Literature Review 2.0 Spending Behavior

Literature Review 2.0 Spending BehaviorNowadays, the marketers be facing great competition among themselves to market the crossroads and go to the consumers. The study of consumer consumption air enables the marketers to understand how consumer thinks, feels and react to the subtle environment when corrupt a product(Wassana Suwanvijit, 2009). Hence, the marketer scum bag predict the consumer disbursal demeanors and develop a prim marketing plan to address the products to the consumers.According to businessdictionary.com, consumer runing could be delimitate as goods and services bought by ho workholds in the satisfaction of their needs and wants. In addition, Spending is specify as the act of expending and conduct is outlined as response of an singular to an action, environment, somebody, or stimulus. While Kotler (2000) declargond that consumer behavior studies how psyches, groups and organizations select, secure, use and dispose of goods, services, ideas or experience s to satisfy their needs and believes.In our investigate context, disbursement behavior is defined as the act of disbursing money in response to an action, environment, or person in the satisfaction of needs and wants.2.1 FactorsWilson, et.al, 2005 stated that consumer expenditure behavior is strongly influenced by quatern factor ins Cultural factor (culture, sub-culture, genial clique), Social factor (groups, family, roles and condition), Personal factor (Age and life provoke pass stage, life-styles, melodic phrase, economic situation, personality and self concept) and Psychological factor (motivation, perception, learning, beliefs and attitude). Understand these four factors could help to address customers needs and wants and finally enlarge sales. In addition, thither is a nonher factor so-called economic factor which would make believe consumers expenditure as well.2.1.1 Personal FactorWassana Suwanvijit, (2009) conducted a study to examine factors locomote con sumer life-styles and purchasing behaviors. He tack that consumer life-styles ar derived from and personalized by dint of social and cultural learning and consumer demographics go out influence consumers behavior.In this study, Wassana Suwanvijit,(2009), administered a questionnaires to ccc consumers at Songkla province. The result indicated that demographic and socio-economic factors miscellany the consumer life-styles and purchasing behaviors. In Songkla, bonnie disbursal rate was approximately 550 baht per conviction and the factor affecting the outgo per time was consumer income. The author besides found that consumer promotion will affect consumers send packinging behavior and sales.Chetsada Noknoi, Sutee Ngowsiri, and Wannaporn Boripunt, (2009) also conducted a study to tally the kinship between demographic characteristics and the consumer behavior. The study found that consumer behavior is capable on the demographic characteristics such(prenominal) as income, a ge, marital circumstance, occupations, etc.Besides, base on the research paper done by Juma K. Salim, the researcher turn out that various life cycle stages and socio-demographic factors such as region of residence, lead of the reference person, and sex of the reference person were found to be firm factors of the pattern of expenditures within each occupational group. The researchers results are consistent with the results found by Abdel-Ghany and Sharpe (1997), Cage (1989), and Jacobs, Shipp, and Br proclaim (1989). The researcher also proved that the occupation influence expenditure between teachers and non-teachers. Teachers spend a lot in only two categories of expenditure, education and miscellaneous, compared to professionals and administrators or managers.Besides occupation, direct of education also influences consumption behavior. Income, education, and occupation are some of the factors that influence ones position in society.Vanessa G. Perry and Marlene D. Morris (2 005) examined the relationship between consumer financial knowledge, income and locus of control on financial behavior. In this research, it suggested that consumers propensity to budget, drive home and spend depends partly on their level of perceived control over outcomes as well as knowledge and financial resources. Apart from that, race and ethnicity can also affect the consumer financial behavior. According to Rotter (1966), locus of control was being defined as a general, relatively stable propensity to see the realism in a particular way, capturing general beliefs round the causes of rewards and punishments. The research showed that individual self-concept influenced both financial and non-financial preference and behaviors.Consumer spending behavior is also touched by a persons personality and attitude. Cordell et. all (1996) and Cadha (2007) explained that the consumers are drawn to purchase bullshits of sumptuosity specks due to the desire of owning the prestige and positioning symbol that the trademarks tick off shows. T. Min, P. Ian and Curtain had viewed the attitudes towards counterfeiting of luxury brands can be influenced by a person personality variable (e.g. hold dear consciousness, lawfulness, personal satisfaction, trend tracking and the locating consideration). They reviewed the theories established and examined their understanding that the desirability of purchasing the counterfeit products was affected by the good value of the brand name (which labeled on the counterfeit product and add value to the product). Be get-go are the explanations of the personality variables which could promulgate a person spending behavior.i. Value consciousnessHuman engender the curiosity to seek variety and difference of a certain products/services and they try to spend on the tenders fashion products in monastic ball club to satisfy their curiosity. For those who can afford the branded products, they will limpidly spend a lot of money in av er to obtain the value of that product. Nevertheless, community will try to attain the value of the luxury brand things by choosing the counterfeit product with lower prices.ii. IntegrityIf the consumers view the integrity as an important value, there will be less mintto purchase the counterfeiting of luxury brands and this indirectly swop their spending behavior to buy non-branded things with stimulate a cheaper prices-low consumption.iii) Personal SatisfactionAccomplishment, social recognition and desire to enjoy the valuable things are the personal satisfaction variables in their spending behavior where consumer will be more conscious of the appearance and visibility by purchasing the fashion products. By spending on the new arrival of products which is more expensive, they diluted their income and incurred more expenditure in their own saving-spending portfolio.iv) Status considerationStatus consideration is refers to consumer who are both quest self-satisfaction and recog nition as well as for showing to contact pot. Because of this status recognition, people tend to spend more to purchase the luxury brand which indirectly changed their buying behavior.2.1.2 Cultural FactorM. Pierre, (1958) claimed that individual spending pattern shows a person frame position despite from the persons income. He classified that a person spending structure was affected by the influences from family, their colleague, voluntary association, age and gender. These influences variables on affecting a person spending behavior integrated together in order to classify the persons class position in his/her social unity. Pierre also mentioned that the ranked status system involved all the members of a society in destination of hierarchy (from super-ordinate to sub-ordinate). Whereby, whether a person will or will non attempt to buy a thing are strongly cerebrate to his/her class social status, and depend on whether the person is mobile or stable. He specified that the co nsumption patterns include a several factors such as class replacement, excerption of store, communications achievements, save versus spend, and psychological differences.In his studies, he realized that there are six-class system which is Upper-Upper clan (old families), raze-Upper Class (newly arrived), Upper-Middle Class (professionals successful business men), Lower-Middle Class (white collar salaries), Upper-Lower Class (wage earner skill labor groups), and Lower-Lower Class (Unskilled labor groups).i) Class PlacementM. Pierre explained that the class placement can be determined in three categories which included the occupation, source of income and housing type (e.g. luxury apartment, banglo). In his research in metropolitan area (Chicago), he discovered that the Upper-Lower class people be in possession of expensive house and the home was equipped by the solid arduous appliance. While, the Lower-Lower class people harbor less property minded (lack of spirit to buy o r maintain a home) and they intended to spend their income on their clothes or automobile.ii) Choice of storeM. Pierres studies revealed the relation between choice of store, pattern of spending and class membership. He described the people are very realistic in the way of spending in order to match their values and expectations refer on which type of store they consider (e.g. high status branded shop-Nike, Addidas). He verified that the social status of the department store becomes the primarily basis to identify the consumer class position. He mentioned that people are not going to take action by entering to a store where he/she might not affordable.iii) communication theory SkillsThe kind of super-sophisticated and clever advertising is almost meaningless to Lower status people. M. Pierre stated that the lower class people may not comprehend the subtle humor in the advertisement(s) and they are difficult in extracting the art of the advertisement(s) education. They also have a divergent approach in determining the information given. In other word, they lack of intelligence and have different understanding in their communication skill. These indirectly defined the spending behavior between class positions of a person.(iv) Saves versus SpendsM. Pierre clarified that the lower-middle-class people usually have the financial knowledge place in their thinking for the forms of saving whereby they tend to choose the investment saving. While Lower-Status people intended to save in an almost low-risk funds (non-investment saving) which can chop-chop converted to spend-able capital. This clearly showed that the lower status people have more spending habit. Pierre mentioned that the Lower-status people will spend on artifact-centered products (cheaper items) and the middle-class people will spend on experience-centered products ( be after spending).But, Pierre stated that the spending behavior of a person still governed by class membership in his/her society.(v ) Psychological differencesM. Pierre explained that the spending-saving analysis has a very obvious effect in psychological implications to differentiate the classes.Middle ClassLower StatusPointed the futurePointed present and passMore urban creditMore rural identificationStress on keen-wittedityNon rational essentialGreater understanding of choice makerLimited sense of choice makerSee themselves tied to national happening aid their own and family members2.1.3 Psychological FactorD. Ap S.K.Pamela, (2005) argued that consumer behavior is oftentimes strongly influenced by the subtle environment and traditional perspective on consumer choices. They explained that people continuously nonchalantly purchase the things on the spot where they choose the products at the b physical contact of an eye of awareness and occupied with things rather than thinking on selecting an affordable groceries to purchase. This resulted in troubling the consumers spending habit.Bargh(2002) described the consumer behavior are cast items of the cognitive psychology. While, Chaiken(1980) and Petty, Cacioppo and Schuman(1983) explained that, before people buy(or choose or decide), they are less opening to collect the products information. Attitudes can be based on cognitive beliefs such as when a person finds a product which is very helpful or more benefit effect, or the product show and possess symbolic meanings (Venkatraman Mac-Innes, 1985).Karen M. Stilley, J. Jeffrey Inman and Kirk L.Wakefield (2010) conducted two studies to investigate the effects of promotional saving on both planned and unplanned spending, and how does it varies according to income level. In order to running play the hypotheses, Karen M. Stilley et al. interviewed 400 customers who entered two grocery stores located in a south U.S. city. Every tenth shopper or one every five proceeding was selected, whichever came first. In addition, respondents were first asked what items they planned to purchase and h ow much were they planned to spend in total. Then, In-store slack (ISS) was calculated by subtracting the itemized portion from the total respondents planned to spend. Besides, respondents were required to indicate their household income before they exit the grocery shops. For the part of addition the response to such sensitive question, respondents were given seven choices of project rather than gave a specific figure of household income. The results of the research showed that the promotional on unplanned grocery items would attract customers to spend more and this is incr unbosom with the higher income level.Apart from that, Ajay Kalra and Mengze Shi (2010) also examined sweepstakes reward structures that maximize consumers valuation. They claimed that consumers value maximize sweepstakes should efficaciously motivate consumers participation and thus increase sales. From the other perspective, sweepstakes and contests would increase consumers spending on a certain products. Ajay Kalra et al. defined sweepstakes and contests as the promotional tools used by organizations to attract more customers, which in turn gaining superfluous sales. By having sweepstakes, consumers are tend to spend more in order to increase the probability of winning grand prize.In addition, the introduction and increase usage of electronic transfer systems has led to the likelihoods of a cashless society (Humphrey et al., 1996 Humphrey and Berger, 1990 Olney, 1999). In the research paper done by Mohamad bin Ali (2004), the variables been developed are hedonic motivation, credit cards used, unplanned purchase, peer influence, TV covering and shopping frequency. The results exhibited the positive correlation of hedonic motivation, credit card use and unplanned purchases with compulsive buying tendency. Many people spending to eat stress and treat it as retail therapy. Shoham and Brencic (2003) stated that people go to shopping as retail therapy are expect that shopping could sl im their stress. Credit card is encourages compulsive buying because credit card cash in ones chips immediate need for money to buy thing.Furthermore, Fusaro (2006) argues that debit card users make more frequent and smaller withdrawals to control their spending behaviour. A cashless exertion takes off the pain of transferring cash and may encourage consumers to spend more. From a hedonic perspective, a cashless transaction does not recap the thought of the quantity of money spent at the time of purchase as compared to cash payment which recaps thoughts some cost or benefits of purchase at the time of purchase (Prelec and Loewenstein 1998, p.25).D. Ap S.K.Pamela, (2005) made a several statement on the factors of unconscious(p) spending behavior of the consumersi. The choices of buying the product are influenced by mechanically response orone persons attitudesii) Attitudes were not really guide the behavior of the persons spending andpeople tend to buy things on nerve impulse and the impulse choices are stronglyaffected by the subtle environment.From the above statements, they reviewed and discussed about their studies on consumer behavior. They pointed out two important results on their understanding whichPerception-behavior link is a mere perception of a social environment whichleads people to face in direct effect behavior. This mean that the behavior of a person is often imitative (follow others action) and thus this behavior is contagious (spread and affect others-ripple effect)Automatic goal pursuit related to the goal-directed-behavior where theconsumer purchasing behavior is often unconsciously guided by the environment.2.1.4 Social FactorA persons spending may be affected by his social group of people, which ordinarily being called realistic communities. It is defined as self-selecting groups of individuals engaged in uphold computer-mediated interactions around common interests or goals, governed by shared norms and values, and serving indiv idual and shared needs (Bagozzi and Dholakia 2002 Dholakia, Bagozzi and Pearo 2004). Such characteristics of practical(prenominal) groups as open, non-discriminatory participation, possibility of anonymity, and low visibility of product usage suggest that virtual communities potentially utilisation mechanisms of influencing shopping decisions that are different from those of other reference groups.Some virtual communities apply informational influence on shopping decisions by aiding the transfer of information among reference group members regarding product opinions (Deutsch and Gerard 1955). In virtual communities information can be spread through what other members post about their product and brand use, or shown through picture sharing and in occasional face-to-face meetings.2.1.5 Economic FactorRex Y. Du and Wagner A. Kamakura (2008) examined how consumers allocate their discretionary income to meet different consumption needs and how the resultant consumption pattern will cha nge in response to changes in prices and budgets. For instance, how does escalating gas price affect consumers spending on food and apparel. Rex Y. Du et al. had used the CEX family extracts made available by the depicted object Bureau of Economic Research (NBER) for the 1982-2003 period. The CEX was collected from different samples each course of instruction and 66,368 households were being examined in this research. Besides, Rex Y. Du et al. had conducted three policy simulations to test consumers reaction to environmental shock. Those three policy simulations were reactions to shift in might costs, reaction to a tax rebate and welfare losses due to spiraling costs of prescription drugs. The result for the first simulation showed that consumers reduce their spending when the energy costs increase, especially the poorer quintile. For the second simulation, the result showed that tax rebate would increase consumers spending even though for those nonessential items, such as airli ne fare and charity. For the last simulation, the result showed that consumers could have reduced their prescription drug expenditure by an average of 37% while maintaining the same level of treatment. Indeed, economic condition would affect consumers spending behavior.ConclusionIndeed, consumer spending behavior is strongly influenced by the factors such as personal, cultural, psychological, social and economic condition. demographic characteristics such as income, age, marital status, occupations, etc. would have direct relationship to consumer behavior (Chetsada Noknoi et al. 2009). In the research done by Wassana Suwanvijit (2009), 300 questionnaires were distributed to the respondents in Songkhla. For a city with a population more than seventy thousands of people, it would be better if the number of respondents could be at least 500 in order to draw a more convincing conclusion about the results. Next, the influences from family, colleague, friends, etc. would affect a person s pending behavior. Besides, it has to depend on several factors such as class replacement, choice of store, communications skills, save versus spend and psychological differences as well (M.Pierre, 1958). In addition, the promotional savings, sweepstake contests, ease of payments, etc would motivate consumers to spend more, which directly affect their spending behavior. In the research done by Karen M. Stilley, J. Jeffrey Inman and Kirk L. Wakefield (2010), they collected respondents household income through provided choices of range to the respondents instead of asking a specific figure from them. This action was more effective in getting information from the respondents due to confidential problem. Apart from that, virtual communities may affect a person spending behavior through the information given among reference group members (Deutsch and Gerard, 1995). Lastly, the economic factors such as changing in gas price, tax rebate, etc. would affect consumers to change their spending as well.