Tuesday, June 4, 2013

consumer behavior: Irrational purchases in modern society

The consumer behavior has undergone various changes since its inception in the early 1940’s where the consumers were considered as very highly rational beings whose consumptions were guided by the stringent economic calculations and utility. Under this paradigm of an economic man, the consumers sought to maximise the benefits that they derived from the consumption of the goods. The consumer is also viewed as being aware of all the goods in the market as well as being able to order their preferences. The information that is available to the consumers is perfect. However, the notion of perfect information has rendered the notion of rational consumer inapplicable (Zaichkowsky, 1991). First the consumers cannot adequately rank all the substitutes as they have knowledge of only some alternatives. Secondly, the theory of utilities is in most cases violated by the preferences as different consumers may have completely different preferences from the others (Uusitalo, 1985). Some goods also defy economic theory for instance gifts which are considered more desirable when higher price tags are attached to them. These problems led to the development of the concept of the irrational consumer who is open, passive and extremely vulnerable to influences which are external in their purchase decisions. The irrational consumer is mostly conceived through two main theories of psychology (Hall, 1990). The first is the Pavlovian model which is premised around the concepts of response, drive, reinforcement and cue. The model emphasises the use of repetition so that learned responses cannot weaken when there is lack of practice by providing reinforcement to the message. The copy strategies are also supported by the model for instance the taking of cues which are meant to arouse drives into the consumers for instance fear to make consumers of seat belts to purchase. The second model of referred to as the psychoanalytic Freudian which held that the motivations for the behaviors of the consumers are not definite. The model held that purchases by the consumers were made against the backdrop of certain symbols and motives for instance purchases meant to impress, good feeling about self or even self gratification (Zaichkowsky, 1991). The paper is a discussion of irrational purchasing decisions by the consumers. In the motor vehicle industry, there are purchases which in most cases can be considered irrational although at the time, the consumer may think that they have made a rational choice. Sports cars being very expensive would in most cases not be bought by rational consumers who are concerned about the utils which they will derive from the purchase of the car (Koekemoer and Bird, 2004). Some consumers buy the cars under the guise that they like the maneuverability of the car while in the real case, they buy so that they can impress their mates or to achieve the sexual gratification that their lives may be missing. It thus can be stated that the irrationality that characterises the purchase of cars falls under Freudian psychoanalytic model. Brand loyalty which has been considered by many individual when they buy cars is a show that there is a huge irrationality in the motor vehicle market. Due to the satisfaction with one brand, the buyer may not consider the other brands that may be available in the market (Zaichkowsky, 1991). The irrationality of the consumers in most cases is created by themselves and in some instances by the marketers of the goods which they purchase. To begin with, the irrationality of the consumers arises from the dependence of the consumers on heuristics as the information that is available to them for making decision may be overwhelming (Ariely, 2008). Also, the consumers may be overwhelmed by the wide range of choices that are available thus end up making purchases which may not provide them with the maximum benefit. Also, the consumer can be forced by the time constraints and the financial condition to make purchase decisions which may not be rational. For example when a consumer has a lot of money they will tend to buy goods that are highly valued as they will view those that have lower price tags as inferior (Becker, 1976). The second issue is the emotional state of the consumer, thus when purchases are made by consumers who are emotionally unsettled, they will in most cases not think their purchases over thus falling into the trap of irrational consumption. Also, if the person is experiencing strong emotions, the consumer will in most cases fall into the trap of making unnecessary purchases as they may not be in a position to consider the long term consequence and effects of their purchase on the financial well being. People also make irrational choices due to the feeling of instant gratification (Altman, 2006). The irrationality of the consumers mostly occurs in the point of making purchase decision due to the many choices that the consumer is faced with. Due to the limited information that the consumer has, they will not be able to comprehensively compare the different products offerings so that they decide on that which would satisfy their needs (Mitchell, 1977). This problem also arises due to the problem of brand loyalty as the customer will, in some cases, not attempt to even inquire about the other products and services that are offered in the market. For example, a person who has previously owned three Volvos would more likely look for another Volvo when they have the need to purchase a new car. Their choice may be informed by the benefits that they have been able to derive from the car without considering the fact that there may be new models, which are more efficient, stable and cheaper than Volvo, in the market (Newman and Staelin, 1972). There are a variety of factors which have contributed towards the development of the irrationality of consumer purchase. The first factor is the notion of maximisation of the pleasure that the person derives from the consumption of the good while keeping any possibilities of pain at the minimum (Parisi, 2005). Consumers will be involved in the consumption of goods that leave them with little regrets. The consumers would makes choices of consumption which would provide favourable outcomes to the consumer as the feeling of hedonism will fade off if the choices turned out to be unfavourable. The second factor that contributes to consumer irrationality is the increasing globalisation where the choices o goods that are available to the consumers are too great that they cannot adequate gauge all of them to determine those that would give them maximum utility (Chessel, Hilton and Chatriot, 2006). Consumer irrationality is also contributed to by the different cultures of the consumers and even the subcultures where they belong. In most cases, women will often be more ready to buy products that have feminine appearance even if the actual utilities that they would derive from the consumptions are low. In the same way masculine culture would support the consumption of goods which compliments the status of the men in the society for instance the consumption of odiferous cigars will be encouraged. The purchase decision in this case would not be informed by the economic conditions but by the need to appear to the society as being powerful (Hoyer and MacInnis, 2008). Standardisation is also another factor that has greatly contributed towards the irrationality of the consumer. Since the goods are of the same quantity, the consumers will compare the prices and the perceived utility from the front of the various prices in which the goods are offered. This mostly arises where the consumers had previously consumed good that belongs to the category that they wish to buy. They will compare all the different prices with the price of the good that they already bought to gauge their ability to satisfy his needs. This in most cases lead to irrationality as humans have the tendency to overvalue the products that they already have, under the guise that they are of high quality (Drolet, Schwarz and Yoon, C. 2010). In conclusion, the concept of rational consumer cannot hold due to the different forces which greatly affect the consumers’ ability to make right economic choices in their consumption. These forces have acted to destroy the ideal conditions which favoured the rationality of the consumer, for example, globalisation has led to a huge lot of information thus seriously crippling the ability of the consumer to make the right economic choices. The forces have led to irrational consumption where the motive of the purchase may be hidden even from the consumers themselves. The theory of consumer behavior owes its origin to the science of economics and specifically the theory of marginal utility. The underlying assumption in the definition of a rational consumer is that he strives to exploit utility by cautious allotment of his resources. In the modern society, consumer behavior has gone beyond the boundaries of economics analysis so as to adopt a psychological approach with the rational consumer being the foundation to the analysis of the behavior of other consumers. The approach taken on this dissertation is that the psychological rationalization process may result to irrational behavior. Surprisingly, consumer behaviorists have a strong passion for the things they toil for (Zaichkowsky, 1991). Accordingly, there is a need to confess that a relevant meaningful external standard for the judgment of rational behavior of customers is yet to be generated since evaluation by behavioral experts have left us with a kind of controversial norm that all customers have a rational behavior. This is to say that the idea of irrational behavior is contrary to the scientific view of rational behavior and modern scientists have a belief that the society has diversely shifted from the science of rational behavior in many ways. Irrational behavior is a non-oriented approach in defining the purchasing power of customers. Consumer behavior analytics partly consider a consumer as an inactive, spontaneous decision maker vulnerable to external forces. Among the prominent models describing this irrationality behavior is Pavlopian model which is based on four driving components such as prompt, drive, response and reinforcement (Hall, 1990).The component of drive involves hunger, sex and fear hence very important as it compels a specific feedback in relation to a specific arrangement of cues. Next is the Freudian psychoanalytic model that links the exclusion of consciousness power by acts of shame and fear. An example of irrational consumer behavior is where a consumer buys an expensive car on the basis that he likes its maneuverability and the way it appears. At another level a consumer may purchase the car in order to amaze others or even as a substitution to gratification of sexual desires that had not been satisfied. Another example identified by Freudian in his research is that of men liking odoriferous cigarettes since it is an attest to their masculinehood (Zaichkowsky, 1991). A similar scenario is that of seriousness in women while baking cakes as a symbol of rebirth. In the prospect theory Kahneman and Tverky have identified three scenarios where choices are inconsistent with rational consumer behavior. In the first place consumers have a problem in handling of information and in formulating reliable observation. Consequently, they utilize heuristics that leads to a failure in maximizing choices and are over sensitive thus infringing the axioms of rational theory (Drolet, Schwarz and Yoon, C. 2010). In the present day business industry, irrational behavior exists. An example is that of a person unconsciously picking items in a supermarket while thinking of other episodes such as European football tournaments. The main idea is that consumers choose what to buy unconsciously, however this behavior is founded on cognitive psychology. An examination of consumer behavior shows that there is a need to study the behavior of consumers in relation to choices and decisions. The final purchase power is governed by the decision making process and therefore all models discussing consumer behavior are built on the decision making process (Hoyer and MacInnis, 2008). The behavior of consumers is treated as a series of behavioral activities with the notion that something is taking place in the mind of the consumer. The thought of making choices is taken as a very significant process in the cognitive process of making logical decisions. There is an assumption that logical transformation of the cognitive scheme such as values, norms and attitudes among others occur in the process of decision making. The consumer is taken as the co-founder of schemes, responses and a regulator of his reaction to stimulus guided by his thinking intelligent quotient and thinking capacity (Drolet, Schwarz and Yoon, C. 2010). In the modern market there are some tactical persuasive that triggers unconscious thoughts towards our preferences. One scenario is that of advertisement such as “the offer is limited to today only, rush to purchase as stock last.” In majority of such cases we act mindlessly and rush to purchase what we had not planned for since the phrase indicates a possibility of scarcity. This is a stimulus triggering some automated responses that are not cognitive in nature (Hoyer and MacInnis, 2008). The principle of scarcity incidentally tends to inform us that what is scarce is absolutely good and stimulates our mindless buying act. Majority of the unconscious habits of shopping are founded on attitudes and are automatically generated on seeing the product. For example the customer did not reason while buying bread since it is his favorite food and the purchasing power is attributed to earlier information processing. Evidently, these unconscious attitudes are flexible and situation dependent. They have given a scenario where a customer is forced by a situation to purchase a number of loaves of bread due to hunger. In such a case the buying behavior is not driven by attitudes but by impulsive forces which are uncontrollable. In other words these impulse forces completely pre-dominate attitude and take charge of the purchasing power (Hoyer and MacInnis, 2008). The irrational behavior of consumers owes its existence to both the consumers themselves and to the selling organization. In the former case the habitual acts of customers prompt them to unconsciously buy. What consumers do unconsciously is based on the cultural beliefs and imitations from what others do in the society. In the latter case the business environment may act persuasively toward changing consumer’s irrational behavior (Koekemoer and Bird, 2004). In the recent past researchers such as Bargh and chartrand have identified that the business environment has unraveling influence on the decision of customers. The perception is that the business environment leads people to engage in an impulsive behavior with the conduct being highly obsessive and imitative leading to contagiousness (Hall, 1990). In the consumers deepest knowledge it is admissible that what is scarce is typically better than what is abundant. Consumers lose the capacity to make choices on the purchase of scarce commodities meaning that the motivational source of purchasing scarce commodities is uniquely derived. On the same, the thought of losing a commodity rather than gaining it impulsively makes customers to purchase what they had not planned for. Another driving factor towards irrational behavior of consumers is the “liking behavior” since customers may like the person selling the product but not the product thus acting irrationally. The principle of reciprocation also invokes unconscious purchase behavior of customers. Under this rule, people feel indebted to give something back as a form of appreciation. In the business environment, Bigus found that milkmen were experiencing huge milk orders as a result of free milk they had previously given to their customers as gifts (Koekemoer and Bird, 2004). Theorists are of the opinion that consistency is a powerful motivator in the field of customer behavior. Accordingly, this technique is founded on a quest for small favors that once granted opens a room for large quests though the original favor quest grant generates customer commitment. The customer decision making process consists of four main stages namely; problem recognition, information search, alternative evaluation, purchase decision and post purchase decision. Problem recognition takes place when a difference between a customer’s ideas condition and truth exists. The underling question to this is whether the customers originally have a problem or the problem is triggered by the marketers (Koekemoer and Bird, 2004). Problem recognition stage occurs when the when the customer sees a need and he gets inspired to solve the problem. This is the process that initiates subsequent stages and steers the decision making process. Problem recognition develops as result of the deference between the consumer and the supreme state. In the process an inconsistency occurs between the consumer needs and the real situation. An out of stock situation prompts the phase of problem recognition as consumers develop a need for a product as a result of the diminishing existing stock .consequently change in the lifestyle of a consumer may develop a need for new products ;such changes in lifestyle may be brought about by improved employment status. The purchase of a new product such as a motor bike may also trigger a need for the purchase of a wheel, tire or fuel thus creating a need for problem recognition in the purchase of the mentioned accessories. 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