CHAPTER 2- LITERATURE REVIEW
2.0 Introduction
This chapter is focused on existing literature that is relevant to the subject matter of this study. The literature review will comprise of models and studies, which will shed more light on the topic and provide a framework for conducting the study. These models include the consumer decision-making process, consumer buying behavior model, and the consumer choice criteria. This literature review further provides a comprehensive explanation of the factors that influence consumer choice with an in-depth analysis of hedonic and utilitarian factors. It also includes an analysis of similar researches conducted on consumer choice.
2.1 Consumer Buying Behavior
According to Belch and Belch (2007), consumer behavior can be defined as “the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires” (Variawa, 2010). In understanding consumer choice, it is important to understand consumer-buying behavior. There are generally four types of consumer buying behavior that are based on the kind of product being purchased, level of involvement and significant difference between brands (Kotler & Armstrong, 2010). Blackwell, Miniard & Engel (2001), furthur define the different kinds of buying behavior as stated below.
Complex Buying Behavior- This behavior is seen when the consumer has a high involvement in the product purchase decision. This means the consumer might seek to collect a lot of information on features and attributes of the product before the choice to buy is made (Kotler & Armstrong, 2010). Products under this buying behavior face financial risk, physical risk and a...
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...This makes up the main theoretical framework for this study. The research conducted by Spronk, Hasan and Karjaluoto are similar to this particular research since they sought to identify the main factors of consumer choice, focusing on brands of soft drinks, ice cream, sneakers as well as cars and mobile phones respectively. The findings of these studies were used to juxtapose the findings this research presented.
To the best of literature search however, there has not been any research conducted to determine the relative importance of influences of choice on products with marginal benefit and price differences such as fuel in Ghana. Therefore, this research seeks to determine the relative importance of factors that influence choice of fuel retail brands in Ghana. This study does not seek to understand or explore why certain factors are more important than others.
In this paper I aim to tie the concepts of behavioral economics to issues in health economics. The goal is to use economics and psychology to explain how patients or physicians stray from the assumptions of the standard economic theory. In it through behavioral economic concepts that help researchers analyze and forecast patient or physician behavior. Behavioral economics has neumerous applications in the medical care field and these ideas can be used to create better health outcomes and stronger policies. I will be observing the economic issue of asymmetric information in certain spaces in the medical care field. According to the standard economic theory decision makers are fully informed have rational preferences with the aim to maximize utility. Behavioral economics literature examines patient and physician decision making through a variety of lenses such as the concepts of radical uncertainty and visceral factors. Through research and observation it is only “rational” to apply concepts of behavioral economics. In this sector uncertainty hovers above every decision where patients have limited information that influence decisions in the environment of fear make choices in the context of fear and trust in the physician. Every situation the medical field is unique to its own and this creates a great deal of uncertainties. These uncertainties can infiltrate decisions about diagnosis, treatment and prognosis. Since this is such a broad subject I will narrow it down to a few topics to explain the ideas. I will try to show patient and physician decision making capacity in risk situations and use the example of end of life care to make the argument tangible.
Consumer behavior is the ways that consumers exhibit in searching for, purchasing, using, evaluating, and disposing of, products and services. The study of consumer behavior as a separate marketing discipline all started when marketers realized that consumers did not always react as marketing theory suggested they would (Ekström, 2003). Many consumers rebel at using the identical products that everyone else used, instead they prefer differentiated products that they feel reflect their own special needs, personality and lifestyles.
The rational consumer behavior model outlines the ways that consumers weigh their consumption choices to maximize utility given the constraints they face. When comparing the prices of multiple goods and the person’s income, there is a bundle where a person’s happiness (utility) can be maximized. Maximizing utility, however, is not always easy. Consumers can be bound by many extraneous factors, or even be complicit in their loss of utility. While the rational consumer behavior model provides a solid framework of buying habits, it does not always reflect reality.
The factors that influence consumer behavior have to be understood by marketers as they cannot directly influence them, but rather gain an understanding so they can use them to their best advantage. With the emergence of ‘Black Diamonds’ in the South African market, they indulge themselves in the finer things in life as they have come long way through from the apartheid era. A typical ‘black Diamond’ consumers’ status is typically being seen in the right car, shopping at the right mall and purchasing the right class-appropriate brands (Radebe, 2013).There are four major factors that affect consumer behavior which are cultural, social, personal and psychological.
Consumer Decision Making Process A key factor in successfully marketing new/existing products or implementing a product Extension is a thorough understanding of the motivation, learning, memory, and decision Processes that influence consumers purchasing behavior. Consumer purchasing behavior theories have found their way into managerial decision making to help companies more effectively develop and launch new products, segment the market, determine market entrance and in brand management. Therefore, a better understanding of how consumers decide what to purchase is critical to the success of a product. There are numerous theories and models describing the consumer purchasing decision process.
Vijaya Lakshmi, S and Mahalakshmi: “consumer buying behavior in decision making process in purchasing of electronic home appliances (India): an empirical study”, consumer behavior is the study of group, individual or
“It takes little effort to be a consumer. The simple act of buying a good or service is the only requirement for entering the club of consumerism, but in the free market economy the consumer is a special person” (Essock, 1978). Retail personnel seek to acquire buyers’ wants and needs in their products and hope to meet their customer’s desires, keeping their fingers crossed that they will return for more merchandise. Although those weekly, monthly, or even yearly shopping trips become second nature to customers, employees in the retail business thrive off these shopping routines, habits, and patterns. To find these patterns seems simple, but with an array of consumer characteristics the search can become complicated (“Types of
As we discussed the decision-making process for consumers is anything but straight forward. There are many factors that can affect this process as a person works through the purchase decision. The number of potential influences on consumer behavior is limitless. However, marketers are well served to understand the KEY influences. By doing so they may be in a position to tailor their marketing efforts to take advantage of these influences in a way that will satisfy the consumer and the marketer (remember this is a key part of the definition of marketing).
Consumer behaviour is defined as the behaviour that consumers undertake in seeking, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their personal needs (Nayeem 2012). Different consumer may have different choices in purchase that is dependent on various influences. High involvement purchase sets the best example of engaging in consumer behaviour in various aspects as complex buying behaviour occurs when the consumer is highly involved with the purchase and when there are significant differences between brands. This behaviour can be associated with the purchase of a something significant in value and meaning to consumer which could be risky (Tanner 2012). High involvement purchase could be deduced from both emotional and rational perspective. Evidently, there are various dimensions and avenues to high involvement purchase and thus this essay to focus on that.This essay will analyse the behaviour of a consumer who is an international Chinese student who is involved in a high involvement purchase of Chinese New Year gifts. Meanwhile, the influences of purchase situation, decision making process, internal & external influences on the student’s selection between different brands of lanolin cream will also be further analyzed in this essay.
Colgate-Palmolive has remained a leader in the oral hygiene industry. The company operates all over the world and has been successful in all markets. One reason the company has remained successful is because the company understands its customers and customer buying behaviors. This paper will discuss different segmentation variables for Colgate-Palmolive. This paper will also discuss the behavioral influences. Finally, this paper will make some recommendations for the Colgate-Palmolive company.
While researchers can determine consumer behavior quite easily, it is almost impossible to get accurate and reliable data on why people buy what they do. How in the world can we figure out why consumers make the decisions in purchases they make, when we can only predict motives? Well, everything tends to be linked to a psychological trait that can help define the behavior of consumers.
Customer behavior can be defined as the process used by organizations, individuals and groups, to select, buy or use particular products or services to satisfy their needs and the impact it has on the society (Wikipedia, consumer behavior). Every product in the market is given a different value by an individual user based on the need it satisfies and also the level of the want. For example a person may put choosing a car as just for a means of transport from point A to point B but for another individual a car is not only used as a mode of transport but also as a means of his lifestyle. Many marketers use these difference of needs in consumers to create different marketing campaigns to attract consumers that use their products.
The phenomenon of impulse buying is becoming increasingly commonplace in developed countries. Our culture of consumption makes us less likely to resist temptation and consider the consequences before purchasing things. The impacts could be varied dramatically depended on where it takes place. For instance, the things that you purchase impulsively could be a bar of chocolate; however, it could also be a Louis Vuitton handbag and the consequences would be much severe. Hence, a lot of researchers are interested in studying the causes of this phenomenon in terms of different parameters such as age and gender. In relation to gender, researchers attempted to find whether there will be a gender difference in impulse buying and the possible
The research on consumer behavior assists the organization recognize and forecast the purchase behavior of the consumers while they are purchasing a product. Thus, the study of consumer behavior helps the marketers not only to understand what consumer's purchase, but helps to understand why they purchase it (Kumar, 2004). There are a lot of elements which can influence the purchase decision of consumers such as social influences, cultural influences, psychological factors and personal factors (Super Professeur, 2011). Understanding these factors helps the company to market the product on right time to the right consumers in order to generate more profits. On the other hand, if the marketers fail to understand these components that might influence consumers, they will fail to convince the consumers to purchase that product or will fail to meet the demands of consumers. However, consumer behavior is one of the stimulating and challenging areas in marketing studies being a human activity focused on the products and services. Thus understanding the behavior of the consumers is a great challenge. Moreover, it is not easy to get a full picture of consumer behavior as customers make plenty of different buying decision every day and they usually do not know exactly what influences their purchase. In short, basing on all
In today’s competitive world where organizations looking for high profitability and market share, consumers have very important role. Companies are looking for capture consumers in order to get larger market share. For this reason organization developed a number of techniques and tools. One of such tools is consumer behavior which has been come from economic theory. Consumer behavior is mainly studying the factors and situations that can affect purchase decisions of consumers. Consumer behavior is being very important discipline of management sciences which help out to understand of customers’ decision making.