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Rural-Urban differences in consumer decision making in South Africa Essay Sample

Rural-Urban differences in consumer decision making in South Africa Pages
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ABSTRACT:
The study examines Rural and Urban differences in consumer decision making in Makana Municipality in the Eastern Cape Province, South Africa. There are factors which impact upon What,When,Where, and Which Brand will purchased by the consumer. The participants in this study will be family units in Grahamstown and the Albany district i.e. (Seven Fountain, Alicedale, Salem) in South Africa. The independent variable for the study is Urban and Rural residence, and the dependent variable is consumer decision making. The measuring instrument will comprise a self-designed questionnaire to measure biographical information, with a questionnaire developed by Spores and Kendall (1986) to measure consumer decision making. This is a 22 item instrument which was used to measure consumer decision making. The scale reliability is (α= 0.87)

KEYWORDS: Rural and Urban differences, Consumer decision making

Definitions of Terms:
Rural: – Land used for commercial farming is classified as rural and also villages in tribal areas are regarded as rural.

The rural development framework (RDF) of 1997 defines rural areas as “sparsely populated areas in which people farm or depend on natural resources, including villages and small towns, that are dispersed through these areas. In addition they include the large settlements in former homelands, created by the apartheid removals, which depend for their survival on migratory labour and remittances” (RDF, 1997)

Urban: – An urban area is generally a very populated area. Most urban areas are considered to be cities within different states and countries. Urban areas have large buildings that are lit up and seen from the skyline.

Consumer Decision Making:- A process by which (1) consumers identify their needs, (2) collect information, (3) evaluate alternatives, and (4) make a purchase decision. These actions are determined by Psychological and economic factors and are influenced by environment factors such as cultures, groups and social values.

1. BACKGROUND TO THE STUDY
In order to deal with the marketing environment and make purchasing decisions, all consumers regardless of age, gender, nationality or religion, engage in a decision-making process. The focus of this process, which forms an integral part of consumer behaviour (Lamb, Hair, & McDaniel 2004: 142) is how consumers spend their available resources (such as time and money) on personal and household products and services so as to satisfy their needs (Schiffman&Kanuk 2000: 7)

The influence of children in family decision-making has been a much too neglected subject of inquiry. Practically all research has centered upon the husband and wife. Family decision-making research was initially directed to spouses, however the role of children in decision-making and negotiation strategies has become an important issue of study (Kaur& Singh, 2006). Children not only enjoy making regular consumption decisions with their parents but they also insist on their parents buying the products they desire (Kaur& Singh, 2006).

Previous researchers have identified that, as children mature from childhood to adolescence, their knowledge of consumer behaviour, values and skills increases. (John, 1999).Caruana and Vassallo (2003) identified that, ever since the early 1990s, marketers have targeted children as they are not only the consumers but they also influence family purchasing patterns.

What prompted researcher in this topic is that people from rural areas differ from people leaving in urban areas in terms of consumer decision-making.

Rural consumer decision making tends to be authoritarian that is the, the heads of the family are the ones who decide what, when and which brand will be purchased while urban consumer decision is participatory, that is most of the family members including children participate in what to be purchased.

The study of consumers assists firms and organizations to improve their marketing strategies by understanding issues such as how:- •Consumers think, feels, reason, and select between different brands, products •The consumer is influenced by his or her environment (e.g., culture, family, signs, media); * Consumers behave while shopping or making other marketing decisions; •Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome; •Consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer; and •Marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.

It has been proven that children have an impact on their parent’s decisions and family decision making. Recent research indicates that children’s influence extends far beyond what is traditionally thought, to include areas where children were primary product users. Meyers and Roy (2004) claim that children have been found to have a strong influence on non-traditional areas such as home décor, automobiles, and home electronics. Husbands have traditionally dominated in purchase decisions for such product categories as insurance automobiles and televisions. On the other hand, wives have dominated in purchase decisions for products associated with the homemaker role, such as appliances and washers.

2. STATEMENT OF THE PROBLEM
Rural and Urban consumers are faced with different challenges when making consumer decisions. The consumer decision process may also differ because of traditional roles adopted by family members. The study examines whether rural consumer decision making is Authoritarian i.e. Centralised while Urban consumer decision making is Participatory, within the Grahamstown and Albany Districts (i.eAlicedale, Salem and Shaw Park) in the Eastern Cape , South Africa. The independent variable for this study is as follows:-

Location of the consumer, be it rural or urban

The dependent variable for this study is as follows:
Consumer decision making

3. RESEARCH OBJECTIVES
The objectives of this research are to:
* Examine whether rural consumer decision making is authoritarian and urban consumer decision is participatory. * To assists firms and organizations to improve their marketing strategies by understanding issues such as how:- * Consumers think, feel, reason, and select between different brands, products * The consumer is influenced by his or her environment (e.g., culture, family, signs, media); * Consumers behave while shopping or making other marketing decisions; * Much there are limitations in consumer knowledge or information processing abilities

influence decisions and marketing outcome;
* Consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer; and * Marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.

4. HYPOTHESIS
H1: There is significance difference between Rural and Urban consumers decision making processes H0: There is no significance difference between Rural and Urban consumer decision making processes. H1: Rural consumer decision making is authoritarian or centralized while urban decision making tends to be participatory H0: Rural and Urban consumers adopt equally authoritarian and participatory consumer decision making styles

5. SIGNIFICANCE OF THE STUDY
The study will assist in clarifying whether there is a relationship between certain demographic variables such as (marital status, age, number of children, number of hours, level of education, family members) and how these variables influence Rural and Urban consumers in decision making. To improve the marketing strategies by understanding the Psychology of how consumers think, feel reason and select between different brands. Also the limitations in consumer knowledge or information processing abilities that influence decision making outcome.

6. LITERATURE REVIEW
A study conducted by Grant and Waite, 2003 stated that young consumers provide an interesting topic for discussion for consumer research for four reasons: Firstly, at the period of time during adolescence to adulthood,young people acquired own individual personalities and established own behaviour patterns, attitudes and values, thus consumption patterns. (Holbrook and Schindler, 1989) state that young people make purchases to express themselves and to create an identity of their own making. Secondly, in a study by Grant and Waite, (2003) it was found that young people are keen to influence purchase decision of others Thirdly, (Leslie, 2001) state that young people act as change agent by influencing the society and culture.

Lastly, (Grant and Waite,2003) mentioned that young people are a unique market segment that from a marketing perspective point of view form a powerful spending group in their own way. According to the study conducted by (Belch 2005) stated that young people as high internet users and have a much greater access to market information , could impact their influence in family consumer decision making Latest researchstudies conducted proposed that there is a set of factors that influence rural consumer behaviour. In rural areas social norms, traditions and social customs have a greater impact on consumer behaviour than in urban areas.

According to the study conducted by (JhaMithileshwa, 2007) rural consumer demand is impactlyinfluenced by the seasonality of agricultural production, hence the landlesworkers and daily wage earners receive their income in instalments, consequently their purchasing decision is restricted to small quantities of products on daily basis.

Research to date by (Kashyap Pradeep,2005) has established that Urban family units i.e husband and wife often children are participatory in consumer decision making, while in Rural family units because of lack of transport and little contact with the market consumer decision making is authoritarian. In contrast to this focus an urban area household member is free to make an independent purchasing decision without a consultation with family member while in rural area because of the strong social level of community decision making is quite common. Theoretical work by Belch et al (2005) suggest that young people who are internet uses which gives them access to information creates an impact on family purchase decision in one way or the other.

The study at hand tries to examine the comparative purchasing behaviour of Urban and Rural family units towards the purchase of products. Consequently it will assist marketers to improve their marketing strategies by understanding issues such as How: * Consumers households reason, feel, think and select between different brands and products * Consumers’ household is influenced by his or her immediate environment such as culture, family size and media. Prior research by (Ahuja and Stinson 1993) has found that children have a lot of influence in purchase decisions for children products such as snacks; as well as toys (Burns and Harrison 1985).According to (Dunne 1999) young people has been identified as having a much influence in decision such as holiday or vacations; and the choice in which restaurant or a decision making for family households to eat or dine out (Williams and Veeck, 1998).

Theoretical work by Mangleburg et al (1999) suggest that in some family households young people are perceived to be more as equal by parents, while in other family households are viewed as subordinate to parents’ authority. In contrast to this focus on the other hand family unit plays a vital role in influencing our purchasing behaviour, as young people the choices are set by parents based on safety and need of the teenager’s considerations. Lastly the decision making process in colour of the family car is also influenced by children.

Family units buying decisions can examined through four theoretical perspectives:
* Decision making stage
* Family culture
* Power structure
* Role structure

Decision making stage
Each and every family member at one stage or another do have an impact on purchasing behaviour. For example when a family decides to buy a computer, the woman specify the needs accordingly , man decides upon the brand of the computer either Compaq, HP, Sony or LG based on technological competence while children’s role will be on the colour of the computer.

Family Culture
Each and every family household has different internal culture which has an impact in its purchasing decision. These could be due to cultural backgrounds and social upbringing and family values. Theoretical work by (Kaur and Singh, 2006) suggest that children‘sinfluence differs by the stage of decision making process he identified amongst others Problem recognition, information search, choice and product category.

According to (Kaur and Singh, 2006) children are information seekers, initiators and purchasers for other categories of products and these purchases are influenced by their parents.Prior research by (Moschis and Moore 1979) has found that as the age of teenager increases the competence of the teenager as a consumer also increases.

Research to date by (Shoham and Dalakas, 2005) has established that the amount teenagers spend in family household purchase decision has risen over period of forty years. Theoretical work by (Hawkins et al, 2001:207) suggest that teenagers alsoexert a major influence on their parent’s consumer decision making and spending.

Power Structure
Different power structure within the family do have an impact on decision making processes, for example a Man as the head of the family makes the most decisions while a woman who is the head of the family also will make the most decision for her family but in equalitarian society both share equal decision making powers.

Role Structure
Family members in a family has role to play in terms of decision making , gender role preferences is focusing on the role played by husband and wife as father and mother in the household and the perception is that their roles based on gender have an impact on the decision making process and household decision process.

Prior research by Blackwell et al. (2001:748) has found that teenager’s influence on family household spending differs by product user and by degree, hence they have a significance influence in purchase decisions in products of their own. In contrast to this opinion on teenager’s influence on family spending Blackwell et al.(2001:387) suggest that teenagers learn these consumer skills from shopping with their parents. According to (Mulrooney,1999) there is plus minus 12 ,9 million young people in the Republic of South Africa of which 35 percent are in junior and senior secondary schools who command a disposable income of R4 billion per annum.

Theoretical work by Koenderman (2001) suggest that teenagers spend approximately R4.5 billion per year in the Republic of South Africa and they also influence another R20 billion per annum spending on items such as television sets motor cars.

McNeal (1993) identified five-stage shopping learning process that teenagers gothrough in consumer development. * Stage 1 : Observing
This is the first time that the teenager interacts with the marketplace; it could be visiting a shopping mall or stores with a parent. * Stage 2: Making requests
At this stage teenagers having seen something they like in the shopping mall they ask their Parents about a product they want, even when at home watching TV they can remind their parents about a product they have seen at the mall on the advert on TV * Stage 3: Making selections

As teenagers grows they start experiencing a physical contact with the product by taking it off the shelves * Stage 4: Assisted purchases
Having experienced parents exchanging money for goods purchased in stores during their shopping spree, they do it themselves with the money received from family members when they purchase their own products consequently they understand that money is the medium of exchange. * Stage 5: Making independent purchases

Lastly, in the development of consumer behaviour is doing their purchasing without the assistance of their parents. This is evident in the study conducted by (McNeal &Yeh, 1993) which suggests that there is s significant period between a teenager’s first purchase with parents and an independent purchase. Prior research by Acuff (1997:109) found that 92% of the cases teenagers don’t consult their parents when purchasing soft drinks and sweets while 70% of the cases clothes are bought independently and 20% of the cases they don’t consult parents’ computer software is bought.

6.1 THEORIES SUPPORTING THE STUDY
CONSUMER DECISION-MAKING
Consumer decision- making is the process by which a consumer (1) identify their needs and (2) collects information (3) evaluate alternatives and (4) makes the purchase decisions (5) post-purchase evaluation. These actions are determined by Psychological and Economical factors, and are influenced by Environmental factors such as Cultural groups and Social values

Theoretical work by Sproles and Kendal (1986) states that consumer decision – making styles is the way consumer me ntally approaches the market place choices Prior research by Sproles& Kendal (1986) has identified eight decision – making styles. a. Perfectionist, High – Quality Conscious: The focus of the consumer is looking at quality products. b. Brand Conscious, Price Equal Quality: The consumer correlates high price with high quality products specifically with reference to national brands. c. Novelty-Fashion Conscious: The consumer gets satisfaction the most when looking out at the latest, most modern and exciting product. d. Recreation/Hodonistic Shopping Conscious: The consumer gets the satisfaction from the shopping experience. e. Price Conscious, Value-for-Money: The consumer always looks for promotions like sales bargains, and reduced – priced products. f. Impulsive, Careless: The consumer’s shopping trips is not planned before hand and doesn’t care about money spent in those trips. g. Confused by over choice: The consumer is perplexed about range of product choices and too much product information. h. Habitual, Brand-Loyal: The consumer is always buying the same product.

Research to date by Nancy and Philip Kohler (2007:167) identified factors that affect consumer buying behaviour. a. Cultural factors affecting consumer buying behaviour: Culture has a direct influence on consumer behaviour and is the basic cause of person’ behaviour and wants. Teenagers learn these basic values , the way they see things and wants from family member and important group in the society consequently marketers try very hard to spot the cultural shifts that will give them an idea of coming up with new products or to induce market demand.

b. Social factors: Social factors such as the group in which the customer belongs and the status do have an influence in customer’ buying
behaviour, either is the group that share same geographical location, religion, racial do have an impact in consumer buying behaviour.

c. Age and Life cycle stage: The series of stages in which the consumer’s attitude and behavioural tendencies evolve and occur because of developing maturity, experiences , level of income and status do have an influence on consumer behaviour. Marketers address their target markets in terms of consumer lifecycle stage.

d. Occupation and Income: Level of income and the profession a person is in the society determines what products people consume consequently impact on consumer behaviour.

e. Life Style: The way of life and style of living that reflect attitudes and values of the consumer do have an impact on consumer behaviour.

6.2 RESEARCH LITERATURE
Research to date by Belch et al (2005) established that young people who are internet uses which gives them access to information creates an impact on family purchase decision in one way or the other.

Prior research by (Abramovay& Sachs, 196; Bhooshan,1986; Bryceson& Jamal 1997; Misra 1986; Saint & Goldsmith,1980) has found that a number of urban households engaging in agriculture and that of rural households whose income is derived from non-farm activities is much higher than usually foresee.

Research to date by (Schiffma&Kanuk, 2004:550-553) proposed four distinct views of consumer decision making: * Economic view: The consumer is characterised for not making reasoned decisions, but are also optimal for achieving a goal or solving problems. * Passive view: Here consumers are perceived as impulsive and irrational purchasers. * Cognitive view: The consumer cant make correct decisions but actively search for information that will make them taking satisfactory decisions. * Emotional or impulsive view: The consumer realise that they have made careless decisions

which regret at a later stage.

Theoretical work by (Halan,2002; Singh,1998) suggest that teenagers make up a major consumer market which have a purchasing power for their products such as snacks and sweets and have an indirect buying influence when shopping for bigger items.

7. RESEARCH METHODOLOGY
RESEARCH DESIGN
A non-experimental survey design, following the quantitative tradition will be used in pursuit of the research objectives. Quantitative data analysis is a technique that the researcher uses to convert data to numerical forms and is subject to statistical analyses.

SAMPLE
Respondents of the study will be family units of parent and a child from the Grahamstown and Albany district (i.e. Alicedale, Salem Alexandria and Shawpark). A random sample of n = 300.

MEASURING INSTRUMENTS
The measuring instruments are self-designed questionnaire to measure rural-urban differences while a questionnaire developed by Sproles and Kendall (1986) will be used to measure consumer decision making. This is a 22 item instrument which was used to measure consumer decision making. The scale reliability is α= 0, 87. (See Appendix A – Copy of Questionnaire Attached)

METHOD OF DATA COLLECTION
Firstly, permission will be requested to do the study at each of the households identified. Each household will then be asked for permission to address them at their spare time. A systematic random sample (n=300) will be taken from selected couples. The researcher will select every kth household depending on the number of households available. In consultation with their employer, participants will be invited to take part immediately, where they will be gathered in the refreshments halls and invited to take part voluntarily in the study anonymously.

The purpose of the study will be explained to the participants prior to participation. Instructions will be given verbally and no time limits will be applied. Questionnaires will be handed out to individuals in a booklet format. The researcher will collect completed forms immediately after completion. After the data collection phase, the researcher will check the questionnaires for missing data. Those with missing data will be omitted.

Data analysis procedure:
The statistical analysis will be carried out with the SPSS programme (1998). Descriptive statistics and inferential statistics will be used to analyse the data. Where applicable Cronbach alpha coefficient will be used to assess the reliability of the measuring instruments.

8. DELIMITATION OF THE STUDY
The researchers’ topic will focus family units with income ranging from R0 000 to R2 000 per month, with standard ten up to degree level of education. The sample that the researcher is planning to use will be drawn from the EASTERN CAPE PROVINCE;Grahamstown will be used for Urban consumers while the surrounding farms/villages will be for rural consumers. (Alicedale, Shawpark, Alexandria an Salem)

9. ETHICAL CONSIDERATIONS
In conducting this research the researcher has taken note of the psychological ethics code of conduct. The researcher will avoid unethical conduct and ensure: Informed consent – Before conducting this study, the researcher will ensure that all participants voluntary agree to take part in the research. Confidentiality – The researcher will respect the privacy of the participants and others involved in the research project. Deception – The researcher will not give participants erroneous information or withhold information as to deceive them. Plagiarism – If the researcher uses the work of others, proper acknowledgement of their contribution will be made

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