Consumer Studies

From ZuluNotes - Free Leaving Cert Notes

Contents 1 Factors Affecting Consumer Decision Making 2 Issues to be considered when making consumer choices 2.1 Wants 2.2 Needs 2.3 Price 2.4 Household Income 2.5 Trends 2.6 Time 2.7 Sales People 2.8 Friends & Peers 2.9 Packaging 2.10 Advertising & Merchandising 2.11 Special offers, discount coupons, etc 2.12 Labelling 2.13 Shopper Loyalty Schemes 2.14 Easy Pay Systems 3 Purchasing Process (HL only) 3.1 Supermarkets 3.2 Small,Independent shops 3.3 Chain Stores 3.4 Shopping Centres 3.5 Department Stores 4 Internet Shopping 5 Retail Psychology 6 Consumer Research 6.1 Consumer Research provides the following 6.2 Benefits of Consumer Research

Factors Affecting Consumer Decision Making

There are so many similar goods and services available to us that it can make it difficult to make an informed decision. It is important for the consumer to avoid "impulse buying" and buying items which cost realistically more than we can afford when our resources are limited and there are other important necessities that we must budget for. It is said that the best purchases we can make, are those that are well thought out and planned.

Issues to be considered when making consumer choices

When deciding on whether we should purchase something, there are particular questions we really should ask ourselves:

• Why do I want this? (whether it be an item or service)
• Do I really need it?
• Is it of good quality?
• Is it suitable for it's purpose?
• Is it worth the money?
• Can I afford it?
• Will it last well? (Does it come with a guarantee or warrnaty)
• Is it well designed, safe and easy to use?

When we are faced with having to decide between 2 different products or services over another, there are a number of factors that can influence our decision to buy a certain one:

Wants

Even though we all want certain things, wants are not essential

Needs

There are some items and services that we cannot do without such as food and clothing

Price

Money has a big influence on what we the consumer buy. Value for money is very important. The less money we have to spend, the more important the price will be to us.

Household Income

The amount of money available to us will obviously affect our decision making. A choice or decision will be more important if there is less money available to us.

Trends

As we know, fashion trends are changing all of the time, this applies similarly to footwear, music and even food.

Time

Our choice of particular products may be influenced by how much time we have to spend to choose the product and also the amount of spare time we have. A person who works a very long day may benefit more from an convenience foods or items such as a tumble dryer.

Sales People

A talented sales person can be very influential in our decision making process if they are very convincing and know alot about the product in question.

Friends & Peers

The majority of people are influenced by the opinions of their friends and family.

Packaging

How a product is displayed plays an important role in the consumers decision making process. Packaging can be vital to help sell a product. Packaging is used for many reasons, such as:

• It preserves the quality of the product until it is ready to be opened and used
• It helps to market the product by making it attractive
• It gives information about the contents

The use of Silver or Gold packaging tends to be used to create a sense of luxury, often seen to be used by Cosmetic companies who try to promote their product as better than a similar product sold by a rival company.

Since recycling has become a huge issue in Ireland today, consumers are now becoming more aware of the effects of packaging material and are now tending to opt for newly available refills for detergents or re-usable containers.

Advertising & Merchandising

Advertisements on television, radio or posters are messages that are designed to inform, persuade and increase sales of products and services. There are many techniques used to persuade the consumer that they must have a certain product. The following are persuasive techniques:

• The use of colour
• Catchy Tunes
• Catchy Slogans or Phrases
• Celebrity Endorsements
• Cute animals or children
• Glamorous People
• Romance

Consumers may also be attracted by free samples, in store promotions, free gifts etc. The idea of competitive advertising is that they set out to convince the consumer that 1 product or service is better than another.

Special offers, discount coupons, etc

Special offers are aimed at encouraging us to buy particular items examples of these are buy one get one free offers etc. Discount coupons found on the internet (pigsback.com) or in store are an incentive for consumers to make repeat purchases of the same product. In recent years, it has become common to offer a free gift when making bulk purchases such as a free bowl or glasses.

Labelling

Consumers nowadays are very aware of their rights and want to make sure that the products they are purchasing are of good quality and will last well for the price they are paying. With labelling available, consumers will examine energy labels on electrical goods, safety labels on toys, nutritional labels on food and care labels on clothes.

Shopper Loyalty Schemes

It is common now for many large shops and supermarkets to offer points when you shop in their store. E.g. Dunnes Stores, Tesco, Supervalu, Superquinn etc The more you spend, the more points you get. These schemes are used to encourage customers to shop in particular stores and may entice them to spend more if they are hoping to get more points to attain money off vouchers/holidays etc.

Easy Pay Systems

These systems allow consumers to pay in installments. Companies such as ESB and An Post allow customers to pay their bills in installments without charging any extra for this facility. This system is designed to help the consumer to budget for regular bills and prevent them from getting into debt.

Purchasing Process (HL only)

Retail Outlets can be classified into a few different categories

Supermarkets

• Self service shops
• Sell mainly groceries
• Increasing numbers now sell music, dvd's, computers & other electronic goods, clothes, hardware etc
• Are cheaper than smaller shops
• many open 24 hours for convenience

Small,Independent shops

• Often close to home
• Usually more expensive than supermarkets
• Sometimes family owned and run

Chain Stores

• Part of a retail chain with several shops throughout the country (Dunnes Stores, Pennys)

Shopping Centres

• Provide a wide variety of goods & services in the one place
• Convenient

Department Stores

• Many different departments eg. food,clothes,electronics etc in the same store
• Examples: Arnotts, Clearys, Brown Thomas

There are other types of retail outlets available. With modern technology, the consumer does not have to leave the comfort of their house thanks to go shopping, thanks to mail order buying, the Internet and television. In recent years, these have all become popular ways to shop for those who lead busy lifestyles.

Internet Shopping

There are thousands of websites dedicated to shopping online. It is now possible to have your groceries purchased over the internet, to order a take away, to transfer funds from your bank account, to order a dvd and also pay our bills. The Internet has become revolutionary in the way we shop. It makes it easy for people to purchase clothes, cd's, holidays, dvd's etc from home and abroad. Popular internet shopping sites include eBay, CDwow, Amazon etc

Retail Psychology

Advertising and marketing are carefully used to persuade customers to buy particular products. Retail psychology provides us with many influential factor that we may be unaware of when making a decision on whether we buy a product or not. The aim of retail psychology is to uncover the way consumers think when they are shopping. Market research is constantly being carried out to determine the consumers likes and dislikes.

Examples of ways in which retail psychology operates:

• The smell of freshly baked bread & cakes from an in - store bakery is hard to resist

• Free Samples of new foods and drink are on offer to customers to encourage them to buy the product

• Special offers may encourage to buy more of the product than they actually need

• Necessities: such as milk or bread tend to be kept at the back of the store so that we have to pass by all other products in the store to find what we need and hopefully pick up other products along the way

• Association: Items are generally grouped by association e.g. tea and biscuits, ice - cream & wafers. This encourages the customer to buy both even if the only wanted 1

• Impulse Buying: Sweets, chewing gum, magazines and novelty items are often put at the checkouts to attract the impulse buyer who will simply buy the item because t is there or because they are hungry. This works well at busy times such as Christmas when checkout queue's are long and customers are bored.

• Displays, most supermarkets display their fruit and veg at the front of the store, near the door to entice customers to the colourful display

• Store Cards : are given out by some stores. Only card holders may get special or certain discounts in stores.

• Loyalty Cards: Am to make shopping in a certain store more appealing by receiving points for shopping in the store for which you own a loyalty card. The points can then be used to gain money off vouchers

• Department Stores often have their perfume and cosmetics department on the ground floor, with the hope that the glamorous looking displays and waft of perfumes will lure customers into the shop.

Consumer Research

This can be defined as the collection of all data required to develop a new product or change an existing one.

Market researchers are hired by companies who are hoping to develop a new new product or service, to find out information about potential new customers. Researchers find out information by means of surveys, questionnaires and interviews. This information includes the consumers buying habits, satisfaction and thoughts on existing brands and their likes or dislikes. The answers provided by the consumers gives the researchers a profile of potential customers i.e. their gender, age, income level and occupation.

Consumer Research provides the following

• Consumer responses to new products
• Key trends in the economy
• Location of market
• Potential size of the market
• Size of the current market
• Characteristics of the market e.g. age, income of consumers etc
• Competitors share of the market

Benefits of Consumer Research

1. Shows the extent to which a new product idea meets consumers requirements
2. Helps to identify the type of people who are likely to buy the product e.g. age, income level, occupation etc
3. Shows what it is about a product that appeals to consumers, and advertising and marketing campaigns can be designed accordingly
4. Decreases the risk of products failing
5. Allows strengths & weaknesses of existing products to be revealed & means that improvements can be made to new products