Geographic Impact on Consumer Buying Behaviour

Consumer is the study “of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires” (Solomon 1995, 7).The core function of the marketing department is to understand and satisfy consumer needs, wants and desire. Consumer behaviour captures all the aspect of purchase, utility and disposal of products and services. Failing to understand consumer behaviour is the disaster as some companies have found it the hard way. For example, Wal-Mart launched operations in Latin-America with store design replicating that of US markets. However, Latin America consumer differs to US consumer in every aspect. Wal-Mart suffered consequences and failed to create impact.

Consumer buying behaviour is the topic that most of the companies these days are trying to figure out to market their products in the selected segment. Consumers are the ultimate customers of the companies which use the products of the companies directly or indirectly. There are many factors those influence the buying pattern of the buyers and which can differ in individuals buyers. Social, cultural, individual and emotional forces play a big part in defining consumer buying behaviour. Cultural, sub-culture and social class play an important role in finalizing consumer behaviour. For example, consumer growing up in US is exposed to individualism, freedom, achievement, choice, etc. On sub-culture level influence of religion, race, geographic location and ethnicity define consumer behaviour. Social class consists of consumer with the same level of income, education, taste, feeling of superiority and inferiority. Over time consumer can move from one social level to another.

The segments chosen for this assignment are Asia and Europe. Both these segments have their own strength and weakness. Asia is the most populated region on the earth and Europe is the most economically strong region on the earth. The population of Asia is increasing with the rapid pace and after the economic downturn in 2008, the growth in this region is much higher than the rest of the world. Two high growth countries India and China are emerging as super powers in Asia with growth rate more than the rest of the world. If we observe these two nations closely, we can see that these two nations have highest number of people compare to any another country. On the other hand, Europe is very economically strong with the presence of Germany, France and UK.Although Credit crunch hit this region badly, but they are recovering with the reasonable pace. These are the most advance area where life standard of people are better than the rest of the word. Consumers in these two segments have different life standard and economic conditions which affect directly to the buying of products and services. Consumers in Europe are individualist whereas consumers who belong to Asia are most collectivist. Culture plays an important role in dividing these two segments as individualist and collectivist. Culture of Asia is collectivist where collective decisions are preferred on individual decisions. There are close knots in the family members who influence decisions of each other’s .The most elder person in the family mostly make decisions of buying for the high value products and rest of the family members support him in his decisions.

Literature Review

Many studies have been conducted in the area of cultural effect on consumer buying behaviour.

To some, consumer behaviour is synonymous with marketing. Robertson and Kassarjian (1991), for example, explain consumer behaviour as “the scientific study of consumer actions in the marketplace” (p. vii). However, some others view consumer behaviour as independent of marketing or any particular discipline. Jacoby (1976), defined consumer behaviour as “the acquisition, consumption and disposition of goods, services, time and ideas by decision making units ….” (p. 1). Arndt (1976) argued that consumer behaviour encompasses the “the problems encountered by members of society in the acquisition and realization of their standard of living” (p. 213). More recently, Holbrook (1995) defined consumer research as “the study of consummation in all of its aspects.” Holbrook defined, “Consummations of one sort or another are what all humans and therefore all consumers seek. Consummation attaining customer value or achieving satisfaction thereby designates the central core of the concept of consumer research” (Holbrook, 1995, p. 88). As a field, consumer behaviour represents the intellectual meeting ground for investigators from economics, marketing, applied psychology, sociology, anthropology, philosophy, family sciences, and related disciplines. Conventional wisdom holds that the emotional cultural differences between countries will significantly impact on cross national business relationships between firms from different countries and cultures. Studies from both the field of anthropology and management science have concluded that most human behaviour is mediated by culture (eg, Hofstede, 1984). The study of psychology developed the hierarchy of effects model, which proposes that behaviour is composed of three dimensions: cognitive, affective and conative (Lavidge and Steiner, 1961). The cognitive dimension involves developing awareness and knowledge, the affective component relates to developing feelings and attitudes, and the conative dimension involves development of conviction or intention and actual behaviour, such as purchase (Lavidge and Steiner, 1961).

The literature is divided concerning the influence of national culture on cross national Business ventures. Traditionally, the literature has accepted that fundamental beliefs can differ greatly between cultures (Hall, 1960). It is, however, complex to understand how these culture differences can influence international business relationships. Scholars have called for markets with different cultures to be treated differently (eg, Solberg, 1995), while offering little in the way of empirical evidence to support such notions. The literature warns the reader that the success of any international marketing strategy depends on attempting to conform to customer culture norms (Deshpande and Webster, 1989). Hofstede’s work resulting in the creation of five indices of culture (uncertainty avoidance, power distance, individualism, masculinity and long term orientation), upon which the work related values of individuals of different countries are purported to differ, has been received as seminal in the cross cultural literature. Countries (and indeed regions) have different attitudes towards IDV and collectivism. Countries such as the People’s Republic of China (PRC) consider the value of tradition as paramount: ‘The traditional Chinese person . . . hardly thinks of himself as an individual’ (Riesman et al., 1953: 33) as the ‘. . . Western concept of’ personality” does not exist in the Chinese tradition’ (Hofstede, 1984: 150). Economic and political systems also enforce individualism (IDV) or collectivism. The capitalist market economy philosophy emphasises IDV and the achievement of the individual, whereas socialist forms of economic control and state planning encourage collectivism. Of the five indices of culture developed by Hofstede, the individualism collectivism index is considered to be the most important difference associated with the cultures of various countries’ (Williams et al., 1998: 136). Despite the obvious impact of lifestyle, life stage, income and age on consumers’ behaviour within each of these, essentially, men and women have an interest in, talk about, and show a fondness for, different products (Slama and Williams, 1990). Despite calls for more research focusing on gender differences (eg Otnes and McGrath, 2001; Hansen, U. & A. Emmerich (1998), relatively few studies have been conducted (Carsky and Zuckerman, 1991) and these studies have focused on relatively narrow areas, such as impulse buying, or have been very product specific, eg house purchasing. Evidence suggests that gender differences exist in the aids used to arrive at buying decisions (eg Mueller, 1991; Wiedmann and Walsh, 2000) as well as in the decisions themselves (eg Helmig, 1997; Wood, 1998). However, most of the studies have focused on low involvement and nondurable products (Patterson, 1993). Country of origin effect can be defined as any influence that the country of manufacture has on a consumer’s positive or negative image of a product (Cateora and Graham, 1999). With increasing availability of foreign goods in most national markets, the country of origin can become more important as consumers often evaluate imported goods differently than they do competing domestic products. (Bilkey and Nes, 1982). With the increasing pace of globalization and the diversity of manufacturing activities internationally, more studies are needed to guide marketers to have a better insight into buyers’ attitudes and behaviour with respect to global products. Cross cultural management researchers have traditionally used Hofstede’s (1980, 1997) definition of culture, which equates culture to “the collective programming of the mind which distinguishes the members of one group or category of people from another” (Hofstede, 1997, p. 5). Culture influences behaviour through its manifestations: values, heroes, rituals, and symbols (Hofstede, 1997). These are the forms in which culturally determined knowledge is stored and expressed. Thus, each cultural group possesses different cultural manifestations. Culture, which could be seen as ‘group personality’ (Litvin & Kar 2003), is one of the factors distinguishing groups from one another, especially physically distant groups; Thus, it is seen as an important agent of bias, especially in formation of country images.