Consumer Behavior and Decision-Making Process
Category : Consumerism, Decision Making Process
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Consumer Behavior AND Decision-Making Process
Today’s market is characterized by highly competitive organizations which are all vying for consumer’s loyalty. Firms are faced with the challenge to maintain their own competitive edge to be able to survive and be successful. Strategies are carefully planned and executed to gain the ultimate goal of all: company growth. However, external factors are not the only elements which influence growth. There are also internal factors, components working within the organization which shape the direction of the company.
Despite the economic and technological conditions that make it possible now to promote products and services in a larger consumer market, there are other factors that still need to be considered for a business organization reach out easier to their target market. Looking into the characteristics and thought processes of the people still holds as the most significant factor to be looked into by the individuals in the field of sales and marketing. The large scope of market can pose a hindrance to a successful marketing strategy in terms of over generalized definition of the target or niche market.
According to (2001), consumer buying behavior refers to the buying behavior of the individuals and households who buy the goods and services for personal consumption. Consumers around the world are different in various factors such as age, income, education level and preferences which may affect the way they avail of goods and services. This behavior then impacts how products and services are presented to the different consumer markets. There are many components which influence consumer behavior namely: cultural, social, personal and psychological ( 2001). These characteristics cannot be controlled by the companies; therefore, a need to assess these elements in order to create an effective marketing plan.
For the business people and the people in the field of advertising and marketing, the product or service being offered could be a good start in planning and executing an effective campaign. Knowing the product and its demands in the market as well as the people who will likely avail and take advantage of the offer will open the possibilities for a campaign that will be most ideal in the market. The manufacturers and the advertisers should be conscious enough to know the characteristics of their product and its demand. There are products and services that are only utilized in a particular location because of the unique lifestyle of the people. The character of the product, if properly studied, could be made and taken as an advantage rather than a drawback in gaining a larger number of target market. The advertisers especially the people in the creative department should answer to such demands in the advertising industry.
In this age of globalization and information technology, deciding which brand to choose can be a problem. Competition is evident and intense, and the marketing and management divisions of corporations are surely giving everything they can to establish their brands. A fine and well-advertised brand might have a competitive edge from a lesser exposed brand name. But then, a lesser known brand can also have an edge over price, given that they cost less than known brands. However, in the end, the decision still lies within the consumers.
It is always important to know the characteristics and nature of the products and services offered by any advertising campaign because this will guarantee the success of the marketing strategy. The lifestyle and daily routines of the people in the new target market should be likewise considered to ensure that the products and services offered will be able to enter the new market in a different locality. These learning outcomes could be effectively presented by sharing my experience in managing the birthday celebration of my cousin.
My cousin is celebrating her 8th birthday in three months time. She came from a well-off family with both of her parents operating individual businesses which they own. Our family came to love her because she is characterized as bubbly chatter who makes everyone laugh. She easily befriends people she meets and because of her loving nature those people hold her dearly. Her parents describe her as very responsible and accountable when it comes to her duties as a student and as a big sister to her two other siblings. Her friends love her for being thoughtful and caring. At school, her teachers account and recognize her above average academic standing.
Her intelligence is difficult to recognize because she is not the typical geek/nerd grade-schooler. Just like other kids her age, she likes to feel pretty and pleasing to others as she frequently rummages on my things as which she thinks are cool stuff to play with. She is very conscious of the way she looks, behaves herself and how the other people see her despite her young age which makes her more cute and amusing to the rest of the family. She thinks she’s all grown up because her parents raised her to be very independent and responsible making accountable for duties and chores that kids her age would not likely accomplish. But along with her grown up airs, she admits that she “never outgrew” her fascination with the enchanted lands, fairies, magic, witchcraft, wizards, spells, wands and the like as evident in her large collection of books, movies, costumes, and other fantasy collectibles, that we decided her birthday party will be themed in the land of magic and faeries.
As was earlier mentioned, her parents have individual business enterprises and full attention regarding the planning and conceptualization of their daughter’s birthday party cannot be adequately possible. My cousin understands such dilemma and she suggested that her parents ask me to head and manage the realization of the event. I found no excuse for my cousin to do as she requested because she knows and her parents are aware that I can easily fit the arrangements for the debut in my schedule as well as the fact that she trusts me more than her parents when it comes to “big events” that she calls after seeing the videos and pictures of my debut which I arranged and planned myself. They said it was timely because by that time, I will be craving to end my vacation and will be on the lookout for activities where I can see myself productive. I had no other choice but to accept their demand along with their promise to contribute in the planning and preparation needs of the celebration only to realize that the project was not as simple as I thought it was. I find the need not just to examine the characteristics and personality of my cousin but also of her friends and peers whom she will be inviting aside from the pressure to be economical in deciding the expenses for the event.
In today’s business world, the value and importance of customers is not something that should be set aside by companies. Marketing plans and strategies would be incomplete without paying much consideration to the customers. Customers will and should always be a part of the agenda in any marketing plan of any company. Because of the implications for profitability and growth, customer retention is potentially one of the most powerful weapons that companies can employ in their fight to gain a strategic advantage and survive in today's ever increasing competitive environment (1999).
Aside from being a strategic purpose, gaining customer loyalty is also a key corporate challenge today especially in this increasingly competitive and crowded marketplace because of the eventual profitability it will provide (1997). Every business wants to have a regular customer base because customers dictate profits and how the customer is treated will reflect on whether the customers will remain loyal with the company or not. This concept is illustrated by (1997) in a study about the textile and apparel industry. Competition forces certain brand names to become stronger than others because of product loyalty and name recognition. Consumers tend to buy what is already familiar to them. Thus, it becomes imperative for retailing outfits, especially small or exclusive ones to build a steady base of customers to exist in the competitive marketplace. This relationship becomes mutually beneficial with the company, gaining steady profit and the consumer having the product/s of the said company. However, the company can go a step further and make additional profits by cross-selling as well as save money from having to acquire new or replacement customers. The consumer, on the other hand, can also do the same, by demanding benefits from being a loyal customer that companies would certainly give to maintain them.
In order to successfully arrange for the party and to make sure that all the needed items are not left out, we listed twenty of the most important products and services that should be availed for the completion of the event. The top five items that will be discussed in the latter part of this section presents the considerations of buyers to explain and illustrate the concepts of consumer behavior as well as decision-making on the perspectives of the consumers. Included in the products and services to be availed are the following: (1) venue of the party, (2) catering services, (3) sound system and facilities, (4) coverage of the event, (5) birthday dress/gown for my cousin, (6) artists to decorate the venue, (7) make-up artists for the kids’ face paints, (8) carnival people for the amusements, (9) cake, (10) flowers, (11) lights, (12) host for the games, (13) candles, (14) souvenir items, (15) programme and invitation, (16) paints and toys, (17) actors for the mini-play, (18) transportation for the guests, (19) gifts, and (20) other needed products and services.
Consumers can either be subjective or objective, testing the persuasiveness of brand names. Retail stores selling the products also play an important role in swaying the decisions of consumers. The whole package or visual appeal of the retail outlet can determine sales, or the service of the sales ladies or the clerks. Furthermore, consumers may choose particular products/brands not only because these products provide the functional or performance benefits expected, but also because products can be used to express consumers’ personality, social status or affiliation (symbolic purposes) or to fulfill their internal psychological needs, such as the need for change or newness (emotional purposes) (2002). These are just some of the factors that affect consumer behavior. They have been the subject of consumer research for years, for instance, linking them with customer service and customer satisfaction, or the efficacy and persuasiveness of advertisement, etc.
According to the : “Consumers purchase products and services for the benefits derived from their use. While the study of economics focuses on outcomes, consumer behavior emphasizes the process. Rather than assuming perfect conditions, researchers of consumer behavior explicitly recognize the impact of situational elements on behavior and the variance among individuals faced with the same conditions” Which means that consumers buy products for the benefits they reap out of it, the study of consumer behavior investigates the steps, or the processes involved regarding the decisions made by the consumer. Most consumers regard the purchase of real estate to be ‘high involvement goods' that require complex decision-making,’ in purchasing real estate, such as houses, apartments or units, consumers usually go through three key processes before they consider buying, and these are: information search, evaluation of alternatives and decision rules.
and , emphasized that “consumer behavior is best understood as problem-solving behavior.” Consumer behavior is related to certain motivational behaviors that are aimed towards attaining a certain goal at the end. Goals, according to developmental psychologists are “cognitive representations of desired-end status which serve as standards in the control of behavior. Research on sensation and perception, attention, categorization, inference making, information search, memory, attitude and behavior, attitude formation and formation, conditioning and satisfaction have been undertaken to understand consumer behavior. In the area of sensation and perception and attention, most works are confined primarily to visual or auditory processes. Among the studies on this area include those of and (1994) who examined attention to packages on store shelves, as measured by eye fixations. As such, we first thought of the things that are needed for the occasion. Just like the list above, we defined the problems that we may encounter in the arrangements and preparations for the party and thought of ways to solve them by initiating back-up plans in case of unpredictable circumstances during the event. This is not only in terms of purchasing and availing the needed products and services but we likewise included all the immediate and emerging concerns for the celebration.
Based on the integrated model, culture influences behavior through its manifestations: values, heroes, rituals, and symbols ( 2001). The combination of both etic and emic perspective on the manifestations, can basically reveal culture’s strong relation with customer behavior. The etic philosophy is based on the definition of culture as “the collective programming of the mind which distinguishes the members of one group or category of people from another’’ (1997). On the other hand, the emic philosophy stresses upon understanding issues from the perspective of the subjects being studied (2001). As cited from (1988), this philosophy determines the coordinates of social action and productive activity, specifying the behaviors and objects that issue from both. When we bought and arranged for the five most important products and services for the birthday party we highly considered the requests and preferences of my cousin and her parents. During our scheduled shopping and appointment meetings with the people and establishments that will be most helpful in accomplishing the arranged plans for the occasion, we critically evaluated the economic gains as well as the aesthetic and quality of the products and services we rendered. All the decisions and purchases made were reflective of the cultural orientation and other social factors that characterize my cousin and our family along with the preferences of the guests who are mostly her friends and classmates.
Values are basically the basis of one’s attitude or restriction in attitude. Some examples of values include freedom, pleasure, inner harmony, and happiness. Heroes, on the other hand, refer to icons in the society that may have an impact on people of different levels. Examples of heroes are sports figure or pop culture figures. (2001) stated that heroes may influence consumer behavior through their association with certain products and brands. The same goes with rituals, or symbolic activities commonly performed over and over, such as bathing, tooth brushing, attending to mass, to school, etc. Their involvement on the consumption of consumer products makes them important for consumer behavior. Finally, symbols are equally important because different cultures have different symbols that they favor i.e. language, logos, signs, etc ( 2001). This s evident in the theme we chose fro the party. Since my cousin is very fond of mysticism, spells and magic, the party was planned to enchant her guests. This is reflective of the heroes and preferences of my cousin in particular.
We listed the five most important services and products for the occasion which included (1) venue of the party, (2) catering services, (3) sound system and facilities, (4) coverage of the event, and (5) birthday dress/gown. The availing these services and products were highly considered as we made deliberations with her parents who will finance the whole gathering. All of us suggested ways on what to do, where to go, and whom to transact with for completing and accomplishing the preparations for the party. I particularly checked the establishments and people who can help us with the event asking for their packages as well as considering the offers they would provide once we choose their firm. This goes for all the necessary purchases for the party. Since we were able to check the alternatives and available resources for the party we started to decide which specific businesses to transact with and made the arrangements. Other complexities and post purchasers were noted during the arrangements until after the party.
Meanwhile, of all the components of a marketing plan, the most essential of all these elements but most often, the most overlooked is the definition of the target market. And yet, no one can proceed to a communication plan without answering the question of who do the company have to convince to buy the product or service. Market segmentation is the identification of subgroups within the total market that the company wants to target. This fully recognizes that buyers of any product or service category need, desire, want and expect different performance characteristics from products or services in the category. It helps the company to position the product properly and prepare marketing strategies to satisfy a more focused range of consumer needs and wants. Furthermore, it is also a factor in effectively using limited marketing resources, identifying unique market niches, improving profitability and helping to retain consumer loyalty.
Companies now face the challenge of making its target consumers respond accordingly to their marketing efforts. Those who understand its consumers’ responses will have a great competitive advantage. The starting point towards this is through the stimulus-response model of buyer behavior which involves examining the marketing and other stimuli in the consumer’s black box that translates into buyer responses (2001). Marketing stimuli often consist of the four Ps of marketing: product, price, place and promotion while the other stimuli may include economic, technological, political and cultural factors which exist in the marketing environment. All marketing communications should be directed to a particular target. This aspect suggests that in implementing marketing communication, the company should clearly identify the targeted constituents and stakeholders, or to whom the marketing communication strategy should be directed (2002). The purpose of this aspect is for the company to create or apply communication instruments that will encourage the market to purchase or patronize the product.
In deciding fro the gifts to be included in the gift registry, we took into account the interests and likes of most of the guests. Since they majority of the people who will attend the party are grade-schoolers, we decided to give them gift packages which will serve as souvenirs of the occasion. We tied-up with the local department store to avail discounts on the bulk purchase of the products that were included in the gift package. My cousin wanted the souvenirs to be in line with the theme of her birthday party. As such we picked out products from in the chosen department store which included (1) books, (2) movies, (3) mini stuff toys, (4) CD copies of soundtracks, and (5) game installers to consist the gifts in the registry. All these products, we concluded, will be appreciated by people in my cousin’s age group despite inevitable differences in their socio-economic status. We underwent the same decision-making processes in selecting the gift items just like the deliberations for the overall arrangement of the whole party discussed earlier. The consumer decision-making model was supported by the processes we staged in deciding for the necessities of the event.
There are many components which influence consumer behavior namely: cultural, social, personal and psychological (2001). These characteristics cannot be controlled by the companies; therefore, a need to assess these elements in order to create an effective marketing plan. Cultural factors include culture, subculture and social class which all exert the broadest and deepest influence on buyer behavior. Culture is the most basic cause of the wants and behaviors of a consumer because it cultivates how a person chooses its values and learns its standards for achievement and success. On the other hand, subculture refers it the smaller groups of people who share the same value system and it can include nationalities, religions, racial groups and geographic regions. Many of these subcultures compose the important market segments for which products are specifically designed and marketed ( 2001).
Lastly, social classes are the divisions in a society composed of people who share similar values, interests and behaviors. These form the social class structure which exists in almost every society. It is not determined by a single component alone but a combination of different elements such as occupation, income, education, wealth and other variables ( 2001). Comparing the party of my cousin and a particular birthday celebration if it was mine, I don’t think that her family and my family are characterized differently in terms of cultural orientation. However, her family is very well-off and established compared to the single status and independent lifestyle I have, and that will make the difference in the overall output of her party and a party that I will have.
Social factors also influence consumer behavior. It includes the following: small groups, family, social roles and status. Groups are two or more people who interact in order to accomplish mutual goals. Usually, these groups have their own opinion leaders who are the members of a reference group that wields influence on others because of various reasons such as special skills, knowledge and personality. Companies often use the opinion leader as the basis on how to properly execute its marketing strategy. The next social factor is the family which is considered as the most important consumer buying organization in a society ( 2001).
The last factors are roles and status. These factors refer to the positions held by each person in each of the groups he belongs to but they are completely different in definition. A role is composed of activities which people are expected to do in the group while status is the position which goes along with a role that reflects the general esteem accorded by society (2001). Comparing a personal birthday celebration and the party I planned for my cousin, a lot will significantly be different primarily because I am much older than she is and I have set of friends who are obviously and completely different from her own. This emphasizes the different social roles that we play which distinctly identify the differing specifications we have for a birthday event.
The third set of factors personal factors which are composed of different elements such as age and life cycle stage; occupation; economic situation; lifestyle and personality and self concept. Customer preferences vary according age and the stages of life cycle which accounts for both traditional and non-traditional stages with the latter being increasingly catered to in order to accommodate alternative lifestyles. Occupation can also influence consumer behavior because different professions yield different interests in products and services (2001).
Another personal factor is the economic situation of the buyer because it determines if the consumer has enough spend able income, savings or buying power for the goods and services offered. Lifestyle is also an influence in buying behavior because it refers to the pattern of living – the measurement of AIO dimensions which stand for activities, interests and opinions. Finally, personality and self-concept or self image; influence how consumers choose their products and services (2001). The lifestyle and age highly differentiate my own birthday celebration from that of my cousin’s. In terms of personality, I would say that mine is more limited compared to the carefree and lesser responsibilities that my cousin has at the moment. Simply put, imagine comparing a fantasy birthday bash for a grade-schooler and her set of young friends with her good cousin’s simple tea party in the yard with her close friends.
Lastly, consumer behavior can also be characterized through the use of psychological factors which include motivation, perception, learning and attitudes and beliefs. Motivation or drive refers to an urgent need which causes a person to seek satisfaction of the need. The next psychological factor is perception which is the process of selecting, organizing and interpreting information in order to form a meaningful picture of the world ( 2001). Another psychological factor which influences consumer behavior is learning. It modifies consumer behavior from the consumer’s experience. If the experience of availing the service or product is rewarding, it is most likely that the purchase will be repeated until the consumer becomes loyal to the company.
Beliefs and attitudes are acquired through learning and doing. Beliefs correspond to how consumers formulate their thoughts about a specific product or service because they affect buying behavior. Wrong beliefs about the product or service may be countered through a campaign; therefore, companies need to be regularly updates on the beliefs of its target market. On the other hand, attitudes refer to the consistent evaluations, feelings and tendencies to an object or idea which may either put consumers in the frame of mind of liking or disliking the product or service (2001). As a single and independently living young woman, celebrating my birthday in the line with consumer considerations and marketing perceptions regarding the products and services I will purchase, I would say that the party will be more economical and practical. My loyalty to certain products and services providers will be very relevant when my party is evaluated based on the advertising, economic and marketing considerations of a typical consumer.
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