contrast to sub-culture, lifestyle is more rooted on the individuals choices. Lifestyle as a social influence, creates some sort of groups based on the shared interests of individuals. For example, for those who love to travel, they become one group that constitutes a certain lifestyle. As mosy of peoples decisions are based on their individual beliefs as well as interests, their lifestyle is an important social influence to their purchase decision-making. Social class is sometimes linked to lifestyle although they are not really the same. When lifestyle is used as a segmentation criteria, groups are formed by individuals with the same hobbies, interests and certain way of living. Social class on the other hand is a form of classification within a society which is determined by values that are revered by the society—educational background, earning capacity, net worth, certain professions, or position and status. This classification usually results in some sort of hierarchy, where the people are confined as members of these groups or classes based on these factors. Unlike lifestyle which is dependent on an individuals choices and preferences in terms of ways of living, ones social class is determined by her condition according to those characteristics. Thus, two individuals may have a sporty lifestyle and could be sport enthusiasts, although the two differ in terms of social class as determined by those characteristics that are valued by society. Social class is usually used as an influence to purchase decision-making because social classes are usually, but not in all situations a determinant of ones earning capacity and economic background. Therefore, as the classifications go, the higher ones social class is, the higher his or her earning power, or net worth. If peoples identity and the way they view themselves are mostly attached to their social class, then it is a strong social influence for a marketer to utilize. Households are a different type of social influence. While sub-culture deals with a larger group or community within the overall national community; lifestyle is determined by ones choice of activities that will constitute the way she lives her life; and social class is a pre-determined classification in terms of various characteristics that are given premium by a society as regards ones condition in life, households are a small group or unit of society which constitute the inhabitants of ones dwelling. For example, a household can be comprised of immediate family members an individual shares her dwelling with, or relatives, friends or other people whom she shares a dwelling. Because individuals spend some part of their day living in that dwelling place, some amount of shared consumption can be traced to households. If an individuals decision-making is mostly related to the household and the decision is mostly carried on with most of the members of the group, then the household is a strong influence. Since it is usual that many individuals interact with the members of their households the most, households are also a good source of information. This makes them good influencers to a target market. Reference groups are groups that an individual looks up to and considers herself to be part of, or wishes to be part of. A reference group may not be a group where an individual already belongs, but it is a group that an individual considers herself to be part of. For example, a middle class worker sees herself as an a member of the jet-set in the future. Although technically, she is not a member yet of the jet-set as regards the rigid classification, the jet-set is her reference group, something she wishes to be part of. Although she does not yet belong to the group, since she refers to it as her group she may act as being part of one. Subsequent decisions in her life, especially concerning her purchases may be grounded on that thinking, and can be affected by her reference group. For instance, as she sees that most of the members of the jet-set buy haute couture, she may be motivated to buy them as well although she could not afford it for the moment. This social influence is based on the individuals perception of herself and how she wishes to be seen by others, which is a very powerful social influence. Sub-cultures, lifestyles, social class, households, and reference groups are all important social influences, part of the decision-making unit of an individual when it comes to consumer purchase. All these are external factors where ones own view of herself and how others view her as an individual play a key role. Sub-cultures are more general, lifestyles are more flexible as they depend on the individuals choices, social classes are a determinant of the individuals earning capacity; households identify a certain level of shared consumption, as well as immediate source of information and some influence over a decision, and reference groups identify where an individual sees herself as being part of. All these, to some degree has some impact on an individuals decision making. However, as a marketer, the link between the actual self and the ideal self is usually the most potent motivator as regards an individuals purchase decision to look at. Individuals usually buy products because they want to be seen as their ideal self in front of other people. With this, although most of the social influences are important, reference groups are usually the most important from a marketers perspective. Identifying ones reference group helps a marketer define an individuals view of herself, her goals and aspiration, and how she wants to be viewed by others. By knowing this, the marketer can tailor an individuals wants to how she views herself. Because the ideal self represents some aspirations, it is a very potent motivator for purchase. Question 2 Discuss differences in perceived risk and motivation that may apply to organisational buying decision making processes compared to consumer purchases. Ensure you explain theory and terminology in your own words and use original examples (real or hypothetical) to illustrate your explanations. To every purchase there is some degree of risk that is perceived as associated with the decision. This applies to decisions that are both carried by consumers as well as industrial enterprises. However, since the risk is associated with the amount as well as performance, it is very usual that the risks that organizational buyers have are higher. In order to look at it more closely, we need to identify the risks that are associated with a every purchase decision. These risks include financial risks as well as as performance-related risks. As for consumers, there is an additional type of risk—social risk. All these are related to products failure after the decision has been made. The level of these risks determine the level of involvement that buyers will have in their decisions. Financial risks are related to the high costs that the buyer will pay and may go to waste if ever the product under performs or fails. Performance-related risks include the consequences of the products failure. As for consumers, social risks include the impact on their image and reputation in front of other people when the product fails. Let us look at some examples. A corporate buyer of a medium-scale electronic manufacturer decides to purchase an equipment that costs around 90,000 pounds as part of its manufacturing facility to produce cellphones. The financial risk to the organization is very high—if the product fails, the organization needs to buy another one in order to replace it, if the product is not covered by service repairs and warranty and completely defective. But although this amount is high, for a large organization this can be seen as small. This is indeed a high financial risk purchase, but its relevance depends on the size of the organization. Apart from it, the performance-related risk that is related to the purchase is very high as well. If the product fails, the organization may have its production line stopped which can result to major delays and losses on the part of the organization. If the organization is smaller and will not be able to absorb the losses, or is dependent on the equipment as regards its production line, the risks could be higher. These are the risks that are related to the organizational buyers purchase decision. Now let us look at the consumers purchase decision. A consumer decides to buy a 15,000 pound car. Because of the hefty price tag, the financial risk is very huge. If the car is defective and without a warranty, the consumer would have wasted some 15,000 pound. However, although this is a high financial risk purchase, the degree to which it is relevant to consumers depend on the consumers ability to absorb the risk. For example, for a multi-millionaire, although the purchase entails high financial risk, the risk seems to be of little significance compared to an average consumer. Apart from the financial risk is the performance-related risk. If the car fails to deliver its promise and is defective in the process, the car could cause accidents and adverse physical consequences to the consumers. Therefore, this risk is also considered. From a consumers point of view, another type of risk is existent in the decision process—social risk. This is the risk as regards the damage to the consumers reputation and image if the car under performs or becomes defective in the process. These risks are important to know especially in assessing the buyers level of involvement in the process. The major differences between the decision-making process of the consumer and the organizational buyer lie on the level of risks that are associated with these types of purchase. As for consumers, there are decisions that would entail very little risks such as buying newspaper, etc. This type of decision-making can lead to a habitual-type of decision making process. In the organizational buyers case, the size of the decision which is determined by the price the organization will pay can never go down to a very low level which can lead to a habitual purchase decision-process. When it comes to organizational buying, the process is always a cognitive one because purchases always entail huge risks that concern the whole organizations. As previously discussed, the risks that are associated to the purchase determines the level of involvement of the buyer. The higher these risks are, the more efforts the buyer gives which makes her more involved in the decision process. This can explain the difference between the purchase decisions between a consumer and an organizational buyer. The motivations that are related to these purchase decisions process will now be looked at. Because an organisational buyer is tasked to buy on behalf of the organization, the motivation behind the purchase is mostly related to functional benefits, or what the purchase can do to the organization as a whole. For the equipment example above, the major motivation for the organization when buying such equipment is to make it part of a larger production line, then manufacture products that it needs to sell to the market. The decision is based on the benefits that the equipment can give to the organization as a whole. If the equipment fails, the benefits will not be realized. Apart from the risks, because of the nature of this purchase decision, the organizational buying process will always remain a cognitive one, not an emotional or habitual purchase in contrast to those of a consumer. On the contrary, a purchase decision of a consumer will be a cognitive, emotional or habitual one as the risks related to a purchase can be so low. Depending on the level of the perceived risk, the consumers decision making process will be determined. For example, the higher the perceived risk, the consumer is more involved and will be more likely to use a cognitive path to decision-making. These include high risk purchases such as houses, cars, computers, travel packages, etc. Apart from making their decisions based on the logically assessing the alternatives and pursuing a cognitive path, the consumer may opt to buy a product because of the peripherals, or benefits peripheral to the product itself. This may include the brand, the image of the product, and other emotional benefits to the consumer. When a purchase decision-making process is becomes an emotional one, it is usual that the consumers buy a product based on the peripherals. The purchase of a certain brand, especially in the cases of luxury brands and products is considered an emotional one. The function of the dress is to provide clothing, but because the purchase concerns more than the dress, the purchase is due to peripherals and an emotional one. When the purchase entails very little risk, the purchase process becomes a habitual one. Because of the low risk, the consumer will have very little involvement in the process, and the decision to buy will be out of habit. Only when the product fails will the consumer be alerted of the outcome, and will be forced to make another decision. An example of this can be buying a chewing gum. Only when the chewing gum fails to deliver the desired benefit, or when the consumer feels like changing and trying another brand out of change of habit will a change happen. Read More