Customer Behaviour

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1. Introduction 1.1 Problem description Nowadays, the habits of consumers are changing more often as it was decades ago. What was “in” yesterday is “out” today. Being able to identify and understand the subliminal triggers that are responsible for specific customer actions and reactions is a key factor for companies when creating effective solutions. If they have technology at their fingertips to interact in the marketplace in new ways, we will be remiss, as marketers, if we do not prepare for that technology. Being oblivious to customer behaviour is not a viable option for businesses. There are many factors that influence human behaviour. The decision-making process is affected by cultural and social factors, for example through the individual’s family and friends. Our childhood, what we learned and how we perceived during this time, has a fulminant impact on our decision. Moreover, it is influenced by the personnel characteristics (e.g. age, lifestyle) and psychological factors (e.g. motivation, beliefs and attitudes). Consumer behaviour refers to the process of acquiring and organizing information in the direction of a purchase decision and of using and evaluating products and services. The Internet is more the key which the customer can use to get information according to his attitudes. A major factor for successful competing in today’s business word for a company is the understanding of consumer behaviour. Behaviour occurs either for the individual, or in the context of a group (e.g., friends influence what kinds of clothes a person wears) or an organization (people on the job make decisions as to which products the firm should use). To take adequate actions in the area of marketing, one must understand how people perceive for example advertising, how they learn to consume, how they make decisions and how personality affects those decisions.1 One must also analyse what motivations influence the individuals’ decisions, how attitudes are formed and how groups affect the consumer behaviour. The analyses of this phenomena requires the consideration of various processes, internal and external to the individual.2 Hence, to understand the purchasing behaviour one need to examine 1 http://www.powerpointers.com/printarticle.asp?articleid=451. 2 Engel,

J.F.; Blackwell, R.D.; Miniard, P.W., Consumer Behaviour.

Forming and changing of Consumer Attitudes and Behaviour

3 the complex interaction of a lot of elements, present at different stages, from arousal to decision, as well as from purchase to post-purchase experiences.

1.2 Purpose The aim of this essay is to give a view on customer behaviour and answer the following given question: “How attitudes are formed and changed? Analyse the forming and changing of attitudes when consumers are likely to devote a lot of effort to processing information and making decisions.”

1.3 Methods First, we choose to understand what customer behaviour is. It will be described and explained in part 2.1. Hereon follows a description of the consumer behaviour process, which includes a short presentation of the marketing mix, an extensive characterization of the individual and environmental Factors, and a description of attitudes, which impacts the behaviour process. In the conclusion, we come back to our problem and we are come up with proposals, how attitudes are formed and changed. The authors collected the information for the theory part from books, articles and lecture material. The books are partially form the library and private ones. The articles that we use are from different databases and from different websites. Most of articles were found by the help of a special search-tool, which is called Copernic 2001 Pro.

1.4 Limitations Since we have a limited time frame and limited resources, we have some limitations to mention: We are not going to have a look on Customer Relationship Management (CRM). Some theories are only short explained. 4

2. Theory The following part presents a general overview on consumer behaviour and attitudes. By using the model of consumer behaviour process the different levels of a buying decision should be described. According to this model the buying decision is influenced by several factors. This factors are described nearer in this theory part.

2.1 Consumer Behaviour Since consumer behaviour is one of the most important areas in marketing there are many different theories and definitions. We select the following definition: “Consumer behavior is the study of individuals, groups or organizations in obtaining, using and disposing of products and services, including the decision processes that precede and follow these behaviors.”3

2.1.1 Consumer behaviour process Figure 1: A Model of the Consumer Behaviour Process. Source: Own creation according to Prof. Dr. M. Zerres. 3 Gibler, Karen M., Nelson Susan L., Consumer behavior applications to real estate education.

5 The model works as follows. When stimuli, often information from companies, reach a supposed customer the decision and evaluation process begins.4 By a complex interaction between the

individual factors (Personal and Psychological factors), environmental factors (Cultural and Social factors), and the marketing mix the consumer evaluate the stimuli. When having finished the process the consumer have reached a decision about the product or service.5 But even if the decision is positive it does not automatically mean that the consumer actually will buy the product or service.6

2.1.2 Marketing Mix The marketing mix is the set of marketing tools a company uses to pursue its marketing objectives in the target market.7 The most common way to look at the marketing mix is through the eyes of the seller. One then originally talked about the 4Ps: Product, Price, Place and Promotion. When looking at the marketing mix from the buyer’s point of view you get the 4Cs: Customer needs and wants, Cost to the customer, Convenience and Communication. The companies that can meet the 4Cs will be winners.8

2.1.3 Individual and Environmental Factors There are a lot of factors that control the consumer behaviour process. Most of these are quite impossible to influence for a marketer. Therefore they have to concentrate even more on the factors they can influence. The most important factor one can use to influence is perception.9 The stimuli that information gives is therefore the factor that initiate the process that leads to the consumer’s decision. This makes it very important to formulate the message in the information in the best possible way. There are many major factors that influence a consumer’s buying behaviour. In the paragraphs below the model of Kotler should be described. Many of these factors can used to segment the market.10 4 Zerres,

M., Marketing, p.56 et sqq. M., Lecture slides Marketing I., 2001. 6 Smith, R., Psychology, p. 579. 7 http://www.netmba.com/marketing/mix. 8 http://sol.brunel.ac.uk/~jarvis/bola/marketing/mix.html. 9 Howard, J., A., Buyer Behavior in Marketing Strategy, p. 110. 10 Bliemel, F., Kotler, P., Marketing-Management, p. 280 et sqq. 5 Zerres,

Forming and changing of Consumer Attitudes and Behaviour

6 Figure 2: Factors Influencing Behaviour. Source: Bliemel, F., Kotler, P., Marketing-Management.

CULTURAL FACTORS The broadest and deepest influence on consumer behaviour is cultural factors. Roles played by culture, subculture and social class is of great importance.11 Culture The most fundamental determinant of peoples wants and behaviour is culture. While growing up one acquires values, perception, preferences and behaviours by looking, listening and learning from family, school, friends and so forth.12 Subcultures Subcultures are smaller proportions of cultures that provide a more specific identification and

socialisation for its members. Examples of subcultures are: Nationalities, Religions, 11 Thogersen, 12 Meffert,

J.; Ölander, F, Introduction to Consumer Behaviour and Marketing Strategy. H., Grundlagen marktorientierter Unternehmensführung, p. 122 et sqq.

Forming and changing of Consumer Attitudes and Behaviour

7 Racial groups and Geographic regions. The subculture identifications influence food preferences, recreation, career aspirations and more. Social Class All human societies have some degree of social stratification. The most common is social class. “Social classes are relatively homogeneous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interest, and behaviour.”13 Social class reflects income, occupation, education and area of residence. Other characteristics may be difference in the way people dress, speech patterns, recreational preferences and more. A cluster of characteristics indicates a person’s social class. Social classes show distinct product and brand preferences in many areas.14 Examples of this are home furnishing, clothing, and automobiles. Media preferences also differ. Upper class prefers magazines and books whereas lower class likes television. SOCIAL FACTORS In addition to cultural factors reference groups, family, roles and statues influence consumer behaviour. Reference Groups A number of groups influence buyer’s behaviour. Groups that direct influence behaviours and attitudes are called membership groups. Primary groups are family, friends, co-workers and so forth. In the Secondary groups are people with a more formal interaction. The group includes organisations like trade unions, religious groups and professional associations. Group pressure influences attitudes and behaviour much. Family A person’s family is the utter most influential reference group. One can divide the family into two groups. The family of orientation deals with the influence that parents have had on their 13 Kotler, 14 Kotler,

P., Armstrong, G., Saunders, J., Wong, V., Principles of Marketing, p. 193. P., Armstrong, G., Saunders, J., Wong, V., Principles of Marketing, p. 193.

Forming and changing of Consumer Attitudes and Behaviour

8 siblings during the upbringing. When talking about the family of procreation one mean the influence people who live together have on each other. Husband and wife influence the buying of different products in different ways. Husband Dominant: Automobile, television and insurance.

Wife Dominant: Furniture, kitchenware, and carpeting. Equal: Vacation and outside domination. Roles and Statuses Role and status define a person’s position in each group. Roles – activities that a person is expected to perform. Each role carries a status. Some products are considered to be status symbols, like Rolls Royce. PERSONAL FACTORS The decision to buy is also influenced by personal characteristics such as age, stages in the life cycle, occupation, economic circumstances, lifestyle, personality and self-concept.15 Age and Stages in the Life Cycle The taste in clothes, furniture, recreation and the need for different kinds of food, services is age related. The consumption is also shaped by the family life cycle. The family’s financial situation and product interest have impact on the buying behaviour. Psychological life cycle stages – transformations through life such as marriage and divorce.16 Occupation Occupation influences a person’s consumption pattern. Managers buy suits. Carpenters buy working clothes. Therefore marketers try to find the occupational groups who have above average interest in their product.17 Economic Circumstances Economic Circumstances greatly influence product choices. It consists of people’s disposable income (level, stability and time pattern), savings, assets, debts, borrowing power and attitudes toward spending versus saving.18 15 Kotler,

P., Armstrong, G., Saunders, J., Wong, V., Principles of Marketing, p. 198 et sqq. F., Kotler, P., Marketing-Managment, p. 1075 et sqq. 17 Bliemel, F., Kotler, P., Marketing-Managment, p. 1076 et sqq. 18 Meffert. H., Grundlagen marktorientierter Unternehmensführung, p. 465. 16 Bliemel,

Forming and changing of Consumer Attitudes and Behaviour

9 Lifestyle Even people coming from the same subcultures, social class and occupation can lead to different lifestyles. “A person’s lifestyle is the person’s pattern of living in the world as expressed in the person’s activities, interests and opinions.”19 Personality and Self-concept Every individual has a distinct personality that influences his/her buying behaviour. Personality characteristics are: 20 Self-confidence, Dominance, Autonomy, Sociability, Defensiveness and Adaptability.

Personality is a useful variable when analysing consumer behaviour. Self-concept (Selfimage) is related to personality. This often differ from the actual self-concept (How one views oneself.) and others-self-concept (How one thinks others see oneself).21 PSYCHOLOGICAL FACTORS Four major factors influence the buying choice - motivation, perception, learning and beliefs and attitudes. Motivation Individuals have many needs at any given time. Physiological needs (Maslow’s Theory of Motivation) like food and shelter is motivated by survival.22 Social and esteem needs like sense of belonging and recognition is not intense enough to motivate a person immediately. It becomes a motive when the need is aroused to a sufficient level of intensity. Perception 19 Kotler,

P., Armstrong, G., Saunders, J., Wong, V., Principles of Marketing, p. 201. M., Ajzen, I., Belief, Attitude, Intention and Behavior, p. 120. 21 Cote, D.; Johnson, M, Consumer Attitudes, Uncertainty, and Consumer Spending, p. 3 et sqq. 22 Smith, R., Psychology, p. 372. 20 Fishbein,

10 When a person is motivated he/she is ready to act. How one acts is influenced by ones perception of the situation. “Perception is the process by which an individual selects, organises and interprets information inputs to create a meaningful picture of the world.”23 Physical stimuli as well as stimuli’s to the surrounding field and conditions within the individual influences also the perception. Learning When people act, they learn. “Learning involves changes in an individual’s behaviour arising from experience.”24 Human behaviour is mostly learned. Learning is produced by interplay of drives, stimuli, cues, responses and reinforcement.25 Beliefs and Attitudes By doing and learning one acquire beliefs and attitudes. “A belief is a descriptive thought that a person holds about something.”26 “An attitude is a person’s enduring or favourable evaluations, emotional feelings and action tendencies toward some object or idea.”27 Attitudes make people act in a fairly consistent way toward similar objects or situations. In order to change one single attitude one often has to make major adjustments in a lot of attitudes. Consequently it is difficult to change attitudes.28 Concerning to the problem formulation it is important to have a closer look on attitudes.

2.1.4 Attitudes The word attitude originates from Latin: aptus which means fitness or adaptedness. A definition of attitude by L. L. Thurstone is:

“The amount of affect or feeling for or against a stimulus”.29 23 Kotler,

P., Armstrong, G., Saunders, J., Wong, V., Principles of Marketing, p. 208. P., Armstrong, G., Saunders, J., Wong, V., Principles of Marketing, p. 209. 25 Smith, R., Psychology, p. 262. 26 Kotler, P., Armstrong, G., Saunders, J., Wong, V., Principles of Marketing, p. 210. 27 Kotler, P., Armstrong, G., Saunders, J., Wong, V., Principles of Marketing, p. 210. 28 Kleine, R. E., Kernan, J. B., Measuring the Meaning of Consumption Objects: An Empirical Investigation. 29 Mowen, J., C., Minor M., Consumer Behavior, p. 249. 24 Kotler,

11 This factor is one of the most interesting and important factors for marketers. Attitudes toward a company create a company image. People tend to act according to these patterns when buying. Hence, a strong company image gives good business.30 Depending on the type of product a consumer wants to buy, the buying behaviour varies. Expensive, complex products that a consumer does not buy frequently calls for high involvement decisions.31 The consumer actively seeks information and learns about the different characteristics. Nowadays this searching process is facilitated through new technologies, especially the Internet. Consumers have better access to information about products, prices and services which allow an easier comparison between different competitors. Howard’s extensive problem solving work with the same pattern.32 Buying for example a sofa is a high involvement decision.33 Low involvement decisions or routine problem solving follow a somewhat different buying pattern. The consumer knows what he/she want and do not evaluate different alternatives. Impulse buying (Experimental perspective) is when a consumer through positive feelings, sensations or emotions is lured to buy a product. IKEA focuses a lot on trying to influence consumers when the stroll through the store. This is done by putting products with extremely competitive prices at strategic places in the store.34 When using the behavioural influence perspective companies try to influence the consumers before the consumers have formed an opinion about the product or service. Attitude is often said to reflect a person’s deep values meaning that the attitudes are used as an evaluative instrument. We evaluate products, people, and events and so forth by using our experiences and attitudes. This approach is called the Tripartite Theory of Attitudes, the traditional way or the A-B-C Theory. The attitude is divided into three elements that are not separated from each other. The tripartite theory of attitudes corresponds well with the first parts of the consumer behaviour process mentioned in figure 3. The first parts of the consumer behaviour process is the base that leads to the consumers final decision-making. A modification of the A-B-C theory made by Rosenberg and Hovland also includes the variable stimuli.35 The 30 Turnbull,

G., Report on consumer behavior in purchasing of organic food products in Australia. H., Grundlagen marktorientierter Unternehmensführung, p.106. 32 Howard, J., A., Buyer Behavior in Marketing Strategy, p. 18. 33 Mowen, J., C., Minor M., Consumer Behavior, p. 352. 31 Meffert.

34 Solomon, 35 Fishbein,

M., R., Consumer Behavior, p.201 et sqq. M., Ajzen, I., Belief, Attitude, Intention and Behavior, p. 340.

12 link between the A-B-C theory and the consumer behaviour process is therefore rather easy to see. Consequently one sees why it is of importance for the companies to learn about the consumers attitudes. Figure 3: Tripartite Theory of Attitudes. Source: Fishbein, M., Ajzen, I., Belief, Attitude, Intention and Behavior.

Affect refers to a person’s feeling toward and evaluation of an object, person, product, event, issue and so forth (The consumer analyse the characteristics.). Behaviour/conation deals with the behavioural intention and the actions with respect to or in presence of the object (He/she establish what use the characteristics may have.). Lastly cognition denotes a person’s knowledge, opinions, beliefs and thoughts about the object (He/she think about in which way the product can satisfy him/her.). When dealing with attitudes one is concerned with the predisposition of behaviour rather than the behaviour itself. This model emphasizes the interrelationships among knowing, feeling and doing. Consumers´ attitudes toward a product cannot be determined by simply identifying their beliefs about it. For example, a researcher may find that shoppers “know” a particular camcorder has an 8:1 power zoom lens, autofocus, and a flying erase head, but such findings do not indicate whether they feel these attributes are good, bad, or irrelevant or whether they would actually buy the camcorder. For a better overview it is important to mentioned some other theories which deals with the forming of attitudes. 13 According to the principle of cognitive consistency, consumers value harmony among their thoughts, feelings, and behaviours. They are motivated to maintain uniformity among this elements. This desire means that if necessary consumers will change their thoughts, feelings, or behaviours to make them consistence with their other experiences. The theory of cognitive dissonance states that when a person is confronted with inconsistencies among attitudes or behaviours , he or she will take some action to resolve this “dissonance”, perhaps by changing an attitude or modifying a behaviour. The theory has an important ramifications for attitudes because people are often confronted with situations in which there is some conflict between their attitudes and behaviours.36 Self-perception theory provides an alternative explanations of dissonance effects.37 The theory states that we maintain consistency by inferring that we must have a positive attitude toward an object if we have bought or consumed it. Social judgement theory also assumes that people assimilate new information about attitude objects in light of what they already know or feel.38 One important aspect of the theory is the

notion that people differ in terms of the information they will find acceptable or unacceptable. Balance theory considers relations among elements a person might perceive as belonging together.39 The theory specifies that people desires relations among elements in a triad to be harmonious or balanced.

2.2 Practical Example To provide a better understanding of the theory and the forming and changing of attitudes, the authors present an example where they analyse and visualize the model of consumer behaviour process. In the example, a 43 years old man plans to buy a car. His old car is a Audi, and he is satisfied with it. This is the reason why he plans to buy a product of this company again. His behaviour and attitudes are influenced by many different factors, which are described in the following part. 36 Festinger,

L., A Theory of Cognitive Dissonance. D., J., Self-Perception Theory, p. 35 et sqq. 38 Hovland, C., I., Sherif, M., Social Judgment: Assimilation and Contrast Effects in Communication and Attitude Change. 39 Heider, F., The Psychology of Interpersonal Relations. 37 Bem,

14 Environmental factors Because he is Norwegian and lives in Oslo, he is first of all influenced by the local culture. For him and his family religion is not important. Concerning his social class he is always well dressed and prefers expensive brands. According to the reference groups, he is only influenced by the primary group, which is explained in the theory part. He is well socialized and cares about the opinion of friends and co workers. His family (wife and two children) has also a great influence on his decision making process. Buying decisions, for example purchase a car or effect an insurance, are his duties in the family. For him status symbols are really important. Individual factors Working as a manager his income is 60.000€ per year and there are no major open depth. Because of his job, he has several occupation like to buy a suite. He prefers leisure time activities like skiing trips and golf, for this he needs to have a big car. His personality is influenced by his high education and a high self confidence. Marketing mix His buying decision is also influenced by different advertisings. Further he informed himself by comparing different offers in the internet and by sales conversations. This three factors (Environmental and Individual factors, Marketing mix) are comprehensively the stimuli of his buying decision. According to the model, stimuli influences the attitudes.

As described in the attitude theory part, the planned purchase is a high involvement decision. This includes complex products that a consumer does not buy frequently. The consumer actively seeks information and learns about the different characteristics and advantages. After several conversations with good friends and co workers, who are driving other cars and are satisfied with the quality of there product and the service from the companies, he decided to seek more information about other car brands like BMW and Mercedes-Benz. For a first overview he had a look on the web-sides of this companies. By comparing the information like price, quality and service, he is impressed of the BMW performance. Concerning to the decision making process, he elected to have a sales conversation with the local dealers of the different brands. By using the behavioural influence perspective companies try to influence the consumers before the consumers have formed an opinion about the product or service. In our example the man had 16

3. Conclusion The aim of our essay was to give a view on consumer behaviour, especially showing how attitudes are formed and changed and what are the most important factors which influence this behaviour. We explored and analysed the forming and changing of attitudes when consumers are likely to devote a lot of effort to processing information and making decisions. The paper gives an overview of the theories according to the model of the consumer behaviour process. In this model the stimuli is influenced by individual and environmental factors, and the marketing mix. When the information from companies reach a supposed customer, the decision and evaluation process begins. By a complex interaction between the individual factors (Personal and Psychological factors), environmental factors (Cultural and Social factors), and the marketing mix, the consumer evaluate the stimuli. The stimuli is influencing the attitudes. The ABCmodel, which is explained in the theory part, shows how the stimuli is evaluating the attitudes. In our point of view, this model provide the best possibility in describing the forming and changing of attitudes, if the frame is limited. The result of this hole process influence the consumer’s buying decision. In order to show this complex interaction between these factors, we presented the example of consumer behaviour process. This model underline implicit assumption when attitudes are formed and changed. The old attitude is literally replaced through the newer attitude. We recognized that in many cases the prior attitudes might remain at least partially the new one. In

our example, the man had a formed opinion about a specific car brand, but then, after many efforts he changed his attitude. This change was influenced as described in the example by several factors. Not only the personal, also the social, culture and psychological factors have a direct impact on the attitudes, the consumer behaviour and the decision making process. In the example the social factors show the impact of family and reference groups. The culture factors underline for instance the importance of the social class. If taking a closer look on the psychological factors, the relevance of motivation, learning and perception is getting clear. Furthermore, the company itself can use the marketing mix as a tool in order to form and change the attitudes of the consumer. The marketing mix is the possibility for a company to influence the consumer behaviour. Therefore, this term is getting more and more important for company’s policy. This essay pointed out the importance for companies of recognizing different consumer attitudes in order to form and change them. Dealing with this term is not a viable option for companies in today’s business, it is important in order to reach competitive advantages. Forming and changing of Consumer Attitudes and Behaviour

18 Engel, J.F.; Blackwell, R.D.; Miniard, P.W., (1995), Consumer Behaviour. Fishbein, M., Ajzen, I., (1975), Belief, Attitude, Intention and Behavior: An Introduction to Theory and Research, Addison-Wesley Publishing. Howard, J. A., (1994), Buyer Behavior in Marketing Strategy.2nd edition Prentice Hall, New Jersey. Kotler, P.; Bliemel, F., (1995), Marketing Management: Analyse, Planung, Umsetzug und Steuerung, Schäffer-Poeschel Verlag, Stuttgart. Kotler, P., Armstrong G., Saunders, J., Wong, V., (2002), Principles of Marketing, Pearson Education Ltd, Edinburgh. Meffert, H., (1998), Marketing: Grundlagen marktorientierter Unternehmensführung Konzepte – Instrumente – Praxisbeispiele. Gabler GmbH, Wiesbaden. Mowen, J. C., Minor M., (1998), Consumer Behavior. 5th edition, Prentice Hall, New Jersey. Smith, R, (1993), Psychology, West Publishing Company, Minneapolis. Solomon, M. R., (2002), Consumer Behavior: buying, having, and being. Prentice Hall International, Upper Saddle River, New Jersey. Zerres, M., (2000), Marketing. W. Kohlhammer GmbH, Stuttgart. PUBLICATIONS: Bem, D. J., (1972), Self-Perception Theory, in Leonard Berkowitz, ed., “Advances in Experimental Social Psychology”, Academic Press, New York, pp. 1-62. Cote, D.; Johnson, M, (1998), Consumer Attitudes, Uncertainty, and Consumer Spending, Research Department, Bank of Canada, Ottawa, Ontario, Canada.