Problem Recognition and Consumer Decision Making

Discuss about the Consumer Behavior Analysis and Key Theory.

Dick Smith Foods was founded in the year 1999 by Dick Smith (Denniss, 2016). The company was created to provide a local alternative to food products from companies that are foreign-owned. The company was also created in response to the high market share of the foreign-owned companies (Denniss, 2016). This paper will tackle consumer behavior with regards to problem recognition, information search, and purchase behavior. Problem recognition, Information search, and purchase behavior are the key stages of the process of consumer decision making. For this analysis, consumer motivation, consumer perception, and influence of reference groups.

Problem recognition arises when a consumer realizes that there is a difference between the desired state and actual state (Bruner, 2017). The magnitude of the difference between the actual and desired state must be adequate to trigger the purchasing decision process (Bruner, 2017). According to Bray (2014), the problem recognition depends on different professional or personal circumstances and situations which lead to the creation of the idea of purchasing.

Consumers are faced with differences between the actual and desired state of affairs in their analysis of their needs and wants. This occurs in the entire problem recognition stage of their decision-making process. Problem recognition arises when the consumers think about the level of satisfaction they will obtain from buying a different brand or the discontent of a prior purchase (Belk, 2015). Consumption behavior of Dick Smith Foods consumers, OzEnuts Crunchy, in particular, exhibit McGuire’s motives theory and Deci and Ryan’s motivation theory.

McGuire came up with a system that categorized theories into sixteen classes. He divided motivation into four categories which he then separated as affective, cognitive, growth, and preservation-oriented (McGuire, 1974). McGuire (1974) further separated the motivation based on source and objective of the motivation. He subdivided the categories to know whether a consumer behavior is initiated or in response to a situation, or whether the behavior is external or internal with regards to the environment.

McGuire (1974) asserts that teleology can have an impact on a consumer and eventually giving the consumer reason to purchase a particular brand. Applying McGuire’s motivation theory, it is evident that consumers of Dick Smith Foods brands is motivated by response to the proliferation of foreign brands. Additionally, Dick Smith Foods was created to satisfy consumers who prefer local brands and seek to buy products made in Australia and owned by Australia as stated in the previous section. By buying Dick Smith Foods, the consumers would be supporting an ethical Australian owned company. McGuire (1974) teleology motivation also explains the fact that consumers of Dick Smith Foods because it is foreign owned. They also noted that feel the need to belong and connect with others are motivated extrinsically. Tangible factors in Dick and Smith consumers may include supporting local industries and creating jobs for Australians. This is explained by Deci & Ryan (1985) extrinsic motivation concept, and purchasing from Dick Smith Foods to support australian economy is an extrinsic motivation. It is clear that consumers of Dick and Smith brands are motivated extrinsically. These consumers mostly purchase Dick and Smith brands in support of Australian businesses and local products.

Consumer Motivation

Today, Australian consumers have numerous choices in different types of products. There are many foreign brands and products produced in Australia by foreign companies through acquisitions of Australian companies. Even though the market is increasingly globalizing, it does not imply that the Australian consumers are globalizing at the same rate (Tümer, 2012). The Australian consumer may still be inclined to buy local brands and avoid foreign brands. It is referred to as consumer ethnocentrism.

Consumer ethnocentrism is a concept that is sociological. It is the tendency to regard the goods produced in one’s country as superior to those found in other countries, or produced by foreign-owned companies (Mati?, 2013). Consumers who are ethnocentric are loyal to the companies that are from their home country. Consumer ethnocentrism has an adverse and direct influence on consumers’ purchase decision towards products that are foreign or perceived to be foreign-owned. This means that if consumers are highly ethnocentric, they will have unfavorable perception towards foreign businesses and lower purchase intentions for their products. According to Wang (2017), consumers refuse to purchase products that are foreign for the reason that they consider them to lead to unemployment as they are detrimental to the national economy.

Sherry (2017) found that consumer ethnocentrism can be used to predict preferences of consumers to purchase products that are produced domestically instead of foreign products. He added that ethnocentric tendencies could be used to predict consumers’ purchase behavior better than marketing mix and demographic variables. Priest, Carter, & Statt (2015) also asserted that consumers’ ethnocentrism construct relies on the assumption that the patriotic emotions of the consumers will have considerable impacts on their purchase intentions and attitudes. Therefore, they reported that consumer ethnocentrism had a significant influence on consumers’ intentions to buy products produced globally. However, the outcomes have been varying depending on the traits of the countries and consumers. Many studies have suggested that consumers’ ethnocentrism is dependent on the extent to which a country is developed (Sherry, 2017). Consumer centrism concept emerged originally in countries that were developed, where consumers normally evaluated the quality of domestic products positively. Since Australia is a developed country and Dick Smith markets its products ‘As Australian as You Can Get’, the consumers of its products can be said to have ethnocentric tendencies.

Key Theory: Consumer Perception

Consumer perception is related to how people form opinions about companies and the products they provide through purchase decisions they make (Kazmi, 2012). The perception of a consumer of a product has two effects on information search. A consumer’s perception may influence the information search in a negative or positive way. It can be said that consumers of Dick Smith Foods brands have positive perception of their brands because of what the aims to achieve in Australia. Dick Smith Foods is known to support local products and businesses, and help in the creation of employment for Australians (Singh, 2015). If taken advantage of, these positive perception consumers have about Dick Smith Foods brands may make it possible for Dick Smith Foods to raise their prices and consumers will still buy.

Consumer Ethnocentrism

Also, consumer perception is informed by the price of a product. Further, the perception of a consumer is based on the brand. Dick Smith Foods products are Australian made and owned by Australian companies. The products are made using Australian ingredients, an action that creates employment for Australians and keeps profits in the country through reinvestment in charities in Australia. The perception of doing good by consumers may allow Dick Smith Foods to compete with foreign companies in other ways other than prices. The marketing narrative of Dick Smith Foods also allows the company to attract new consumers to their brands. The marketing narrative of the company makes consumers have the perception that they own the company and the products it sells. Dick Smith Foods marketing narrative evokes emotions of patriotism, which may make the consumers of their products loyal. Dick Smith Foods brands also provide consumers with symbolic meaning. They associate the brands with the love of their country hence contributing to the positive perception they have of the brands. This is evident in the perception of Dick Smith consumers where the products are not necessarily rare, exclusive, or unique but somewhat Dick Smith Foods has positioned itself as a local brand owned by Australia embodying the taste of Australia (Denniss, 2016). Since there are many foreign brands in Australia, this enhances consumers’ desire for scarcity and association feelings to the brand.

Linking Theory: Behavioral Learning

Behavioral learning is basically an association between a stimulus and a response (Rothschild, 2016). Applying behavioral learning, if a consumer purchases a particular brand and the brand brings negative experience, the consumer may learn to associate negative experience with the brand. If a consumer associates a brand with a negative experience the consumer will avoid purchasing that brand as much as possible. On the other hand, if a consumer purchases a product and obtains positive as a result, the consumer learns to associate positive experiences to the brand. This may make the consumer to purchase the brand in future and become loyal (Rothschild, 2016).

Skinner and Pavlov were the main proponents of behavioral learning. Pavlov proposed classical conditioning while Skinner proposed instrumetal conditioning. In classical conditioning, an individual learns to relates an unrelated stimulus with a specific behavioral response that was previously stimulated by a related stimulus. Through classical conditioning, consumers begin to associate Australian made products with Dick Smith Foods. The food products produced in Australia and only produced in Australia by foreign companies. However, with Dick Smith Foods selling its products as Australian made and owned, consumers begin to associate Australian products with Dick Smith Foods thus they become loyal consumers of Dick Smith Foods brands. Classical conditioning works in this case because food products are low on differentiation and consumers make routine purchases (Budden, 2017).

Consumer Perception

Skinner asserted that human beings like any living entity, acts instrumentally. They behave in ways that make them feel rewarded and enable them to get what they want (Bray, 2014). On the contrary, they avoid behaviors that make them feel punished. According to Skinner (1948) reinforcement impacts the likelihood of non-repetition or repetition of a response. He added that reinforcement could be of two types; positive and negative, and both can be applied to encourage a behavior that is desired. Positive reinforcements consist of outcomes that increase the likelihood that a response will reoccur in future. For instance, if a reward followed an activity, the possibility that the activity would be repeated increases. On the other hand, negative reinforcement is also used to encourage a particular behavior (Skinner, 1948). For example, negative reinforcement may encourage a person to act in an alternative way that would be rewarding.

Instrumental conditioning can be used to explain consumption behavior of Dick Smith Foods consumers. Dick Smith Foods make consumers aware that there are undesirable consequences if they buy brands that are produced by foreign-owned companies. They are warned that foreign companies transfer profits out of Australia hence transferring jobs abroad. This is an example of negative reinforcement. Consumers alternatively purchase Dick Smith Brands to avoid the negative consequences (Bruner, 2017).

Key Theory: Influence of Reference Groups

According to Weckman (2015) reference groups is any group or person that an individual uses as a comparison point in forming specific or general attitudes, values, or a particular behavioral guide. Influence of reference groups plays a crucial role in Dick Smith Foods brands consumers purchasing behavior. This stage of consumer decision-making process is where consumers evaluate the information they have about a product, consider the disadvantages and make purchasing decision as a result of the perception they have of the product (Weckman, 2015). Influence groups help in reassuring the consumer that he has made correct decision about the product he wants to purchase. Reference groups may have a direct or indirect impact on the values of the consumers, their aspirations, and attitudes. There are three major types of reference groups. Associative groups are groups an individual belongs to while dissociative groups are groups that an individual avoid. Additionally, aspirational reference groups are groups that an individual wants to belong to.

According to Weckman (2015), reference groups can influence consumer purchasing behavior in three ways. Reference groups can affect a consumer informatively, in a utilitarian way, or in a value-expressive manner. In informative influence, a consumer’s decisions are information based while in utilitarian influence the consumer wants to conform to others’ wishes. In value expressive influence, the consumer is influenced by the need to identify with the same values or beliefs with a group. In this regard, Dick Smith Foods consumers are impacted indirectly by aspirational reference groups. These consumers are impacted by this reference group because the group has a positive influence on the consumer. As stated in previous sections, Dick Smith Foods brands are associated with local tastes (Bruner, 2017). This implies that Dick Smith Foods exposes consumers to materials where consumer behavior focuses on the need to consume Australian owned and made products. This means that the purchase behavior of Dick Smith Foods consumers is in response to the desire to belong to the group that supports Australian businesses. Furthermore, the consumers are seen to be influenced by value-expressive influence. Consumers that value Australian products will probably purchase Dick Smith Foods brands. For consumers who value Australian products more, Dick Smith Foods brands are products that are designed to act as a symbol of Australia. Aspirational reference groups can influence consumers through value-expressive influence and encourage the purchase of Dick Smith Foods brands.

Linking Theory: Opinion Leaders

Behavioral Learning

There are many definitions of opinion leaders. However, the most suitable definition in this context is that opinion leaders are people whose opinions are respected (Chaudhry, 2012). Their views are used by the recipients of the opinions to make decisions across many situations. The opinions of opinion leaders may influence what types of clothes a person wears, whom to vote for in elections, and what brands of products to buy. The opinion leader can be an individual who has contact with the respondents such a priest or member of a social group. An opinion leader can also be someone who is a public figure whose opinions are obtained from the public statements he makes. An opinion leader influences the attitudes and actions of the respondents informally. Receivers of opinion usually perceive the opinion leader as a credible person, objective product information source. Opinion receivers take the advice of opinion leaders to reduce their search of product information. The founder of Dick Smith Foods can be considered to be an opinion leader whose opinions about supporting Australian business by purchasing products from Australian owned companies.

Opinion leaders are usually motivated to offer advice and information to consumers of a product (Chaudhry, 2012). In doing so, they enhance their own self-image and status and because such advice appears to reduce post-purchase disparity they may have. According Chaudhry (2012) services and goods markets is one of the areas where the impact of opinion leadership has been tested. He asserts that consumer behavior is significantly influenced by opinion leaders. With regards to Dick Smith Foods brands, the founder, Dick Smith is a public figure whose opinions and beliefs are respected. He influences consumers through his public statements (Chaudhry, 2012).

Change Pricing Strategy

Setting the price of a product is complex and requires numerous calculations, ability to take risk, research, and understanding of the consumers and the market (Bray, 2014). Optimal pricing strategy helps in determining the price at which to sell a product to maximize profits. When setting a price for a product, various factors need to be taken into consideration. The factors are distribution and production cost, prices of the competitors, strategies of positioning, and the targeted market segment (Bruner, 2017). Dick Smith Foods brands are not optimally priced. Most of their brands are sold at premium prices compared to foreign brands. Premium pricing cannot work where there are many alternatives to the products, and the product is not unique. Even though consumers in Australia may desire to buy Australian made and owned products, then it would be difficult to buy at a premium price.

Expand Target Market

As explained in the analysis in the previous sections, Dick Smith Foods only targets Australian consumers. They aim to achieve loyalty by Australian consumers through ethnocentrism. However, consumers today may not be loyal just because a product is produced from own country. Consumers view global brands as cultural ideals symbols. They use global brands to have a global identity and to feel like citizens of the world. According to (Budden, 2017) global brands make consumers to feel that they are part of something bigger and feel that they belong. Therefore, Dick Smith Foods should embrace globalization and enter other markets while marketing its brands as Australian made and owned.

Improve and Maintain Consumer Perception

It is evident from the analysis that instrumental conditioning has an impact on the products of Dick Smith Foods. For the company to increase its market share, improving consumer perception that buying Australian products is beneficial, especially among young consumers (Weckman, 2015). Young consumers perceive global brands as symbols of status. Currently the company advertises its products as owned and made in Australia, which may not appeal to young Aussies.

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