Consumer Behaviour †Theory and Practice The WritePass Journal

Consumer Behaviour – Theory and Practice 1.0 Introduction and Discussion – 20% Consumer Behaviour – Theory and Practice 1.0 Introduction and Discussion – 20%2.0 Critical Analysis (Theory) – 50%2.1 Definition of Consumer Boycott2.2 Advantages of Boycotting2.3 Disadvantages of Boycotting2.4 Example of Successful Boycott2.5 Solution for Companies to handle boycott3.0 Conclusion – 20% 1.0 Introduction and Discussion – 20% 2.0 Critical Analysis (Theory) – 50%2.1 Perception2.2 Attitudes2.2.1 Definition of Attitudes2.2.2 The functions of Attitudes2.2.3 Attitude Models2.2.4 Measuring Attitudes2.2.5 Marketer changing consumer attitudes3.0 Conclusion – 20% Reference ListRelated 1.0 Introduction and Discussion – 20% Consumer buying is important to society because it is a key component of the economic system of many countries, it can influences by political, religious, spiritual, environmental, social and cultural aspects of society (Jim Blythe, 1997). Nowadays, consumers are more toward to ethical purchasers because they are more aware that their consumption pattern is part of global political and economic system (Solomon, M., G. Bamossy, S. Askegaard and M. Hogg, 2009). Generally, consumers reflect their values and beliefs by what they do or do not buy (Dickinson and Hollander, 1991). For example, consumer perceptions will signify the strengths and weaknesses of countries by favouring or dislike goods produced in a particular country. Sometimes consumer negative experience generate boycott of a company’s products, or even protests against everything from a politically undesirable country by discourage consumption of products from certain companies or countries, like boycotting Israel products. Boycotting is a form of ethical purchase behaviour. The term â€Å"boycott† arose in the year 1880 after Captain Charles Cunningham Boycott, an English land agent in Ireland whose ruthlessness in evicting tenants led his employees to refuse all cooperation with him and his family (Hazem Jamjourm, 2008). According to an Environics, the trend to boycott and warn against those irresponsible companies are strongest in North America and Oceania, and Northern Europe, while in Eastern Europe, Central Asia and Latin America taken boycott is very unlikely (Rob Harrison, Terry Newholm, Deirdre Shaw, 2005). Boycotts have become a pervasive and effective instrument of consumer dissatisfaction in today’s marketplace. Economist (1990, p. 69) writes: ‘Consumer boycotts are becoming an epidemic for one simple reason: they work to initiate organizational and social change’; a recently conducted survey reports that 50% of Americans claim to have taken part in a product boycott (Dolliver, 2000). Between 1988 and 1995, over 200 firms and over a thousand products were actually subject to organised boycotts in the US. On the other hand, according to the Co-operative Banks latest research the value of boycotts in 2007 was up by 15% in the food and drink sector and 20% in the clothing s ector. Money talks, they say. So listen to these figures food and drink boycotts in 2007 in the UK  were valued at  £1,144m, travel boycotts  £817m, and clothing boycotts  £338m (Ethical Consumer, 2008). 2.0 Critical Analysis (Theory) – 50% 2.1 Definition of Consumer Boycott Boycotts are a widely used movement tactic to gain influence over corporations to adopt some change in practice or policy. It can be anti-corporate, labour, and other social change movements (Manheim, 2001). In this few years, a number of theorists have studies and outline the theory of boycott. Smith (1990b:258) explain boycott was essentially a moral act; an expression by the consumer of disapproval of the firms activities and disassociation from them. Friedman (1999, p.4) defines consumer boycotts as â€Å"an attempt by one or more parties to achieve certain objectives by urging individual consumers to refrain from making selected purchases in the marketplace.† Laidler (1968) defines boycotting as â€Å"an organized effort to withdraw and induce others to withdraw from social or business relations with another.† From different view of the theorists, consumer boycotts can be explain in more specifically that consumer boycotts is a collective act from the consumers to refusing buying a company’s services or products, consumers express their dissatisfaction with intention and make political claims about corporate practices. 2.2 Advantages of Boycotting Although boycott would seriously hurt the business, in fact, boycott has advantages. The main advantage of boycott is a way that consumers can use their power for positive social change. Another advantage is the exposure of irresponsible company with less people buying their products and buying substitute goods. As result, demand and supply for substitute goods will increase to enhance competition in the market and firms will reduce their process as a result to compete and also to gain the extra consumers this will benefit the smaller firms to gain more of the market share (Baumeister, Roy F., 1998). 2.3 Disadvantages of Boycotting Boycotts are an unwelcome act to marketers because firms targeted by a well-supported consumer boycott have apparently failed to sustain a sufficient customer focus. In the recent world, most of the companies are sensitive to boycotts because they can have serious financial implications (Pittman, Thane S., 1998). Observably, there are lots of disadvantages to boycotts though. One of drawback is boycotting could be a large reduction in jobs. After boycotting a company, there can cause an unfavourable impact on individuals and communities which become innocent victims of the economic damage. Secondly, the company reputation will be harmed as a result on the impact of consumer boycott. Hence, this is not good for company as it would need to lower its prices to get back the consumer purchasing demand. Somehow, consumers boycotting not purchase particular countries produce cause a loss of worldwide specialisation and technology in third world country because most of the company may not do business with them. Also this action may limit consumer choice from the market. Another disadvantage to the company is that the company budgets will get ruined and will need to be analysed and changed. Furthermore the gross domestic product of the host country could fall. Besides that, there can also result irregularly violence and antipathy from the boycotts. As conclude, although consumer boycotting brings lot of drawback to companies as well as it also bring advantages. Marketer should make a balance view of boycott and learn from other companies’ mistake to enhance the operation and create positive value to consumers. 2.4 Example of Successful Boycott In fact, empirical examinations of corporate recognition to boycotters demands found that only a quarter of all publicized boycotts were successful (Friedman, 1985). Boycotts can be successful because when result in increased public scrutiny of the company. This in turn will cause concerns inside the company about lost profits from the loss in consumer interest and companies are always concerned about their financial position. Countless successful boycott examples could be given of the boycott in use by many different groups of people in past centuries. One well-known successful boycotting example is boycotting Barclays Bank in year 1986. Boycotter choosing to boycott Barclays Bank because they have strongly believed Barclays’ company as the largest bank in South Africa supported apartheid is a wrong consequence. Besides that, consumers participate in the boycott may have been motivated by the belief that supporting boycott could helping people from South Africa by forcing Barclays’ withdrawal and speeding the downfall of the apartheid regime, secondly is the consumers desire not be associated with a company that directly or indirectly benefits from apartheid, a â€Å"clean hands† motivation; and lastly it show that a reluctance to be seen patronizing the â€Å"apartheid bank,† an avoidance of unseemly conspicuous consumption. As result, Barclays was forced to pull out of the co untry after protests against its involvement during the apartheid regime. Also at that time, Barclays led to a drop in its share of the UK market from 27 percent to 15 percent. Consumer boycotts upon environmental arguments are a strategy commonly used by many environmental NGOs. Procter and Gamble has been focus of a long running boycott from the Uncaged Campaign due to the use of animal testing. PG declare that animals are used in their ‘product safety research’, as well as cats and dogs in pet food experiments, Uncaged’s investigations continue to expose disturbing examples of PG’s ongoing involvement in a painful and dangerous animal tests. PG test on animals because of their desire to get new chemical ingredients on the market and to make as much money as possible. Garrett’s (1987) review of the boycott literature hypothesized six factors in boycott participation: the awareness of consumers; the values of potential consumer participants; the consistency of boycott goals with participant attitudes; the cost of participation; social pressure; and the credibility of the boycott leadership. However, according to the report on boycott PG Day 2010 actions, the fourteenth global boycott PG Day on 8 May 2010 has ratcheted up the pressure on PG to stop their cruel and unreasonable animal testing. Moreover, another famous boycott case is the Nestlà ©. A number of groups, many of which are coordinated by the International Baby Milk Action Network (IBMAN), have called for the boycott of Nestlà © products due to Nestlà ©Ã¢â‚¬â„¢s marketing practices in promoting infant formula in poor countries. IBMAN points to the dangers of formula feeding in developing countries (most notably, lack of clean water to use in mixing formula powder). Further, it maintains that Nestlà © is exploiting susceptible customers and contributes to increased infant mortality. To examined the boycotters’ intentions to participate, motivations for participating, and actual product choice, as result their participation is based on product judgments and their perceived badly of Nestlà ©Ã¢â‚¬â„¢s actions, boycott participation and brand image. According to observers of boycotts, boycotters have this feeling because they are referring to the ‘moral outrage’ (Smith 1990). The latest Update of Baby Milk Actions Boycott News, the international boycott is having an important impact on Nestle, not only in direct economic terms but also in manipulate damage to its corporate image, management morale and management time the company must spend struggle it. 2.5 Solution for Companies to handle boycott It is not possible to study consumer boycott effectiveness without studying the target’s reaction to the protest. A satisfactory response, complying with a campaign’s demands, can stop a boycott before it has even got under way, whereas a reaction that is deemed insufficient or abusive could potentially recruit new members to the campaign. Smith identified four key types of management response: ignore, fight, fudge/explain or comply (1990b: 254). One increasingly popular solution used by marketers is to set up a joint task force with the boycotting organization to try to iron out the problem. For instance, in the US, McDonald’s used this approach with the Environmental Defence Fund, which was concerned about its use of polystyrene containers and bleached paper. The company agreed to test a composting programme and to switch to plain brown bags and to eliminate the use of antibiotics in such products as poultry. 3.0 Conclusion – 20% In conclusion, consumer boycott is an effort to punish those irresponsible companies. Yet consumer boycotts often have a large number of participants, and sometimes be successful in changing the behaviour of firms. Generally, participation may be driven by individual motivations such as guilt, the maintenance of self-esteem, and the avoidance of dissonance; individuals may seek a thrill of victory; or behaviour may be influenced by a false consensus bias. Despite the problems of causation, many writers agree that there is persuasive and widespread evidence of boycott actions delivering on social or environmental goals. Examples include PG anti animal testing in production; keep away from Barclays Bank apartheid in South Africa and persuade Nestle to take responsible the problem in third world. Obviously consumer boycotts cannot effectively address the full range of social and environmental issues, because it requires choice and competitive markets to function. Finally, consumer boycotts have the potential to harm many innocent parties, including guiltless workers and the various economic entities that depend on the boycotted firms. 2) B) Discuss the various ways in which marketers can attempt to influence consumer perception and attitudes, using examples to illustrate your argument. (60%) 1.0 Introduction and Discussion – 20% According to International Monetary Fund (2010), analyse that in year 2010 the world spending is at GDP 62,909274. United States have the highest GDP, which are 14,657,800. Consumer is the most important person to marketer because marketer takes into account consumer likes and dislikes on the production of goods and services. Marketing and consumer behaviour are basically connected.   By clearly understanding of consumer behaviour to support all marketing activity, it is a necessity to organizations for being marketing orientated and thus profitable. However, to understanding what consumers buy or not to buy is the most challenging concept to marketers. As consumer buying behaviour is difficult to be understanding clearly because factors affecting how consumers make decision are extremely complex. Buying behaviour is deeply rooted in psychology with dashes of sociology. The reason is, since every person in the world is different, it is impossible to have simple rules that explain how buying decisions are made. In general, there are three main factors that influence consumers buying decision which are personal, psychological and social. Besides that, involvement also can be a major factor in consumer’s decision making. Because consumers often form emotional attachments to products, for example most people would be familiar with the feeling of having fallen in love with a product. But, studying consumers can help marketers improve strategies. Through obtaining a view into how consumers think, feel, reason and choose. Marketers can use this information to design products and services that will be in demand. By understanding customers better it can improved trading relationships. Next is can reduced cost and greater efficiency, for example, through better targeting of marketing efforts, which reduced the cost per sale. Third is improved competitiveness, by understanding consumer, marketer can through consumer feeling adapt in marketing practice to result more effective. Lastly, it will gain more sales. 2.0 Critical Analysis (Theory) – 50% 2.1 Perception Before making purchase, consumers go through series of steps. These steps include problem recognition, information search, alternative evaluation, purchase decision and post purchase evaluation (Appendix 1). In the information search process, psychological element that influences consumer is perception which influences the way consumers receive information. Jim Blythe (2001) explains perception is the way people build up a view of the world. While William D.Wells and David Prensky (1996) define perception as the process by which an individual uses his or her perceptual processes to selects stimuli, organizes information about those stimuli, and interprets the information to form a coherent, meaningful view of the world (Appendix 2). Stimuli are inputs into any one of the five senses – vision, hearing, smell, taste, and touch. The explanation of the stimuli can be subjective on individual’s environment that becomes the basis for the behavioural processes of learning, attitude formation, and decision making. At the same time, it has cultural, social, economic, and psychological bases since it requires the selection, organization, and interpretation of what the individual senses. For example, consumers manage to purchase certain products and leave the store without becoming overwhelmed. This is because of their background characteristics, past experiences and motivations to satisfy their needs help to assign meaning to the stimuli and recognize products that will offer certain benefits to them. Therefore, marketers should design their packages so that consumers will be able to distinguish them from other stimuli in this hectic retail environment. For instance, Innocent created a range of smoothies especially targeted to kids. In the packaging of this range of products, the Innocent brand identity is enriched with some funny details on the logo, in order to immediately distinguish this product from the others and appeal the children. Perception plays important part in marketing programmes, where the use of pictures, images, spoken and written language, colour, noise, music, tastes and smells are used in such abundance. At the information search stage communication campaigns should be informative in nature, so when marketers make an advertisement it should provide information about the product and its attributes to consumers. This helps in creating brand awareness and dispelling doubts regarding the product among consumers. Individual’s perception is unique and powerful in its inferences for marketers. Usually, consumer purchase will take place when individual perceives that product or service will offer benefits of needs. Hence, marketers must understand how perception works in order to communicate successfully a product’s benefits. In reality, consumers exposed to advertising and promotion do experience information overload.   Hence, the perceptual process includes a component called selective perception, which allows individuals to screen out some stimuli while allowing other stimuli to be perceived. Therefore marketer can use clear communication as strategy. Advertisements should be copy tested to ensure consumers get the message. Things to avoid include incorrect understanding of imagery, inappropriate humour, and double entendre. Also, lengthy communications are less likely to pass through consumer’s mental filters. Perception is also subjective. People understand things differently. The manner in which consumers organize and interpret information is individualistic and biased. That is, people experience subjective perception; perception deviated from reality due to individual differences in the perceptual process. 2.2 Attitudes 2.2.1 Definition of Attitudes The next step of consumer buying process is evaluation of alternatives which information is gathered. Another key element that influences the evaluation process is the attitude of the consumer towards the product. Attitudes are learned, it will be affected by new information and experience. Consumers use perception and learning to gather new information and combine with knowledge about product’s quality and benefits. This serves the basis for evaluating the choice products from which consumer will make purchase decision. An attitude is how positive or negative, favourable or unfavourable, or pro or con a person feels toward an object. This definition views attitudes as a feeling or an evaluative reaction to objects. A second definition represents Attitude can be defined as ‘a learned tendency to respond to an object in a consistently favourable or unfavourable way’ (Onkvisit and Shaw, 1994). This definition is slightly more complicated than the first because it incorporates the notion of a readiness to respond toward an object. A third definition of attitude popularized by cognitively oriented social psychologists is: ‘an enduring organization of motivational, emotional, perceptual, and cognitive process with respect to some aspect of the individual’s world’ (Krech and Crutchfield, 1948). This views attitudes as being made up of three components: (1) the cognitive, or knowledge, component, (2) the affective, or emotional, component, and (3) the cognitive, or behavioural-tendency, component. As conclude, an attitude is a learned tendency to act in a consistent way toward an object based on feeling and opinions that result from an evaluation of knowledge about the object. Yet, attitude formation is the process by which individuals form feeling or opinions toward other people, products, ideas, activities, and other objects in their environment (Michael R. Solomon, 2004). Attitude toward object is combine with three factors, first is learned knowledge form previous experience, second is evaluation based on individual’s knowledge, last is tendency to act based on evaluation. Attitudes are important to marketers because consumer will based on their attitude towards the product to buy or not to buy. But marketer cannot directly observed attitudes as attitudes are the result of motivation, perception, and learning. By understanding consumer attitudes, marketers can use interviews and surveys to measure consumers’ attitudes. 2.2.2 The functions of Attitudes Daniel Katz (1960) has developed functional theory of attitudes to explain how attitudes facilitate social behaviour. Attitudes provide individuals to apply their knowledge to an evaluation of alternative products and, consequently, to make faster, easier, and less risky purchase decisions to satisfy their needs. Obviously, attitudes help individuals with four primary functions, which are utilitarian, value-expressive, ego-defensive and knowledge function. To clarify, utilitarian function is gain utilitarian benefit from the product, while value expressive is product express individual’s values and lifestyle, and ego defensive is about a product that support self-concept and finally knowledge function is organize individual’s knowledge about product in his or her environment. 2.2.3 Attitude Models Consumers’ attitudes to products can be complex. They vary according to valence, extremity, resistance, persistence and confidence (Jim Blythe, 2008). Attitude has three components: affect, which is about the consumer’s emotional attachment to the product; behaviour, involves the person’s intentions to do something with regard to an attitude object and cognition, which is to do with the conscious thought processes. These three components are known as tri-component attitude models or as the ABC model of attitudes (Appendix 3). This model emphasizes the interrelationships between knowing, feeling and doing. Consumers’ attitudes towards a product cannot be determined simply by identifying their beliefs about it. The second attitude model is multi-attribute models. This model is unlike tri-component models cause it focus on an object’s multiple attributes and suggest individual’s attitude toward the object is the result of the aggregation of his or her evaluations of each one. There are three components is this models too, which are attributes on which the object is evaluated, beliefs about whether an object possesses the attribute and an evaluation of the importance or relevance of each attribute in determining the individual’s overall attitude toward the object (Martin Fishbein, 1963). This model is emphasizes that beliefs and evaluations both require evaluation of knowledge. Next is the attitude-toward-the-ad model. This model is an effort to understand how advertising influences consumer attitudes toward a particular product (Terence A. Shimp, 1981). Variables in these models include where, when, and in what context the as is seen as well as the effectiveness of the ad in generating feelings and dispelling negative beliefs. Mean that, an advertisement influences not only consumer’s attitudes about the ad itself but also their view of the product. As conclude, attitude-toward-the-ad model is consumers form feeling and judgments as the result of their exposure to an ad. 2.2.4 Measuring Attitudes In order for marketers to use that various attitude models, they need to measure all of these beliefs and evaluative components. There are three common methods used to measure attitude components. First is the observation of behaviour, second is qualitative investigations then attitude scales. Each has unique advantages, depending on the circumstances and all are helpful in determining the strength and direction of particular attitudes. The most often use by marketer is the attitude scales like consumer survey questionnaires with quantitative scale taken by consumers. In fact, this method may be hard for participants to recall information or to tell the truth about a controversial question. 2.2.5 Marketer changing consumer attitudes Marketer can attempt to influence consumer’s belief, affect, and conative intention by providing information about the attributes and benefits consumers use to form attitudes by influencing the social context in which consumers form those attitudes. For example, usually consumers look to members of their reference group for information and advice, marketers use communication tool to influence consumers and the information and advice can change their attitudes. In actuality, marketer changes consumers’ beliefs or evaluation of the product by promote their product offers benefit and will satisfy their needs better than competitors or previously product. The strategies marketers employ to influence and promote attitude change include adding benefits, changing product or package, changing the criteria for evaluation and linking products to existing favourable attitudes. The most often strategies use to influence attitude change are adding benefits and changing product or package. To enhanced product value, the product must offer multiple benefits to consumers. As consumer’s attitudes will become more positive by product’s perceived value increase. For example, Johnson’s Baby Oil claims to soften a baby’s skin, condition adults’ skin, remove makeup, and promote tanning. Besides that, consumers often form attitudes in response to changes that improve a product’s ability to deliver benefits. Softso ap, for instance, introduced liquid hand soap and in turn favourably influenced consumers’ attitudes about the convenience of the product. An alternative to changing the product itself is changing its packaging. For example, Jif peanut butter available in a plastic container. As result, changing package consumers’ attitudes are formed in part by evaluating packaging features that offer convenience and environmental benefits. The drawback of this changes will increased costs for company to maintain competition within market place and maintain their share hold of market. Also works against the consumer, as newer products make older product obsolete, resulting in more costs to remain current. 3.0 Conclusion – 20% In conclusion, according to Katona and Strumpel (1978), attitudes and perception are closely related. Both concepts tend to affect one’s perceptions and shape one’s behaviour. To identify consumer perception and attitude concept and function, several theories and models were represented. This is to focuses attention on how some of the factors that can contribute to those concepts and how they are evaluated by the consumers. Besides that, some examples are listed to support and identify various way that marketer attempt to influence consumer perception and attitudes. Lastly, it is useful that marketers have a better understanding on consumer’s attitudes and perception so that strategies can be applied in a proper manner to gain competitive advantages from other competitors and also can capture consumers’ attention for products to leading successful. Reference List Jim Blythe, (1997) The Essence of Consumer Behaviour. London, Prentice Hall. Solomon, M., G. Bamossy, S. Askegaard and M. Hogg (2009) Consumer Behaviour: A European Perspective. FT Prentice Hall (4th Edition). Dickinson, R., and S.C. 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