Consumption Behaviour of Students

Consumption Behaviour of Students Chapter One Introduction 1.1. BACKGROUND OF THE STUDY 1.1.1 Consumption Behaviour Definition If it is said that marketing in true sense is the conclusion of social culture of post modern consumer culture (Firat, 1993) then an immense burden and responsibility has been imposed to determine the conditions and meanings of life for the future (Firat and Venkatesh, 1993). This life which is dealing with meeting unlimited demands with limited resources in hand and planning to secure future by making savings. So keeping this in view the consumption by individuals is really critical to full fill the needs and to secure the future. So in view of this consumption is definitely a focal point of present social and economic world. And that consumption in return definitely triggers a primary marketing concern of probability to repurchase a product regardless of its type (Peter Olson, 1990). Although consumption is as old as human history and has passed through plenty of phases but even in todays world the repurchase of items is the core priority of sellers. No matter that repurchase is o f basic necessity item or luxury product or whether it is matter of mobile connection or someone is talking about E-Banking or it is making flight reservation, every company tried its level best that a consumer should repeatedly purchase its product. The definition of consumption given by Peter and Olson (1990) is â€Å"use of product.† Peter and Olson (1990) are also of the opinion that it is not easy to define or to comprehend the meaning of consumption as there is a vast difference in the nature of various products and services. Even in this age of Information Technology and Globalization era the meaning of product (includes both goods and services) varies from culture to culture and it keeps on changing from one country to another. If a commodity or service is considered as necessity in one region, in other part of the world it may be categorized as luxury. But despite all these limitations researchers and authors still gave some comprehensive and compact definition of consumption. The idea of consumption defined by Webb (1993) in the following words â€Å"Consumption is the evaluating, buying, using and disposing of  products and services.† But like other fields of study this topic also remained under debate by variety of scholars and researchers in all parts of the world. The word of consumption attracted the attention of researchers and marketers who kept on trying to comprehend the meanings of this idea of â€Å"consumption†. While reviewing books and literature another good and wide-range definition of consumption given by Caru and Cova (2007) in the following words â€Å"Consumption is an activity that involves a production of meaning,  as well as field of symbolic exchanges.† The author elaborates this definition by mentioning that consumers do not consume products but they consume the image and meanings associated with the product and they think that it is mandatory that an object or services should fulfil certain functions. Those functions should meet and better to exceed customers expectation. If it failed to meet their anticipation then they will drop the idea of repurchase of that particular product or in case of services they will avoid to consume or avail that particular service. Simultaneously it is also said that consumption behaviour also refers to single use of a product like a soft-drink can or one can consume a product repeatedly like mobile phone or automobile. This concept of consumption behaviour also covers the issue of disposing off a product ( (Noel, 2009). Like in case of soft drink can or other single used items a general trend emerged over a period of time is that customers prefer those products whose packaging is reusable or can be recycled. But in case of mobile, automobiles, computers customers often sell those products after making multiple use of it. Consumption deals with the variety of question as it is mentioned by Schiffman and Kanuk (2007) like what to buy, when to buy, why to buy, from where to buy, how frequently they should buy, and the question of evaluation that purchase. Simultaneously the impact of evaluation on future purchase and disposing it off are also two important concerns of consumer. 1.1.2 Types of Consumption Schifman and Kanuk (2007) also highlighted two different kinds of consuming entities which deal with the consumption behaviour. The first term is personal consumption which can be defined as when good or services are bought for personal use , for household consumption or to exchange it with someone in shape of a gift. In the mentioned contexts the products are brought for final use by individuals who are referred as end users or ultimate consumers. The second category of consumers is termed as organizational consumption. It includes purchases made by profit and non-profit businesses, government agencies, and institution, all of which must buy products, equipment and services in order to run their organizations. Although both mentioned categories are of great importance but in this writing my main objective will be personal consumption. As consumption by end user is the most pervasive of all types of consumer behaviour as it involves every individual, of every age and background, in the role of either customer or user or both (Schifman and Kanuk 2007). It has been revealed from prior consumer spending studies that individuals consume in a specific way and that particular consumption behaviour is in practice due to certain factors like life style, self-image, upbringing and family structure (Martin Bush, 2000; Penman McNeill, 2008). There are some other factors which influence the Consumption Behaviour of young consumers which are parents and grandparents (McNeal 1997), parents income (Page Ridgway, 2001) and parents decision making style (Jay 2005; Elder, 1969). The mentioned factors highlighted the multi-dimensional role of parents. But the role of brands (Page Ridgway, 2001; Doston Hyatt, 2005; Bacca, 2005), consumer socialization (Razak 2003; Gil 2007; Gronhoj, 2007) and advertising (Bacca, 2005; Spero, 2004) may also not be neglected. 1.1.3. World Consumption Statistics The word â€Å"consumption† is synonym to â€Å"spending† or â€Å"expenditure†. So using this synonym, in order to quantify the consumer consumption into US $ following table best explains consumption in different parts of the world. The mentioned figures are for the year 2009. From the above table it can be easily inferred that consumers spend US $ 34,050 billion on mentioned below categories. This amount when converted in trillion it becomes almost US $ 34 trillion. This huge spending is almost 11 times more than USA total budget figure which was exactly 3.1 Trillions (http://www.whitehouse.govt, 2009). So this huge consumption creates my interest to study the factors which are reason of this huge spending. From the above table it is evident that consumer consumption in Asia Pacific is at number 3. Such a high consumption is of great interest for not only academicians but also for marketers. 1.1.4. Malaysian Public university students Consumption Behaviour According to Ministry of Higher Education website (accessed on 2011) there are total twenty public and twenty four private universities in Malaysia. The total enrolment according to MOHE (2007) in public universities is 382,997 Out of this total number 247,881 students which becomes almost 65% registered in undergraduate degree programs. It is consensus by Li, Jiang, An, Shen and Jin (2009) Komarraju, Karau and Ramayah (2007), Penman and McNeill (2008) and Feltham (1998) all are agreed that Young Consumers who are also called as Geberation Y are students. It is also agreed that young consumers fall within the age bracket of 18-24 years. As fas as Malaysia is concerned the total population of Malaysian Youngsters in 2007 was around 5 million which was almost 19% of total Malaysian population (Euromonitor International, 2010). Zainurin, Ahmed and Ghingold (2007) focus on the Malaysian young consumers attitude towards shopping malls. It is highlighted by the authors that Young Malaysian s spent a significant proportion of their monthly expenditures in shopping malls. The sources of income highlighted by Zainurin et. al. (2007) are scholarship or study loan, sponsored by parents, self sponsored and others. But Kamaruddin and Mokhlis (2003) mentioned that the major proportion of spending by young consumers is on clothes, make-up, food, sports equipment and entertainment. In the same article Kamaruddin and Mokhlis (2003) discussed young consumers consultation with parents and concluded that Chinese young consumers as compare to Malay are less likely to interact with their parents. But in case of Indians they are more likely to interact with their parents and less likely to interact with peers in consumption matters. But it will be of great interest to find out that what is consumption behaviour of Malaysian young consumers. As it is mentioned in a report compiled by PricewaterhouseCoopers (2004/2005) Malaysian households spent their high percentage of income on food, groceries and personal care items. But less had been researched on consumption behaviour of young consumers in Malaysia. The Malaysian young consumers is now well aware of products as they are more exposed to Information Technology. Their information due to frequent use of internet along various other factors like socialization, advertising, etc. establishes good awareness of marketing strategies among them. This trend of spending by Malaysian young consumer needs to be further explored. 1.2. Problem Statement As it is mentioned earlier that according to Euromonitor International 2010 the Malaysian Generation Y is about 5 million in 2007. This is also evident from above discussion that Generation Y has more disposable income (Eisner, 2005; Hongjun, 2006; XU, 2007; Henrie Taylor, 2009) to spend on variety of products. So keeping in view, the above mentioned facts Generation Y is a lucrative market for producers. Obviously their consumption behaviour is influenced by different factors and variables. It should be interesting to explore the main contributors towards consumption behaviour of Malay Generation Y. The industry like electronics, telecom, consumer products etc. whether fulfil their requirements or do they still fail to meet this Malay Generation Y expectations. It is really of great concern to study that the consumer skills or knowledge which they acquire during their childhood and teenage whether lasts with them for long time or does it keeps on changing during their adulthood. So through this study, I intend to highlight the factors and variables that influence the consumption behaviour of Malay Generation Y, which is relatively under-researched in Malaysia. 1.3. Study Objectives The general objective of this research proposal is: To identify general consumption behaviour of Malaysian public university students registered in undergraduate degree program. Whereas under the light of primary objective following are other objectives which will be achieved: To explore differences in the consumption behaviour among the three communities Malay, Chinese and Indians. To determine factors that influence consumption behaviour of Malaysian public university undergraduate students. To prepare recommendation for developing marketing strategies for Malaysian public university students. 1.4. Research Questions RQ. 1. What is the consumption behaviour of Malaysian public university students registered in undergraduate degree program? RQ. 2. What are the differences in consumption behaviour among all three communities i.e. Malay, Chinese and Indians? RQ. 3. How significant each factor in influencing consumption behaviour of Malaysian public university students? RQ. 4. What are good recommendations to develop marketing strategies for Malaysian public university students? 1.5. Significance of the Study It has been estimated by US Census Bureau (2010) that more than 17 % of total world population falls within the age bracket of 15-24 years. This age bracket is about 1.14 billion and it was mentioned by Xu (2007) that this age bracket is wealthiest group. As far as Malaysia is concerned, according to Euromonitor International (2010) the population among this age bracket was 5 million in 2007 which became almost 19% of total population. This age bracket normally are part of universities. It is mentioned by Walsh and Mitchell (2005) that education improves analytical skill so through this study I intend to study the students registered in variety of educational degrees from certification/diploma to PhD programs so that their consumption behaviour can be explored. This particular group has more disposable income (Eisner, 2005; Hongjun, 2006; XU, 2007;Henrie Taylor, 2009) as compare to the generation of parents and grandparents. Simultaneously they have less saving spirit as compare to Generation X. To study the consumption behaviour of Generation Y is of great interest as most of the Malaysian studies conducted in shopping malls and authors always studied the way this age group shop. In addition to this they are always studied by combining with teensor tweens. So through this study I will solely study consumption behaviour of Malaysian Generation Y. 1.5.1. Academic Perspective So far lot of studies had been conducted about the behaviour and attitude of Malaysian consumers in shopping malls like grocery shopping by Miranda and Jegasothy, a study of Malaysians behaviour in shopping malls conducted by Zainurin et. al. (2007) etc. But I failed to find any study which is solely targeting Malaysian young consumers. There are studies where main focus was exploring single variable like television viewing by Ghani (2004), culture studied in context of service quality by Kueh and Voon (2007), ethics in consumption studied by Chai and Lung (2009). In the light of above mentioned facts the main focus of this study will be consumption behaviour of Malaysian young consumers. The study will be a food for thought for academicians which will further enhance the existing body of knowledge on the consumption behaviour of young Malaysian consumers. The significance of factors that influence consumption behaviour of young consumers definitely opens new horizons and helps the researchers to broaden the scope from studying attitudes of young consumers in shopping malls to the general consumption of Malaysian young consumers. 1.5.2. Industry Perspective Young consumers are always a great mystery for producers of products. It is really challenging to fulfil their fast changing taste, needs and choices. This study will definitely give a more coherent and clear picture of the factors that influence young Malaysian consumers consumption behaviour. Through this study it will be explored that how Malaysian Generation Y undergo the four steps mentioned in the definition of consumption behaviour which are pre-purchase evaluation, finalizing and making purchase of product, using of product and disposing off product. Through this study the consumption behaviour among three ethnic groups of Malaysia will be explored so that a clear and specific distinction of consumption behaviour among these three groups can be researched which will definitely useful for marketers for developing marketing strategies. Chapter two 2.1. Literature Review For this study I would like to start my discussion by highlighting the importance of marketing. 2.1.1 Marketing and its Importance In Forbes it is mentioned by Trout (2006) that it has been long ago that Peter Drucker, the father of business consulting, made a very profound observation that has been lost in the sands of time which is: Because the purpose of business is to create a customer, the business enterprise has twoand only twobasic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business. This concept of marketing is far beyond offering and creating of products and services. Its a matter of customer creation. It deals that how relationship can be established with customer and the ways through which these relationships can be strengthen. It also addresses to certain other critical issues like; How a loyal customer can be created? How product inclusive of goods and services can be innovated? Before discussing this concept in detail it is better to present certain definitions of marketing: Marketing in the words of Kotler, Armstrong, Ang, Leong, Tan, Hon-Ming (2009): â€Å"The process by which companies create value for customers and build strong customer realtionships in order to capture value from customers in return.† Another definition of Marketing given by American Marketing Association mentioned by Cooper and Schindler (2006) is: â€Å"It is an organizational function and a set of processes forcreating, communicating and delivering value to customers and formanaging customer relationships in ways that benefits the organizationand its stake holders† Aaker, Kumar and Day (2001) define marketing in the following words: Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives. The marketing concept requires customer satisfaction rather than profit maximization. It is evident from all mentioned definitions that customer is the main focus of each producer and service provider. As it is highlighted by Levitt in 1960 that industry should focus customer- satisfaction process rather than a goods producing process. He emphasized that all producers should understand this philosophy as industry begins with the customers and his/her needs not with the patents or copyrights, neither it starts with raw material or a selling skill. The idea which was presented around 50 years back is still valid and nowadays this main issue is a core concern by all the companies. The Druckers philosophy about business enterprise is very well comprehend by saying that marketing and innovation are two basic functions of business. The idea of marketing keeps on emphasizing that how customers confidence can be won. The companies from USA to Australia, the organizations operating in Africa, the enterprises offering their products in Asia Pacific and regardless of product variety as well as geographic location all are trying hard to satisfy the fast ever changing consumer needs, wants and requirements. Peter and Olson (2008) highlighted that companies are making changes to serve their customers. They have highlighted three reasons of these changes. The first reason of bringing the changes is the dramatic success of Japanese companies such as Toyota and Sony who give ample attention to their consumers and give them value-laden [5] products. This idea spurred other companies philosophies and influence them to prioritize customers taste, needs and wants. The second major reason is the dramatic increase in the quality of consumers and marketing research. In the past although companies conduct surveys and receive feedback from customers which was occasional and not so frequent. But today Information Technology made it easy for retailers and manufacturers to keep the track of customer reactions towards product and services. The third main reason of prioritizing customers taste is the development of internet as marketing tool. As internet is a tool to through which information about products can be shared with vast majority. 2.1.2. Consumer Behaviour Variety of writers like Kotler (2008), Engel, Black and Miniard (1995), Mclver and Naylor (1986), mentioned that understanding and adapting to customer motivation and behaviour is not an option but it is life blood for the survival of companies in this modern world. And this term or subject bring tremendous change in organizational set up. According to McNeal (1982, p. 8) â€Å"consumer behaviour is the preparation for purchase, the purchase act and the use and disposal of those things purchased.† McNeal (1982) also highlighted the three stages for the act of consuming which are (1) pre purchase behaviour, (2) purchase behaviour, (3) post purchase behaviour. The author mentioned that most of the time researchers or writers overlook pre purchase behaviour but that is the stage which cannot and should not be overlooked. While defining â€Å"consumer† author elaborated that consumer is the person who undergo through all mentioned three stages for his benefit or for the benefit of others. So in consumer behaviour the three stages mentioned by McNeal (1982) are integral. And whenever a consumer spends money whether on good or on services he/she has to undergo these three stages. Another definition of consumer behaviour given by East (1997) â€Å"consumer behaviour is about human responses in a commercial world; how and why people buy and use products (include both goods and services), how they react to prices and other promotional tools and what underline mechanisms operate to help and hinder consumption.† 2.1.3. Consumer Behaviour: Bridge the Gap between Producer and Consumer Above mentioned definitions, considered the discipline of Consumer Behaviour as a bridge between producers and customers/consumers. Like commercial world where producers advertise and share the information about the products they are offering to the market and response shown by the customers or consumers can be positive or negative. The positive response of the customer or consumers resulted in the shape of increasing sales, revenue for the company, satisfaction and trust on a particular or all products by a company. But a negative attitude can be like not purchasing the product of a company, shown distrust or sharing negative beliefs about a companys product to others. Simultaneously, the definition also shed light on another important aspect help to study the mechanisms, behaviour or attitude of customers or consumers under the influence of which they stop buying the product or any change in the attitude of customers/consumers towards a product. After discussing the definitions of Marketing and Consumer Behaviour one thing is evident that creation of value for producers and marketers are of core concern. This creation of value is integral and most critical phenomenon for marketers. Value is defined by the customer not by the supplier in the factory or it can also be defined that value is not what the producer puts in but what the customers get out (Khalifa, 2004). So this creation of value should be addressed and deal professionally as if it fail to meet or exceed customers satisfaction than he/she will jump to alternate or competitor. 2.2. Consumption Behaviour in Different parts of The World Consumption is lifeblood of each individual. Consumption can be termed as a process or a phase through which each and every individual of each nation has to undergo (Raijas, Lehtinen, Leskinen, 2010; Kamaruddin Mokhlis, 2003) or consumption is a mean to express and create self identity (Phau Woo, 2008) or consumption is ruled by sports celebrities (Dix, Phau, Pougnet, 2010). So a lot of factors that influence consumption are researched, studied and comprehended in variety of studies. How individuals undergo consumption in different parts of the world are mentioned below: 2.2.1. Consumption Behaviour: American and Canadian Perspective It is highlighted by Moschis and Churchill (1978) that early sociologists speculated that young people learn most of the basics of consumption from their parents. It is interestingly a very valid fact even in this age of information technology and in this world which is called as global village. Parents are still considered as the most valuable, reliable and modest source of knowledge regarding consumption behaviour. Even young consumers not only consider them as ready source of knowledge but even when young consumers start living alone they still consult their parents whenever they have to make any purchases. It was highlighted by Feltham (1998) that primary groups have stronger influence on consumption. Parents are one of the most strongest part of this primary group. Generally it has been observed, researched and mentioned that generally parents are considered as strongest and comprehensive source of knowledge and they have greater influence on the consumption behaviour of their d escendents. Felthams (1998) finding that males are less likely to discuss about consumption with parents and if they do they receive lesser reinforcement but this trend is quite opposite in case of females where they openly and comfortably discuss about consumption with parents and simultaneously they receive positive feedback as well. This finding of Feltham (1998) is consistent with Moschis, Moore and Smiths (1983) results. It is mentioned by Clark, Martin and Bush (2001) that parents are role models for their children in consumption and the way parents educate their children about consumption, brand and other spending activities it lasts with them for quite a long time. 2.2.2 Consumption Behaviour: European Perspective It is highlighted by Rolfe (2005) that young consumers in UK are living with their parents and they are provided with all the necessities but the parents of this Generation Y has more disposable income as compare to the generation of 1960s and 1970s. On the basis of this factor Generation Y are more interested in Branded and expensive items. This fact is highlighted and mentioned by Gronhoj (2007). Both positive and negative experiences teach young people how to direct their future decisions on spending. At the same time, they learn that good intentions can be lost to temptation, and consumer goods and/or services may not be rationally controllable. According to Gil, Andres and Salinas (2007) repetitive consumption of brand establish a loyalty of brand among children and it last with them even when they start living alone. They stick to that brand and loyal to its features. It also mentioned that memories associated with that brand also stopped them from switching the brand. It is fact mentioned by Gil, Andres, and Salinas (2007) that when young consumers start living alone they carry the experience of consumption with them which they learn while living with their parents. They take the same learned consumption behaviour with them which is shown by their parents and which they experience during their stay with their family. As per Gronhoj (2007) young consumers not only spend increasing amounts of money on consumer goods but they exert considerable influence on the consumption choices of the rest of the family. Media through advertisement also shape up the consumption behaviour of these young consumers. Bravo, Fraj and Martinez (2007) highlighted that whenever young consumers faces some new consumption situation which they never encounter earlier they contact their parents. In most of the cases parents kept on giving them suggestions even when they start living alone. It is also realised that young consumers consult their parents more frequently when they start living alone than during their cohabitation. Even the product quality is also dependent of the parents usage, suggestion and recommendation. Schloffer, Maloles III and Chia (2009) mentioned that Generation Y is very well informed generation. They start using computer, internet and other electronic gadgets from the early part of their lives which not only enhance their knowledge for products but also it polishes their thinking capabilities. Internet is a tool for them who helped them in making purchase decisions. They are brand conscious and fashion oriented generation. But simultaneously they are criticised as poor financial planner and considered as they have very low financial skills. In Finland it has been noted and written by Raijas, Lehtinen and Leskinen (2010) that technological and economical institutions facilitate and encourage consumption by offering credit to consumers. These financial institutions are offering credit cards, mortgages, personal loans, etc. Young consumers are availing these credits facilities mainly for two reasons: one is for setting up their own homes and secondly they want to raise their social status. Consumption on mentioned factors leads this Generation Y towards increase their consumption and in some cases this consumption is more than their income which becomes critical and have adverse impact of the countrys economy. Bouzaglo and Moschis (2010) mentioned that in some countries and culture the show off becomes trend and people especially young consumers showed it in their consumptions. They purchase products which are classified as speciality products so that they can have separate identity and considered as status oriented and fashion driven. But in countries like France it is the culture that money and possessions should be kept in secrecy. It is also mentioned by Bouzaglo and Moschis (2010) that in case of dislocated families young consumers heavily rely on peer communications and media. In this case the important role of parental communication about consumption is missing and these young inexperienced consumers may lead towards excess consumption. 2.2.3. Consumption Behaviour: Asian Perspective According to Hongjune (2005) young consumers always try to experience new things. They are very experiential and innovative. When they are associated to a group of friends then their liking and disliking should be aligned with their peers. If they failed to do so then they have feeling that they will be dropped by their peers. Even in purchasing products they are very careful about the groups opinion with regard to the brand, colour, and features of product. Simultaneously in Singapore it is mentioned by Hongjune (2005) that Generation Y of Singapore has seven pockets. Parents, grandparents from maternal and paternal side and now part time work is also considered as respectable source of income. The income from part time work is sometimes saved but most of the time it has been observed that they kept of spending and the saving spirit is not like their parents or grandparents. Hsu and Chang (2006) on the basis of findings by Moschis and Churchill (1978) mentioned that socialization has an enormous impact on the consumption behaviour of individuals. There are three important and integral socialization agents which are parents, peers and media. Among these three parents are considered as one of the most critical and