Effect of the Financial Crisis on Consumer Buying Behaviour

Effect of the Financial Crisis on Consumer acquire behaviorABSTRACTConsumer buy doings is a conglomerate phenomenon, which is comprised of a bundle of decision-making mathematical mouldes, stinting determinants and market stimuli. Consumer purchase deportment has been attracting the by-line of a great round of academic and moneymaking(prenominal) parties for many years. The complexness of the processes with which consumer purchase gage be associated has made the phenomenon considerably difficult to be predicted and controlled. However, as consumers argon the more or less natural commencement of tax revenue for business organisations, therefore their demeanor is of signifi trickt grandeur for achieving market survival and fiscal prosperity.This is the reason why the array dissertation is tensenessed on look intoing and analysing the phenomenon in the read monetary crisis. As the up-to-date crisis is already treasure to be having a major effect on many sp aring and friendly aspects of the united Kingdom, the interrogationer concentrates specifically on revealing the effectuate the deport economic downturn has on the purchase demeanour of consumers.The author is passing evoke in revealing the disturbances that hatful be identified to occur and thus provide valuable insight to commercial and academic parties in the background of predicting and controlling consumer purchasing patterns. The dissertation is specifically centre on analysing the buyer behavior changes from a market perspective. The author provides a number of suggestions, which were extracted from the conducted supplemental and immemorial investigation. The developed propositions blueprint the versatile considerations companies should integrate in their marketing campaigns in golf-club to perform successfully, despite the financial crisis and economic downturn.CHAPTER 1 INTRODUCTION purchasing doings smoke be described as the set of attitudes that cha racterise the patterns of consumers choices. acquire behavior is a phenomenon that varies depending on a wide wave of factors, such(prenominal)(prenominal) as demographics, income, social and cultural factors. Apart from the inherent immanent factors, which burn be appreciate as influential to acquire behaviour, there are a number of situational contexts that mickle be suggested to affect consumer choices. In this respect it goat be proposed that consumer behaviour is a conspiracy of nodes purchasing consciousness and remote incentives which are presumable to moment in behaviour remodelling (Dawson et al., 2006). This is why look intoers in the field of consumer get patterns conclude that it is derivative of function that encompasses economic principles and marketing stimuli (Hansen, 2006).As get behaviour is a key factor for companies profitability, it is a phenomenon that has been attracting the attention of look intoers for many years. One of the fields most pregnantly interested in consumer choice, is the field of marketing (Kotler, 2000).Marketing is the learn commissioned on extracting friendship on consumers characteristics to enable companies to respond to customers expectations and facilitate organisations in providing spicy quality customer service (Groucutt et al., 2004). This is why it rat be suggested that the context of the cave in dissertation could be of signifi poopt importance for marketing inquiry workers and professionals.As the present project aims to analyse the financial crisis effects on consumer behaviour it shag be suggested that the in depth scrutiny which the current examination would establish could transform into a valuable quotation of marketing counsellor. In opposite words, the present dissertation is apt(predicate) to transform into a valuable source of marketing comprehensiveness as it would reveal knowledge on the probable changes in get behaviour which the current financial and economic downturn is causing and thus provide commercial organisations with a piece of inquiry that could stimulate great tolerateness and integrity in companies business performance during a volatile arrest (Churchill and Peter, 1998 Iacobucci and Calder, 2003).Todays financial crisis, which has go forthed in an economic downturn, could be prize as a major challenge for the profitability and even survival of many global companies. The financial crisis, which was the result of the sub-prime mortgage crisis in the USA, has transmitted internationally and ca utilised disturbances in a wide range of powerful economies. Many countries are seen to be on the brink of recess if not already plunged into it (Deutche Welle, 2008).As the present dissertation is specifically evaluating the financial crisis impacts on consumers purchasing behaviour it stomach be value that some of the challenges which consumers are currently facing and are likely to experience in the near future shadow be sep arate into 2 categories direct and indirect. The direct factors can be value as the fall disposable income, ruminate insecurity and credit financing hurdles ( space for National Statistics, 2008). On the separate hand the indirect aspects of the credit crunch on customer behaviour can be delineated as the challenges of credit financing and investment capability which commercial organisations face and which make these organisations unable to continue with producing high quality fruits and customer service (The Economist, 2008).The look for hesitation the current project aims to answer is What type of consumer acquire behaviour has been most significantly affected by the financial crisis in the UK?. As it can be observe, the movement the detective focuses on addressing can be used for outlining the query parameters of the dissertation (Bell, 2005). In order for a look for to yield credible results it should be frame-worked in a manner that clearly structures the conte xtual boarders of a project. This can be achieved only finished and through the identification of a set of look into variables, to be explored, tested and synthesised in a logical flow (Saunders et al., 2003).In the present context, the question focus and the variables which can be recognised are The United Kingdom the current financial crisis consumer get behaviour and in crabby non-business consumers and retailing. As it can be observed the research variables outline a clear modelling to subscribe to the researcher through the development of a consistent and coherent research process. Once recognised, the research variables can be addressed through the application of sub- interrogatives and research objectives (Easterby-Smith et al., 2002). In this respect the objectives which the dissertation incorporates for responding to the research question are the evaluation of purchase behaviour characteristics, which would reveal various acquire behaviour characteristics and patte rns analysis of the financial crisis impacts on consumers and in finical the effect on purchasing behaviour characteristics and the identification of current buying trends of products in the UK.In the context of forming a clear framework and outlining clear objectives to address the set research question, this dissertation can be divided into six chapters to guide the research process flow.Chapter 1 introduces the readers to the topic by outlining the aim of the dissertation, the first-string research question, the research objectives and the value of the examination.Chapter 2 provides a fine literary works freshen up of the topic. The literature review is structured by the application of a funneling strategy, depicted in Figure 1. The funneling strategy aims to provide greater lucidness in the research boundaries as it gradually tightens the research focus by outlining the specific research variables to be explored and examined.Chapter 3 provides the research methodology emp loyed in the current investigation. The division also reveals the research philosophy, strategy, objectives and sources, which were employed for the successful exploration of the topic.Chapter 4 outlines the research findings, which are achieved through a multi-source strategy of secondary and primary research.Chapter 5 provides a discussion on how or whether the research findings address the research question.Chapter 6, the final chapter of the dissertation, offers a conclusion to the research. This chapter is followed by a list of references.CHAPTER 2 LITERATURE check over 2.1 Consumer BehaviourConsumer behaviour can be described as a process in which individuals or radicals purchase a clear or impalpable product to satisfy needs or preferences (Perner, 2008). Nowadays, the component of the consumer is of great macro and micro-importance as the consuming power is an essential economic cause force. The great deduction of the consumers role can be recognised from the fact th at most contemporary consumers spend a great amount of sequence and nothing on buying behaviour and decision-making activities. This is why consumer behaviour can be identified as a process, which comprises all activities related to the process of purchasing, such as information hookup information exchange selecting buying and consuming (Hansen et al., 2004). As buying behaviour is identified to encompass a wide range of a priori and post-buying activities, therefore it can be recognised as a significantly complex phenomenon.Buying behaviour is cond by two main factors internal and outdoor(a). The internal factors that determine consumer buying behaviour are presented by the various consumer segments. In other words, the busy set of characteristics a segment possess (i.e. demographic, social, cultural, action style, and so on), can be described as essential determinants of the segments buying behaviour. On the other hand, there is a set of foreign factors that can play a si gnificant role in ascertain consumer behaviour, such as promotions publicise customer service, economic and market stability, etc. In this respect, it can be cogitate that buying behaviour is significantly impelled and influenced by the exceedingly interdependent combination of customers buying consciousness and external stimuli (Dawson et al., 2006).2.2 Types of Consumer BehaviourThe literature recognises quad characteristic types of consumer buying behaviour. They resist with respect to the frequency of occurrence, sensational take onment, decision-making complexity and try. In this context there are four distinctive buying behaviour patterns which can be outlined, such as programmed behaviour limited decision-making buying behaviour extensive decision-making buying behaviour and capricious buying (Arnould et al., 2002).Programmed behaviour, also known as habitual buying behaviour, is the buying pattern which can be characterised as the routine purchasing of low cost items, such as coffee everyday saucilyspaper tickets, etc. It is a process that involves little search for information and low complexity of decision-making (Learn Marketing, 2008).Limited decision-making buying behaviour can be characterised as a buying pattern that involves moderate levels of decision-making and comparatively low amounts of required information to trigger purchasing. It is a buying behaviour, which can be related to the purchasing of clothes the consumer can easily obtain information on the quality of the product and often spends short time on selecting and securing the purchase (East, 1997).In course to the limited decision-making buying pattern and the programmed purchasing behaviour, the literature identifies extensive decision-making buying behaviour (Foxall and Goldsmith, 1994). This type of behaviour is characterised with complex decision-making, where the buyer needs a comparatively longer period to make a decision and greater amounts of information gat hering. It is buying behaviour usually provoked by expensive and infrequent purchases, which involve high levels of economic and psychological risk (Peter and Olson, 2007).The fourth type of buying behaviour, which is observed in the literature, is the impulsive buying. Impulsive buying is characterised as a buying process that does not involve any conscious planning. It is a short-term phenomenon, which is usually provoked by an external stimuli and irritation, making particular products irresistible to consumers at a wedded short period of time (Wells and Prensky, 1997).As it can be observed in the literature on the dissimilar types of buying behaviour, a significant determinant, which accompanies for each one of the described behavioral choices, is the consumers emotion. The consumers emotion as suggested by Hansen et al. (2004) is a fundamental determinant of buying behaviour. It is a component of the purchasing decision-making, which can be recognised to be both influentia l to, and influenced by, a number of internal and external factors (Chaudhuri, 2006 Laros and Steenkamp, 2005).Deriving from the significant importance of consumer emotion in purchasing and the great determining value it possess, the research would suggest a new framework of buying behaviour in order for the researcher to address the sign research question adequately.The framework is adopted from the phenomenological literature and theoretical possibilitys, which were identified during the research process. In this respect the continuum proposed encompasses all of the buying behaviour types and the consumers emotion as their most significant determinant. At each extreme of the continuum, there can be recognised two distinctive types of buying behaviour planned and unintended which are to be researched and discussed in the succeeding section of the present literature review.Although emotion is a subjective phenomenon, which significantly varies according to individual traits and situational particularities, the researcher suggests that emotion is the most essential determinant of planned and unplanned buying behaviour (Havlena and Holbrook, 1986). In other words, as unplanned buying behaviour is the attribute of impulsive buying, it can be suggested that unplanned buying behaviour is greatly affected by greater emotional drives.On the other hand, as planned behaviour usually involves complex decision-making, greater information gathering and a longer time period for selection, it can be concluded that planned buying behaviour is rather resulted by rationality than emotionality. Although it is a fair clarification that many complex decision-making processes may initially occur through emotional attraction and impulse, the particular features of the buying process are the variables which are evaluated in the present research and therefore, it can be suggested that planned buying behaviour is less emotional than unplanned.2.2.1plotted Buying BehaviourPlanned consumer buying behaviour is best described by the theories of planned behaviour (TBA) and reasoned action (TRA) (Hansen, 2006). The theories reveal that planned behaviour can be dictated by the consumers perceptions of complexity or in other words how difficult it is for the consumer to select and secure a particular product (Ajzen, 1991). The notion of perceive complexity is described by Keen et al. (2004), to comprise of the situational variables of channel tradeoffs and transaction costs. In other words, the level of complexity of a particular transaction, it is suggested, is obstinate by the prospect cost of the alternative channels that exist and transaction costs, such as time, money and effort.Furthermore, the theory of planned behaviour specifically introduces the concept of sensed behavioural control as an essential determinant of the process of planned behavioural intention (Posthuma and Dworkin, 2000). In this respect, the TBA not only does explain the importance of the consumers perception of the levels of complexity with which a particular purchase can be associated, but also outlines the essential role of the buying risk which consumers are likely to bear during purchases.The perceived risk perspective can be recognised as a multidimensional construct. High perceived risk can result from the consumers expectation of experiencing a negative outcome from a buying interaction (Lim, 2003). In this respect if any situational determinants of the process of purchasing reveal a gap of negative outcome, it can be suggested that this is likely to increase the levels of consumers perceived risk. In this context, situational determinants of these types can be recognised to be the transactional costs, which are associated with every purchase consumers make. In other words, the higher the transactional costs (i.e. money, time, effort, etc.) the greater the likelihood of higher levels of perceived risk (Hansen, 2006).On the other hand, perceived risk i s not only determined by the transactional costs, which consumers identify. Contrary, perceived risk is often influenced by situational variables and outcomes, which the consumer fails to recognise. In other words, if a consumer is unable to clearly identify the possible outcome of a particular buying transaction, the consumer would be less inclined to purchase. In this respect, it can be concluded that another significant determinant of buying risk is uncertainty (Shim et al., 2001). This is why planned behaviour is associated with complex decision-making processes, which is characterised by extensive information gathering (Peter and Olson, 2007).2.2.2 Unplanned Buying BehaviourAs it was already identified, there are four distinctive types of buying behaviour, which can be recognised in the literature and which can be categorised in two distinctive categories of planned and unplanned buying behaviour. each of the categories can be identified as encompassing different decision-makin g processes, characteristics, complexity and length (Arnould et al., 2002). Moreover, consumers decision-making goes through a number of transformations at different submits in the buying process problem recognition information search evaluation of alternatives and purchase decision (Peter and Olson, 2007). In this respect, it can be suggested that the purchasing determinants pull up stakes according to the stage at which the particular consumer is situated in the buying process at a given time. in that location are two distinctive but highly interdependent sources that can be identified as influencing the buying behaviour of consumers. They can be recognised as internal and external buying behaviour factors (Brassington and Pettit, 2007).The internal factors that determine consumer buying behaviour can be divided into the categories of personal (i.e. age, life style, occupation) psychological (i.e. wants, motivating, perceptions) social (i.e. needs, social class, group and famil y influence) and cultural (i.e. car park sense, background, beliefs, knowledge) (Groucutt et al., 2004 Iacobucci and Calder, 2003).On the other hand, the external buying behaviour factors can be identified as the marketing approaches of companies to attract consumers by advertising and promotions. Another external factor that may be recognised as highly influential to the purchasing behaviour of consumers is the micro and macro-economic stability within the particular market milieu (Churchill and Peter, 1998).As it can be observed, purchasing behaviour is mainly determined by internal factors (i.e. economic principles disposable income, status, social class) and external stimuli (i.e. marketing promotions and advertising economic environment) (Dawson et al., 2006).Moreover, it can be proposed that these factors are highly interdependent as, for example, the economic stability within a market environment can be suggested to be significantly influential on the internal purchasing determinants of lifestyle, occupation and disposable income, which is likely to have subsequent effect on wants, motivation and perceptions.2.3.1 The Financial Crisis performerThe Western world is currently facing a significant economic challenge in the face of the current financial crisis. The financial crisis, which is experienced by the majority of the developed G7 countries and in particular the UK, was the result of the US subprime mortgage crisis in August 2007 (Toussaint, 2008).The US mortgage crisis was caused by the frightful quality of loans which were issued in the market at that time. For a period of seven years, some of the US financial institutions had been providing numerous credits to consumers with bad credit history, which afterwards resulted in a pool of credits with a lowered possibility of repayment (Cecchetti, 2008). There are several translations for the occurrence of the crisis, which can be recognised in the literature but are not discussed in the presen t dissertation as the research question is more interested in the outcomes of the crisis than the factors that caused it.The break down of the real the three estates mortgage bubble had a contagious effect on the rest of the well-developed Western economies (Horta et al., 2008). Many EU countries experienced the shock in their banking sectors as the provision of credit financing became a great challenge. Banks were suffering from lack of liquidity, which caused both business and non-business consumers financial hardships (The Economist, 2008).The effect of the financial crisis unfolded over a wide range of other economic aspects. The wide scope of the crisis caused a downturn in many industries, the bankruptcy of leading organisations and overall economic recession to countries like the UK, Germany and France (Deutche Welle, 2008 Hopkins, 2008 Office for National Statistics, 2008).The multi-dimensional characteristic of the financial crisis is identified to have negative impacts both on business and non-business consumers. Some of the major impacts the current financial crisis has on consumers are job uncertainty and unemployment decreased disposable income decreased saving rates fewer credit financing opportunities greater consumption risk higher product and service prices, etc (Allen and Gale, 2007 Gramley, 2008).The UK retailing market is recognised as one of the markets that has been most severely affected. Consumers are seen to be purchasing very conservatively as they focus on efficiency buying and cutting back on waste and premium products, but consumers are not predicted to be trim down their regular consumption. Buying behaviour is seen to be shifting to products with comparatively good quality and low price (Hawkins, 2008).Furthermore, the current economic sluggishness is likely to incline to greater consumer interest in hard discounters, which makes such retailers believe in market share expansion and prosperity. Moreover, food retailing, on w hich the present research question is focused, is seen to be the most stable part of the retailing industry and it is predicted to be gaining market share by the production of efficient marketing strategies. However, the failure in providing good buying experience and low variability of products, which are common for hard discounters, are predicted to be the factors that are likely to impede their market egress (Mintel Oxygen, 2008).UK consumers are also recognised to be spending more time at home (Euromonitor International, 2008). This shift of buying behaviour can be considered to publicise the use of online buying channels through which consumers can compare prices and gather information for their purchasing decisions but at the same time are likely to face buying risk which is usually associated with online purchases.CHAPTER 3 RESEARCH METHODOLOGYThe research methodology of the present dissertation is influenced and structured by the research process onion, which was developed and introduced by Saunders et al. (2003). In this respect the Research Methodology section of this dissertation is divided into five sub-topics, each of which aims to provide a detailed explanation of the research process.cognition is a complex phenomenon influenced and developed by various contextual variables. In this respect, a research philosophy represents a researchers perception of the stylus knowledge is constructed (Saunders et al., 2003).There are three research philosophies recognised in the literature philosophies of positivism, interpretivism and realism. Each of these philosophies provides a distinctive view on the way knowledge is developed. It is authorized for a research process to clearly establish its research philosophy as it has a significant impact on the methodological framework applied.For example, positivism applies scientific reasoning and law-like generalisations in the process of knowledge construction (Remenyi et al., 1998). The research methodology influenced by this philosophy is characterised with a highly transparent structure to facilitate reproduction (Gill and Johnson, 1997). On the other hand, the research philosophy of realism identifies the existence of a number of external social objectives, which influence peoples interactions and respectively the psychiatric hospital of knowledge. Realism can be recognised to be close to the philosophy of positivism but at the same time possesses clearly distinctive characteristics as the philosophy highlights the incorrectness of exploring peoples interactions in the style of natural science (Saunders et al., 2003).The philosophy, which is incorporated in the context of the present dissertation, is the research philosophy of interpretivism. Interpretivism is chosen to be the philosophic framework of the study, as the researcher believes that knowledge is a complex phenomenon, which cannot be generalised in a value-free and detached manner. Furthermore, the researcher focuses o n exploring the topic by the application of exact interpretations and gradually establishing research conclusions (Remenyi et al., 1998).3.2 Research ApproachThe literature outlines two distinctive research approaches, which can be applied in the present dissertation deductive and inductive. A deductive research approach is suggested to be suitable for scientific research, where the researcher develops a hypothesis, which is tested and examined to establish a theory (Hussey and Hussey, 1997).In the present context, as the researcher aims to gradually formulate the research theory through the critical evaluation of the research variables, and as the inductive research approach follows research data to construct theory, therefore it can be suggested that the present research approach is inductive. Furthermore, the inductive research approach, which provides greater flexibility, provides the researcher with the fortune to modify the research emphasis depending on the accumulated fi ndings throughout the research process (Easterby-Smith et al., 2002).3.3 Research StrategyA research strategy can be explained as the son of a bitch or tools the researcher employs for addressing the research question. There are six research strategies, which can be identified in the literature, such as experiment adopt grounded theory ethnography action research and case study (Saunders et al., 2003).The present dissertation employs the research strategy of grounded theory. The researcher primarily focuses on extracting knowledge through research in the phenomenological literature. The present research strategy is appropriate as it is described in the literature to be suitable for inductive reasoning or in other words, applicable to research contexts which aim to gradually establish research assumptions and propositions (Husey and Husey, 1997).Although the present dissertation is essentially influenced by the research strategy of grounded theory, the researcher subsequently emplo ys a primary research strategy of in-depth interviews to collect data. This primary research method is described in greater dilate in the entropy Collection section.3.4 Time HorizonAnother important characteristic of the present research process is the time horizon. There are two time horizons recognised in the literature longitudinal and cross-section(a). A longitudinal research process examines particular phenomenon over a given period of time, whereas cross-sectional is focused on a particular moment.The present dissertation has a cross-sectional time horizon as it is recognised to be appropriate to the research aim and the researchers resources. Firstly, the researcher was given a limited period of time which constrained the ability to conduct a longitudinal examination. Secondly, the present research question is not interested in analysing the variance of the research variables over a period of time but focused on exploring and revealing new contextual insight by suggesting new interpretations and theoretical assumptions (Robson, 2002).3.5 Data Collection MethodThe present research process can be described as an beta one. It aims to reveal new insight and evaluate the researched phenomena in a new light. Furthermore, the research has a flexible approach to establishing its theoretical propositions, which does not mean that the research lacks clear direction and framework (Adams and Schvaneveldt, 1991).As exploratory research processes share the common research strategy of exploring the phenomenological literature and extracting expertise from specialists in the field and focus group interviews, similarly the present dissertation incorporates the research strategy of grounded theory and in-depth interviews. In this respect, it can be concluded that the present study is built on a combination of secondary and primary data.3.5.1 Secondary DataThe secondary data employed can be described as multiple source secondary data. triplex source secondary data c an be divided into two categories area based, which comprises of academic sources and time series based, which focuses of commercial issues (Saunders et al., 2003). The use of multiple source data provides the researcher with the opportunity to develop a balanced and analytical dissertation. The academic literature is used for outlining the academic context of consumers buying behaviour, whereas the commercial sources are used for identification of the current conditions, which are likely to challenge the academic constructs.3.5.2 Primary DataThe present dissertation incorporates a multi-method research process, where the researcher combines secondary and primary data in the same study. This strategy is chosen as the researcher believes that both methods are significantly dependable on each other in the present research context, and that secondary data provides solid theoretical foundation, whereas primary data contributes to the researchers ability to address the most important is sues in the present context (Robson, 2002). The primary data is extracted through the conduction of in-depth interviews.3.5.2.1 In-depth InterviewingIn-depth interviews, also known as unstructured interviews, are recognised as an appropriate data accumulation method as the information they reveal corresponds to the researchers aim of analysing, interpreting and responding to new contextual insight rather than reaching any law-like generalisations. This is why in-depth interviews are a common data collection method in exploratory research projects.Furthermore, in-depth interviews provide greater flexibility as they can be conducted both opposite and over a telephone, which is recognised not to affect the interview outcomes differently (Ghauri and Gronhaung, 2002). This can be considered as a significant facilitation curiously with respect to the time constraints, which the researcher experiences.In the present context, each subEffect of the Financial Crisis on Consumer Buying Behav iourEffect of the Financial Crisis on Consumer Buying BehaviourABSTRACTConsumer buying behaviour is a complex phenomenon, which is comprised of a bundle of decision-making processes, economic determinants and market stimuli. Consumer purchasing behaviour has been attracting the interest of a great number of academic and commercial parties for many years. The complexity of the processes with which consumer purchasing can be associated has made the phenomenon considerably difficult to be predicted and controlled. However, as consumers are the most essential source of revenue for business organisations, therefore their behaviour is of significant importance for achieving market survival and financial prosperity.This is the reason why the present dissertation is focused on researching and analysing the phenomenon in the present financial crisis. As the current crisis is already recognised to be having a major effect on many economic and social aspects of the United Kingdom, the research er concentrates specifically on revealing the effects the present economic downturn has on the buying behaviour of consumers.The author is highly interested in revealing the disturbances that can be identified to occur and thus provide valuable insight to commercial and academic parties in the context of predicting and controlling consumer purchasing patterns. The dissertation is specifically focused on analysing the buyer behaviour changes from a marketing perspective. The author provides a number of suggestions, which were extracted from the conducted secondary and primary investigation. The developed propositions outline the various considerations companies should integrate in their marketing campaigns in order to perform successfully, despite the financial crisis and economic downturn.CHAPTER 1 INTRODUCTIONBuying behaviour can be described as the set of attitudes that characterise the patterns of consumers choices. Buying behaviour is a phenomenon that varies depending on a wide range of factors, such as demographics, income, social and cultural factors. Apart from the essential internal factors, which can be recognised as influential to buying behaviour, there are a number of situational contexts that can be suggested to affect consumer choices. In this respect it can be proposed that consumer behaviour is a combination of customers buying consciousness and external incentives which are likely to result in behaviour remodelling (Dawson et al., 2006). This is why researchers in the field of consumer buying patterns conclude that it is derivative of function that encompasses economic principles and marketing stimuli (Hansen, 2006).As buying behaviour is a key factor for companies profitability, it is a phenomenon that has been attracting the attention of researchers for many years. One of the fields most significantly interested in consumer choice, is the field of marketing (Kotler, 2000).Marketing is the discipline focused on extracting knowledge on consum ers characteristics to enable companies to respond to customers expectations and facilitate organisations in providing high quality customer service (Groucutt et al., 2004). This is why it can be suggested that the context of the present dissertation could be of significant importance for marketing researchers and professionals.As the present project aims to analyse the financial crisis effects on consumer behaviour it can be suggested that the in depth scrutiny which the current examination would establish could transform into a valuable source of marketing direction. In other words, the present dissertation is likely to transform into a valuable source of marketing comprehensiveness as it would reveal knowledge on the likely changes in buying behaviour which the current financial and economic downturn is causing and thus provide commercial organisations with a piece of research that could stimulate greater appropriateness and integrity in companies business performance during a vo latile period (Churchill and Peter, 1998 Iacobucci and Calder, 2003).Todays financial crisis, which has resulted in an economic downturn, could be recognised as a major challenge for the profitability and even survival of many global companies. The financial crisis, which was the result of the sub-prime mortgage crisis in the USA, has transmitted internationally and caused disturbances in a wide range of powerful economies. Many countries are seen to be on the brink of recession if not already plunged into it (Deutche Welle, 2008).As the present dissertation is specifically evaluating the financial crisis impacts on consumers buying behaviour it can be recognised that some of the challenges which consumers are currently facing and are likely to experience in the near future can be divided into two categories direct and indirect. The direct factors can be recognised as the decreasing disposable income, job insecurity and credit financing hurdles (Office for National Statistics, 2008 ). On the other hand the indirect aspects of the credit crunch on customer behaviour can be outlined as the challenges of credit financing and investment capability which commercial organisations face and which make these organisations unable to continue with producing high quality products and customer service (The Economist, 2008).The research question the current project aims to answer is What type of consumer buying behaviour has been most significantly affected by the financial crisis in the UK?. As it can be observed, the question the researcher focuses on addressing can be used for outlining the research parameters of the dissertation (Bell, 2005). In order for a research to yield credible results it should be frame-worked in a manner that clearly structures the contextual boarders of a project. This can be achieved only through the identification of a set of research variables, to be explored, tested and synthesised in a logical flow (Saunders et al., 2003).In the present co ntext, the research focus and the variables which can be recognised are The United Kingdom the current financial crisis consumer buying behaviour and in particular non-business consumers and retailing. As it can be observed the research variables outline a clear framework to guide the researcher through the development of a consistent and coherent research process. Once recognised, the research variables can be addressed through the application of sub-questions and research objectives (Easterby-Smith et al., 2002). In this respect the objectives which the dissertation incorporates for responding to the research question are the evaluation of buying behaviour characteristics, which would reveal various buying behaviour characteristics and patterns analysis of the financial crisis impacts on consumers and in particular the effect on buying behaviour characteristics and the identification of current buying trends of products in the UK.In the context of forming a clear framework and out lining clear objectives to address the set research question, this dissertation can be divided into six chapters to guide the research process flow.Chapter 1 introduces the readers to the topic by outlining the aim of the dissertation, the primary research question, the research objectives and the value of the examination.Chapter 2 provides a critical literature review of the topic. The literature review is structured by the application of a funneling strategy, depicted in Figure 1. The funneling strategy aims to provide greater clarity in the research boundaries as it gradually tightens the research focus by outlining the specific research variables to be explored and examined.Chapter 3 provides the research methodology employed in the current investigation. The section also reveals the research philosophy, strategy, objectives and sources, which were employed for the successful exploration of the topic.Chapter 4 outlines the research findings, which are achieved through a multi-so urce strategy of secondary and primary research.Chapter 5 provides a discussion on how or whether the research findings address the research question.Chapter 6, the final chapter of the dissertation, offers a conclusion to the research. This chapter is followed by a list of references.CHAPTER 2 LITERATURE REVIEW 2.1 Consumer BehaviourConsumer behaviour can be described as a process in which individuals or groups purchase a tangible or intangible product to satisfy needs or preferences (Perner, 2008). Nowadays, the role of the consumer is of great macro and micro-importance as the consuming power is an essential economic driving force. The great significance of the consumers role can be recognised from the fact that most contemporary consumers spend a great amount of time and energy on buying behaviour and decision-making activities. This is why consumer behaviour can be identified as a process, which comprises all activities related to the process of purchasing, such as information gathering information exchange selecting buying and consuming (Hansen et al., 2004). As buying behaviour is identified to encompass a wide range of a priori and post-buying activities, therefore it can be recognised as a significantly complex phenomenon.Buying behaviour is determined by two main factors internal and external. The internal factors that determine consumer buying behaviour are presented by the various consumer segments. In other words, the particular set of characteristics a segment possess (i.e. demographic, social, cultural, life style, etc.), can be described as essential determinants of the segments buying behaviour. On the other hand, there is a set of external factors that can play a significant role in determining consumer behaviour, such as promotions advertising customer service, economic and market stability, etc. In this respect, it can be concluded that buying behaviour is significantly determined and influenced by the highly interdependent combination of customers buying consciousness and external stimuli (Dawson et al., 2006).2.2 Types of Consumer BehaviourThe literature recognises four distinctive types of consumer buying behaviour. They differ with respect to the frequency of occurrence, emotional involvement, decision-making complexity and risk. In this context there are four distinctive buying behaviour patterns which can be outlined, such as programmed behaviour limited decision-making buying behaviour extensive decision-making buying behaviour and impulsive buying (Arnould et al., 2002).Programmed behaviour, also known as habitual buying behaviour, is the buying pattern which can be characterised as the routine purchasing of low cost items, such as coffee daily newspaper tickets, etc. It is a process that involves little search for information and low complexity of decision-making (Learn Marketing, 2008).Limited decision-making buying behaviour can be characterised as a buying pattern that involves moderate levels of decision -making and comparatively low amounts of required information to trigger purchasing. It is a buying behaviour, which can be related to the purchasing of clothes the consumer can easily obtain information on the quality of the product and often spends short time on selecting and securing the purchase (East, 1997).In contrast to the limited decision-making buying pattern and the programmed purchasing behaviour, the literature identifies extensive decision-making buying behaviour (Foxall and Goldsmith, 1994). This type of behaviour is characterised with complex decision-making, where the buyer needs a comparatively longer period to make a decision and greater amounts of information gathering. It is buying behaviour usually provoked by expensive and infrequent purchases, which involve higher levels of economic and psychological risk (Peter and Olson, 2007).The fourth type of buying behaviour, which is observed in the literature, is the impulsive buying. Impulsive buying is characterise d as a buying process that does not involve any conscious planning. It is a short-term phenomenon, which is usually provoked by an external stimuli and irritation, making particular products irresistible to consumers at a given short period of time (Wells and Prensky, 1997).As it can be observed in the literature on the different types of buying behaviour, a significant determinant, which accompanies each of the described behavioural choices, is the consumers emotion. The consumers emotion as suggested by Hansen et al. (2004) is a fundamental determinant of buying behaviour. It is a component of the purchasing decision-making, which can be recognised to be both influential to, and influenced by, a number of internal and external factors (Chaudhuri, 2006 Laros and Steenkamp, 2005).Deriving from the significant importance of consumer emotion in purchasing and the great determining value it possess, the research would suggest a new framework of buying behaviour in order for the researc her to address the initial research question adequately.The framework is adopted from the phenomenological literature and theoretical concepts, which were identified during the research process. In this respect the continuum proposed encompasses all of the buying behaviour types and the consumers emotion as their most significant determinant. At each extreme of the continuum, there can be recognised two distinctive types of buying behaviour planned and unplanned which are to be researched and discussed in the succeeding section of the present literature review.Although emotion is a subjective phenomenon, which significantly varies according to individual traits and situational particularities, the researcher suggests that emotion is the most essential determinant of planned and unplanned buying behaviour (Havlena and Holbrook, 1986). In other words, as unplanned buying behaviour is the attribute of impulsive buying, it can be suggested that unplanned buying behaviour is greatly af fected by greater emotional drives.On the other hand, as planned behaviour usually involves complex decision-making, greater information gathering and a longer time period for selection, it can be concluded that planned buying behaviour is rather resulted by rationality than emotionality. Although it is a fair clarification that many complex decision-making processes may initially occur through emotional attraction and impulse, the particular features of the buying process are the variables which are evaluated in the present research and therefore, it can be suggested that planned buying behaviour is less emotional than unplanned.2.2.1Planned Buying BehaviourPlanned consumer buying behaviour is best described by the theories of planned behaviour (TBA) and reasoned action (TRA) (Hansen, 2006). The theories reveal that planned behaviour can be determined by the consumers perceptions of complexity or in other words how difficult it is for the consumer to select and secure a particular product (Ajzen, 1991). The concept of perceived complexity is described by Keen et al. (2004), to comprise of the situational variables of channel tradeoffs and transaction costs. In other words, the level of complexity of a particular transaction, it is suggested, is determined by the opportunity cost of the alternative channels that exist and transaction costs, such as time, money and effort.Furthermore, the theory of planned behaviour specifically introduces the concept of perceived behavioural control as an essential determinant of the process of planned behavioural intention (Posthuma and Dworkin, 2000). In this respect, the TBA not only does explain the importance of the consumers perception of the levels of complexity with which a particular purchase can be associated, but also outlines the essential role of the buying risk which consumers are likely to bear during purchases.The perceived risk perspective can be recognised as a multidimensional construct. High perceived risk can result from the consumers expectation of experiencing a negative outcome from a buying interaction (Lim, 2003). In this respect if any situational determinants of the process of purchasing reveal a possibility of negative outcome, it can be suggested that this is likely to increase the levels of consumers perceived risk. In this context, situational determinants of these types can be recognised to be the transactional costs, which are associated with every purchase consumers make. In other words, the higher the transactional costs (i.e. money, time, effort, etc.) the greater the likelihood of higher levels of perceived risk (Hansen, 2006).On the other hand, perceived risk is not only determined by the transactional costs, which consumers identify. Contrary, perceived risk is often influenced by situational variables and outcomes, which the consumer fails to recognise. In other words, if a consumer is unable to clearly identify the possible outcome of a particular buying transact ion, the consumer would be less inclined to purchase. In this respect, it can be concluded that another significant determinant of buying risk is uncertainty (Shim et al., 2001). This is why planned behaviour is associated with complex decision-making processes, which is characterised by extensive information gathering (Peter and Olson, 2007).2.2.2 Unplanned Buying BehaviourAs it was already identified, there are four distinctive types of buying behaviour, which can be recognised in the literature and which can be categorised in two distinctive categories of planned and unplanned buying behaviour. Each of the categories can be identified as encompassing different decision-making processes, characteristics, complexity and length (Arnould et al., 2002). Moreover, consumers decision-making goes through a number of transformations at different stages in the buying process problem recognition information search evaluation of alternatives and purchase decision (Peter and Olson, 2007). In this respect, it can be suggested that the purchasing determinants vary according to the stage at which the particular consumer is situated in the buying process at a given time.There are two distinctive but highly interdependent sources that can be identified as influencing the buying behaviour of consumers. They can be recognised as internal and external buying behaviour factors (Brassington and Pettit, 2007).The internal factors that determine consumer buying behaviour can be divided into the categories of personal (i.e. age, life style, occupation) psychological (i.e. wants, motivation, perceptions) social (i.e. needs, social class, group and family influence) and cultural (i.e. common sense, background, beliefs, knowledge) (Groucutt et al., 2004 Iacobucci and Calder, 2003).On the other hand, the external buying behaviour factors can be identified as the marketing approaches of companies to attract consumers by advertising and promotions. Another external factor that may be reco gnised as highly influential to the purchasing behaviour of consumers is the micro and macro-economic stability within the particular market environment (Churchill and Peter, 1998).As it can be observed, purchasing behaviour is mainly determined by internal factors (i.e. economic principles disposable income, status, social class) and external stimuli (i.e. marketing promotions and advertising economic environment) (Dawson et al., 2006).Moreover, it can be proposed that these factors are highly interdependent as, for example, the economic stability within a market environment can be suggested to be significantly influential on the internal purchasing determinants of lifestyle, occupation and disposable income, which is likely to have subsequent effect on wants, motivation and perceptions.2.3.1 The Financial Crisis FactorThe Western world is currently facing a significant economic challenge in the face of the current financial crisis. The financial crisis, which is experienced by t he majority of the developed G7 countries and in particular the UK, was the result of the US subprime mortgage crisis in August 2007 (Toussaint, 2008).The US mortgage crisis was caused by the bad quality of loans which were issued in the market at that time. For a period of seven years, some of the US financial institutions had been providing numerous credits to consumers with bad credit history, which subsequently resulted in a pool of credits with a lowered possibility of repayment (Cecchetti, 2008). There are several explanations for the occurrence of the crisis, which can be recognised in the literature but are not discussed in the present dissertation as the research question is more interested in the outcomes of the crisis than the factors that caused it.The burst of the real estate mortgage bubble had a contagious effect on the rest of the well-developed Western economies (Horta et al., 2008). Many EU countries experienced the shock in their banking sectors as the provision o f credit financing became a great challenge. Banks were suffering from lack of liquidity, which caused both business and non-business consumers financial hardships (The Economist, 2008).The effect of the financial crisis unfolded over a wide range of other economic aspects. The wide scope of the crisis caused a downturn in many industries, the bankruptcy of leading organisations and overall economic recession to countries like the UK, Germany and France (Deutche Welle, 2008 Hopkins, 2008 Office for National Statistics, 2008).The multi-dimensional characteristic of the financial crisis is identified to have negative impacts both on business and non-business consumers. Some of the major impacts the current financial crisis has on consumers are job uncertainty and unemployment decreased disposable income decreased saving rates fewer credit financing opportunities greater consumption risk higher product and service prices, etc (Allen and Gale, 2007 Gramley, 2008).The UK retailing market is recognised as one of the markets that has been most severely affected. Consumers are seen to be purchasing very carefully as they focus on efficiency buying and cutting back on waste and premium products, but consumers are not predicted to be reducing their regular consumption. Buying behaviour is seen to be shifting to products with comparatively good quality and low price (Hawkins, 2008).Furthermore, the current economic sluggishness is likely to predispose to greater consumer interest in hard discounters, which makes such retailers believe in market share expansion and prosperity. Moreover, food retailing, on which the present research question is focused, is seen to be the most stable part of the retailing industry and it is predicted to be gaining market share by the production of efficient marketing strategies. However, the failure in providing good buying experience and low variability of products, which are common for hard discounters, are predicted to be the factors tha t are likely to impede their market growth (Mintel Oxygen, 2008).UK consumers are also recognised to be spending more time at home (Euromonitor International, 2008). This shift of buying behaviour can be considered to promote the use of online buying channels through which consumers can compare prices and gather information for their purchasing decisions but at the same time are likely to face buying risk which is usually associated with online purchases.CHAPTER 3 RESEARCH METHODOLOGYThe research methodology of the present dissertation is influenced and structured by the research process onion, which was developed and introduced by Saunders et al. (2003). In this respect the Research Methodology section of this dissertation is divided into five sub-topics, each of which aims to provide a detailed explanation of the research process.Knowledge is a complex phenomenon influenced and developed by various contextual variables. In this respect, a research philosophy represents a researche rs perception of the way knowledge is constructed (Saunders et al., 2003).There are three research philosophies recognised in the literature philosophies of positivism, interpretivism and realism. Each of these philosophies provides a distinctive view on the way knowledge is developed. It is important for a research process to clearly establish its research philosophy as it has a significant impact on the methodological framework applied.For example, positivism applies scientific reasoning and law-like generalisations in the process of knowledge construction (Remenyi et al., 1998). The research methodology influenced by this philosophy is characterised with a highly transparent structure to facilitate replication (Gill and Johnson, 1997). On the other hand, the research philosophy of realism identifies the existence of a number of external social objectives, which influence peoples interactions and respectively the creation of knowledge. Realism can be recognised to be close to the philosophy of positivism but at the same time possesses clearly distinctive characteristics as the philosophy highlights the inappropriateness of exploring peoples interactions in the style of natural science (Saunders et al., 2003).The philosophy, which is incorporated in the context of the present dissertation, is the research philosophy of interpretivism. Interpretivism is chosen to be the philosophical framework of the study, as the researcher believes that knowledge is a complex phenomenon, which cannot be generalised in a value-free and detached manner. Furthermore, the researcher focuses on exploring the topic by the application of critical interpretations and gradually establishing research conclusions (Remenyi et al., 1998).3.2 Research ApproachThe literature outlines two distinctive research approaches, which can be applied in the present dissertation deductive and inductive. A deductive research approach is suggested to be suitable for scientific research, where the res earcher develops a hypothesis, which is tested and examined to establish a theory (Hussey and Hussey, 1997).In the present context, as the researcher aims to gradually formulate the research theory through the critical evaluation of the research variables, and as the inductive research approach follows research data to construct theory, therefore it can be suggested that the present research approach is inductive. Furthermore, the inductive research approach, which provides greater flexibility, provides the researcher with the opportunity to modify the research emphasis depending on the accumulated findings throughout the research process (Easterby-Smith et al., 2002).3.3 Research StrategyA research strategy can be explained as the tool or tools the researcher employs for addressing the research question. There are six research strategies, which can be identified in the literature, such as experiment survey grounded theory ethnography action research and case study (Saunders et al., 2003).The present dissertation employs the research strategy of grounded theory. The researcher primarily focuses on extracting knowledge through research in the phenomenological literature. The present research strategy is appropriate as it is described in the literature to be suitable for inductive reasoning or in other words, applicable to research contexts which aim to gradually establish research assumptions and propositions (Husey and Husey, 1997).Although the present dissertation is essentially influenced by the research strategy of grounded theory, the researcher subsequently employs a primary research strategy of in-depth interviews to collect data. This primary research method is described in greater details in the Data Collection section.3.4 Time HorizonAnother important characteristic of the present research process is the time horizon. There are two time horizons recognised in the literature longitudinal and cross-sectional. A longitudinal research process examines pa rticular phenomenon over a given period of time, whereas cross-sectional is focused on a particular moment.The present dissertation has a cross-sectional time horizon as it is recognised to be appropriate to the research aim and the researchers resources. Firstly, the researcher was given a limited period of time which constrained the ability to conduct a longitudinal examination. Secondly, the present research question is not interested in analysing the variance of the research variables over a period of time but focused on exploring and revealing new contextual insight by suggesting new interpretations and theoretical assumptions (Robson, 2002).3.5 Data Collection MethodThe present research process can be described as an exploratory one. It aims to reveal new insight and evaluate the researched phenomena in a new light. Furthermore, the research has a flexible approach to establishing its theoretical propositions, which does not mean that the research lacks clear direction and fra mework (Adams and Schvaneveldt, 1991).As exploratory research processes share the common research strategy of exploring the phenomenological literature and extracting expertise from specialists in the field and focus group interviews, similarly the present dissertation incorporates the research strategy of grounded theory and in-depth interviews. In this respect, it can be concluded that the present study is built on a combination of secondary and primary data.3.5.1 Secondary DataThe secondary data employed can be described as multiple source secondary data. Multiple source secondary data can be divided into two categories area based, which comprises of academic sources and time series based, which focuses of commercial issues (Saunders et al., 2003). The use of multiple source data provides the researcher with the opportunity to develop a balanced and analytical dissertation. The academic literature is used for outlining the academic context of consumers buying behaviour, whereas the commercial sources are used for identification of the current conditions, which are likely to challenge the academic constructs.3.5.2 Primary DataThe present dissertation incorporates a multi-method research process, where the researcher combines secondary and primary data in the same study. This strategy is chosen as the researcher believes that both methods are significantly dependable on each other in the present research context, and that secondary data provides solid theoretical foundation, whereas primary data contributes to the researchers ability to address the most important issues in the present context (Robson, 2002). The primary data is extracted through the conduction of in-depth interviews.3.5.2.1 In-depth InterviewingIn-depth interviews, also known as unstructured interviews, are recognised as an appropriate data collection method as the information they reveal corresponds to the researchers aim of analysing, interpreting and responding to new contextual insight r ather than reaching any law-like generalisations. This is why in-depth interviews are a common data collection method in exploratory research projects.Furthermore, in-depth interviews provide greater flexibility as they can be conducted both face-to-face and over a telephone, which is recognised not to affect the interview outcomes differently (Ghauri and Gronhaung, 2002). This can be considered as a significant facilitation especially with respect to the time constraints, which the researcher experiences.In the present context, each sub