Report on Consumer Behavior Analysis of Dick Smith Foods

This report provides a comprehensive consumer behavior analysis of Dick Smith Foods, an Australian brand established to compete with foreign-owned food companies. The analysis covers key stages of the consumer decision-making process, including problem recognition, information search, and purchase behavior, utilizing theories such as consumer motivation (McGuire's motives theory and Deci and Ryan’s motivation theory), consumer perception, and the influence of reference groups. The report also explores linking theories like consumer ethnocentrism and behavioral learning (classical and instrumental conditioning) to understand how consumers' preferences for local brands and associations with positive experiences influence their purchasing decisions. Finally, it offers marketing strategy recommendations for Dick Smith Foods, focusing on pricing, target market expansion, and maintaining positive consumer perception. Desklib provides access to this assignment and many other solved assignments for students.

Running head: CONSUMER BEHAVIOR ANALYSIS 1
Consumer Behavior Analysis
Student’s Name
Institutional Affiliation

CONSUMER BEHAVIOR ANALYSIS 2
Table of Contents
1.0 Section One: Brand Overview and Key Theory Identification.................................................3
2.0 Section 2: Problem Recognition................................................................................................3
2.1 Key theory: Consumer Motivation........................................................................................3
2.2 Linking Theory: Consumer Ethnocentrism............................................................................5
3.0 Section Three: Information Search............................................................................................6
3.1 Key Theory: Consumer Perception........................................................................................6
3.2 Linking Theory: Behavioral Learning...................................................................................7
4.0 Section Four: Purchase Behavior...............................................................................................9
4.1 Key Theory: Influence of Reference Groups.........................................................................9
4.2 Linking Theory: Opinion Leaders........................................................................................10
5.0 Section Five: Marketing Strategy Recommendations.............................................................11
5.1 Change Pricing Strategy.......................................................................................................11
5.2 Expand Target Market.........................................................................................................12
5.3 Improve and Maintain Consumer Perception......................................................................12
References......................................................................................................................................14

CONSUMER BEHAVIOR ANALYSIS 3
Consumer Behavior Analysis
1.0 Section One: Brand Overview and Key Theory Identification
Dick Smith Foods was founded in the year 1999 by Dick Smith (Denniss, 2016). The
company was created to provide a local alternative to food products from companies that are
foreign-owned. The company was also created in response to the high market share of the
foreign-owned companies (Denniss, 2016). This paper will tackle consumer behavior with
regards to problem recognition, information search, and purchase behavior. Problem recognition,
Information search, and purchase behavior are the key stages of the process of consumer
decision making. For this analysis, consumer motivation, consumer perception, and influence of
reference groups.
2.0 Section 2: Problem Recognition
Problem recognition arises when a consumer realizes that there is a difference between
the desired state and actual state (Bruner, 2017). The magnitude of the difference between the
actual and desired state must be adequate to trigger the purchasing decision process (Bruner,
2017). According to Bray (2014), the problem recognition depends on different professional or
personal circumstances and situations which lead to the creation of the idea of purchasing.
2.1 Key theory: Consumer Motivation
Consumers are faced with differences between the actual and desired state of affairs in
their analysis of their needs and wants. This occurs in the entire problem recognition stage of
their decision-making process. Problem recognition arises when the consumers think about the
level of satisfaction they will obtain from buying a different brand or the discontent of a prior

CONSUMER BEHAVIOR ANALYSIS 4
purchase (Belk, 2015). Consumption behavior of Dick Smith Foods consumers, OzEnuts
Crunchy, in particular, exhibit McGuire's motives theory and Deci and Ryan’s motivation theory.
McGuire came up with a system that categorized theories into sixteen classes. He divided
motivation into four categories which he then separated as affective, cognitive, growth, and
preservation-oriented (McGuire, 1974). McGuire (1974) further separated the motivation based
on source and objective of the motivation. He subdivided the categories to know whether a
consumer behavior is initiated or in response to a situation, or whether the behavior is external or
internal with regards to the environment.
McGuire (1974) asserts that teleology can have an impact on a consumer and eventually
giving the consumer reason to purchase a particular brand. Applying McGuire’s motivation
theory, it is evident that consumers of Dick Smith Foods brands is motivated by response to the
proliferation of foreign brands. Additionally, Dick Smith Foods was created to satisfy consumers
who prefer local brands and seek to buy products made in Australia and owned by Australia as
stated in the previous section. By buying Dick Smith Foods, the consumers would be supporting
an ethical Australian owned company. McGuire (1974) teleology motivation also explains the
fact that consumers of Dick Smith Foods because it is foreign owned. They also noted that feel
the need to belong and connect with others are motivated extrinsically. Tangible factors in Dick
and Smith consumers may include supporting local industries and creating jobs for Australians.
This is explained by Deci & Ryan (1985) extrinsic motivation concept, and purchasing from
Dick Smith Foods to support australian economy is an extrinsic motivation. It is clear that
consumers of Dick and Smith brands are motivated extrinsically. These consumers mostly
purchase Dick and Smith brands in support of Australian businesses and local products.

CONSUMER BEHAVIOR ANALYSIS 5
2.2 Linking Theory: Consumer Ethnocentrism
Today, Australian consumers have numerous choices in different types of products.
There are many foreign brands and products produced in Australia by foreign companies through
acquisitions of Australian companies. Even though the market is increasingly globalizing, it does
not imply that the Australian consumers are globalizing at the same rate (Tümer, 2012). The
Australian consumer may still be inclined to buy local brands and avoid foreign brands. It is
referred to as consumer ethnocentrism.
Consumer ethnocentrism is a concept that is sociological. It is the tendency to regard the
goods produced in one's country as superior to those found in other countries, or produced by
foreign-owned companies (Matić, 2013). Consumers who are ethnocentric are loyal to the
companies that are from their home country. Consumer ethnocentrism has an adverse and direct
influence on consumers' purchase decision towards products that are foreign or perceived to be
foreign-owned. This means that if consumers are highly ethnocentric, they will have unfavorable
perception towards foreign businesses and lower purchase intentions for their products.
According to Wang (2017), consumers refuse to purchase products that are foreign for the reason
that they consider them to lead to unemployment as they are detrimental to the national
economy.
Sherry (2017) found that consumer ethnocentrism can be used to predict preferences of
consumers to purchase products that are produced domestically instead of foreign products. He
added that ethnocentric tendencies could be used to predict consumers' purchase behavior better
than marketing mix and demographic variables. Priest, Carter, & Statt (2015) also asserted that
consumers’ ethnocentrism construct relies on the assumption that the patriotic emotions of the

CONSUMER BEHAVIOR ANALYSIS 6
consumers will have considerable impacts on their purchase intentions and attitudes. Therefore,
they reported that consumer ethnocentrism had a significant influence on consumers’ intentions
to buy products produced globally. However, the outcomes have been varying depending on the
traits of the countries and consumers. Many studies have suggested that consumers'
ethnocentrism is dependent on the extent to which a country is developed (Sherry, 2017).
Consumer centrism concept emerged originally in countries that were developed, where
consumers normally evaluated the quality of domestic products positively. Since Australia is a
developed country and Dick Smith markets its products ‘As Australian as You Can Get’, the
consumers of its products can be said to have ethnocentric tendencies.
3.0 Section Three: Information Search
3.1 Key Theory: Consumer Perception
Consumer perception is related to how people form opinions about companies and the
products they provide through purchase decisions they make (Kazmi, 2012). The perception of a
consumer of a product has two effects on information search. A consumer’s perception may
influence the information search in a negative or positive way. It can be said that consumers of
Dick Smith Foods brands have positive perception of their brands because of what the aims to
achieve in Australia. Dick Smith Foods is known to support local products and businesses, and
help in the creation of employment for Australians (Singh, 2015). If taken advantage of, these
positive perception consumers have about Dick Smith Foods brands may make it possible for
Dick Smith Foods to raise their prices and consumers will still buy.
Also, consumer perception is informed by the price of a product. Further, the perception
of a consumer is based on the brand. Dick Smith Foods products are Australian made and owned

CONSUMER BEHAVIOR ANALYSIS 7
by Australian companies. The products are made using Australian ingredients, an action that
creates employment for Australians and keeps profits in the country through reinvestment in
charities in Australia. The perception of doing good by consumers may allow Dick Smith Foods
to compete with foreign companies in other ways other than prices. The marketing narrative of
Dick Smith Foods also allows the company to attract new consumers to their brands. The
marketing narrative of the company makes consumers have the perception that they own the
company and the products it sells. Dick Smith Foods marketing narrative evokes emotions of
patriotism, which may make the consumers of their products loyal. Dick Smith Foods brands
also provide consumers with symbolic meaning. They associate the brands with the love of their
country hence contributing to the positive perception they have of the brands. This is evident in
the perception of Dick Smith consumers where the products are not necessarily rare, exclusive,
or unique but somewhat Dick Smith Foods has positioned itself as a local brand owned by
Australia embodying the taste of Australia (Denniss, 2016). Since there are many foreign brands
in Australia, this enhances consumers’ desire for scarcity and association feelings to the brand.
3.2 Linking Theory: Behavioral Learning
Behavioral learning is basically an association between a stimulus and a response
(Rothschild, 2016). Applying behavioral learning, if a consumer purchases a particular brand and
the brand brings negative experience, the consumer may learn to associate negative experience
with the brand. If a consumer associates a brand with a negative experience the consumer will
avoid purchasing that brand as much as possible. On the other hand, if a consumer purchases a
product and obtains positive as a result, the consumer learns to associate positive experiences to

CONSUMER BEHAVIOR ANALYSIS 8
the brand. This may make the consumer to purchase the brand in future and become loyal
(Rothschild, 2016).
Skinner and Pavlov were the main proponents of behavioral learning. Pavlov proposed
classical conditioning while Skinner proposed instrumetal conditioning. In classical
conditioning, an individual learns to relates an unrelated stimulus with a specific behavioral
response that was previously stimulated by a related stimulus. Through classical conditioning,
consumers begin to associate Australian made products with Dick Smith Foods. The food
products produced in Australia and only produced in Australia by foreign companies. However,
with Dick Smith Foods selling its products as Australian made and owned, consumers begin to
associate Australian products with Dick Smith Foods thus they become loyal consumers of Dick
Smith Foods brands. Classical conditioning works in this case because food products are low on
differentiation and consumers make routine purchases (Budden, 2017).
Skinner asserted that human beings like any living entity, acts instrumentally. They
behave in ways that make them feel rewarded and enable them to get what they want (Bray,
2014). On the contrary, they avoid behaviors that make them feel punished. According to
Skinner (1948) reinforcement impacts the likelihood of non-repetition or repetition of a response.
He added that reinforcement could be of two types; positive and negative, and both can be
applied to encourage a behavior that is desired. Positive reinforcements consist of outcomes that
increase the likelihood that a response will reoccur in future. For instance, if a reward followed
an activity, the possibility that the activity would be repeated increases. On the other hand,
negative reinforcement is also used to encourage a particular behavior (Skinner, 1948). For

CONSUMER BEHAVIOR ANALYSIS 9
example, negative reinforcement may encourage a person to act in an alternative way that would
be rewarding.
Instrumental conditioning can be used to explain consumption behavior of Dick Smith
Foods consumers. Dick Smith Foods make consumers aware that there are undesirable
consequences if they buy brands that are produced by foreign-owned companies. They are
warned that foreign companies transfer profits out of Australia hence transferring jobs abroad.
This is an example of negative reinforcement. Consumers alternatively purchase Dick Smith
Brands to avoid the negative consequences (Bruner, 2017).
4.0 Section Four: Purchase Behavior
4.1 Key Theory: Influence of Reference Groups
According to Weckman (2015) reference groups is any group or person that an individual
uses as a comparison point in forming specific or general attitudes, values, or a particular
behavioral guide. Influence of reference groups plays a crucial role in Dick Smith Foods brands
consumers purchasing behavior. This stage of consumer decision-making process is where
consumers evaluate the information they have about a product, consider the disadvantages and
make purchasing decision as a result of the perception they have of the product (Weckman,
2015). Influence groups help in reassuring the consumer that he has made correct decision about
the product he wants to purchase. Reference groups may have a direct or indirect impact on the
values of the consumers, their aspirations, and attitudes. There are three major types of reference
groups. Associative groups are groups an individual belongs to while dissociative groups are
groups that an individual avoid. Additionally, aspirational reference groups are groups that an
individual wants to belong to.

CONSUMER BEHAVIOR ANALYSIS 10
According to Weckman (2015), reference groups can influence consumer purchasing
behavior in three ways. Reference groups can affect a consumer informatively, in a utilitarian
way, or in a value-expressive manner. In informative influence, a consumer's decisions are
information based while in utilitarian influence the consumer wants to conform to others' wishes.
In value expressive influence, the consumer is influenced by the need to identify with the same
values or beliefs with a group. In this regard, Dick Smith Foods consumers are impacted
indirectly by aspirational reference groups. These consumers are impacted by this reference
group because the group has a positive influence on the consumer. As stated in previous sections,
Dick Smith Foods brands are associated with local tastes (Bruner, 2017). This implies that Dick
Smith Foods exposes consumers to materials where consumer behavior focuses on the need to
consume Australian owned and made products. This means that the purchase behavior of Dick
Smith Foods consumers is in response to the desire to belong to the group that supports
Australian businesses. Furthermore, the consumers are seen to be influenced by value-expressive
influence. Consumers that value Australian products will probably purchase Dick Smith Foods
brands. For consumers who value Australian products more, Dick Smith Foods brands are
products that are designed to act as a symbol of Australia. Aspirational reference groups can
influence consumers through value-expressive influence and encourage the purchase of Dick
Smith Foods brands.
4.2 Linking Theory: Opinion Leaders
There are many definitions of opinion leaders. However, the most suitable definition in
this context is that opinion leaders are people whose opinions are respected (Chaudhry, 2012).
Their views are used by the recipients of the opinions to make decisions across many situations.

CONSUMER BEHAVIOR ANALYSIS 11
The opinions of opinion leaders may influence what types of clothes a person wears, whom to
vote for in elections, and what brands of products to buy. The opinion leader can be an individual
who has contact with the respondents such a priest or member of a social group. An opinion
leader can also be someone who is a public figure whose opinions are obtained from the public
statements he makes. An opinion leader influences the attitudes and actions of the respondents
informally. Receivers of opinion usually perceive the opinion leader as a credible person,
objective product information source. Opinion receivers take the advice of opinion leaders to
reduce their search of product information. The founder of Dick Smith Foods can be considered
to be an opinion leader whose opinions about supporting Australian business by purchasing
products from Australian owned companies.
Opinion leaders are usually motivated to offer advice and information to consumers of a
product (Chaudhry, 2012). In doing so, they enhance their own self-image and status and
because such advice appears to reduce post-purchase disparity they may have. According
Chaudhry (2012) services and goods markets is one of the areas where the impact of opinion
leadership has been tested. He asserts that consumer behavior is significantly influenced by
opinion leaders. With regards to Dick Smith Foods brands, the founder, Dick Smith is a public
figure whose opinions and beliefs are respected. He influences consumers through his public
statements (Chaudhry, 2012).
5.0 Section Five: Marketing Strategy Recommendations
5.1 Change Pricing Strategy
Setting the price of a product is complex and requires numerous calculations, ability to
take risk, research, and understanding of the consumers and the market (Bray, 2014). Optimal

CONSUMER BEHAVIOR ANALYSIS 12
pricing strategy helps in determining the price at which to sell a product to maximize profits.
When setting a price for a product, various factors need to be taken into consideration. The
factors are distribution and production cost, prices of the competitors, strategies of positioning,
and the targeted market segment (Bruner, 2017). Dick Smith Foods brands are not optimally
priced. Most of their brands are sold at premium prices compared to foreign brands. Premium
pricing cannot work where there are many alternatives to the products, and the product is not
unique. Even though consumers in Australia may desire to buy Australian made and owned
products, then it would be difficult to buy at a premium price.
5.2 Expand Target Market
As explained in the analysis in the previous sections, Dick Smith Foods only targets
Australian consumers. They aim to achieve loyalty by Australian consumers through
ethnocentrism. However, consumers today may not be loyal just because a product is produced
from own country. Consumers view global brands as cultural ideals symbols. They use global
brands to have a global identity and to feel like citizens of the world. According to (Budden,
2017) global brands make consumers to feel that they are part of something bigger and feel that
they belong. Therefore, Dick Smith Foods should embrace globalization and enter other markets
while marketing its brands as Australian made and owned.
5.3 Improve and Maintain Consumer Perception
It is evident from the analysis that instrumental conditioning has an impact on the
products of Dick Smith Foods. For the company to increase its market share, improving
consumer perception that buying Australian products is beneficial, especially among young
consumers (Weckman, 2015). Young consumers perceive global brands as symbols of status.

CONSUMER BEHAVIOR ANALYSIS 13
Currently the company advertises its products as owned and made in Australia, which may not
appeal to young Aussies.
References

CONSUMER BEHAVIOR ANALYSIS 14
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