Consumer Behaviour with Reference to Hospitality and Tourism Industry - Essay Example

A Study of Consumer Behaviour (With Reference to Hospitality and Tourism Industry) TABLE OF CONTENTS 0 OBJECTIVE OF THE STUDY 2 Introduction 2.0 PSYCHOLOGICAL FACTORS OF CONSUMPTION 2.1 Consumption cycle 2.2 Needs 2.3 Perception 2.4 Motivation 2.5 Life Style 3.0 DECISION MAKING 3.1 Decision making process Emerging need Active Consideration Researching; Short-Listing; Purchase Post-purchase Behavior 3.2 POST MODERN CONSUMER BEHAVIOUR 4.0 RESEARCH METHODOLOGIES 4.1 QUALITATIVE RESEARCH METHODOLOGIES 4.1.1 Case-Study Research Methodology 4.2.2 Observation Research Methodology 4.2.3 Ethnographic Research Methodology 4.2 QUANTITATIVE RESEARCH METHODOLOGIES 4.3.1 Descriptive Research Methodology 4.3.2 Experimental Research Methodology 4.3.3 The Quasi-Experimental Research Methodology 4.3 JUSTIFICATION FOR QUANTATIVE METHODOLOGY 4.4 DATA COLLECTION METHOD 4.5 DATA ANALYSIS 5.0 LITERATURE REVIEW 6.0 FINDINGS/RESULTS AND ANALYSIS 6.1 CONCLUSION 7.0 REFRENCE ABSTRACT The assignment discusses in detail the consumer behaviour, starting the research main objective, which is to understand the negative and positive service encounters in hotels and restaurants and its impact on customer's behaviour. The consumption process as the basis of the report, which traces the evolution in the Western world, and then discuss the decision making process, followed by the literature review of the hospitality industry and research methodology to explore the issue with a solid conclusion. 1.0 OBJECTIVE OF THE STUDY The objective of this research is to understand the consumer behaviour by studying consumer decision-making process and its application in hotel and restaurants, with reference to positive and negative service encounters and how degradation of quality affects the tourism sector. To understand the problem extensive study will be done through secondary sources to form the basis of literature review, which will be later on analysed and under research findings. 1.2 INTRODUCTION Consumer behaviour is "the study of how consumer, and how they buy and why they buy" (Blythe, 1997) .It is sub-category of marketing which blends elements of psychology and sociology and economics. It tries to fathom the buyers decision-making process and study the characteristics of individual consumers, such as demographics, psychographics and behavioural variables in an endeavor to understand, what buyers want. And thus by understanding consumers needs, the marketers come up with a better strategy of selling Till Middle Ages, buying for purpose was considered a necessity; however making profit was considered a mean practice. Making profit has been considered cheap and mean practice in the early Christianity and Islam as well. Normally the traders were foreigners who earned profit along with the" contempt of the people they served". Amassing of wealth was considered corruption of the soul and death of spirituality. Priests often vehemented against the desire of accumulation with prediction of fire and hell. .Thus restriction on consumption was often used as a political tool in the histroy and it was not the sacrcity of the resources, but rather accoumulation of wealth in few hands, which made the rich super rich and poor more poorer (Klein,2002). The arrival of industrial age changed the senario for the indsutialist nation as now more can be produced in less time and much cheaply.This consumer revolution of early twentieth centuries took place due to the arrival of new technologies.More goods, but laying waste as people didn't have enough cash to to buy.The Henry Ford famous $ 5 per hour wages was harbinger for the age of consumption .In 20th century producer adopted a different policy which was to chang the mindset of consumer. In the past saving was considered virtue now the thinking has to changed ,which is "the commercialization of society" . The luxries which earlier were dienied to the common man were made necessities of living. To achieve consumerism in the United States to occur, buying habits were transformed and luxuries were made into necessities. The luxry products moved out of the drawing rooms of the elite to become part and parcel of common man creating high standard of life by the producer. The culture of consumption was soon adovacted by massive campigns and society was covinced to belive in the "idelogy of pleasure" (Lury, 1996) It was this combination of all these forces which changed the mindset of society from saving pennies to spending money on fashion, fad, lifestyle and seeking of pleasure. As more products were to be sold wages has to be increased so did the credidt limit to induce the consumers ,all of these factors stimulated ecomnomic growth and truly established wide distribution of wealth and creating a true consumer society. 2.0 PSYCHOLOGICAL FACTORS OF CONSUMPTION Consumption is defined as the satisfaction of human wants through the destruction of the utility embodied in goods and services. Wealth is composed of goods and services. Consumers goods are meant to satisfy human needs and desires. The function of producer is to create, while consumers give value (money) to the producers, thus the cycle of consumption continues. 2.1 Consumption cycle The consumer experiences a desire, (2) the enterpriser recognizes that desire, and (3) creates a product. (4) The size of reward depends upon the capacity of his product to appease client's desire (Waite, 1949). The manufacturers have concept of a rational being picking and choosing always seeking and rewarding the enterpriser who anticipates consumer wishes. In a consumer society, it is the consumer who rules and products are designed and changed according to the desire of consumers .It is not astonishing that manufacturer often make remarks like consumer is king or customer is always right. It actually determines what shall be made and how much consumer is willing to pay (Gardner, 1993). 2.2 Needs We all have needs and marketers have always been searching for this latent needs in consumers. Marketers encourage needs and they associate needs with acquisition and purchases. We human beings are prone to possess things. Products are possessions, be it a car or garment or any electronic product, human being feel satisfaction in buying products. Products fulfills such needs, they are suggestive, creating an aura with possessions. For example sports car does not have any practical purpose but being expensive and unlike normal cars makes it a symbol of status and prestige. East (1997) has aptly remarked, that consumption is the "ostentatious use of goods" to signal status to other members of society. Marketers publicise this image of uniqueness, distinct from others giving consumers a sort of satisfaction, which they want again and again. Maslow (1943) theory of human motivation (see figure 1.1) explains that human beings are motivated by needs. Human beings have different goals in life, some aspire superior job, some desire expensive car or a grand home, and other seek to become professionals. The values of society influence goals in life. These values create life style and it is this life style, which marketers create and recreate time after time to sell their products. Figure 1.1 MASLOW THEORY OF HUMAN MOTIVATION Source: http://psychclassics.yorku.ca/Maslow/motivation.htm Consumer society offers countless choices in selecting products. Often it's winning the trust of consumers and creating a brand, due to which buyers prefer product to other. For example Sony (electronic) products are often sold at a 30 to 40 percent higher price compared to other brands (Griffin, 2002) 2.3 Perception It is not a single factor, which counts; perception about a product differs from consumer to consumer. Price is normally the first thing to be counted in any bargain. Normally perceptions are formed through many sources, such as media, papers, friends, and personal experiences, which may be true or not true at all, but it is these perceptions, which creates the first step for buying. 2.4 Motivation Motivating factor differs from person to person, according to the class, education and economic background. Motivation is the force behind the people behavior. In the case of consumer behavior, motivation cannot be simply understood by mere observation. The reason is that motivation is an intricate process. A customer looking at a package cannot give us any idea, what he is actually looking at. Motivation can be positive or negative Positive motivation leads to pleasure and happiness, while negative motivation leads to pain and discomfort. People look normally for positive situation such as happiness, joy, leisure, freedom, and social approval. The marketers sell both kinds of products; positive products result in holidays, vacations, while products related to negative motivation are painkillers, facial products and garments. Advertisers convey this appeal of products in different ways; for example, after-shave advertisements are associated with masculinity. Products related to woman are more focused on desirability. Advertisements related to garments, perfumes, makeup, portray the message of deniability to women. The marketers exaggerate power of the products and lures consumers with expectation of enhanced happiness and satisfaction (Solomon, Askegaard, 2002) 2.5 Life Style Larose (2002) has mentioned that buyers buy according to their lifestyles. For example, the Internet is used by educated and techno savvy class. The buyer comes normally from younger age group. The electronic products and gadgets are purchased mainly by younger age group (21 to 35 years old). Young people are the first "internet generation" of shoppers and are often prized shoppers for marketers. According to an estimate these young consumers spend about 12 percent of their total income online, and those purchases are concentrated in categories (clothes, music, and books) frequently associated with compulsive buying. Younger people are more curious and can afford to experiment in life (Gottdiener 2000). At an early age young people copy each other life style and it is often a life style, which is associated with modernity and sophistication. Latest products not only give the illusion of modernity, but it also satisfies craving for novel and exotic products. Possessing contemporary products gives the idea of modernity. All these factors combine to make lifestyle for modern consumers. 3.0 DECISION MAKING 3.1 Decision making process The behavioural science answers questions such as, how consumers make choices, and why they prefer one brand to other and these answers are utilised by manufacturers to enhance their products and businesses. Consumer decision-making is a complex process. Consumer behavior is described as the "behavior patterns of consumers" which follows the decision process in buying products. According to research in psychology, consumer mind works like mathematician, comparing and contrasting in order to search for alternatives to reach a decision. People differ in decision-making and human mind is not software, which can do exact replication. The purchase decision process consists of five stages as described below figure 1.2 (East, 1997). (a) Emerging need (b) Active Consideration (c) Researching; (d) Short-Listing; (e) Purchase Post-purchase behavior (a) Emerging needs The cognitive view defines consumer as a "rational decision maker". A problem (desire of product) arises and consumer comes with an attempt to solve the problem. A problem can be any thing, the reward of which is either avoiding pain or feeling satisfaction. The marketers provide solution by offering products. (b) Researching In cognitive model consumer search information, select and reject the choices based on this information. However it is not possible that consumer will utilise all the available options at hands. A bitter experience with a product is unlikely to result in a repeat purchase. The normal resources for information are colleagues, friends, newspaper, journals and advertisements. A purchase decision differs from expensive to inexpensive products. For example buying a book is less expensive matter. The difference of few dollars from one shop to another does not matter. However buying a car is high involvement decision, where consumers spend more time to seek thorough information, before making the final decision (Wertime, 2000). Figure 1.2 STAGES OF CONSUMER BEHAVIOR Source :http://www-rohan.sdsu.edu/renglish/ ( c) Active Consideration The information search clarifies the problem for the buyers. When consumers have more options at hands to choose from, all options are utilized, which can either be one factor such as price, brand and value or all. For example a consumer buying a digital camera will check camera brand, memory size and price. After checking all this information consumer will finally make a purchase. (d) Purchase (decision) During a purchase consumer is often riddled with questions, such as where to buy What are the terms of sale How was the past shopping experience What is the warranty and return policy, all of these factors are taken into account before customers make some purchase decision. Environment of store, treatment of the sales people and above all pleasantness shopping experience all these factors contributes in a successful purchase. If a sales person ignores a customer, it is unlikely the customer would shop again. However if a customer receives positive attitude, he is likely to shop again and again (Jalliet, 2000). (e) Post purchase Behavior All products carry some expectations. It is upon the fulfillment of these expectations that a consumer is either satisfied or dissatisfied. This satisfaction or dissatisfaction affects consumer values, perceptions and repeat behaviour. Positive post-purchase behavior of the sales people also contributes to customer loyalty and retention. 3.2 POST MODERN CONSUMER BEHAVIOUR One of the key challenges in the modern consumer behaviour is the shift from a passive shopper to becoming an active shoppers and the reason for this conversion of postmodern consumerism is the Internet. The study of online consumers shows that there are a number of differences between real world shoppers and the online shoppers. Online shopping is a relatively new type of shopping method. The way people perceive Internet depends upon their educational and cultural background. Perner (2004) has pointed out that each person has his own worldview. Online shopping has the ability to tailor shopping according to the "individual's preferences". Electronic commerce has opened a whole new world; no longer consumers are restricted to shop in their own country. Electronic commerce is a new phenomenon; little has been known about online shopping behaviour. Consumers have different attitude towards cyber space according to their education, experience and lifestyle. According to Skolnik (2001) there are four factors that affect consumer's decision to shop online: vast selection, screening, reliability, and product comparisons. Consumers can buy virtually anything via the Internet, just by typing in what they want. Online shopping sites classify their listings into categories, subcategories, and even sub-subcategories to facilitate browsing and providing countless options. Online shopping allows consumers to compare products, find alternatives and encourage price competition. It is an innovative and convenient way of shopping compared to traditional shopping channels. Online shopping offers convenience, the most important factor associated with Internet shopping. The consumers who perceive less uncertainty are likely to buy more online. The choices over web are countless; customers find it easy to switch from one shop to other compared to real world, where many physical hurdles are hard to overcome. The next shop over web is always a click away, thus it is inevitable for online companies to provide ultimate customer satisfaction. "Consumers who have a satisfying (first) purchase experience are likely to spend more time and money" in future as well. First impression is the last impression; first online purchase is the "moment of truth ". It is just like starting a song with the right node (Mary, 2002). Some older users find cyber shopping complex and intricate due to their lack of technology; they find Internet shopping complex and often end up in frustration. Scores (2002) indicated that poor Web site design prevented 65 percent of motivated shoppers from purchasing from major e-commerce Web sites. It is often the web site complex design, which according to the Webmaster looks perfect, but from customer side it may look illogical and intricate. Viruses, spyware, phishing and scams are making Internet unsafe place for average Internet shoppers. Jun and Yang (2002) has mentioned that nine out of ten Internet users have mentioned, that they have changed their online behavior due to the fear of falling victim to spyware. Either they do not shop through normal browsers or shop only in a limited amount or completely stop shopping. These people are willing to shop, but the browser hijackers have made them fearful, as a result they are unwilling to open their information in such hostile environment. The online act of purchasing is key to any marketing strategy. Understanding this process of buying online is of utmost importance. It is not mere regular shopper that counts, the modern consumers who do not shop online have also some motive, such as gathering information for offline shopping. There are many things to be known, as why some people buy online What motivates them to buy Why other prefers to buy offline What they exactly look for on a specific web site. And why some trust online shopping and other do not. There may be some similarities between normal consumers and post-modern consumers, however the new age consumers need more tailored strategy compared to traditional methods. 4.0 RESEARCH METHODOLOGIES 4.1 QUALITATIVE RESEARCH METHODOLOGIES Qualitative methodology focuses on "quality" a term referring to the essence or ambience of something (Anastas, 1999). Qualitative methods are used to understand complex social phenomena. They are suitable to seek knowledge about the fundamental characteristics of a phenomenon under study. 4..1.1 Case-Study Research Methodology Niland (1954) has defined case study as a "realistic" methodology, which deals with solid and specific questions. Case study translates research question into more researchable problems, and provides rich examples, which are easy to comprehend. The significance of case studies is its revealing meaning of a phenomenon. 4.2.2 Observation Research Methodology Observation is an effective way of finding out about people in their particular environment. Garvey (1998) has mentioned that observational research method provides understanding of interaction between marketers and users, exploring members interaction in an organisation and understanding norms in a community. 4.3.3 Ethnographic Research Methodology Ethnography is the study of cultural groupings. It concentrates on close field observation of socio-cultural phenomena. Ethnographic research is a holistic approach that tries to understand a culture through the members of given culture. TABLE 1.1 QUALITATIVE RESEARCH DESIGN Historical Collection and evaluation of data related to past events that are used to describe causes, effects and trends that may explain present or future events Ethnographic The collection of extensive narrative data over an extended period of time in natural settings to gain insights about other types of research. Data are collected through observations at particular points of time over sustained period Data include observations, records and interpretations of what is seen. Case Studies An in-depth study of an individual group, institution, organisation or program Data include interviews, field notes of observations, archival data and biographical data Source: Adopted from Veal (2000) 4.2 QUANTITATIVE RESEARCH METHODOLOGIES Quantitative research is gathering data in quantity. The goal of the quantitative research approach is to find out the truth by using statistical procedure. The use of statistics reduces contradictions, which may exist in research. Morgan (2000) has mentioned that "quantification" allows accuracy of statements by providing facts and figures with precision. Absence of one will make the other incomprehensible. It is assumed that quantitative methodologies are more logical and more comprehensible than qualitative methodology for this reason. TABLE 1.2 QUANTITATIVE RESEARCH DESIGNS Descriptive Describe phenomena, as they exist. Descriptive studies generally take raw data and summarize it in a useable form. Can also be qualitative in nature if the sample size is small and data are collected from questionnaires, interviews or observations. Experimental The art of planning and implementing an experiment in which the research has control over some of the conditions where the study takes place and control over some aspects of the independent variable(s) (presumed cause or variable used to predict another variable) Quasi-experimental A form of experimental research. One in which the researcher cannot control at least one of the three elements of an experimental design: Environment Intervention (program or practice) Assignment to experimental and control groups Source: Adopted from Veal (2000) 4.2 .1 Descriptive Research Methodology Descriptive research is related to describe "characteristics of a given population accurately" (Anastas, 1999). In descriptive studies researcher does not merely present convictions of casual observations but like an investigator researcher carefully examines problematic situation; describe the problem, state hypotheses and analyse the data. Descriptive research begins with a well-defined objective and is aimed to describe an event. Descriptive research not only helps in describing but it also documents information about the subjects. Descriptive research is focused and has clear objectives instead of hypotheses. 4.2.2 Experimental Research Methodology The experimental method is basically control and trial method. Experimental methods are normally associated with natural science and laboratories. 4.3.3 The Quasi-Experimental Research Methodology . In order to have an approximated ideal of an experimental research which is less complex and less time consuming than an actual experiment is referred as "quasi-experiment". 4.4 JUSTIFICATION FOR QUANTATIVE METHODOLOGY Gardner (2001) has described numerous advantages of experimental methodology; such as experimental study deals with realism. Experiments can be replicated any where to produce the same result. Experimental studies can also be carried as longitudinal studies but are time consuming. As the study is description of the consumption and consumer theories, which requires extensive study and putting them in proper format, descriptive methodology is more ideal to conduct such study. 4.5 DATA COLLECTION METHOD As the chosen methodology for this study is quantitative (Descriptive), the data for this study will be collected from books, journals, magazines and online libraries. 4.6 DATA ANALYSIS The objective of the data analysis is to summarize the themes and patterns and determine the relationships among the variables. The researcher will analyse the recorded conversation after a series of reading and study performed for this study and the finding s will be discussed at the end of this study. 5.0 LITERATURE REVIEW Today tourism is not plain and simple sector, but rather it has now a holistic approach dependent on many supportive industries. As it encompasses different sphere of life with a society, it becomes increasingly important that today many states around the world are adopting a state planned tourism polices. With the spread of globolisation, tourism has generated US$635 million, other than US$444 billion gathered in registration and receipts, with exclusion of $180 billion of which was generated by transport sector due to the movement of tourist (Cooper and Wahab, 2001). The achievements in global information technology is playing its own unique role by providing un-imaginable services with highly competitive prices from all over the world and increasing pressure on quality service. As planning and marketing of tourism related products are competitive, the pressure builds on providing quality service. Often a resort may have very high standard, but it may not be able to cater exactly to the customers needs of its customers, which leaves customers unsatisfied. Providing quality customer needs a lot of patience and hardwork, which can lead to provide success in the competitive world. According to Hoffman (1997) "service quality is an intricate issue constructed" due to various factors by customers, depending on his/her emotional state, resort environment, and the staff attitude to the customer's needs, which makes it hard to measure the quality service. For example it is generalized that greetings and smiles increase the customer satisfaction, however studies have shown that customers often have an expectation about a product or service and the response (negative/positive) is the outcome of that. Expectations are formed according to customers service provided making service encounters instrumental to increase the customers satisfaction. Miller (1977) has defined different kind expectations, which refers to ideal or tolerable expectations carried out in a continuum. However there is no fix criterion to measure which service is more important to a customer. For example customers staying in a resort encounter many kinds of services ranging from room, beach location and quality of food. Normally customers associate clean and idyllic beach with clear water and palm trees as an ideal place to be in. And when it comes to accommodation on such resorts, beach view is the prized sight for customers, but realistically it is not possible to provide all rooms the same view, unless, the resort is sprawled and very big, which is not possible in the case of small resorts. It may happen a customer is satisfied from room service, but the food or beach size or staff attitude does not meet his expectation (Williams, 2002). Often in resorts there is small card left in the room to mark the quality of service, which can hardly provide the accurate information of the customer experience, as card has standard questions and cannot meet all the scenarios the customers encounters. Similarly in the restaurants Johnston (1985) argues that the dinning room environment or ambience is affects customer most and forms the perception of dinning quality. Often the ambience coupled with beautiful furnishings and superior quality of service are the influencing elements for a customers to come again and it is often quality of food and waiters good table manners which leads to customer satisfaction in a restaurant. In any organisation quality customer service is key to success and increase in business. The way to increase quality and performance is by measuring the customer feed back and finding the gap between the services provided and the customers expectations (Gronroos, 1998). And if the customers are satisfied, they will utilize the services of the same hotel and restaurants again and the repeat purchase will take place. 6.0 FINDINGS/RESULTS AND ANALYSIS The research report has explored and described in detail the consumption theory and decision-making process along with the detailed literature review to understand customer-buying behaviour with reference to creating quality service in the restaurants and resorts. From the study and data studied, it is clear that providing quality service is essential to retain customers, however perception of quality differs from customer to customer. For some customers quality service may mean high-class accommodation with bigger bathroom, for others it may mean better room view, good food and prompt response, almost a package of every thing, and yet there will be others who want every thing on budget price. The common mistake takes place when an expensive resort is launched without any understanding of customers needs and the management expects customers to come on their own without listening to the customers needs. This sort of over confidence creates a false perception of quality, and the management soon realize that customers are still unwilling to come to a resort either due to their own bitter experiences or bad publicity spread through friends and colleagues. The study has shown that for any business understanding the psychology of customer is very essential and specifically the hospitality sector, which is not selling a ready made product, but is selling services as product. Thus it is impetrative that management of the resorts should explore the psychology of their customers and try to understand, how their customer think, feel, and why they have selected their hotel/resorts and would they visit again or not. It is these kind of questions which can give the management of the resort/ restaurants to tailor their services according to the their customer needs. It is understandable that different customers will have different reasons and motivation for making a decision, yet being in customer service, there is always an opportunity of improvement, which can be explored through further research and detailed studies. The decision making model has provides insight into consumer's mind and it has also provided the researcher to understand customers behavior. However ,human beings are not machines nor robots, who can think in exact sequence , there can be occasions where a buyer can skip some step in the middle and jump to direct buying or go two step further and come back to step one or he/she may complete the buying process in fewer than six steps. In the age of Electronic Commerce, new challenges are arising for business with new set of consumers who are more educated, well informed and have greater bargaining power. For example booking of ticket or hotels can now be done directly by the customers as Internet has provided that opportunity, and the role of middleman or agent is dying. There is no doubt, human beings have basic needs, the consumer decision making model is helpful to provide basic insight, however it has limitations as there are new questions arising especially, when marketers want to launch their products in new markets over the Internet. They have to overcome the cultural and language barriers, if they want to grow and wish to remain in the business. This study has responded to some basic questions about decision-making, however like every study it has limitations of time and funding which are essential for every study. The ideal study mode for hospitality service will be longitudinal study extended in a resort over a period of time which will allow the researcher to interact in real time with the customers to understand the quality service. 6.1 CONCLUSION The consumer economy is based on consumer choices and decisions. The problem for the producer has always been, how consumers make choices How do they decide What does a consumer really want It is true that consumers seek to satisfy their wants, while the producer constantly has to meet those wants. Consumer often have long list of products with countless choices, he has to make a limited selection. How consumer makes his selection has always been riddle. Understanding this riddle of consumer decision-making is vital for the growth of business, and marketers have to constantly tailor their products to meet the growing demands of customer to ensure prosperous business. REFERENCE Blythe, J. (1997) The essence of consumer behaviour. 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