Credit Crunch and Financial Crisis effect on Consumer Buying Behaviour

ABSTRACT
Consumer 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 researcher 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: INTRODUCTION
Buying 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 consumers’ 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 volatile period (Churchill and Peter, 1998; Iacobucci and Calder, 2003).

Today’s 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 context, 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 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 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-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 REVIEW

2.1 Consumer Behaviour
Consumer 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 consumer’s 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 segment’s 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 Behaviour
The 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 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 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 consumer’s emotion. The consumer’s 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 researcher 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 consumer’s 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 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.

2.2.1 Planned Buying Behaviour
Planned 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 consumer’s 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 consumer’s 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 consumer’s 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 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 Behaviour
As 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 recognised 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 Factor
The 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 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 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 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 that 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 METHODOLOGY
The 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 researcher’s 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 people’s 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 people’s 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 Approach
The 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 opportunity to modify the research emphasis depending on the accumulated findings throughout the research process (Easterby-Smith et al., 2002).

3.3 Research Strategy
A 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 Horizon
Another 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 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 researcher’s 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 Method
The 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 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 Data
The 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 Data
The 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 researcher’s 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 Interviewing
In-depth interviews, also known as unstructured interviews, are recognised as an appropriate data collection method as the information they reveal corresponds to the researcher’s 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 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 subject was interviewed 30 minutes after they had made a purchase in a grocery retailer. The interviewer allowed a 30-minute gap before conducting the interviews as the interviewer believed this would be appropriate time for the consumer to fully absorb his/her emotions and shopping experience and thus reveal his/her impressions in greater detail.

The interviewer used a blue pen and a sheet of white paper to record the responses. Every interview had a length of 30 – 40 minutes, as the time accuracy was not considered as important because the interviewer was focused on extracting valuable consumers’ impressions rather than pursuing methodological generalisibility.

The interview had the format of a casual conversation where the interviewee was the one who guided the interviewer’s questions, although the interviewer has a clear idea of the interview objectives.

3.5.2.2 Sampling
Sampling is the technique applied in primary research for facilitating the researcher in choosing the most appropriate and relevant amount of data for the particular exploration (Saunders et al., 2003).

Sampling can be divided into probability and non-probability sampling. The primary research method of the present dissertation is non-probability sampling, also known as judgmental sampling. Non-probability sampling is an appropriate choice in the exploratory context of the present dissertation. Moreover, the non-probability sampling technique, which the researcher employs, is the purposive sampling.

Purposive sampling is a technique that fails in being statistically representative but is useful in providing significantly rich information on the explored context. This technique contributes to the researcher’s aim of identifying and exploring in-depth the key themes in a homogeneous environment, which in the present case is represented by the sample of retail consumers. The interviewer chose 20 grocery retail consumers, who were in full-time employment and had families.

3.6 Relevance and Validity
The credibility of every research project depends on the validity and reliability of its findings and conclusions. In other words, research can be characterised as reliable only if it yields the same results in a different occasion (Easterby-Smith et al., 2002). This suggests that the reliable research is transparent and replicable.

On the other hand, the validity of a research project is achieved only if the research findings achieve their initial objectives and addresses the research question appropriately (Sapsford and Jupp, 1996).

The present dissertation achieves research reliability and results validity through the application of several approaches. Firstly, the researcher clearly outlines the examined research variables by employing a funnelling strategy, which contributes to high extent of research transparency and internal validity. Secondly, the researcher outlines a contextual framework, which can be suggested to contribute to the external validity of the research findings. In other words, the researcher provides a transparent framework to guide other research attempts in achieving the same results on different occasions. Finally the researcher achieves reliability and credibility by conducting a number of discussions with academic and commercial specialists in the researched context. This provided the researcher with useful guidance and avoided the researcher’s failure in addressing key research themes.

3.7 Research Limitations
The researcher used a wide range of well-established, credible and contemporary academic and commercial literature sources. However, the list of references is not an exclusive one and there are many other sources, in terms of scientific domain and area, which could be used. In this respect, the present dissertation is structured through a particular literature focus, which could vary depending on the literature sources employed.

Another limitation is that due to the fact that the literature is developed on specific contextual particularities it could be suggested that there is a certain degree of subjectivity embedded in the literature. This is why it would be fair if the present dissertation is also recognised to be influenced by a certain amount of contextual subjectivity (Bell, 2005).

Finally, the present research project is entirely dependent on university requirements, which creates certain research limitations. Although the researcher received continuous academic guidance and support, and was provided with a great richness of academic information, the dissertation was conducted under a number of university research criteria, which resulted in a number of research constraints such as: time horizons, research approaches and resources.

CHAPTER 4: FINDINGS

4.1 Key Themes
There were a number of key themes revealed during the in-depth interviews. During the interviewing processes, the interviewees recognised four essential challenges which they experience to determining their purchasing behaviour and which they associate with the current financial crisis. The challenges identified were: lowered disposable income; risk of greater opportunity cost; decreased savings and job uncertainty. The interviewees revealed that these are the financial crisis challenges, which they would outline as causing the most significant distraction in their buying behaviour.

The interviewees were asked to identify one factor which has the most significant influence on their buying behaviour at present. Although the number of consumers interviewed is not large and thus does not present to be of any statistical importance it is still valuable for the researcher to divide the different responses and identify any trends in the consumers’ perceptions.

4.2 Buying Trends
The interviewed retail consumers revealed that the key challenges, which were identified in the previous section, cause the greatest buying behaviour variance in comparison to their previous behaviour. In other words, consumers described the way by which the identified ‘key themes’ affect their purchasing patterns.

The combination of ‘job uncertainty’, ‘risk of opportunity cost’, lowered disposable income’ and ‘decreased savings’ makes consumers focus on buying efficiency by cutting on waste. In other words, consumers identified that they are likely to plan their purchases more than they did in the past. This shows that the process of planning has become an essential characteristic of consumers and is therefore a buying trend, that can be clearly recognised and outlined from the conducted interviews.. Moreover, those interviewees who described themselves as impulsive buyers, shared that they do not feel like spending impulsively any more, as their disposable income has shrunk significantly.

4.2.1 Disposable Income
The lowered disposable income is recognised to be the greatest challenge for the consumers’ purchasing activities. All of the interviewees described that lowered disposable income makes them feel more careful when buying particular products. They also revealed that they are likely to discuss their purchases and shopping lists with their families or close friends in order to achieve greater buying efficiency in terms of buying the best quality for the amount of financial value they sacrifice. This suggests that group influence would be a great determinant of customer behaviour, which is an interesting context for further academic research as it would be valuable for a wide range of academic and commercial parties to gain more insight on the way peer pressure affects consumers during an economic crisis.

The interviewees revealed that when they discuss purchases they are most interested in the price-quality ratio and the transaction costs, which they are likely to experience during the buying processes. However, they also shared that price and quality are important determinants but many of them still identify the process of purchasing as a pleasurable event and therefore customer service and in-store environment are of high importance.

4.2.2 Savings
Consumers also revealed that they find it more difficult to sustain the same level of savings as they did in the past. They recognised high prices and money depreciation to be the most significant factors affecting their inability to sustain their usual amounts of savings. This was another financial crisis outcome, which resulted in greater cautiousness during purchasing. The inability to collect the same amounts of saving budget also influenced greater pre-purchasing discussion with family members and friends. This is another factor contributing to the growing importance of peer pressure and how groups influence individuals.

The growing inability to sustain the same amount of savings made consumers focus on two distinctive alternatives. A group of the interviewees shared that they would keep consuming at the same levels by purchasing products at a lower price.

On the other hand, the other interviewees shared that they would not cut on their consumption and would try to keep purchasing comparatively high in quality products. They also revealed that in order to be able to achieve their buying plans they are likely to rely on friends’ recommendations and people who share the same life style.

4.3.3 Risk of Opportunity Cost
Every choice and purchase is associated with a particular opportunity cost. In this context, interviewees revealed that they often feel pressure during the process of selecting goods, as they do not want to make wrong decisions and thus experience greater opportunity cost. This is another factor explained by the consumers that causes them to be more cautious during buying decision-making.

Consumers revealed that because of the risk of experiencing great opportunity cost they are likely to engage in pre-purchasing planning. Pre-purchasing planning, as they shared, was represented by personal observations, online searches and discussions with family and friends. A pre-planning action would give them more alternatives to choose and measure. Interviewees believe that this is a good strategy for making correct decisions, although the often rely on their personal preferences.

4.3.4 Job Uncertainty
Most of the interviewees revealed that they experience great pressure with respect to their job security. Most of them have witnessed staff reduction and feel uncertain with their job stability.

In this respect, many of them reveal that they plan their purchases ahead of time and avoid unplanned purchases in order to be able to increase their savings. By increasing their savings, the interviewees shared that they would be able to back up themselves at least with some temporary financial stability if they were dismissed.

Moreover, an interesting finding revealed during the conducted interviews was that some of the interviewees feel depressed by the various crisis outcomes and specifically by the feeling of uncertainty. This has a significant effect on their perception of shopping as a pleasurable activity. They stated that this is why they are often behaving irritably.

The following chart represents a comparison of the different purchasing values for the interviewed consumers. In other words, every consumer was asked to identify the shopping values in which they were interested at present. This contributed to the researcher’s ability to identify trends in the current consumption perceptions and thus establish an overall impression of the stimuli likely to affect the choices of selection and purchases.

CHAPTER 5: DISCUSSION
The aim of the present dissertation is to explore the impacts of the current financial crisis on consumer buying behaviour. The purpose of this research is to reveal useful knowledge, which can be used by business organisations in their marketing strategies to attract and retain consumers. This is why the present section would discuss the financial crisis effect on consumer behaviour through a marketing perspective.

The researcher identified four types of buying behaviour, such as: programmed buying behaviour; limited decision-making buying behaviour; extensive decision-making buying behaviour; and impulsive buying behaviour (Arnould et al., 2002). The researcher grouped these purchasing patterns in two categories of buying behaviour, which clearly encompass their distinctive characteristics – planned and unplanned buying behaviour.

5.1 Planned Buying Behaviour
Planned buying behaviour is characterised by the literature to involve complex processes of decision-making (Hansen, 2006; Peter and Olson, 2007). Furthermore, consumers who practice planned buying behaviour usually employ a process of information gathering and alternatives evaluation (Hansen et al., 2004). In this respect it can be suggested that consumers who engage in planned buying have greater sense of opportunity costs.

Moreover, planned buying behaviour is recognised by the literature to be highly determined by transactional costs (i.e. money, time, effort), which can be associated with purchasing (Keen et al., 2004). In other words, the greater the transactional costs and complexity, the greater the risk which they are bearing and thus the greater the likelihood of shifting to less risky options (Posthuma and Dworkin, 2000).

Deriving from the characteristics of planned buying behaviour and identifying the current financial crisis challenges consumers face, it can be concluded that business organisations are facing and are likely to be facing a number of challenges, which they need to overcome through the application of careful, well-reasoned and efficiently tailored marketing strategies.

Nowadays, the financial crisis can be identified to be resulting in an increased transactional complexity, with which a purchase can be associated. In this respect, consumers are likely to face greater risk in their purchases and therefore are likely to shift their interest to less ‘harmful’ alternatives. This is why it can be suggested that an efficient marketing strategy in these circumstances would be the one that minimises the transactional costs, which buyers are likely to face.

A marketing approach, which can be suggested to be a possible solution for the above identified purpose of diminishing transactional costs, would be the one that provides greater information. As planned buying behaviour is associated with complex decision-making that encompasses the processes of information gathering and alternatives selection (Foxall and Goldsmith, 1994), it can be concluded that marketing strategies that respond to the needs of such complex behaviour are likely to decrease the buying risk which consumers perceive (Shim et al., 2001).

The conducted interviews revealed that consumers are highly sensitive to the value they receive in return for the money they supply within a purchase. This can be considered as another example of the valuable role of information and the greater confidence to which it is likely to contribute to the doubting consumers’ moods. Moreover, as the present financial crisis increases consumer uncertainty it can be suggested that an extensively informative marketing strategy would relieve pressure and increase customer trust (Brassington and Pettit, 2007).

In the context of relieving consumer pressure, a significant marketing importance has the marketing mix of 7Ps – ‘place’, ‘price’, ‘product’, ‘promotion’, ‘people’, ‘processes’ and ‘physicality’ (Groucutt et al., 2004). The 7Ps is a bundle of marketing components, which are essential factors for the efficient marketing performance of a company (Kotler, 2000). However, in the present case, the components of the marketing mix which can be suggested to be the greatest determinants of consumer satisfaction are ‘people’, ‘processes’ and ‘physicality’.

These are components of the marketing mix recognised to have great impact on the emotional perceptions of consumers (Churchill and Peter, 1998). In this context, the marketing strategy of hard discounters, which incorporates the primary focus of low pricing, may yield unsuccessful results in the future. Moreover, consumers currently associate hard discounters with bad and inappropriate customer service (Mintel Oxygen, 2008). This is why, it can be concluded, the marketing concentration on pricing is an adequate commercial direction as consumers are observed to be cutting on premium products but still insufficient in terms of attracting long-term interest. Moreover, in the conditions of the present financial crisis and the unemployment in which it results (Office for National Statistics, 2008), it can be suggested that many companies are likely to suffer from capacity management obstacles and thus perform badly in the customer experience they provide to their consumers.

Another interesting conclusion that can be established is that the marketing efforts of companies should not only be directed towards the development of in-store stimuli to attract consumer attention, but also focus on other marketing promotion and sales channels. The present research reveals UK consumers are spending more time at their homes and are becoming more inclined to engage in online shopping (Euromonitor International, 2008). This is clearly an opportunity for UK retailers to retain their pool of consumers, but on the other hand can be identified as significant challenge.

Firstly, online websites can be recognised as shopping channels, which are observed by many consumers as likely to result in the occurrence of a negative outcome. This is why planned buying behaviour is recognised to perceive these channels as risky and predisposed to high transactional costs (George, 2004; Lim, 2003).

In this context, business organisations are challenged to develop online platforms, which would relieve the pressure of the purchasing uncertainty consumers often experience. However, this is not an easy task especially in the situation of a financial crisis, as many organisations may suffer from lack of credit financing opportunities to sponsor the development and maintenance of such an initiative.

5.2 Unplanned Buying Behaviour
Unplanned buying behaviour, which is recognised in the literature as impulsive and highly determined by emotional factors (Havlena and Holbrook, 1986), is not characterised with great complexity in the decision-making as it is with the planned buying behaviour, but is also significantly affected by the current financial crisis (Chaudhuri, 2006; Laros and Steenkamp, 2005).

Unplanned buying behaviour is influenced by various positive and negative factors (Rook, 1987; Wells and Prensky, 1997). A factor, which can be recognised to result in unplanned purchasing behaviour, may be provoked by any type of product and marketing innovation. As innovation is a process associated with the introduction of a novelty (Afuah, 2003), it can be suggested that it predisposes it to situational unfamiliarity, which is seen as provoking unplanned purchasing (Chaudhuri, 2006).

In this context, the successful marketing strategy may be recognised as having an innovative focus. This is likely to attract customers’ attention and contribute to market share expansion and revenue growth. Moreover, it can be suggested that such a marketing approach may result in the emergence of new brand recognition and consumer perceptions. In other words, the financial crisis may appear as a favorable period for companies, which are targeting new market niches and relocating their positioning strategies (Hawkins, 2008).

However, the possible opportunities for innovative marketing performance of companies may be easily detracted by the highly influential economic factor of lower disposable income, which many UK consumers experience (Euromonitor International, 2008). These significant factors resulted in consumers’ buying behaviour, which is focused on economical and efficient purchasing (Mintel Oxygen, 2008b). This is why the successful development and implementation of innovative marketing promotions has a good chance of failing – because of UK consumers’ financial considerations.

Furthermore, innovative marketing is recognised to be challenged by another essential factor and this is the fact that many UK consumers are spending more time at home. This can be identified as a significant drawback in terms of retailers’ ability to promote unplanned buying behaviour. Impulsive buying is associated with consumers’ mood states (Luo, 2005; Rook and Fisher, 1995) and consumers’ mood states are suggested to be influenced by the marketing mix of ‘physicality’, ‘people’ and ‘processes’ (Groucutt et al., 2004; Iacobucci and Calder, 2003). In this respect, organisations are challenged to develop new channels for promoting their products and services.

Some of the alternatives could be the development and employment of direct marketing approaches. As consumers are likely to spend more time isolated from the in-store environment it can be proposed that retailers should recognise channels through which they can reach the pool of consumers.

An essential element of the unplanned buying is the compulsive buying behaviour. Although compulsive buying behaviour can be suggested to be similar to impulsive purchasing in terms of the unexpected and ‘immature’ purchasing decision-making, it is a phenomenon with significantly different characteristics and determinants (Shoham and Brencic, 2003). Compulsive buying behaviour is recognised in the literature to be resulted by negative external stimuli, which cause buyer’s irritation and anxiety (Solomon, 2002).

Deriving from the characteristics of the compulsive buying behaviour and recognising the high levels of pressure in which the current financial crisis results, it can be proposed that compulsive buying is likely to increase. The rationale of this suggestion is constructed on the proposition that the financial crisis pressure is likely to result in consumer buying disturbance and thus result in compulsive buying, produced by emotional irritation and perception irrationality (Chaudhuri, 2006).

Although unplanned behaviour, and in particular compulsive buying behaviour, may be suggested to gain popularity, it is still not an opportunity retailers should applaud. Firstly, compulsive buying behaviour, because of the likely levels of irrationality involved in this purchasing process, cannot be recognised as buying behaviour to establish the beginning of long-term purchasing pattern. In other words, compulsive behaviour does not mean loyalty, trust and consumer retention, which can be identified as key determinants of long-term prosperity (Kotler, 2000).

The conducted research reveals that the present financial crisis has significant impacts on both planned and unplanned consumer buying behaviour. The greatest determinant of buying behaviour, as it can be seen here, is consumer disposable income. It is an essential element of planned buying behaviour because of the purchasing rationality; opportunity cost evaluation and risk considerations, which consumers employ in their buying decision-making. However, the low prices which some hard discounters provide are still not the only requirements for growth in market share and profitability.

There are a number of in-store marketing mix components, which are recognised to construct an essential buying predisposition. It can be suggested that the marketing strategy retailers should develop should not only focus on one unique selling proposition but represent a bundle of propositions to satisfy and fulfill consumers’ economic considerations and emotional drives. Therefore, marketing efforts should be tailored to fit to a wide range of consumer buying determinants and thus not only result in short-term revenue growth but in a continuously growing buyer-seller interaction.

CHAPTER 6: CONCLUSION
At the present time the world is facing a tremendous economic challenge. The subprime crisis, which burst in the USA in 2007, infected a number of well-developed Western economies such as the United Kingdom. The financial crisis is recognised as a multi-dimensional phenomenon, which has numerous impacts on various aspect of the economic and social life of the country. In this context one of the most severely impacted components of the UK economy was the consumer buying behaviour.

Consumer buying behaviour is characterised as a bundle of decision-making processes, which are influenced by a range of internal and external factors. However, as the literature suggests, the most influential factor is recognised to be the external economic instability that UK retail consumers experience. The negative effects of the financial crisis can be observed to hit the overall purchasing behaviour of consumers as both planned and unplanned buying behaviour are significantly affected.

This extremely volatile environment is identified to be highly challenging for UK retailers and in particular for their marketing strategies. Deriving from the conducted research it can be concluded that the most powerful and successful marketing strategy to attract and retain consumers’ interest in the present situation is the marketing strategy which integrates and successfully exploits all of the marketing mix components of price, product, place, promotion, people, processes and physicality. In other words, the most successful marketing strategy is the one which is not only focused on one aspect of the consumer buying behaviour, but provides a mix of unique selling propositions, innovative promotions, adequate pricing, attractive in-store environment, high quality of customer service and physical evidence for good product quality. This is the only strategy that is likely to result in long-term market share expansion and growth in consumer loyalty.

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