Marketing - The Effects of Credit Crunch on the Buying Behaviour of Consumers - Research Proposal Example

Marketing – Research Proposal Introduction It is a littler over two years since the subprime exposure crisis in the United s of America in July2007 ignited the credit crunch and recession in developed world. The paucity of credit was and continues to be experienced by not only business enterprises, but even the general populace. Buyer behaviour is influenced by the availability of credit and the continuing impact of the credit crunch provides an opportunity for understanding influence of credit crunch on the buying behaviour of consumers. Objective of the Study The objective of the study is to evaluate the effects of credit crunch on the buying behaviour of consumers Relevance of the Study Buying behaviour is an important aspect for marketing, the understanding of which makes for marketing to effectively market products. The credit crunch currently being experienced provides an opportunity for an understanding of its influence on buyer behaviour. This learning will allow marketing to work out strategies to operate efficiently in markets, where there is a paucity of credit. Such strategies could include giving tangible value to brands and pricing and promotion strategies in a market where there is a paucity of credit. Literature Review Lenard, 2008 suggests that during paucity of credit, consumers tend to equate price and brand. In other words in the credit crunch have made consumers hypersensitive to price and this provides an opportunity to develop a pricing strategy that capitalizes on this hypersensitivity of consumers to price. Less of brand promotion and more of competitive pricing may be the requirement in such a marketing strategy (Lenard, 2008). Why has price become such a dominant factor in consumer behaviour? Even prior to the credit crunch wages as a share of national income has been showing a downward trend over the last three decades raising the level of the influence of price on purchase decisions. The credit crunch has heightened this influence of price on purchase decision (Harman, 2008). High value capital goods are among the first places to feel the impact of credit crunch. This can be seen in the changed behaviour in car purchases in the United Kingdom, fuelled by the higher prices of petrol and the credit crunch. In the United Kingdom new car registrations fell by 21.8% in September 2008 (Committee on Climate Change, 2008). Consumer behaviour reaction has not just impacted high value capital goods, but almost every product and service. For almost fifty years consumers were given a surplus of credit that enabled them to purchase with the minimal influence of price. The credit crunch changed all that in that it sparked recession in the UK in the final quarter of 2008, which led to an increase in unemployment and heightened fear of job losses. The credit flow was shut off and the unemployment and fear of job changed the focus of consumers to price instead of any other aspect of the product. Where a product or service was considered unnecessary, purchases or utilization of services just dropped and where purchases or utilization of services competitive prices became the focus in buyer behaviour (UK Consumers React to the Credit Crunch, 2009). Globalization had already enhanced the competition in the markets and the present global credit crunch will have the impact of greater competition in terms of prices in response to consumer behaviour focused on prices. For business organisations to survive environment of consumer behaviour cost reduction strategies will be more important than growth strategies (The Chartered Institute of Marketing, 2009). Universe of the Study The study will be conducted in five supermarkets in the city of London, UK. Sample Size Twenty consumers each from these five supermarkets making up 100 (N=100) customers will be sampled in the study. Methodology This study will use an inductive and deductive framework to meet the objectives of the study. The reason for the combination of inductive and deductive frameworks lies in making use of the advantages of both. Many of the problems that management research explores are done more effectively through the combination of inductive and deductive methods. The inductive method is better suited for the use and interpretation of qualitative data, while the deductive method has more emphasis on measurement and therefore is better suited for use in quantitative data and the interpretation of quantitative data (Lancaster, 2005). According to Lancaster 2005, p.26, “we may begin a research project using inductive methods and approaches, by say, first observing and measuring a phenomenon or problem that we wish to explore. This in turn can lead us to develop theories that we can then test using deductive methods and approach”. The study will use a literature review as part of the inductive approach to understand the effects of credit crunch on the buying behaviour of consumers. . Nunes and Al-Mamari, 2008, p.67, argue in favour of such an approach in the use of the inductive method to formulate early theories and problems in research. According to Nunes and Al-Mamari, 2008, p.67, “the literature review process should therefore produce a priori theory that reflects the cumulative knowledge in the field on the phenomenon being studied, i.e., generic a priori categories that are strongly expected to be relevant in the discussion, explanation and understanding of that phenomenon”. Such an approach however does not imply that the subsequent findings need to be in keeping with these initial theories that arise from the literature review, for they only constitute the initial framework, which the subsequent part of the study may uphold or be denied, based on the results obtained from the deductive process (Nunes & Al-Mamari, 2008). This is the justification of the use of the understanding generated from the literature review, as the basis for the subsequent deductive approach for the study purposes. The study has chosen to use the questionnaire method to acquire the required quantitative data for the purposes of the study. Questionnaire are one of the effective means to get quantitative data and is popularly used in many research studies, because of the limited constraints it puts the research team in and the utility of the data received through it. Questionnaires can be used to generate factual data like age and sex or it can be used to generate opinions as is required in this research study. The study will employ an open questionnaire, because of the enhance depth of probing that it offers over the closed questionnaire (Easterby-Smith, Thorpe & Lowe, 2004). Statistical Analysis The study acknowledges that there is a limitation in the knowledge and skills in the use of advanced statistical tools like SPSS. This limitation will mean that simple statistical tools like classification, tabulation, averages, percentages, graphs, bar charts and pie diagrams will be employed for the statistical analysis of the data. In the event it is possible to seek and obtain assistance for statistical analysis, then the advanced statistical tool SPSS will be used to provide the results of the study. Ethical Considerations 1. Administrative sanction from the institution and permission from the will be received before starting the study and applying the questionnaire respectively. 2. The supermarkets will be clearly informed about the nature and purpose of the study, while taking the permission. 3. Customers will be informed of the nature and purpose of the study before they volunteer for the study. Only those customers willing will be made a part of the study. 4. Professional ethics as a researcher will be maintained at all times during the study. 5. Data collected will be for academic purposes only. 6. Data will be collected in such a manner as to ensure confidentiality of the super markets and customers (Questionnaires will be coded). 7. At the end of the study the questionnaires will be handed over to the administrative authorities for safe keeping or destruction. Literary References Committee on Climate Change. 2008, Building a low-carbon-economy- the UK’s contribution to tackling climate change. The Stationary Office, Norwich, UK. Easterby-Smith, M., Thorpe, R. & Lowe, A. 2004, Management Research: An Introduction, Sage, California, USA. Harman, C. 2008, ‘From the credit crunch to the spectre of global crisis’, International Scialism: A quarterly journal of socialist theory, [Online] Available at: http://www.isj.org.uk/index.php4?id=421&issue=118118harman_33 (accessed September 13, 2009). Lancaster, G. 2005, Research Methods in Management: A Concise Introduction to Research in Management and Business Consultancy, Elsevier Butterworth-Heinemann, Oxford, UK. Lenard, J. 2008, ‘What Fuels Consumer Behaviour’, NACS Magazine [Online] Available at: http://www.nationalpaymentcard.com/releases/03-08_NACS.pdf (accessed September 13, 2009). Nunes, M. B. & Al-Mamari, S. H. 2008, ‘Inductive Approaches Using a Priori Coding in Information Systems Research: A Discussion’, in Seventh European Conference on Research Methodology for Business and Management Studies, Regent’s College, London, UK, 19-20 June 2008, ed. Ann Brown, Academic Publishing Limited, Reading, UK. The Chartered Institute of Marketing. 2009, The Marketing Planning Process. Butterworth-Heinemann, Oxford, UK. ‘UK Consumers React to the Credit Crunch’. 2009, Reuters [Online] Available at: http://www.reuters.com/article/pressRelease/idUS124398+23-Mar-2009+MW20090323 (accessed September 13, 2009). Read More