SOCIETAL FORCES CREATING NEW CONSUMER BEHAVIOURS

JOMO KENYATTA UNIVERSITY OF AGRICULTURE & TECHNOLOGY

MASTER OF BUSINESS ADMINISTRATION DEGREE YEAR1 SEM 1

SOCIETAL FORCES CREATING NEW CONSUMER BEHAVIOURS

Question

The marketplace has changed drastically over the last 10 years with interlinking societal forces creating new consumer behaviours alongside new opportunities and new challenges for business. Identify at least seven of these forces and explain the resultant; new forms of behaviour, new opportunities, new challenges, and explain how business should respond.

DefinitionsA society is a group of people living together in a more or

less ordered community, with shared laws, traditions and

values. It could also be considered the people of a particular

country, area or time, etc., thought of as an organized

community. (Merriam-Webster, n.d.)

A marketplace is the world of commercial activity where goods

and services are bought and sold (The Free Dictionary, n.d.),

or the economic system through which different companies

compete with each other to sell their products (Merriam-

Webster, n.d.).

Consumer behaviour is the study of individuals, groups, or

organizations and the processes they use to select, secure,

and dispose of products, services, experiences, or ideas to

satisfy needs and the impacts that these processes have on the

consumer and society (Kuester, 2012). It blends elements from

psychology (the study of the individual), sociology (the study

Andrew Wafula Wapakala – HD333-C002-1002/2014

of groups), social psychology (the study of how an individual

operates in group), social anthropology (the influence of

society on the individual), marketing and economics. It

attempts to understand the decision-making processes of

buyers, both individually and in groups such as how emotions

affect buying behaviour. It studies characteristics of

individual consumers such as demographics and behavioural

variables in an attempt to understand people's wants. It also

tries to assess influences on the consumer from groups such as

family, friends, reference groups, and society in general.

IntroductionConsumers or the Customers are valuable assets for any

organization. A Consumer is an individual or group of

individuals who select, purchase, use, or dispose of products,

services, ideas, or experiences to satisfy needs and desires.

In other words, Consumers are the eventual destination of any

products or services. Consumer behaviour can be influenced by

society. This paper will attempt to identify the forces that

have affected consumer behaviour and in describe their

effects.

Societal Forces That Influence Consumer BehaviourOne of the influences on consumer behaviour, whether personal

consumer behaviour or organizational consumer behaviour is

that of society. Consumer behaviour is how individuals make

decisions to spend their available resources (time, money,

effort) on consumption-related items that includes what they


buy, why they buy, when they buy it, where they buy it, how

often they buy it, how often they use it, how they evaluate it

after the purchase and the impact of such evaluations on

future purchases, and how they dispose of it. The forces of

society that influence these consumption-related decisions can

be overt or they can be covert. Some of these forces are:

1. Technology

The proliferation of technology has changed society.

Technology has made it possible for people to communicate

at speeds and distances that were unimaginable a few

years back. With the ability to get breaking news from

round the world the instant it happens, consumers now

demand instant information, instant service, and

practically instant everything from organizations they

interact with. Therefore companies have had to adjust the

way they market their products and how they handle their

customers. Consumers no longer accept slow service,

waiting in long queues and responses that take a long

time in coming. Technology has also opened up avenues for

people to complain about a product or praise a product,

which brings the challenge of how to manage the emergence

of social media as a tool to engage customers. Customers

who are dissatisfied now go to social media to highlight

their issues and let others know. Gone are the days when

one would phone in a complaint – word of mouth has now

become world of mouth (Qualman, 2012). If a company doesn’t

manage it well, negative reports on social media can


spread fast and very wide causing people to change their

purchase decisions as was in the . This creates both an

opportunity and a challenge for any business. It is a

challenge because not many companies have a social media

policy or a policy on how to engage their customers on

‘new media’. A lot of customers have been caught flat

footed with no means to respond when negative reports

circulate on social media and the company only gets to

respond when the impact spills over in traditional

sources such as print media. In such a case, a response

on print media is hardly sufficient since majority of the

users of social media don’t get their information on

print media any more.

Social media is an opportunity for any business that can

manage it well. By building a presence on social media, a

business can engage its customers in faster ways but

providing instant responses to queries, complaints and

can even judge the preferences and tastes of customer by

watching what they talk about on social media. As such,

any business that wishes to be successful has to embrace

technology and social media in particular. If a company

does not have any social media presence, all that will be

out there will be negative content. In fact, social media

has increased the importance of building positive

customer experiences online and offline. (Barbara, 2012)

2. Increase in Income Levels


Income levels have been steadily increasing over the past

few years. The middle class in Kenya has been growing. A

recent African Development Bank report found that “Strong

economic growth in the past two decades has helped reduce

poverty significantly and lift previously poor households

into the middle class,” in Kenya and in other African

nations.

With East African economies among the fastest growing in

the world, and Kenya’s own GDP growing at a 5% clip, the

Kenyan middle class is expected to continue rising,

bringing Kenya ever closer to its goal of becoming a

middle-income nation by 2030.

A burgeoning middle class has boosted Kenyans’ purchasing

power, giving rise to a thriving mall culture and booming

housing market, and a double-digit boost in domestic

tourism. As income levels increase so does purchasing

power. While people were previously willing to buy just

what was affordable, the new middle class demands more.

They want top of the range, and are willing to pay for

it. Demand for inferior goods is going down as income

rises, because of the negative elasticity of the goods.

Because they have more disposable income, consumers make

different consumption choices compared to before. Where

they were willing to settle for just something to meet

their needs, now they want to buy something that reflects

their newfound status in society.

The challenge for businesses is that those that dealt in

inferior goods or just no-name products have now began to


lose market share and patronage as the new middle-class

seeks to satisfy their egos and show off their status by

moving to branded goods, and to shops that market

themselves as being trendy, fashionable and ‘with it’.

This has in turn created a new market, where the new

middle class is flocking to malls to buy from shops that

sell branded products or are franchisees of well-known

worldwide brands. The businesses that have taken

advantage of this effect have shifted themselves into a

new market that is growing and has a mass of people

willing to spend. As the middle class is predicted to

grow even further, business should begin to change their

models to attract and retain this new group of consumers

by designing stores that appeal to them and selling

products that seek to enhance their consumer’s image.

3. Increase in Literacy Levels

Linked with the first two forces is a third – improved

literacy levels. The literacy rate in Kenya (measured

based on the most common definition - the ability to read

and write at a specified age in this case 15 years of

age) has seen an increase over a number of years. Based

on the CIA World Factbook, Kenya’s literacy level has

gone from 78.1% in 1995 to 85.1% in 2003 and the latest

figures from 2010 show that it stands at 87.4% (Ignoring

the disparity that exists between North Eastern Province

and the rest of Kenya). One main factor that has

contributed to this is the introduction of free primary


education by the government.

Research suggests that a rise in education levels can

lead to more efficient consumer behaviour, such as paying

less money for the same goods and services. As a result,

there is a generation that demands more value for money.

Unwilling to just take things as they are, they are more

willing to question the pricing given by a seller, and

are willing to change to another supplier if they find

better prices and good quality service.

This creates a challenge for the businesses that prey on

the ignorance of the consumer. For instance, in the past,

people would go to a doctor and whatever the doctor

diagnosed and prescribed was accepted as the truth.

However, people are now better educated and better

informed and would like to understand what led a doctor

to a certain conclusion and why he would prescribe

certain medication. Businesses which once offered a

‘take-it or leave-it’ level of service are also seeing

change in that patrons demand better service and also

require better informed feedback on their queries. What

was acceptable in the past nowadays would lead to being

put down as a poor service provider. As the literacy

levels continue to grow (where literacy will be more than

just the ability to read and write, but will be a

person's ability to understand and use information), we

will have a population with higher education levels and

more varied work experience. This group will have a

better knowledge of the workings of both government and


business in general and will be more likely to demand

their rights as consumers.

The opportunity here is for businesses to begin to show

that they care about their customers and are willing to

spend some time and effort to engage them. Consumers are

willing to seek out businesses that give good affordable

service and therefore any business that takes the time to

invest in its employees to develop their customer service

skills as well as work on their costs to give services

better faster and cheaper are likely to gain customers

from the better educated majority.

4. Demographics

A demographic is a group of consumers that share a

collection of market-relevant attributes. This group can

be any number of people across the same time frame.

Market-relevant attributes can include any number of

shared values, physical attributes, experiences, beliefs,

environmental conditions, cultures, or political or

financial elements that can be used to increase

awareness, loyalty, sales, or product improvement.

With the population growing and the increase in literacy

levels, there has come a change in what is demanded by

consumers. According to statistics, Kenya has a young

population with 73% of residents aged below 30 years

because of rapid population growth. This growing young

population has an advantage for businesses in that the

future section with great purchasing power is just


beginning to grow and as it grows, there will be a

greater market for goods. However, the way this section

of society will interact with businesses will be quite

different from the traditional models seen today.

The youthful group of people are more likely to interact

with businesses through impersonal means such as their

mobile phones or the internet. As mentioned in the

sections on technology and education, this group will

have different tastes compared to previous generations

and also will demand better quality and services as well

as faster delivery and support. This will lead to more

business being done electronically and more goods being

bought to support a lifestyle rather than just a living.

The challenge for businesses here is to adapt to this new

generation’s demands and take the opportunity to serve

them. Also, as their numbers will be greater, there will

be more people to sell to, and being young, they will

demand more variety. Businesses will have to be flexible

enough to be able to meet this variety. No longer can

they sell just one version of their product, cast from

the same mould, but they will have to segment their

markets well, to be able to target different consumers

and fill their demands for different tastes and

preferences.

5. Quality of Life

Quality of Life is defined as one’s personal satisfaction

(or dissatisfaction) with the cultural or intellectual


conditions under which he/she lives (as distinct from

material comfort). WHO defines Quality of Life as

individuals’ perception of their position in life in the

context of the culture and value systems in which they

live and in relation to their goals, expectations,

standards and concerns. It is a broad ranging concept

affected in a complex way by the person's physical

health, psychological state, level of independence,

social relationships, personal beliefs and their

relationship to salient features of their environment.

(WHO, 1997)

People generally desire to improve their quality of

life. As incomes and education improves, so does the

general level of economic development of a society. This

results in a high consumption of goods and services by a

majority of its members. These goods then take on

specific meanings in society, because people begin to be

measured by what they own rather than who they are.

People may not necessarily want things but they get them

to represent their level of success.

On the other hand, improvement in economic well-being

leads to a demand for higher standards of education,

safety, health care. This is consistent with Maslow’s

Hierarchy of Human Needs.


Figure 1: Maslow's Hierarchy of Needs. Source: http://cperiod2010africa.wikispaces.com/file/view/Maslow_Triangle_1.png/114972469/Maslow_Triangle_1.png

This growing desire to fulfil higher level needs has

caused a change in consumer behaviour where people now

begin to go after what they don’t really need and a rise

to a consumer culture or behaviour called consumerism.

Consumerism has its advantages to business, but

disadvantages to individuals and society in general.

Marketers have taken advantage of this desire to fulfil

higher level needs and created advertising that puts

pressure on consumers. They fuel desires in people where

they advertise that a product is something one really has

to have when then don’t necessarily need it, or in the

case of females, created an obsession with thinness.

Materialism is also on the rise especially in countries

that have undergone rapid development cycles. Advertisers


take advantage of this to market more and more products

resulting in consumers in higher income brackets owning

more material possessions than those in lower income

brackets. Ownership of economic goods now becomes the

measure by which one’s subjective wellbeing (quality of

life) is measured.

As this is a force that can impact people’s wellbeing

negatively such as contributing to obesity, conditions

such as anorexia or bulimia in women, much care is needed

by businesses to ensure that their practices are ethical

and for the greater good of society. They must not be

driven by just the motivation to increase profits (though

it is the primary reason they exist), but also a greater

sense of duty to ensure that their customers do remain

around for the long haul – by ensuring their health and

safety. They must think of protecting the consumer versus

short term profitability, in that they must now adapt to

quality of life marketing. Quality of Life (QOL)

marketing helps marketers resolve conflicts by guiding

them to act in the best interest of the consumers without

compromising organizational objectives.

6. Environmental and Ethical Issues

In the recent past, there has been greater emphasis on

environmental issues and concerns as to how our current

behaviour is affecting the environment and what it holds

for us in the future. Climate change has become one of

the ‘hot-topics’ this generation is talking about and is


being constantly highlighted in the media. This has led

to the rise in what is called sustainable business and in

turn to sustainable consumer behaviour and how to

influence it. There has been a drive to improve

sustainability on the supply side of the economic

process, with a focus on green products and green

production where consumers and governments demand goods

that are environmentally friendly and use sustainable

methods to protect the environment. There is now a focus

on the demand side of the economic equation, which

focuses not on whether the goods purchased are eco-

friendly but whether the demand decisions by consumers

reflect the drive towards sustainability.

The first question is whether enough is being done to

educate consumers on how their choices affect

sustainability. Is enough being done by businesses and

advertisers to drive consumer awareness for them to

engage in more environmentally friendly behaviour? The

other issue here is whether our obsession with

materialism overrides the transcendental value of

environmental protection?

The fact is that people are becoming more aware of their

actions and how they individually or personally are

contributing to the whole issue of environmental

sustainability and this includes the area of their

purchasing or consumption decisions. Businesses will need

to focus more not on just ensuring that their products or

processes are sustainable towards the environment, but


also whether they encourage their consumers to be a part

of the sustainability through their own actions. Also, as

people become more educated, there will be a shift

towards getting more involved in environmental issues and

businesses that will work towards portraying themselves

as having eco-friendly policies will win at the end of

the day. In future, there will be greater emphasis on how

much waste we generate from our purchases and how we

handle that waste at the end of the day (when we are done

consuming) will become important. Currently waste is

becoming an issue because of materialism where people

accumulate things, sometimes much more than they actually

need. Businesses that capitalize on helping consumers

reduce waste or handle the waste afterwards will be

favoured as this will be the eco-friendly way to do

things. Another area businesses will need to address is

how to help consumers reduce energy consumption. This has

already began being dealt with through energy saving

appliances, but a future trend will be smart homes and

offices that manage energy, save energy or even generate

their own energy in ways that put the environment first.

The same concept will apply to water.

As a result, there will be a demand for access to high-

quality, reliable information about the environmental

characteristics of products, which helps consumers

express their demand for environmental quality in the

marketplace. How much consumers know about environmental

issues, the environmental impact of their consumption and


lifestyle decisions, and the practical actions that they

can take to support sustainability goals will be a factor

business will need to consider in driving behaviour

change.

Ethics also plays an increasingly greater role in

business today. Customers increasingly want to be aware

that the products they consume were not produced using

child labour or do not contain conflict minerals. They

also want to know that workers are paid well and are

treated in accordance with basic human rights.

Governments now enforce and require disclosure on ethical

issues when companies file reports. As a result,

businesses are forced to look at their supply chains to

ensure that all through the process, products are not

only ‘green’ but are produced ethically. This is an

opportunity some manufacturers have capitalised on. For

instance, Apple declares that it products are free of any

conflict minerals, and Nike recently made an effort to

ensure its supply chain is completely free of child

labour.

7. Social Responsibility

There is a growing emphasis for corporations to give back

out of their profits to society. This force is such that,

especially in the developed world, companies or

organizations that don’t seem to give back anything to

the society are shunned or their products avoided. People


tend to look for alternatives whose manufacturers they

know give back in some way to society.

Such avenues could be funding education for girls,

feeding programmes among disadvantaged communities, and

support for the environment and so on. As the shift in

culture in society increasingly tends towards helping the

less fortunate in society and trying to bring about

equity, companies that want to grow in their market share

must put aside part of their revenue for social

responsibility. The challenge here is that it will impact

their bottom lines in the short run. However, in the long

run, it is an opportunity since the positive brand image

created from any social responsibility activities are

likely to result in increased sales and revenue.

8. Changing Workforce Habits

The modern workforce is changing. Gone are the days when

job stability was the main driver for employment. Today’s

workforce is more mobile, with people always looking for

better opportunities or challenges to grow and earn more

money. There is also a shift from a focus on time input

versus productivity. Employers are becoming more flexible

to allow employees freedom of where to work from as long

as they deliver results. This in turn will result in a

change in consumer habits. Where traditionally one could

segment a market for instance in terms of age brackets

and more or less they would grow in the same market,

people are more mobile and change segments frequently to


reflect their change in status. Businesses have a

challenge now to frequently analyse their market

segmentation and profiles to see whether they are still

valid.

However, an opportunity awaits them as with the mobility,

there tends to be increase in income levels, which leads

to an increase in disposable incomes. They can then

target the consumers by better understanding their needs

and thereby generate new avenues of revenue.

9. Increased Freedom

As democratic beliefs become more entrenched in society,

there is an increase in freedom – freedom of speech,

freedom of the press, freedom of worship and so on. This

has led also to a greater freedom of choice and the

desire to express individualism. This gives rise to a

demand for people to express themselves and their

individuality by having a wide range of alternatives to

choose from. This will result in consumers wanting to

choose from a wide range of colours, flavours, features

or styles. Also, consumers will regularly demand change

and they will be more vocal about it, especially on new

media such as social media. They don’t want to be served

yesterday’s products. A company that doesn’t change with

the times will find it has lost business to its

competitors that are changing to reflect the changing

tastes of their customers.

For businesses, this demand creates a challenge for them


in that they must become flexible in creating multiple

versions of the same product. For some businesses it may

mean a complete overhaul of their manufacturing processes

to ensure that they can quickly change from one product

to the next. It is also an opportunity in that there is a

chance to grow revenues faster because meeting individual

demand results in greater volumes being sold.

SummaryIn conclusion, it is necessary for businesses to recognize the

societal forces that cause shifts in consumer behaviour. These

shifts can become sources of valuable revenue if identified

and capitalized on. It may in the short run require them to

change their processes or even their production facilities,

but in the long term, it will provide them additional sources

of revenue in markets that are increasingly competitive.

Consumer behaviour will be increasingly dynamic as a younger

generation, with more propensity for risk grows. Societal

norms that were accepted for long are now being modified or

abandoned and new norms are being formed. Businesses must

adapt or face extinction when consumer behaviour shifts.


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SOCIETAL FORCES CREATING NEW CONSUMER BEHAVIOURS

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