Consumer behaviour in Greece during economic crisis

Essay , 2011 , 31 Pages

Business economics - Offline Marketing and Online Marketing

This paper examines the characteristics of the Greek consumer prior and during the crisis based on the study of various researches. Its main objective of this paper is the comparison of the Greek consumer style prior to the crisis and during the crisis and the extent to which this is in accordance to the typical consumer profiles in recession times. Another objective is to show that an exogenous factor such as economic recession effects consumer behaviour more than individual factors such as personality.

Contents

Abstract

Introduction

Purpose

Definition of consumer behavior

Exogenous factors and Consumer Behaviour

The importance of socioeconomic and demographic factors

Profile of Greek consumer prior to economic recession

Greek recession and Consumer

Typical types of customers in recession

Profile of Greek consumer during crisis

Impact of economic crisis
Increase and decrease spending per product category
Changing buying behavior
However, the economic crisis seems to have made Greeks to return to more balanced and healthier food choices:: Milk, dairy products, bread, vegetables and fruits appear almost daily on the consumers’ table, while red meat, fish, fries and soft drinks are restricted to once a week. Emergence of new consumer values

Conclusion

References

Abstract

This paper examines the characteristics of the Greek consumer prior and during the crisis based on the study of various researches.

Its main objective of this paper is the comparison of the Greek consumer style prior to the crisis and during the crisis and the extent to which this is in accordance to the typical consumer profiles in recession times.

Another objective is to show that an exogenous factor such as economic recession effects consumer behaviour more than individual factors such as personality.

Keywords: Economic recession, Greece, consumer profile, consumer behaviou r .

Introduction

In the current economic crisis the consumer has lost his confidence and "takes revenge" of the market, simply by not buying as much as she/he did before. According to a recent research from the Economic University of Athens (2010), the Greeks restrict their consumption spending by buying less and cheaper products, while half of those who were planning a major purchase postpone it for the future. This phenomenon is worldwide, causing concern.

Why reducing consumption is so scaring? The decline in consumer confidence and the reduction of spending has led to declining sales of businesses and thus their profits, and generally less money circulates in the financial system. By reducing consumption, the demand is falling and this has the effect of reduced investment and growth.

In the present paper, the effect of macroeconomic crisis on the behavior of Greek consumers will be examined and the extents to which exogenous factors such as unemployment, job insecurity, and public finance instability effect this behavior. The paper presents a definition of consumer behaviour. The analysis is also based on the examination of the exogenous factors of consumer behaviour whereas unemployment and economic environment are part of, the profile of the Greek consumer prior and during recession, the economic data of Greek recession as well as the categorization of consumer profiles in recession times.

Purpose

It is known from previous researches that exogenous factors such as unemployment, inflation etc. effect in a catalytic way the purchasing decisions of consumers.

The purpose of this study is to make for the first time a comparative study of the purchasing behavior of Greek consumers before and during the severe economic crisis plaguing the country. The comparative study will examine whether the economic conditions of the country outweighed factors such as personality and individual characteristics in making purchasing decisions.

Definition of consumer behavior

The term Consumer Behavior involves buyers in general, customers of specific goods as well as the people who use goods. Various definitions have been occasionally formulated and presented. According to Siomkos (1994:.24) as consumer behavior is defined: "... All the relevant purchasing activities, thoughts and effects that occur before, during and after purchasing the product as these are made by purchasers and consumers of products and services and by those who influence the market."

Exogenous factors and Consumer Behaviour

The consumer is influenced by his environment. This fact indicates his ability to adapt to different circumstances, depending always on the needs to be met. The effect is that this exogenous influence impacts on the consumer decision-making process. There is a plethora of external factors that can affect the consumption behavior of the individual, which sometimes have a long or short effect. The culture refers to the beliefs, values ​​and opinions that are shared with the members of the society where people live and it influences in a catalytic way our behavior during our lifetime, by setting "limits" in our understanding of what products and services are acceptable.

The subcultures - not with their bad sense - are groups of people who fall within the broader context of culture and share similar values ​​and attitudes. Some examples are those of gender, ethnicity, race, age and religion. Also, the social class to which someone belongs to is a factor that may influence consumer behavior (Pinson & Jolibert, 1998), like what profession she/he practices, income and education level that this person has. One of the main factors effecting purchasing behavior is the family. Especially in a society such as Greek, where family institution is still strong, people are influenced by the family’s consumer habits as children and as adults later. The social surroundings and the reference groups to which people belong is an equally important factor, since everyday conversations and contacts influence consumer habits.

The external conditions such as inflation and unemployment or a long illness in the family are factors that will determine the amount to be spent to purchase a product and when it is best to purchase that good. The marketing environment combined with mass media presence is an area that in recent decades has gained immense influence power in today's consumer. There are factors impacting more as it is the case of culture and subculture. For example, the ads usually aim to influence consumers for a certain product brand, while the culture factor does not "suggest" specific brands but more goods for consumption. As reported by Peter & Olson, (1998), the culture affects consumer behavior, which in turn may enhance the formulation and development of culture.

The importance of socioeconomic and demographic factors

The exogenous factors of consumer behavior are culture, subculture, family, the broader social and economic environment, external conditions and marketing environment and how these factors can influence it. Besides the social reality that characterizes each country consumption depends definitely on the economic status and demographic data of the country.

Some general changes that have taken place in recent decades in Western countries are worth mentioning to see the evolution of culture and life style. The reduction of the family size due to divorces and lower birth rates, has led to changes in food consumption, in product packaging and habits concerning the purchase of home equipment. In addition, the increase of unemployment has led to reductions in costs associated with personal purchases and home purchases.As Pinson & Jolibert (1998) suggest, the aging of population (120 million Europeans are over 50 years) has become one of the most important problems in Europe. According to a survey conducted in France by Darmon et al, (1991), aging has a significant impact on health, food, leisure and transport (Pinson & Jolibert,1998). It makes sense that older consumers usually buy smaller quantities in local shops, have different eating habits and are over consumers of television, radio and newspaper. But certainly they are not a group with homogeneous behavioral traits.

De Rada’s survey, (1998) in a region of Spain defined different types of consumers depending on their consumer habits.

He noticed that regardless of developments in communication (mass media) and transport (extensive use of private and public vehicles), the differences between rural and urban consumer habits are not diminished. This is due not only to economy but also to the social and mental mindset of consumers in relation to the environment where they live.

In the same survey, there was a separation between traditional consumer behavior (buying products out of necessity, taking into consideration price and product quality, use the product until it is "exhausted") and the new consumer behavior that focuses on the individual and the prestige that she/he will obtain from the use of specific products.

According to the researcher, this new consumer behavior is the product of a particular social development which may vary depending on external factors that may affect consumers, but will reappear when these factors are eliminated. At this point the question arises whether the two above types of consumer behavior are influenced by factors such as age, sex, education and social status.

Williams (2002), suggests in a survey, that the importance of evaluation criteria of a market is influenced by gender, income and social status of the consumer.

From the above, it is evident that the social, political, economic and demographic realities of a country are important factors influencing the consumer behavior of individuals. A reasonable conclusion is that the more economically developed a country is the more intense will the effects of mass production and consumption be, since stimuli for consuming goods are everywhere, while the largest percentage of population has access to shops and supermarkets.

Profile of Greek consumer prior to economic recession

The profile of Greek consumer was studied quite lengthy by various research companies.

AGB Hellas (2010), after lengthy researches, resulted in a separation of the Greek society into groups with different life styles. The results referred concern earlier periods and are purely educational in nature. The main criterion by which this separation was done was the television behaviour of individuals. The categories are the following:

- The domestic 12%, housewives, middle-aged (average 45 years), with reference to home and family (household).
- The retired 13%, conservative, authoritarian, introverted and loyal to the values ​​and traditions (retired) people.
- The decent 12%, people in their forties, having a good job with high incomes and education, political power, developed consumer behaviour and sense of communication.
- The unsatisfied 11%, approximately thirty years old with average economic and social situation and willingness to climb the social ladder. They are the victims of the social changes of recent decades. They adopt at the same time modern and traditional/ conservative views. They reject modern standards of consumer purchasing behaviour but they follow them at the same time.
- The conventional 10%, people at their forties, support the society, without economic, social and political power, low educational level. Duty and compromise is the goal and the criterion by which they shape the standards of their conduct. They choose products they know, are hesitant, avoid the new or different.
- The sensitive 9%, young, mostly students, open in communication, modern, unconventional, extroverted, sensitive, receptive, picky consumers.
- The carefree 12%, young people of limited economic and social power, receivers of every message without having the necessary filters of processing the social stimuli.

They follow the major trends, are magnetized by advertising, magazines and television glamour.

- The climbers 9% Young people whose origin is usually not from Athens, with rising social power. They contrast the momentum and the new symbols against established culture. They seek wealth and luxury, and consume products that enhance social difference.
- The alternatives 12%, people in their forties and older, the generation of the Polytechnic (students that fought against dictatorship), with critical thinking, perception, high education, social and cultural power. Modernists, incompatible, they respect the transcendent eternal values. Selective and powerful consumers of products that confirm their social identity.

A research by the Greek Ministry of Development (2005) divided consumers into four categories based on four criteria: offers, price, quality and benefit.

Consumers that prefer offers (21%) live mainly in Athens, belong to low social classes, have low to medium education, prefer to search for offers and they buy only from offers. They will buy the cheapest and are indifferent for quality. They only buy from sales and Chinese.

Consumers that prefer prices (31%), they live in big cities, belong to low and middle classes, have average education, they prefer the less expensive by sacrificing partly quality and they also buy from Chinese shops. They are not influenced by brands and they do not relate price to quality.

Consumers that look for benefit (22%) i.e. they buy the best in the best price, in other words they seek good quality and good price. They live mainly in Thessaloniki and big cities, they belong to middle class, they do not necessarily look for the cheapest and they do not sacrifice quality. They would hardly buy something from Chinese shops and they are interested in buying branded products in good price, they want quality but they do not want to pay for it dearly.

Finally, there are the consumers of quality (26%). These consumers want to buy the best. They live in Athens, belong to upper middle class, they care about the country of origin and they would never buy from Chinese shops. They prefer branded products and they do not sacrifice quality for better price.

Another survey by the General Consumer Secretariat (2009) defines 5 types of Greek consumers based on product consumption:

Superconsumers: 22%, Loyal: 17%, Indifferent: 16%, Informed: 25% and Price Conscious: 20%.

The characteristics of these consumers are the following:

The Superconsumers (22%) prefer branded food and beverage (73%). They insist on buying specific brands and they consider as safer the products of large firms/industries as well as the packaged products. They always try new products that are advertised. They are lured by offers at the point of sale and they often buy products that they do not often need. They believe that the family is what protects them as consumers but they also appear to trust all stakeholders in relation to other types of consumers. It seems that in this category fall mostly young people and more specifically the categories of unsatisfied, sensitive, carefree and climbers of the previous research.

The Loyals (17%) insist on buying specific brands of food and drinks more than the other types of consumers. They always prefer brands.

They do not worry about price comparison at the point of sale. They are not lured by offers at the point of sale. It seems that in this category fall people in their forties and more specifically the categories of loyals, conservatives, perhaps conventional and alternative.

The Athenian consumers (46%) and mostly those of higher education and social class level seem to be the most loyal ones.

The Indifferent (16%). They are not frustrated and they do not complain when the product does not meet their expectations. They do not buy products they do not need.

More indifferent are young men aged 15-25 (53%) compared to women of the same age (47%). It could be said that part of the domestic, retired and unsatisfied fall in this category.

The Informed (25%) feel frustrated and complain more than other types of consumers when the product does not meet their expectations. More than half (54%) of the informed consumers, when facing a problem with a product, they return it or complain to the store where they bought the product. Only 3% seems to do nothing. They are more informed about the products they buy and they never buy products that they do not need. They always compare prices before deciding what to buy. The Thessalonians are more informed consumers. It seems that mostly the sensitive, the alternative and probably decent and part of climbers fall in this category concerning product information.

[...]

• Author: Fotini Mastroianni (Author)
• Publication Year: 2011
• Pages: 31
• Catalog Number: V354221
• ISBN (eBook): 9783668406384
• ISBN (Book): 9783668406391
• Language: English
• Tags: Economic recession, Greece, consumer profile, consumer behaviour