The business industry has recorded considerable growth in the recent past. Businesses in the local and global scene have expanded, with several investors being attracted to some common line of operations.
The increased number of players in the market for a particular product or service has led to the current high level of competition in the markets. In addition, consumers have a wide range of products and services from which to choose in order to satisfy their needs.
This has become a major challenge to business organizations. A business organization that is to survive in the contemporary market must be able to identify, understand, and respond to the needs of clients.
The firms should then develop products and services that are of high quality to meet the demands of customers. Nevertheless, the traditional business strategy of focusing on the maximization of the returns of the business organization no longer applies in the current market.
Despite a firm’s understanding of the needs of the clients, there is still a challenge in the final behavior of clients in buying and using the products and services. A firm may develop products and services that actually satisfy the needs of clients; however, other forces may influence the client who may end up buying and using alternative products in the market.
The customers often do not behave as predicted or as expected by the business organizations. For instance, a market research may show that customers are in need of a particular product and would be willing to buy the product if it is availed in the market.
An organization would then go ahead to avail much of the product into the market. Now, in certain instances, the customers may have other influences like extensive advertisement by a competitor after the market research. Such customers may end up buying the newly advertised product as opposed to the former product.
The first organization will then incur some losses due to this shift in attention. As such, apart from understanding the changing needs of clients and responding promptly to these needs, firms should have a thorough understanding of the buying behavior of the consumers.
Consumer behavior is the study of how customers (individuals or organizations) decide to buy a product, select and buy the product, use the product to satisfy their needs, and eventually dispose the product, and how this behavior affects the society (Perner, N.d).
A business organization will often succeed in its operation through effective customer satisfaction if it has a good understanding of buying behaviors of customers. This will enable organizations to channel their production towards products and services that meet these changing needs.
Moreover, this would involve developing completely new products, performing sales promotion and advertisements, offering competitive prices, or increasing the retail locations of a firm to serve several clients conveniently.
In general, sales and marketing managers in business organizations should carry out extensive researches to understand how information about a product is conveyed and processed by clients and eventually, how the clients make decisions to buy the products.
Several factors have been identified that affect the buying behavior of consumers. In relation to the factors, models have been developed that attempt to explain the likely behavior of consumers in respect to buying and using a given product or service.
However, these models have certain weaknesses. This paper focuses on some of the models used to explain the buying behavior of consumers with an insight on some of the weaknesses of each of the model. These models are considered in the context of hospitality industry.
The theoretical concept of Consumer Behavior
It has been observed that it is very important for business organizations to consider why a section of the market consumers can have particular interests in their products. The firms need to understand how the clients make decisions on which products in the market to buy and where to obtain the products.
Several factors determine consumers’ final decision to buy a given product, and the firms have to identify and evaluate these factors.
This is the concern of consumer behavior, which involves a study of “how individuals, groups and organizations, select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and the impacts that these processes have on the consumer and the society” (Perner, N.d). It is more than mere buying of products and services.
It is then evident that the concept of consumer behavior has certain aspects that should be of interest to the business organization. Firstly, the consumers here are considered as individuals, groups of individuals, or as organizations (Perner, N.d).
The buying behavior towards a given products can be influenced at these distinct levels. Several factors that are specific to an individual may determine his or her decision to buy a given product. Taste and preference, the financial status of an individual, the level of education, information about a particular product or service, or previous experience are some factors influencing buyer behavior at an individual level.
An individual may decide to buy a given product because he has knowledge and experience of the quality of the product. The buying behavior can also be influenced at a group level. The group with which an individual is associated will affect the individual’s use of a given product or service.
Peer group influence generally affects the social life of an individual and the subsequent products and services used by the individual. This is common in the hospitality industry. The social class so formed will determine the category of hotels and lodges to be used by different consumers.
The buying behavior of individuals can also be influenced in the organizational context. The management of an organization may decide in a particular product to be used by its employees, who are in turn influenced to buy the product.
It is also important to note that consumer behavior not only includes the products and services but ideas and information about these products as well. The way individuals receive and perceive information about a product or service, develop ideas about the products, and eventually how they make decisions are of key interest in studying the consumer behavior.
The environmental impact of a given product is of important consideration to a business organization. The effects of these products on the environment will contribute towards the position of the product in the market. The medium of disposal of a product after its use will determine the environmental impacts of the product.
Thus, the other significant aspect of consumer behavior is that it is not only concerned with the decision to buy a product but is also concerned with how the consumers use and dispose of the products (Perner, N.d). Most of the environmental problems are caused by poor disposal of waste products.
This provides a negative image to the product and the company dealing in the product. Knowledge of how a product is used by the consumers and the final method of disposal will enable the business organizations to position their products well in the market and attract more customers.
Another important aspect to consider is that the consumer behavior has significant impact on the society (Perner, N.d). The operations of an organization may have serious impacts on the economic, political, or social development in the society.
These effects are in turn influenced by the behavior of the consumers of the products of such an organization. A product may have harmful effects on the health of the individuals. However, the manufacturer of the product may engage in extensive advertisement and sales promotion for the product to win the interest of several consumers.
These individuals will end up using the products despite their negative consequences on the consumers’ health. Here, the poor consumer behavior has negative impacts on the society.
The ancient Decision-making models
Various developments have been seen in the study of consumer behavior over the years. Different theories were developed to explain the decision-making processes by the consumer. One such theory is the Utility Theory that date backs to three centuries ago that was initially developed by Nicholas Bernoulli and extended by other economist.
The theory suggests that the decisions made by the consumers concerning a particular product or service are determined by the consumers’ expectations of the outcomes of the decision (Richarme, 2004). In other words, consumers will decide to buy a product or service when they expect the product to be of high quality and capable of meeting their needs.
This perspective portrayed the consumers as rational decision makers who able to foresee and quantify the possible outcomes of each of the alternatives that are available. The consumers would then settle on the alternative with a likely outcome that would best suit their needs.
This model had a weakness since the consumers are not that rational in decision-making and neither can they determine precisely the probabilities of these outcomes (Richarme, 2004). The consumers are often not aware of the forces that may affect the decision-making process (Bray, 2008, p.3).
As an alternative, another theory was developed that suggest that a consumer needs not to consider all the possible alternatives before making a decision as in the Utility theory (Richarme, 2004). Instead, he should go through the alternatives that are in close range and make a choice out of these alternatives.
This theory also had some shortcomings and other approaches were developed on these previous concepts. The issues of quality and value were later incorporated in the theories that explain the buyer’s behavior. Developments have continued in the approaches to the consumer decision-making models.
Decision-making models applied in the hospitality industry
Unlike the other business organizations that deal in tangible products, the hospitality industry is mainly concerned with services. The consumers will be satisfied by the quality of the service provided as compared to the quality of the products in other business environment.
The quality of the service is in turn influenced by the interpersonal interaction as well as the human-environment interactions (Hui & Bateson, 1991, p.174).
It is then important for the managers in the hospitality industry to understand how the consumers make decisions on the types of services they need and where to obtain the services. Various models have been developed in the recent past that attempt to explain how the consumers make a decision, eventually purchase, and use a product and service.
It has been pointed out that the ancient Utility Theory considered consumers as rational decision-maker with perfect economic principles. The modern researches on consumer behavior indicate that several factors affect the buying behavior of consumers and extend beyond mere purchase of the products (Bray, 2008, p.2).
Different models have then been developed that explain the consumer behavior. Now, most of these models have certain common activities that are involved. These include “need recognition, information search, and evaluation of alternatives, the building of purchase intention, the act of purchasing, consumption, and finally disposing” (Bray, 2008, p.2).
The current models that explain the consumer behavior are developed from the theoretical approaches that have been used in the study of consumer behavior. The theoretical approaches include the Economic Man, psychodynamic approach, the behaviorist approach, the cognitive approach, and the humanistic approach (Bray, 2008, p.3).
These approaches have evolved over time. For instance, the Economic man was the approach that developed the Utility Theory. Much focus will be given to the cognitive approach and the resulting models in relation to the hospitality industry.
In the cognitive approach, the behavior of a consumer is largely attributed to his internal cognitive ability, the ability to perceive and process some information. It is greatly attached to the field of Cognitive Psychology (Bray, 2008, p.6). According to the approach, the external factors like environment of an individual are considered as stimuli that generate information for internal decision-making process (Bray, 2008, p.6).
There are two categories of cognitive models of consumer behavior namely the analytical models and the prescriptive models. The analytical models take note of the factors that are believed to influence buyer behavior and the relationship between these factors.
The Consumer Decision Model and Theory of Buyer Behavior are some of the models in this category (Bray, 2008, p.9). These models generally follow five step elements for decision-making process by the consumers.
These steps include problem recognition, information such, valuation of alternatives, purchase decision, and post-purchase evaluation (Reid & Bojanic, 2009). The other category provides a structured framework of purported consumer behavior.
The consumer decision model includes the fundamental activities namely problem recognition, information such, evaluation of alternatives, purchase decision, and post-purchase evaluation as well as divestment (Bray, 2008, p.15). The model was developed in the late1960s.
It has since recorded various developments over the years. The decision-making process is affected by two main factors. The first is cognitive ability where information is perceived, processed, and linked to the individual’s experiences. It is also affected by the environmental influences and the factors specific to a consumer.
These factors include the culture, family background, the individual’s attitude and personal opinions, his social class, knowledge of the products or services, and the prevailing situations among many others (Bray, 2008, p.16).
The model explains much of what the consumer decision-making process entails in the hospitality industry. For instance, the first step is often problem recognition. This involves a look at the difference between the current state and the desired state of an individual.
An individual feels hungry and tired and wants to eat, rest, and gain strength. The individual then looks for information on where to obtain the services. This can include internal search involving the individual’s experience or external search of information.
The individuals may compare the alternatives that are available and settle on one. After settling on a service and its location, the consumer goes ahead and consumes the service with an expectation that it will meet his expectation.
The individual then makes an evaluation of the value of service he has received and compares with his expectation. The comparison so made will determine if the consumer will consider this particular organization and its services in the future.
However, this model still has some weaknesses in explaining the behavior of consumers in the hospitality industry. The model puts little or no emphasis on the influence of the environmental factors in consumer behavior in the contemporary hospitality industry.
The evaluation of various alternatives is less applicable in the current hospitality and neither is it so practical. A first-time consumer may make choice from the few alternatives that are in the vicinity like some hotels at a beach.
Thus, other factors like availability of the service have more influence on the behavior of such a consumer as compared to cognition. Even in the events that the environmental factors are considered in this model, their definition is vague and the role they play in influencing the behavior is not explained (Bray, 2008, p.18).
The theory of buyer behavior is the other cognitive model and the first to be developed. It draws largely from the concepts of learning theory. According to the model, different social, psychological, and marketing influences affect the consumer behavior in the market (Bray, 2008, p.10).
Various variables are defined that affect consumer behavior namely exogenous (external) variables, input variables, and the hypothetical constructs (intervening variables). In deed, this is applicable in the current hospitality industry.
For instance, the input variables include different environmental stimuli namely significative stimuli, symbolic stimuli, and social stimuli. Significative stimuli are the true aspects of the services like its quality observed by the consumer while symbolic stimuli are appeals by the service provider about the quality of the services.
Similarly, the social stimuli are other factors like peer influence. These factors are typical of the consumer behavior in the current hospitality industry.
This model has the weakness that it identifies exogenous variables as external factors that are specific to a buyer and influences the buyer behavior. However, it fails to provide a succinct definition of these external variables (Bray, 2008, p.13).
The consumer behavior is still irregular in several dimensions. Changes have also been noted in the hospitality industries that have prompted the organizations to act. For instance, most consumers in the hospitality industries currently emphasize on healthy diets.
They demand menu choices that are healthier with low levels of toxic substances. The hotels have responded by including in the menu foods that have lower fat and salt contents (Reid & Bojanic, 2009).
After improving the menu, it is not obvious that the particular consumers that demanded for such foods will make such orders regularly. These individuals make occasionally make orders for the fatty foods claiming that they have consumed less fatty foods for long and this day would compensate for the deficit.
In general, the two analytic cognitive models described above have certain weaknesses and fail to describe the real behavior of the consumer in the current market. The models take the traditional approach in which consumers are assumed rational decision-makers.
It has been observed that consumers often exhibit non-conscious behaviors that cannot be explained even by the consumers (Bray, 2008, p.19). The models also have little theoretical background and make use of variables that may not be observed. They then fail to explain the consumers’ behavior explicitly.
The fundamental factors affecting consumer behavior in hospitality industry
The above-discussed models of consumer behavior make use of different factors. Some of the factors emanate from the consumers whereas other factors stem from the business organizations.
The factors that are specific to the consumers like the religion, cultural values, beliefs and practices, the economic status of an individual, the age, sex, experience with a product/service, or peer group influence often affect the choice of a consumer on a particular product.
The culture or religion may affect the types of foods consumed by some individual and the kind of hospitality services used by these individuals. The cultural values of a community will determine the behavior of an individual from the community in a given context (Luna & Gupta, 2001, p.47).
Culture is particularly influential for organizations in the hospitality industry that have expanded their operations to an international market (Reid & Bojanic, 2009). Some cultures forbid taking some foods and so do some of the religious teachings and belief.
These will also dictate the lifestyle that individuals adopt thus affecting the operations of organization in the hospitality industry. In the same manner, the economic status of an individual often determines the kind of product or service that the individual can afford. The hospitality services are provided at varying costs.
The kinds of hotels and lodges that can be afforded by an individual will be associated with the level of income of the individual. Peer group influence coupled with an individual’s personality and social status affect the buyer behavior of consumers.
It has been observed that ‘the need to feel important and be treated with the utmost respect may lead a potential guest to search for an upscale hotel with concierge floor when making a reservations’ (Reid & Bojanic, 2009). An individual’s personality and status in the society will determine the individuals with whom he is associated.
The members of these social classes may influence an individual’s choice of the kinds of hospitality service to use as well as where to obtain the services. Similarly, an individual’s attitudes or opinion about a product or service, the knowledge he has about the product or the experience of using the product will influence his buying of the product.
An individual may develop negative attitude towards some product from the initial encounter with the product. This may affect his future use of the product. A consumer may also be attracted to services of an organization having understood its quality in the past.
On the other hand, factors concerning the operational strategies of an organization may also affect the consumer’s decision to use its services.
The product brand, quality of the products and services, prices and packaging of the products, the products’ availability in the market, and the promotional strategies employed by the organization’s management are some of the factors influencing a consumer’s decision to buy some product.
The loyalty of a product brand often appeals to the consumers who are in turn influenced to buy the product. The loyalty is enhanced by developing product or services of high quality and that can serve the interest of the clients over long periods.
The prices of products can also affect the buying of the product. Consumers will compare the prices of the alternative products in the market and go for the prices that are cheaper but have the same quality. The packaging of the products is also influential as customers may be in need of varying quantities of a product.
If one needs small quantity for a given product and there is no pack of that size, he will definitely move on to an alternative product with the required packaging. Customers also buy products because they have bee informed about the products.
The kind of advertisement carried out by a business firm on a given product will affect the consumers’ buying and use of the products. The other important factor is the availability of the product in the market. The geographical locations of the products and services will affect the buying and use of these products or services.
The consumers often do not want to travel long distances and incur much expense while looking for a product or service. In the hospitality industry, the hotels and lodges should be located in strategic and convenient places so that the clients do not have to travel long distances to get the services.
Tourists and other travelers are common clients to the companies in this industry. Thus, the organization’s facilities should be located in major towns or near tourist attraction sites with proper accessibility to the locations.
Significance of consumer behavior to business firms and organization
The understanding of the consumer behavior is important for enhancing the operations of a given business organization. This is observed in several dimensions. Firstly, the knowledge of consumer behavior enables firms to develop effective marketing strategies to gain competitive advantage over their competitors.
Business organization should strive to impress the customers in the first instance in order to maintain these customers (Perner, N.d). An organization is able to understand the psychology of the buyers and the other environmental factors influencing their buying behavior.
By understanding the whole process of decision-making by a customer concerning buying and using a given product, the firms are able to develop products and services that meet the needs of the customers. The firms understand how the clients prioritize on different levels of products.
They can then develop good marketing campaigns to capture a wide market (Perner, N.d). Effective promotion and advertisement of products have significant influence on the consumers’ willingness to buy the product.
Consumer behavior enables the business organizations to understand that their products may not do well at the initial stages of its introduction in the market. Few people will be initially interested in the product and then influence others to buy and use the products later (Perner, N.d).
In that respect, the firms can strategize financially to support its operations during these hard times. It also enables the firms to understand the importance of pleasing its initial customers in order to capture a wider market in the future.
Business operates under the policies imposed by the local and international regulatory agencies and thus the development of such policies have direct impacts on their operations. Governments develop public policies that apply to the business organizations to protect the rights of the members of the public.
Consumer behavior is very important in the development of these public policies (Perner, N.d). A product may be developed that is used by the consumers for some purpose. This product may have some side effects on the whole or a portion of the consumers.
It is necessary to the manufacturers indicate the possible side effects and the clinicians advise the users accordingly. Now, some of the users often ignore these instructions and suffer the side effects of the products. The policy makers will use this consumer behavior and ensure that visual impressions of the side effects of the product are indicated on their packs.
Knowledge of consumer behavior patterns can also be beneficial to the consumers who will develop a proper decision-making approach towards the purchase and use of a product or service. It should be clear that if one buys a particular quantity of a given product in one pack, he should pay less compared to buying two separate packs that are half this quantity (Perner, N.d).
The concepts derived from consumer behavior can also be used in other fields of the social sciences away from business. The way information is perceived and conveyed among the users of a product can be used in influencing the perception of the individuals towards some social practices that improve on their health and well-being.
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