Major Factors that Affect Consumer Buying Behavior - Coursework Example

Topic: Identify, analyse and evaluate the major factors that could affect consumer buying behaviour. Introduction: This paper seeks to identify, analyze and evaluate the major factors that could affect consumer buying behaviours. Specifically we will attempt to understand individual differences in terms motivation, personality, attitudes, perception, attention, memory, information processing, which we also call as internal factors and environmental influences in terms of culture, social class, family, situation, which we also call as external factors that affect consumer behaviours. We will apply these factors to an analysis of marketing activities and we also identify and evaluate of key differences between consumer and organisational buying behaviour by using car purchase as an example. In so discussing these factors, we will also relate the same to other relevant concepts in marketing. 2. Analysis and Discussion 2.1. Need, the main determinant of product creations A man is created a living thing and he has varied needs. He is a mobile being and this need to move can be satisfied in so many ways. He needs to move to places so that he could get what he needs to do and what freedom could allow him to do. Sometimes, the need to move may be satisfied by the use of an airplane or sometimes by a ship if one wants to travel by water. In his dwelling, man needs to go to work and therefore he needs a vehicle him to bring to and from said place of work. Will it be always be car? The answer to the question need not be in the affirmative because there are many variables to consider why he would use a car. He can walk, he can take the public transport or he can just join a friend with another car. These possible reactions are the interest of marketers since these people want exactly to know how customer will behave and how really to convince him to buy a car. For simplicity, we will assume that the person must have the capacity to buy a car since a person who cannot purchase a car because of lack of income or wealth will not be targeted by marketers. The simple reason is that he is not part of the “demand”. So the next question is: Are there internal and external factors that get involved in consumer behaviour? Yes, the customer is influenced in either or both ways. Current theories in marketing says that what determines a person’s decision include his culture, his social group, other reference groups and his family. Internal factors too come in the way before a purchase is made and these include perception, motivation, attitude and beliefs and life style. We will discuss and analyse first the external factors and then the internal factors. 2.2 The external factors 2.2.1 Culture Bennett (1988) defined culture as "the complex of learned values and behaviours that are shared by a society and are designed to increase the probability of the societys survival." The meaning of culture dictates the reality of having learned and shared values. If we now try to apply it, let us observe the case of American culture from a Hispanic culture as far as car purchase is concerned? An American would rather have a car because he needs the car to travel to his place of work hence the purpose if more of functional utility but a Hispanic “chose price and style, compared to the general markets preference for price and safety features. Style to Hispanics also connotes quality, brand, and prestige.” (The CEO Refresher, 2004). To them, it “represented a symbol of accomplishment and success. Less-expensive or used vehicles are stepping stones, space savers for the idealized higher-priced vehicles. That is one reason analysts predict that there will be big increases in the Hispanic share of the luxury auto segment in the coming decade.” (The CEO Refresher, 2004). 2.2.2 Social Class Social class may refer to people who have not only similar income levels, but also, comparable wealth, skill and power (Churchill, Jr. and Peter,1995) (Paraphrasing made). We could therefore classify for example the American people in Lower Americans, Upper Americans, and Middle class Americans. For purposes of preparing a target market, a car maker may produce only such amount of luxury cars in relation to the capacity and lifestyle of the would-be consumers. The upper class preference for luxury cars is understandable. The people in this class have the money and they want to enjoy it above all else. The middle class would most likely buy a production car and sometime a luxury car in certain cases depending of what is more important to him or to her. Now we could see the difference in consumer behaviour despite the obvious classification of people according to social classes. This could be explained by other factors such as perception and motivation. 2.2.3 Reference Groups and Family A great number people want to consult the opinions of their friends and co-employees, their business associates and even the companies they are working. These are the so called reference groups which may assert in the minds of the would-be buyer which type of car he is going to buy. Churchill, Jr. and Peter (1995) agreed that reference groups act as reference point for evaluating customer’s beliefs attitudes. Reference groups actually comprise of the family, which is very relevant in car purchase. The family represents the most basic social institution, which could influence members in making the purchase decision. In the case of car, the husband and wife who could be the earners are targeted by marketers since they would most likely influence the decision to buy in the household. Churchill, Jr. and Peter (1995) explained that “with so many possible influences, marketers have to reach who the buyers and influencers are for specific products.” The authors thus emphasized the importance of the family in market segmentation is a desired. This is especially true if the younger members of the family would prefer stylish ones in case of rich families. 2.2.4 Segmentation After determining and establishing that certain groups do in fact play great part in the decision of the consumer, marketers now segment the market. Segmentation is done to focus on specific target markets. At this point, it should be easy to find that the relevance of the external factors depends upon the specific products to be sold and the manner of segmentation desired. Perner, (n.d.) defined segmentation as “basically involving dividing consumers into groups such that members of a group (1) are as similar as possible to members of that same group but (2) differ as much as possible from members other segments. This enables us then to "treat" each segment differently—e.g., by: (1) Providing different products (e.g., some consumers like cola taste, while others prefer lime), and (2) offering different prices (some consumers will take the cheapest product available, while others will pay for desired features) (Perner, n.d.) (Paraphrasing made). The best example of market segmentation in car industry is those that cater to functionality which includes the production car and those that cater needs style and more than functionality. Another example of segmentation is the one as cited by CEO Refresher (2004) when it said: “Minorities in the United States purchase more than 20 percent of the nation’s new and used vehicles. The Hispanic population, in particular, is estimated to have spent about $18 billion in 1999 on motor vehicles and parts, a figure that is expected to grow to $40.2 billion in 2010. In light-vehicle sales alone, Hispanics account for about 5 percent of that market. That translates into roughly $16 million annually.” 2.3 The internal factors Having discussed the external factors we have also to understand the internal factors affecting the behaviours of consumers. These include motivation, perceptual learning, attitude and lifestyle to complete the process. 2.3.1 Perception Perception refers to the way people gather and record information (Churchill, Jr. and Peter, 1995). A product may be excellent from the point of view of the manufacturer but what the customer will perceive is more important. It may be technologically ready but if the customer is not satisfied or delighted then he or she would probably not make repeat purchase, which is also a marketing objective. 2.3.1.1 Selective perception Churchill and Peter (1995) described how perception is influenced. They theorized that people gets exposed first to enormous marketing information just like when they see car in the magazine in the TV or in the Internet. With so many advertisements these would-be car buyers pay attention only to what is interesting or relevant to them. They illustrated by the fact that when one decides to buy a car, suddenly there is tremendous amount of magazine and articles, conversation and advertising on the subject of automobiles (Paraphrasing made). 2.3.1.2 Selective interpretation Buyer or consumers only have the “tendency to hear and interpret things in a way that fits existing beliefs and values” (Churchill and Peter, 1995). For example someone who believes that to be avail of the warranty of purchased car must be brought to a franchise dealer for repair, the customer would be deciding between availing the warranty for service and choosing a non-franchise shop to repair his car which would disqualify him to avail of the benefit. To have peace of mind, because the buyer perceived that the authorized shop would entitle him for warranty, then he would likely use a franchised repair shop. 2.3.1.3 Selective Retention With the enormity of information marketers want consumers to remember their messages but consumers only practice selective retention, “where people tend to remember only certain information that matches their beliefs and values. Thus marketers who can make the perfect match would actually accomplish its purpose. If for example a person hears that only authorized repair shop could guarantee the security in his car, he would most probably find it reassuring to follow the suggestion of the manufacturer to bring his car to the authorised shop. 2.3.2 Motivation Marketers are also interested in understanding motivation. As to what is motivation, Churchill, Jr. and Peter (1995) described it as the inner drive that propels the consumers to fulfil the need. In buying a car for example, what motivates the buyer? Is it the function? Is it the prestige? Is it the symbol? Consumers have different motivations and these could be confirmed by Baki, et. al (2004) who found the following reality about cars: Today’s society judges people on the type of car you drive. Society does not like to admit to this but it is very true. Manufactures know this happens and targets their markets by these thoughts. For example, anyone who drives a mini van is perceived as a soccer mom. This is because the manufactures target mini vans to mothers. Anyone who drives a nice vehicle is thought to be wealthy. No one wants to be seen driving an unattractive piece of junk because of what other people will think of him or her. Consumers also just feel better when they are driving a nice or new car, if makes them feel better about themselves. To further understand motivation in the purchase of a car, it observable that the self plays a major part in making a choice for car. Belk (1988) confirmed this when he said: “Our possessions are a major contributor to and reflection of our identities.” This is further backed up by Franken (1994) (p. 443) when the author said: “there is a great deal of research which shows that the self-concept is, perhaps, the basis for all motivated behaviour." and by Onkvisit & Shaw (1994) when the author said: “The Total sum of an individual’s ideas thoughts and feelings about themselves in relation to other objects in a socially determined frame of reference.” 2.3.2.1 Maslow’s Hierarchy of needs Maslow’s Hierarchy of needs is about a five-level hierarchy. Churchill, Jr. & Peter (1995) said that in general according to Maslow’s, people try first to meet the needs at the bottom of hierarchy; the physiological needs as the needs for the food and rest. “As the needs are fulfilled, people move on in the higher categories, that is the need fro safety, affiliation and self esteem and self-actualization.” (Churchill, Jr. & Peter, 1995). Applying now to the car purchase, the marketer may need to identify what kind of need may a car purchase satisfies. For example the marketer would not introduce a new car in a place where people could hardly afford to buy for their basic needs, there is simply no market. The authors also posit that Maslow’s hierarchy can help with selection of target markets. The authors mentioned, “Makers of a super compact car might position the product to meet the basic need for transportation. Makers of luxury sedan would seek to identify consumers who are more concerned about affiliation and self-actualization needs. “The most logical thing then to happen is consumer would be more motivated to purchase because marketers would tell them how the product would satisfy the needs. 2.3.2.2 Utilitarian and Hedonic needs Utilitarian means the need to basic functions and material benefits. Some buyer would like to have a car to satisfy their basic need to move from one place to another and what is important to them is the reliability of the car rather than fancy interior. The authors gave as example, “a recent study of consumer’s view about buying automobiles shows that they are primarily interested in such utilitarian criteria as performance, performance, reliability and ease of maintenance” (Adweek, August 24, 1992). In contrast hedonic needs are related to desire for pleasure and self-expression. Some people want to have sports car and buyers not only value the products in terms of functionality but also the speed and the stylish accessories. In such sense consumers are reacting rationally and emotionally. The marketer can then take advantage of the situation and there modify its advertising in trying to inform the customer how to meet those needs. 2.3.2.3 Attitude and Beliefs When one is already motivated to buy a car, does it follow that he will now to go the car dealer and now buy the car? Not necessarily, it is not that simple. One must also need to consider attitude. Churchill, Jr. and Peter (1995) defined attitude as the combination of person’s beliefs about the evaluations of something, leading to the tendency to act in particular way. If the person applies attitude in the above example he must weigh first the alternatives and his attitude will take a significant role. If is Friday the 13th today, the person might consider postponing the purchase of the car. If he believes that the nearest car dealer does not treat well customers of his own nationality he would probably find another car dealer. Or, if the salesman trying to sell to him a car is not a friend of his or from a company of which he associates something not good, he would probably listen but will defer buying the car and talk to some he could trust. Attitude and beliefs could be as varied as want the person feels from one moment to another depending on the stimulus he gets from the environment. 2.3.2.3.1 Cultivating favourable attitude Attitudes and beliefs are important because they could lead to purchase of the product that is what the marketers want to happen. Churchill, Jr. and Peter (1995) warned that belief does not necessarily lead to actions. Marketers have the unique role to play in cultivating good consumer behaviour since this will determine the acceptability of the product. A classic example is the case the use of nuclear energy, which is perceived to be dangerous. Unknown to several if not many people it has really an advantage, that being nuclear or having the characteristic of nuclear is good for the air. Without the marketer trying to change the attitude of would be buyers it would be very difficulty to effect change when the time come to use nuclear energy in cars. 2.3.2.4 Life Style Bennett (1988) defined lifestyle as “the manner in which people conduct their lives, including their activities, interest and opinions” They called the process of identifying various categories of life-styles, psychographics. Certain customer prefers different colours in or accessories in cars and this where marketers will be very interested in understanding customer behaviour. Churchill and Peter (1995) said that marketers use psychographic because life-style information tells them more about target markers so they can better tailor the marketing mix to meet customer needs. 2.5 The consumer’s decision making process After understanding the customer’s behaviour in purchasing a car, the marketer must be have him purchase and there fore he must understand how consumer decide in making the purchase. Churchill, Jr. and Peter (1995) said that in general, consumers undertake an more formal lengthy –decision making process when the following condition exist The authors then said: “Consumers may look for information about products from internal sources, group sources, public sources, marketing sources, public sources or experiential sources. Once they have chosen the products, especially a big-ticket item, they may experience cognitive dissonance, or loss of confidence in their choice. Marketers can counter this by providing support after buying decision has been made.” Marketers thus play a major role in trying to undertand and shape consumer behaviour. 3. Conclusion We have identified, analysed and evaluated the major factors that could affect consumer buying behaviour by using car purchase as example. We have therefore understood consumer behaviour in different contexts with the sole objective of how the marketer will take advantage knowledge of said behaviour in relation to the different factors in effecting the sale. We have seen the relevance of culture into the psyche of the consumer that a car could be more than its function to move people. Although the generic need of moving from one place is the utilitarian or functional need being serve, the selling of a car consider the other part of the consumers behaviours like his desire of style, for comfort and other non emotional needs of the customer which he solely defines on the basis of his attitude , beliefs, life styles and motivation. The role of the marketer is to make it sure that its product or service coincide with the particular need or belief of the customer as shaped and influenced modified by his culture, reference groups and family. Buy so fulfilling what is needed by making customer to perceive that product are exceptional would cause the consumer to effect repeat purchase which could lead to better and more business relationships, which could be long term as long the consumer finds value (Kotler, 1994) in his money after the purchase. We also found that marketers also segment the market so that they could know where to have the maximum revenue and which, if translated, may amount to higher profits. Segmenting considers both external and internal factors and which will influence most the behaviour of consumers. In the case of the car purchase, the consumer could be segmented on the basis of the social groups then further under family status and many other subcategories that the marketer may find in course of his research. The design of the strategy using marketing mix is influenced by all these factors to so as to get the decision maker and the buyer within the target market set. By so doing, sales may be maximized and objectives met. Bibliography: 1. Adweek (August 24,1992), Keeping the customer satisfied, page 40+ 2. 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Perner, L. (n.d.) The Psychology Of Consumers Consumer Behaviour and Marketing, {www document}URL http://www.consumerpsychologist.com/, accessed December 31,2006 10. The CEO Refresher (2004) Hispanic Marketing Update 2004 from Garcia 360°Comunica, http://www.refresher.com/!garcia6.html, accessed December 31,2006 Read More