CHAPTER 2 THEORITICAL FOUNDATION. The field of consumer behavior is the study of process that individuals, groups or

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1 CHAPTER 2 THEORITICAL FOUNDATION 2.1 Consumer behavior The field of consumer behavior is the study of process that individuals, groups or organization use in order to select, use, and/or dispose products and services that satisfy the wants and consumers needs. Consumer behavior needs to be studied to learn all about providing product and service that can satisfy consumers wants and needs. It teaches how consumers behave, so that marketers can know how to deal with the consumers professionally. There are two factors that can affect consumer behavior; there are internal factors and external factors. Internal factors mainly are emotion, personality, experience, while external factors consist of friends, family, culture, environment, and social. There are many things need to be consider in consumer behavior, for example: each country, even in each region of a country has their own culture. Understanding their culture and not to insult other culture is one of consumer behavior study. (McGraw- Hill. Consumer behavior; building marketing strategy, tenth edition). 2.2 Consumer decision making-styles Learning is a part of decision making process (Sproles and Sproles, 1990). Appropriate decision making involves three logical steps which are identifying problems, searching for alternatives and last step is choosing best alternative. Previous research done by Baxter Magolda, and Porterfield 1988 about decision-making said that appropriate 6

2 7 decision-making needs abstract thinkers, considering multiple alternatives. In fact, there are many consumers think as absolute thinkers (they believe that there is only one right answer and one wrong answer) and as they get older, they become more abstract thinkers (they believe that there are more than one right answer and more than one wrong answer). As there are many types of people, each of their behavior should be different. Their thinking toward decisions will also different. Study done by Sproles and Kendall in 1986 was to provide marketers a tool to better understand consumer s decision purchasing style, so Consumer Styles Inventory known as CSI was developed, to analyze the decision making styles of consumers in the marketplace. From the empirical study done, the CSI identified there are eight consumer decisionmaking styles: Perfectionist, high quality conscious: a consumer considers the product quality and the consistency of its product quality. Some consumers tend to seek perfect choice for their fashion. They have high awareness to what they want to buy, in which they have specific ideas in what they should buy in term of quality. Quality is one important factor in decision making style. From previous research done by Kim and Shim 2002, it was found that 40 percent shoppers are quality oriented shoppers. Brand conscious, price equals quality: a consumer assumes high quality need higher price. Some consumers desire well-known brand, higher price brand, such as: GUESS. Brand conscious shoppers believe that these product brands have

3 8 higher quality than other lower brands product. This becomes one important consideration in decision making. Novelty-fashion conscious: a consumer likes to update their fashion to the newest model. Fashion conscious consumers tend to search information about the newest and most exciting product. Recreational/ Hedonistic shopping conscious: a consumer feels happy and enjoy their shopping moments and experience. Many consumers enjoy shopping in their holiday, or free time. Bellenger and Kaogonkar 1980 found that 70 percent of consumers enjoy shopping in their free time. Therefore window display may become one of way to attract consumers. Price conscious, Value-for-money: a consumer likes discount products, such as: sales, vouchers, bargains. Price conscious shoppers seek lower price for same beneficial product. When there many alternatives with same level of product benefit, this type of consumers will choose lowest price product (Janiszweski and Lichtenstein, 1996). Kim and Jin 2006 found that this type of consumers is more frequently than other type of consumers. So this becomes one of the most important factors in decision making styles. Impulsive, careless: a consumer often not planning shopping trips and do not count the amount of money spent. Bellenger, Robertson, and Hirschman 1978 found that almost 40 percent of consumers are impulsive buyers and around percent shoppers are unplanned. And age group under 35 and over 65 years old has a larger impulsive percentage.

4 9 Confused by over choice: a consumer confused with outrageous amount of product choices available. There are many brands produce clothing, and in that same brand also produce many kinds of clothing. These varieties of size, color, model, price, quality, brands make consumers confuse to purchase specific product. Habitual, Brand-Loyal: a consumer tends to buy same product brand consistently. Brand attractiveness, quality and image, make consumers enjoy their product. When consumers happy to a specific brand, this consumers will buy this product brand consistently Consumer decision-making styles is defined as the way consumer mentally (or cognitively) approaches marketplace choices. (Sproles and Kendall, 1986) 2.3 Cognitive component Cognitive component is belief of consumer towards an object. For example: an individual may believe that Massimo Dutti is use high quality materials of clothing, expensive brand, and fashion oriented. There are two most famous types of cognitive styles: adaptive and innovative (Kirton, 1976). Adaptor tends to seek new model without altering previous decision and behavior decision making, and innovator tends to seek newest and changing decision patterns. There are four ways to change the cognitive components. There are change beliefs which a strategy shifting customers beliefs towards the performance of the brand, shift importance is enhancing a product attribute, add beliefs is adding another beliefs toward the product, and change ideal is changing the ideal perceptions towards the brand.

5 Brand The word brand came from the Old Norse word brandr, which means to burn, that used by owner livestock to identify their animals. Meanwhile, according to AMA which stands for American Marketing Association, a brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of seller and to differentiate them from those of competition. A brand is used to identify a product and/or services, so that it can be well known by others. It is to build awareness, status and reputation in the market for customers can easily identify the product or services they purchase (Kevin Lane Keller. Strategic brand management book; Building, measuring, and managing brand equity; Second edition). It is important to maintain the product and services they offer, so that customers keep purchasing same brand. For example: GUESS, a brand name from America that sold variety of products, from clothing, watch, accessory, jeans, etc. Many customers already know brand name GUESS, the reason why many customers like GUESS is they keep maintaining good quality of product and service. If, by some reason one of GUESS disappointed a customer, it will have effect on GUESS brand as a whole. Imported Brand clothing is brand clothing that came from outside country (outside Indonesia), and domestic brand clothing is brand clothing that came from its country (Indonesia) Quality conscious and Brand conscious Marketing can influence quality consciousness, sometimes what you see is not what you get it is because consumers always have inference towards product or services. Inference can go beyond what is showed, stated, or given. Consumers often retrieve

6 11 information and interpret it with their own thinking to make conclusion about the products or services. Quality signals, some inferences about product quality attach to consumers mind consistently. Consumers receive quality inferences from their experience and knowledge which some of them not reliable. Price-perceived quality. There is popular belief that price equals quality, so when the price is high, the quality will also high and when price is low, the quality will also low. Discounts make product price lower and it can be a signal for lower quality, therefore many companies carefully use discount strategy. Advertising intensity. Consumers tend to believe that company who advertise their brand more is selling high quality product or service. The reason is more advertising mean more cost needed, and it need more effort to do it. More effort indicates more success. Warranties. With longer warranties, consumers believe that it give better quality. Companies will not give long warranties, unless they confident to their product quality. Country of Origin. Consumers response positively on product which they consider good in term where they manufactured. Brand conscious. Brand name also has effect on quality signals. Well-known brand is believed, having higher brand than unknown brand. (Kevin Lane Keller, Strategic brand management book; Building, measuring, and managing brand equity; Second edition).

7 Country of Origin Country of origin is the place where product is manufacture or produce. Developed country tends to have lower effect on country of origin (Elliot and Comoron, 1994). In developed country, people tend to buy domestic product over imported product, as they are sure of the product quality. While in less develop or developing country, it has higher effect on country of origin. They prefer foreign brand which they believe it has a high quality product. For example: GUESS from US, Massimo Dutti from Spanish, and Ted Baker from London.