2012

CULTURAL EFFECTS ON CONSUMER BEHAVIOR

ARUN KUMAR. M MBA (REGULAR) 32311005 11/11/2012

CONSUMER BEHAVIOUR:
Consumer behavior is the study of how people buy, what they buy, when they buy and why they buy. It blends elements from psychology, sociology, socio psychology, anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics, psychographics, and behavioral variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. How many times throughout the day do people make product decisions? If you stop to think about it, many product decisions are made every day, some without much thought. What should I wear? What should I eat? What am I going to do today? Many product decisions are answered routinely every day and they help move the economy of cities, countries and ultimately the world. Product decisions also shape life for the consumer. How can simple decisions be so important? Why do marketers spend millions of dollars to uncover the reasons behind these decisions? To define consumer behavior: It is the study of consumers and the processes they use to choose, use (consume), and dispose of products and services. A more in depth definition will also include how that process impacts the world. Consumer behavior incorporates ideas from several sciences including psychology, biology, chemistry and economics. "All marketing decisions are based on assumptions and knowledge of consumer behavior," (Hawkins and Mothersbaugh, 2007). Researching consumer behavior is a complex process, but understanding consumer behavior is critical to marketers-they can use it to: Provide value and customer satisfaction. Effectively target customers. Enhance the value of the company. Improve products and services. Create a competitive advantage Understand how customers view their products versus their competitors' products. Expand the knowledge base in the field of marketing. Apply marketing strategies toward a positive affect on society (encourage people to support charities, promote healthy habits, reduce drug use etc.)

Initially the consumer tries to find what commodities he would like to consume, then he selects only those commodities that promise greater utility. After selecting the commodities, the consumer makes an estimate of the available money which he can spend. Lastly, the consumer analyzes the prevailing prices of commodities and takes the decision about the commodities he should consume. Meanwhile, there are various other factors influencing the purchases of consumer such as social, cultural, personal and psychological. The explanation of these factors is given below.

1. Cultural Factors Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture, and social class. Culture Subculture Social class 2. Social Factors Social factors also impact the buying behavior of consumers. The important social factors are: reference groups, family, role and status. Reference groups Family Roles and status 3. Personal Factors Personal factors can also affect the consumer behavior. Some of the important personal factors that influence the buying behavior are: lifestyle, economic situation, occupation, age, personality and self-concept. Age Occupation Economic situation Life style Personality 4. Psychological Factors There are four important psychological factors affecting the consumer buying behavior. These are: Perception Motivation Learning Beliefs Attitudes

Here we see in detail, the cultural effects on consumer behavior with examples:

What are Cultural Factors?

Cultural factors comprise of set of values and ideologies of a particular community or group of individuals. It is the culture of an individual which decides the way he/she behaves. In simpler words,

culture is nothing but values of an individual. What an individual learns from his parents and relatives as a child becomes his culture.

Example - In India, people still value joint family system and family ties. Children in India are conditioned to stay with their parents till they get married as compared to foreign countries where children are more independent and leave their parents once they start earning a living for themselves.

Cultural factors have a significant effect on an individuals buying decision. Every individual has different sets of habits, beliefs and principles which he/she develops from his family status and background. What they see from their childhood becomes their culture.

Let us understand the influence of cultural factors on buying decision of individuals with the help of various examples. Females staying in West Bengal or Assam would prefer buying sarees as compared to Westerns. Similarly a male consumer would prefer a Dhoti Kurta during auspicious ceremonies in Eastern India as this is what their culture is. Girls in South India wear skirts and blouses as compared to girls in north India who are more into Salwar Kameez.

Our culture says that we need to wear traditional attire on marriages and this is what we have been following since years. People in North India prefer breads over rice which is a favorite with people in South India and East India. Subcultures: Each culture further comprises of various subcultures such as religion, age, geographical location, gender (male/female), status etc. Religion (Christianity, Hindu, Muslim, Sikhism, Jainism etc): A Hindu bride wears red, maroon or a bright colour lehanga or saree whereas a Christian bride wears a white gown on her wedding day. It is against Hindu culture to wear white on auspicious occasions. Muslims on the other hand prefer to wear green on important occasions. For Hindus eating beef is considered to be a sin whereas Muslims and Christians absolutely relish the same. Eating pork is against Muslim religion while Hindus do not mind eating it. A sixty year old individual would not like something which is too bright and colorful. He would prefer something which is more sophisticated and simple. On the other hand a teenager would prefer funky dresses and loud colours. In India widows are expected to wear whites. Widows wearing bright colours are treated with suspicion.

Status (Upper Class, Middle class and Lower Class): People from upper class generally have a tendency to spend on luxurious items such as expensive gadgets, cars, dresses etc. You would hardly find an individual from a lower class spending money on high-end products. A person who finds it difficult to make ends meet would rather prefer spending on items necessary for survival. Individuals from middle class segment generally are more interested in buying products which would make their future secure.

A big car for a Single Man!!

A single Vehicle for a big family!!

Gender (Male/Female): People generally make fun of males buying fairness creams as in our culture only females are expected to buy and use beauty products. Males are perceived to be strong and tough who look good just the way they are.

Now we will see some companies which failed due to not considering the culture as an important factor for dealing with consumers.

Wal-Marts failure in Germany- A Case of cultural insensitivity:

Specific Difference in German Consumer behavior and Culture in comparison with US consumers: The biggest mistake of Wal-Mart was to ignore the local culture, local buying habits and impose an American boss on its German operations. Wal-Mart stores are designed for customers who are willing to spend lot of time shopping. But in Germany, the shopping hours are shorter: Shops close by 5 PM on weekdays, and no shopping on Sundays. This meant that customers dont have the habit of spending lots of time in a store wandering around for the things they need. Coupled with this problem, German customers do not like to be assisted by Wal-Marts friendly store assistants. Germans prefer to do their own search for bargains. Instead of understanding and adjusting to the culture of its clients, Wal-Mart tried to impose their Culture on to the Customers, which never worked out.

Germans like to see the advertised discount products upfront without having to ask the store assistant. This implies that the discount products must be placed at the eye level. Instead Wal-Mart chose to use its US style merchandise display strategy where premium priced products are kept at eye level and discount products are kept at higher shelf or in the bottom racks. This irritated the German shoppers. Wal-Mart also got its store inventory wrong, Wal-Mart stocked its store with clothes, hardware, Electronics and other non-food products were given much bigger floor space than food products; as a result more than 50% of the revenue was from non-food products. But other German retailers stock more of food products. For example for Metro, food products constitute more than 75% of the revenue. Germans prefer to bag groceries themselves into reusable carriers, or at least to pay a small fee for the avoidable sin of needing a plastic bag. Germans are introvert in nature and doesnt like display of emotion in public, as they always care for their private personal space. Employees, like the reserved customers, didnt care for Wal-Marts public displays of corporate moral such as the morning cheer. The German Customers even didnt liked to be accompanied by the Cheerful employees either, as they would like to make choices by themselves. These are cultural misunderstandings as well, but one could say the cultural philosophy of Wal-Mart could not survive in the context of a German culture with a Happy Planet Index significantly higher than Americas Inefficient Top Management which ignored the relevance of local Culture: It was clear that the cultural insensitivity of Wal-Mart started right at the top management. To begin with, it appointed four CEOs during its first four years of operation. The first head of German operations was Rob Tiarks, an expat from the USA who did not understand Germany or its culture. He had previously supervised around 200 Supercenters in America. Not only did he not speak any German. Due to his unwillingness to learn the language, English was soon decreed as the official company language at the management level. He also ignores the complexities and the legal framework of the German retail market, ignoring any strategic advice presented to him by former Wertkauf executives. This has resulted in the resignation of top three management executives from Wertkauf. His successors were also unsuccessful in integrating German Outlets with the Wal-Marts Business model and culture.

FedEx - failure in Spain & Russia:

FEDEX (Federal Express) wisely chose to expand overseas when it discovered the domestic market was saturated. However, the centralized or "hub and spoke" delivery system that was so successful domestically was inappropriate for overseas distribution. In addition, they failed to consider cultural differences: In Spain the workers preferred very late office hours, and in Russia the workers took truck cleaning soap home due to consumer shortages. FEDEX finally shut down over 100 European operations after $1.2 billion in losses.

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