Disclaimer: This is an example of a student written essay.
Click here for sample essays written by our professional writers.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com.

Literature Review 2.0 Spending Behavior

Paper Type: Free Essay Subject: Cultural Studies
Wordcount: 3568 words Published: 1st Jan 2015

Reference this

Nowadays, the marketers are facing great competition among themselves to market the products and services to the consumers. The study of consumer spending behavior enables the marketers to understand how consumer thinks, feels and react to the subtle environment when purchase a product(Wassana Suwanvijit, 2009). Hence, the marketer can predict the consumer spending behaviors and develop a proper marketing plan to address the products to the consumers.

Get Help With Your Essay

If you need assistance with writing your essay, our professional essay writing service is here to help!

Essay Writing Service

According to businessdictionary.com, consumer spending could be defined as “goods and services bought by households in the satisfaction of their needs and wants”. In addition, Spending is defined as “the act of expending” and behavior is defined as “response of an individual to an action, environment, person, or stimulus.” While Kotler (2000) stated that consumer behavior studies “how individuals, groups and organizations select, buy, use and dispose of goods, services, ideas or experiences to satisfy their needs and desires.”

In our research context, spending behavior is defined as the act of disbursing money in response to an action, environment, or person in the satisfaction of needs and wants.

2.1 Factors

Wilson, et.al, 2005 stated that consumer spending behavior is strongly influenced by four factors: Cultural factor (culture, sub-culture, social class), Social factor (groups, family, roles and status), Personal factor (Age and life cycle stage, life-styles, occupation, economic situation, personality and self concept) and Psychological factor (motivation, perception, learning, beliefs and attitude). Understand these four factors could help to address customers’ needs and wants and finally increase sales. In addition, there is another factor so-called economic factor which would affect consumers’ spending as well.

2.1.1 Personal Factor

Wassana Suwanvijit, (2009) conducted a study to examine factors affecting consumer life-styles and purchasing behaviors. He found that consumer life-styles are derived from and personalized through social and cultural learning and consumer demographics will influence consumer’s behavior.

In this study, Wassana Suwanvijit,(2009), administered a questionnaires to 300 consumers at Songkla province. The result indicated that demographic and socio-economic factors affecting the consumer life-styles and purchasing behaviors. In Songkla, average spending rate was approximately 550 baht per time and the factor affecting the spending per time was consumer income. The author also found that consumer promotion will affect consumers spending behavior and sales.

Chetsada Noknoi, Sutee Ngowsiri, and Wannaporn Boripunt, (2009) also conducted a study to test the relationship between demographic characteristics and the consumer behavior. The study found that consumer behavior is dependent on the demographic characteristics such as income, age, marital status, occupations, etc.

Besides, based on the research paper done by Juma K. Salim, the researcher proved that various life cycle stages and socio-demographic factors such as region of residence, race of the reference person, and sex of the reference person were found to be substantial factors of the pattern of expenditures within each occupational group. The researcher’s results are consistent with the results found by Abdel-Ghany and Sharpe (1997), Cage (1989), and Jacobs, Shipp, and Brown (1989). The researcher also proved that the occupation influence expenditure between teachers and non-teachers. Teachers spend a lot in only two categories of expenditure, education and miscellaneous, compared to professionals and administrators or managers.Besides occupation, level of education also influences spending behavior. Income, education, and occupation are some of the factors that influence one’s position in society.

Vanessa G. Perry and Marlene D. Morris (2005) examined the relationship between consumer financial knowledge, income and locus of control on financial behavior. In this research, it suggested that consumers’ propensity to budget, save and spending depends partly on their level of perceived control over outcomes as well as knowledge and financial resources. Apart from that, race and ethnicity can also affect the consumer financial behavior. According to Rotter (1966), locus of control was being defined as a general, relatively stable propensity to see the world in a particular way, capturing general beliefs about the causes of rewards and punishments. The research showed that individual self-concept influenced both financial and non-financial preference and behaviors.

Consumer spending behavior is also affected by a person’s personality and attitude. Cordell et. all (1996) and Cadha (2007) explained that the consumers are drawn to purchase counterfeits of luxury brands due to the desire of owning the prestige and status symbol that the trademarks brand shows. T. Min, P. Ian and Curtain had viewed the attitudes towards counterfeiting of luxury brands can be influenced by a person personality variable (e.g. value consciousness, integrity, personal satisfaction, trend tracking and the status consideration). They reviewed the theories established and examined their understanding that the desirability of purchasing the counterfeit products was affected by the “good value” of the brand name (which labeled on the counterfeit product and add value to the product). Below are the explanations of the personality variables which could reveal a person spending behavior.

i. Value consciousness

Human have the curiosity to seek variety and difference of a certain products/services and they try to spend on the news fashion products in order to satisfy their curiosity. For those who can afford the branded products, they will obviously spend a lot of money in order to obtain the value of that product. Nevertheless, people will try to attain the value of the luxury brand things by choosing the counterfeit product with lower prices.

ii. Integrity

If the consumers view the integrity as an important value, there will be less people

to purchase the counterfeiting of luxury brands and this indirectly change their spending behavior to buy non-branded things with possess a cheaper prices-low consumption.

iii) Personal Satisfaction

Accomplishment, social recognition and desire to enjoy the valuable things are the personal satisfaction variables in their spending behavior where consumer will be more conscious of the appearance and visibility by purchasing the fashion products. By spending on the new arrival of products which is more expensive, they diluted their income and incurred more expenditure in their own saving-spending portfolio.

iv) Status consideration

Status consideration is refers to consumer who are both seeking self-satisfaction and recognition as well as for showing to surrounding people. Because of this status recognition, people tend to spend more to purchase the luxury brand which indirectly changed their buying behavior.

2.1.2 Cultural Factor

M. Pierre, (1958) claimed that individual spending pattern shows a person class position despite from the person’s income. He classified that a person spending structure was affected by the influences from family, their colleague, voluntary association, age and gender. These influences variables on affecting a person spending behavior integrated together in order to classify the person’s class position in his/her social unity. Pierre also mentioned that the ranked status system involved all the members of a society in term of hierarchy (from super-ordinate to sub-ordinate). Whereby, whether a person will or will not attempt to buy a thing are strongly related to his/her class membership, and depend on whether the person is mobile or stable. He specified that the consumption patterns included a several factors such as class replacement, choice of store, communications skills, save versus spend, and psychological differences.

In his studies, he realized that there are six-class system which is Upper-Upper Class (old families), Lower-Upper Class (newly arrived), Upper-Middle Class (professionals & successful business men), Lower-Middle Class (white collar salaries), Upper-Lower Class (wage earner & skill labor groups), and Lower-Lower Class (Unskilled labor groups).

i) Class Placement

M. Pierre explained that the class placement can be determined in three categories which included the occupation, source of income and housing type (e.g. luxury apartment, banglo). In his research in metropolitan area (Chicago), he discovered that the Upper-Lower class people possess expensive house and the home was equipped by the solid heavy appliance. While, the Lower-Lower class people have less property minded (lack of intention to buy or maintain a home) and they intended to spend their income on their clothes or automobile.

ii) Choice of store

M. Pierre’s studies revealed the relation between choice of store, pattern of spending and class membership. He described the people are very realistic in the way of spending in order to match their values and expectations refer on which type of store they choose (e.g. high status branded shop-Nike, Addidas). He verified that the social status of the department store becomes the primarily basis to identify the consumer class position. He mentioned that people are not going to take action by entering to a store where he/she might not affordable.

iii) Communications Skills

The kind of super-sophisticated and clever advertising is almost meaningless to Lower status people. M. Pierre stated that the lower class people may not comprehend the subtle humor in the advertisement(s) and they are difficult in extracting the art of the advertisement(s) information. They also have a different approach in determining the information given. In other word, they lack of intelligence and have different understanding in their communication skill. These indirectly defined the spending behavior between class positions of a person.

(iv) Saves versus Spends

M. Pierre clarified that the Middle-Class people usually have the financial knowledge place in their thinking for the forms of saving whereby they tend to choose the investment saving. While Lower-Status people intended to save in an almost low-risk funds (non-investment saving) which can quickly converted to spend-able cash. This clearly showed that the lower status people have more spending habit. Pierre mentioned that the Lower-status people will spend on artifact-centered products (cheaper items) and the Middle-Class people will spend on experience-centered products (planned spending).But, Pierre stated that the spending behavior of a person still governed by class membership in his/her society.

(v) Psychological differences

M. Pierre explained that the spending-saving analysis has a very obvious effect in psychological implications to differentiate the classes.

Middle Class

Lower Status

Pointed the future

Pointed present and pass

More urban identification

More rural identification

Stress on rationality

Non rational essential

Greater sense of choice maker

Limited sense of choice maker

See themselves tied to national happening

Concern their own and family members

2.1.3 Psychological Factor

D. Ap & S.K.Pamela, (2005) argued that consumer behavior is often strongly influenced by the subtle environment and traditional perspective on consumer choices. They explained that people always occasionally purchase the things on the spot where they choose the products at the moment of awareness and occupied with things rather than thinking on selecting an affordable groceries to purchase. This resulted in troubling the consumers’ spending habit.

Find Out How UKEssays.com Can Help You!

Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.

View our services

Bargh(2002) described the consumer behavior are cast items of the cognitive psychology. While, Chaiken(1980) and Petty, Cacioppo and Schuman(1983) explained that, before people buy(or choose or decide), they are less initiative to collect the products’ information. Attitudes can be based on cognitive beliefs such as when a person finds a product which is very useful or more benefit effect, or the product show and possess symbolic meanings (Venkatraman & Mac-Innes, 1985).

Karen M. Stilley, J. Jeffrey Inman and Kirk L.Wakefield (2010) conducted two studies to investigate the effects of promotional saving on both planned and unplanned spending, and how does it varies according to income level. In order to test the hypotheses, Karen M. Stilley et al. interviewed 400 customers who entered two grocery stores located in a southwestern U.S. city. Every tenth shopper or one every five minutes was selected, whichever came first. In addition, respondents were first asked what items they planned to purchase and how much were they planned to spend in total. Then, In-store slack (ISS) was calculated by subtracting the itemized portion from the total respondents planned to spend. Besides, respondents were required to indicate their household income before they exit the grocery shops. For the purpose of increase the response to such sensitive question, respondents were given seven choices of range rather than gave a specific figure of household income. The results of the research showed that the promotional on unplanned grocery items would attract customers to spend more and this is increased with the higher income level.

Apart from that, Ajay Kalra and Mengze Shi (2010) also examined sweepstakes reward structures that maximize consumers’ valuation. They claimed that consumers’ value maximizing sweepstakes should effectively motivate consumers’ participation and thus increase sales. From the other perspective, sweepstakes and contests would increase consumers’ spending on a certain products. Ajay Kalra et al. defined sweepstakes and contests as the promotional tools used by organizations to attract more customers, which in turn gaining additional sales. By having sweepstakes, consumers are tend to spend more in order to increase the probability of winning grand prize.

In addition, the introduction and increased usage of electronic transfer systems has led to the likelihoods of a cashless society (Humphrey et al., 1996; Humphrey and Berger, 1990; Olney, 1999). In the research paper done by Mohamad bin Ali (2004), the variables been developed are hedonic motivation, credit cards used, unplanned purchase, peer influence, TV viewing and shopping frequency. The results exhibited the positive correlation of hedonic motivation, credit card use and unplanned purchases with compulsive buying tendency. Many people spending to release stress and treat it as retail therapy. Shoham and Brencic (2003) stated that people go to shopping as retail therapy are expect that shopping could reduce their stress. Credit card is encourages compulsive buying because credit card eliminate immediate need for money to buy thing.

Furthermore, Fusaro (2006) argues that debit card users make more frequent and smaller withdrawals to control their spending behaviour. A cashless transaction takes off the pain of transferring ‘cash’ and may encourage consumers to spend more. From a ‘hedonic perspective’, a cashless transaction does not recap the thought of the amount of money spent at the time of purchase as compared to cash payment which recaps thoughts about costs or benefits of purchase at the time of purchase (Prelec and Loewenstein 1998, p.25).

D. Ap & S.K.Pamela, (2005) made a several statement on the factors of unconscious spending behavior of the consumers:

i. The choices of buying the product are influenced by automatically response or

one person’s attitudes

ii) Attitudes were not really guide the behavior of the person’s spending and

people tend to buy things on impulse and the impulse choices are strongly

affected by the subtle environment.

From the above statements, they reviewed and discussed about their studies on consumer behavior. They pointed out two important results on their understanding which:

Perception-behavior link is a mere perception of a social environment which

leads people to face in direct effect behavior. This mean that the behavior of a person is often imitative (follow others’ action) and thus this behavior is contagious (spread and affect others-ripple effect)

Automatic goal pursuit related to the goal-directed-behavior where the

consumer purchasing behavior is often unconsciously guided by the environment.

2.1.4 Social Factor

A person’s spending may be affected by his social group of people, which normally being called virtual communities. It is defined as self-selecting groups of individuals engaged in sustained computer-mediated interactions around common interests or goals, governed by shared norms and values, and serving individual and shared needs (Bagozzi and Dholakia 2002; Dholakia, Bagozzi and Pearo 2004). Such characteristics of virtual groups as open, non-discriminatory participation, possibility of anonymity, and low visibility of product usage suggest that virtual communities potentially employ mechanisms of influencing shopping decisions that are different from those of other reference groups.

Some virtual communities apply informational influence on shopping decisions by aiding the transfer of information among reference group members regarding product opinions (Deutsch and Gerard 1955). In virtual communities information can be spread through what other members post about their product and brand use, or shown through picture sharing and in occasional face-to-face meetings.

2.1.5 Economic Factor

Rex Y. Du and Wagner A. Kamakura (2008) examined how consumers allocate their discretionary income to meet different consumption needs and how the resultant consumption pattern will change in response to changes in prices and budgets. For instance, how does escalating gas price affect consumers’ spending on food and apparel. Rex Y. Du et al. had used the CEX family extracts made available by the National Bureau of Economic Research (NBER) for the 1982-2003 period. The CEX was collected from different samples each year and 66,368 households were being examined in this research. Besides, Rex Y. Du et al. had conducted three policy simulations to test consumers’ reaction to environmental shock. Those three policy simulations were reactions to shift in energy costs, reaction to a tax rebate and welfare losses due to spiraling costs of prescription drugs. The result for the first simulation showed that consumers reduce their spending when the energy costs increase, especially the poorer quintile. For the second simulation, the result showed that tax rebate would increase consumers’ spending even though for those nonessential items, such as airline fare and charity. For the last simulation, the result showed that consumers could have reduced their prescription drug expenditure by an average of 37% while maintaining the same level of treatment. Indeed, economic condition would affect consumers’ spending behavior.


Indeed, consumer spending behavior is strongly influenced by the factors such as personal, cultural, psychological, social and economic condition. Demographic characteristics such as income, age, marital status, occupations, etc. would have direct relationship to consumer behavior (Chetsada Noknoi et al. 2009). In the research done by Wassana Suwanvijit (2009), 300 questionnaires were distributed to the respondents in Songkhla. For a city with a population more than seventy thousands of people, it would be better if the number of respondents could be at least 500 in order to draw a more convincing conclusion about the results. Next, the influences from family, colleague, friends, etc. would affect a person spending behavior. Besides, it has to depend on several factors such as class replacement, choice of store, communications skills, save versus spend and psychological differences as well (M.Pierre, 1958). In addition, the promotional savings, sweepstake contests, ease of payments, etc would motivate consumers to spend more, which directly affect their spending behavior. In the research done by Karen M. Stilley, J. Jeffrey Inman and Kirk L. Wakefield (2010), they collected respondents’ household income through provided choices of range to the respondents instead of asking a specific figure from them. This action was more effective in getting information from the respondents due to confidential problem. Apart from that, virtual communities may affect a person spending behavior through the information given among reference group members (Deutsch and Gerard, 1995). Lastly, the economic factors such as changing in gas price, tax rebate, etc. would affect consumers to change their spending as well.


Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: