Understanding consumer behaviour is essential to succeed in business. As Solomon et al. (2013) stresses, businesses exist to satisfy consumer’s needs. By identifying and understanding the factors that influences their customers, firms have the opportunity to develop a more efficient strategy, marketing message and advertising campaigns that is more in line with the needs and ways of thinking of their target consumers (Perreau, 2015).
The targeted consumer has been identified as a recent retiree who is in her early 60s. This customer has just broken her laptop which was given to her as a gift from her daughter, four years ago and is looking for a replacement. As she is not in tune with the latest technology developments and vast option available for her, she does not know which option will best suit her. Additionally due to this she would prefer a device with simplicity, ease of use but also longevity.
This report will examine the decision making process in depth, analysing elements such as; characteristics that affect this consumer behaviour, types of buying decisions, component of decision making process and conclude with marketing recommendations.
The next section of this report will outline the different characteristics that affect consumer’s behaviour.
2. The Characteristics that Affect Consumer Behaviour.
‘ Figure 1, shows the factors influencing consumer behavior. There are four different factors all which play a crucial role in determining the action of consumers. It is important that marketers understand these affecting characteristics as they can determine the difference between buying or not.
Figure 1, Factors influencing consumer behaviour. (Data collected 11am on 9th March 2015.)
Source: Blogspot.com (2015)
1. Social factors.
‘ As the target customer is an elderly woman in her early 60s, her family and friends will play a major role in influencing which technological device and brand she would consider (Mason and Beardon, 1978). Especially as this consumer does not have the same level of knowledge, ownership and interest in technology. Davis (2013) report shows seniors in similar situations tends to rely on younger generations for advice, education and help in this area as they would have grew up exposed to this era.
2. Personal factors.
‘ As this consumer is in her early 60s, she has no interest in the latest stylish brands and expensive designs but just wants a simple and manageable device that will serve the basic functions of a laptop. A laptop that is easy to use is particular important for this customer as women over the age of 55 are particularly influenced by the ease of use of a technology product (83% vs. 70% of senior men), (Davis,2013)
‘ Price wise, she is looking for something of reasonable price, as she is now a retiree and is planning on paying for this purchase with her personal savings, her budget is ??400.
‘ As technology devices are long term investments the buyer requires something that will be great quality and of great longevity.
‘ It appears that a segment of seniors also value the quality of their purchasing journey from start to finish. Three fifths (60%) of over-55s who are influenced by the level of after-sales service also value the length of guarantee, whilst 41% of this group also care about the level of customer service in-store (vs. 17% of all seniors). (Davis,2013)
3. Psychological factors.
‘ This consumer’s previous experience with a functional laptop has influence how she know views laptops in comparisons to desktops, as she finds the portable device is handy to carry around the house and bring along when traveling to visit her children.
3. The Types of Consumer Buying Decisions.
‘ Consumers buying decisions behaviour can vary depending on the type of goods involved and the factors associated with the particular product. Figure 2 shows the four different categories and how they are each classified. Depending on how involved the consumer is with the purchase and how significant the difference is between the brands available, a buying decision can be classified as complex, variety-seeking, dissonance-reducing and habitual.
Figure 2 Four types of buying decision behavior. (Data collected 11am on 9th March 2015.)
Source: Launchengineering.com (2015)
‘ The purchasing of a laptop can be classified as a complex buying behaviour. This is due to the fact that the product is expensive and the consumer will need to be highly involved with the purchase. As there is a wide range of options available with significant differences among each brand, this purchasing decision will take a long time especially because the consumer has much to learn regarding the product category. There is also a high risk associated with this purchase as she particularly wants a product with simplicity but with great quality and longevity. Kjell (1977).
‘ The fact that this is a long term investment and will be costly indicates that the consumer will have to be highly involved with the buying decision. She will be required to spend an extensive period of time evaluating the different options available which according to keynote market report (2014) of the UK market, is a vast range including personal computers, laptops, notebooks and tablets computers.
‘ As mention before, this product will be costly and price being the biggest influence for consumers of all ages when it comes to purchasing technology products, with 84% saying it is one of their main considerations (86% of over-55s), more attention and effort will have to be paid before making any purchasing decision, in order to ensure it will be money spent efficiently. (Davies,2013)
‘ The purchasing of televisions, household appliances such as washing machine and a car would also involve a complex buying behaviour decision. In the state of buying a new television as watching TV is still an extremely popular activity amongst most seniors with 92% of seniors compared to 85% of the younger generations more likely to have a television within their household, they would therefore equally invest their time and money in the purchasing decision as it is an enjoyable hobby for them. (Davies,2013)
4. The Components of the Decision-Making Process.
1. Problem recognition.
‘ This is the first stage when the buyer recognises a problem or need. The need can be triggered by internal or external stimuli. Internal stimuli arises from an individual’s average need while external need arises from the environment in which we live in. (Armstrong and Kotler, 2013). This consumer’s need began when her old laptop broke down and as a result she decided it was time for her to replace it.
2. Information Research.
‘ As the potential buyer interest as been triggered by the breakdown of her laptop she now has a drive to search for and gather information about the possible products that could replace it. This stage is usually one of the longest processes as information can be gathered from a range of different sources. It is also an extremely important stage as this is when the consumer’s opinion formulation often begins.
‘ Research shows that over twice as many seniors rely on younger generations for advice, education and help with technology. This is certainly the case for this customer as she is not familiar with the advancement in technology she starts with her personal source which is usually the most effective and influential and draws on the opinions and experiences of younger friends and family members. (Davis, 2013)
‘ However most of her personal source would have gather much of their own knowledge from commercial sources such as advertisement, online sources and salespersons which information about the product were provided from the company’s market.
‘ Public source will also have an influence as the elderly rely more heavily on newspaper, television and salespersons for marketing information than other generation grouping (Martin, 2013).
3. Information Evaluation.
‘ After gathering relevant information the next step is to evaluate the various alternatives available in the market. Figure 3, shows the current desktops and laptops in the market and each brand’s personality ranking.
‘ The consumer will try to choose the best option available, while taking into consideration her need, taste and budget. This consumer particularly required a device that is of ease of use but can still perform all basic roles of a laptop. An affordable option is also vital as she is now a retiree but will be using her savings for this purchase. She also wanted a reliable brand that will be durable and last the upcoming years.
Figure 3 Desktops and laptops brand’s personality.
Source: Mintel (2014)
4. Purchase Decision.
‘ After the brand evaluation stage, the intention to buy a specific brand will be made in this stage. This could generally be the buyer most preferred brand but two factors can come in between these processes, the attitude of others and an unexpected situational factor.
‘ This buyer has made a decision to go with the brand Hewlett-Packard, a highly used brand which has also earned the strongest amount of commitment from over-55s, who trust it and much prefer it to newer brands (Munson, 2014)
‘ She found the ‘HP 15-r101na Laptop’ most suited to her as the laptop cost a reasonable price of ??299 while still meeting all her desired needs.
5. Post purchase Evaluation
‘ This is the final stage and occurs after the product has been the purchased and the customer analysis whether the product was useful and fulfilled his/her needs.
‘ This customer was highly satisfied with her overall experience when purchasing her new HP laptop. The staff at Argos provided her with excellent service and they were very friendly and informative throughout the whole purchase process, offering her with great advice and deals.
‘ She has also received a two year laptop warranty from the manufacturer, which has given her a great sense of relief and security.
‘ Additionally she is greatly satisfied with the specific laptop she chose to buy; she has found it easy to manoeuvre and is currently enjoying using it. She feels pleased with her purchase.
5. Marketing Recommendations.
Based on the analysis on the factors that affect consumer behaviour, the types of buying decisions and the components of the decision making process the following suggestions and recommendations can be made:
‘ Manufacturers should focus on producing excellent quality products for their consumer, as all consumers regardless of their demographics expect products of high quality especially when it comes to long term investment. Additionally the manufacturer should work on building products that offer simple functionality that will be favoured by many in this particular market.
‘ As price is the biggest influence for consumers of all ages when it comes to purchasing technology products, manufacturer should work on providing the most competitive price. Marketers can then emphasise this affordable price and provide additional deals in order to attract potential consumer and assist in gaining an overall bigger share in the market.
‘ Marketer’s that tailor products for this market should aim to highlight specification features in order to up sell their devices, whilst ensuring they avoid using too much ‘jargon’ that will alienate the buyers, as this particular market is not familiar with the current technology terms.
‘ Marketers should make use of reference group as these sources have proved to be the most influential. A direct focus should be made on friends and family in their advertising strategies and personal selling strategies, educating these groups more about what the brand can offer them.
‘ Products and features that are complicated by nature could be more attractive to seniors if walk-through demonstrations are offered in-store or available as part of after-sales service schemes. This will also help build a great relationship with their consumers as seniors are more concerned than younger generation with their overall sales experience as well as peace of mind.
‘ As the length of product guarantees is one thing that really matters to this age group, with 35% of seniors saying it influences their purchasing decisions, compared with just 23% of under-55s, I would also recommend marketers to extend their warranty period in order to persuade the consumers to purchase their products. (Davis, 2013)
In summary this report has identified that there are different characteristics that can affect consumer behaviour and it is extremely crucial that marketers try to understand this in order to successfully meet these processes with utmost effectiveness and ensure sales.
In the state of complex buying behaviour when buyers are highly involved with the purchasing decision, marketers will find advantage of this process if they provide the buyer with relevant, concise but sufficient information about their brand, as it will greatly assist consumers while gaining sales.
The senior market tends to be of different demographics to the younger generations and because of this marketers should not neglect them but pay attention to their particular desires and needs when purchasing goods in order to win their sales.
7. List of References.
Armstrong G. and Kotler P., (2013) Marketing an Introduction. 11th Global edn. Pearson Education.
Blogspot.com (2015) 5 March, 2015. Available at http://1.bp.blogspot.com/-z9S6aasnBbQ/UkRjZaSfrAI/AAAAAAAAABk/m1QcrVyFp-Q/s1600/buying_customer_factors.gif [Accessed: 5 March, 2015].
Davis P. (2013) Technology and the Over 55s. Mintel. [Online] Available at: http://academic.mintel.com.ezproxy.herts.ac.uk/display/650142/?highlight#hit1 [Accessed: 10 March, 2015].
Keynote (2011) Computer Hardware Market Report. Keynote. Available at: https://uhvpn.herts.ac.uk/market-intelligence/view/product/10455/computer-hardware/chapter/1/,DanaInfo=www.keynote.co.uk+executive_summary
[Accessed: 10 March, 2015].
Kjell G., (1977) Industrial Marketing Management, Vol. 6 Issue 6, p439-445. 7p. 1 Black and White Photograph, 3 Charts. Business Source Complete [Online] Available at: http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=7335216&site=bsi-live [Accessed: 7 March, 2015].
Launchenginnering.com (2015) 5 March, 2015. Available at http://www.launchengineering.com/images/Types%20of%20buying%20behavior.jpg [Accessed: 5 March, 2015].
Mason, J. B., and Beardon, W. O. (1978), Profiling the Shopping Behavior of Elderly Consumers The Gerontologist, 18, 454-461. [Online] Available at: http://www.acrwebsite.org/search/view-conference-proceedings.aspx?Id=5885 [Accessed: 7 March, 2015].
Munson R. (2014) Desktop and Laptop Computers ‘UK. Mintel. [Online] Available at: https://uhvpn.herts.ac.uk/display/679757/,DanaInfo=academic.mintel.com+
[Accessed: 12 March, 2015].
Solomon, M., Bennett R., and Josephine P. (2013) Consumer Behaviour [Online] Available at: https://books.google.co.uk/books?hl=en&lr=&id=ajDiBAAAQBAJ&oi=fnd&pg=PP1&dq=why+marketers+should+understand+consumer+behaviour+&ots=ewRRQx3hHI&sig=Wi4NrOPn1MHETuHl9tnysdO5AfA&redir_esc=y#v=onepage&q=why%20marketers%20should%20understand%20consumer%20behaviour&f=false
[Accessed: 25 February, 2015].
Towle, J. G. and Martin, C. R. (1976), “The Elderly Consumer: One Segment of Many?” in The Elderly Consumer, ed. F. E. Waddell, Columbia, MD: The Human Ecology Centre, Antioch College, pp. 232-242. [Online] Available at: http://www.acrwebsite.org/search/view-conference-proceedings.aspx?Id=5885
[Accessed: 7 March, 2015].
Perreau F. (2015) The Consumer Factor. [Online] Available at: http://theconsumerfactor.com/en/4-factors-influencing-consumer-behavior/
[Accessed: 25 February, 2015].
Essay writing has also become a tool to test you on communication skills. MBA aspirants may be asked to write essay before GD & PI. Today, you will read Essay on :
“Consumer Power in India”
Consumers are being considered as God in India. It would not be an overstatement if it is stated that the existence of consumers makes an economy grow and prosper. Sustainability of the economy happens when the consumers make prominent choices of authentic goods and services. Since ancient civilization it has been envisaged that trade and commerce had been considered as the nerves of Indian economy. In every trade and commerce the role of consumers is indispensable. The demands of the consumers have been highlighted and thereby products and the services have been produced and modified respectively. The profit which has been generated in the economy is because of the intelligent choices and purchases made by the consumers.
In this scenario, it is impertinent to empower the existing consumers with their right to choose, demand, purchase and complain in case of non satisfaction. It is equally important to safe-guard these rights as an unsatisfied consumer may lead to dismantling of a production house and thereby shutting up of the particular business in a region. In order to educate the consumers the Indian government has initiated programme known as “Jago Grahak Jago” under which a consumer may approach a consumer court in order to expedite any case pertaining to non-satisfaction of a product or service.
India being the largest democracy in the world also enjoys the position of being second largest populous country in the world having the population of 1.22 billion. It is 17.50% after China which is 19.40% of the world population. Although the country’s population growth may be considered as a merit but it cannot be overruled that majority of the population of our country is still under the darkness of poverty. India is currently 30% urbanized while 70% of the Indian consumers are still in rural area.
According to a survey, 404 million of the population are either consumers or are aspiring consumers; on the other hand 742 million are still under privileged. Out of 30% of urban population, 80% is low/lower middle class having income of Rs. 12,500 per month.15% is middle class and only 5% is upper class who has the capacity to spend on the variety of products and services.
Inspite of the above mentioned facts, it is also equally true that majority of our population is generating income within the economy being within the age group 18-60 years and thereby increasing the purchasing power of the overall population. And that is the reason why India is one of the best destinations of FDI. Foreign direct investment (FDI) is direct investment into production or business in a country by a company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.
Starting from a baseline of less than $1 billion in 1990, a recent UNCTAD survey projected India as the second most important FDI destination (after China) for transnational corporations during 2010–2012. As per the data, the sectors that attracted higher inflows are services, telecommunication, construction activities and computer software and hardware. Mauritius, Singapore, US and UK are among the leading sources of FDI. Based on UNCTAD data FDI flows were $10.4 billion, a drop of 43% from the first half of the last year. On 14 September 2012, Government of India allowed FDI in aviation up to 49%, in the broadcast sector up to 74%, in multi-brand retail up to 51% and in single-brand retail up to 100%.
The choice of allowing FDI in multi-brand retail up to 51% has been left to each state.In its supply chain sector, the government of India had already approved 100% FDI for developing cold chain. This allows non-Indians to now invest with full ownership in India's burgeoning demand for efficient food supply systems. The need to reduce waste in fresh food and to feed the aspiring demand of India's fast developing population has made the cold supply chain a very exciting investment proposition.
At the fag end it can be concluded that India’s population, if channelized in a positive manner wherein the government takes care of the education and employment of the population, Indians can transform the economy by being the most educated, informed and efficient consumers in the world.