Factors affecting buying behaviour
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    Factors affecting buying behaviour Factors affecting buying behaviour Document Transcript

    • A Take- Home Assignment for EC 50011 Market Planning in a Global EnvironmentIn considering the development of international consumer markets it is important to take into account factors influencing buying behaviour Submitted To Dr. Sushil Mohan University of Dundee Submitted On March 2012 By Luu Thi Huong Giang 120000829 Swapnil Mali 120004897 Katharina Weber 120006194
    • ContentsList of figures1. ...2. Consumer market and consumer behaviour.....................................................................1 3. Factors influencing decision making.................................................................................2 3.1 Cultural influences....................................................................................................3 3.2 Social influences.........................................................................................................3 3.2.1 Reference groups............................................................................................3 3.2.2 Family influences............................................................................................4 3.2.3 Social class......................................................................................................4 3.3 Personal influences....................................................................................................4 3.4 Pschycological influences..........................................................................................6 3.5 Buyer...........................................................................................................................74. Conclusions...........................................................................................................................8 References...............................................................................................................................9Appendix.................................................................................................................................11
    • List of figuresFig. Number Name of figure Page No. 1 1 2 The consumer buying process 2 3.1 Internal and external factors in decision making 5 3.2 6 3.3 8
    • EC 50011 Market Planning in a Global Environment 20121. IntroductionWhen travelling through different countries, one can recognize that one and the same productknown from home sometimes appear to have different a brand name in another country. Forexample, someone who is craving for ice cream during a hot summer day could experiencerelief from the famous ice cream brand n the UK, India, or Vietnam. The same icecream would be found in Germany as Langnese, as Frigo in Spain, and as Eskimo inRomania.In order to understand why companies make use of different brand names we have to realizethat the core of marketing aims at satisfying the needs of customers. These needs and wants ofcostumers are influenced by many factors which influence the consumer buying behaviour.In the following we will take a deeper look at these factors and explain why they need to betaken into account when developing international consumer markets. Fig. 1:2. Consumer Market and Consumer BehaviourConsumer markets are the markets of products and services which are purchased byindividuals or households for their own consumption (Tutor To U, n.d.). The mental andsocial processes to make purchase decisions are called consumer behaviour. For marketers, itis essential to understand the needs of customers as it helps a company to develop themarketing strategy which is advantageous over competitors who have not identified theseneeds (Lancaster & Massingham, 1993). When a firm wants to expand to new countries it isnecessary that it recognises the different factors that can influence whether a customer isinterested in a product. 1Influences on buying behaviour in international consumer markets
    • EC 50011 Market Planning in a Global Environment 2012The consumer buying process is divided into five steps: Need Recognition, InformationSearch, Evaluation of Alternatives, Purchase, and Post-Purchase Behaviour. NeedRecognition is the perceiving of the unfulfilled desire. So marketing helps customers torecognize the imbalance between present status and preferred state. Then customers startinformation search, by recalling their memory or using external sources such as internet, TV,newspapers, friends, etc. After having acquired some alternatives, customers compare thevalue and the attributes of products so that finally they come to the decision to purchase themost attractive option they have. At this step, marketing determines which attributes are themost important in influencing a consumers choice. The final step is post-purchase, at whichthe consumers compare the experience of using the product to their expectations of theproducts performance, or they do further purchases. It is common that the consumers canexperience concern or anxiety about their purchasing decisions. Consumers might experiencethe uncomfortable psychological state ofpurchase would have been preferable (Festinger, 1957). To avoid that consumers will switch to adifferent brand as a result, aftersales services (ads, follow-up calls, guarantee, etc.) should beused by marketers to convince the customers that they have made the right decision. Information Evaluate Purchase Problem or need Purchase Option Search Decision Fig. 2: The consumer buying process3. Factors in decision makingDecision making is a process dependent on many factors which vary from person to personand also from region to region. Consumers are living in a society which follows its ownculture and values. Personal preferences again change with age, lifestyle, income, andpsychological factors. 2Influences on buying behaviour in international consumer markets
    • EC 50011 Market Planning in a Global Environment 20123.1 Culture influencesAccording to Kotler behaviour. Brewster, Sparrow, and Vernon (2007) definedistinct way of life with common values, attitudes and behaviours that are transmitted overtime in a gradual, yet dynaand already has a large impact on children as they grow up. People growing up in anindividualistic culture may hold different aspirations, values, and needs than people who livein a collectivistic culture. Whereas individualistic cultures focus on achieving personal goals,collectivistic cultures centre on family and group well-being (Hofstede, n.d.). However,cultural values can change over time and have to be watched by marketers. One example isthe change of the role of women in most Western societies.Simply ignoring cultural factors can be costly for firms. As for example Starbucks had topalace because it clashed with the Chinese cultural value of protecting this nation symbol(Reuters, 2007).3.2 Social influencesConsumer buying behaviours are clearly affected by social influences such as referencegroups, family members, and social class.3.2.1 Reference groups values, opinions, attitudes, andbehaviour patterns (American Marketing Association Dictionary, 1995). They can be dividedinto different forms: Aspiration reference group: It is a group of people against whom one tends to compare oneself (Perner, n.d.). Many international firms have chosen celebrities as their spokespersons or performers in advertisements1.1 Recent researches have shown that there was a 20% increase on the sales of some brandsupon starting an endorsement deal and the stock of some companies has increased by 0.25%on the day the deal was announced (Crutchfield, 2010). 3Influences on buying behaviour in international consumer markets
    • EC 50011 Market Planning in a Global Environment 2012 Associative reference group: The group to which one actually belongs (a group of friends, co-workers, a club, etc. s linked to appropria (Wayne & Deborah, 2009) Dissociative reference group: The group to which one maintains a distance due to differences in values or behaviours. The store brand name Gap because many younger people wanted to dissociate from parents and other older people (Perner, n.d.)3.2.2 Family influences behaviour resulting from consumersocialization, family life cycle and family decision making. Consumer socialization: Family plays an essential part in the processes through which family members acquire the skills, knowledge and attitudes necessary to their functioning as a customer in the marketplace (Consumer behaviour, n.d.) Family life cycle: Every individual has to go through a family life cycle. Each stage determines different purchasing behaviours. Newly married couples show more interest in travelling services while the full-nest households tend to be greater interested in quality and timesaving products. (Family life cycle, 2010). Family decision making: There are two types: spouse-dominant (decisions are made by either wife of husband), or joint decision making (both wife and husband are responsible for making decisions). Recently the role of children as decision-makers has changed significantly. Many firms have tried to capture the market of which target customers are children. It is well known that Disney has been particularly good at interactive promotional marketing (Buyer behaviour, n.d.)3.2.3 Social classSocial classes are determined by occupation, income, education, wealth, and other variables.People within a given social class tend to possess the identical buying behaviours, whichmake it easier for marketers to place target in specific social class. For example the consumersin lower classes tend to be more brand loyalty than wealthier consumers (Rofianto, n.d.).3.3 Personal influencesEvery person is different and so is buying behaviour. This is because of different factors such 4Influences on buying behaviour in international consumer markets
    • EC 50011 Market Planning in a Global Environment 2012as age and sex of consumers, occupation and economic circumstances which again influencethe lifestyle of consumers. These factors can be divided as internal and external factors.Personality is not just about what a person is, but also about what a person wants to be. Internal Memory Way of thinking External Media, Mouth publicity, Feedback Fig. 3.1: Internal and external factors in decision making . A simple example is that men purchasedifferent things than women. Studies proved that women tend to spend more than men (Pant,2011). Therefore, special care should be taken when marketing women products which allowcompanies to generate extra profit.Younger generations prefer spending over saving (Mathur & Moschis, 2007) and tend tospend more on technological products than on other things. As per life cycle, preferences dochange too. E.g. undergraduates go for casual wears over formal wears. This shows theimportance of demographic studies of the market in order to do better marketing.The economic life cycle is another aspect to be considered. It was observed that many peopleshifted to lower priced packaged food during recession. They found that the food was reallybetter than they expected. This made them to stick with the same product even after recovery(Consumers and economic trends, 2011).External factors depict the personality a consumer would like to achieve. E.g. consumersthink that cars may reflect personality. Even if a person is happy with a small car, he may optfor a bigger one. In day to day life some decisions are taken as per the situations which arecalled situational effects, the circumstances surrounding our purchases that may strongly 5Influences on buying behaviour in international consumer markets
    • EC 50011 Market Planning in a Global Environment 2012impact our decision-making process (Higgins, n. d.). When a man goes out on a date with hispartner, he will prefer to spend more and tries to make his day more luxurious than a routineone. So in order to earn more profit, studies of these internal and external factors arenecessary.3.4 Psychological influencesThe four key psychological factors which influence consumer behaviour are motivation,perception, learning, and memory (Kotler & Keller, 2006).Motivation is the process that initiates, directs and sustains goal-oriented behaviours. Amotive can be defined as a drive to satisfy a need (MMC Learning, 2009). MaslowsHierarchy of Needs simplified suggests that we need to satisfy a lower level need before weare motivated to satisfy a higher level need. Marketers try to understand the specific needs oftheir consumers so the consumers will prefer their products over those of competitors. Self- actualization needs Esteem Needs Social Needs Safety Needs Physiological Needs Figure 3.2Perception is the way in which people, select, organize and interpret stimuli in order toacquire a meaningful picture (Lancaster & Massingham, 1993). What information weperceive out of the large pool of information depends among others on our current beliefs andCustomers even distort information when they are not coherent with prior beliefs aboutproducts and brands in order to reduce cognitive dissonance (Festinger, 1957). Support forthis effect comes from a study (Russo, Medvec, and Meloy, 1996) which found that alreadythe weakest form of a brand preference, i.e. a developing preference in the absence of an 6Influences on buying behaviour in international consumer markets
    • EC 50011 Market Planning in a Global Environment 2012existing preference, can result in a confirmation bias towards that brand. If for example aforeign chocolate fabricant wants to enter the UK market, it hasestablished competitor which consumers might still prefer despite the better quality of theforeign brand.Learning occurs whenever people act. It is the change in behaviour resulting from experience(Kotler & Ketler, 2006).and is satisfied with it might again choose the same brand when in need of another electronicdevice. -term-memory. The challenge for marketers is to create good experiences to establish their brand inEven though it is costly and time intensive to study how psychological factors are influencingthe buyer behaviour, they are unavoidable for marketing success when developinginternational consumer markets.3.5 BuyerWhereas some day to day buying decisions are done within seconds, other decisions likebuying a car take a lot of time. These behaviours can be classified as high and low riskdecisions (see Appendix, Table1: Purchasing situation and buyers decisions).All the above mentioned factors affect buying behaviour. From the marketing point of view,firms must consider all these aspects and try to market their product accordingly. On the basisof research conclusions, marketing strategy is formed by the firm. But at the end of the day itis the consumer who is going to react in his unique way to these factors and decides what tobuy and what not. 7Influences on buying behaviour in international consumer markets
    • EC 50011 Market Planning in a Global Environment 2012 Perception Marketing Research Inforamtion Culture Strategy Choices Beliefs Preferences Consumer Society Communication Personality Fig.3.3: Influencing factors in buyers/ consumers decisions4. ConclusionsEach person has his / her own behaviour towards the purchasing process; however they areinfluenced by certain factors. Those influences can be environmental influences (cultural,social influences) or individual influences (personal, psychological influences). The culturalvalues are shared between people in a society and affect them gradually over time. Besides,the society hasone belongs. Each individual also has their own effects varying from age and sex or theprocess of perceiving, learning, motivating and memorizing. Those factors affect theconsumer buying decision so they should be considered. The buyers themselves are thedecision makers and the most important factors in the consumer market. When a firm wants toenter a foreign market, the local customer behaviour is probably different from the customerbehaviour they are dealing with in the home country. As a result, it is important for themarketing manager to take into account all those factors, helping them to develop themarketing campaign in the international market and to improve the product to fully satisfycustomers which ultimately leads an increase in sales. 8Influences on buying behaviour in international consumer markets
    • EC 50011 Market Planning in a Global Environment 2012 ReferencesAmerican Marketing Association Dictionary, 1995, viewed 18 March 2012,<http://www.marketingpower.com/layouts/Dictionary.aspx?dLetter=R>Brewster C., Sparrow P., & Vernon G. (2007), International Human Resource Management(2nd ed.). In, The impact of national cultures (pp.13-38).Buyer behaviour - case study: influence of children on buyer behaviour, viewed 18 March2012, <http://tutor2u.net/business/marketing/casestudy_%20buyers_children.asp>Consumer behavior, viewed 18 March 2012, <http://www-rohan.sdsu.edu/~renglish/370/notes/chapt05/>.Consumers and economic trends, January 2011, Consumer spending habits and thrift in anuncertain global economy, Viewed 19 March 2012, <http://blog.euromonitor.com/2011/01/qa-the-thrift-lifestyle.html>Crutchfield, D., 2010, Celebrity Endorsements Still Push Product, media release, 22Setemper, viewed 18 March 2012, <http://adage.com/article/cmo-strategy/marketing-celebrity-endorsements-push-product/146023/>Family life cycle, 2010, media release, 29 January, viewed 18 March 2012, <http://american-business.org/347-family-life-cycle.html>Festinger L., 1957, A theory of Cognitive Dissonance Theory, Evanston, IL: Row andPetersonHiggins, n.d., Principles of marketing: An applied, collaborative learning approach, viewed19 March 2012, <http://www.principlesofmarketing.com/Full.htm>Hofstede G.(n.d.), National culture dimensions. Countries, viewed 19 March 2012<http://geert-hofstede.com/national-culture.html>Kotler P. & Keller K.L., 2006, Marketing Management 12e, Chapter 6, Pearson Prentice Hall. 9Influences on buying behaviour in international consumer markets
    • EC 50011 Market Planning in a Global Environment 2012Lancaster G & Massingham L., (1993), Essentials of Marketing, Second Edition, McGraw-Hill Book CompanyMathur A.,Moschis G., 2007, Baby boomers and their parents, Page 110, viewed 19 March2012MMC Learning, 2009, Multi Media Marketing, Buyer Behaviour, Viewed 19 March 2012,<http://www.multimediamarketing.com/mkc/buyerbehaviour/>Pant P., July 2011, Women Trail in Budgeting and Saving, viewed 19 March 2012,< http://budgeting.about.com/b/2011/07/19/women-trail-in-budgeting-and-saving.htm>Perner L., n.d., Consumer behavior: The psychology of marketing, viewed 18 March 2012,<http://www.consumerpsychologist.com/>Reuters, 2007, Starbucks finds imperial palace a forbidding market, Viewed 19 March 2012,<http://www.reuters.com/article/2007/07/14/us-china-starbucks-idUSPEK13229420070714>Rofianto W., n.d., Social class, culture and consumer behavior, viewed 19 March 2012,<http://rofianto.files.wordpress.com/2010/05/cb_week_09_social-class-culture-and-consumer-behavior.pdf>Sproul s.,1991,A buyer behaviour framework for the development and design of softwareagents in e-commerce, viewed 19 March 2012,<http://www.emeraldinsight.com/journals.htm?articleid=863689&show=html>.Tutor To U, n.d., Types of Markets, viewed 19 March 2012,<http://tutor2u.net/business/marketing/market_types.asp>Wayne D., Deborah J., 2009, Consumer Behavior, viewed 18 March 2012. 10Influences on buying behaviour in international consumer markets
    • EC 50011 Market Planning in a Global Environment 2012 AppendixTable 1: Purchasing situation and buyers decisions New Purchase Frequent purchase High Risk Unstructured process, trying Structured process, risk out new things, extensive reduction by opting familiar information needed brands Low risk Unstructured process, Very structured process with minimum information long decision time, all needed, generally go with feedbacks taken into account others or market trends 11Influences on buying behaviour in international consumer markets