Abstract
The consumer is the most elemental basis for any business organization; hence, their core behaviour is also of great importance and significance for a successful marketing experience and financial affluence. However, consumer purchasing behaviour can vary severely and has a very intricate trend. Consumer buying behaviour has been attracting the studies and interest of a large amount of commercial and academic faction for a long time. The level of intricacy of the process where the consumer buying can relate to has made the trend greatly difficult to be predicted and managed. This research aims to study the impact of the Global Business Crisis on Bahraini consumers, investigate their perception of this problem and whether their consumption behaviour has changed as a result.
As known, the current financial downturn had a huge influence on the economic and social aspects of consumers around the globe. Different behaviour has been shifted through different level of economies, one of which, the Bahraini culture purchasing pattern. For this reason, this research is aimed to focus on the changing trends in consumer buying behaviour in the present global business crisis.
Keywords: Global business crisis, Consumer behavior
Keywords: Global business crisis, Consumer behavior
Introduction
Generally speaking, consumer behaviour is the study of the processes that individuals or groups go through in making their purchasing choices in order to satisfy their needs. Usually the buying behaviour takes many forms of consumer's choices that can vary depending on a broad set of factors such as: earnings, demographics, social and cultural factors. Beside these basic internal factors which are considered to be influential to the buying behaviour, there are also a set of factors that would be simulated by the external circumstances in the environment surrounding the consumer. It is valuable to mention that the consumer behaviour is a combination of customer's buying awareness combined with external motivators to result in a change in the consumer's behaviour. This is why most of the economies around the globe shares one problem; because of the external influence on the internal community aspects.
The phenomenon of consumer behaviour has been so long attracting many researches because of its imperative importance to businesses around the world. By predicting consumers' behaviour, a business can understand consumers' needs, and can work on fulfilling the needs and meeting the expectations of their customers. This would eventually help businesses to maintain their prosperity and attain their long term goals. The context of this research can significantly help businesses and professionals to uncover the changes that would possibly occur to consumers' buying behaviour as a result of the global financial crisis.
The social impacts of the financial crisis can be seen more obvious in the developing countries where the poor are being severely hurt during the crisis as demand for their labour falls, prices of essential commodities rise substantially and social services are cut. They find themselves forced to pull children out of schools and the food is being rationed among the family, with women the first to sacrifice their share. The general economic slowdown and rising unemployment forced household to increase working hours or send additional members to the labour force. As a consequence, household expenditure falls by as much as income. The consumers cannot prevent the fall in total expenditure; they tend to adjust the basket of goods purchased. For example the expenditure on food and necessities increases comparing to expenditure on clothes.
The results of this research were based on the analysis of a questionnaire that was distributed to random consumers in Bahrain to have an overview of their knowledge about the Global Financial Crisis and some of its effects and to see if the financial crisis affected their consumption. The data was analyzed using SPSS package to test the hypotheses. In order to investigate the existence of the statistical significance between the variables in the hypothesis, we are going to apply the One Sample T-test method. However, the paper approaches some difficulties that faced consumers after the financial crisis and tries to suggest some solutions. One of the most important problems that consumers are suffering from is the accelerated prices of basic commodities such as food and housing.
Literature Review
1. Consumer behaviour
Perner, (2008) stated that consumer behavior involves the study of the processes which individuals, groups, or organizations perform to acquire products, services, experiences, or ideas to satisfy their needs and how these processes have impacted the consumer and society. The role that consumers play in these days is very crucial to businesses' survival. It is the driving force behind the success of many businesses, because most of the contemporary consumers spend major time on buying decisions.
There are four distinctive classes of consumer buying behaviour identified by the literature. What differentiate these classes can be observed thorough the frequency of occurrence, emotional involvement, decision making complexity and risk. These types are known to be: programmed behaviour; limited decision making buying behaviour; extensive decision-making buying behaviour and impulsive buying (Arnould, 2002, p. 172).
Programmed behaviour (also called habitual behaviour) is distinguished by low complexity and little information search, this process is usually known as routine purchase of low cost items that consumer is used to buy out of habit: such as coffee, newspapers, bus tickets, etc. (Learn marketing, 2008).
On the other hand, the planned behaviour is a result of rationality rather than emotionality because planned behaviour is a complex process for the great deal of information needed and the long time spent on selection. Although the planned behaviour is primarily induced by emotions, it is still considered to be less emotional than unplanned.
Methodology
This study investigates the impact of the Global Business Crisis on consumer behaviour in Bahrain. The problem of the study is to identify the impact of Global Financial Crisis on consumer behaviour in Bahrain, presented in the following questions :
1. To what extent the Bahraini consumer is aware of the Global FC and its effects ?
2. What is the impact of the Global Financial Crisis on change of the Bahraini consumer behaviour ?
The Hypotheses :
H1 : The Bahraini consumer is aware of the Global Financial Crisis and its effects on consumption, inflation and on the country's economy.
H2 : The behaviour of Bahraini consumers did change in effect of the global financial crisis, these is a shift from expensive to inexpensive substitute, a shift from luxury to essential, a shift from huge quantities to small quantities and a shift from consumption to saving.
A questionnaire would be distributed to random population and the results of the survey would be analyzed using SPSS software.
Testing Hypotheses and Results Analysis
This part of the research includes three main topics, the first is concerning testing the reliability of the statistical analysis for the data by using Cronbach's alpha. The second topic is about descriptive statistics of the study variables through descriptive statistical measures such as frequencies and percentages. The third topic represents testing the study hypotheses, using the one sample T-test.
1. Testing the reliability
In order to measure the internal reliability of the data used in this research, Cronbach's alpha was used to measure the internal consistency. The result of the reliability test should be close to alpha= 0.82. Higher value indicates more reliability.
2. Descriptive Analysis
- Table 1
- Table 2
- Table 3
- Table 4
- Table 5
3. Testing the hypothesis
In this part, One Sample t-test will be used to test our hypothesis.
First : Hypothesis setting for one sample t-test
H1 : "The alternative hypothesis": The Bahraini consumer is aware of the Global Financial Crisis and its effects on consumption, inflation and on the country's economy.
H2 : "The alternative hypothesis": The behaviour of Bahraini consumers did change in effect of the global financial crisis, these is a shift from expensive to inexpensive substitute, a shift from luxury to essential, a shift from huge quantities to small quantities and a shift from consumption to saving.
Second : Calculation of the degree of freedom using the following formula
V = n – 1
Where,
V= degree of freedom
Then, V = 50 – 1 = 49
Sig = 0 .05
Where,
V= degree of freedom
Then, V = 50 – 1 = 49
Sig = 0 .05
Third : Hypothesis testing
In hypothesis testing for the one sample t-test, the calculated value of (t) will be compared with the table value. To accept alternative hypothesis, the calculated value of the one sample t-test must be greater than the table value. Also it must be noted that the value of sig must be less than 0.05.
4. The results testing the first hypothesis
Accept the alternative hypothesis H1, because all calculated values of t are above t-tabular = 1.684, and all sig values are below sig=0.05.
- Impact of consumption has significant relationship with the Global financial Crisis.
- Effect on consumption has significant relationship with the Global Financial Crisis.
- Effect on rising inflation has significant relationship with the Global Financial Crisis.
- Effect on country's economy has significant relationship with the Global Financial Crisis.
Three out of four calculated values of t were above t-tabular= 1.684, and three out of four sig were below sig=0.05, thus the alternative hypothesis H1 is accepted.
- Shifting from expensive to inexpensive substitute goods has significant relationship with the Global Financial Crisis.
- Shifting from luxury to essential goods has significant relationship with the Global financial Crisis.
- Shifting from huge quantities to small quantities has significant relationship with the Global Financial Crisis.
- Shifting from consumption to saving has no significant relationship with the Global Financial Crisis. T below t-tabular= 1.684 and sig above sig=0.05.
Challenges
The current crisis has reached the consumers globally. It has threatened their wealth as people have lost their assets, savings and they are facing major concerns about their future stability.
They lost trust in the current financial system because some financial institutions have been putting peoples' money at risk for their own benefits. Even the consumers who don’t own a bank account and never applied for a loan have been affected by this crisis. Consumers must be aware that the global financial crisis has reached a consumption level and it is no longer affecting only financial institutions and investors.
The Four identified challenges associated with the financial crisis that mostly reshaped the buying behaviour of consumers are: the lowered disposable income, increased opportunity cost risk, decreased savings and job uncertainty.
The disposable income is defined as the available amount of money for spending and saving by households after income taxes have been deducted. The diminished disposable income is distinguished to be the most critical challenge for the consumers' purchasing activities.
Currently there has been a new trend that consumers are extensively turning to use e-commerce to search for lower prices and generate income on the Internet. Though consumer gains have been realized, the e-market place is evidenced by fraud and lack of security in e-transactions which raises questions regarding privacy protection and the ability to solve any problem that may arise.
Proposed Solutions & Recommendations
The government role is fundamental in trying to overcome some problems associated with the Global Financial crisis. Its intervention is essential to ensure that consumers are not affected adversely by this crisis by subsidizing the essential commodities like food. This would prevent increasing the prices in the future. Controlling the prices would be in favour of the consumers who have lost their jobs, wages and life time savings. There is a need for government to provide regulations to protect consumers from the effect of the global financial crisis, especially the poor.
Government must take actions to restore responsibility, accountability and transparency to the national and international markets by creating legislative and institutional structures to reduce undesirable effects of the global financial crisis especially in the financial sector due to its vital role which affects all the aspects of society.
Government should be ready to step in especially after the credit squeeze which has affected vital services and this harmed the poor especially in food and housing sectors. It should put restrictions on businesses that do not work in favour for consumers.
Education is a fundamental factor that assists consumers to take more rational decisions regarding the uses of their disposable income. This is rather impossible for a population where financial studies are not part of their compulsory education. It is highly suggested that financial studies to be included as appropriate in the public schools as a core subject to be studied by all students.
Saving is an important action toward securing for retirement period. It is a way to remain financially stable and normally feel more secure. In order to be able to increase the savings plan, consumers have to follow the planned behaviour suggested by the literature earlier. By planning the purchases ahead of time consumers can avoid extra spending caused by unplanned purchases and as a result saving rate will increase.
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