BACHELOR IN BUSINESS ADMINISTRATION

SEMESTER 3

E-COMMERCE.

ASSIGNMENT 1

Prepared for:

Lecturer’s name: Mr. Saboor

Prepared by:

Student’s Name:
Table of Contents
INTRODUCTION.....................................................................................................................................2
QUESTION 1.............................................................................................................................................3
INFLUENCE OF INTERNAL AND EXTERNAL FACTORS ON CONSUMER’S DECISION
MAKING PROCESS OF A PRODUCT (COFFEE)..............................................................................3
5 STAGES OF CONSUMER DECISION MAKING PROCESS......................................................4
WHY ARE PEOPLE WILLING TO PAY MORE FOR COFFEE?.................................................5
THE IMPORTANCE OF FINDING OUT CONSUMERS BEHAVIOR..........................................5
INFLUENCE OF INTERNAL AND EXTERNAL FACTORS.............................................................6
INTERNAL FACTORS:...........................................................................................................................6
1. Decisions:........................................................................................................................................6
2. Personal Needs & Motives............................................................................................................6
3. Attitudes:........................................................................................................................................6
4. PERCEPTION:..............................................................................................................................6
5. MOTIVATION:.............................................................................................................................6
6. ATTITUDE:...................................................................................................................................7
7. LEARNING:..................................................................................................................................7
EXTERNAL FACTORS:..........................................................................................................................7
1. CULTURE:....................................................................................................................................8
2. GROUP:.........................................................................................................................................8
3. FAMILY:.......................................................................................................................................8
4. Segmentation..................................................................................................................................9
 The Students:.............................................................................................................................9
 The Leisure:...............................................................................................................................9
5. SUBCULTURE:.............................................................................................................................9
QUESTION 2.............................................................................................................................................9
COMMON CHALLENGES RETAILERS FACE GIVING CUSTOMERS WHAT THEY WANT. 9
1. Need for customization:...............................................................................................................10
2. Retail price inflation....................................................................................................................10
3. Communication:..........................................................................................................................10
• Scalability.................................................................................................................................10
 • Tracking...................................................................................................................................10
• Automation...............................................................................................................................10
• Reporting..................................................................................................................................10
6. Sustainability:..............................................................................................................................11
7. Digital disruption:........................................................................................................................11
8. Building fulfillment objectives around each customer:............................................................11
INTRODUCTION
In present, the most challenging concept for marketers are to identify what consumers buys and
don’t buy and why and when they buy specific product or service. This consumer purchasing
decision related information is difficult but critical for marketers as it helps them in identifying
what is significant to the consumer and what influences him/her most at the time of taking their
purchase decisions. The information about consumer behavior and their purchasing decision
influences marketers in creating their marketing programs or strategies in accordance to the need
of specific consumers. In this concern, the most substantial help for marketers can be done by
going through the process of consumer behavior and identifying specific internal and external
influences on consumers. The process of consumer behavior is a conceptual model and it does
not entail enough information that assist in predicting specific behaviors of consumers. However,
the consumer behavior process manifests general beliefs of consumers that can be very helpful
for marketers to design their products and services according to identified beliefs (Predicting
who buys what, how and where).

 
QUESTION 1

INFLUENCE OF INTERNAL AND EXTERNAL FACTORS ON CONSUMER’S

DECISION MAKING PROCESS OF A PRODUCT (COFFEE)
CONSUMER DECISION MAKING PROCESS: Consumer decision making process involves
the consumers to identify their needs, gather information, evaluate alternatives and then make
their buying decision. The consumer behavior may be determined by economic and
psychological factors and are influenced by environmental factors like social and cultural values.

The consumer decision making behavior is a complex procedure and involves everything starting
from problem recognition to post-purchase activities. Every consumer has different needs in their
daily lives and these are those needs which make than to make different decisions. Decisions can
be complex, comparing, evaluating, selecting as well as purchasing from a variety of products
depending upon the opinion of a consumer over a particular product. This renders understanding
and realizing the basic problem of the consumer decision making process for marketers to make
their products and services different from others in the marketplace.

5 STAGES OF CONSUMER DECISION MAKING PROCESS

1. Need Recognition: Need recognition occurs when a consumer exactly determines their
needs. Consumers may feel like they are missing out something and needs to address this
issue so as to fill in the gap. When businesses are able to determine when their target
market starts developing these needs or wants, they can avail the ideal opportunity to
advertise their brands.

2. Information Search: The information search stage in the buyer decision process tends to
change continually as consumers require obtaining more and more information about
products which can satisfy their needs. Information can also be obtained through
recommendations from people having previous experiences with products.

3. Evaluation of Alternatives: This step involves evaluating different alternatives that are
available in the market along with the product lifecycle. Once it has been determined by
the customer what can satisfy their need, they will start seeking out the best option
available. This evaluation can be based upon different factors like quality, price or any
other factor which are important for customers.

4. Purchase Decision: When all the above stages have been passed, the customer has now
finally decided to make a purchasing decision. At this stage, the consumer has evaluated
all facts and has arrived at a logical conclusion which is either based upon the influence
 from marketing campaigns or upon emotional connections or personal experiences or a
combination of both.

5. Post Purchase Behavior: The purchase of the product is followed by post-purchase

evaluation which refers to analyzing as to whether the product was useful for the
consumer or not. If the product has matched the expectations of the customer, they will
serve as a brand ambassador who can influence other potential consumers which will
increase the customer base of that particular brand. The same is true for negative
experiences; however, it can halt the journey of potential customers towards the product.

WHY ARE PEOPLE WILLING TO PAY MORE FOR COFFEE?

People who willing to spend for quality services, good environment, Wi-Fi area and located
convenience places because they are coffee drinkers, that’s why people will choose to spend
their money in the expensive places rather than cheaper ones. In another way, people are
influenced by their buying behavior from their friends and family, in loyalty which is to test-
marketing ideas to keep the customers fully constant to the brand and the environment which is
in the changing life style.

Other than that, they are also influenced by culture, sub-culture, places, races, past experience
and reference groups. These types of thinking, feelings and actions will influence the changing
attitude from the consumer. Customer past experience will affect millions of people around the
world to patronize the coffee bean outlet.

THE IMPORTANCE OF FINDING OUT CONSUMERS BEHAVIOR

Consumer behavior is what consumer wants and needs. They may be perceived in quality differs
from management-based of product quality and objective. When consumer is buying on the
quality and a nice product, there will be based on believe signal, consumer will focus on finding
the lowest price product and buying on promotion. In another way, consumer will focus on
aspects of the product that satisfy a consumer’s needs and wants. Consumer behavior is
influenced by these factors, for examples: motivation, perception and learning. Those factors are
known as internal factors or personal factors. In addition, factors like norms, family and cultural
in external or internal.

Consumer is most important person for the marketer because the marketer takes in to
consideration on the taste and dislikeness of the consumer as well as produces the goods and
services accordingly. In addition, marketers willingly to fulfill the customer wants and needs,
then only will design out the optimal product or service for the customers, after all the survey,
marketer will only decide what price customer will be purchasing on their product or service,
marketer will use different kind of marketing strategies to do their promotion to get the customer
to buy a product or service. This will help the marketers to launch their new product and
changing the decision making of the consumers. Marketers will improve the performance of the
company and achieve their goals.

INFLUENCE OF INTERNAL AND EXTERNAL FACTORS

INTERNAL FACTORS:
Internal factors are also known as internal influences. It includes lifestyle, motivation, attitude,
perception, learning, and personality. Internal factors are influenced by an individual’s feelings,
self-concepts, memory, and lifestyles. These are also called as psychological factors. Internal
factors include the way that how a customer interact with the society and take a major decision
with respect to the purchasing. Mr. George is deciding the car Fortuner as per his perception of
the vehicle.

1. Decisions: Internal influences basically come from consumers own lifestyle and way of
thinking. These are consumers’ personal thoughts, self-concepts, feelings, attitudes,
lifestyles, motivation and memory.

2. Personal Needs & Motives: The most substantial internal influence that affects
consumers purchase decision is his personal needs and motives. The need of a consumer
can be defined as a lack of something or the difference between his desired and actual
state.

3. Attitudes: The next substantial internal influence that affects consumers buying behavior
is their own attitude. Attitude pertains to what an individual feels or thinks about
something. It is always reflected in individuals’ acts as well as in their buying patterns.

4. PERCEPTION: Perception is a process how a consumer stimulates his imagines a real

picture. Perception is the gathering of the information through the senses. He has chosen
Fortuner as he has a very good perception of the vehicle in his mind. The consumer’s
perception is mainly driven by the advertisement of the product. The need and the
motivation are also very important factor. Mr. George will never buy a car until and
unless he needs it. He needs an SUV for his family. That is the reason he is ready to buy a
car which is able to fulfill the need. The need of the customer can also be taken as
deficiency of something in one’s life. It may be called as a gap between the actual and
desired level of a person.
 5. MOTIVATION: The motivation is an inner mental state that encourages the individual
to satisfy his need by purchasing the particular product. The customer has a big family
and possesses a small car. This is the actual state of the customer. In order to fulfill his
need, he would go out and search for some better option of a car. This better option for
Mr. George is the SUV. This can be also called his desire. Sometimes, it happens that the
customer only gets influenced by his attitude.

6. ATTITUDE: Attitude is the next influential internal factor that affects the buying
behavior of the customer. It contains to what a customer assume for the product. The
attitude is always positioned in customer’s buying pattern. It is really a difficult task to
change someone’s attitude. In other words, if a customer has a negative attitude for a
particular product, then it is a difficult task to change that belief. The situation may be in
favor of the product also. Here, in this case, the attitude is that he wants to purchase a
new car for his family.

7. LEARNING: Learning is also an important attribute which influences the buying

behavior of the customer. Consumer learning can be taken as a process in which the
consumer avails the required knowledge for the product. He evaluates that whether the
product is compatible with his needs. In other words, the person who is buying a major
thing car will learn the functions and features of the car properly. Then only, he would
make over his mind to purchase that particular vehicle. Learning is a procedure in which
one requires the knowledge, the personal experience. The consumer analyses whether the
product is suitable to him as per the learning. The experience regarding a particular
product influence the customer to make a decision that whether the product is worth or
not. Apart from all these factors the customer’s purchasing power, i.e. the value of the
money is also an important factor. If a customer affords the product, then only he goes for
the same. Furthermore, the present ability of the product, the packaging, the branding,
etc. also affects the customer’s buying behavior

EXTERNAL FACTORS:
These factors are called as social influences. It contains the social norms, group influence, the
cultured family, friends, household structures, etc. Mr. George is facing with the impact that
what is his society, where he lives, what is his business status? These are the external influences
as these all are not the creation of his mind. These all are coming from outside. These all strike in
one’s mind whenever an individual is planning to purchase something. These all are external
influences as the source of all these are exterior despite interior. These are also called as socio-
cultural factors as they help in growing the individual relationships with his family, friends, and
relatives. The understanding of these factors is also very important in making the buying
decision. The major factor that affects the decision of a buyer is the culture. Culture is a value,
beliefs, attitudes, opinion of the people that matters in a customer’s life.

Understanding of these external influences is essential to affect consumers purchasing decisions.

Although almost all above described external factors are essential to understand but the most
important and fundamental external factor that influence consumer purchase decision is his/her
culture that is as follows:

1. CULTURE:
The culture of the individuals also covers the emotional part of a person towards his
decision in buying a specific product. A person always tries to protect his cultural beliefs
and values. This protective behavior towards his culture is visible in the buying behavior
of an individual. Culture has affected Mr. George by the values and norms maintained by
the society in which he is living. The society contains high-class families. In order to
maintain his standard, he has decided to buy the SUV. Culture can also be taken as the
environmental factor that transfers from one generation to the other. As a culture
denominates the religion and the family members, the association with a specific product
is possible.
Culture can develop a consumer need and as well as can also affect the gratification of
that need. In this way, culture depicts how an individual satisfy or fulfil his needs that if
identified by coffee marketers can assist them in serving US consumers in a much more
effective way by serving coffee in a way that resonate with the priorities of US culture,
US coffee marketers can increase their chances of consumer acceptance and success.
They should try to serve coffee with high quality and different kinds of environment
according to the needs of US consumers.

For business class people, they should have serve coffee at esteemed and premium prices
with peaceful environment whereas for youngsters they should serve coffee at reasonable
prices with fun-loving environment. Before serving consumers, it is vital that US coffee
marketers collect information about their specific target markets cultural values. It can be
done by analyzing their family, religious establishments, and education associations.

2. GROUP:
The next factor is a group. A man is called as a social creature. He likes to live in a
group. He cannot live alone. A group has two or more members who have prescribed
values, norms, and beliefs and they usually interact with each other in order to reach to a
specific decision. An individual has a habit to discuss his personal affairs in a group. The
individual’s buying decision affects the group which includes the status, pride, the
frequency and level of interaction, the mutual understanding, etc.
3. FAMILY:
The family is also defined as a group, where two or more people live together. They may
be related by marriage, birth or adoption. Mr. George is feeling the full pressure on their
children for purchasing the SUV. The family is the only group that pressurizes a
customer and influences the buying behavior of the customer. The family is the most
important reference group. A customer’s immediate family plays a vital role in
influencing his decision. A child when imbibes from the parents, that becomes a part of
his living. It becomes his habit and the style of living. Being the head of the family Mr.
George has to fulfill his children’s demand.

4. Segmentation
With the help of discussion of internal and external influences on US consumers
purchasing behaviour, they can be segmented on the basis of demographic,
psychographic and location & culture. In regard to demographic segmentation, US
consumers can be segmented on the basis of factors like age, income, gender, and
education level. In psychographic segmentation target market can be segmented on the
basis of attitude towards drinking coffee, attitude towards going out for coffee, attitudes
towards coffee price, opinion about coffee shops etc. In concern to culture or location,
market can be segmented into different locations.
On the basis of different types of segmentation approaches, the primary customer
segments for coffee marketers in the United State are:

 The Students:
This segment mainly involves students of university, collage, and post-collage from
urban cities. It includes students within the 16-22 age range. This segment consumer
has lower income and is very price sensitive to consumer goods such as coffee.

 The Leisure:

This segment includes people from family and friends that love to have coffee for
enjoying a good conversation. Age of this group people varies from 16-65. It involves
people from different income and education levels so it is a broad group to serve by US
coffee marketers.

Business People: This segment represents busy business class professionals that normally
aged between 22 and 55, with moderate to high income and education levels.

5. SUBCULTURE: Furthermore, the subculture, the society also influences the buying
behavior of the consumer. Subculture transfers their values and norms from one
generation to another. The influence of society is also remarkable. Mr. George has bought
the SUV as it is also a matter of honor, pride and status for him in his society.
QUESTION 2

COMMON CHALLENGES RETAILERS FACE GIVING CUSTOMERS WHAT THEY

WANT
The retail industry is in a state of constant transformation and there is an increasing urgency to
reduce costs and to increase efficiency in operations. As customers become more demanding,
there is also extra pressure to exceed their expectations with regards to the quality of the product,
service and overall experience. Below are 5 common challenges retailers face today;

1. Need for customization: Customers can prove very demanding and they are increasingly
looking for unique experiences that allow them to build and customize their own
products. Retail managers must rethink the role of their stores and develop smarter, more
personalized offers. With the growing popularity of online retail stores such as
LAZADA, overcoming this challenge is central to creating retail experiences that still
draw in customers.

2. Retail price inflation: With consumers having to pay more and more for their daily
essentials, many have less disposable income and are now more likely to cut down on
their budget for luxury products likes clothes. For this reason, it is now up to retailers to
give consumers a valid reason to shop and to prove that what they will have represents
excellent value for money. Equally, retailers are struggling to deal with higher costs
which are likely to rise further.

3. Communication: Operating a retail business is undoubtedly a hard job, and managing

internal communication is no exception. The complexity of this process will depend on
the size of the business, how many stores there is, the number of workers. However, there
are four other less obvious challenges that should always be considered, but are
sometimes left forgotten.

• Scalability – Increasing the scale of something equates to more complex teams

and communication flows. There is a need to optimize interaction between staff
and the managers.

• Tracking – It is essential to track communications to guarantee the compliance

and excellence of every retail process. This includes conducting reviews,
approvals, production, design, logistics, among others,
 • Automation – Automated signs are important to ensure team members are held
accountable for their actions, to help them to organize their tasks and to help them
to solve problems rather than just creating stopgap.

• Reporting – It is crucial to measure results and to check that the teams are hitting
their targets. This is especially an important task for operation managers, as it
allows them to make better-informed decisions, based on a review of current and
upcoming communications.

6. Sustainability:
The younger generations are becoming increasingly demanding of having a degree of
transparency with regards to the ethical practices of the products they are purchasing.
This ‘conscious consumer’ is changing the retail industry as brands must be more
socially, environmentally and politically conscious which has a huge impact on the daily
running of operations.

7. Digital disruption:
Technology and the scope of its uses are growing exponentially. It means that retailers
need to merge online and offline businesses, from back-office operations to the final
delivery to the consumer in-store. Data collection is also evolving rapidly and helping us
all to make decisions in sales, marketing, customer service, and operations. For example,
with access to real-time data, it is possible to replenish a store, define optimized labor
schedules, and manage KPIs to achieve positive financial results. Retailers should use
data to set actionable targets and solve issues.

8. Building fulfillment objectives around each customer:

It’s easy for retailers to build their fulfillment objectives around their core customers…
until they begin to scale. Then the challenge becomes how to bring big picture
understanding to each unique customer interaction. Let’s say customers within a certain
urban geographic area prioritize shipping speed above all else, while their rural
counterparts need free shipping to place the order. A single retailer addressing both
regions needs the ability to adjust optimization goals with targeted profiles, so they can
offer both urban and rural customers a shipping option that suits their priorities. But what
happens when retailers need to prioritize multiple objectives at once to get a particular
customer to cross the finish line? Intelligent order routing enables retailers to fulfill a
wide spectrum of customer orders, adhering to fulfillment objectives in order of
importance, so there’s never a reason for customers to abandon a purchase in the final leg
of their journey.
 Communicating with existing supplier networks:
When retailers switch order management providers or seek out new suppliers to conserve
resources in light of recent import tariffs, they need to maintain supply chain
transparency to remain relevant and effective. Reports show that 65% of logistics, supply
chain, and transportation executives recognize that there are tectonic shifts in their daily
processes.
Open API solutions work with retailers’ existing supplier networks but are also open to
new developers and can receive data from third-party sources. So, retailers don’t lose
their end-to-end inventory visibility if their supplier’s network isn’t compatible with their
supply chain management platform––with open API, it’s always compatible.

 Mastering minute-by-minute inventory visibility

Real-time inventory visibility is quickly becoming table stakes for omnichannel retailers.
A staggering 94% of customers say real-time inventory visibility is a significant factor
when shopping with a retailer. But only retailers know the important role reverse logistics
play in getting returned inventory repackaged, individually SKU-ed, repriced, and back
on the sales floor (or online catalog).

The sooner a retailer’s reverse logistics platform makes refurbished or resellable returned
inventory visible to customers, the less chance of markdowns or retiring the returned
product. Statista found that 40%of retail organizations are producing less waste as a
direct result of their reverse logistics investments
CONCLUSION

In conclusion, I learned that consumer will be influenced by the people who is around and the
importance of the consumer. People who are willing to spend for services, quality products and
good environment. They are also influenced by culture, sub-culture, places and races, past
experiences and reference groups. Besides that, consumer decision making can be influenced by
factors such as motivation, learning and perception. Consumer is most important person for the
marketer because the marketer takes into consideration on the taste of the consumer, as well as
producing quality goods and services accordingly.