CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Consumer behavior is a young discipline; the earlier books were written in 1960’s however, its intellectual forefathers are much older. Understanding of consumers is the consumption process provides a number of benefits. These benefits include assisting the manager in decision making and providing the marketing research with a theoretical base from which to analyses consumers in making better purchase decision.
The study of consumer can help to understand more about psychological, sociological and economics factors that influence human behavior. A general knowledge of consumer behaviors also has personal value. It can help people to become better consumers by informing them of the way in which they and others go about their consumption activities. In addition it can assist consumers in the buying process by informing them about some of the strategies used by companies to market their products (Foxall & Goldsmith, 1994).
The field of consumer behavior explores why people make certain purchasing decisions, what products and services they buy, where they buy them, how they use them, the frequency with which they purchase them, and the consumer decision process in action. In this context, consumer behavior has been defined as the activities of people engaged in actual or potential use of market items-whether products, services, retail environment, or ideas (Berkman & Gilson, 1978).
One of the important means of dissemination for information is word of mouth. Word of mouth both negative and positive can have a profound impact on consumer behavior. If utilized correctly, it can go a long way to promote products or service and build a perception created through this method can persist for a long time and adversely effect to the marketing. Therefore the effect of word of mouth can be harsh as well as beneficial (Solomon, 1996). Word-of-Mouth Marketing progress align advertising campaign messaging and product releases with local market influencers, Trendsetters, and Tastemakers to craft mass opinion and purchase behavior.
Effective word of mouth marketing campaign connects with Influencers and Trendsetters who initiate consumer trends (e.g. Fashion trend, automobile purchase trends, consumer product trends, entertainment trends, and beverage consumption trends) that are followed by mainstream consumption trends) that are followed by mainstream consumers. Consumers value word-of-mouth twice as much as they value advertising. In a world in which we all are bombarded with advertising all day (and all night), what is the first thing we usually do to learn more about a business, a restaurant for example? We try to find someone we know who has been there, or someone who knows someone who’s been there. It’s true. Word of mouth does have more credibility than advertisers can even imagine, much less conjure up. And yet word of mouth suffers from the same virtue that makes it so strong. It is personal and therefore, limited in its reach (Pusateri, 1999).
For companies to attain commercial success, it is important that managers understand consumer behaviour. The relationship between consumer behaviour and marketing strategy is emphasised because the success of companies’ marketing strategies depends upon managers’ understandings of consumer behaviour (understanding of consumer behaviour is especially important during a recession – see Kotler and Caslione (2009). Consumer buying decisions indicate how well the company’s marketing strategy fits market demand. Thus, marketing begins and ends with the consumer.
The study of customer behaviour is based on consumer buying behaviour, with the customer playing three distinct roles: user, payer and buyer. Research has shown that consumer behaviour is difficult to predict, even for experts in the field (Armstrong & Scott, 1991). Consumer behaviour involves the psychological processes that consumers go through in recognising their needs, finding ways to solve these needs, making purchase decisions (e.g., whether to purchase a product and, if so, which brand and where), interpret information, make plans, and implement these plans (e.g., by engaging in comparison shopping or actually purchasing a product).
Consumer buying behavior refers to the selection, purchase and consumption of goods and services for the satisfaction of their wants. There are different processes involved in the consumer behavior. Many factors, specificities and characteristics influence the individual in what he is and the consumer in his decision making process, shopping habits, purchasing behavior, the brands he buys or the retailers he goes. A purchase decision is the result of each and every one of these factors. 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, economic, personal and psychological.
Consumer behaviour research attempts to understand the buyer decision-making process, both individually and collectively. It studies individual consumer characteristics such as demographics and behavioural variables in an attempt to understand people’s wants. Consumer behaviour research allows for improved understanding and forecasting concerning not only the subject of purchases but also purchasing motives and purchasing frequency (Schiffman & Kanuk, 2007).
One of the current fundamental assumptions in consumer behaviour research is that individuals often purchase products for their subjectively perceived values rather than their primary functions (Stávková, Stejskal & Toufarova, 2008). This does not mean that the products’ basic functions are not important, but that the contemporary role of a product is more than its basic use-value (Solomon, 2004). Frequently, consumers do not rate products according to their core attributes (i.e., the primary utility they provide) but, above all, according to the so-called real product (i.e., a particular products’ qualities) and the extended product, which represents the set of intangible factors that confer a desired perceived advantage on the consumer – including image, consultancy, and after-sale service (Foret & Procházka, 2007).
The majority of developed countries have attained their objectives by relying on domestic production and also through government campaigns in support of the utilization of local goods. The intensity of dedication to the consumption of local products depends greatly the extent on ethnocentrism (Sciffman & Kanuk 2007). Therefore, this study focuses on the factors influencing consumer buying behavior on household products in Nigeria.
1.2 STATEMENT OF THE PROBLEM
The research problem can be stated as finding out the right and suitable marketing strategy to be adopted by organization producing households products to increase the local consumption of their locally made products.
In Africa, Nigeria is one of the developing countries where large amounts of products from other countries are imported each year and alcoholic beverages are not an exception. This has exposed many Nigerian to alternative preference for domestic made products and foreign products. The great variety of goods and services from other countries has made many consumers to patronize imported products. However, many of the local industry are thriving hard to survive in today’s turbulent Nigerian market.
As more companies consider the value of expansion in Africa, the need to understand the African consumer is becoming a priority (Hatch, Becker & van Zyl, 2011). However, there is currently very little research that has been conducted regarding the factors that impact the consumer decision-making process in Africa.
It has been assumed that African companies are not as mature in their analysis and assessment of their consumer base, when compared to companies in developed countries. Maturity in this context can be defined as having progressed to a state of understanding the required consumer and consumer base. Companies are not mature largely due to their inherent composition, and also because of the consumers that they serve. Much of Africa’s markets are also immature, with a large portion of purchasing happening in open markets. It is estimated that approximately 80% of total consumer purchasing happens in open markets in Nigeria, which is one of Africa’s largest economies (CNBC Africa, 2014). These problems make it glaring that there is a need to carry out a study on the factors influencing consumer buying behavior on household products in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The general objective of this study is to examine the factors influencing consumer buying behavior on household products in Nigeria. The specific objectives include the following:
1. To find out the perception of consumers towards buying household products in Nigeria.
2. To ascertain if social factors influence consumer buying behavior on household products in Nigeria.
3. To investigate the socioeconomic factors influencing consumer buying behavior on household products in Nigeria.
4. To know the impact of Psychological factors on consumer buying behavior on household products in Nigeria.
5. To examine if cultural factors influence consumer buying behavior on household products in Nigeria.
