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ASIAN JOURNAL OF MANAGEMENT RESEARCH Online Open Access publishing platform for Management Research © Copyright 2010 All rights reserved Integrated Publishing association Review Article ISSN 2229 – 3795 ASIAN JOURNAL OF MANAGEMENT RESEARCH 216 An exploratory study on consumer buying behavior in Pakistani perspective Mumtaz Ali 1 , Jing Fengjie 2 , Naveed Akhtar Qureshi 3 1 Research scholar, PhD Marketing Scholar, School of Management, Huazhong University of Science of Technology, Wuhan, P.R China 2 Professor in Marketing, School of Management, Huazhong University of Science of Technology, Wuhan, P.R China 3 Lecturer, Sukkur Institute of Business Administration, Pakistan ABSTRACT The main purpose of this study is to find out the reasons why customer behaving differently at the time of purchasing goods/services. The factors such as family structure, country of origin, age, culture, and advertising have an impact on an individual’s way of thinking and ultimately on consumers’ decision making process, where as price is associated to product. Further more this study will provide a detail view of the consumers’ way of thinking and will investigate the degree of association of five factors i.e. family structure, country of origin, age, culture and advertising on buying behavior. The all previous studies on consumer behaviour mainly focused on finding out the cultural influence on buying behaviour. But this research will in depth evaluate all those factors such as price, family structure, country of origin, age, culture, and advertising in context of Pakistani consumers’ buying behavior. These factors have been studied to a great extent, but very small numbers of marketing researchers have applied AHP approach in context of consumer buying behavior. For this purpose a survey was conducted based on personal interviews and focus groups. After that AHP – Analytical Hierarchy Process technique has been applied to investigate the interaction of one factor over another. These factors are also prioritized to see the priority of one factor over another. The results of study in detail show that only the price is a factor associated with product; while all remaining factors have great degree of association and impact on consumer psychology and ultimately on consumer’s decision making process. Key words: AHP, Buying behavior, Culture, MCDM, Pakistan 1. Introduction The main focus of this study is to know the interaction and impact of all these factors over one another and the degree of association with consumer buying behavior. The factors considered for this study are; price, family structure, country of origin, age, culture, and advertising. Further more this study will mainly address the issues relevant to how price, family structure, country of origin, age, culture, and advertising affect consumer psychology and possible change in buying behavior. For this purpose AHP – Analytical Hierarchy Process; which is a multicriteria decision making (MCDM) approach has been applied to identify the interaction of one factor over another. These factors are also prioritized to see the priority of one factor over another. AHP has been widely used by researchers and practitioners in a MCDM where you have a multi criteria for decision making and prioritizing the all relevant factors under study.

Consumer Buying Behavior in Pakistan

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ASIAN JOURNAL OF MANAGEMENT RESEARCH Online Open Access publishing platform for Management Research

© Copyright 2010 All rights reserved Integrated Publishing association

Review Article ISSN 2229 – 3795

ASIAN JOURNAL OF MANAGEMENT RESEARCH 216

An exploratory study on consumer buying behavior in Pakistani perspective Mumtaz Ali 1 , Jing Fengjie 2 , Naveed Akhtar Qureshi 3

1­ Research scholar, PhD Marketing Scholar, School of Management, Huazhong University of Science of Technology, Wuhan, P.R China

2­ Professor in Marketing, School of Management, Huazhong University of Science of Technology, Wuhan, P.R China

3­ Lecturer, Sukkur Institute of Business Administration, Pakistan

ABSTRACT

The main purpose of this study is to find out the reasons why customer behaving differently at the time of purchasing goods/services. The factors such as family structure, country of origin, age, culture, and advertising have an impact on an individual’s way of thinking and ultimately on consumers’ decision making process, where as price is associated to product. Further more this study will provide a detail view of the consumers’ way of thinking and will investigate the degree of association of five factors i.e. family structure, country of origin, age, culture and advertising on buying behavior. The all previous studies on consumer behaviour mainly focused on finding out the cultural influence on buying behaviour. But this research will in depth evaluate all those factors such as price, family structure, country of origin, age, culture, and advertising in context of Pakistani consumers’ buying behavior. These factors have been studied to a great extent, but very small numbers of marketing researchers have applied AHP approach in context of consumer buying behavior. For this purpose a survey was conducted based on personal interviews and focus groups. After that AHP – Analytical Hierarchy Process technique has been applied to investigate the interaction of one factor over another. These factors are also prioritized to see the priority of one factor over another. The results of study in detail show that only the price is a factor associated with product; while all remaining factors have great degree of association and impact on consumer psychology and ultimately on consumer’s decision making process.

Key words: AHP, Buying behavior, Culture, MCDM, Pakistan

1. Introduction

The main focus of this study is to know the interaction and impact of all these factors over one another and the degree of association with consumer buying behavior. The factors considered for this study are; price, family structure, country of origin, age, culture, and advertising. Further more this study will mainly address the issues relevant to how price, family structure, country of origin, age, culture, and advertising affect consumer psychology and possible change in buying behavior. For this purpose AHP – Analytical Hierarchy Process; which is a multi­criteria decision making (MCDM) approach has been applied to identify the interaction of one factor over another. These factors are also prioritized to see the priority of one factor over another. AHP has been widely used by researchers and practitioners in a MCDM where you have a multi­ criteria for decision making and prioritizing the all relevant factors under study.

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AHP, developed by Satty in 1980 (Saaty, 1980), is a simple and feasible multi­objective evaluation method widely used for multi­object evaluation activities. It is designed for subjective evaluation of a set of alternatives based on multiple criteria organized in a hierarchical structure. At the top level, the criteria are evaluated and at the lower levels, the alternatives are evaluated by each criterion. The decision­makers assess his evaluation separately for each level and sub­ level subjectively. By creating a pairwise comparison matrix, his subjective evaluation for every pair of items is assessed (Dyer, 1990). AHP is a kind of multi­criteria decision making technique. In complex multi­criteria decision making, AHP is usually used to deal with a decision making problem with several assessment criteria and in an uncertain situation and can systematize a complex problem by resolving the problem into several levels, conducting quantitative judgment, identifying factors needing priority attention and then making a comprehensive assessment, so that decision makers can have enough information and control the risk in decision making (Saaty, 1980). AHP can solve unstructured problems concerning economy, society and managerial science. Facing a problem, the decision maker shall first set a general objective, and then develop criteria, sub­criteria and criteria at the bottom level. After this step, pair wise comparison is conducted with a scale of 1 to 9 and then Eigen vectors are worked out as weighted values of criteria and finally the overall priority vector is determined (Kamal, 2001; Lipovetsky and Michael, 2002; Mohammed, 2002).

To some, consumer behavior is synonymous with marketing. Robertson and Kassarjian (1991), for example, define consumer behavior as “the scientific study of consumer actions in the marketplace” (p. vii). However, others view consumer behavior as independent of marketing or any particular discipline. Jacoby (1976), for example, defined consumer behavior as “the acquisition, consumption and disposition of goods, services, time and ideas by decision­making units ....” (p. 1). Arndt (1976) suggested that consumer behavior encompasses the “the problems encountered by members of society in the acquisition and realization of their standard of living” (p. 213). More recently, Holbrook (1995) defined consumer research as “the study of consummation in all of its aspects.” Holbrook explained, “Consummations of one sort or another are what all humans and therefore all consumers seek. Consummation­­attaining customer value or achieving satisfaction­­thereby designates the central core of the concept of consumer research” (Holbrook, 1995, p. 88). As a field, consumer behavior represents the intellectual meeting ground for investigators from economics, marketing, applied psychology, sociology, anthropology, philosophy, family sciences, and related disciplines. In Pakistan there are four types of price indices; Consumer Price Index (CPI), Wholesales Price Index (WPI), Sensitive Price Index (SPI) and GDP Deflator, which are used to calculate inflation. Among these indicators, the major emphasis is on CPI as a measure of inflation, which covers 375 items in 71 markets of 35 cities of the country (Economic Survey, 2006­07). Conventional wisdom holds that the emotional cultural differences between countries will significantly impact on cross­national business relationships between firms from different countries and cultures. Studies from both the field of anthropology and management science have concluded that most human behaviour is mediated by culture (eg, Hofstede, 1984). The psychologists developed the hierarchy of effects model, which proposes that behavior is composed of three dimensions: cognitive, affective and conative (Lavidge and Steiner, 1961). The cognitive dimension involves developing awareness and knowledge, the affective component relates to developing feelings and attitudes, and the conative dimension involves development of conviction or intention and actual behaviour, such as purchase (Lavidge and Steiner, 1961).

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2. Literature Review

In the marketing literature, individuals with a high need for cognition have been shown to process and evaluate advertising information more thoroughly than those with a low need for cognition. They tend to be influenced by message­relevant thoughts rather than peripheral cues such endorse attractiveness (Haugtvedt and Petty, 1992), spokesperson credibility (Petty and Cacioppo, 1986), humour (Zhang, 1996) or the number of arguments presented (Cacioppo et al., 1983). In an extensive literature review of the subject, Cacioppo et al. (1996) found that individuals with a high need for cognition tended to process information more thoroughly and tended to engage in more extensive information search than those with a low need for cognition. This suggests that individuals with a high need for cognition might use a wide range of information sources, which reduces their relative preference for interpersonal sources. On the other hand, individuals with a low need for cognition are less motivated to gather and process extensive raw information and are more likely to accept already processed information given to them by trusted personal sources. Murray and Schlacter (1990) defined perceived risk as a multi dimensional construct. It represents consumers’ pre purchase uncertainty related to the type and degree of expected loss resulting from the purchase and the use of a product or service. Possible loss categories are financial loss, performance loss, psychological loss, social loss and convenience loss (Arndt, 1967b; Bansal and Voyer, 2000). Past research has consistently recognized perceived risk as a fundamental concept in consumer information search (Arndt, 1967b; Chaudhuri, 2000; Murray and Schlacter, 1990). Arndt, for example, found that ‘to cope with the hazards of buying, consumers tend to develop risk­handling strategies. One such strategy . . . would be to seek additional information from a number of sources’ (1967b: 303). Bansal and Voyer (2000) found a negative influence of product expertise on perceived risk, and a positive influence of perceived risk on word­of­mouth information actively sought. In addition, Murray (1991) proposed that word of mouth is the most important source of information when the goal is to reduce the perceived risk. He argues that this is because word of mouth offers great opportunities for clarification and feedback. Culture is considered as a nebulous construct that is difficult to define (Triandis et al., 1986) and is posited to be subject to change over periods of time. This has led to the phenomenon being defined as ‘. . . those beliefs and values that are widely shared in a specific society at a particular point in time’ (Ralston et al., 1993) [emphasis added]. Culture is thought of as being learned (Hofstede, 1984) and is manifest through history, religion and education which act as strong factors that define and shape a nation’s or society’s character and culture (Harris, 1979). Culture is also considered to influence all human activity (Rosaldo, 1989, cited in Monaghan and Just, 2000). However, one cannot hope to know all there is about culture. Geert Hofstede (1984), the author of one of the most­cited studies of culture on work values, admits that there may be shifts in culture evident over long periods of time. This forces a constant reconsideration and reevaluation of the nature and influence of culture. The literature is divided concerning the influence of national culture on cross­national business ventures. Traditionally, the literature has accepted that fundamental beliefs can differ greatly between cultures (Hall, 1960). It is, however, complex to understand how these culture differences translate into influencing international business relationships. Scholars have called for markets with different cultures to be treated differently (eg, Solberg, 1995), while offering little in the way of empirical evidence to support such notions. The literature abounds with studies warning the reader that the success of any international marketing strategy depends on attempting to conform to customer culture norms (Deshpande and Webster, 1989). Perhaps the most often cited study advocating cultural differences concerning the work­related values of

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individuals between countries is the work of Geert Hofstede (1984). Hofstede’s work resulting in the creation of five indices of culture (uncertainty avoidance, power distance, individualism, masculinity and long term orientation), upon which the work­related values of individuals of different countries are purported to differ, has been received as seminal in the cross­cultural literature.

Collectivist individualist values are Eastern and Western cultures (largely based on religious ideology). Countries (and indeed regions) have different attitudes towards IDV and collectivism. Countries such as the People’s Republic of China (PRC) consider the value of tradition as paramount: ‘The traditional Chinese person . . . hardly thinks of himself as an individual’ (Riesman et al., 1953: 33) as the ‘. . . Western concept of’ personality’’ does not exist in the Chinese tradition’ (Hofstede, 1984: 150). Economic and political systems also enforce individualism (IDV) or collectivism. The capitalist market economy philosophy emphasises IDV and the achievement of the individual, whereas socialist forms of economic control and state planning encourage collectivism. Of the five indices of culture developed by Hofstede, the individualism collectivism index is considered to be the ‘. . . most pervasive difference associated with the cultures of various countries’ (Williams et al., 1998: 136).

Despite the obvious impact of lifestyle, life stage, income and age on consumers’ behaviour within each of these, essentially, men and women have an interest in, talk about, and show a fondness for, different products (Slama and Williams, 1990). Despite calls for more research focusing on gender differences (eg Otnes and McGrath,2001; Hansen, U. & A. Emmerich (1998), relatively few studies have been conducted (Carsky and Zuckerman, 1991) and these studies have focused on relatively narrow areas, such as impulse buying, or have been very product specific, eg house purchasing. Evidence suggests that gender differences exist in the aids used to arrive at buying decisions (egMueller, 1991; Wiedmann and Walsh,2000) as well as in the decisions themselves (eg Helmig, 1997; Wood,1998). However, most of the satisfaction studies have focused on low involvement and non­durable products (Patterson, 1993). Relative Advantage and Value Barrier Relative advantage is positively related to adoption and represents ‘the degree to which an innovation is being perceived as better than the idea it supersedes’ (Rogers, 1995: 212). Often this may be a price advantage and is therefore consistent with the value barrier of innovation resistance theory which represents the perceived performance­to­ price value of the innovation compared with the product or service it substitutes (Ram and Sheth, 1989).

Country of origin effect can be defined as any influence that the country of manufacture has on a consumer’s positive or negative perception of a product (Cateora and Graham, 1999). With increasing availability of foreign goods in most national markets, the country of origin cue has become more important as consumers often evaluate imported goods differently than they do competing domestic products. (Bilkey and Nes, 1982). Consumer behavior can be seriously impacted by country of origin factor in three distinct ways: Firstly, buyers may simply use the country of origin as one of the many attributes employed to engage in product evaluation (Johansson et al, 1985; Hong and Wyer, 1989). Secondly, the country of origin may create a “halo effect” whereby consumers’ attention and evaluation of other product dimensions are affected (Erickson et al., 1984; Han, 1989). Over the past three decades, the effect of a product’s country of origin on buyer perception and evaluation has been one of the most widely studied

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phenomena in international business, marketing and consumer behavior. In a study, Tan and Farley (1987) concluded that the potential impact of the country of origin of a product is the “most researched international aspect of consumer behavior”. The analysis of the country of origin focuses on the consumer’s opinion regarding the relative quality of goods and services based on the country where a particular product is manufactured. With the increasing pace of globalization and the diversity of manufacturing activities internationally, more studies are needed to guide marketers to have a better insight into buyers’ attitudes and behavior with respect to global products.

Cross­cultural management researchers have traditionally used Hofstede's (1980, 1997) definition of culture, which equates culture to ``the collective programming of the mind which distinguishes the members of one group or category of people from another'' (Hofstede, 1997, p. 5). Culture influences behavior through its manifestations: values, heroes, rituals, and symbols (Hofstede, 1997). These are the forms in which culturally­determined knowledge is stored and expressed. Thus, each cultural group possesses different cultural manifestations. Hofstede's (1980) landmark study of the dimensions of culture can considered an etic approach to the study of cultural values. Culture has been defined as the underlining factor of people’s stereotyping other groups of people (Boissevian and Inglott, 1979; Brewer, 1978; Pi­Sunyer, 1977). Culture, which could be seen as ‘group personality’ (Litvin & Kar 2003), is one of the factors distinguishing groups from one another, especially physically distant groups; thus, it is seen as an important agent of bias, especially in formation of country images. Price is the amount of money a consumer must pay to obtain the right to use a product (Hawkins, Best and Coney 2001). As a major competitive tool in meeting and beating close rivals and substitutes, price can serve as a means of communication with buyers (e.g., list price, discounts, allowances, credit terms, payment period, etc.) by providing a basis for judging the attractiveness of the offer. Becker (1980) summarized the international pricing situations as pricing for new market entry, changing price, either as aggressive strategy or to contend with evolving competition, and multiple­product coordination, in case of related demand. General price strategies employed by international marketers include the standardization of prices around world, dual pricing (i.e., differentiating domestic and export price), and differentiated prices for different international markets (Robinson 1984). In terms of pricing strategies, pricing challenges should be considered the same when encountered in both domestic and international markets. Furthermore, the scope of global pricing strategies will vary according to the degree of foreign involvement and the type of market encountered. Therefore, this study will examine international price strategies in terms of standardization versus localization approach.

3. Methodology

AHP proposed in this research in order to handle both tangible and intangible factors and sub factors that have impact on buying behavior. The selection methodology is based on the characteristics of the problem and the consideration of the advantages and drawbacks of other methodologies. The decision maker judges the importance of each criterion in pair­wise comparisons. A survey has been conducted to know the effect of these factors on buying behavior. This survey was comprised of interviews, and carefully selected focus groups. To avoid the problem of data biasness equal number of male and female participants were maintained. In addition professional interviews of 30­45 minutes of some highly knowledgeable individuals were conducted to further strengthen the validity of data and study. Another method

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of data analysis i.e. Focus groups were selected from the total participants (200) on the basis of their knowledge and level of expertise to further help in making the research results more transparent. The each focus group was supposed to work on a mechanism of five participants per focus group and in total eight focus groups participated in the session. The total number of participants for this study was forty. The total time allocated for session was 200 minutes or 3 hours and 20 minutes. On the basis of participants’ response a matrix was formulated and AHP technique was utilized. For this reason all six factors i.e. price, family structure, country of origin, age, culture, and advertising have been prioritized by assigning them a specific number after receiving the feedback from survey. The outcome of AHP is a prioritized ranking or weighting of each decision problems by intermediate levels. Finally the decision alternatives or selection choices are laid down at the last level of the hierarchy.

4. Factors for research study

• Factors 1. Price 2. Family structure 3. Country of origin 4. Age 5. Culture 6. Advertising

Table 1: Consumer Preferences, surveyed requirement matrix

Price Family structure

Country of origin

Age Culture Advertising

Price 1 1/5 1/7 1/4 1/3 2 Family structure

5 1 3 2 2 7

Country of origin

7 1/3 1 4 1/2 6

Age 4 1/2 1/4 1 2 1/2 Culture 3 1/2 2 1/2 1 5

Advertising 1/2 1/7 1/6 1/5 1/5 1

Note. With the help of above filled matrix we can apply AHP technique which will help us to prioritize these factors and their association with buying behavior. Further price is not relevant to other five factors. Because price is associated with the product while other five parameters are directly relevant to consumer behavior.

5. Results

The results from figures below reveal that that the surveyed individuals preferred the family structure as the most influencing factor for buying behavior while the advertisement was rated at the lowest. Further the figures indicate that country of origin with score of 0.238 is the second most influential factor, culture with score of 0.188 is the third most influential factor, age with score of 0.133 is the fourth most influential factor, and advertisement with score of 0.066 is the

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fifth most influential factor affecting the buying behavior respectively. The remaining factor price with lowest score of 0.054 is associated with product.

Table 2: Scale of Preferences proposed by Thomas Saaty

Synthesis with respect to: Goal: consumer behaviour

Overall Inconsistency = .21

Price .054 Family structure .321 Country of origin .238 Age .133 Culture .188 Advertising .066

Figure 1: Prioritization of factors influencing buying behavior

Preference weights/ level of importance

Definitions Explanation

1 Equally preferred

Two activities contribute equally to the objective

3 Moderately preferred

Experience & judgment slightly favor one activity over another

5 Strongly preferred

Experience & judgment slightly favor one activity over another

7 Very strongly preferred

An activity is strongly favored over another and its dominance demonstrated in practice

9 Extremely preferred

The evidence favoring one activity over another is of the highest degree

possible of affirmation 2,4,6,8 Intermediate

preferred Used to represent compromise

between the preferences listed above Reciprocals Reciprocals for inverse comparison

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Figure 2: Prioritization of factors influencing buying behavior in prioritized fashion

6. Conclusion

The study concludes that AHP is a very useful technique to know the buying behavior of consumers when they are going to make a purchase decision about a product. In this regard a survey was conducted based on personal interviews and focus groups. On the basis of the respondents feedback a matrix was formulated. That matrix table was filled with the input provided by these respondents. After that the application of AHP approach has been used to evaluate the interaction of one factor over another factor and their effect on buying behavior. AHP which is a MCDM approach indicates that the five factors i.e. family structure, country of origin, age, culture, and advertising are associated with buying behavior: where as the remaining one i.e. is price is associated with product. AHP approach enables the decision makers to make an appropriate decision and minimize the errors that make occur a decision is taken on intuition and experience. So for as very small numbers of marketing scholars have applied AHP approach to analyze the buyer behavior; therefore in future for similar type of research issues the AHP approach will be highly desirable.

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Biographical Notes

1. Mumtaz Ali, PhD Marketing Scholar, School of Management, Huazhong University of Science of Technology, Wuhan, P.R China.

2. Jing Fengjie, Professor of Marketing, School of Management, Email: [email protected], Huazhong University of Science of Technology, Wuhan, P.R China.

3. Naveed Akhtar Qureshi, Lecturer, Sukkur Institute of Business Administration, Email: naveed@iba­suk.edu.pk, Sukkur Institute of Business Administration.