Consumerism

Consumerism

Consumerism is considered to be a very significant aspect of today’s world as everything in an individual’s life revolves around the consumption of goods and services. The field of consumer behavior comprises various topics as it focuses on the entire consumption process, including arguments that influence a consumer before, after, and during a purchase.

What Is Consumerism?

Consumerism is a theory that defines the increasing trend of consuming goods and services purchased in the market which is always a desirable goal and how a person’s wellbeing and happiness depend essentially on obtaining consumer goods and material possessions. In an economic sense, it is associated with the predominantly Keynesian theory 1 of consumption where he states that consumer spending is the key driver of the economy while encouraging consumers to spend is a major policy goal. From this idea, consumerism is a positive phenomenon that fuels economic growth. In the field of psychology, however, consumer behavior is a specialty area that studies our how ideas, beliefs, attitudes, and perceptions influence our buying habits related to goods and services. It is a rich field of psychological research, especially for companies trying to sell products to as many potential customers as possible.

Since what individuals buy or why they buy, impacts various aspects of their lives, research into consumer behavior ties together several key psychological issues, such as –

  • Communication
  • Consumer identity
  • Decision-making ability
  • Mental and physical health


Consumerism, in other words, is the study of individuals, groups, or organizations and the manner which they use to choose, secure, use, and dispose of products, services, experiences, or ideas to complete needs and the impacts that these processes have on the consumer and society. In common use, consumerism or consumer behavior refers to the trend of people living in a capitalist economy, engaging in a lifestyle of excessive materialism that caters to reflexive, wasteful, or conspicuous overconsumption. In this sense, consumerism is widely understood to contribute to the abolition of traditional values and ways of life, exploitation of consumers by big business, environmental degeneration, and negative psychological effects.

Understanding Consumerism

A 2009 study 2 puts down three definitions of consumer behavior or consumerism. The original definition refers to ”manipulative advertising and marketing practices” to stimulate consumers to buy and consume more. The second definition caters to the ”consumer movements” to protect their rights against the excesses of marketing. The third definition describes consumerism as a consumer ideology which assumes that ”consumers’ happiness and well-being can be achieved through consumption”. In this regard, consumerism is defined as “the doctrine that the self cannot be complete without a wealth of consumer goods and that goals can be achieved and problems solved through proper consumption”.

Additionally, the study also explains the third definition with the help of ”role theory”. According to role theory, consumers are players on the staged marketplace and, like in any play, each consumer has lines, props, and costumes needed for a good performance. Since people have many roles to play in their daily lives, they will pick products and services according to the appropriate “play” they are in at the time. Products not only help consumers to play their roles but also to define these roles, which cultures the statement “You are what you consume” to describe how products shape the self. Because people see themselves as they imagine others see them (such as a person’s clothing, jewelry, furniture, car, and so on), therefore, it is clear that these products also help to define the perceived self. Individuals use these products to make judgments about that person’s social identity.

The Science Of Consumerism

The science of consumerism is usually considered a subspecialty of industrial-organizational psychology, also known as the psychology of consumer behavior or the psychology of marketing. Consumer psychologists study a variety of topics including:

  • How consumers choose businesses, products, and services
  • The thought processes and emotions behind consumer decisions
  • How environmental variables such as friends, family, media, and culture impact buying decisions
  • What drives people to choose one product over another
  • How personal factors and individual differences alter people’s buying choices
  • What marketers can do to reach their target customers effectively

The Psychology Of Buying And Spending

Purchase of products such as food, shelter, or medical care, is necessary for the purpose of health and security. However, what compels one to buy unnecessary products or services is still not quite known. However, the studies of such purchase patterns (which is mostly irrational) are closely related to the field of behavioral economics, where it is examined why people stray from the most rational available choice.

Behavioral economists, marketing professionals, and psychologists have settled that inappropriate purchases may be motivated by a need to display one’s social status, or in response to emotions like sadness or boredom. In other cases, retailers can successfully manipulate the desire for a “good deal” by making a less important item look particularly affordable or representing it as something in limited supply. Learning to recognize common manipulation tactics may help individuals and families save more money and foster less stress in the long term.

Psychological Factors Influencing Consumerism

Consumer behavior is influenced by various psychological factors since human psychology is a major determinant of consumerism. While these factors are difficult to gauge, they are powerful enough to influence a buying decision. Some of the important psychological factors are:

1. Motivation

As per Maslow’s Theory of Motivation 3, human needs are arranged in a hierarchy from the most basic needs to the higher-level needs. Humans are driven by various needs such as –

  • Social needs
  • Basic needs
  • Security needs
  • Esteem needs
  • Self-actualization needs


Out of all these needs, the basic needs and security needs take the top seat when compared to others. Basic needs and security needs have the power to motivate a consumer to buy products and services and when these needs are motivated enough, a consumer takes the first step towards buying a product/service. According to a study, in the drive reduction theory, consumer behavior is directed towards reducing the tension that is connected to obnoxious drives, which are themselves caused by needs arising from tissue deficit.

2. Perception

Consumer perception or knowledge is the key factor that influences consumerism. It is a process where a customer gathers information about a product and interprets the data to make an exact image of a particular product. Likewise, when a consumer sees advertisements, promotions, customer reviews, and social media feedback about the product, he/she develops an impression about the product. Thus, consumer perception plays a significant role in influencing the buying decision of consumers. As per a study, perception is the ”energy” that makes consumers aware of the world around them and attaches meaning to it after a sensing process. Perception is how consumers interpret the world around them based on knowledge received through their senses. In response to stimuli, consumers subconsciously assess their needs, values, and expectations, and then they use that evaluation to choose, organize and interpret the stimuli

3. Learning

Learning comes from using a product or a service over a period of time, after purchasing the same. A consumer’s learning depends on skills and knowledge. While skill is gained through practice, knowledge is obtained only through experience. Learning can be further divided into conditional or cognitive. In conditional learning, the consumer is exposed to a condition repeatedly, thereby enabling a consumer to develop responsibility towards it. In cognitive learning, the consumer applies his/her knowledge and skills to find fulfillment and a solution from the product that he/she buys. According to a study, there are two types of learning-

  • Experiential learning occurs when it changes the behavior of consumers through experience.
  • Conceptual learning is not acquired through direct experiences.

4. Attitudes & Beliefs

Consumers cultivate certain attitudes and beliefs which influence their buying decisions. Based on this attitude, the consumer behaves in a distinct way towards a product. This attitude represents a vital role in defining the brand image of a product. Thus, marketers try hard to understand the attitude of a consumer to design their marketing campaigns. The balance theory is a cognitive consistency theory that studies how inconsistent attitudes can motivate individuals to feel influenced. It implies that individuals have both attitudes toward (sentiment relations) and connections to (unit relations) other people, objects, ideas, or events. The pattern of the relations getting organized will determine whether or not they are balanced.

Other Factors Influencing Consumerism

1. Social Factors

Given the fact that humans are social animals, living around and with other people, humans tend to imitate others, including their buying patterns as well. Thus, the social factors influencing consumerism are:

A. Family

Family plays a vital role in determining the buying pattern in a person. An individual develops a buying pattern and preference by watching his/her family buying products, thus continuing the same even when he/she grows up.

B. Reference Groups

A reference group is a group of individuals with whom a person associates and in such groups, everyone shares a common buying behavior and influences each other.

C. Roles & Status

A person is influenced by the role and status that he/she holds in society. A person holding a high status and playing an important role in society will practice a buying pattern influenced largely by his status and associates at his level.

2. Cultural Factors

When a person belongs to a particular community, his/her buying behavior is highly motivated by the culture relating to that particular community. Some of the cultural factors are:

A. Culture

Culture strongly influences consumer’s buying behavior. It includes basic values, wants, needs, preferences, behaviors, and perceptions that are recognized and learned by a consumer from his/her near ones and other people closely associated with his/her culture.

B. Subculture

There are various subcultures within a cultural group. While such subcultures consist of people from different religions, caste, geographies, and nationalities, these groups share the same set of beliefs and values. These subcultures by themselves form a customer segment.

C. Social Class

Each and every society across the globe has the form of social class determined by income, occupation, family background, education, and residence location. Social class is essential to predict consumer behavior.

3. Personal Factors

Personal factors also play a significant role in influencing consumerism or consumer behavior. Such personal factors include:

A. Age

Every age group is influenced by a different buying pattern. While teenagers and young adults will be inclined towards buying colorful outfits and beauty products, adults will be inclined towards buying houses, property, and other things for their families and the elderly will be inclined towards buying healthcare products.

B. Income

Income too has the ability to influence the buying behavior of a person. While higher-income groups will indulge in buying luxurious, expensive products, lower and middle-income groups will focus on buying basic needs such as groceries and clothes.

C. Occupation

Occupation of a consumer also influences his/her buying behavior. A person tends to buy things that are appropriate to this/her profession.

D. Lifestyle

Lifestyle is defined as an attitude and a way in which an individual lives in a society. Thus, the buying pattern is highly influenced by the lifestyle of a consumer.

4. Economic Factors

The consumer buying habits and decisions also depend on the economic situation of a country or a market. In a developed nation, a strong economy leads to a greater money supply in the market and higher purchasing power for consumers. Whereas, a developing or underdeveloped nation with a weak economy exhibits a struggling market that is influenced by unemployment and lower purchasing power. Some of the important economic factors are:

A. Personal Income

When a person has a higher disposable income (income referring to the money left after spending on basic, personal needs), the purchasing power increases simultaneously. However, when disposable income reduces, spending on multiple items also reduces.

B. Family Income

When the number of working members in the family are more, there is more income available for shopping for basic needs and luxuries. Higher family income leads the people in the family to buy more.

C. Consumer Credit

When a consumer is offered easy credit to purchase goods, it promotes higher spending. Sellers are making it effortless for the consumers to avail credit in the form of credit cards, bank loans, easy installments, hire purchase, and many other credit options.

D. Liquid Assets

Consumers with liquid assets tend to spend more on comfort and luxuries. Cash in hand, bank savings, and securities are some examples of liquid assets.

E. Savings

A consumer is highly influenced by the amount of savings he/she wishes to set aside from his income. If a consumer has decided to save more, then his/her expenditure reduces.

Consumerism & Decision Making

Consumer decision making is a process that involves the consumers to recognize their needs, collect information, assess alternatives, and then make their buying decision. Consumer behavior or consumerism may be defined by economic and psychological factors and are influenced by environmental factors like social and cultural values. Consumer decision-making behavior is a complicated procedure and involves everything starting from problem recognition to post-purchase activities. Decisions can be complex as it involves comparing, evaluating, selecting as well as purchasing from a variety of products depending upon the opinion for a particular product. This provides an understanding of the basic problem catering to the consumer decision-making process for marketers to make their products and services different from others in the marketplace. Here are the various questions one can ask catering to the decision making role of consumers.

1. How do Consumers Perform Decision-Making?

When a person is put in a familiar situation with a product/service that he/she has used before, his/her decision is often fast and automatic, based on the longtime experience with what works and what doesn’t. However, when encountering a situation that the person has never been in before, he/she may take time to weigh the potential benefits and risks when choosing a course of action. Such individuals are more likely to make mistakes and face negative consequences.

2. What is Informed Decision-Making?

The capacity to think critically is key to making good decisions without surrendering to common errors or bias. This means that not just going with one’s gut, but rather figuring out what knowledge the person lacks and obtaining the same. When the person looks at all possible sources of information with an open mind, he/she can make an informed decision based on facts rather than intuition.

Significance of Consumerism

From corporate sectors to political campaigns and nonprofit organizations, every industrial sector goes through the findings of consumer behavior to determine the best marketing strategy. In some cases, they accomplish this by managing people’s fears, their least-healthy habits, or their worst tendencies. Additionally, consumers themselves can also be their own worst enemy by making rash purchasing decisions based on anxiety, faulty logic, or a sudden desire for social status. However, consumers aren’t powerless as learning more about the different strategies that companies use along with the explanations for an individual’s frequently confusing purchasing decisions, can help individuals to act and decide more consciously as to what, why, and whether to buy.

Pros & Cons Of Consumerism

The advantages and disadvantages of consumerism are as follows –

1. Advantages of Consumerism

Advocates of consumerism point out that consumer spending can drive an economy of a nation forward and lead to increased production of goods and services. As a result, a rise in GDP growth or Gross Domestic Product will take place. Business owners, workers in the industry, and owners of raw materials can profit from sales of consumer goods, either directly or by downstream buyers.

2. Disadvantages of Consumerism

Consumerism is also criticized on economic grounds. It is believed that in the form of noticeable consumption, consumerism can impose enormous real costs on an economy. Consuming real resources in zero or negative-sum competition for social status can negate the profits or earnings from commerce in a modern industrial economy and lead to destructive creation in the market for consumer and other goods. Consumerism can also create grounds for consumers to take on unsustainable levels of debt, which can contribute to financial crises and recessions.

Rational Consumerism – A Boon For Mental Health & Economy

Consumerism is often criticized on psychological grounds as it is assumed that the practice increases status anxiety, where people experience the stress of maintaining their social status, which they achieve by increasing their consumption. However, understanding the strategies that marketers and brands apply to make a product look important or limited stock may help an individual to make rational decisions. As for marketers or industries, learning what compels an individual to buy things they do has become much more than a guessing game. Businesses should make use of consumer psychologists to scientifically evaluate customer’s decisions and choices.

Thus, the next time when a consumer looks at an advertisement or takes a consumer survey, he/she should acknowledge the role that consumer psychologists may have played in making those messages and questionnaires.

References:
  1. F.R.E.I.T. Forum for Research in International Trade. https://www.freit.org/WorkingPapers/Papers/PoliticalEconomy/FREIT487.pdf []
  2. Yani‐de‐Soriano, M., & Slater, S. (2009). Revisiting Drucker’s theory. Journal of Management History15(4), 452-466. https://doi.org/10.1108/17511340910987347 []
  3. Durmaz, Y. (2014). The impact of psychological factors on consumer buying behavior and an empirical application in Turkey. Asian Social Science10(6). https://doi.org/10.5539/ass.v10n6p194[]
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