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| Factors Influencing Consumer Choice: |
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Every day, consumers and households make decisions about the goods and services they purchase. Some factors that influence these consumption decisions are:
Finance; can I obtain finance to help me make this purchase?
Price; What is my budget? Can I afford this good or service?
Marketing and advertising; How is marketing used to help lure me as a potential customer?
Age and Gender; How do my age and gender influence my purchasing habits?
Environmental concerns; What impact does the consumption of products have on the environment?
Service and convenience; What in-store service is avialable? How easy is it to shop in this way?
Warranties and after-sales service; Does this product have a warranty? What after-sales service is available? |
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In order for consumers to purchase goods and services they require funds. These funds can come from their savings account or from financial institutions. Retailers also offer finance in the form of store and hire purchase. Hire purchase is similar to purchasing goods on a credit card. With hire purchase, however, the funds are lent to the customer by the store not from the bank or financial institution. Hire purchase is a common way of purchasing durable goods such as cars, jewellery and white gold. The amount of money you earn (income) is an important factor that influences purchasing behaviour. Disposable income is the amount of money that you have to spend on goods and services. Disposable income is calculated by subtracting the tax you are required to pay from your total income(gross income).
Disposable income = Gross income - Tax
Factors that influencce the level of gross income include : type of industry you work in, qualifications and level of experience in the job.
The amount of money you are willing to spend and the product's price are two of the most important factors affecting the decisions of a consumer. Price and value for money are essential because we try to maximise our satisfaction. Being a wise consumer means answering the following questions before you purchase a good or service:
Am I spending more than I can afford?
Have I checked the prices of the same product in other stores?
If an item is expensive and we have alternatives that could also satisfy us, we may buy the cheaper alternative because the limited availability of funds means we have to choose what to buy and what to do without. The amount of money a person has to spend can limit choices. If our income was $3,000 per week, we might expect to buy a car each year. If it is $300 per week, we might have to make our car last for several years and budget to ensure that we can buy a new one when the time comes.
It is sometimes convenient to purchase items that save us time or effort even if they are more expensive. For example: buying a prepared set of shelves and hanging them on the wall is much easier than cutting the timber to size and shape, and then varnishing it before hanging.
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Marketing and Advertising |
Retailers and manufacturers use the five P's of marketing (price, position, product, promotion, and place) to make a consumer behave in a certain way. For example, breakfast cereal manufacturers package their products in large boxes to maximise the advertising power of each box on the supermarket shelves. (This attracts the consumer causing them to buy the product.)Marketing strategies such as this have a considerable negative, as well as positive, impact on consumers. Growing numbers of consumers and community groups are unhappy with the wasteful use of resources in some product packaging and the extra costs that are passed onto consumers. These groups would like to see manufacturers reduce the amount of packaging and minimise the impact of their production methods on the environment.
People are bombarded everyday with millions of advertisements and product suggestments. Advertising describes the benefits of the goods and is often very persuasive, using images to create ideas in the minds of consumers.It can also be informative and present recommendations for the product from influencial people such as athletes and TV stars. All these efforts attempt to convince the individual to buy a particular product because it will bring some satisfaction to their life. The task of the marketer is to establish a marketing strategy that will be successful in this goal. Many of the advertisements on televisions and in magazines place emphasis on beautiful people and fun settings which associate them with the benefits that one product offers over another. Many companies spend millions of dollars hiring marketing research firms to collect data and determine which method of persuasion works better to sell their products.
Another approach to advertising may be to first determine a better understanding of why certain methods are more successful in convincing people to purchase products. This understanding may give marketing researchers clearer insight into what products will work with each persuasion method.
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The wants of consumers begin to vary as they get older. There are demographic factors that also influence the consumption of goods and services. Demographic refers to the features of a population such as age and sex structure. Demographic influences such as ethnic backgroud, gender, income and age all have their impact on our purchasing behaviour. An example of Demographic influence on consumers are the 'tweens'.Tweens are aware of brand names and purchase make-up in order to make them selves look older.The Tweens usally have impact on girls age between 10-13 years. It is estimated that the tween market could potentially be worth more than $175 million a year to retaliers.Other influences on adolescents include: Sabrina the teenage witch and Niki Webster and Betty Boop. Spiderman pyjamas and The Hulk socks are sold in the boys' department of stores, while Powerpuff Girls singlets, printed in pink and blue, are in the girl's department.
As we get older, our wants change from toys and lollies to clothes and sports gear to cars and travel. We require more sophisticated goods and services to satisfy our needs and wants as we mature. Gender is a key characteristic of the buyer. It is interesting that many adults try to give children gifts which are not gender specific and yet, as children grow up, they often demand toys which are. The different activities of boys and girls may give rise to different demands such as netball skirts for girls and football jerseys for boys. Heroes and role models are designed to be attractive to different groups.
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In recent years consumers have become aware of environmental issues and have taken these into consideration when deciding which goods and services to purchase. Consumers have started to look beyond the ' value for money' and consider the impact of their purchase on the environment. Manufacturers and retailers have started promoting environmentally friendly products such as toilet paper made from recycled paper. These environmentally friendly products have become increasingly popular with consumers.
Throw-away items such as paper cups and plastic bags result in vast quantities of rubbish and many consumers are now rejecting over-packaged goods and disposable items out of concern for the environment.'Reduce','Re-Use',and 'Recycle' have become common catch phrases. Consumers are encouraged to return containersfor re-filling at stores. (For example; At the body Shop, you can re-fill bottles with shower gel or shampoo.)
Buying organically grown fruit and vegetables encourages farmers not to use chemicals which can poison the surrounding area, and buying products which are environmentally friendly also helps to preserve our quality of life. |
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In recent years, service and convenience have become increasingly important to customers as their lives have become busier and the value of free time has increased. As a result of these pressures and the difficulties of transport in many Australia's large cities, customers are increasingly making use of new, convenient shopping alternatives, such as online shopping and internet banking.
The demand for increased convenience is accompanied by a desire by many consumers for a more personalised shopping experience. Businesses have responded to this demand by offering a range of services, eg: car washing, pet grooming and gardening services. Many of these businesses operate seven days a week and will travel to a customer's home or workplace at a time that is convenient for the customer. |
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Warranties and Before and After Sales Services |
A warranty is an agreement that outlines the conditions under which a consumer is entitled to have a good either repaired or replaced. Warranty conditions can be different depending on one product manufacturer to another, so it is important to know what is covered by each policy and what isn't. To find a a good, secure deal that you will agree to, you will need to shop around.
An extended warranty can also be purchased by the consumers from the manufacturer. Paying for an extended warranty can save a lot of money on ongoing repairs, which makes the product cheaper in the long run. Extended warranties are popular for expensive electrical goods, such as computers. It is important to be aware of your rights and responsibilities as a consumer so you know whether you can have the product repaired or replaced if it is faulty.
Other types of after sales services include: help lines and product support websites. Make sure you are aware of the product support before you purchase it. |
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Fashion; Friends and Culture |
The appeal of goods and services is subject to peer pressure, fashion and culture.
We may need reassurance from our friends that we are worthy of their friendship and often this means that we wear the right clothes and go to the right venue to have a good time. Who tells us these things are right? Friends. How do they know? From advertising, culture and other friends.
In most areas of their lives, people tend to conform. If an individual is willing to conform in one area, they are usually willing to conform in many areas.Once a person has conformed to group pressure and agreed that they are interested in a product, they will often agree to purchase that product. Once a person has stated that they will purchase a product they will be extremely likely to do so. This is an example of the direct effect conformity can have on purchasing decisions.
Peer influences affect individuals throughout their lifetime. Conforming behaviour can start as early as eight years old. In a recent study conducted in the ACT, it has been found that adolescents rely on their peers' opinions in purchase over their parents.
As fashion changes dramatically, people often tend to purchase the latest styles.
Culture is another factor that influences purchasing behaviour. Culture is defined as our attitudes and beliefs. As an individual growing up, a child is influenced by their parents, brothers, sisters and other family members which helps them develop their opinions, attitudes and beliefs. These factors will influence the individuals purchasing behaviour. |
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Quality; Product Features and Reputation of the Service Provider |
A consumer needs to look at the quality, the product features, and the reputation of the service provider before purchasing a product.
The quality of the product must be the quality that the consumer is after. The quality of durable goods must be very good quality because this will allow the product to have a longer life span, (examples of these include: fridges and dining room tables.)
The features of the product must suit the needs of the consumer. For instance, if a circular tub is needed, a rectangular tub wouldn't be purchased because that is not what the consumer wants.
The reputation of the service provider should also be researched so that the consumer will know if this company has sold good or faulty products before. If this company has a good reputation, more consumers will want to purchase products from it and vice versa. |
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| Page Updated Tue Mar 15, 2005 1:02am EST |
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