This study seeks to explore the factors of consumers’ behavior and its influence on consumers’ investment decisions as a panacea for national transformation in Nigeria. The consumer is the most elemental basis for any business organization and the economy; hence, their core behaviour is also of great significance for a successful economy and financial affluence. Different factors are responsible for the behavior of consumers within the Nigerian economy towards making investment decisions. These factors can be grouped into marketing/entrepreneur factors, business environmental factors, and psychological factors and consumers’ personal factors. These factors are based on different theories of consumer behavior that can be broadly categorized as unplanned consumer behavior theories (i.e. emotional-based theories) and planned consumer behavior theories (i.e. rational-based theories).
This study finds out that factors of consumer behaviour influence investment decision making in the era of national transformation. From the findings, consumers’ behaviour influences investment decisions based on different theories, and the study recommends among others that consumers’ investment decisions should be based more on the rational-based behaviour theory rather than the emotional based behaviour theory.
The Term Paper on Behaviourist And Cognitive Approaches To Consumer Learning Theory
‘Describe behaviourist and cognitive approaches to consumer learning theory and discuss the implications of these theories for marketing practice’ Learning is one of the major determinants of human behavior. Psychologists are of the opinion that all human behavior involves some form of learning. Human beings are not born with the knowledge or skills that could be used as guidelines of ...
Key Words: Consumers’ behaviour, investment decisions, national transformation
Consumers’ Behaviour and Investment Decisions in the Era of National Transformation
Introduction
The growth and transformation of any economy depends on the investments made within that economy, where the investment is a function of consumer behaviour. Nigeria as a country tried severally to encourage investments through her fiscal and monetary policies but achieved little, alluding to the problems of continuity, consistency and commitment to agreed policies, programmes, and projects as highlighted by the National Transformation Agenda 2011 – 2015 document (Federal Government of Nigeria, 2011).
Consumer investment is key to national transformation, but how the consumer behaves may influence his investment decisions.
A consumers’ investment decision is based on much the same behavioural and attitudinal considerations for both real and financial assets and is closely related to if not equal to his savings decision (Crockett & Friend, 1967).
Saving as opined by Crockett and Friend (1967) is traditionally thought of as a device for achieving the preferred balance between current and future consumption, given the available opportunities for transforming current money into future money, it is also used to acquire assets to perform certain specific current and future services that are sufficiently valued by the household to compete with current consumption for the household’s resources.
Several studies (Walsh, 1954; Stewart, 1960; Green, 1961; Crockett & Friend, 1967; Agbonifoh & Edoreh, 1986; Hanf & von-Warsebe, 1994; Beckett, Hewer, & Howcroft, 2000; Mitchell, 2004; Soares, 2004; Bello & Bello, 2007; Padel & Foster, 2005; Lutter, 2008; Onodje, 2009; Chater, Huck, & Inderst, 2010; Daniela, 2010; Aregbeyen & Mbadiugha, 2011; Mansoor & Jalal, 2011) were conducted on consumers’ behaviour and some of which focused basically on consumption and investment as macroeconomic variables (Stewart, 1960; Onodje, 2009).
The Research paper on Consumer Behavior 6
1. You are the brand manager of a new line of light weight autofocus, economically priced digital cameras. Describe how an understanding of consumer behaviour will help you in your segmentation strategy and promotion strategy. What are the consumer behaviour variables that are crucial to your understanding of this market ? 2. Gillette, an established market leader in shaving products, is planning ...
Whereas, other studies examined consumers’ behaviour at its individualistic level relating it to investment services, investment in shares, culture, price & quality, risk theory, financial services, global business crisis and savings (Crockett & Friend, 1967; Hanf & von-Warsebe, 1994; Beckett, Hewer, & Howcroft, 2000; Soares, 2004; Lutter, 2008; Chater, Huck, & Inderst, 2010; Daniela, 2010; Mansoor & Jalal, 2011).
These studies were based on the foreign environment and economies.
A few studies exist on consumers’ behavior and investment decisions in Nigerian. A study by Aregbeyen and Mbadiugha (2011) focused on the factors influencing investors decision in shares of quoted companies in Nigeria without emphasising on consumer behavior as a variable. Whereas, Bello and Bello (2007) related how consumers’ behaviour influences variables determining residential property value in Lagos, Nigeria without exploring the factors of consumers’ behaviour. None of the studies related consumers’ behavioural factors and investment decisions in Nigeria within the context of National Transformation Agenda. This study seeks to explore the relationship between consumers’ behavioural factors and investment decisions in Nigeria within the context of National Transformation. Due to the newness of the concept of the Transformation Agenda in Nigeria this study will use exploratory research design to achieve its objective.
National Transformation Agenda and the Consumers’ Investment Behaviour The Transformation Agenda (TA) of the President Goodluck Jonathan’s Administration was anchored on the basis of continuity, consistency and commitment (3Cs) in executing agreed projects, programmes, and government activities to improve the standard of living of Nigerians. According to the TA document, the 3Cs were neglected in the past in executing agreed policies, programmes and projects (FGN, 2011).
The Transformation Agenda 2011 – 2015 was based on the National Vision 20:2020 and the first National Implementation Plan (NIP) (FGN, 2011).
The focus of the TA is to reduced unemployement through effective management of public expenditure and better collaboration of fiscal and monetary policies of government. This focus of the TA is aimed at improving the dispoable income of Nigerian consumers by creating the enabling environment for investments through effective monetary and fiscal policies.
The Term Paper on Consumer Behaviour In Marketing Ethics
Marketing can undoubtedly bring benefits to society, although some aspects of marketing may be questionable on ethical grounds. The aim of this assignment is to raise criticism of marketing and show that consumer behaviour is affected by ethical issues. Do consumers really care about marketing ethics? Ethics is a complex concept to define, and there is an attempt made by contemporary theorists to ...
The environment may influence how consumers behave towards making investment decisions. Consumers’ Behaviour and Investment Decisions: A Conceptual Approach Consumers are persons or groups of persons who purchase products or services generated within an economic system. The consumers differ from each other by age, income, education, lifestyle, attitude, etc. and all these influence the way they behave to make decisions to buy. Consumers’ behaviour is simply the actions, responses or reactions of consumers in their attitude to buy. Perner (2008) stated that consumers’ behaviour involves the study of the processes which individuals, groups, or organizations perform to acquire products, services, experiences, or ideas to satisfy their needs and how these processes have impacted the consumer and/or society. The role that consumers play in these days is very crucial to businesses’ survival which leads to economic growth. Consumers’ behaviour is the driving force behind the success of many businesses, because most of the contemporary consumers spend major time on making decisions on what to invest their income in, i.e. whether to invest in consumables, real assets or financial assets.
Consumers play a role and are involved in a purchasing process; they initiate the purchasing of a product or service, they influence the final decision to buy, they make decision to buy, they make the purchase, and use the product purchased. Lutter (2008) idenfied the consumer in the above purchasing process as the initiator, influencer, decider, purchaser, and user in that order. The purchasing process and behaviour is considered a very complex phenomenon because it consists of a wide set of prior and after purchase activities (Hansen, 2004).
Consumers’ purchasing behaviour can be seen as the decision-making process that ends up in investment decision. Investment is generally a deferment of present consumption for future benefits. Farlex’s The Free Dictionary defines investment as a property or possession acquired for future financial return or benefits. From the foregoing, investment is operationally seen as a property, possession or deferred consumption own by a consumer for the purpose of future consumption.
The Essay on Investment Theory Is Unsatisfactory
“Investment theory is unsatisfactory because too little attention is paid to business expectations and unless you do this it is hard to explain what happened to investment rates in many Western economies since 2008.” Discuss. In this essay I will describe the key aspects behind the basic neoclassical model of investment and explain how it can be considered a satisfactory model, sufficient in ...
Investment is related to savings. Consumers postpone their consumption of their total income in order to save for precautionary, transactionary and speculative reasons. These reasons are investment issues that deciding on them may depend on how the consumers behave. Consumer investment decision involves consideration and choice of how to defer consumption for future benefits. Bailard, Biehl and Kaiser model divides investors into five types, thus: adventurers – those who are strong-willed and take risk; celebrities – those who stay in the centre of things, where the action is; individualists – those who make their own analysis and make their own decisions; guardians – those who are risk averse and very cautious and; straight arrows – these are middle of the road investors that fall into any of the preceding four types (Lutter, 2008; Investment Psychology: Investor Classification Systems).
Consumers’ behaviour and investment decisions are influenced by different theories put forward by psychologists.
Consumers’ Behaviour and Investment Decisions: Theoretical Background Several theories of consumers’ behaviour have been propounded by different scholars. These theories are classified differently based on their frequency of occurrence, emotional involvement, decision-making complexity and risk (Mansoor & Jalal, 2011).
According to Arnould, Price, and Zinkhan (2002), these theories can be classified into programmed behaviour; limited decision making buying behaviour; extensive decision-making buying behaviour and impulsive buying. Programmed behaviour usually involves habitual buying behaviour with little complexity, such as buying newspapers (Learn Marketing).
Usually little amount of information and reasonable level of making decisions are involved in limited decision-making buying behaviour, e.g. purchase of clothes (East, 1997).
Whereas in the extensive decision-making buying behaviour, the consumer would spend a relatively longer time in searching for information and making a decision regarding a purchase and it involves higher psychological risk (Peter & Olson, 2007).
Lastly, Wells and Prensky (1997) identify impulsive buying behaviour as a decision made unconsciously and induced by an external stimulus that would make a specific product to appear attractive and irresistible to the consumer. It can be seen in the four listed behaviours above that the fundamental driving force behind these consumers’ behaviour is the consumers’ emotion. Consumers’ emotion is the primary determinant of consumer purchasing behaviour that is highly influenced by some external and internal factors (Chaudhuri, 2006).
The Essay on Factors Influencing Consumer Behaviour
We talk about Importance of Consumer Behavior , Consumer Behavior—Introduction ,CRM as a part of leadorganizer and lead management with reference to crm. In last two post, we talk about Types of Consumers and Buyer Vs User. Today, I m going to talk different factors influencing consumer behavior. Consumer behavior is affected y a lost of variables, ranging from personal motivations, needs, ...
Although emotion is a subjective issue that differs according to individual attributes and situational contexts, it is still regarded as the most elemental determinant of planned and unplanned buying behaviour (Havlena & Holbrook, 1986).
The unplanned behaviour matches greatly the impulsive buying which is driven mostly by emotional forces (Laros & Steenkamp, 2005).
These four classifications by Arnould, Price, and Zinkhan can be grouped as unplanned cunsumer behaviour theory or emotional-based consumer behaviour theory. If there is an unplanned consumer behaviour theory, then certainly there will be a planned consumer behaviour theory. The planned consumer behaviour is a result of rationality rather than emotionality, because planned behaviour is a complex process for the great deal of information needed and the long time spent on selection. The level of complexity is driven by the opportunity cost of the alternatives as well as the transaction costs like time, money and effort (Ajzen, 1991).
Although the planned consumer behaviour theory is primarily induced by emotions, it is still considered to be less emotional than unplanned. This theory also presents the concept of ‘perceived behavioural control’ as a vital component, i.e. perceived risk assessment behaviour. Theories set out the frame for practice, therefore, the next section dwelled on different practical studies. Related Existing Studies on Consumers’ Behaviour
Beckett, Hewer, and Howcroft (2000) carried out a study on the exposition of consumer behaviour in the financial services industry using focus group discussions. The study developed a model which classifies consumer behaviour in the purchasing of financial product and services. Mitchell (2004) explored consumers’ behaviour and perceived risk theory and came out with a tentative findings that pecieved risk influences consumption pattern. In the same line, it was hypothesised by Soares (2004) that cultural values have consequences in terms of consumer optimum stimulation level, and exploratory and risk taking behaviour and product-specific perceived risk. Mansoor and Jalal (2011) found out that global business crises have influence on consumers’ behaviour. A study by Chater, Huck, and Inderst (2010) on consumer decision-making in retail investment services found out that cognitive and social biases play a role in consumer investment decision when assisted by an advisor and salesperson. Daniela (2010) analysed the saving and investing consumer behaviour after a severe financial crises in Romania, and found out that Romanians are educated in finance and investment but invest more on consumer products. Even if they have to save for the future, the invest on cars and houses.
The Essay on Investment Decision Methods
Financial managers use many different kinds of investment decision methods while making capital investments. The four widely used and major methods are i. Payback ii. Net present value (NPV) iii. Internal rate of Return (IRR) iv. Modified Internal Rate of Return (MIRR) The payback method tells us the time that is needed to retrieve a projects cost. When we have to select between two projects we ...
The Nigerian study of Aregbeyen and Mbadiugha (2011) on factors influecing investments decisions in shares of quoted companies, descriptive and inferential statistics were used to analysed data. The study found some factors that have influenced the investment decisions of the respondents in order of ranking; social factors (1st), economic factors (2nd), psychological factors (3rd), and cultural factors (4th).
Behavioural factors Influencing Nigerian Consumers’ Investment Decisions Different behavioral factors may inflence consumers’ investment decisions in Nigeria. These factors are categorised into four by Lutter (2008), thus: Marketing factors; environmental factors; individual factors and; psychological factors. These are represented in the figure below: Figure 1: Behavioural Factors influencing Customers’ Investment Decisions (Modernised by Authors from Lutter (2008))
As shown in figure 1, marketing issues, business external environment, the consumers’ personal and psychological features influence consumers’ behaviour towards making investment decisions. Some of these factors are based on unplanned consumers’ behaviour theory (i.e. emotionally-based consumers’ behaviour theory) and others are based on the planned consumers’ behaviour theory (i.e. rationally-based consumers’ behaviour theory), and some of the factors are based on the mixture of both theories. Investment needs of consumers may be motivated emotionally or rationally. Emotionally induced needs are associated with feelings, attitudes, individuality, perception, etc., whereas rational motives are associated with expediency, such as economical, prudent, low price, product, etc. (Lutter, 2008).
Aregbeyen and Mbadiugha (2011) identified four factors that can influence investment decisions in shares of quoted companies which include economic, cultural, social, and psychological factors.
Responses from the questionnaires designed in the study of Aregbeyen and Mbadiugha (2011) on these factors have shown that on the average, social factors top in influencing investment decision, followed by economic factors, then psychological factors and lasly cultural factors. Other factors apart from the four factors considered in the study may as well influence the investment decisions of consumers. These factor may include the enterpreneural marketing functions and consumers personal features as ealier mentioned. The ranking of the factors considered in the study of Aregbeyen and Mbadiugha (2011) may change when compared to other kinds of investments, such as real assets, enterpreneurship, other financial assets in which the current government policies promote. Transformation agenda of President Goodluck Jonathan is a government policy aimed at improving the standard of living of the Nigerian citizens by providing the enabling environment, such as social, economic, political and technological that can influence other factors, such as psychological, enterpreneural and personal factors in the society positively to enhance overall economic prosperity.
When these factors are inflenced positively through the government transformation policy, consumers’ behaviour towards investment decisions may also change positively. From the foregoing, we can tentatively deduce that consumers’ behaviour is affected by marketing/enterpreneural factors, environmental factors, psychological factors and consumers personal factors. These factors are based on either emotionally-based consumer behaviour theory or rationally-based consumer behaviour theory or both theories which influence consumers investment decisions in Nigeria, especially in the era of national transformation. The finding of this study is justified by the findings of Mitchell (2004); Soares (2004); Chater, Huck, and Inderst (2010); Mansoor and Jalal (2011); Aregbeyen and Mbadiugha (2011).
Conclusion
From the finding, this study can affirm that consumers’ behaviour influences investment decisions, and when the TA policy of the President Goodluck Jonathan administration is implemented to the latter, there will be economic growth that will create jobs and improve consumers’ disposable income that can be invested. Recommendations
The study recommends as follows:
1. The present government should imbibe and apply continuity, consistency and commitment (3Cs) in the implementation of the policy of TA 2011 – 2015 as highlighted in the TA document. That will improve the disposable income of consumers for reinvestment into the economy. 2. Consumers’ investment decisions should be influenced more on the behavioural factors that are based on planned consumer behaviour theory (i.e. rational-based consumer behaviour theory) rather than emotional based consumer behaviour theory. 3. Government should encourage consumers to save through publicity and transparency, because saving is seen as the bedrock of investment which subsequently leads to growth within the economy of our nation.
References
Agbonifoh, B., & Edoreh, P. E. (1986).
Consumer Awareness and Complaining Behaviour. European Journal of Marketing, 20(7), 43-49. Ajzen, I. (1991).
The Theory of Planned Behaviour. Organisational Behaviour and Human decision Processes, 50, 179-211. Aregbeyen, O., & Mbadiugha, S. O. (2011).
Factors Influencing Investors Decision in Shares of Quoted Companies in Nigeria. The Social Sciences, 205-212. Arnould, E., Price, L., & Zinkhan, G. (2002).
Consumers (2nd Ed.).
New York: McGraw-Hill. Beckett, A., Hewer, P., & Howcroft, B. (2000).
An Exposition of Consumer’s Behaviour in the Financial Services Industry. International Journal of Bank Marketing, 18(1), 15-26. Bello, M., & Bello, V.A. (2007).
The Influence of Consumers Behaviour on the Variables Determining Residential Property Values in Lagos, Nigeria. American Journal of Applied Sciences, 4(10), 774-778. Chater, N., Huck, S., & Inderst, R. (2010).
Consumer Decision-Making in Retail Ivestment Services: A Behavioral Economics Perspective. Europe: Decision Technology. Chaudhuri, A. (2006).
Emotion and Reason in Consumer behaviour. London: Butterworth=Heinmann. Crockett, J., & Friend, I. (1967).
Consumer Investment Behavior. Anatomy of Investment, 13-128. Daniela, L. (2010).
The Saving and Investing Consumer Behavior Analysis on the Romanian Financial Market. Journal of Economic Literature, 798-804. East, R. (1997).
Consumer Behaviour: Advances and Applications in Marketing. London: Prentice Hall. Farlex. (n.d.).
The Free Dictionary. Retrieved June 26, 2012, from http://www.thefreedictionary.com/Investment Federal Government of Nigeria (FGN) (2011).
The Transformation Agenda 2011 – 2015. Abuja: National Planning Commision. Green, J. (1961).
Direct Additivity and Consumers’ Behaviour. Oxford Economic Papers, 13(2), 132-136. Hanf, C., & von-Warsebe, B. (1994).
Price,Quality, and Consumers’ Behaviour. Journal of Consumer Policy, 17(3), 335-348. Havlena, W., & Holbrook, M. (1986).
The varieties of Consumption Experience: Comparing two Typologies of Emotion in Consumer Behaviour. The Journal of Consumer Research, 13(3), 394-404. Investment Psychology: Investor Classification Systems. (n.d.).
Retrieved June 26, 2012, from What type of Investor are you?: http://www.psychonomics.com/research/a&s/profiling.htm Laros, F., &
Steenkamp, J. B. (2005).
Emotions in Consumer Behaviour: Hierarchical Appoach. Journal of Business Research, 58(10), 1437-1445. Learn Marketing. (n.d.).
Consumer buying bahaviour. Retrieved June 26, 2012, from http://www.learnmarketing.net/consumer.htm Lutter, J. L. (2008).
Consumer Behavior during Investment Gold Purchase in Comparison to Other Investment Instruments. Unpublished Bachelor’s Thesis. Tallinn University. Mansoor, D., & Jalal, A. (2011).
The Global Business Crisis and Consumer Behavior: Kingdom of Bahrain as a Case Study. International Journal of Business and Management, 6(1), 104-115. Mitchell, V. (2004).
Understanding Consumers’ Behaviour: Can Perceived Risk Theory Help? Management Decision. Management Decision, 30(3).
Onodje, M. (2009).
An Insight into the Behavior of Nigeria’s Private Consumer Spending. African Journal of Business Management, 383-389. Padel, S., & Foster, C. (2005).
Exploring the Gap between Attitudes and Behaviour: Understanding why Consumers Buy or do not Buy Organic Food. British Food Journal, 107(8), 606-625. Perner, L. (2008).
Consumer Behaviour: The Psychology of Marketing. Retrieved June 25, 2012, from University of Southern California: http://www.consumerpsychologist.com Peter, P., & Olson, J. (2007).
Consumer Behaviour. London: McGraw Hill. Soares, A. (2004).
The Influence of Culture and Consumers: Exploratory and Risk Behaviour. Retrieved June 23, 2012, from http://hdl.handle.net/1822/4839 Stewart, I. G. (1960).
Consumer Demand in Nigeria. London Colonial Research Studies, 307-318. Walsh, V. (1954).
On Descriptions of Consumers’ Behaviour. Economica, 21(83), 224-251. Wells, W., & Prensky, D. (1997).
Consumer Behaviour. London: John Wiley & Sons.
