Factors influencing customers’ purchasing decisions
The research focuses on the impact of social media on the buying behaviour of customers. As pointed out by Rodriguez, Peterson and Ajjan (2015) in the modern world, most of the activities undertaken by a person are directed by social media. Therefore, it can be said that while purchasing any product, review provided in the social media remains a reliable source of verification. The research focuses on such impact and helps to understand the importance about its application from the point of view of the organisations as well as the customers. In order to understand the impact in a proper manner, focus is made on Tesco, one of the well-known grocery retail stores situated in the United Kingdom (Tesco.com 2018). The development of the technology that has taken place in the society is considered and the manner in which customers can be influenced in a positive as well as a negative manner is analysed in the research.
The literature review focuses on the concepts that can be related to the variables of the research. In this case, social media and the purchasing power of customers are the factors that need to be considered so that an idea about the application of concept can be made. At the same time based on the analysis of the literature review, future recommendations can be provided that can help in gaining a proper solution to the problem at hand. According to Nascimento and Da Silveira (2017), the purchasing power of the customers may depend upon a variety of factors, which can be direct the interests shown and compel in taking decisions that may affect the profitability and productivity of organisations.
Jussila, Kärkkäinen and Aramo-Immonen (2014) are of the opinion that the purchasing power of customers is economic theories that are related to the ability of an individual or business to buy goods and products. Therefore, certain factors influence the decisions that form a large part of the overall economy of a nation. These factors include:
Supply and demand: This particular factor can be considered as the basic factor that helps in the influence of purchasing power. Kaplan and Haenlein (2016) are of the opinion that one of the strategies that are applied by companies is that it lowers its prices while trying to sell commodities that are stacked in its inventories. Hence, it allows the purchase of goods and at the same time helps in increasing the overall supply. However, the reason behind this being an influential factor is that with the decline in economy customers can be reluctant to spend the least amount that is marked by the organisations.
Theories related to purchasing decisions of customers
Marketing campaigns: Ngai, Tao and Moon (2015) are of the opinion that a good marketing campaign in the form of advertisement or by the use of print media can help in influencing the decisions of customers. This is mainly because customers may prefer one brand to another. However, as stated by Siddiqui and Singh (2016) a proper marketing campaign needs to be maintained so that the customers can be attracted to a particular company. Communication in the form of marketing campaign can help in retaining the loyalty of the customers.
Apart from these, other factors include personal preference as well as the cultural implications. According to Dijkmans, Kerkhof and Beukeboom (2015), these factors take into account the beliefs of the customers and to mitigate such preferences, organisations need to conduct surveys so that it can help in the development of its brand. In this regard, the role and importance of social media in business can be taken into account.
As stated by Kumar et al. (2016) social media can have a positive as well as negative impact upon a business. Social media help in increasing the popularity of a business and at the same time may provide business with opportunities to improve its influence in the market. Therefore, an analysis can be made about the importance of social media and the manner in which it can help in influencing the decisions of the customers.
Build awareness of the brand: Tiago and Veríssimo (2014) is of the opinion that proper exposure to social media can help in the building the awareness of a particular brand. This is particularly helpful if the brands are newly established in the market or aim to launch a new product. However, one of the downside of this is that in case an organisation is involved in any type of controversy, social media steps forth to report such events. These help in influencing the decisions of the customers as the culture of the business play an important role for earning the trust of the customers.
Provide support: As stated by Holt (2016) social media can help in providing the required support in a business. One of the assistance that is provided by social media is that it helped in bridging the communication gap between companies and customers. Earlier it was difficult for companies to reach out to customers to promote its products, however, with the development and help of social media companies can promote products and help in its development. However, in case of a company being involved in any unethical behaviour or controversy, social media may hinder its progress and create problems for the development of the organisations.
Similarities between EKB and Hawkins Stern theories
Hence, it can be said that the factors as well as the influence of social media can have both positive as well as negative influence in the purchasing power of customers. According to Hill and Brierley (2017), the reliability of the customers in the use of social media helps in identifying the best brand. At the same time, the application of theories can help in providing a clear understanding of the purchasing decisions of customers.
Blut et al. (2015) is of the opinion that in order to understand a concept in proper manner it is necessary to analyse the related theories so that recommended course of action can be taken. In the case of understanding the purchase power of customers, it is necessary to analyse theories that can be used to determine the influential factors. Hence, a detailed description of the theories is provided.
The Engel, Kollet and Blackwell (EKB) model was designed to understand the steps that customers take while making a decision to purchase products. According to Saeidi et al. (2015), the systematic approach of the customers provides an idea about the manner in which cautious prevails while purchasing a product. The initial step taken by the customers involves the use of social media as the advertisements that are mad for the promotion are uploaded in social media. Based on it information is collected about the quality and quantity of the products before discussing the proper use of the product.
As seen by Mei, Li and Li (2017) under the EKB model customers usually have two periods in which the input provided is put to value. One of the periods is the initial information stage in which customers have to collected relevant knowledge about the products. The other part includes the decision making stage in which the customers finalises the purchase of the product. These two stages provide a proper understanding of the theory and its relevancy to the customers.
Agnihotri et al. (2016) suggested that the Hawkins Stern theory mainly focuses on the impulse behaviour of the buyers. It has been argued that certain purchases made by customers can be acquainted with the rationale purchase that involves heavy thinking and decision-making. The external stimuli of the people have an impact on the impulse purchase that need to the traditional decision-making of an individual. One of the advantages of this theory is that it provides four categories that help in identifying the impulse behaviour of the people.
Analysis of Tesco’s impact of social media on customers’ purchasing power
As stated by Han and Hyun (2015) the impulse buying theory presents many opportunities of analysis that involve understanding the aspects that are undertaken by customers in trying to discover the product or service suitable for the time. This can also be related to social media, as the advertisements trigger the impulse purchase of the customers. Hence, it can be said that the application of the Hawkins Stern theory can help in predicting the purchase decisions and show the marketers the best and predictable behaviours that can be brought about in the market.
Hence, a conceptual model by analysing the theories and literature can be provided that can help in understanding the concept. The application of both the theories can bring about rational as well as impulse purchase decisions of the customers and based on such decisions it can be said that marketers can capture the thought process of the customers.
After having analysed the existing the theories, an analysis can be made about the application of the theories and the manner in which it helps in identifying the impact of social media. As observed by Gera et al. (2017) the similarity that exists between the Engel, Kollet and Blackwell with that of the Hawkins Stern theory is that both theories focus on a systematic analysis of the mindset of the customers. It is important to understand that the customers usually try to understand the products or services that are offered by an organisation before committing to purchase the item. Social media acts as an agent that helps in determining the factors necessities for engaging in the purchase of the materials.
As stated by Martinaityte, Sacramento and Aryee (2015) it is an important duty of the customers to identify the proper organisations that provide it with the best satisfaction in terms of its demands. In this case, analysis of Tesco can be done so that the impact of social media on the purchasing power of customers from the organisation can be understood. It has been stated earlier Tesco is one of the best grocery retail stores in the United Kingdom. Despite its growth in the international market, it faces competition from various other companies of the same industry and therefore, need to ensure that it remains the best in its retail products.
The impact of social media on the customer decision making while purchasing products from Tesco can be attributed to the feedback provided by the people for the company. Sengupta, Balaji and Krishnan (2015) is of the opinion social media can bring about huge changes in the development of a market and at the same time ensure that target customers can continue to remain loyal. However, the application of social media can be benefitted by the customers as well as the organisations. Organisations like Tesco can use the social media to promote its new products so that information of it can reach the target market of the company. In the case of the customers the social media can help in increasing the reputation of the product or organisation.
Caruana, Ramasashan and Krentler (2015) stated that the factors that exist in the influence of customer satisfaction can be attributed with the fact that every factor represents the importance and direct link it has with the social media. For example, in the case of demand and supply, it has been seen that the demand factors and the supply factors are complementary to one another indicating that these two factors can be influenced by the social media. This is mainly because while social media helps in promoting one particular product, indirectly it causes a dip in popularity of the other products that are sold by the organisations (Bansal and Taylor 2015).
Similarly in the case of Tesco, the demand of fresh vegetables from the company may diminish if social media intervenes in the promotion of fresh vegetables at a lower cost than Tesco that are available in Walmart. This can create competition as well as make sure that the purchase decision of the customers become doubtful. According to Gu and Ye (2014), the impact of social media can be seen from the effectiveness it has on the market and at the same time can help in pointing out the flaws in an organisation. It is for this reason that social media is often referred to as the best critique for any organisation (Aijing, Terui and Kannan, 2016).
The analysis of the Engel, Kollet and Blackwell theory as well as the Hawkins Stern theory provides an idea about the mentality of the customers in a way that it defines the steps taken by customers. These steps can be related with the factors involved in making decisions based on the purchase of the products. These factors clearly signify that for an organisation to grow and succeed, it needs to continue with developing strategies that may change the consequences of the behaviour. However, Kumar et al. (2016) is of the opinion, every factor such as the economic fluctuation cannot be controlled by the organisations and therefore, it is necessary that innovation be made to mitigate the impact.
In the case of using social media it can be said that it is important that a company like Tesco use the power of the media to its advantage. It has been seen that Tesco has its own website which can be used to be linked with that the social media sites. The application of the website can help Tesco to improve its popularity and the same time become popular in countries outside the United Kingdom (Tesco.com 2018). The customer purchase decision can be manipulated in a way that it can help in proving the customers with an opportunity to ignore the factors. Hence, Tesco can use the social media to gain support in the business, especially while maintaining communication with the customers (Tesco.com 2018).
Therefore, it can be said that the application of social media in business can help in its development and at the same time ensure that every customer earn the right to continue making decisions based on the internal and external factors. Dijkmans, Kerkhof and Beukeboom (2015) are of the opinion that it is necessary for an organisation to value the positive as well as the negative side of the social media so that casual relationships with the customers can be maintained. This relationship can be based on trust of the customers after reviewing social media or by identifying the nature and quality of the products based on self decision making ability.
In order to understand the concept in a more prominent manner, a conceptual model can be propose that can highlight the factors that are involved in the development of the impact of social media on the purchase decision of the customers.
Figure: Conceptual model
(Source: Created by author)
After the analysis of the literature review and forming a concept about the impact discussion can be made about the link between the factors and the practical implications in the business. It can be seen that for a company like Tesco the use of social media can help it to gain popularity in the business. However, it is the factors that affect the purchasing decisions that need to be the focal point of the company. The conceptual implication provides facts that the factors that affect the customer decisions process as well as the importance of social media are responsible for the influencing the decision of the customers.
Therefore, it can be said that for policy makers the practical implementation of the model can be to understand the development of any new factor within the market. Organisations like Tesco need to look beyond the stated factors so that it can maintain its reputation in the market. It is for this reason that it is important for Tesco to identify the impact and ensure that social media is used for promoting its goods and services. It can help in mitigating threats from the competition all over the world and provide the company with an opportunity to succeed in the current business market.
In the light of this limitations of the concept can be stated. The limitation is that the concept fails to state specific research points necessary for the development of social media. It is also necessary to understand the factors involved in the purchase decision and the manner in which it can be mitigated so that companies like Tesco can continue to grow its business. Furthermore, social media helps in identifying the negative impact that it may cause. Therefore, the future research that needs to be undertaken can help in identifying the importance of social media in detail.
Conclusion
Therefore, it can be concluded that the impact of social media on the customer purchase decision can be attributed to the development of factors that influence its behaviours. At the same time, it is also necessary that every customer view the social media sites in order to understand the review provided about an organisation or product. In the case of Tesco, the company can use the social media for its benefit and ensure that it manages to continue with its growth in the international market. The concept of social media and the manner in which it can influence the customers has been verified that validates the importance of the power of the social media. Furthermore, it can be said that in order to gain a proper reputation in the market, social media can be used to perform and provide effective reviews. The use of the theories related to the social media establishes this fact thoroughly along with the fact that the decision making power of the customer rest upon a systematic analysis.
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