Outline the Ways in Which Rubbish Can Be Said to Have Value in a Consumer Society

Since the latter part of the nineteenth century, contemporary UK society has been steadily changing. Where once we tended to define ourselves by our employment and the status in society that position may have given us, we now define ourselves much more by the goods we buy and choose to surround ourselves with (Hinchcliffe 2009). What we wear, the house we live in, the food we choose to buy and the experiences we create for ourselves all are thought to say more about us personally and as a society and have led to the creation of the term ‘consumer society’(Hinchliffe 2009).

The rise in disposable income and the ability to acquire easy credit has enabled the vast majority of the UK population to buy goods more readily than at any time ever before and to fill our homes with an array of consumables. However this increase in affluence has generated a massive rise in consumer goods being manufactured and purchased and consequently is creating huge amounts of waste in return. Outdated and broken goods, massive amounts of packaging and waste created during manufacture are proving increasingly difficult to dispose of.

The resources being depleted in order to create and transport goods are also having devastating consequences on the earth and the environment and are not sustainable (Brown 2009). This essay will look at some of the ways in which we can revalue this rubbish in our ever changing and evolving society. When we purchase goods today there are many factors that can eventually transform the item into what we would commonly term as ‘rubbish’, something of no value whatsoever to its owner. Goods are made increasingly cheaply and in quantity to allow for low selling prices and are not necessarily built to last.

The cost of repair can be more than replacing the item itself with very few specialist repair services being offered on the high street nowadays. Ever changing fashions and trends altering every season can lead to everything from shoes to furniture being thrown away and replaced in order for one to stay ‘in trend’ in our modern consumer society (Brown 2009). One theory of how rubbish can be redefined and given new value is put forward by Michael Thomson (Brown 2009). His theory suggests that items can move from being valued into the category of rubbish and out again into something of value.

Items can be ‘Transient’, in other words, not built to last and consisting of most of the consumer goods such as mobile phones and clothing we can purchase in our shops today. Their value will decrease with use and they will often be replaced as fashion and trend dictates and newer and more desired items come on to the market. Other items can be called ‘Durables’. These items are often more expensive to buy and gain value over time such as good jewellery, paintings and rarer items people may wish to invest in or collect. His third category is one of ‘Zero value’ such as completely broken items and worn out clothes (Brown 2009).

Economic reasons can be one of the ways in which new value can be placed on an object. The rise in charity shops, car boot sales and online auctions enables some of the ‘Transient’ items to be given new value. One person’s rubbish may be of value to another (Brown 2009). The changing economic climate since the recent credit crunch and more unemployment may mean that people with more time and less money may find uses for the worn out clothes and other ‘Zero value’ items by repairing or recycling in some innovative way(‘Reflections on Material Lives’,2009).

Transient goods can become out-dated over time until they apparently become almost worthless. Some of these goods may then become popular or appealing in some other way. For instance a new trend in retro items such as the current interest in ‘shabby chic’ goods gives the items a fashionable appeal. Old and outdated consumer goods can become of interest to collectors and as interest increases so does the value. If these goods are no longer being produced, demand will outweigh supply and thus increase their price and therefore their value (Brown 2009).

Aesthetic revaluation is another example of how new value can be given to rubbish. Some contemporary artists such as Tracey Emin and Chris Jordan (Brown 2009) have created works containing junk and other waste such as plastic cups, circuit boards, empty bottles and cigarette ends. By making a statement about our wastefulness in our consumer society in their works, they are bringing new value to rubbish by transforming it into valuable objects of art (Brown 2009). Environmental concern is another aspect that is prompting the revaluation of rubbish.

In 2008, the waste generated more quickly than could be disposed of, was said to be 40% greater than the earth’s available yearly resources (Brown 2009). The earth’s resources and its capacity for absorbing the waste we generate has become environmentally unsustainable. Disposing and recycling of rubbish is now huge international business and although there is great economic value in this for the companies involved the need to find ways to sustain the environment is also a major factor in this process (Brown 2009).

Transporting rubbish around the world where it is recycled more cheaply and remanufactured into a usable commodity to be shipped back, highlights the new value of some of our rubbish. Waste plastics, paper, card and glass are now just some of the products collected, recycled and sold for profit. Previously they may have been simply landfilled at not only monetary cost, so of ‘negative value’, but as we are now discovering, great cost to our planet (Brown 2009). Revaluing rubbish can therefore come about in many ways.

In an ever growing consumer society we are beginning to become more fully aware of not only the amount of rubbish we are generating, but the understanding that by revaluing this waste we are helping to sustain the planet. Where once we would have thrown it into the bin without thought, we now know the ‘value’ of our waste. The increasing demands to cease using plastic carriers in favour of supermarket ‘bags for life’; the prevalence of car park bottle bins and clothing banks; the household recycling bins are all constant reminders to us of the value of our rubbish.

Economic value can be added to out dated goods due to new trends and fashions and as items become of interest to collectors. The less there may be of something and the more the demand is for it; the more likely the value will be raised creating further interest and higher prices. Taking junk and turning it into art also revalue’s rubbish. Many artists are seeing the possibilities of pointing out to us our wastefulness and by using rubbish in their art they are turning it into something of artistic merit and often considerable monetary value (Brown 2009).

Moreover, even design students today are being taught to utilise used items and create something new and useful or aesthetically appealing from them. (Reflections on Material Lives’, 2009). Whether selling our old possessions on online auctions for profit or donating to the charity shop, we are giving new value to what we no longer feel has worth. Rubbish is becoming more and more valuable as our consumption as a society grows ; “at a time when we’re both short of materials globally as well as short of energy globally, we’re now looking to waste as a real resource” ( Reflections on Material Lives,2009).

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What is the opposite of a consumer culture?

Anti-consumerism can be considered as the opposite of consumer culture. This term refers to sociopolitical ideology. Consumerism is related to perpetual purchases and consuming material goods. Anti-consumerism is connected with private actions from various business companies which seek financial targets.

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Supply and Demand and Budget Line

Table of contents

There are two ways to measure the consumer preferences or what the consumer wants. The first one is by trying to put a ‘value’ on the satisfaction a consumer obtains from consuming a ‘unit’ of a good. Consumers are assumed to be able measure utility in terms of a ‘util’. However, we cannot find the total utility by using this method.

So we can use another way which is by ranking the product. We can say that the consumer is preferred good Y compared to good X. the indifference curve is a curve that shows consumption bundles that give the consumer the same level of satisfaction. So this means that the consumer is satisfied at any point if the indifference curves above. The slope of the indifference curves are downward sloping. For example, the consumer will satisfy when he buys 3 good X and 4 good Y. The meaning of the term budget constraint is what the consumer can afford to buy.

The income of the consumer will determine how much he can buy in the market. So, the budget line in the graph above is showing how much good X and Y that the consumer affords to buy. If the slope of the budget line is higher, this means that the consumer afford to buy good X compare to good Y. While if the slope of the budget line is lower, the consumer afford to buy good Y compare to good X. From the graph, we can see that the consumer is not maximizing the satisfaction. This is because the indifference curves are inside the budget line and it intersect at two points which are a and b.

At point b, the slope of the indifference curve (MRSxy ) is less than the slope of the budget line (Px/Py). While, at point a, the slope of the indifference curve (MRSxy ) is greater than the slope of the budget line (Px/Py). So the consumer does not maximizing the satisfaction for both point a and b. In order to maximize the satisfaction, the slope of the indifference curve must equal to the slope of the budget line. So at point b, the consumer should reduce the consumption of good X and increase the consumption of good Y until both slope of indifference curve and budget line will become the same.

By switching spending away from good X towards good Y, the consumer will be able to reach a higher indifference curve. From the graph, we can see that the indifference curve has shift and meet the budget line at the point c. at this point, the slope of the indifference curve and the budget line are the same. So the equation will change to [MRSXY = PX / PY]. At point c, the consumer satisfaction is at the highest place. The consumer choice is the product which been sold in the market. While, the individual demand for a product is the demand of a consumer on that product. The demand on a product will be higher if there are only small choices in the market. People tend to demand more for the product as they cannot find other product.

Definition of Price Elasticity of Demand (PEoD)

The price elasticity of demand is the measure of how responsive is the quantity demanded to a change in price. There are many types of elasticity in demand which will stand for different types of product in the market. In order to differentiate between them we need to state the definition and the ratio of the elasticity.

Relatively Elastic Demand The relatively elastic demand is a demand relationship in which the percentage change in quantity demanded is large in absolute value than the percentage change in price. In other words the percentage change in quantity demanded is larger than the percentage change in price.  The ratio for the relatively elastic demand is 1< PEoD < Infinity Relatively Inelastic Demand The relatively inelastic demand is a demand that responds, somewhat, but not a great deal to change in price.

In other words, the change in percentage change in price is larger than the percentage change in quantity demanded.  The ratio for the relatively inelastic demand is 0 < PEoD < 1 Unit Elastic Demand The unit elastic demand is a demand relationship in which the percentage change in quantity demanded is the same as the percentage in change of the price.  The ratio for the unit elastic demand is PEoD = 1 Perfectly Elastic Demand The perfectly elastic demand is a demand in which the quantity demanded drops to zero at the slightest in price.

In other words, the quantity demanded will become zero if the seller increases the price of the product. While they will never reduce the price as it will reduce their normal profit. {draw:frame} The ratio for the perfectly elastic demand is PEoD = Infinity Perfectly Inelastic Demand The perfectly inelastic demand is a demand in which quantity demanded does not respond at all to the change in price. {draw:frame} The ratio for the perfectly inelastic demand is PEoD = 0.

Calculating the Price Elasticity of Demand

The formula to determine the price elasticity of demand is: PEoD = (% Change in Quantity Demanded)*/(*% Change in Price) Price (OLD) =9 Price (NEW) =10 Q Demand (OLD) =150 Q Demand (NEW) =110 Calculating the Percentage Change in Quantity Demanded [QDemand(NEW) – QDemand(OLD)] / QDemand(OLD) [110 – 150] / 150 = (-40/150) = -0. 2667 Calculating the Percentage Change in Price [Price(NEW) – Price(OLD)] / Price(OLD)] [10 – 9] / 9 = (1/9) = 0. 1111 PEoD = (% Change in Quantity Demanded)/(% Change in Price) PEoD = (-0. 2667)/(0. 1111) = -2. 4005 TASK 3 The product that I choose is tobacco.

Both of the elasticity of demand and supply of tobacco is relatively inelastic. This is because the product will has an inelastic demand if the item is habit forming. As tobacco is a habit forming, it is relatively inelastic in demand. So if there is increase in price, the quantity demanded will not respond too much. While, the supply of the tobacco is relatively inelastic is because of the time period. As the tobacco is the agriculture product, it will take some times to grow it and get the product. So the producer cannot increase the quantity of supply although there are many demands for the tobacco.

The graph above has shown a market of tobacco with the relatively inelastic demand and supply curves. As we can see, the total surplus has reduced since the implementation of the tax. The benefit received by buyers in a market is measured by consumer surplus. The consumer surplus is the amount buyers are willingly to pay for the good minus the amount they actually pay for it. So the consumer surplus before the tax are (a + b + c). However, after the implementation of tax on the tobacco, the consumer surplus is only a.

This means that the consumer needs to pay more after the implementation of tax. P in the graph stands for the price of tobacco before the tax. While, P*B* is the price that buyers need to pay after the tax has been implemented. The benefit received by sellers in a market is measured by producer surplus. The producer surplus is the amount of sellers received for the good minus their cost. So the producer surplus before the implementation of tax is (d + e + f). But, the producer surplus change after the implementation of tax, which became only f*. * This means that the seller received less profit after the tax implemented. **P*S in the graph is the price that seller received after the implementation of the tax. So this means that, the consumers and producers have to bear the tax burden after the tax has been implemented. Tax burden is the amount of tax suffered by individuals or organization. The tax burden for the consumer and seller may vary depends on the elasticity of the demand and supply curves. Although the consumer and sellers seems to be burden by the tax, there is one party that gains benefit from it.

It is the government because it has gain revenue from the tax. The tax revenue is the (b + d) in the graph above. From the revenue, the government can use it for other investment. However, the tax has also brought another disadvantage which is the deadweight loss. The deadweight loss is the reduction in total surplus that results from a tax. The deadweight loss in the graph is (c + e). The size of deadweight loss also depends on the elasticity of the demand and supply curves. If both of the curves become more elastic, then the size of the deadweight loss will become smaller. So in the conclusion the tax has given benefit to the government but brought disadvantages to the consumer and producer.

Reference

  1. Mankiw, N. G. (2008). Ten Principles of Economics. In J. W. Calhoun, A. V. Rosenberg, M. Worls, J. Tufts, J. E. Thomas & K. Yanos (Eds. ), Principles of Economics. Canada: SOUTH-WESTERN CENGAGE Learning.
  2. Moffatt, M. (2010). Price Elasticity of Demand. _ _Retrieved April 26, 2010, from http://economics. about. com/cs/micfrohelp/a/priceelasticity. htm
  3. Webster, N. (2007). Economics_ _(3rd ed. ). Adelaide: Greg Eather and Associates, Publication Division.

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Global Consumer Product

Bibliography Executive Summary Global Consumer Products Company, a well-established company decided to launch a new product range. That is Baby Soap ranges. Suddenly they identified a need of a Brand Manager for this product ranges. And decided to recruit a person externally. Since this was not pre-planned and the company is in a hurry to introduce their new product to the market, the recruitment and selection process was carried out within a very period of time.

There were several major mistakes in the advertisement they repaper in order to publish on the newspaper. The company had failed to include the Job Description, Job Specification and a description about the company. Hence the advertisement was unable to attract enough number of candidates. Somehow they managed to select number of people to call for the initial interview. Marketing Manager and the HRS Manager were supposed to carry out this interview. But this was placed on the exact date on which the company had its monthly Board meeting.

Since it is mandatory for these two responsible managers to attend to that the interview was done hurriedly and selected two candidates for the last interview. As the CEO and the Marketing director had to participate in an exhibition through which their target was to create new customers for their new product, they are hoping to launch in the near future, the last interview took place but late. Mr.. Anton was selected as the Brand Manager. In the first week he was supposed to give an induction to make him familiar with the company and the Job. But he had to involve in the business activities from first day onwards.

He was asked to come up with a strategic plan for branding no sooner he came. He didn’t have proper knowledge and kills and also didn’t have time to study the branding architecture of the new products. So the branding strategy and the action plan he brought was not successful when compared with the rival firms. And the product proved to be a failure from the very beginning. Mr.. Anton understood that his level of competency and technical knowledge was under the required level and hence he was denominated. Since the company target couldn’t be achieved whole branding group was denominated. As a result Mr..

Matron’s probationary period was extended. That is the overall summary of the case study to be analyzed. Analysis: Issues involved in the case. Global Consumer Products Company (GAP), had planned a strategy to launch a new product range. (Baby Soap Ranges). Planning a new product is a long term procedure. Hence identifying the Manpower requirement in order to carry out the plan must be done along with the product planning. Because it is a part of the product launch. Failure to do so resulted in several issues including product being failed in the market. Key issues identified are discussed below. 1.

Poor HRS Planning The key reason for all the issues discussed here is poor HRS planning. The GAP Company failed to identify the HRS requirement for the post of Band Manager, when they were planning the new product. This post can be considered a critical post, to which selecting a person is very difficult. Because, they are going to introduce a new product, I. E. Baby soap range to the market. In Sir Lankan context, the market for the baby soap is almost saturated with both local and imported baby soap products. Mostly the brands are now inculcated in customers and hence it is difficult to creep into this market and create an own brand.

But knowing that, still deciding upon to launch this product, company is taking a huge risk. They need ample of marketing campaigns and plans and ways of making the brand familiar to the customers and create a new customer segment. It is, the brand manager who has the responsibility to work it out. Therefore company should recruit a person with vast experience and knowledge regarding Marketing and Branding of products. The study states that Mr.. Anton does not have the required level of experience and competencies to do it. But this was found out later.

Required Brand Manager must have to have the enough competencies and skills plus a good understating about the industry and the monitors in order to create a very strong branding strategy to grab the market. He must have the talent to create a brand strategy which makes the product popular among the target customer segment. Since the company was in a rush to hire a Brand Manager within very short period of time, they didn’t have enough time to create a suitable Job Description and a Job Specification to publish in the newspaper. Job Description describes the Job.

The responsibilities, duties assigned to the Job, etc. Whereas Job Specification the type of person you wish to hire. His qualifications, skills knowledge and, competencies. Etc. This is yet again, another adverse result of poor HRS Planning. 2. Mistakes in the Advertisement The company was in such a hurry to hire a Brand Manager; they didn’t give much of an attention to create a professional attractive advertisement. The advertisement appeared on the newspaper was suffering from absence of several vital information such as Job Description, Job Specification and details about the company.

After Effects: The company was failed to attract enough number of candidates. The cost incurred in the advertising was in vain, because the company made a wrong selection ultimately. Most suitable candidates have not applied for the post because of the lack of information provided. Study clearly says that because of the careless mistakes done by the company when doing the advertisement, their expectation on getting a pool of candidates was not fulfilled. Only very few applied, and among them there wasn’t a single C.V. that will fit into the Job well.

Since they have incurred a cost, and it is and extra cost plus a time consuming process to correct the mistakes and advertise again and get another round of C.v., they have decided to proceed further with the received C.v.. 3. Mistakes and Failures in the Interview Process Marketing Manager and the HRS Manager once shortlist the available C.v. and called for interviews. Another mistake they did was, without checking the company’s schedule, they placed the date of the interview.

As a result they have scheduled the interviews on the exact date of monthly Board meeting was supposed to take place. Initial interview is the first time the candidates and employers met physically. Hence the interview should be well organized properly planned and should be done with a greater care. Because, we have to select a person who has the skills, knowledge, experience, and also the right attitude towards the Job and the company. Each and every candidate should be given same attention and same questions and evaluated on a fair manner.

Since both the interviewers were in hurry to participate in the monthly Board meeting, which also has a similar importance, there is a question whether they did the interview accordingly. They were under a pressure to finish off the interview as soon as possible to present at the meeting. Questions arising with regard to this improper interview session: Were all the candidates given same time eroded? Were all the candidates asked same questions and in the same sequence? Were the candidates given enough time to describe themselves and give information?

Were candidates being questioned stressing on the subject matter? (I. E. Were they asked questions relating to the post of Brand Manager, so as to get an idea regarding whether he/she has the capacity to work as the brand manager) Were candidates given time to ask questions about the company and the Job post? (Since the advertisement doesn’t provide information enough, candidates must have questions ND doubts to clarify) Did interviewers pay attention on the candidates’ behavior, non-verbal communication etc? Interviewer should have a free mind to interview people and observe them closely.

They were in a hurry to go to the board meeting. Therefore they did the interview without paying much of an attention and interest. Still they managed to select 2 candidates for the final interview. They might have missed more competent candidates while they rush through the interview. 4. No Induction program Once a candidate is hired to any company, it is an essential aspect to give him/ her n induction program. Through that the new employee familiarizes to the company culture, and to the department he has to work plus introduce him to other employees with whom he/she has to work.

Then he can get a better knowledge about the nature of the Job he has to perform, his peers, subordinates and superiors. In this case, GAP Company didn’t give Mr.. Anton an induction to make him familiar with company’s systems and processes. Instead he was directly put into his Job and was expected to work as there were lots of requests to the new product. At least he was not given knowledge about the new product range the company is expecting to launch in the future, or the requests and demand placed on the product by the external parties. Even Mr.. Anton was not informed about the market company tried to create by visiting the exhibition.

Correctly speaking Mr.. Anton should have been selected before the exhibition, so that he could have participated in it. Because, every decision was taken without his knowledge, and participation prior to his arrival. As the Brand Manager he must be a part of the decision making process as far as this new product is concerned. 5. Poor Performance of Mr.. Anton Mr.. Anton was not familiar with the systems and processes of the company. Also he does not have a good knowledge about the Job he has to perform, because as soon as he was employed, directly put into the Job.

Then, with no time he was asked to develop a branding strategy for the new products range. Mr.. Anton faced a huge problem here. Because he did not have expected level of knowledge and experience in Strategic Management initiatives. He didn’t have adequate time to study the Branding architecture of the new product. He has not exposed to such experience in his previous Job. He didn’t have time to study the nature of competitors the company has to compete with, so that he could have created a Branding Strategy and an action plan to bring out their products.

Therefore it is reasonable and natural that the strategy and action plan he created being failed. This made him understand that he is not suitable to this position. Especially he understood that he does not have the expected knowledge and experience to perform as the Brand Manager, Sometimes he had to listen to his subordinates when it comes to technical areas of the Job role. 6. Product fails in the market Ultimate result was the product range couldn’t compete with the well establish rivals and it was at a failure. Branding team was not lead by a powerful manager, therefore in latter part hardly branding activity took place.

Hence employees were denominated. They couldn’t achieve the given targets. GAP lost the contacts the company managed to create in the beginning, and lost the market share. 7. Poor HRS practices in GAP All above issues created because of the poor HRS practices of the company. Even though it was not clearly mentioned in the text, the way they acted in recruiting Mr.. Anton implies that. HRS department has failed to fulfill certain duties and responsibilities placed on them. The whole process of recruiting, selecting and induction was not planned at all.

HRS department had not planned for future HRS needs in the company. Didn’t plan the Interview process properly. 1 . JDK and AS must be prepared carefully clearly mentioning the type of person and the nature of the Job he has to perform. 2. When advertising in public media, HRS division must be more responsible to make sure that every information is provided. 3. Scheduling the date of interview must be done without clashing with other programs n the company. Recruited employees must be given a proper induction. Evaluating the performance of the new employees.

Had the HRS division done so the performance of Mr.. Anton as the Brand Manager, they could have identified the problem facing by Mr.. Anton. The issue could have been addressed earlier than this. Recommendations Mr.. Anton is employed as a permanent employee to this company, he cannot be terminate purely based on his poor performance. As the first step, company can arrange a proper training and development session for Mr.. Anton to give him an opportunity to enhance his knowledge on branding. It will help him to develop his technical competency required in his Job.

Proper training will take some time for him to gain the expected level of skills and competencies, but still the company has to do it as there is no replacement and it was company’s fault of providing insufficient information and recruiting the wring person. Another recommendation is to hire an external professional temporarily to develop a stronger strategy to relocate the product and reenter into the market freshly. This is costly option but still as the company has invested a huge amount on this new product and hence the opportunity cost is very high, company cannot discontinue the operations.

And can make Mr.. Anton work under the hired external professional for some time. This will be an excellent on the Job training to him. When considering the situational factors, hiring an external professional to the company is a very good short term solution. The company can monitor the performance level of Mr.. Anton. If he shows improvements in the Job then the company can continue to keep him as the Brand Manager. The marketing team should implement some attractive and string marketing campaigns to reenter to the market. A very aggressive alternative is also is available.

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Australian Consumer Law Tutorial Answers

A representative for Scoutmaster told Mrs. Trans that: ; “We believe the new rent is very reasonable and below the market value”; and The rent is lower than the rental paid by other tenants in the Food Court” Both statements were incorrect. Scoutmaster gave Mrs. Trans 7 days to agree to the lease renewal, but provided no reason for giving this limited time frame. Advise Mrs. Trans as to whether Scoutmaster Pity Ltd has breached the Competition and Consumer Act 2010 (previously referred to as Trade Practices Act 1974 (Act)) and if so, her available remedies.

Issue: Were the statements misleading or deceptive in breach of the Australian Consumer Law? Law: ; Section 18, Schedule 2 to the Competition and Consumer Act 2010 (Act) (or alternatively you can say Section 18 Australian Consumer Law which is the title for Schedule 2) ; Section 4 (“presumption of misleading”) ; Eveready Australia Pity Ltd v Gillette Australia Pity Ltd OR Taco Company of Status Inc v Taco Bell Pity Ltd (“objective test”) Application: ; Explain which of the statements was an opinion and why the law presumes it was misleading (e was there any basis for making the opinion? ; Apply the objective test to the second statement made by the Scoutmaster representative. In particular: (what will be the target market and why would a reasonable person from that target market be misled or deceived? Issue: Did Scoutmaster engage in unconscionable conduct? ; Section 22 Australian Consumer Law ; Miller v Gunter & Ours OR Commercial Bank of Australia v Amid ; Explain why section 21 and not section 20 applies ; Explain why Scoutmasters’ conduct was in trade or commerce ; Explain what the conduct was and why it was unconscionable, with reference to the factors listed in section 22 of the Australian Consumer Law.

In particular: o The superior bargaining position of Scoutmaster o Ability to understand documents o Undue pressure and tactics used Issue: Did Scoutmaster make a false or misleading representation? Section Australian Consumer Law ; Explain why the statements were false regarding the price of a service, in particular noting what the relevant price is and what the service is in the question. Issue: What are the remedies? Law: Section 236 (damages); Section 232 (injunction); Section 243 (other orders) ; Explain the remedies that Mrs. Trans would be seeking as you are advising her and not the AC.

In particular: o Explain what an injunction would do and why Mrs. Trans would want this remedy; o Explain when Mrs. Trans would be entitled to damages and how damages would be calculated o Explain when Mrs. Trans loud want to vary the contract and what the variation would be o Explain when Mrs. Trans would want to void the contract and what the effect of voiding the contract would be Conclusion: ; Scoutmaster has engaged in misleading and deceptive conduct, unconscionable conduct and made a false or misleading representation in respect of the price of a service.

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The Behavioral Economics of Consumer Brand Choice

The behavioral economics of consumer brand choice: patterns of reinforcement and utility minimization Gordon R. Focal a, , Jorge M. Oliver-Castro b , Teresa C. Schwarzenegger a b a Cardiff Business School, Cardiff University, Cardiff, UK Institutor De Psychological, Universities De Bras Lila, Bras Lila, UDF, Brazil I I Abstract Purchasers of fast-moving consumer goods generally exhibit multi-brand choice, selecting apparently randomly among a small subset or “repertoire” of tried and trusted brands.

Their behavior shows both matching and minimization, though t is not clear Just what the majority of buyers are maximizing. Each brand attracts, however, a small percentage of consumers who are 100%-loyal to it during the period of observation. Some of these are exclusively buyers of premium-priced brands who are presumably maximizing informational reinforcement because their demand for the brand is relatively price-insensitive or inelastic.

Others buy exclusively the cheapest brands available and can be assumed to maximize utilitarian reinforcement since their behavior is particularly price-sensitive or elastic. Between them are the charity of consumers whose multi-brand buying takes the form of selecting a mixture of economy- and premium-priced brands. Based on the analysis of buying patterns of 80 consumers for 9 product categories, the paper examines the continuum of consumers so defined and seeks to relate their buying behavior to the question of how and what consumers maximize. 004 Elsevier B. V. All rights reserved. Keywords: Consumer behavior; Elasticity of demand; Brand choice; Behavioral Perspective Model; Fast moving consumer goods 1 . Introduction Within marketing science, the analysis of brand choices for fast- paving consumer goods, based on aggregate data, shows that most individuals tend to purchase a variety of brands within a product category.

More specifically, such results indicate that, in steady-state markets: (a) only a small portion of consumers buy Just one brand on consecutive shopping occasions, that is, few consumers remain 100% loyal to one brand; (b) each brand attracts a small group of 100%-loyal consumers; (c) the majority of consumers buy several different brands, selected apparently randomly from a subset of existing brands; (d) existing Corresponding author. Tell. : +44-2920-874-275. E-mail address: Foxallg@Cardiff. C. UK (G. R. Focal). Rand’s usually differ widely with respect to penetration level and not so much in The Behavioral Economics of Consumer Brand Choice: Patterns of Reinforcement and Utility Minimization By mimicry utility minimization Gordon R. Focal , Jorge M. Oliver-Castro b , Teresa C. Apparently randomly from a subset of existing brands; (d) existing * analysis period); and (e) brands with smaller penetration levels (or market shares) also tend to show smaller average buying frequency and smaller percentages of 100%-loyal consumers (I. E. , “double Jeopardy’).

These results have been replicated for mom 30 food and drink products (from cookies to beer), 20 cleaning and personal care products (from cosmetics to heavy cleaning liquids), gasoline, aviation fuel, automobiles, some medicines and pharmaceutical prescriptions, television channels and shows, shopping trips, store chains, individual stores, and attitudes toward brands (CB. Doll’s Riley et al. , 1997; Remembering, 1972; Remembering et al. , 1990; Remembering and Scrivener, 1999; Goatherd et al. , 1984; Uncles et al. , 1995). 0376-6357/$ – see front matter 2004 Elsevier B. V. All rights reserved. Ii:10. 1016/ j. Beeper. 2004. 03. 007 G. R. Focal et al. Behavioral processes 66 (2004) 235-260 So sure are the relationships involved that a mathematical model has also been developed to describe such regularities, the Directly Model (e. G. , Remembering et al. , 1990), which has been used to predict the market insertion of new products (Remembering, 1993), to analyze the effects of promotions (Remembering, 1986; Remembering et al. , 1994), and to evaluate patterns of store loyalty (Remembering and England, 1990; Keen and Remembering, 1984; Sharp and Sharp, 1997; Uncles and Remembering, 1990).

Nonetheless, despite the wide replication of such patterns, which have been raised y some authors to the status of “empirical generalizations” in marketing (e. G. , Uncles et al. , 1995), little is known about the variables and the underlying behavioral mechanisms that influence and explain consumers’ brand choices. The marketing literature is not forthcoming, for instance, about the factors responsible for shaping the subset of the brands that compose a product category among which consumers choose in practice (their “consideration sets”) and what Remembering calls the “repertoire” of such brands actually purchased (their “purchase sets”).

It is a basic axiom of modern marketing thought that sales are produced not simply by price acting alone, any more than by product attributes, or advertising and other promotional means, or distribution effectiveness acting singly, but by a combination of all four of these influences on demand that constitute the “marketing mix. As marketing science has developed as a separate discipline, it has De-emphasized the influence of price on demand (the principal focus of the economist’s purview) and stressed the non-price elements of the marketing mix, notably the promotional activity involved in brand differentiation (De Charleston and McDonald, 2003; Ajar ND William, 1998; Watkins, 1986).

Behavioral economics, partly because of the stress it has placed on the economics of animal responding in experimental situations, where the sole reliable analogue of the influences on consumer demand ruling in the market place relates to price, has necessarily followed the reasoning and methodology of the economist rather than the marketing scientist. The non-price economics. The assumption that consumers maximize utility in some way or other?a preoccupation of the economics approach?is, nevertheless, common in the marketing literature.

Criminality and Raja (1988), for example, state that “the consumer hoses that alternative which maximizes his (or her) utility,” although they recognize that this is a latent or unobservable utility which is assumed rather than tested (CB. Archaic, 1980). Based on this minimization assumption, one could expect consumers to choose the cheapest brands that offer the attributes and characteristics that they are looking for.

Although the price of different brands is certainly one variable that is expected to influence brand choice, as exemplified by the literature on the effects of promotions (e. G. , Remembering, 1986; Remembering et al. , 1994; Bell et al. , 1999), empirical evidence showing that consumers tend to maximize when choosing across brands was not available before recent research on the behavioral economics of brand choice (Focal and James, 2001, 2003; Focal and Schwarzenegger, 2003).

In this paper, we extend this research from the analysis of single cases to that of panel data for some 80 consumers purchasing 9 product categories, examining in detail the relationship between price and quantity demanded in relation to the functional and symbolic attributes of brands which influence the composition of consumers’ consideration and purchase sets. 1. 1 . Previous research Focal (AAA), Focal and James (2001 , 2003), and Focal and Schwarzenegger (2003) adopted techniques refined in choice experiments in behavioral economics and behavior analysis to investigate brand choice.

Three types of analysis were used: matching, relative demand, and minimization. 1. 1. 1 . Matching analysis The results of choice experiments with nonhuman animals in behavior analysis gave support for the development of the matching law, which in its simplest form asserts that organisms in choice situations match the relative distribution of responses to the relative distribution of the enforcers they obtain (Hermiston, 1961, 1970).

In its more general form, the generalized matching law (Beam, 1974, 1979) states that the ratio of responses between two alternatives is a power function of the ratio of reinforces, that is, Bal RI -b 82 RE s 237 where B represents responses, R represents reinforces, and the subscripts 1 and 2, choice alternatives. The parameter b, obtained from the intercept of the linear log- log formulation of the law, is a measure of biased responding between the alternatives, usually related to asymmetrical experimental factors such as differences n response cost between the alternatives.

The parameter s, the slope of the linear log-log formulation, is interpreted as a measure of sensitivity in response individual favors, more than predicted by precise matching, the richer (s > 1) or poorer (s < 1) schedule of reinforcement. In behavioral economics, the parameter s can also be used as an estimate of the level of substitutability of the reinforcers in the situation, in which case there is evidence suggesting that it should be equal or close to 1 for substitutable commodities, and negative for complementary commodities (cf.

Beam and Nevi, 1981; Focal, AAA; Gaggle et al. , 1995). Focal and James (2001 , 2003) applied this type of analysis to data obtained from consumers’ brand choice. Consumer choice was analyzed for brands that were substitutes, non- substitutes and independent, for 1-, 3-, and 5-week periods. Matching and minimization analyses were based on relative measures of price paid and amount bought, which considered the relation between the amount paid for (or amount bought of) the preferred brand and the amount paid for (or amount bought of) the other brands in the consumer repertoire.

As predicted, substitute brands showed itching whereas independent brands showed some evidence of anti-matching. Their results also showed some evidence that consumers tend to maximize the amount they pay in relation to the amount they buy within their brand repertoire by purchasing the cheapest brand (although they sometimes also bought some more expensive brand). Similar results have also been reported by more recent research (CB. Focal and James, 2003; Focal and Schwarzenegger, 2003). 1. 1. 2.

Relative demand analysis Whereas matching analysis relates the actual amount of a reinforced obtained to the actual amount of behavior expended in obtaining it, an understanding of consumer decision making in the face of competing sources or reinforcement offered at a variety of programmed behavioral costs or prices requires a different kind of analysis. Matching analysis plots the quantity obtained of a commodity as a positively accelerating function of the amount paid for it. By contrast, the sensitivity of the quantity demanded of a commodity to its ruling market price is expressed by economists in terms of the demand curve.

One of the assumptions underlying the demand curve is that as the unit price of a commodity increases, its consumption will decrease (Madden et al. 2000). This is demonstrated when demand curves plotted on logarithmic coordinates show consumption to be a positively decelerating function of unit price. The sensitivity of quantity demanded to price is expressed in economic terms as “price elasticity of demand” which at its simplest relates the percentage change in amount consumed to the percentage change in price (Houston and McFarland, 1980; see also Harsh, 1980; Harsh and Banana, 1987).

In an attempt to incorporate some of the features of naturalistic marketing settings involving consumer choices among competing brands whose relative prices might influence selection decisions, Focal and James (following Gaggle et al. , 1980) employed relative demand analysis which presents the relative amounts of brands A and B as a function of their relative prices. Their results, albeit for a restricted sample of individual consumers and covering a small number of product categories, found downward-sloping demand curves which indicated a degree of price sensitivity on the part of the buyers investigated (Focal and James, 2001, 2003). . 1. 3. Minimization analysis Analyses to reveal whether the observed consumer behavior was maximizing Hermiston and Loveland (1975), Hermiston and Vaughan (1980). On con ratio schedules,l there is a fixed probability of reinforcement for each response, 1 A ratio schedule is one in which a specified number of responses has to be performed before reinforcement becomes available. Fixed ratio schedules keep the number of required responses equal from reinforced to reinforced; variable ratio schedules allow the required number of responses to change from one reinforced to the next.

Concurrent variable ratio schedules, usually abbreviated to con IVR IVR, allow simultaneous choice to be investigated. It is this arrangement that most clearly assembles the purchases of brand within a product class. Which can be expressed as the reciprocal of the schedule parameter. Concurrent VRRP VRRP refers to response alternatives which have respective reinforcement probabilities of 1/30 and 1/60. On ratio schedules, the probability of reinforcement is independent of response rate (something not true of VI schedules where the probability of reinforcement is inversely proportional to rate of responding).

Although most research on matching and minimization has been undertaken in laboratory settings which incorporate VI schedules, IVR schedules are more probable in attraction settings (Hermiston, 1982; Hermiston and Loveland, 1975; Hermiston and Propel, 1991; Hermiston and Vaughan, 1980; Vaughan and Hermiston, 1987). Faced with con VRRP VRRP schedules, the individual’s maximal probability of reinforcement is obtained by responding exclusively on the VRRP schedule. Matching theory makes the same prediction for con IVR IVR schedules, claiming that minimization is under these circumstances a special case of matching (CB.

Archaic, 1980). Previous research, subject to the limitations of scope noted above, confirmed that consumers tend to examine by generally purchasing the least expensive brand available within their consideration set (Focal and James, 2001, 2003). 1. 2. Research issues Taken together, these results indicate that, within their repertoire of brands, consumers show price sensitivity, maximizing (most of the time), and matching (which refers to the relation between the amount they spend and the amount they buy).

Based on such findings, one can predict that consumers will buy, more often than not, the cheapest brand among those that they usually buy, although one still does not know why they usually buy a certain set of brands and not others. The fact that consumers tend to buy the cheapest brand within a restricted set of brands rather than the cheapest of all brands available in the product category indicates that not all brands are perfect substitutes for the others. Even though they may be functionally equivalent for the consumer, the brands are not entirely equivalent, that is, consumer preferences reflect more than functional utility.

This additional source of utility is usually rationalized in the marketing literature as stem- mining from rather nebulous “branding” considerations. Branding is not, however, a to clarify its basis as an extra-functional source of reinforcement. Although research to date is indicative that the principles and methods of behavioral economics can be usefully applied to consumer brand purchasing, there is clearly need for a more extensive investigation of a larger, systematically-selected sample of consumers purchasing a wider range of products in order to ascertain how far previously reported results are generalize.

It is necessary to take into greater consideration the differences between the typical consumption patterns of laboratory subjects which can be shown to be sensitive to price (or its analogue) and those of consumers n supermarkets who are subject to a much wider spectrum of choice under the influence of the entire array of marketing mix variables available to retailers.

For example, an expectation of demand analysis as it is employed in the behavioral economics literature is that when consumers choose between qualitatively identical reinforces which vary in terms of the unit prices that must be paid for them, the brand with the lower or lowest unit price will be exclusively chosen (Madden et al. , 2000). This is the prediction of both matching and minimization theories with regard to choice on con IVR IVR schedules.

However, research in these theoretical traditions typically takes place within laboratory settings that restrict choice to two alternatives, one or other of which must be selected at any choice point. Consumer brand choice is more complicated than this in that numerous choices are usually available to the consumer within a given product category, more than one of which may be selected on a single shopping occasion (Focal and Schwarzenegger, 2003).

A source of difference among brands, related to this and other aspects of consumer choice, stems from the distinction between utilitarian and informational benefits offered by efferent brands, as proposed by the Behavioral Perspective Model (Focal, 1990, 1994, 1996, 1997, 1998). According to this proposal, the behavior of the consumer can be explained by the events that occur before and after the consumer situation, which influence directly the shaping and maintenance of consumer behavior in specific environments.

The consumer situation, in turn, is defined 239 as the intersection between the consumer behavior setting and the consumer learning history. The consumer behavior setting?a supermarket, a bookstore, or a rock concert?includes the stimuli that form the social, physical and temporal nonuser environments. As purchase and consumption are followed by different consequences in different settings, the events in the setting become predictive of such consequences, building a learning history that relates elements of the setting to different consequences.

According to the proposal, antecedent events present in the consumer behavior setting signal the possibility of three types of consequences: utilitarian reinforcement, informational reinforcement, and aversive events. One major characteristic of economic behavior is that it involves both aversive and reinforcing consequences, for one has to give away money or rights (I. . , loss of Utilitarian reinforcement consists in the practical outcomes of purchase and consumption, that is, functional benefits derived directly (rather than mediated by other people) from possession and application of a product or service.

It is reinforcement mediated by the product or service and refers to consequences associated with increases in the utility (I. E. , use value) for the individual (“pleasant”) obtained from the product or service. The utilitarian, most obvious, consequence of owning a car, for example, is to be able to go from one place to the other, door to or, not depending on other people’s time schedules and avoiding being exposed to weather conditions, as usually happens when one uses public transportation.

Informational reinforcement, on the other hand, would be symbolic, usually but not exclusively mediated by the actions and reactions of other persons, and would be more closely related to the exchange value of a product or service. 2 It does not consist in inform Following Warden (1988), we use “informational reinforcement” to refer to performance feedback. The term “informational” carries excess baggage for many behavior analysts since it may appear to make cognitive inferences.

Given the examples we provide in the text, it may appear that “social” would be a more acceptable and accurate alternative. However, “social” does not entirely capture what we mean by “informational” which includes rewards for adhering to social mores, and physical sources of feedback such as lines on the road that convey an impression of speed, or the fullness of one’s shopping trolley. A nation per SE but in feedback about the individual’s performance, indicating the level of adequacy and accuracy of the consumer’s behavior.

Whereas utilitarian reinforcement is associated with the functional and economic consequences of arching and consuming goods or services, informational reinforcement is derived from the level of social status and prestige that a consumer obtains when purchasing or using certain goods. According to Focal, informational and utilitarian reinforcements would be orthogonal, and most products and services would involve, in different levels or proportions, both types of reinforcement.

Then, according to this analysis, the person who drives a Jaguars or Bentleys gets, in addition to door-to- door transportation (utilitarian), social status and approval from friends and acquaintances who see that car as a prestigious product, and from the general public that sees him or her driving around in a socially desirable car. The social status and prestige received are the informational, symbolic, consequences that the consumer obtains, which are usually related to branding or the level of brand differentiation of the product (CB. Focal, AAA).

The specific combination of utilitarian and informational reinforcement made available by purchase or consumption of a particular product is known as the “pattern of reinforcement” controlling these responses. Focal and James (2001 , 2003) argued that pattern of reinforcement influences consumers’ brand choices and that it is a key to understanding what consumers maximize. Different consumers might, for example, select brands belonging to different levels of informational reinforcement, some buying mostly highly differentiated whereas others buy relatively undifferentiated brands.

The differences in patterns of brand choice, including the set of brands that constitute responsiveness to different types of benefits. This idea gains even concomitant consideration arises in the functional definition of rules as “plays,” which involve the ideation of other people and which are therefore social, or as “tracks,” which depend on the rule-follower’s “reading” the physical environment, e. G. , in the process of following directions to get to a supermarket (Settle and Hayes, 1982).

Informational reinforcement thus remains our designation of choice for this phenomenon since it includes both personally-mediated and nonparallel-mediated performance feedback. 240 more force when we consider that branding is usually related to price, higher- differentiated brands being more expensive than less differentiated ones, and that consumers have different income levels. Then, individual buying patterns may be predominantly related, for example, to minimizing costs, maximizing utilitarian reinforcement, maximizing informational reinforcement, or to particular combinations of these.

If this is so, consumers may differ with respect to price responsiveness related to informational and utilitarian benefits. The research reported here tested predictions arising from these considerations using data from a consumer panel. Panel data are especially valuable for longitudinal studies because changes in purchasing behavior can be monitored very accurately by continuous agreements (Crouch and Housemen, 2003). Furthermore, diary panel data are considered to be very precise and less susceptible to errors than those obtained through consumers’ reporting their past behavior in surveys (Churchill, 1999).

Hence, they are particularly valuable when collecting multifarious information on variables such as price, shopping occasion, brand name, and so on. The special significance of this research technique for the present research lies in the fact that the data were obtained non-experimentally, by electronically tracking real consumers spending their real discretionary income. The two main purposes of the investigation were as follows.

First, in order to ascertain the generalizations of earlier research findings to consumer behavior in marketing-dominated contexts, three analyses were undertaken in order to determine whether the brands in question were in fact close substitutes (matching analysis), whether brand choice was sensitive to price differentials (relative demand analysis), and whether consumers could be said to maximize returns (minimization analysis). Second, in order to gauge consumers’ responsiveness to price and non-price marketing mix elements, the brands of 9 food reduce categories were ranked according to their informational and utilitarian levels.

The proportion of purchases made by each consumer at each brand level was computed, which served as basis for grouping consumers according to the level of brands they bought most. To test for differences in price responsiveness, price elasticity for consumer groups and individual consumers were compared. Softer, provided consumer panel data for 80 British consumers and their total weekly purchases in 9 fast-moving consumer goods categories over 16 weeks.

Taylor Nelson Softer is one of the largest and best-known companies in its field and clusters nonuser purchasing data on its so-called TENS Supernal on a range of consumer goods from 15,000 randomly selected British households. Data collection is personalized as follows: after each shopping trip, members of the panel scan their purchased items into a sophisticated handheld barded reader by passing the scanner across the Barbados, which nowadays are printed on all packaged supermarket products.

The data are then automatically sent to Taylor Nelson Softer for central processing without any further voluntary contribution from the panel participants. The retail outlets at which purchases were made was also identified for ACH shopping occasion, and included major I-J supermarkets such as Sad (a subsidiary of Wall-Mart), Tests, and Ginsburg. The 9 product categories that served as basis for this research were: baked beans, cookies, cereals, butter, cheese, fruit juice, instant coffee, margarine, and tea.

In more detail, the following information was recorded on each shopping occasion for each consumer: brand specification (I. E. , different versions of the same product category were classified as different brands, e. G. , Corn Flakes and Rice Crispiest by Kellogg), package size, name of the supermarket/shop, date, number of units, and total amount spent. As the analysis of brand choice requires information concerning actual purchase across several buying opportunities, data from consumers who bought, within each product category, fewer than four times during the 16-week period were disregarded. . 2. Measures and analyses 2. 2. 1 . Matching In consumer research, the matching law becomes the proposition that the ratio of amount of money spent for a brand to the amount spent on other brands 241 within the product category will match the ratio of reinforces earned (I. E. , purchases made as a result of that spending) of that brand to the amount bought of other Rand’s within the product category. The first of these, the amount paid ratio, was personalized as the ratio of money spent on “Brand A,” defined as the most frequently purchased brand, to money spent on “Brand B,” I. . , the amount spent on the remaining brands purchased within the requisite product category: Amount paid for Brand A/Amount paid for the remaining brands in the product category (B). The amount bought ratio was calculated, in terms of the physical quantity acquired, as: Amount bought of Brand A/Amount bought of Brand B (the remaining brands of the product category). Logarithmic transformations were used for the analyses. 2. 2. 2.

Relative demand In order to devise relative demand curves for the product categories, a demand analysis expressed the ratio of amount bought of the dominant brand (A) to the amount bought of the remaining brands in that category (B) as a function of the ratio of the relative average prices of the dominant brand to the relative price ratio). In operational terms, the relative price ratio = mean price of Brand A/Mean price of other brands in the repertoire (B). The amount bought ratio was calculated as in the case of the matching analysis.

Again, log transformations were used for the analyses. 2. 2. 3. Minimization To ascertain whether minimization is occurring, following Hermiston and Loveland (1975), Hermiston and Vaughan (1980), we plotted the amount bought ratio against probability of reinforcement. The latter is personalized as the reciprocal of the price of brand A over the reciprocal of the price of brand A plus the reciprocal of the mean of the prices of the other brands in the consumer’s consideration set (“Brand B”): I/PA PIP + I/BP ).

If the step function described by the data points falls to the right of the 0. 5 line on the abscissa then the researcher is maximizing by selecting the favorite brand (A) which is also the least expensive (Hermiston and Loveland, 1975). 2. 2. 4. Schedule analogies To ascertain how consumers make decisions, it is necessary to have some idea of how they integrate price data and brand choice responses over time, notably from shopping trip to shopping trip.

In the laboratory this can be achieved without undue difficulty by the imposition of a schedule of reinforcement which programs the relationships between dependent and independent variables. Researchers who are concerned with the behavioral analysis and explanation of non- experimental behavior face the difficulty of ascertaining with precision whether brand choice in naturalistic settings occurs, by analogy, on a series of fixed ratio schedules (represented by the prices of each brand obtaining on each purchase occasion) or, aggregated over several such occasions, on variable ratio schedules.

The question we are seeking to answer is whether consumers take into consideration only the prices of the brands in their consideration set that are in force on each discrete shopping trip, or whether their behavior (brand choice) reflects the price-quantity legislations for competing brands that are in force over the extended period represented by a series of shopping trips. This led us to undertake two analyses for each product category studied.

The first treated the schedules as a sequence of fixed ratio relationships by expressing measures of amount bought as a function of measures of prices for (a) weekly periods, representing (albeit by analogy rather than programming) the situation in which experimental subjects face a sequence of FRR schedules, and (b) periods of 3 weeks, for which the data were averaged, similarly representing an experimental situation governed by IVR schedules. . 3.

Utilitarian and informational reinforcement To investigate possible effects of informational and utilitarian reinforcement values on brand choice, an attempt was made to identify different levels or magnitudes of informational and utilitarian reinforcement offered by the brands available (I. E. , bought by consumers in the sample) in each product category.

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The Impact of Membership Fees on Consumer Attitude and Purchase Behavior

The Impact of Membership Fees on Consumer Attitude and Purchase Behavior

Abstract:

This study examined the impact of membership fees on consumer attitude and decision making process.  The factors that are affecting the membership would also be determined like the factor of social influence and the like. The broad subject of consumer would have to be discussed in order to explain the relationship between the two. Furthermore, this study aims to enumerate and explain the different effects of membership to the firm that offers it. Factors like profit, demand, and operations may be briefly touched. This paper proposes that membership has a positive effect on the profit generation of the firm and that it also helps the retention of its clients.

I.         Introduction

Club memberships are in the groove nowadays that the consumers are jumping on to possible alternatives that would lead them to reduced costs for services and facilities. The need of the consumers to reduce the cost of living is reaching a limit beyond the standards of before. For the past years, membership of a club is generally connected to the concept of luxury, of which the people then has. But nowadays, the concept of club membership as a luxury seemed an extinct concept. To combat the increasing standards of living, one can be observed as catching memberships of health clubs and the like to reduce the rates that they would have to pay. But is this really the answer to the problems posed by the economy?

II.        Research Focus

Starting of with the basic question: what drives a consumer to join memberships? The questions to follow would be: what do they expect from joining these clubs? What would they experience in joining clubs?

A.    Added benefit: Cost Reduction

An incentive is one of the reasons. Consumers would normally react positively to the presence of incentives. An added benefit always seemed to be a good idea on the point of view of consumers since companies believe that a good way of motivating consumers to be a member of their club is to give away incentives; consumers on the other hand, thinks that is a bonus to the benefits and facilities that they have paid to use. Normally, an incentive works in such a way that their offerings become superior to any other company’s. Theories in economics dictate that a superior good is always preferred by consumers from an inferior good.(Lars Perner, N. D.-c) So any product or offering with a sense of “superiority” would be preferred by any consumer in the market.

B.     Social network influence

Another reason may be the influence of friends, relatives, co-workers and other social ties that influence a person’s decision. One does not want the feeling of being left out that’s why the person does everything so as to be in the fad of the times. The influence of others is plays a large role since this also satisfies a need of a person, as would be explained later.

C.    Motivation

Lastly, a consumer is motivated because of the use of the company of the theories involved in consumer behavior. With the use of these theories, the company would be able to acquire the necessary topics in which they could exploit the consumers’ decision-making criteria. Without which, the company would not be able to determine the consumers’ preferences. The consumers’ tastes greatly affect the offers of the company through the factor of demand. The greater the demand, the more diverse the offers would be.

III.             Review of Literature

Consumer behavior has been studied for years in hope of decoding the rational mind’s decision making capacities. The consumer should behave rationally according to studies, in such a way that they would choose the goods or services in terms of the benefit they would give and not the price of it. The assumption on this is that there is no oligopolistic or monopolistic producer that governs the market and that the consumer is located in a perfectly competitive market.(Taylor-Gooby, N. D.)

Recent studies have been conducted to analyze the people’s view of luxury, and it has been found out that consumers have been considered to be more luxurious through the years.(Johnson, 1999) Prestigious brands are being purchased left and right, prompting market analysts to predict that the more expensive brands are being preferred. The image projected by these brands pose a customer’s mind into thinking that the price won’t matter as long as the benefit is as good as it suggests.

This is somehow connected to Maslow’s Hierarchy of Needs, placing the image factor of people in the third level: the need for social connections.(Drinnien, 1987) The hierarchy reflects that after satisfying the physiological and security needs, the need for social interaction should also be satisfied. However, this particular need can be accomplished by the person by interacting with other people; therefore achieving connections.

Consumer behavior affects this part as no consumer may move freely in a market that is governed by economic theories. The specification on consumer choice entails that the consumer behaves under the laws of supply and demand and that their actions constitute the fundamental principle of consumer choice.(Allenby, 2004)

IV.      Analysis

The first part to be discussed would be that of the membership fees. This is the primary step in which the company offers their membership. Employing the economic laws of supply and demand, the member ship tells us that the higher the price of the membership, the lower the desire of the consumer to be part of the club. However, the price of the membership fees also constitutes a part of consumer expectation. The price would be the benchmark at which the consumers may compare the services that it entails. The membership fees should be able to compensate the consumer so that it would be a fair deal for the consumer.

A.        Integration

With these, we can now go to understanding principles and explanations of consumer behavior. First of which would be, what drives consumers to seek membership in clubs? Well, the answer would lie in a few fields. First of which would be the field of consumer behavior that is affected by many factors. Second is of the marketing strategies applied by the company and lastly, it can be an influence made by preference.

The factor of consumer behavior with respect to the drive of consumers to be a member of a specific club depends on certain criteria. First of which may be the preference. The consumers’ preference is reflected at the choices the consumer makes. It can also be manifested through the taste he or she has on certain goods and services. The frequency of the choices makes the consumer decide to choose the alternative at which either he/she gets the good or service at a lower price, if the selection of the good or service would be given an added benefit through incentives or if the service offered would increase in quality at the same price. These three may be the point of choice of the firm that will provide. The club, which is the firm in question, may choose to perform one of these tasks: lower their offering price, add a perk, or increase the quality of the service. All of which would point out to the same result. And that is additional satisfaction on the part of the consumer. With the added satisfaction, another factor comes into play: consumer loyalty. With this, the company would then be assured of a share in the market from that consumer alone. Along with the other club members, it would account as a significant market share. The satisfaction of these consumers would be an advantage for the firm since they may attract more clients with this, and at the same time, they would also have a certain grasp on the market share that they have wanted to protect. The implication of which is that the company would only have to maintain its present level of service to maintain the market share. It also serves as an added advantage for the firm if it would reduce the costs of the services for the clients because somehow, they would be availing of the services more frequently. For this, the consumers would be attracted.

The second factor would be the marketing strategies employed by the company. The company’s strategies are always geared towards the achievement of a higher number of market shares that they can acquire. Just how exactly would they be able to do this? They can advertise. With the power of the media, the firm may be able to broadcast that they can give better service, better facilities and lower rates. The club can also claim that certain people of higher classes prefer the facilities and services that the club offers. They can even offer that the membership fees would be lower and affordable to all classes of the society. All strategies pointing out to one conclusion: that the club is the best there is and that there is no reason not to be member of the “prestigious” club. It seems funny but psychology tells us that this is done and has been done in the previous years.(Johnson, 1999) People have been attracted to these kind of deals and that until now, they claim to be satisfied. The confirmation of which would be present in the recent developments in the club businesses.(Haussman, 2002) the boost that is all of a sudden present in the clubs sector only confirms the fact that the marketing strategies that are employed by these clubs are on the rampage. They are gathering market shares like they are just stones to be picked from the road.

The influence of preference, however, is a very tricky subject. This factor can be easily divided into a lot of parts, the most common of which are the factors of influence of others, taste and the quest for prestige.(Johnson, 1999) It is human nature to be influenced by others. It is human nature to be influenced by your taste. And, of course, it is human nature to be influenced by a person’s want and desire to be prestigious. The influence of others can be by recommendation of friends, relatives and other acquaintances; but it boils down to one thing: that they talk of the superior quality of services that club offers if you become a member. The ones that influence a particular person generally are all praises for the club, triggering a sense of curiosity in the person that makes him/her to discover the things that make these people claim such things. If the person then gets satisfied, he would also do the same in which he was influenced. The influence of taste, however, is a little murky since the taste of the consumers is a volatile topic to discuss. The market is a very dynamic unit to analyze, attributing it to the fact that tastes change so fast. The consumers may want a certain good or service now, but tomorrow, they may not want it anymore. If today, they don’t think it is wise to be a member of a tennis club, maybe tomorrow, that person would turn to a tennis buff himself. The market is very dynamic.

These are the factors from the point of view of the club. However, like many things, the factor of expectation also comes into play. If ever a person comes into an idea to become a member of the club, they would also have a certain number of expectations to satisfy. First of which would be if the club would be able to live up to the promises that they say? Would they be able to give me the services that I want? Are the facilities really of high quality that they claim it to be? Is the club really as prestigious as it claimed to be? Would the rates be really lower than before? Would the added benefits really compensate the fees that I paid for?

Such are the questions that would run in the minds of new members. How the clubs satisfy these would be at their discretion. The only thing that would matter is that: if the new member would find the benefits of being a member, he can withdraw his membership and spread his dissatisfaction about the club. That would result to a decrease in the market shares and eventually profit. Clubs would, of course, not want this.

            The relationship of relationship and luxury differs from person to person but most think that being a member of a club entails a connotation of luxury. It would look like the consumer does not have any problems of financial nature that he can afford to be part of a “luxurious” club. What people do not really understand is that the luxury is just a connotation and that some members of the club just seek membership for the incentives given and the lower rates offered for the members. The concept of luxury is really subjective such that it varies from person to person. The prevailing concept is that a luxury is defined as so if it is not really needed. A person may view something as a luxury if the person does not include the activity or good in his daily routine. However, if it has become part of the routine and has become a staple for the person, it may be considered as a necessity.

But before we judge people with their thinking patterns, it would be essential for us to know the consumers’ thinking path. Learning and understanding the thinking path of consumers would definitely be beneficial to the market and the industry. The market and the industry also take advantage of the thinking and reasoning patterns of people to make the consumer behavior more comprehendible to common thinkers. The line of thinking is somehow related to the common theory of consumer behavior. However, the only difference would be that the thinking path takes on a more scientific way of dealing with the situation.  Since thinking path can be generalized with accordance to the type of person, it is essential that we understand first a unit before we would be able to understand the whole group. Not using the terms in economics such as supply and demand, it utilizes the theory of people trying to accomplish the self-actualization involving Maslow’s Hierarchy of Needs.

Figure 1. Maslow’s Hierachy of Needs

Maslow’s Hierarchy of Needs indicates that there are five needs that need to be satisfied step by step in order for the person to achieve self-actualization which is the last step.(Drinnien, 1987) Each step is different from one another and is essential in every person’s life. The first step is the Physiological Needs of man. This refers to the basic necessities of man like food, shelter and clothing. After the satisfaction of this step, the Safety Needs need to be satisfied. This refers to the sense of security that a person may feel. The third step is the Need for Love, Affection and Belongingness. Every human has feelings and from time to time would need the feeling that they are cherished and loved. It reinforces the Need for Security and may satisfy other Physiological Needs. After the satisfaction of the third step, the fourth step of Esteem takes the stage. Man needs to feel that he has a high level of respect in himself, takes pride in what he do, and values his personal dignity. After the accomplishment of the four steps, the last step of Self-Actualization comes into play. This would be the realization that the person is needed in an organization and feels that his judgment of certain situations is valued. He also sees the function that he needs to perform and that other people respect him/her for doing so.

The thinking patterns of man can be judged using this theory and is applied by the clubs in the form of their memberships. Take for example, a tennis club that offers an exclusive facility, lower rates, added benefits and participation in activities tied to tennis clubs across the country like tournaments. The first need would be the satisfaction of physiological needs. Once a customer feels that he needs to exercise to keep himself healthy, it would seem logical to apply for membership of a sports club, like a tennis club. The security needs is satisfied as he gets to communicate with other members that the new member’s ability in tennis is not important; stating that the only thing important to the members is that not only do they have fun, they also get to stay healthy. The satisfaction of the third step would be accomplished when the new member gets to acquire friends through the club; Friends that he can invite for Friday night poker or for a bottle of beer on a Saturday night. The fourth step of esteem is satisfied when through current sessions in the tennis club, the new member gets to hone his skills and elevate as one of the best players in the club. He develops a high level of respect for himself then. The last step of self-actualization would then be accomplished if the member would then be asked to join an inter-club tournament. He would then realize that people respect him and that in the near future, he would also share the experiences he had with possible new members.

With this in context, it would be easier to market the memberships of clubs. The basic concepts of human behavior and marketing are being utilized by the clubs to attract regular clients to become members. The minds of the marketing staff of these clubs do not mainly focus on the facilities, but imply that a greater world would be at the regular client’s grasp once he decides to apply for membership. Usually, if the client won’t budge, the frequent contingency would be the cost and the perks that come with the membership. Also, the feeling of being one with the elite at such a low price proves to be a good motivational concept to apply for membership.

Another question would be: is the concepts of membership in clubs really help maintain the retention rate of the members? The answer would be yes. Looking back at the Hierarchy of Needs, once a person gets to satisfy all of the steps, it would really be hard for a person not to be satisfied in his current situation. Given that a person is already happy in his present state, it would be natural not to look somewhere else. Basically, a person satisfied is the person most likely to stay since it would be really a gamble in a high risk state if he would decide to look for the satisfaction he has achieved in other clubs of the same type. If a person may feel that he is not satisfied, then, we can conclude that his own Hierarchy of Needs is not well satisfied. He may have a deficiency in satisfaction in the third or fourth step that did not permit him to achieve self-actualization.

Furthermore, the retention rate would be maintained since members try hard to recruit other people in their influence to be an affiliate. Men would invite beer buddies and women may invite the other moms that they chat with at the day care center. In short, it is also a marketing strategy that is not exactly one. The members would be the marketers themselves, spreading news about their club to encourage non-members to join. The entrance rate of members may be high or low, but one thing is for sure: that the company would have to maintain its service if ever they want to lower down the rate of departure of their members, taking in mind that the members are the ones that make the clubs alive.

The last question would be if the memberships in clubs really increase profits. Well, the answer would be yes and no. Yes, in the sense that frequent usage of the facilities mean more payments although the rates are lower. The clubs also generate profit from other means like the canteen and the vending machines. Furthermore, income is realized earlier since they would come in the form of monthly fees. No, in the sense that some clubs realize their income through the financial concept that a company should not always be on the profit side of things but sometimes, the raising of its price of shares or stocks. This is commonly termed as the “maximization of wealth”. Clubs may not realize that although they would engage in a certain project that earned a small profit, the implication on the share price may also raise, which would make the shareholders of the club satisfied, and even the stakeholders like the club members and the employees.

B.        Hypotheses

Hypothesis 1: If price is a major determinant, a lower price would mean more members.

Hypothesis 2: If consumer satisfaction is provided by memberships then, more clients would come if the services are better.

C.                Answers to Hypotheses

The answer to the first hypothesis is that price indeed is a major determinant. However, it does not necessarily lead to the conclusion that a lower price would mean more membership requests. A major factor to be considered by customers is that, although the price is high, would it deliver a higher satisfaction that the consumer has? Consumers are more concerned in getting the value of their money rather than the lower price offers. If the compensation that the club promises to be delivered is received by the customer, then the customer would be satisfied. The concerns of consumers do not necessarily rely on the pricing alone, but satisfaction that their payment has given them.

Hypothesis 2, meanwhile, is true in the sense that the satisfied customers tend to spread word about the satisfaction he or she got from a particular company’s service or product. The word of mouth factor cannot be displaced since this is one of the determinants in which the company bases their marketing strategy of marketing memberships. However, it also holds true that unsatisfied customers tend to spread his reasons of being unsatisfied t a club, therefore, lowering the membership rates for a specific number of people. Some club members are recruiting other people to join the club, simply to expand their social circle. So this means that although the hypothesis proves to be true, it doesn’t hold true for all situations.

V.        Conclusion

            The effect of membership depends from consumer to consumer. However, the basic benefits would make him realize that the membership is worthwhile. Just like any other members, the consumer would try to recruit new members in their club. Other members that did not feel satisfied would either withdraw or be just plain inactive. The expectation of a happy consumer, meanwhile, is that of the satisfied thoughts rather than disappointing notions. And since companies employ the theories of consumer behavior and the Hierarchy of Needs, there is no proof that the consumer would want to be a member of another club. The objective of the company is satisfied the same way that the members attained their expectations.

            The expectations of a consumer are highly subjective that we have to study behavioral patterns and economic theories. However, in this case, the expectations of a consumer may be met through high satisfaction at a club’s membership activities. The price of membership does not necessarily constitute a negative mark on the club, but a club’s service on members would greatly affect the consumer’s expectation of the price; especially if the company would fail to provide the necessary services that are with regards to the client’s status. The customers’ main concern in their expectation of a membership’s price is that if the company would be able to compensate them in their being a member. Failure to do so would mean failed expectations and lower retention of old members.

Bibliography

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