Category: Consumer Behavior

Factors that Influence Consumer Behavior tn the Purchase of Durable Household Products

Overview

The consumer conduct or purchaser conduct has increased expanded significance in a consumer oriented promoting arranging and the executives. Consumer behavior is the training utilized when individuals, groups, or associations select, use or discard the item, facility, thoughts or experience to satisfy customer’s necessities and wants. The main reason for doing this press conference is to identify the main factors which affect consumer purchasing behavior of durable household goods in South Africa. Durable goods are a group of customer items that do not should be bought regularly as it is made to quite long time (generally last for three years or more). They are likewise called purchaser durables or durables. Examples of durable products are furniture, vehicles, jewelry, electronics item and many more. But for this press conference mainly focus on customer behavior in purchasing durable household products.

There are main reasons that influence customer when purchasing durable household items such as quality, features, price, brand name, ad and previous experience about the product. One of the most important factor in the research paper was quality, without a proper quality product customers may not having interest on purchasing the product even though the pricing was cheaper or higher. The service quality is not just estimated contrasted with product quality. There are two quality types, objective of quality it refers to basic features of product and perception of quality is about product consideration and decision taking place the several characteristics. This study shows, quality is the best dominating factors that influence customers when purchasing durable household products. Price and features is second importance factor among customers in South Africa when buying those products. Price also can be divided into two part such as perceive price and objective price, for perceive price consumers will be having their own perception on how costly a product through their opinion on its level of quality. The objective price is a real price of a product that offered by the marketers to customers. Features it’s depend on what household products that consume b customers like features in television is much more essential to customers in South Africa compared with other durable goods. Mainly features are the characteristics of a product that refer to modules, abilities, clarity, technology system and etc.

Besides that, brand name, ad and previous experience are also the key factors that influence customers but it not similar with other factors that mentioned earlier. In the study stated that, still some customers considering this kind of factors when purchasing durable products. Certain customers only buying selected branded items since is known to be the best while some customers influence by the commercial ads that appears in social media, television and many. Next, previous experience which help customers to repurchase the same product because they are well known on the feature, quality and price of the item. Furthermore, elements like cultural, social, personal, and psychological factors also influence customers purchasing choice to that particular product. Firstly, cultural factors can be divided into three groups such as customer’s culture, sub-culture and social class. Cultural factors force through the values, needs, interests and conduct that learned by an individual from society, family and other vital organizations in making decisions to purchase a particular product like household products. For example, South Africa culture is different from other countries and they have eleven formal languages and each of them having its specific culture. It may influence their purchasing behavior towards the durable household products because of culture factors. Secondly, is social factors that includes family members, characters, status, and age and life cycle period. Opinions of family members also be the main impact on buyer’s actions. Advertisers are highly focus on certain roles and try to influences them like spouse, children and many more. Besides that, age and life cycle period influences purchasers conduct since people groups are different with a period changes, may be among youngsters and old people in South Africa.

Next, personal factors also can be the one of impact on obtaining products and service through customer’s profession, countries economic condition and educational level. Psychological factors like how customers interpreted or motivated to buying durable household products in South Africa may be through brand image, awareness and learning about the product before made a decision. This are the factors that influence customers when made their purchasing on durable household items. So that, manufacturers must consider those elements when design and developed a durable household product to the customers.

Current situation related with marketing challenge

The durable product industry, in the most straightforward term, comprises of organizations that manufacture products that are utilized by the buyer. There are many firm produce durable household products like Panasonic, IKEA, and many more. Current situation related with marketing challenge are changes in customer demands where it always tend to change quickly. For example, Panasonic is a worldwide household products. But, changes in innovation have drastically adjusted spending in customer electronics. And nowadays, more individuals watch content through their cell phones and tablets than on television. This has exhibited traditional Japanese electronics businesses with real marketing challenge because of this issues. The customer demands change according to the current trend, for that Panasonic come with marketing strategy or plan in digital marketing platform to make the customer aware of the B-to-B groups. Panasonic has adopted a worldwide approach to grow its B-to-B business, including the arrangement of service area and solutions. Besides that, Panasonic adding extra features in the existing household products to attract many younger customers.

Another marketing challenge is competition between organizations to manufacture the best durable household products to customers. For example, competition between Panasonic and Philips to manufacturer durable household products to customers by identify the product quality, features, pricing of the items.

Furthermore, handling social network sites to create awareness like in Panasonic. They develop internet advertising to create an awareness among customers about the channel, since it was reasonable, directed, and quantifiable. To pick up the customer consideration and opportunity through the clamor related with Internet promotions, a method was used by Panasonic that is “shock and wonder”. This would make an amazing moment to the customers when they browse the website page and create interest that would motivate further information. Types of advertising are banner ad, social media ad like Facebook, Instagram, campaign microsite, YouTube advertisements and channels to develop and to show the Panasonic B-to-B products.

Next marketing challenge is to keeping quality constantly high because customers nowadays are more conscious about the quality product that they purchasing. Toshiba intends to add to society by giving safe, trustworthy and high-quality items that fulfill consumer. Toshiba Group is attempting to support the capacities to ensure quality focused on the four principle pillars of quality improvement inventiveness. Besides that, Toshiba focus on improving the Quality Management System (QMS) based on ISO 9001 to raise the quality of design and structure, which are the major reason of disability, and also to upgrade the training of work force who can maintenance the development of the QMS. For example, in China the Toshiba China Academy, a training organization of Toshiba China, assumes an essential role in improving the skills of staffs. It to fit the nearby traditions and conditions, of the various nations with their preferences. This also will improving the abilities of quality work force while it also may leads to increase the productivity level of the firm.

Goals

The objectives should be measurable and can be monitored to meet the organization goals effectively. There are two objectives hope to be achieved through the Press Conference that conducted by us, firstly to understand the purchasing behavior of customers on long-lasting products. Customer behavior is the training utilized when individuals, groups, or associations select, use or discard the item, facility, thoughts or experience to satisfy customer’s necessities and wants. Customer behavior on purchasing long-lasting products, made by how customers make choices and select the product with their preferences. A comprehension of purchasing behavior of customers towards long-lasting products is basic as it reflects the effect of brands, pricing, quality, features, size, previous experience, method of buying and so on. Furthermore, other elements also influence the purchasing behavior are promotion packages, testing or examining the item, internet, customer rating or review and families while it shows how cautious is the customer when make decisions to purchase durable products according to their needs and wants.

The second objective is to define the key component that leads to the purchasing behavior of the customer. There are many key component or factors that leads to the purchasing behavior such as cultural factors, social factors, personal factors and psychological factors. This are the main key component that affecting customers purchasing decision towards durable household products. Besides that, emotional factors also influence the buying behavior like in individual appearance or afraid of unexpected situation but it was a small potion that affecting consumer behavior. Therefore, manufacturers may possibly utilize the consequence of this Press Conference and convert them to well items, and better-quality items in order to remain focused and fulfil customers’ needs and wants.

The aim of conducting Press Conference is to achieve our goals and objective towards the perception of customer behavior in purchasing of durable household products. Each customer is have their own purchasing behavior when choose and make decision to buy the durable household items and it not similar with others. This Press Conference has established that customer preferences or the option change through a variation durable products. The market for customer durables is becoming competitive so the manufactures should strongly consider about the topic and understand their needs and demands when designing and planning the durable products.

Strategies

The Press Conference (PR) presentation will be done by giving a talk about the factors that influenced consumer behavior in the purchase of durable household products. We will do a slide presentation for our press conference. Besides that, the slide presentation will explain more about the factors that influence consumer behavior in the purchase of durable household products. The slide presentation would also include a short video about the consumer behavior in the purchase of durable household products.

Based on the slide presentation, the targeted audience for the primary target audience which is the manufacturer and marketers can improvise and know how to market their product. The secondary target audience which is the consumers can know the factors that influence them to purchase durable household products.

There are two main objective for our press conference which is to understand the purchasing behavior of consumers on long-lasting products and to define the key component that leads to the purchasing behavior of the customer. The methods by which we will achieve our goals is by conducting a seminar towards the marketers so that they can understand more about the purchasing behavior of consumers on long-lasting products. Marketers need to know the factors that influence consumer behavior in the purchase of durable household products so that they are able to target the consumers and market their durable household products. The other strategy is by organizing educational events. At the event, talk about the cause and connect with people. For example, provide a lesson for the consumers so that they can gain knowledge about the consumer behavior in the purchase of durable household products.

Target audiences

The primary target audience will be the manufacturer and marketers and for the secondary target audience it will be the consumers. This press conference will approach the primary target audience which is manufacturer and marketers because manufacturer and marketers need to know what are the factors that influenced the consumer behavior in the purchase of durable household products so that they can gain more knowledge on how to market their durable household products such as television, refrigerator, laptop, jewels and others to their customers. For the secondary target audience, it will be the consumers. The types of people that we want to reach is the consumers that have purchasing powers of durable goods. The consumers would play three important distinctive roles such as the user, payer and buyer. Hence, the consumers are exposed to a diversity of durable products, which varies in price, quality, features, appearance and size (Gizaw, 2014).

To fulfill the needs and requirements, consumer behavior is the practice used when individuals, groups, or organizations select, use, or dispose product, service, ideas or experience. Most organization would study the consumer behavior to obtain more information about how customers make decisions and choose their products. Durable products refer to products with a long-life span that can be used repeatedly. There are few common durable products which include cars, books, household goods such as household electronics, furniture and tools, exercise equipment, jewels, medical equipment, and toys (Kim et al., 2009). Thus, these types of durable products is not often purchased by the consumers because the durable products can lasts longer rather than non-durable products.

Furthermore, there are few factors that influenced the buying decision by the customers which is cultural factors, social factors, personal factors, psychological factors, perceived price, perceived quality, and perceived value and perceive risk. Cultural factors include the consumer’s culture, sub-culture and social class. Consumer’s culture refers to a set of basic values, wants and behavior learned by a member of society from the family and other important institutions. Sub-cultures include nationalities, regions, racial groups and geographic regions. Social class refers to society’s relatively permanent and ordered divisions, members sharing similar values, interests and behaviors. Social class can be determined by a combination of education, income, occupation and wealth. As for social factors, the sub-factors for social factor are family, roles and status, and age and lifecycle stage. Family members have a strong impact on consumers’ behavior. Marketers are interested in the roles and influences of the wife, husband and children. As for personal factors, it includes occupation, economic situation and motivation. For psychological factors, include perception, leaning and the brand. Three categories of consumers’ perceptions are perceived price, perceived quality, perceived value and perceived risk. Perceive price is an individual belief of how much an item cost based on its quality while objective price is the actual price of the item. Consumers will have a different perspective on the price of an item. Some consumers consider price as an indication of quality. Therefore to them, low price is associated with low quality and high price is associated with high quality. Quality is the evaluation of excellence and superiority of services or products (Zeithaml, 1988). For perceive value, Value differs from consumer to consumer, some consumers consider value as quality product at a reasonable price while some considers value as obtaining the product that suits its intended use. As for perceived risk, American Marketing Association defines a brand as a name, term, sign, symbol or design, or a combination of them intended to signify the goods or services of one supplier or group of suppliers and to differentiate them from those of rivals. Thus, some consumers will only buy a specific brand of a product because it is a well-known to be the best products.

Recommendations

Based on the press conference, there are few recommendations for the factors that influenced the consumer behavior in the purchase of durable goods. The recommendations is by making informational pamphlets and boost social media awareness.

For instance, a great way for people to learn about the issue is through informational pamphlets whether it is printed or digital. Thus, ask the local businesses if you can leave pamphlets out for people to take.

Next, to boost social media awareness, create accounts to spread awareness on Facebook, Twitter, Instagram and YouTube. Try to spark thoughtful conversation on social media by asking questions and give a feedback

SPS Preference of Retailers in Impulsing Consumer Buying Behavior

Abstract

Sales promotion efforts of marketers focusing on the incremental sales volume, acquiring market share, branding, consumer acquisition and retention. FMCG players are providing different schemes to consumers, retailers and sales force to capitalize the industry growth opportunities. Apart from consumer promotion and advertisements, promoting retailers with sales promotion schemes are having more impact on branding and sales achievement. A research report in a business weekly has revealed that about half of the people in India are below the age group of twenty is about 160 million whose major purchases are impulsive in nature. But the FMCG corporate companies are not having a specific plan about the nature type of promotional schemes which are effective and profitable. This study was carried out among the 500 FMCG retailers aimed at understanding their preference level of various sales promotion schemes which impulse the FMCG consumers towards brand preference and product choice.

INTRODUCTION

The expected growth in the retail market in India is estimated at 10 percent (CAGR) and to rise up to US$ 1.6 trillion by 2026. And the traditional retail trade rise at 10 percent, the modern trade would register a quick growth rate of 20 percent per year with an estimated rise of 12 percent per annum in total. Organized retail segment contributes to the total market by only 9 percent but 91 percent contributes to the unorganized retail sector. The retail market focusing Consumer through Business(B2C) would contribute by US$ 26 billion and on the other side retail using internet or e-commerce is estimated to rise as like as physical retail outlets within forthcoming five years. Indian e-commerce retail market is estimated to rise from US$ 30 billion in FY2016 to US$ 120 billion within 2020 supported by internet networks and fast acceptance of e-services by Indian consumers.

FMCG Industry

Fast Moving Consumer Goods(FMCG) are the goods which are demanded more and purchased more frequently by the people. Except for pulses and grains, any usable goods which are purchased at equal intervals in lesser volumes. The products like washing soaps and powders, shaving goods, toothbrushes and pastes, shampoos, packed food items, face creams, hair oil, tea, coffee etc. The major players in the markets are HUL, Cavin care, Nestle, P & G, Colgate, ITC, Nirma, Britannia, Amul, Emami, Marico, and Dabur. A larger amount of monthly family budget occupied by the FMCG products. Among the promotion-strategies (Consumer Promotion, Trade Promotion, and Sales Force Promotion), trade promotion gives a high impact in the retail market to penetrate and rise in a competitive market. Thus, Trade promotion is significant for FMCG companies to market, earn. This made the researcher get interested in this topic to study.

Classification of FMCG Products

• Personal care
• House-hold care
• Packaged food & Beverages
• Health Care (OTC Products)

Classification of Trade Promotion Schemes

• Quantity Based Discount Scheme(QBDS)
• Trade Allowances ( Support to increase sales level )
• Trade reward contests (fix target and benefits to top achievers)
• Trade support by Branding ( For Brand positioning)

REVIEW OF LITERATURE

Peter Boatwright and Robert McCulloch(1999) stated that Promotional strategies are created to foster the sellers to do product promotion in short term price decrease, using store-display or local media. According to Alvarez et.al (2005), Trade promotion schemes providing best results should be used and manufacturers can withdraw schemes which are not producing any change in consumer behavior. Bawa et.al(2004) in their study discussed the effect of free sample promotion in retailing. In the research work done by Blattberg et.al(1995), marketing results by the trade promotion schemes and positioning of the brands suing the schemes were discussed. Ganesh et.al (2012), revealed the trial purchase and spillover effects on products movement in the market. Gauri(2008) in his research study studied the retail promotion and effect on consumers’ effectiveness towards purchase. Moreau, Krishna and Harlam( 2001) mentioned about the triadic work of manufacturer and retailer. Ravindran and Venkatesakumar(2015,2017) in their studied found that schemes as a promotional tool in softdrinks and other FMCG products, retailers’ promotional preference of schemes with respect to self services and non self services stores. Rampier (2012) found that ‘Price-reduction’ &’ buy one get one ‘ free offers are having an impact in increasing short term sales and induce the first trial. Also, small packed goods reduce the risk of bad quality. Thus the quality of goods and comfort within the store boosts satisfaction level of users along with the scheme promotions while direct reduction in pricing may cannibalize future sales. Tsao and Lu(2016) studied the relevance of promotional tools in manufacturer and retailer supply chain. Jonq et. al (2008) analyzed that Promotions increase the demand for the product by the consumers and incentive for brand owners to boost the products. In Dhruv and Michael (2007) studied the key issues and future research areas in various sectors of Retail industry with respect to price, promotion, service, consumer behavior and others .

FINDINGS

The retailers though exposed to various types of promotions by different companies for different products, their preference are mostly related to promotions linked to quantity or volume of purchase followed by the trade allowance for enhancing liquidation of products in secondary sales.

From the study it was found that the FMCG retailers expressed their opinion that consumers would not respond to the components like value of promotion, coincidence with another promotion, first use of promotion, Product awareness, confusing nature of the deal, execution of the promotion, premium or deal attractiveness, good correlation of other products and competition level. Thus the retailers’ opinion on consumers’ response to schemes alone were not considered for planning the trade scheme operations. But the same was found to be having variations with a different category of products.

Thus the retailers and manufacturers have to plan any sales promotion schemes based on the impulsing nature of products and schemes together considering the type of outlets and their capability to sell the products in their market.

CONCLUSION

In FMCG product categories retailers, preference of sales promotion schemes is an important task in budgeting for promotion schemes and allocating to retailers based on the location of outlets and retailer characteristics are challenging task for any manufacturers Among the product categories, Food & Beverages are having huge growth opportunities and have more brand switching nature of consumers with respect to available sales promotion schemes. Since Healthcare category products do not show any significant difference based on the existing trade schemes, another type of promotions should be adopted to influence health care customers So if the type of schemes, location, and type of retailers are studied before designing the sales promotion budget, then the sales promotion schemes will be more effective in influencing the consumers buying behavior . The sales promotion schemes need to be customized according to the product and retail characteristics to impulse consumer behavior.

BIBLIOGRAPHY

1. Alvarez Alvarez, B., & Vázquez Casielles, R. (2005). Consumer evaluations of sales promotion: the effect on brand choice: European Journal of Marketing, 39(1/2), 54–70.
2. Blattberg, R. C., Briesch, R., & Fox, E. J. (1995). How Promotions Work: Marketing Science, 14(3_supplement), G122–G132.
3. Dhruv Grewal and Michael Levy(2007),Retailing research: Past, present, and future: Journal of Retailing ,83(4,2007),447-464.
4. Ganesh Hariharan, V., Bezawada, R., & Talukdar, D. (2012). Trial, repeat purchase and spillover effects of cobranded extensions: Journal of Product & Brand Management, 21(2), 76–88.
5. Gauri, D. K. (2008). Retail promotions: Consumers’ effectiveness in availing them and retailers’ success in using them. Dissertation Abstracts International Section A: Humanities and Social Sciences, 68(9–A), 3967.
6. Jong Ying Lee et.al(2008)The Impacts of Retail Promotions on the Demand for Orange Juice: A Study of a Retail Chain: Journal of Food Products Marketing,15(2).
7. Moreau, P., Krishna, A., & Harlam, B. (2001). The manufacturer-retailer-consumer triad: Differing perceptions regarding price promotions: Journal of Retailing, 77(4), 547–569.
8. Peter Boatwright and Robert McCulloch(1999), Account-Level Modeling For Trade Promotion: An Application Of A Constrained Parameter Hierarchical Model: Journal Of The American Statistical Association 94(448), 1999; 1063-1073
9. Rampier, M. (2012). Sales Promotion of Fast Moving Consumer Goods: International Journal of Logistics & Supply Chain Management Perspectives, 1(1), 59–63.
10. Ravindran,D., and Venkatesakumar,V.,(2015). SDM-An Emerging Promotional Tool in Retailing of Softdrinks. Jamal Academic Research Journal,60(7) , 41-49.
11. Ravindran,D., and Venkatesakumar,V.,(2017). Retail Preference of Promotion in Cashless Economy -FMCG Products: Shanlax International Journal of Commerce,104(93): pp. 457-462.
12. Ravindran,D., and Venkatesakumar, V.,(2017). Differences in Evaluation of Trade Promotional Schemes -A Comparison of Self- Service Stores Vs Non-Self Service Stores: Asia Pacific Journal of Research, 17(1): pp. 1-5.
13. Tsao, Y. C., & Lu, J. C. (2016). Trade promotion policies in manufacturer-retailer supply chains. Transportation Research Part E: Logistics and Transportation Review, 96, 20–39.

The Factors of Costumer Behavior Motivation in IKEA

INTORDUCTION

The main purpose of marketing is to meet the needs of the customer and to make the customer feel good during shopping and to ensure that the experience gives positive results for the customer and the seller. There is no easy and specific way to improve the motivation of the customer to purchase the product or service since the motivation to buy the product or service may differ for all customers. If the customer’s motivation to buy the product or service is not analyzed correctly, some major mistakes can be made. For marketers and communication professionals, estimating the motivation of consumers to buy products and determining where the trend is evolving is considered to be one of the most significant issues.

In this study, it is examined that how customers’ purchasing motivations change and how it can improve their purchasing motivation and experience in the providers store for the retail furniture giant IKEA stores.

METHODOLOGY

In the first part of the study, company information about IKEA, customer portfolio target, annual sales capacity and store structures will be examined. In the second part, customer motivation for purchasing products and services will be analyzed. At this stage, Maslows Hierarchy of needs and Heisenberg hygiene theory will be used. In the third part, five situational influences which are physical surroundings, social surroundings, temporal perspective, task definition, antecedent states will be assessed. In the fourth part of the study, some recommendation will be provided as a a consumer behavior consultant. These recommendations are about how to improve the marketing strategy of the seller.

INFORMATION ABOUT IKEA

Overview of The Company

IKEA is a Swedish furniture retail giant. It has stores all over the world and reaches millions of customers every month. IKEA became an international retailer when the first store in Norway opened in 1963.

The company expanded beyond the Nordic countries in 1973, when a store was established in Switzerland. Thereafter, stores opened in many countries, including Germany (1974), Australia (1975), France (1981), the United States (1985), the United Kingdom (1987), China (1998), and Russia (2000). The typical IKEA store is extremely large, generally covering an area of 186,000 square feet (17,280 square metres). IKEA is not owned by shareholders. Instead, it is controlled through a number of operating companies, holding companies, and nonprofit foundations. The complex corporate structure was created partly in response to high Swedish taxation.[1]

As it is seen, IKEA is an old-aged firm. They have approximately 450 stores around the world. IKEA sold 38.8 billion euros ($44.6 billion) of goods and services in the 12 months through August, up 5 percent in local currencies, brand owner Inter IKEA said. The growth rate was roughly the same as the year before. IKEA, whose stores are owned by 11 franchisees, opened 19 new outlets, taking the total to 422 in more than 50 markets. The largest franchisee is IKEA Group, with 367 stores.[2]

Target Market

The global retailer IKEA, has deliberately designed products to address the target market and further reduced costs by facilitating operations with local suppliers. Although the products are not very expensive, they have a good quality. Customers are aware of this and know that they will not be faced with a huge budget surprise at IKEA. Besides, customers know that if they need any furniture for their home, they can find it at IKEA for the best price. In this case, it can be said that customers with a medium-economic level are main market targets for IKEA.

IKEA’s main shoppers are classified as not-old, mid-range and upward mobile, preferring low-priced yet trendy furniture and home products. The company’s CEO defines IKEA’s target market in the US as ‘someone who travels abroad, loves to take risks, enjoys fine dining and wine, has frequent flies, and adopts consumer technologies early.’ Recently, IKEA has developed product plans to increase the use of waste or recycled materials due to the increasing demand of its customers for environmentally friendly products.[3]

Business Strategies

It seems obvious that IKEA has adapted to international markets while staying true to its business concept. Besides, IKEA is a concept-driven company where it is necessary to manage operations and share information through the IKEA method, regardless of the location of the retail outlet. Open communication is vital to IKEA’s operational systems. For example, if there is a problem takes place, not only external but also internal networks are used to have quick solutions. This coincides with research that argues that good relationships are important to enable knowledge sharing. IKEA devotes considerable time to product development and strengthens long-term relationships with its suppliers to produce products cheaper and to constantly find new ways to produce a better product. Strategic global outsourcing of product manufacturing enabled IKEA to effectively lower prices for its products, leading to international expansion. In addition, productive internal competitiveness has developed between retail stores and supply chain distributors.[4]

COSTUMER MOTIVATION FROM THE PERSPECTIVE OF MASLOWS HIERARCHY OF NEEDS

First of all Maslows Hierarchy of Need Theory should be defined to be able to recognized the motivation of costumer. Maslows Hierarchy of Need Theory categorized the needs of human on the basis of their hierarchy. Maslow’s hierarchy table is most often shown as a pyramid structure. Basic human needs are on the lowest stage of the structure while self actualization is on the top of the structure.

The groups of users who are motivated to purchase Ikea products range from students to young married couples and individuals in small residences. Among the people, whose value affordability and are aware of space saving opportunities are primary buyers.

Ikea also creates opportunities to take advantage of low turnout, utilitarian purchases by using marketing tactics such as quick grab items and cash space shopping. Intrinsic motivation is another important factor that motivates buyers as they can gain pleasure or a sense of accomplishment from the experience of putting together a piece of furniture.[5]

There are some reasons why IKEA addresses to people with narrow and medium economic levels, having a wide range of products, convincing people to adopt the DIY(do it yourself!) philosophy and having fun to install the product offer many ways to meet customer motivation.

When you need a furniture (suc as a chair for your study desk), you look for ways to purchase a chair. It is the first step of Maslows Hierarchy of Need Theory which is physiological need step. You feel yourself in good hands because of purchasing this chair from IKEA. This means that you are on the second step which is safety needs. Because IKEA is a well-known brand you feel yourself belonging a huge community. So it shows that the third stage of Maslows which is belongingness is come true. You purchased a new chair because you think it take a prestige to you, maybe some of your friends will see the new chair and they will tell you how a good chair that. So the Maslows Hierarchy of Need Table’s fourth stage with is Ego Needs (Esteem Needs) comes true. You purchased the chair, you transferred it yourself, and you set up the chair by using the set-up papers. So, the top need of Maslows Hierarchy of Need Table which is self actualization came true.

So IKEA utilize the theory of Maslows Hierarchy of Need on motivation of costumers. If it is managed correctly, this retail furniture giant IKEA could benefit greatly from this trend of costumer motivation.

SITUATIONAL INFLUENCE

Consumer behavior can be determined by knowing situational influences. The situational effects influence the behavior of costumer apparently. The situational influence involves five categories which are physical surroundings, social surroundings, temporal perspective, task definition, and antecedent state. Physical surroundings refer to the area of shopping center. If it is sufficient physically, one may want to there and purchase the products she/he need. Social surroundings refer to the friends’ opinion. If your friend like the products you purchased before, you can go and shop on IKEA again. Temporal perspective refers to a particular point of view or attitude an actor has about time. For instance, if you go to IKEA on winter, the shopping area will be well heated, and if you go to IKEA on summer, the shopping area will be well-cooled. Task definition refers to reasons that people decide to purchase a product from IKEA. Antecedent states refer to momentary conditions. If one knows the the product she/or he need is being sold in IKEA, then the lowest price is in IKEA.

The main influence aim of purchasing is awareness of IKEA’s products. There is no other product catalog in the world that is as famous as IKEA. IKEA places a lot of emphasis on advertising and its returns. Customers’ familiarity with IKEA increases with advertisements and product catalogs reaching their homes. Thus, they adopt IKEA and IKEA products. IKEA places great emphasis on customers spending time in the store and convincing them that this time is not a waste of time. They establish the store structure that will allow the customer to see all the products in the store in order to increase the quality of the time spent in the store. Once a customer enters the store, they have the opportunity to experience all the products in the store by getting into the flow of the shopping and following the road.

In addition to these, customer will see the product she/he will buy in the simulated room structures in the store. For example, a customer who comes to IKEA to buy a kitchen cabinet gets an idea in the store about how that cabinet can be positioned in a sample kitchen.

In addition, IKEA maintains its restaurant side in their stores. This ensures that the customer who comes to IKEA for shopping and is tired of spending hours, knows that she/he can eat at the IKEA restaurant at the end of the shopping and that he does his shopping with the clarity of mind that this gives.

RECOMMENDATIONS

When examining IKEA’s customer portfolio, it was concluded that the biggest customer group was newly married families and young people preparing to get married. The reason why customers in this category prefer IKEA is that IKEA sells more modern products than other stores in the country. It has been concluded that, in order to maintain its reputation, a special customer loyalty program for people who are coming to IKEA for purchasing furniture for their new house can bring a great advantage for its sales.

Customers who come to IKEA to shop spend at least 1 hour in the store. Research shows that the shopping trolleys used in IKEA are either too big or too small. With the improvement to be made in shopping trolleys, customers will feel more comfortable by using more ergonomic shopping trolleys and it will increase their purchasing possibilities by focusing more on the products sold.

IKEA has been using famous product catalogs for product promotions. Thanks to these catalogs, people would be aware of new products and their prices. However, people now prefer online areas rather than paper catalogs. Therefore, if IKEA wants to reach young customers under the age of 50, they should aim to reach this potential customer portfolio through the social media. Ads on the Instagram or Youtube can be a great way to do this.

When the structure of IKEA is examined, it is seen that there are few stores in big cities, but these stores are built in a very large area. IKEA stores may be far away from some customers’ homes. In addition, a customer who comes to the store to buy a specific product may lose time because the store is too big.

Instead, IKEA may consider reducing store sizes and increasing the number of stores. For example, stores might be divided into different sub-components stores such as IKEA-BATH, IKEA-GARDEN, IKEA-FURNITURE, IKEA-KIDS and might be located these stores in different parts of the cities. Thus, customers who plans come to IKEA to buy a garden product but do not come to IKEA to avoid walking too much due to IKEA’s store structure may now come to IKEA. In addition, IKEA stores located in different parts of the city will increase the brand awareness. More stores in the cities means customers can access IKEA products easier.

IKEA restaurants are known as well as IKEA products. Some people prefer IKEA with the comfort of being able to eat their meals at IKEA restaurants after purchasing their furniture, garden equipment or household item needs. More variety of products in IKEA restaurants will increase people’s demand for stores. The best way to achieve this is if IKEA’s restaurants in different countries offer dishes specific to their country. For instance, fast-food products being offered in stores in the United States, kebap-doner in Turkey, vegetables in Mediterranean countries can be added as food product alternatives. Thus, customers who come to shop will feel at home and their loyalty and belonging to the IKEA brand will increase.

CONCLUSION

IKEA’s excellent product range, providing an impressive experience to its customers, and the perception that it sells cheap and quality products can be shown among the positive features of IKEA. IKEA is a well-known brand that people on the different countries can access the same product.

With the developing technology and internet usage, people’s shopping behavior is also changing. IKEA has to keep up with this change. It is well known how many giant brands that cannot adapt to developing technology have become history. Each customer has a different shopping behavior. Brands reach awareness as much as they can contribute to customers’ needs and shopping experiences.

In this assessment, there are some recommendations were given. Developing a good customer loyalty program, improving a more ergonomic shopping trolleys, using online and social media for ads, dividing stores into more specific meaning, and developing their restaurants’ quality will improve customer’s experience.

Improving customers’ shopping experience is, of course, not limited to these recommendations. However, it is certain that the recommendations presented will help this need

Analysis of Research on the Role Which Influencers Play to Influence Consumer Behaviour

Technological advancements have shifted the marketing designs adopted by firms. Since the advent of social media sites in 1997, consumers buying behaviours and purchasing parity have changed to incorporated social attitudes (Sudha and Sheena, 2017). Traditional marketing entailed relations between brand firms and consumers to initiate purchases and build consumer loyalty. The venture is somehow expensive and time-consuming; thus, many brands have shifted to influencers marketing using social media platforms to reach out to buyers.

Recently, influential marketing has taken a toll on Instagram and YouTube as popular social media sites. The sites allow people to follow others and subscribe to their content. Therefore, most celebrities, such as Christiano Ronaldo, have accumulated vast followership, which makes them stand out as an influential person towards particular brands. As such, companies approach the influencers to utilize their accounts; the brand creates content or product reviews and tags the influencer. Ideally, the followers for a specific influencer will receive images, videos or content depicting the influencer endorsing a particular brand. The brand company will pay some commission to the influencer for the content created or product reviews and endorsements. The venture enables the influencer to earn revenue since their accounts act as a marketing channel for the products or services offered by the brand. For instance, YouTube has a clear video forum where the influencers can deeply integrate product features and describe the usage of products; the influencer uses the product as well as their experiences and reasons why followers should use it too (Nandagiri, Vaibhavi, and Leena, 2018).

This research paper will focus on the role influencers play to influence consumer behaviour and how they consequently make their wealth. Digital marketing and social media marketing have keenly shaped the marketing initiatives which benefit both brands and influencers by creating revenue-generating opportunities. Furthermore, followers are willing to build lasting business relations with the brand endorsed by the influencers from the information shared and the confirmed expressions from product usage. The quality of information shared and content created or reviewed appeals differently to different followers; thereby, it shapes the buying patterns, lifestyle and overall preference for a diverse range of endorsed brands.

Theoretical Framework

Framing theory is adopted to achieve the stated objectives for the research successfully. According to the theory, the media plays a significant role in framing information clearly and concisely understandable to the audience (Vaibhavi and Leena, 2020). The created frameworks act as attractive models for the followers to identify with the brand and make purchase decisions due to their appealing nature and lasting impressions for their satisfaction. Framing theory is favourable for firms to create awareness about product existence, features and pricing mechanisms. The framework acts as a communication or marketing vehicle to entice buyers and create lasting impressions through the influencers’ social media accounts. As such, this paper will address the roles of the influencers on the consumers buying behaviour and how they make wealth from the frameworks.

Research Objectives and Questions

Research aim: The aim of this research is to identify how influencers get money from Instagram and how they can be very rich from advertising products and other goods.

Research objectives:

1. To explore what are the advantages and disadvantages of the information offered to people.
2. To know the relationship between influencers and people and the effectiveness of culture and lifestyle.
3. To check the relationship between cultural move in people’s mentality and behaviour, and how to transfer to other countries.
4. To recognize and understand how the same subject or content get different consumers over the world, even with cultural diversity.

Research questions:

1. What are the advantages and disadvantages of the information offered to people by influencers?
2. Identify the relationship between influencers’ and consumers, and the effectiveness of culture and lifestyle.
3. What is the relationship between cultural move in people’s mentality and behaviour, and how to transfer to other countries?
4. How do different consumers receive the subject or content across the world, even with cultural diversity?

Problem Statement

Instagram is the most famous influential marketing site whereby consumers are persuaded to initiate purchases for various brands. Examples of biggest influencers on Instagram are daily dose which has a followership of over 1.4 million persons (Influencermarketing, 2019). Others are Huda Kattan, Cameron Dallas, Kayla Itsines, Selena Gomez, and Kylie Jenner. There is little knowledge on how these influencers make wealth from their framing tactics for the various brand endorsements, product reviews, or content creation. However, their wealth and financial capacity are incomparable and attributed mainly to their careers in social media marketing, especially Instagram (Grafström, 2018). Although it is difficult to measure the ROI (Return on Investment) for social media marketing, influencers still make large sums of wealth; thus, the study is dedicated to unveil their influence. Furthermore, the research will shed light on how the influencers appeal on consumers from diverse walks of life with varying cultural diversity.

Literature Review

Celebrity or influencer marketing is a known trend in the modern business community. The influencers play a critical role in enticing brands and creating high purchase patterns for the endorsed brands. Different celebrities, such as Amos, Holmes, and Strutton have influenced mass purchases for different brands by effectively communicating appealing messages about products and their favourable attributes. According to the McGuire’s communication-persuasion matrix, the effectiveness of a given message is determined by the input components for the persuasion message (Lou and Shupei, 2019). The various inputs include information sources, communication channels, the idea or message, and respondents of the message; therefore, different celebrities or influencers utilize multiple tools to appeal to the audience on social platforms.

The success of the product endorsements and reviews by influencers depends on the social relations between influencers and followers. The existing relationship between an influencer and an audience dictates the level of trust, credibility, and impact on buying behaviour patterns after an advert on Instagram (Casaló et al., 2019). High followership reflects a liking for a given person; thus, an advert posted using the influencer’s account attracts many potential buyers. Over 70% of internet users often trust the messages conveyed by influential persons, thus shift their buying patterns or preferences to align with their favourite influencers (Business Insider, 2019). However, people from diverse cultural affiliations display divergent brand attitudes; therefore, most brand endorsers with poor alignment of the persuasion message fail to attract consumers’ loyalty.

Influencers shape consumers’ buying patterns positively and negatively using their endorsements or content updates. Several advantages accrue to the influencers’ adverts, such as clear content and details of unfamiliar brands. The influencers act as links between the consumers and brands to give feedback about the suitability of products, features, and levels of satisfaction achieved from product usage. According to Leonard, there exists a consistent conflict of interest between two parties; thus, the consumers have a certain level of expectation that is often unmet by the brand company (Leonard, 2012). On the other hand, influencers convince the product users about the favourable attributes of brands, which may not appeal to the consumers, thereby resulting to lower sales. Furthermore, influencers aid in increasing product visibility and customer participation during product development, thus enhancing the final product output.

Several demerits attribute to influencer marketing on Instagram. According to a report by Bazaarvoice, the study indicates that 47% of the consumers dislike the lack of authenticity displayed by the influencers, and 62% believe that the endorsers only take advantage of their vast followership (Sudha and Sheena, 2017). Most influencers act as just marketing media, whereas they do not use the products they review or endorse, thereby lack authenticity in the message or content created. Other challenges are inter-judge reliability and anxiety generated from high profile depicted by the influencers, thus decreasing the self-esteem of low-level buyers (Freberg, Karen et al., 2011). Some consumers suffer from unrealistic lifestyles by adjusting to accommodate the levels presented by the influencers, thereby affecting purchasing confidence and credibility levels in purchases. The influencers at time suffer from body shaming, bullying, or depression from the pressures put up by the online consumers. The influencers may provoke negative behaviours on teens or young people, thereby decreasing their appeal and popularity among the buyers.

Influencers have a significant role in increasing the purchases for endorsed brands. After creating content or a product review, the influencers’ followers spike an interest in initiating purchases and consequently placing orders for the products. The challenge arises when the firms want to establish the ROI derived from the social media marketing strategy. Particularly on Instagram, it is significantly challenging to unveil the accurate picture of the appeals made and consequent purchases as a result of the endorsement. Thus, firms have devised different metrics to analyse how the influencers should be compensated based on their ROI. One of the common metrics is the use of intelligence tests and ROI calculators based on a given social site (Kaske, Kugler and Smolnik, 2017). Ideally, customers are requested to provide feedback about their source of knowledge and interest for the brand, which leads to either product referral, first-time trial, or influence via the social influencer.

According to a study by eMarketer, an average 54% of consumers rely on recommendations to make their purchase decisions (Aayush Narang. 2020). Thus, influencers play a significant role in building the trust of the consumers through sharing content and feedback on their personal insights, attitudes and experiences with a particular brand. Ad blocking results to significant losses, which answers the question on the influencers’ role in consumers’ buying behaviour. Furthermore, influencers aid in strong customer relations with the brand which promotes repeat business and continue loyalty which extends to product referrals to one’s friends or relatives.

Methodology

Research Strategy

1. To find the related quality of information over all the influencers and from where inspired by like magazine and celebrity.
2. To get information of over ten years ago from website since Instagram was introduced and explain if there is any improvement or changing policy since that time.

Research Design

The research is designed to integrate different facets which entail various industry players. For instance, the fashion and beauty industries overly depend on brand endorsements by influencers to create lasting brand awareness and strong consumers’ trust for their success. On the other hand, the food and hospitality industry are also increasingly gaining market shares from the reviews and rating shared by the influencers. In turn, the consumers identify with the influencer to make their purchase decisions or recommend a friend.

To understand the topic clearly, it is suitable to approach content analysts. The content analysts have an enduring online marketing specialization, which makes them ideal for achieving the study (Veirman et al., 2017). They have a wide range of ideas and experiences that are needed to forecast the influencer of influencers and the consumer’s buying behaviour based on the role of the influencer in the marketing of the brand. Since it is apparent to achieve the stated objectives with limited resources, the research will incorporate an inductive approach using qualitative method. The research will embrace an interview-focused technique where all content analysts who respond to the research study invite are issued with semi-structured questionnaires based on the research questions and objectives of the study. The study will be unique, just like its focus on digital marketing, whereby all data will be gathered online. Emails direct messaging using LinkedIn will enable the successful data collection by sending the questionnaires to the recipient content analysts.

Cultural diversity and the perspective on lifestyle are mentioned in this research study, thus the data collected will vary from content analysts in different industries and different cultural backgrounds. According to Hofstede’s model, there are five cultural dimensions that should be discussed to resolve the issue that arises from cultural incongruences (Mario and Kira, 2011). The questionnaires will be concisely structured to address the issues on culture and lifestyle.

Research Approach

All the collected data will be analysed using an inductive approach to generate meaningful conceptual framework. The sampling approach will be random and voluntary, all participants will be offered equal opportunities to discuss their ideas and give feedback on the related topic of research. The target sample size is 80 content analysts from various industries; this will help put the research question into perspective from the responses generated. Respondents will be assured of their confidentiality and anonymity, both during and after the study is complete. The data will be presented in charts, tables and meaningful diagrams from comparisons and to establish meaningful responses according to the research objectives. Percentages and general feedback will be used to make comparisons across various industries.

Ethical Considerations

Since the research is diverse and includes online specialists, the questionnaires will be administered online. The respondents will be sent correspondence using emails, LinkedIn or direct messaging to appeal to their support in the study’s success. Confidentiality will be the core agenda to avoid risks of informational appeal. Anonymity will be adhered to all respondents and a consent form will be issued to confirm the ethical considerations to participate in the research.

Research Limitations

Poor turnout by the respondents will adversely affect the overall biasness of the research study. Lack of access to a large pool of influencers and content analysts will be a major setback; however, I intend to use prior means to appeal to the respondents by creating rapport with various organizations. This will be helpful in avoiding major challenges of poor responses or untimely data submission past the research deadline.

Driving under the Influence: Analytical Essay on Consumer Behavior

Introduction

Driving under the influence (DUI) is an issue that has resulted in numerous injuries and fatalities worldwide. The reason behind this is that some people don’t seem to be aware of the consequences of drinking and driving, and those who are aware, may still think that they’re the odd ones out and that alcohol consumption does not affect their driving skills. Alcohol in the bloodstream causes a delay in cognitive skills and slowed breathing. Additionally, alcohol leads to a slower reaction time, lack of coordination, reduced concentration, and decreased vision, ​ which can result in unimaginable outcomes. Unfortunately, this issue is falsely perceived as minor and rare in Amman, and is neglected because of religious and cultural restrictions on drinking alcohol. As a result of the increase in the number of bars, clubs and pubs in Jordan’s capital, driving under the influence has become a more serious problem among many teenagers and young adults. What these individuals seem to forget, however, is that driving under the influence is not only a severe legal crime, but it is also a huge threat to the lives of all parties involved, as well as innocent strangers. A significant rise in the number of alcohol-related car accidents in Jordan created the need for a product like Tap to Safety. We feel it is necessary to educate the Jordanian youth about the dangers of drinking and driving, alternative ways to get home after a night out, and the importance of passing this life-saving information to their friends and colleagues.

Target Market & Targeting Strategy

Demographic segmentation was used to determine the primary audience; males and females between the ages of 18 and 29. This is because car accidents related to alcohol consumption are more prevalent amongst people in that range. Psychographic segmentation was also conducted and members of the middle to upper class, that enjoy spending time at bars and clubs were chosen. In reference to geography, the focus is on the capital of Jordan, Amman as it is the most densely populated city in the Kingdom, and has the largest number of restaurants, bars and pubs.

Moreover, a secondary audience was selected; family members, friends and colleagues of those who drive under the influence, as well as concerned members of the community.

Although our product targets a primary and a secondary audience, we have chosen an undifferentiated targeting strategy. Using the same marketing mix variables and value proposition, we aim to address both audiences.

Value Proposition

The value proposition is based on safety and wellbeing. We offer our audience a safe and secure way to get home, as opposed to putting themselves and others in grave danger. We are aware of other well-known mobile applications that offer services somewhat similar to ours, such as Uber and Careem, however, we believe that our service is more convenient. Instead of having to order a car, call the driver to give directions and wait in the street to be picked up by a complete stranger which could potentially be an embarrassing situation after consuming alcohol, we came up with an alternative. Our application provides a fast and easy way for individuals to contact people they know and trust, get home safely, with the satisfaction of knowing they did not put their community at risk.

“Better to have your friends bail you out, than bail you out.” Our slogan is a reflection of the consequences that a drunk driver may face in the event of an accident. We want the target audience to think long and hard before choosing to drink and drive ever again, because of the consequences that might follow their actions, if they are the cause of an unfortunate accident. The statement is meant to indicate that it is better to accept help getting home than to need help getting out of prison if the unimaginable happens. For those who aren’t afraid for their own lives, this is a reminder that the cost of their actions could be harming innocent people and spending their lives paying for it.

Marketing Mix Variables

• Product: A mobile application. The application requires people to set up a profile and a list of 7 to 10 trusted contacts with their names and phone numbers. When a person is on a night out and feels like they have consumed a bit too much alcohol, they can tap on a single “X” button in the middle of the application’s home page, that sends out an automated message which states “(full name of the person) is currently unable to drive home and has shared their location with you for immediate pick up”, along with their GPS location to their list of contacts. When one of the listed emergency contacts clicks the “Accept” button on the message, the other contacts are sent a notification saying “Someone is now on the way to pick up (full name of the person)”.
• Place: On the App Store, and Google Play.
• Price: In terms of monetary cost, the fee will be 2 JODs per month. There is also the non-monetary cost of dedicating time and effort to download the application and use it.
• Promotion: We will be using celebrity endorsements to promote the application. We are planning to get Jordanian social media influencers, with very high numbers of followers, such as “Amman Street Fashion”, to discuss the issue of driving under the influence, introduce our application, and encourage their followers to use it. We will also create our own pages on Instagram and Facebook, where we will regularly post valuable material about the dangers of drinking and driving, real stories of tragedies that occurred as a result of alcohol consumption followed by driving, and the benefits of using our application to avoid being the victim of the next tragedy. As well as that, booths will be set up in popular public locations such as fitness centers and parks, where flyers containing information about Tap to Safety will be handed out to passers-by.

Maslow’s Hierarchy of Needs

The Tap to Safety application is connected with satisfying the second basic need in Maslow’s hierarchy; safety needs. Naturally, when a person gets in the car and drives home after having consumed an excessive amount of alcohol, they are not completely aware of their surroundings and have a very slow reaction time which automatically puts them in harm’s way. If Tap to Safety is used as a safer alternative to this hazardous option, the risks that come with it can be eliminated.

Safety and security is essential to every living person, and that is what the product is intended to provide.

Personality Theories

· Freudian theory

In reference to the Freudian theory, individuals who drive under the influence are influenced by pleasure without any regard to whether this action is ethical or even legal; therefore, they are driven by the id. They are selfishly neglecting the consequences of their behavior and choosing the option they believe is easier or more convenient. They are risking their own lives as well as the lives of others.

The goal is to have these individuals operate in the superego level, by recognizing that their actions can have fatal consequences, choosing to avoid drinking and driving and considering the ethical implications of their behavior. Even though it may seem faster or more convenient to get in the car and drive home, people should realize that it is not worth the risk. It is selfish and unprincipled for individuals to put their own convenience over other’s safety.

· Karen Horney’s neo-freudian theory

According to the Karen Horney theory, detached individuals are those who move away from others and seek independence, self-reliance, self-sufficiency and freedom from obligations. To such individuals, the use of Tap to Safety could represent reliance on others and needing help which they might have difficulty accepting. Although they might be in need of this help, their personality traits may still push them towards rejecting it.

· The trait theory

A new application such as Tap to Safety is more likely to be tried out by innovators first as they tend to be open to new ideas. Innovators can contribute significantly to the acceptance of the product by the intended consumers as they spread positive word of mouth. The aim is to inspire consumer innovativeness with functional motivation. It is safer and better than the alternative, which is driving under the influence, and the application itself is quick and easy to use.

Perception Models

· Absolute threshold

In order to ensure that the target audience will be aware of the product and above the absolute threshold, we will use different types of promotions. Firstly, Jordanian social media influencers will be discussing Tap to Safety on social media platforms to hundreds of thousands of followers. In addition to that, we will have our own sponsored Instagram and Facebook pages to reach as many people as possible with valuable content. Finally, the application will be available on the App Store and Google Play where people can purchase it and begin to use it.

We will also be using ambush marketing by placing booths in totally unexpected places, such as fitness centers and public parks. At the booths, flyers will be handed out with brief information about the dangers of driving under the influence, as well as an introduction about the application, and the names of our pages on social media to attract followers and users.

To avoid sensory adaptation, the booths will only be open for a limited period of time right after the application becomes available for download on mobile phones. After that we will focus on social media presence and celebrity endorsements. Moreover, the content that will be posted on our pages will vary from messages about the risks of drinking and driving, to people sharing their own disastrous experiences with it, to ways you can help protect yourself, your society and others. This variation aims to reduce the chance of consumers getting used to seeing information about Tap to Safety and beginning to avoid it.

· Consumer Imagery

We hope that the product will represent security as well as responsibility in consumer’s minds. We want the audience to perceive using the application as a way to keep themselves and others around them safe. While using the application, consumers should have the satisfaction of knowing they did the right thing, they acted sensibly and may have just saved their own lives and the lives of others. In terms of perceived price, the goal is for consumers to consider 2 JODs as a little amount to pay in return for their health, safety and futures as well as those of others.

Reference Groups

The community an individual is a part of has a major effect on their actions and behavior. Family and friends can usually influence a person’s decisions. For that reason, we have chosen to address friendship reference groups as a secondary audience. The hope is to have individuals who drive under the influence see people close and dear to them express concern over the repercussions of their actions and remind them that if anything should happen to them, the pain will be extended to everyone who cares about them.

Conclusion

In recent years, car accidents related to alcohol consumption have increased drastically. We have created Tap to Safety with the hope that we can reduce that number. Driving under the influence has many potential consequences, such as imprisonment and fines, and terrible accidents which can result in serious injuries or death. Tap to Safety is a reasonably-priced mobile application that allows individuals to press one button which sends out an alert to emergency contacts stating that they need to be picked up, once one of them accepts the request, the others are notified. The main benefit of using our product is safety and security. We will be using celebrity endorsements and online presence to gain the support of our primary and secondary audience. The goal for the primary audience is to get them to realize that the risks of driving under the influence could be fatal. As for the secondary audience, we want them to inspire those who drink and drive to abandon the behavior, by showing them that their actions affect everyone around them.

The Psychological Aspects of Pricing

Pricing is an important aspect to market a product or service such that it reaches the maximum targeted customers as well as profits the organization to keep continuing its production. Being an integral part of marketing, it is critical to decide and come up with sound pricing strategies that “facilitates customer value creation, structure price decisions, and earn profit” (Kienzler and Kowalkowski, 2016). It drives the supply and demand of a product of service in the market or can be other way around, i.e. supply-demand will influence pricing. Many researches have established that demand is directly proportional to customer’s desire and thus, it is important to understand the psychology behind prices and sales. As a result, prices are often focused on cost-base or competition-base. There is a need to shift this to value-based pricing which considers how consumers perceive a product’s benefits in relation to price. Moreover, other aspects like numbers, colors, and other presentation factors also play an important role in how customers perceive a price. This paper summarizes various psychological aspects of pricing.

Pricing usually starts with setting up a calculated initial price by analyzing its break-even point while considering that the price corresponds to the value delivered to the customer. Although these numbers and values show how prices and profitability relate, it is still based on assumptions on how customers react to the product. The economic and psychological approaches to study consumer behavior cannot be perfectly logical and can differ from what was initially assumed. Hinterhuber (2015), in his research mentions that customers as well as managers violate principles of rational choice since no all customers check prices before purchases or not all pricings are shortsighted or based on market rates. As mentioned before, managers try to manipulate customers’ perspective to influence purchase decisions. Some customer perceptions assumed during pricing are discussed in this paper.

Features of Customer Perception of Pricing

The Price-Quality effect

Studies suggest that there is significant relationship between price and quality (price as an indicator of quality). Purchasing expensive products instills increased brain activity of pleasantness for picking better products, and thus, increase demand.

Adding Irrelevant Attributes

Managers often add irrelevant attributes to a product and increase price to give it a dramatic and meaningful differentiation from other products. Although customers realize that attributes associated with the brand or product do not have value, increase in price makes it relevant. For example, taurine is added with several energy drink brands like Red Bull, Monster and Rock Star as an evidence that it helps muscle function and aid athletic performance.

Framing

This concept is a method of changing context of price presentation without changing the price itself. It is based on the theory that when outcome is framed to be a gain relative to part or reference price, customers become risk-averse whereas, when framed as a loss, they become risk-seeking. A few ways this strategy is used includes framing savings as a free bonus pack or percentage price reduction.

The Price-Precision Effect

Precise prices increase sales by 0.6% since it increases the customer’s willingness to pay. Hence, even though the exact price would round off to a whole number, prices avoid the last digits to be zero.

Endings

When prices end with 9, they are read from left to right (lower digits read first), giving a perception of discount or less price and leading to increase in sales (Asamoah & Chovancová, 2011).

Sale Signs, Deal Obsession and ARPs

Presence of ‘Sale’ sign increases probability of purchase because of the feeling of getting a deal. It is for the same reason marketing something free or showing advertised reference prices (ARP) clouds customer judgement and induces willingness to pay.

Discount or Unit Representation Format, Color, Size

Studies suggest that representing discounts as a percentage for low-priced products and as a monetary savings for high-priced products increases perceived attractiveness of an offer. Moreover, attributes that involve numbers, like guarantee/warranty, when expressed as a higher digit (12 months instead of 1 year), increases willingness to pay. Prices in red are attractive to males. Lower sale prices in smaller fonts increases likelihood of purchase. Smaller price values include cents whereas expensive goods eliminate longer syllabic length.

Happily Paying More

Customers prefer paying flat-fee over variable billing. They also feel more satisfied to qualify for minimum purchase requirement and offered lower discounts over larger discounts without purchase requirements.

Price Partitioning

Partitioned prices with each attribute priced relative to its perceived benefit helps to underestimate the total price.

Scarcity, Decoy and Compromise Effect

If a product is perceived to be scares, it will be bought in higher quantities. When it is placed in market as either an intermediate option between the best and worst products, they are preferred through compromise effect. Decoy effect includes introducing an irrelevant option to make an unappealing option look more attractive.

Practical Application

The various findings of customer perceptions of pricing are the major reasons for a success or failure of product/service in the market. It is established that these perceptions can change, vary and be contrasting among different people and target segments. Hence, the findings can be used relative to target customers. Value-based pricing, which considers these researched psychological effects as well as information about customer perceived values can help to understand what pricing strategies would work on a product of service and provide maximum profits to the organization. (Kienzler, 2018) The various strategies listed in the paper helps with increasing sales through bulk purchases, attracting customers through visuals and discounts, providing anchoring and justified discounts or positive perception of increased price by relating it to quality or making them feel happy about paying more for convenience. Since they are all based on intangible and variable aspects of psychology, they need to be continuously studied and determined with changing trends, psychological studies as well as customer feedbacks to ensure pricing strategies are conveyed in favorable manner to the end users. Kienzler & Kowalkowski (2017), also summarize the need for continual behavioral and psychological research for the same.

Conclusion

Prices set the position of brand by setting different expectations among consumers which can attract, repel or target different segment altogether through tactics like quantity discounting. It is necessary to understand and use these tactics to ensure that products are marketed in the right manner with attractive prices.

Consumer Behavior and Pricing Strategy at Costco: Analytical Essay

Introduction:

Costco Wholesale Corporation is the largest membership warehouse club in the United States. Today, the firm has more than six hundred numbers of warehouses, with more than twenty areas of operations around the world, including the more than four hundred warehouses in the United States, and there were more than 70 million cardholders and the annual revenue reached at $105.2 billion (Costco Wholesale Corporation, 2014).

Costco is open only to members with either of these types of membership: Business, Gold Star (individual), and Executive membership which could lead to the purchase of product offerings and various consumer services such as auto and homeowner insurance, auto buying, mortgage, refinancing, boat and RV loans, identity protection, personal check printing, and business services at discounted price offers (Costco Wholesale Corporation, 2014).

Therefore, Costco enjoys the opportunity to generate higher margins, lower marketing costs and low over-head of private-label products (Peter and Olson, 2007). In other words, it is clear that the success of this firm lies in its ability to achieve a large scale leading to its competitive advantage and a high value for customers. For this reason, Costco must eventually have a substantial idea of consumer behavior as integrated into its marketing strategy. This is the most crucial idea that the work at hand, emphasizes, but prior to seeing the big picture about it, it is also important to learn the other significant things about Costco.

History:

Costco was originally operated under the name of Price Club in 1976. The firm is founded by James Sinegal and Jeffrey H. Brotman. In 1983, the first Costco warehouse was instituted in Seattle Washington. In 1993, Costco merged with Price Club, calling it PriceCostco, while dominantly employing the business model and size of Price Club, which generated billion dollar sales every year. However, Robert Price, the founder of Price club left PriceCostco and started Price Enterprises in 1994. This left Costco alone and led it to rebrand the firm as Costco Wholesale in 1997 including all those Price Club locations it had already established.

Costco is the second largest retailer in the US and the fifth largest retailer in the world (Said, 2013). Today, Costco is known for its ability to provide high value for customers, especially when it comes to its highly affordable and varied product offerings.

The company carries a “broad line of product categories including groceries, appliances, television and media, automotive supplies, toys, hardware, sporting goods, jewelry, cameras, books, housewares, apparel, health and beauty aids, tobacco, furniture, office supplies, and office equipment” (Sander & Bobo, 2011). Perhaps, one will call Costco a one-stop shop, with high affordability, enough to help the small to medium-sized businesses save on their purchases for them to be able to resell. However, Costco’s leading sales came from individual consumer, the firm’s ultimate growth driver (Sander & Bobo, 2011).

About the organization:

There are many things to understand about Costco, which primarily include its values, mission, vision and objective. However, aside from this, ideas concerning its current related-marketing moves, and SWOT and stakeholders analysis are also vital considerations in understanding this firm.

Values, mission, vision and objective:

Costco’s ability to acquire profits and offer prices is in line with ethics, which can be depicted in the following mission statement.

“Costco’s mission is to continually provide our members with quality goods and services at the lowest possible prices. In order to achieve our mission, we will conduct our business with the following Code of Ethics in mind: obey the law, take care of our members, take care of our employees and respect our vendors. If we do these four things throughout our organization, then we will realize our ultimate goal, which is to reward our shareholders – Costco Mission and Code of Ethics” (Farfan, 2014).

Costco saw the opportunity that when they keep costs down, they can pass the savings on to their members and when membership base is large enough leading to tremendous buying power, the result will be efficiency for the firm and the best possible prices for their customers (Costco Wholesale, 2014).

It is clear in the mission statement on Costco that the firm values how the idea of becoming responsible of the society, primarily to their stakeholders and how it would conduct itself before them. Costco is after of implementing rules and obeying them, while continuing provision of the kind of respect that their stakeholders deserve.

On the other hand, Costco’s mission elaborates how it is important for them to continuously provide high quality of goods and services even at a lower cost. Employing this leads Costco to obtain their goal of successfully rewarding their customers. In other words, Costco’s mission is integrated with its ultimate goal of enticing the actual need of their customers.

Current marketing:

According to Costco’s website, one can be a Gold Star Member, Business Member, or an Executive Member. Business membership and Gold Star membership both cost $55 while Executive membership costs $110. Costco wholesale mainly targeting and focusing more heavily on individual consumers who are willing to pay more for higher end quality products.

Costco entry is associated with higher grocery prices at incumbent retailers, and that effect is strongest in cities with small populations and high grocery store densities. This is consistent with the retailers competing with Costco along non-price dimensions such as product quality or the quality of the shopping experience. In addition, Costco has much power in cities with low populations and a large number of grocery stores per capita.

Price is assumed to be the most pivotal element in order for the exchange process to be initiated (Peter & Olson, 2007). Therefore, this leads to the idea that the actual pricing strategy is relevant to the link existing among price affect and cognition, price environment and price behavior. The actual current marketing of Costco without question is linked to the importance of pricing strategy.

Good quality merchandise at low prices is what Costco would want to offer to its customers in order to provide them the value and reward that they deserve. In order to make this happened, Costco ensures to acquire more members to widen its scale. When this scale is widened, as a wholesaler, Costco will also generate remarkable savings on costs from its prospective suppliers. This potential savings on costs, as stated in Costco’s vision and mission, will be rewarded to the members, allowing them to enjoy low prices on branded and high quality product offerings. The business model associated with Costco’s current marketing is simple, but since it is the first to initiate this in the industry, the firm remains to be the largest membership retailer in the US, which is due to its ability to acquire higher margins, lower marketing costs and low over-head of private-label products.

SWOT analysis:

Costco has many strengths, of which the strongest is their robust membership retention at 86%, with over 67 million cardholders worldwide. They have seen unyielding revenue and membership growth from year-to-year along with lower pricing than that of their competitors. Costco also has the lowest employee turnover rates in the industry, employees receive some of the highest paychecks and best medical insurance (Shields, A. 2012). Happy employees equate to a better and healthier environment for customers.

When it comes to weaknesses, Costco’s major issue is their lack of substantial warehouses to meet customer demand. This weakness forces many customers take a full day out of their busy lives to make the trip to Costco. The company has a relatively low urban presence, which produces this phenomenon. Furthermore, with little to no advertisements or promotional events the company does not promote themselves well to new or potential customers.

There are numerous opportunities Costco’s can look forward to. Costco’s low presence in evidently potential warehouse locations can lead to abundant opportunities for future growth. The company’s success in worldwide expansion will likely continue in future efforts. Moreover, the addition of an online membership option at a reduced price might greatly increase the company’s membership, while also helping to curb Amazon as a major threat.

Costco’s threats are retailers that provide on price and customer experience in the same as Costco. Indirectly Wal-Mart is Costco’s biggest threat, since they own Sam’s Club, which is a direct warehouse competitor. In fact, Apple products will soon be stocking the shelves at Sam’s Club, which could change the game for Costco (Shields, A. 2012). Amazon along with other online such sales organizations are threats to Costco as well. Although becoming a national supermarket is a lot of work it is still possible, so Costco must keep an eye out for threats from new organizations entering the field as well.

The 4 P’s of Costco:

In most price comparisons Costco is on the top for overall lowest price, they do this by “buying in huge quantity and never marking up any product more than 15 percent” (Logan & Beyman. 2013). Recently channel 5’s WPTV West Palm Beach decided to do a price comparison between Costco and its closest threat Sams Club; “The grand total was $262.05 for Costco; $274.31 cents for Sam’s Club” (Munro & Jackson, 2014). Costco does their best to keep the price low for their customers.

The promotions Costco endorses to its Costco club members are enumerable and enticing, but lacking when it comes to non-members of the club. Costco is “a store that never advertises, has no signs in its aisles, doesn’t bag what you purchase, and charges you a fee just to walk in the door” (Logan & Beyman, 2013). They have incredible weekly coupons and discounts on food, vitamins, jewelry, and travel among many other products and services.

The number of products carried by Costco is surprisingly small, most would be surprised to find that such a large warehouse has only about 4,000 SKU’s on their selves. In comparison to an average of 15,000 to 60,000 at most other supermarkets, Costco’s 4,000 is quite a low number. Another interesting aspect of Costco’s warehouse method is that almost all products stocked on their shelves can only be purchased in bulk.

Costco’s location placement is found in thickly settled areas with a specific demographic variation. Costco keeps its warehouse numbers low so there are only approximately 460 locations in the United States. Costco is the “largest warehouse chain in the world, with more than 600 locations and $93 billion in annual revenue” (Logan & Beyman, 2013). Costco’s worldwide locations include Mexico, Japan, United Kingdom, South Korea, Puerto Rico, Taiwan, Australia and Spain.

Stakeholder analysis:

Originally, Costco was open for small to medium enterprises because of its wholesale. However, individual customer is later part of its stakeholders. For this reason it would be safer to include the members, vendors and employees as Costco’s ultimate stakeholders. Below are the general stakeholders of Costco and their individual impact on Costco’s business. It was found that each of these stakeholders has an impact on Costco’s finance, organization, legislation and business as usual.

Impact on

Stakeholder group

Finance (gain/loss)

Organization

Legislation (planning)

Business as usual

Small to medium enterprises

√

√

√

√

Individual/loyal customers/members

√

√

√

√

Retailers

√

√

√

√

Government

√

√

√

Employees

√

√

√

√

Generally, the stakeholder groups can be categorized further as internal stakeholders and external stakeholders.

The small to medium enterprises, customers and members, retailers and employees are the internal stakeholders because of their direct impact on the organization, giving them higher power of influence in the organization, higher legitimacy and even a higher opportunity to ignite or demand action from the company.

The government on the other hand is the external stakeholder because of its indirect influence on the company. However, the government has a strong influence to demand action from the company when it comes to legal matters and socio-political concerns. There are other potential stakeholders of Costco that will have substantial influence, especially in the socio-political context. This might include the society as a whole, and the other organizations that try to protect the welfare of consumers or the people.

Below is the summary of the above points.

Internal Stakeholders

External Stakeholders

Enterprises (high power, strong influence)

Government (strong influence – urgency, legitimacy)

Customers/members (high power, strong influence – legitimacy)

Society (strong influence – legitimacy)

Retailers (high power, strong influence)

Other organizations (strong influence – legitimacy)

Employees (high legitimacy, strong urgency)

Marketing ideas:

The very basic ideas that are observed in Costco’s actual marketing activity are in line with the consideration of consumer costs and business costs. The actual marketing exchange is assumed to take its place when there is an important consideration between the consumer costs and business costs (Peter & Olson, 2007). Peter and Olson argued that marketing exchange will usually be the product of the interaction between consumer costs and business costs.

In the case of Costco, and particularly in its mission and ultimate goal and values for the customers, providing the lowest price for quality and branded products seems to be a way of ensuring the highest value satisfaction for the target market. This is a relevant competitive advantage of Costco.

Costco is trying to ensure overall cost leadership in the process, allowing customers to be enticed by its product offerings. In theoretical consideration, overall cost leadership is a source of competitive advantage for an organization (Porter, 1980). However, what is clear in the case of Costco with its low-price offerings is the consideration of value. A logical consumer based on the idea of Peter and Olson will find for a higher value, and a logical company will find for a higher profit. Costco, because of its scale will still ensure a higher profit margin, because of its ability to cut costs in its value chain.

Costco, captures price-sensitive consumers who are willing to drive longer distances to obtain offers and discounts. In this case, it is possible if the prices staty to rise at Costco they will start losing shoppers who are more price-sensitive and serve shoppers who are less price-sensitive. According to Ellickson(2004, 2007), large grocery chains compete on the basis of quality and variety, which requires substantial fixed investments in retail services.

Conclusion:

The work at hand just presented the important details on how exactly the pricing strategy of Costco provides the potential value of the customers and the significant value this has added to the target market. As found, customers are after of finding the right value for their money, which is a relevant factor that could ignite the actual exchange. On the other hand, an organization providing product offerings is looking forward to realize a profit, but in the case of Costco, providing low-cost offerings was made possible because of the firm’s large scale leading to its ability to generate higher margins, lower marketing costs and low over-head of private-label products.

References

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Benefits and Limits of Political Consumerism

Political consumerism is becoming an increasingly popular form of political participation as its impacts of causing positive global changes are becoming more significant outside of conventional political methods such as voting (Breivik et al. 2007).

Defining political consumption is key to understanding its aims. As argued by Follesdal et al. (2004, pp. xiv) political consumption is:

Consumer choice of producers and products with the goal of changing objectionable institutional or market practices. It is based on attitudes and values regarding issues of justice, fairness, or noneconomic issues that concern personal and family well-being and ethical or political assessment of business and government practice.

This definition emphasises how consumers are taking political responsibility as argued by Crépault (2013, pp. 95-96) into their own hands by using market actions to portray their political concerns. The overall aim is to cause positive changes to institutional and market practices (Breivik et al. 2007; Follesdal et al. 2004).

The most significant cause which drives political consumerism is the process of globalization (Harrison 2005, pp.55-70 ; Beck 2000). Footloose enterprises take increasing control of markets which causes citizens to loose the power they conventionally had through voting- they therefore turn to political consumerism to publicly target transnationals and regain their power.

Moreover, there are many motivators for people to join the social movement of political consumerism (Bossy 2011). Ranging from; ethical reasons which are most common such as concern about workers and animal rights to social reasons such as wanting to construct a positive, healthy social identity (Dulsrud and Jacobsen 2007).

This essay aims to critically assess the effectiveness of political consumerism by using methods such as boycotts and buycotts to beneficially change the practices of governments and co-operations. It therefore also evaluates the limitations such as; the dependence of class, income and education which, along with examples will be discussed in this essay.

The substantial increase in the engagement of political consumerism as shown by the activity of boycotting quadrupled over the last three decades (Hooghe et al. 2005) shows its increased popularity which has caused its many benefits globally.

There are two main types of boycotting which aim to cause positive change. The first being boycotting products to criticise the role of governments (Linton 2003). Historical examples of this include; American citizens avoiding British goods which led to the shaping of the American revolution (Breen 2004), as well as boycotts being used as a worldwide tool to further the civil rights movement against the apartheid regime in South Africa (Seidman 2003). The success of these schemes has led to boycotts still being used in the current day. An example of this can be seen how American citizens used their purchasing power to show their political annoyance over the French government opposing the approval of the “ UN security council resolution” to allow US military force against Iraq. They acted by restaurants dropping French wines and foods from their menus which aimed to hurt French exports and hence economy (Hooghe et al. 2005, pp. 245-246).

The second most common use of political consumerism actions is to change the practices of corporations by raising awareness of issues that aims to damage stocks and shareholders’ values forcing companies to take action (Dulsrud and Jacobsen 2007).

One of the largest methods to target business practices is the action of boycotting which is carried out in many forms such as through the creation of labeling schemes. Labeling schemes aim to provide simple information on food, ecosystems such as forests and clothing to encourage consumers to buy products which have been certified as ethical and therefore to boycott others (Micheletti and Stolle 2013).

Firstly, labeling schemes are used on food products- the largest example being Fairtrade. The influence of Fairtrade can be seen as it is trusted by 83% of UK shoppers when deciding if a product is ethical (Fairtrade Foundation 2019) and has been argued by Max Havelaar in Reed (2009, p.5 ) as an “Immediate success”. It aims to promote food products that have met high ethical standards of working conditions of farmers and to advertise the values of green political consumerists who are following the ‘organic movement’ away from genetically modified food. The success can be seen how global brands such as Nestle, Heinz and Mcdonald’s eliminated certain GM foods from their lines and how some companies even made their own private GM labels to attract ethical customers such as Tesco (Micheletti and Stolle 2013, pp. 141-142).

Secondly, another use of labeling schemes is forest and marine stewardship, which aim to promote products which sustainably use natural resources and discourage products which do not. Impacts of this can be seen how Ikea furniture was boycotted due to it not being certified with a label because of its extensive forest degradation (Micheletti and Stolle 2013, pp. 149-159).

Thirdly, labeling schemes can be used in clothing such as the “White label campaign” which was an anti-sweatshop labelling scheme to encourage American women to only buy underwear certified ‘sweatshop free’ and to boycott others (Sklar 1998, pp. 17-36).

The overall aim is to decrease sales of non-ethical goods to pressure companies to change their ways in order to increase sales.

Another method political consumers use to advocate their views is the direct boycotting of products without the use of labelling schemes. An example of this is the international boycott of Nestle against the inappropriate marketing of infant formulae in developing countries. This boycott caused extreme changes as it forced the production of the ‘International code of marketing of breastmilk substitutes’ which Nestle, and companies had to adhere to in the future( Bar-Yam 1995).

Moreover, Globalisation has played a significant role in extending the reach that political consumerism campaigns such as boycotts can occur. A good example is Paretti’s famous email exchange with Nike which reached 11.4 million people in which he requested ‘sweatshop’ to be personalised on his trainers. This made many people aware of Nikes poor working conditions giving them a bad reputation, causing people to boycott which decreased Nikes sales (Micheletti and Paretti 2004). The success of this campaign can be seen how Nike were forced to change their practices in order to follow Indonesian law, to raise wages and avoid child labour (Hooghe M et al. 2005)

Another advantage is that globalization has given NGO’s new power which allow their campaigns to reach more people. For example, the Amnesty International’s “Human rights Principles for companies” urged companies to look at their care of employees (Amnesty International 1999). Overall the increased publicity aims to influence other consumers to get involved in political consumerism as well as to cause companies to change their practices due to the large-scale impact of negative attention decreasing their sales (Tobaisen 2004).

Another action of political consumerism is Socially Responsible Investing in which consumers invest in companies that follow ethical practices, this acts as an incentive for companies to portray a positive political image to gain investment (Micheletti and Stolle 2013, pp. 159-164). Moreover, the increase in ethical businesses opening such as Bodyshop and Patagonia clothing demonstrates that political consumerism must be having significant consequences if businesses are opening with ethics at their core (Mirvis 1994).

However, despite the changes caused by political consumerism, there are a lot of limitations to this form of political participation.

From a theoretical perspective, one of the main issues as argued by Smith (1776) is that it is directly harmful to mix politics which is seen as a public matter, with economics which is seen as a private matter. However, this is exactly what occurs when portraying public political thoughts in the private market arena and therefore Smith opposes political consumerism.

A hugely significant limitation of political consumerism is that it depends on many linked factors such as; location, education, class and income.

The location of countries even within continents plays a role in the popularity of political consumerism. According to Crépault (2013, pp. 96-99) the top 5 political consumer countries are located In Northern Europe such as Sweden and Denmark and the bottom 5 are located in Southern and Eastern Europe such as Greece. This could be due to factors such as northern European countries having consolidated democracies with higher incomes.

This introduces that the choice to portray political opinions through actions is largely limited by the income that an individual possesses which is dependent on their social class (Bourdieu 1979; Hechter1994).

As argued by Koos (2012, pp. 42) the ‘Low Cost Hypothesis’ shows how value-orientated decisions are not made when the costs of ethical products are too high and therefore political consumerism is unreliable as individuals will stop participating when they can no longer afford the ethical goods (Follesdal 2004).

As well as this, those in higher classes who can afford education will learn the complexities underlying the issues of production of goods and therefore are more likely to engage in political consumerism (Goul Andersen and Tobiasen 2004; Ferrer and Fraile 2006).

In summary, political consumerism is only available to higher classes who have the education to understand political consumerism and the disposable income to afford the more expensive ethical goods.

Moreover, another limitation is argued by Simon (2011) that political consumerism has caused the decline of other traditional forms of political participation such as voting and union membership- referred to by Rössel and Schenk (2017) as the “Crowding Out Thesis’. This is significant because other political actions such as voting for a party whose policies portray your personal political concerns, means that changes are more likely to be carried out at a national level rather than the personal level political consumerism often acts upon.

However, other academics such as Rössel and Schenk (2017) do not believe that it affects other political actions which shows the conflicting opinions involved with political participation.

Furthermore, political consumerism can cause damage to those it aims to protect. For example, the Boycotts which forced Nike to follow Indonesian laws meant that child laborers along with adults were left unemployed and some were forced towards prostitution. The severe effects of this can be seen how the Swedish Save The Children NGO even advertise against boycotting (Follesdal et al. 2004, pp. 4-14).

Moreover, a limitation of political consumerism is that it contradicts with the basic capitalist principle of making profit as ethical practices are more expensive such as higher workers’ wages and therefore businesses will make less profit. Hence, it cannot be sustainable in the market driven economy as business will become bankrupt which is a major disincentive to use ethical practices pushed by political consumers (Friedman 1963). Therefore, corporations tend to only change production processes if instructed to by law which shows that political consumerism isn’t always successful unless it causes laws to be changed (Kordos and Vojtovic 2016).

In conclusion, critically evaluating political consumerism as a social movement has shown that despite its limitations, it is globally increasing in force.

This can be seen how 55% of Swedes (MEDC) stated in a survey that they had deliberately bought a product for political, ethical or environmental reasons in the last 12 months (European Social Survey 2002). Moreover, in a study taken with university students in Brazil (LEDC) 40.6% said that they occasionally buy organic products to voice their political opinions (De Barcellos et al. 2014, pp. 210-212). The global representation of this movement is significant because the greater the public awareness and actions such as boycotts and labelling schemes, then greater the chance to cause changes such as implement laws to force ethical practices which therefore makes political consumerism a success.

Despite this, political consumerism is limited by significant factors such as; it only being available to a niche market of individuals with high disposable incomes due to the increased price of ethical goods such as organic food or non-sweatshop clothing. In addition, as argued by Simon (2011, p.162) political consumerism “doesn’t solve things; more often, it covers them up with a band aid” and therefore doesn’t provide a permanent solution.

After critically assessing political consumerism it is evident that it is a social movement with potential but would be most significant alongside other forms of political participation.

References:

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Concept of Consumerism: Analytical Overview

The typical American household contains an average of 300,000 items (MacVean). This staggering, slightly terrifying statistic displays America

Consumerism is the idea that the mass purchase of goods and services is economically desirable (“Consumerism,” 2018b). It all stems from the belief that of high amounts of economic activity and strong consumer purchasing habits make for a better society (“Consumerism,” 2018b). These strong purchasing behaviors allow for large amounts of money to flow through the economy (“Consumerism,” 2018b). This probes economic growth and better standards of living (“Consumerism,” 2018b). Consumerism has been proven to be a fairly successful tactic. It creates extremely vast amounts of money, as consumer spending contributes to 70 percent of the U.S. GDP (“Consumerism,” 2018b). In fact, according to author Richard Heinburg, without consumerism, we’d go into a long, deep depression. He states that, “Commerce would contract; jobs would vanish; pension funds would lose value; tax revenues would shrivel, and so would government services.” (Heinburg). Despite its advantages, consumerism has several obvious downfalls. The trash and pollution produced by throwing away and transporting goods has been linked to climate change (“Consumerism,” 2018b). Some argue that the relentless plugging of consumer culture leads to people putting their own personal gains and goals before the greater good (“Consumerism,” 2018b). Additionally, consumerism can’t go on forever due to the massive amounts of resources it uses up (Heinburg). Such limits include few fossil fuels, environmental sink limits, and debt restrictions (Heinburg). Despite its pros and cons, consumerism has played a vital role in shaping our nation today, especially during the Roaring Twenties.

The period between the 1880s and the 1920s marked a time of great change in America (“Consumerism,” 2018a). During this era, the U.S. morphed from a producer-oriented society into a consumerist society (“Consumerism,” 2018a). Advances in communication, transportation, and technology allowed for consumerism to progress (“Consumerism,” 2018a). Steamboats and railroads made it possible for industry centers to boom (“Consumerism,” 2018a). Interchangeable parts, the telephone, and the invention of the electric light bulb made for faster production, communication, and longer workdays (“Consumerism,” 2018a). Fossil fuels such as oil offered cheap, portable energy, which in turn could be used in the manufacturing process (Heinburg). Population movement from rural to urban areas created a larger workforce to be employed in factories (“Consumerism,” 2018a). These factors all worked in harmony to foster the growth and development of consumerism in America. Once they were all set in place, consumerism took off.

During the Roaring Twenties, the American consumerist movement was in full swing. More products were available than ever before. With the assistance of credit, or paying in installments over time, luxuries reserved only for the wealthy became perceived necessities for the middle class (“A Consumer”). The term “buy now, pay later” became a common phrase in this era (“A Consumer”). Buying on credit allowed single-income families to purchase numerous goods all at once (“A Consumer”). Thousands of different inventions completely changed people’s lives. Refrigerators prolonged food life (Alchin). Radios allowed for news and music to be broadcasted all over the world (Alchin). The Ford Model T was another extremely influential product in the Twenties (“The Roaring”). They cost a mere $260 and could be bought with credit, making them exceedingly affordable (“The Roaring”). People could now travel to their destinations in the comfort and safety of their own car, rather than by horses or trains. Other products included dishwashers, vacuums, and televisions. Material objects weren’t the only arrival, as influxes of new entertainment were also introduced (“Consumerism,” 2018a).

New forms of entertainment changed America dramatically (“Consumerism,” 2018a). Cinemas with silent movie showings were extremely popular in the early Twenties (“Popular Culture”). They were easily accessible, cheap, and a great place to socialize (“Popular Culture”). Audio films, also known as talkies, were later developed in 1927 and also boasted massive success (“Popular Culture”). By 1929, 110 million Americans went to cinemas weekly (“Popular Culture”). Jazz music became extraordinarily popular as well (“Popular Culture”). Many Americans desired a newer, faster lifestyle (“Popular Culture”). Jazz music matched this urge entirely (“Popular Culture”). Jazz music’s lively, rhythmical beat created a fun-loving atmosphere, which was exactly what lots of Americans wanted at the time (“Popular Culture”). Arguably the most popular form of entertainment was the radio (“Popular Culture”). By the late 1920s, almost 40 percent of the population owned a radio set (“Popular Culture”). Radios had a wide range of functions, including serving as a form of communication, broadcasting the news, music, and information (“Popular Culture”). Additionally, it was an effective place for manufacturers to advertise their products (“Popular Culture”). These various forms of entertainment and new products were seen in almost every city and town, which lead to studies being conducted on them (“Consumerism,” 2012).

In 1924, two sociologists selected a town in “middle America” which they felt represented the typical towns of that day (“Consumerism,” 2012). Using this town of Muncie, Indiana, they conducted research using the data collected to study American culture (“Consumerism,” 2012). They observed that purchasing goods on credit became a way of life (“Consumerism,” 2012). One official at a local loan company said, “People don’t think anything nowadays of borrowing sums they’d never have thought of borrowing in the old days. They will assume an obligation for $2,000 as calmly as they would have borrowed $300 or $400 in 1890” (“Consumerism,” 2012). In Muncie, consumerism was seen as an obligation and duty (“Consumerism,” 2012). A local newspaper said, “The first duty of a citizen in to produce”; and later, “The American citizen’s first importance to his country is no longer that of citizen but that of consumer. Consumption is a new necessity” (“Consumerism,” 2012). Products and amenities found in towns such as Muncie included washing machines, automobiles, cinemas, and radios (“Consumerism,” 2012). But the manufacturers of these goods and services couldn’t survive without one component: advertising.

William Cheney once said, “Advertising, essentially, is the awakening of human desire. There is no stronger force in this new world of ours.” (“Consumerism,” 2012) Advertising was undoubtedly an essential part of consumerism in the 1920s. From 1860 to 1920, the American population increased three times, but production increased by 12 to 14 times (Beder). This created obvious issues of how to generate more demand (Beder). As production kept rising, manufacturers needed to constantly create and maintain markets (“Consumerism,” 2018a). This was done with the help of mass advertising (“Consumerism,” 2018a). Several mediums were used to advertise products and services, including as newspapers, radios, and magazines such as Good Housekeeping and Ladies’ Home Journal (“Consumerism,” 2018a). Advertisers used several effective tactics to sell their goods. They often made posters filled with vibrant colors and catchphrases (Hardcastle). They made generalizations about people and society, like “healthy children eat whole grain cereals,” or “in order to be socially acceptable, you need a clean bathroom” (“Consumerism,” 2018a). The people portrayed in advertisements were almost always middle- or upper- class (“Consumerism,” 2018c). Using strategies like these, advertisers were able to appeal to emotions and basic human need, thus creating the vast markets needed to sell their products (“Consumerism,” 2018a). Consumerism and all its pieces helped contribute to what would be one of the world’s most life-altering events: the Great Depression.

What began as a typical recession in mid 1929, the Great Depression escalated into the longest lasting, most severe economic depression the industrialized Western world has experienced (“Great Depression,” 2017). Spanning from 1929 to 1939, nearly every single country suffered effects due to the Depression, the U.S. and Europe being hit the hardest (“Great Depression,” 2017). Causes associated with the Depression include low consumer demand, financial panics, and unwise government policies (“Great Depression,” 2017). The effects of the Depression were detrimental. Nearly 25 percent of working eligible people was unemployed, but in some places, it reached a staggering 97 percent (Ecenbarger 15). People lost their entire life savings due to the mass closing of banks (Ecenbarger 15). Everyday necessities such as food, clothing, and shelter became luxuries. The Great Depression marked a dark, grave time in our world, and consumerism is considered partially to blame.

By the end of the 1929s, the majority of America had adapted the “more is more” philosophy. This desperate urge to buy, buy, buy also applied to the stock market (“Great Depression History”). People from all walks of life started to buy stocks, some even pouring their life savings into them (“Great Depression History”). Stock prices rose dramatically from 1921 to 1929 (“Great Depression”). In 1925, all stocks combined were valued at $27 billion, but by October of 1929 it reached a soaring $87 billion (Boyer). In the fall of 1929, the increase in prices reached a screeching halt (“Great Depression”). Investors began to realize that at these ever increasing prices, they were never going to get return on their investments (“Great Depression”). They lost their confidence in the stock market and “Black Thursday”, or October 24, 1929, they began rapidly selling their shares (“Great Depression”). On “Black Tuesday” five days later, even more stocks were sold (“Great Depression History”). In those two days, a record-breaking 28.6 million shares were traded and sold (“Great Depression History”). But many stocks were purchased on margin through loans, so some were even forced to sell their shares (“Great Depression”). This resulted in extremely low share prices (“Great Depression”). This was known as Stock Market Crash (“Great Depression”). The Crash had a huge impact on America, and is often said to be the main cause of Great Depression (“Great Depression History”).

The effects produced by the Stock Market Crash led to a plethora of issues. The loss of investment and consumer spending caused businesses and their factories to slow production and fire their employees (“Great Depression History”). The ones who were fortunate enough to keep their jobs experienced decreased wages (“Great Depression History”). Items necessary to survival, such as food, clothing, and shelter, became scarce. The debt acquired through buying on credit led to thousands of foreclosures and repossessions (“Great Depression History”). The rest of the world suffered the results of the Crash because of its connection to America through the gold standard, “which joined countries around the world in a fixed currency exchange” (“Great Depression History”). These effects, along with many more, changed the world as people knew it. No longer were the days of security, comfort, and certainty. The ten years following the Crash were full of fear, scarcity, and death.

The evolution of consumerism and its influence on society is a fascinating story that explores people’s traits, values, and faults. Throughout history, consumerism has proven to be the cause of economic advancement and destruction. During the 1920s, consumerism, along with many several other factors, allowed for the economy to thrive and grow. But in the following years, these behaviors created the perfect environment for the Crash (“Great Depression History”). The result was a severe depression that rocked the world. It left society to question its ethics, values, and morals. What would life be like without overflowing pantries, jam-packed storage closets, and wardrobes filled to the brim? It may have become a way of life for Americans, but at what cost? Then again, society would have to alter dramatically if it were to give up its extreme spending habits. Through the mess and turmoil of it all, one thing can be agreed upon: consumerism has the power to both boost and destroy the world.

Consumerism and Behavioural Economics: Analytical Essay

In this discussion I am going to explore how behavioural economics can explain some of the drivers of consumerism, I will apply different theories and ideas, assessing to what extent they affect the ever-increasing levels of consumerism. Whilst doing this I will give examples and explain my reasoning for the judgment I come to on each of the areas I have chosen to cover. Furthermore, I will link these drivers to the impacts of consumerism on consumers and Earth as a whole. During the research, I focused on three different ways in which a consumer’s decision-making could be affected and thus lead them to contribute to consumerism, these are:

1. The effect of culture and social interactions on consumer behaviour.
2. The effect and cause of everyday irrational behaviour.
3. How firms take advantage of behavioural economics to increase consumption.
4. The effect and cause of everyday irrational behaviour

Irrational Behaviour

Humans are not only irrational but predictably irrational, or so Ariely 2008 says. Behavioural economics, unlike the field of classical economics where decision-making is completely based on cold-headed logic, allows for irrational behaviour and attempts to understand what causes this behaviour. Irrational behaviour is a term used for when consumers, producers and governments don’t maximise utility, profit and social welfare respectively. In this discussion, the focus will be on consumers and how their decisions on a day-to-day bias cause consumerism and the overconsumption of goods. Before going in-depth into the different causes of irrational behaviour and their subsequent effects, it is important to understand the idea that an irrational decision is subjective as it ‘depends on what individuals’ value most’ Pettinger 2007. For instance, non-profit maximising behaviour may give more satisfaction and therefore be completely rational.

Cognitive Biases

Arguably the most common cause of irrational behaviour is cognitive bias, which is a flaw in consumer reasoning which leads them to misinterpret information which causes them to come to an inaccurate conclusion. This occurs because, over time, each of a consumer’s life experiences is processed by the ‘complex cognitive machine’ Stanborough 2020 which scrutinizes information before making a decision. Over time a consumer’s brain will learn to focus on different pieces of information more and thus develop different kinds of biases. I believe this can be applied as some of the 175 catalogued cognitive biases could cause consumers to buy too much of a good or a good unnecessarily. One such example is the ‘Endowment Effect’ where once people own something they irrationally overvalue it, regarding its objective value. I believe that it could cause consumers to purchase greater quantities of goods that they are already in possession of, as they believe the value is greater than what is being asked of by a producer. The ‘Wealth Effect’ on the other hand is where consumers have higher animal spirits as their assets have a large value. They don’t necessarily have more money but they feel more inclined to spend as they have greater wealth. Both of these effects could cause a consumer to be more inclined to spend on things they don’t need. This point accentuates one of the impacts of consumerism which is how consumerism tends to cause greater amounts of dept which is mentioned in Novotney 2008 when talking about America’s consumerism. However, the evaluation to the Endowment and Wealth effect is that not all consumers do this, this argument is subjective as no one has had the same exact life experience and thus everyone has different cognitive biases. Overall, I believe that cognitive biases are a component of how behaviour economics explains why consumerism takes place.

Pressures and Decision Fatigue

Another cause of irritation in consumer behaviour worth mentioning is consumer pressure. This is the idea that consumers make very different decisions when under pressures like time, the consumer doesn’t have the time to come to the best conclusion and thus could cause them to unnecessarily buy more than they need. Similarly, decision fatigue also causes consumers to think less and possibly buy more. The term was defined by Roy F Baumeister who describes it as the ‘deteriorating quality of decisions made by an individual after continuously making decisions’ Cummings 2016. The final of the four effects of decision fatigue that is explained in Agarwal 2017 is that is causes ‘Impaired self-regulation’ which is a consumer’s ability for self-control against impulses decreases. For instance, research explained in Agarwal 2017 shows that decisions that Judges make are extremely influenced by how long in the day it has been since their last break. However, when linking this to consumerism and the increased quantity of goods consumed it is important to be aware that decision fatigue can also cause decision avoidance and thus reduce consumerism. I believe that both time and fatigue cause consumers to act irrationally by causing them to partake in more impulse purchasing thus adding to consumerism, although they are not the reason consumerism exists as these theories would have affected humans before the boom of consumerism in the 1920s.

The effect of culture and social interactions on consumer behaviour

Culture

During this section of the discussion, I will explore two influences of consumer behaviour; Culture and upbringing; Social Interactions. The first of which is Culture and upbringing. The ideas explored in Williams 2019 highlight how different cultural behaviours influence what is bought, in what quantity and who buys it. Factors such as household size and the role of women managing the household have huge impacts on what is bought on a day-to-day basis. For instance, Indian consumerism tends to be more family orientated than western ones. Whilst exploring this more I found there were too many factors that cause the differences in cultural behaviours from upbringing to economic stability, thus it is difficult to pinpoint which factors cause different behaviours. Additionally, the main issue with the argument, that culture changes decisions, is that human personalities vary between each person, this variety encompasses the extent to which each consumer takes on board the particular influences of their culture. Using the example stated before, just because Indian consumers tend to be more family orientated doesn’t mean there aren’t Indian consumers who make highly individualistic purchasing decisions or on the other-hand western ones that think collectively.

Changing Culture and Globalisation

Additionally, I believe that the rise in consumerism can be attributed to both changes in culture over time and globalisation. For instance, the role of women in the household has changed over the century significantly, I mention this as now both men and women are now more at risk from decision fatigue and time pressure as both genders work the same amount. As the world develops further and further people are faced with more decisions each day from during work to shopping after it. This could cause consumers to generally consume more as they are making more decisions collectively and therefore partaking in more impulse buying. In addition, globalisation also causes increased consumerism as it changed the culture of less developed places, making those people enter the consumer class. As highlighted in Mayell 2004 globalisation causes ‘Items that at one point in time were considered luxuries are now seen as necessities.’ This shows how globalisation causes consumers in developing countries to have new ideologies which are more similar to western ones, causing them to partake in consumerism. This in itself wouldn’t be behavioural economics, but over time these people who are adopting different ideas and goods from across the world create new biases. They also will be faced with more decisions as different goods and services will become available due to globalisation, causing greater decision fatigue.

Conspicuous Consumer

A different kind of behaviour which could cause consumerism is the ‘Conspicuous Consumer’ which Thorstein Veblen describes as the practice by consumers of using goods of high quality or in greater quantity than might be considered necessary. This in itself isn’t irrational as the purpose of buying the goods is to display status and prestige amongst the ‘Leisure Class’. However, this isn’t just done in the Leisure Class but with people from different classes. It becomes irrational and therefore falls under behavioural economics when a consumer from a poorer background is a conspicuous consumer and thus this spending may not be in their best interest. I believe this would contribute heavily to consumerism it is commonplace and is part of the culture of wealthy countries.

Social Interactions

Social interactions form the basis of everyday life, these different interactions cause consumers to act in a way they wouldn’t have without the interaction. For example, the idea of social proof is widely mentioned in the literature surrounding irrational behaviour. Cialdini 1984 has a chapter that talks about social proof detailing how consumers use the behaviour of people around them to determine how to behave. Though, this book concentrates on how to influence consumers and therefore is mostly not applicable to this section of the research. An interesting study explained by Zimmerman 2015 shows how social proof can cause increased consumption without the interference of those selling it. Pedro M Gardete’s study explored social effect, which is when a consumer’s behaviour is influenced by the behaviour of others around them. He focused on the sale of goods on aeroplanes, finding that when you see someone near you make a purchase you are 30% more likely to buy something yourself. ‘Even though they’ve already bought something to eat or watched the movie, they remain extremely open to social influence, more so than someone who has bought only from social influence in the first place,’ Gaudete says. This research can be applied to all facet’s consumption, making people go into stores or buy goods just because they see someone else doing so. Using this, I reached the conclusion that social proof explains the second cause of consumerism which is mentioned in Reichert 2017 which is Social causes.

Social Media

The final factor which is imperative to this section is social media, I personally believe a large amount of the points previously mentioned are exaggerated by it. The digital revolution in the 2000s meant that people were able to share their beliefs and what they do to a greater number of other people. The Digital Age 2018 explains how an individual’s decisions can be impacted by another person through either a message or a post about a product or firm online. Social media allows social proof to happen online, it is so influential as before the digital revolution a consumer would have to see the consumption or purchase of a good in the moment it happened to be influenced. But with social media, the social proof is preserved in time and thus affects a greater amount of people. Likewise, another important way in which social media can cause consumerism is when consumers using social media get a glimpse into other consumers’ consumption-filled lifestyles, causing them to believe that this is the social norm and therefore partake in excessive consumption themselves, even if they are not in the situation where it is rational. Arguably social media has become part of the culture in a great number of developed countries, which could explain the rise in consumerism as more people are now affected by the social effect. The only issue with this argument is that not all consumers have social media or are affected by it, however, the number of people that are affected is ever-increasing. Taking all this into account, I have come to the conclusion that culture and social interactions are two of the main drivers for the world’s rising levels of consumerism.

How do Firms use behavioural economics to their advantage?

Applying Social Proof

The final area under consideration is how firms use these different causes of irrational behaviour to increase the consumption of their goods, contributing to consumerism. Cialdini 1984 believed that there are various psychological tactics which are used by different types of compliance practitioners, one of which is the previously mentioned social proof. An example of a firm using social proof to encourage the purchase of goods is when auction houses plan for people in the crowd of auctions to bid on items to encourage others to also do so, although this itself isn’t consumerism it gives a good example of how consumers are manipulated by firms. However, even though Cialdini 1984 gives a lot of different examples of social proof being used by sales practitioners, a lot of them are very niche scenarios and not many of them link to the idea of consumerism and that more is better. This could be because the book was released in 1984 and doesn’t encompass new methods of increasing consumption which are now utilised by firms now. One example of how modern firms use social proof mentioned in Digital Age 2018 is paying influencers to promote their goods. When these influential people promote these goods, their followers think that as this influencer is promoting it, they should purchase it. Thus, exploiting consumers by using the social proof of the people they look up to, would have an increased affect as the ‘social effect’ study in Zimmerman 2015 is done with strangers, not people they have connections with.

Nudge and Sludge

The next point is based off Thaler 2008, Thaler describes a nudge as a small action you can use to better your day-to-day life, inversely a ‘Sludge’ is used to increase consumer spending. Edwin 2018 describes a ‘Sludge’ as where firms use ‘Nudging’ to unnecessarily increase consumer spending, a prime example of this is when either junk food or more unnecessary goods are placed near checkouts to drive impulse buying and increase consumption. Furthermore, limited-time offers could be used to create urgency as consumers do not want to miss out of the offer, causing them buy it. This is further demonstrated by Sit 2020 who uses the example of sales shopping and how even if the sale doesn’t change the actual price of the good, consumers believe they are getting a bargain due to the ‘sale’ making them more likely to buy it. Going back to the changing culture in recent years, the ever-increasing number of online sales annually means more goods are being bought and shipped but also returned, in the US returns produce around 2.27 million tonnes of landfill waste a year. Furthermore, as the average room size is shrinking but the amount of goods we consume is increasing, consequently the amount we throw away therefore also increases. This has a huge impact on the environment as landfill sites are increasing in size at a greater rate every year. In conclusion nudge and different types of sales, such as BOGOFs (buy one get one free), can cause an increase in the amount consumers buy greatly, contributing to consumerism.

Advertising

Another way that firms can further increase consumption is through advertising, Higgs 2021 explained how both radio and TV adverts where both extremely influential in causing consumerism. ‘Goods that were portrayed to be fashionable which cause more people to want them, even if they didn’t need it’ Higgs 2021. This point links to the idea that globalisation turns wants to needs as advertising does just that. In order to sell their mass-produced goods, firms use advertising to lure buyers into seeing the necessity of the product, ‘The game is to make them (goods) the necessities of all the classes’ said Vance Packard in Higgs 2021. Furthermore, the greater issue with advertising is that it positively projects products, causing information failure as the consumer overvalues the product as they only know about the positives, making them more likely to buy it. Finally, the link with behaviour economics, advertising uses psychology to influence consumers’ behaviour, the constant bombardment of advertising affects consumers in ways we are not yet aware of. ‘Advertisers insinuate themselves by exploiting basic human desires like friendship, happiness and success.’- Greenpeace, fashion at the Crossroads. Overall, I believe that advertising is the greatest cause of consumerism among the researched material. It brings together all of the previously mentioned ideas and theories, acting like a catalyst for the worlds ever-increasing levels of consumers, and with that, the ever-growing detrimental impacts to the environment and our idea of society as we know it.