Hospitality Industry: Consumer Decision-Making Process

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Abstract

The aim of this paper is to critique the consumer decision-making process (CDP) in the context of the hospitality industry. The analysis is underpinned by the premise that postmodernism, globalization and the fragmented nature of consumer behavior has great influence on the decisions of the postmodern consumer.

Thus, the traditional CDP models might not clearly predict or explain consumer decision-making process in the postmodern hospitality industry. Thus, the paper focuses on analyzing the extent to which two CDP models are vague and all-encompassing when applied in the hospitality industry.

These models include Smith’s simple model of the buying process and Teare’s model of consumer decision process for hospitality industry. The findings reveal that the stages of consumer decision-making process proposed by both models ignore important factors that determine purchase decisions.

In Smith’s model, some stages are often skipped while others are usually reversed when the consumer is considering a particular purchase. In Teare’s model, the stages are not applicable in all circumstances in the hospitality industry. This leads to the conclusion that these models are vague and are not all-encompassing.

Introduction

The purpose of this paper is to analyze consumer decision-making process (CDP) in the context of the hospitality industry. In particular, it will assess the extent to which CDP models are vague and encompassing. The paper will focus on two models namely, Smith’s simple model of the buying process and Teare’s model of consumer decision process for hospitality industry.

Consumer decision-making process refers to those behaviors or actions that precede; influence and follow the decisions associated with acquisition of products that satisfy the needs of the consumer (Hoger & Maclinnis 2008, p. 78).

Consumer decision-making models are used to explain how consumers recognize their needs, acquire and consume products that satisfy the identified needs. This paper begins with a discussion on how globalization and postmodernism influence consumer behavior in the hospitality industry. This will be followed by a critical analysis of the two CDP models.

Aims/ Objectives

The objectives of this study include the following:

To indentify the CDP models that best explain the consumer decision-making process in the hospitality industry
To critique the consumer decision-making process (CDP models) in the context of consumption within the hospitality industry

Methodology

A qualitative approach will be used in this study. A qualitative research design involves producing findings without using statistical procedures or mathematical techniques. It facilitates understanding of the behavior of individuals (consumers), as well as, the factors or reasons that influence such behaviors.

Thus, it is concerned with why and how people make decisions. In this context, the interpretivism paradigm is used to discover meanings by improving the researcher’s comprehension of the whole. In this study, qualitative data will be used to analyze the degree to which consumer behavior in the hospitality industry conforms to the traditional CDP models.

Data Collection

Given the time constraint and the inadequacy of resources, primary data was not collected in this study. Thus, the qualitative data used in this study has been obtained from secondary sources such as journals, textbooks and reports of previous studies. The data was collected through a review of the existing literature on CDP models and their application in the hospitality industry.

Postmodernism

Postmodernism is based on the premise that “apparent realities are social constructs which are subject to change” (Solomon 2010, p. 89). It posits that an absolute truth does not exist, and hence, individuals perceive the world in a subjective manner. The postmodern era is associated with information, globalization, fragmented culture, as well as, differentiated structures (Hawkins, Motherbaugh & Bert 2007, p 94).

It is an era that is characterized with societal differentiation, secularization, as well as, individualization. Thus, the main challenge of the postmodern consumer is the ability to choose among the traditions, products and styles originating from both the past and the present era (Xideas & Moschuris 1998, pp. 974-992). Postmodernism influences consumer behavior in the following ways.

Technical Change

Advancements in information and communication technology have significantly improved the efficiency and efficacy of accessing product information. In the postmodern era, fictions, fantasies and non-fictions are used as entertainment and background for various product adverts (Raaij & Bamossy 1993, pp. 76-94).

This creates the hyper-reality that has, partly, replaced the actual reality in the postmodern era. This explains the increase in consumerism and impulse buying that is associated with the contemporary hospitality industry.

Technical change has also increased the complexity of products. Thus, even though postmodern consumers are more educated than previous generations, they have to follow instructions or acquire some skills in order to use various products. For instance, a tourist will have to undergo some training before he can engage in skiing or boat riding. Finally, technical change has led to reversal of the process of production and consumption.

Fragmentation

The acceptance of divergent ideologies in the postmodern era has led to the emergence of numerous and varied norms, values, as well as, lifestyles (Raaij & Bamossy 1993, pp. 76-94). However, these norms and values are observed by people who are highly individualistic. The emergence of a variety of ideologies has led to the fragmentation of consumer behavior in the postmodern hospitality industry.

Postmodern consumers tend to adopt a particular lifestyle depending on the prevailing situation, as well as, their state of mind and mood. Hence, most firms in the hospitality industry have had to segment customers according to their momentary states.

Additionally, differentiating products to match the specific needs of customers has become a common practice in the industry. For instance, most hotels and restaurants in London have different entertainment services for different age groups.

Fragmentation influences consumer behavior in the following ways. First, it leads to disjointed experiences (Pellemans 1971, pp. 8-21). Fragmentation of “information in the postmodern era is reflected in the fragmented experiences of customers” (Hawkins, Motherbaugh & Bert 2007, p 124).

Products in the contemporary hospitality industry are disconnected and lack contexts, as well as, historical roots. Empirical studies reveal that postmodern consumers have several self-images which suit particular situations. Marketing adverts are used to encourage postmodern consumers to switch their self-images.

Additionally, the hyper-reality created by adverts forces some consumers to buy products that they do not need. For example, in a community where game park visits are the most fashionable leisure activity; a couple might be forced to visit a game park in order to conform to the prevailing trend. Otherwise, the couple might not have an interest in the visits.

In many tourist destinations, tourists purchase local cultural artifacts and souvenirs whose meanings and significance they do not understand. Similarly, tourists who are alienated from their religious practices normally visit churches or shrines as a tourist attraction. However, such tourists might not understand the meaning of the symbols and practices associated with such places of worship.

Second, fragmentation leads to segmented production. Mass production in the postmodern era is characterized with the production of more of a variety of a product. Additionally, production of personalized versions of products has become common practice in order to overcome competition.

Most hotels have developed flexible food menus to cater for the taste and preferences of their customers. Additionally, the concept of furnished apartments is increasingly being adopted by hotels to cater for customers who do not like standardized hotel accommodation.

Hyper-reality

Visiting a particular tourist destination is associated with fun, adventure, meeting new people and experiencing a feeling of relaxation. These experiences are associated with aesthetic values which can be added to the tourist destination brand through advertising. This creates new meanings and realities which become hyper-reality if believed by other visitors of the tourist destination (Martin & Woodside 2012, pp. 3-4).

Thus, the product represents the image (meaning) and vice versa. Hyper-reality enables consumers to enjoy available exciting elements of space, as well as, time setting without hardship. For instance, the Grand Canyon’s IMAX Theater allows customers to experience the fun and excitement of visiting the canyon without necessarily, walking through it.

Value Realization

Traditionally, economists believe that value creation take place during the production stage of a product. As a product is consumed, its value is destroyed. However, in the postmodern era, value is also created through consumption.

The product’s image is recreated in terms of the benefit that the consumer gains by consuming the product. In the postmodern hospitality industry, the consumption process has become very important since it determines the value that customers attach to the products (Solomon 2010, p. 121). Paradoxical Juxtaposition

Paradoxical juxtaposition involves combining different things to create a set of new ones (Raaij & Bamossy 1993, pp. 76-94). This can involve blending related products in order to meet the specific needs of the customers. Given the individualistic nature of the postmodern consumers, firms in the hospitality industry have had to differentiate their products through innovation.

Five star hotels such as the Dorchester in London not only provide accommodation services, but also related products such as conference facilities and wedding grounds. Some hotels have their own tour guide departments that help their customers to tour various tourist locations or attractions.

Additionally, most restaurants have acquired outdoor game facilities such as swimming pools in order to increase the range of entertainment products that customers can choose from. Thus, paradoxical juxtaposition facilitates product differentiation in order to attract and retain customers. Additionally, product differentiation enhances the satisfaction of customers.

Globalization

Globalization refers to “the increasing relationships of culture, people and economic activity” (Peter & Olen 2010, p. 211). At the global level, there are several different groups of consumers. These consumer groups have different tastes and preferences since they come from different socio-cultural backgrounds.

The products demanded by consumers are, partly, determined by their cultural and social backgrounds (Schiffman 2004, p. 221). Thus, firms must understand their customers in the context of their cultural backgrounds. In the postmodern era, specific consumer segments such as the Euro-teenagers and mature consumers can be identified.

Additionally, the resurgence of ethnocentric consumers is gaining momentum in most parts of the world. This has led to an increase in market fragmentation and segmentation within countries (Gupta 2011, pp. 251-269). Globalization has not resulted into the disappearance of individual cultures.

Some authors argue that globalization is promoting interests in local cultures and traditions rather than promoting cultural homogeneity. This view is based on the fact that modernization increases confidence in the local social order, as well as, faith in traditional practices.

In the hospitality industry, globalization has led to the emergence of customers who demand products that conform to global trends, as well as, customers who demand products that reflect their local cultures. This has presented a challenge to multinational hotels that focus on maintaining their home country product quality and standards.

In countries where customers are strongly attached to their traditions, multinational hotels have had to adopt their products to the needs of the locals in order to attract more customers (Akhter 2007, pp. 142-150). In general, multinational hotels should avoid their ethnocentric attitude by adopting their products to the cultures of the locals.

Consumer Decision-Making Process Models

Blackwell, Engel and Miniard (1995) states that “a model is nothing more than a replica of the phenomena it is designed to present” (p. 143). Hence, a model identifies the variables associated with a particular phenomenon, and how such variables are interrelated. In this context, models can be conceptualized as flow charts that explain behavioral processes.

Teare’s Model of Consumer Decision Process

Teare’s CDP model is illustrated by figure 1. The stages of consumer decision-making process according to this model can be explained as follows.

The Pre-Purchase Stage

In a complex decision-making process, the factors that influence the pre-purchase stage include “the consumer’s preference structure, information search behavior, prior product experience, the extent of product involvement and role specialization” (Teare 1998, pp. 76-94).

According to this model, preference structure is determined by the consumer’s personality, socialization, perception, as well as, learning. The model ignores important factors such as the products’ benefits, features, price and risk levels, which also determine the preference structure.

According to Teare (1998, pp. 76-94), information search behavior is determined by the availability and accessibility of information, consumer preferences, as well as, the available purchase options. The intensity of information search is influenced by perceived benefits, time, experience, risk, financial constraints and prior knowledge.

However, the model does not explain the reasons why customers search for information. For instance, some customers focus on price information while others focus on the benefits and risks associated with the product (Verbeke 2000, pp. 522-538). Additionally, the sources of information are not explored. Some customers rely on their knowledge while others use external sources such as adverts to get product information.

Teare claims that prior product experience determines the degree to which a consumer is likely to feel confident about a particular purchase, as well as, the amount of product information that is needed. In this context, lack of prior experience is likely to trigger external information search (Dholakia 2001, pp. 1340-1362).

This can be confirmed by the fact that most tourists depend on external sources such as the internet and tour guides to gather information about tourist destinations that they have not visited before. However, lack of prior experience does not always trigger external information search.

For instance, a tourist who is loyal to a particular hotel will not be interested in information about hotels he has never lived in before. Additionally, a customer who is indifferent on the available hotels is less likely to invest his time on searching for information about the hotels. In this context, prior experience plays very little or no role in determining pre-purchase decision.

According to Teare’s model, the perceived risk also influences the pre-purchase decisions. The perceived risk is determined by the mode of purchase, financial consequences and the side-effects associated with the consumption of the product (Essoussi & Zahaf 2008, pp. 95-104). The relevance of perceived risk, as a determinant of the pre-purchase decision, is limited by the availability of information.

Most customers are unaware of the risks associated with various products. As stated earlier, technical change in the postmodern era has led to the production of complex products, and this necessitates acquisition of more information before consuming such products.

It is apparent that most consumers do not seek information about the risks associated with the consumption of certain products, especially, when they are purchasing products associated with low involvement. For instance, individuals who eat junk food in restaurants hardly spare time to find information about the health risks associated with such foodstuffs.

The difficulty in predicting or determining the risk associated with a product also limits the relevance of perceived risk as a determinant of the pre-purchase decision. For example, a tourist might not be able to predict the occurrence of an earthquake or civil unrest in the destination he intends to visit. Consequently, such risks can not be part of the tourist’s pre-purchase considerations.

Purchase Stage

At this stage, the consumer decides to purchase and consume the product. The factors that influence this decision include prior experience, preference structure, personality and situational factors (Teare 1998, pp. 76-94). In reality, customers will not always go through this stage. This is because purchase decisions can be terminated at the pre-purchase stage.

The quality of the product is also not taken into account as a factor that influences the purchase decision. Similarly, the model ignores the consumer’s ability to pay for the product as an influence on the purchase decision. Empirical studies reveal that most consumers purchase products out of necessity rather than factors such as situational context, prior experience and interaction with the sales persons.

For instance, people eat in restaurants out of the need to satisfy their hunger rather than the situational contexts associated with the restaurant. Finally, the purchase decision is not always preceded by a choice process. Customers who are fully aware of the brand they want will hardly spend time evaluating all other available brands.

Post-consumption Stage

At this stage, the consumer evaluates the product in terms of its quality and performance. This evaluation determines whether the customer is satisfied or dissatisfied. Consumers form expectations on product quality or performance before buying and consuming the products (Teare 1998, pp. 76-94). These expectations are used as benchmarks when evaluating the product.

However, the postmodern consumer is more concerned with the product image than the product itself. For instance, a person is likely to eat in an expensive restaurant in order to conform to the trends of his social class rather than to enjoy excellent service quality.

Additionally, hyper-reality makes consumers to evaluate the performance of products based on popular beliefs rather than personal expectations and established standards of product quality.

Smith’s simple Model of the Buying Process

The stages associated with the consumer decision-making process, according to Smith’s model, are illustrated by figure 2. These stages can be explained as follows.

Need Recognition

Need recognition is the first stage in the process of making a purchase decision. At this stage, the consumer recognizes or identifies a problem that should be addressed by purchasing some product. The consumer can also consider a purchase by responding to a marketing stimulus such as a product advert (Laios & Moschuris 2001, pp. 351-372). In the postmodern era, some customers make purchases without recognizing a need.

Adverts that are embedded in fiction are used to create hyper-reality and to promote consumerism. Thus, many customers are lured into the purchase of products that they do not need.

In most cities, businessmen meeting in restaurants usually buy foods and drinks that they do not need simply because they are required to order for meals when using the restaurant’s facilities. Similarly, most alcoholics buy more drinks than they need in order to please their friends. In these cases, purchases are made without need recognition. Hence, this stage of the model is vague and is not applicable in all circumstances.

Information Search

This is the second stage of the consumer decision making process. A customer who has identified a need decides on the amount of information that he needs in order to make an informed choice. When the need for information is strong, the customer will use both internal and external sources to find more information about the product (Dholakia 2001, pp. 1340-1362).

This is confirmed by the fact that most customers seek for as much information as possible when making a major purchase decision such as buying a house or selecting a holiday destination.

However, the information search stage is often skipped in many cases. For instance, a person who is hungry will simply walk into a restaurant and buy a hamburger without spending any time on information search. Thus, this stage is not clear and all-encompassing.

Evaluation Stage

In this stage, customers compare the available product brands in terms of their attributes such as color, size, price and benefits. This stage enables the consumer to choose the best brand among the available alternatives (Cunningham, Gerlach & Harper 2005, pp. 357-372). In the postmodern era, every producer is focusing on product differentiation by imitating their competitors.

Thus, most products have similar attributes. This limits the degree to which evaluation can be done. Customers who are loyal to a particular brand will skip this stage since they are not interested in any other brand. Thus, even though this stage is specific, it is not all-encompassing.

Decision

In this stage, the consumer decides on the brand or product to buy based on the information gathered through the information search and evaluation stage (Schiffman 2004, p. 77). Smith’s model does not explain other factors that determine the purchase decision apart from product information.

The purchase decision is also determined by external factors such as government restrictions and trade quotas. For instance, a tourist can not make a decision to visit a game park if such visits have been banned by the government. In some cases, the decision process can precede the information search stage.

For example, a tourist can begin by deciding to visit Spain. He will then proceed to search for information about tourist attractions and the cost of accommodation in Spain. Hence, the decision stage is not clear and is over simplified in the model.

Buy

In the buy stage, the consumer acquires the product for the purpose of consuming it. The model assumes that all consumers make a decision to purchase a product. It also assumes that all purchased products are consumed by the buyer. In reality, customers can make a decision not to buy a product.

Hence, the buy stage will not exist. Similarly, some products are bought but are never consumed. In the hospitality industry, a customer might recognize a need for a holiday. However, he might make a decision not to go for the holiday due to lack of time or money. Similarly, some tourists book hotels or airline tickets but fail to check-in. Hence, the buy stage is not all-encompassing.

Post Purchase Dissonance

This is the final stage, and it involves evaluating the purchase decision (Burnett & Lansford 1994, pp. 95-104). This evaluation determines whether the consumer is satisfied or dissatisfied with the product. Dissatisfied customers usually switch brands, whereas satisfied customers are expected to remain loyal to the brand (Edward & Sahader 2011, pp 327-345).

However, postmodern consumers might not be loyal to a product even if they are satisfied with it. This is because their rapidly changing tastes and preferences, as well as, the influence of their peers and the media encourages them to try new brands. For instance, many tourists normally change their destinations and hotels in order to enjoy new experiences rather than their dissatisfaction with previous destinations or hotels.

Conclusion

The aim of this paper was to analyze the extent to which two CDP models are vague and all-encompassing when applied in the hospitality industry. The two models include Smith’s simple model of the buying process and Teare’s model of consumer decision process for hospitality industry.

The findings reveal that the postmodern hospitality industry is characterized with fragmentation, hyper-reality, paradoxical juxtaposition and globalization (Raaij & Bamossy 1993, pp. 76-94). These factors have a profound effect on the behavior of the postmodern consumer.

Smith’s model assumes that consumers pass through six stages when making a purchase. However, in most cases, consumers skip some stages such as information search. In some cases, the stages can be reversed by the consumer. Additionally, key factors that determine consumer decisions are ignored in most stages.

Thus, the model is vague and is not all-encompassing. Teare’s model is also vague and is not all-encompassing since most stages ignore important variables that determine consumer decisions. Additionally, the stages are not applicable in all circumstances in the hospitality industry.

Graphical Illustrations

Figure 1: Teare’s Model

Figure 2: Smith’s Model

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