The Development of Consumption across the UK - Essay Example

Examine the factors which have influenced consumption over the past three years in the UK. Has consumption been let get out of control Introduction In order to understand the development of consumption across UK it is necessary to describe primarily the main aspects of consumption across the country. The identification of the patterns of consumption in the particular country could help to locate the reasons that led to the radical increase of consumption during the last three years (as it is proved by statistics released by governmental and private organizations). One of the main characteristics of consumption in UK – like in most countries worldwide – is that the above social phenomenon is related with specific social activities, especially with shopping but also with travelling and entertaining. If compared to the past, the consumption in UK could be characterized as rather increased; however, the whole situation cannot be referred as being out of control. It is rather an expected outcome especially if taking into consideration the development of technology and the changes in the social and cultural ethics across Britain – as a consequence of globalization and the entrance in the country of people with different social and cultural background; more specifically, Britain has become – mainly for professional but also for educational reasons - a favourable destination of people from developing countries but also of those belonging in member states – a phenomenon well developed after the enlargement of European Union. Under these terms, the characteristics of consumption in Britain could be expected to be influenced by many different factors especially the country’s social and cultural ethics while the culture of the people living across the country – this culture can be differentiated as explained above – is another important factor influencing the characteristics of consumption developed across the country. Of course, consumption is a multidimensional social phenomenon; apart from the factors mentioned above other factors – related with the individual’s personal perceptions – can also affect the rate of consumption through the years in a particular region. In UK which is a highly developed country consumption related with a series of social activities (travelling, entertainment, shopping) has been increased the last 3 years following the development of technology but also the improvement of the standard of living in all areas across the country. This increase reflects also the development of the national economy compared to the economies of other countries within the international community. In any case, the rates of consumption across the country are kept within a logical frame (as revealed through the relevant statistics); however, for the future appropriate measures should be taken in order for the consumption rates in Britain to remain aligned with the needs of individuals but also the potentials of the economy. 2. Consumption in UK – general aspects and characteristics The development of consumption within a country is related with a series of social facts and ethics, but also with the buying power of people living across the particular country. In other words, consumption is related with the social life but also with the economy of a specific country. Towards this direction, the potential development of consumption within a specific region should be carefully examined taken into consideration the changes in the needs of people through the years but also the actual level of development of the national economy (that could be also understood as an increase in income) that would allow the development of consumption regarding a series of products/ services available in the market. In Britain, as in most countries worldwide, consumption is related with specific products/ services, especially those belonging in the entertainment/ leisure sector; however, the products/ services of other sectors like the automobile industry as well as the food industry and the beauty sector could be also characterized as reflecting the consumerism trends of the particular society. Under these terms, the potential development of consumption in UK could be studied only in relation with the trends in buying specific products/ services across the country. It should be noticed that the development of consumption in UK has not been equally distributed across the country’s various industrial sectors. On the contrary, there have been sectors, like the financial services one, which have been characterized by a rather decrease of their performance under the influence of severe failures when having to respond to the needs of people across the country. The lack of sufficient control by the government over the activities of the organizations involved has been another factor influencing the decline in the performance of firms operating in Britain’s financial services sector. In a study developed in 2005 by Burton et al. it was revealed that ‘this industry is now in terminal decline, which is in part a product of long-term social processes, the rise of ‘at-a-distance’ delivery systems for financial services, but also due to the unintended consequence of government regulation in the 1990s’ (Burton et al., 2005, 181). The above study refers specifically to the financial services sector of Britain focusing on the effects of the management failures on the performance of firms operating in the specific industry. 3. Factors that led to the increase of consumption in UK the last three years The increase of consumption within a particular society can be related with a series of factors; in any case, there can be no increase of consumption without the funds necessary for the acquisition of specific products/ services. In other words, the development of consumption is directly related with the development of the national economy – which is reflected in the remuneration of employees and the benefits offered to pensioners within a specific country. In this context, in the study of Nayak et al. (2008) it is noticed that the increase of consumption in Britain can be related with the performance of the retail banking industry which has led to ‘a fundamental shift in rationality from `social obligation to `confident consumers which leads to a tension between confident consumers and infantilized adults’ (Nayak et al., 2008, 407). The relationship between consumerism and retail banking is based on the development of the consumers’ confidence under the terms that the financial support provided to individuals and enterprises by the country’s financial institutions is at high levels. The above study should be particularly valuable within current market conditions where the role of banks in the development of national economies has been proved to be crucial; by supporting all business projects developed within a specific country the banks (in fact all financial institutions) can be considered as having a crucial role in the development of all aspects of business activities influencing at a next level the level of consumerisms within the particular country. As explained above, the development of specific consumption trends in Britain can be understood only if taking into consideration the country’s multi-cultural character. More specifically, the development of communities of minorities (Africans, Asians but also of Europeans) is one of the main aspects of the British social life. For this reason, all social and cultural trends of these populations are expected to have influenced the consumption trends in the country at least regarding specific activities, like entertainment and travelling but also the shopping and food. The specific issue is analytically explained in the study of Hamlett et al (2008); in the specific study a direct relationship between the cultural trends of minorities in Britain and the consumption trends in the country (especially shopping and food) has been identified. Other studies have been also developed in the specific field trying to prove the relationship between the patterns of consumption developed in Britain and the social/ cultural background of the people living in the specific country. The government in Britain has extensively tried to lead consumption trends across the country towards a specific direction in order to support the protection of the environment – which has suffered a severe damage because of the increase of consumption globally. More specifically, the increase in needs of people for various products and services, especially those related with the technology – like the mobile phones and computers – has led to the increase in the levels of carbon dioxide (and other emissions) globally, a fact that has caused severe damages to the natural environment worldwide. In this case, the government of Britain has taken a series of initiatives focusing on the increase of the support of individual in the protection of the environment. In this context, the national plans on sustainability have been reviewed and significant suggestions have been made to people across Britain in order to change their consumption habits at least regarding specific products/ services. The above described effort – which started approximately at 1999 and it is still under development – has led to the improvement of the role of individual in the protection of environment in Britain. In a relevant study it is revealed that in UK ‘the individual "rational" consumer is ascribed with responsibility for creating sustainable consumption patterns’ (Hobson, 2004, 121). It is not made clear though which are the main strategies used by the British government for the above target or which have been the obligations of people living in Britain within the context of the specific project that promote the development of sustainable consumption in all regions across UK. The issue of sustainability and its effects on consumption have been studied by Schaefer et al. (2005). In the above study it is made clear that there is a link between the consumption levels developed within a specific country and the sustainability projects established across the particular country. However, the identification of the precise role of sustainability in the development of consumption is a challenging task that could be completed only if a series of questions would be answered: ‘(1) How is this view of consumption linked to prevalent current understandings of sustainable consumption? (2) How would sustainability be achieved following this perspective on consumption? and so on’ (Schaefer et al., 2005, 76). Under these terms, sustainability is a factor influencing the development of consumption in Britain; the active involvement of the British government in the development of sustainable projects across the country is an indication of the importance of sustainability for the development of the country’s social and scientific framework; within this context, sustainability could be regarded as related with all aspects of social life (including consumerism) in Britain. The development of specific social behaviour is closely related with the educational background of the individual involved. In this context, the consumer preferences within a specific society are expected to be influenced by the educational framework of the particular society as this one has been developed through the years in order to meet the needs of local population. In Britain, the reform of the country’s educational system has been continuous over the last 50 years – a period during which the national curriculum was established. The specific issue is highlighted in many studies, like in the one of Koshy et al. (1998) where it is noticed that ‘over the past half-century, the British education system has undergone three major changes: an extension of opportunity for very able working class children to attend selective, state-funded grammar schools; a leveling out of opportunities within state-funded schools by abolishing the 11-plus examination and the introduction of a National Curriculum’ (Koshy et al., 1998, 253). The development of the educational framework of Britain under the influence of the rapid and radical changes in technology and science is expected to influence the country’s social trends (including the consumerism). The reform of the British education system has led to the establishment of ‘an industrialised, mass higher education system designed to produce a standard, reliable, predictable human ‘product’ suited to the putative needs of British industry and commerce’ (Roberts, 2004, 1). In other words, the country’s education emphasizes on the importance of business activities for the development of national economy influencing the consumer choices on specific products/ services and increasing the support on particular sectors, like the technology and the finance – even if the latter is facing a downturn because of the failures identified in the management of funds invested on various governmental and non-governmental bonds and derivatives. Because of the above, the role of education in the development of consumption in Britain can be characterized as quite important; however, in real terms, the development of consumption in the country requires the existence of funds available for investing on the purchase of products/ services in all market sectors; in other words, education can influence the customer choices and the customer preferences in the particular country (as in all countries worldwide) however there could be no development of consumption without the appropriate financial basis – funds. In terms of everyday life, the funds available for consumption are mainly those acquired through the work (salary, pension) or a particular contract (selling of house, compensation within the framework of an existed insurance scheme); however, they could also result by the investment on specific financial products (interests/ profits from shares, bonds). During the last three years the development of e-commerce worldwide (including UK) has led to increase of performance of most firms that chose to use the Internet as a tool for the promotion of their products/ services. In accordance with a relevant report published by the National Statistics organization (UK) in Britain the use of Internet for purchasing products/ services has been expanded in all market sectors; more specifically it is noticed that ‘for the period 2003-2004 Internet purchases rose by 65 per cent from £37.9bn to £62.4bn, while the proportion of businesses purchasing on-line rose by 20 per cent from 29.4 per cent of businesses to 35.3 per cent of businesses’ (National Statistics, UK). The above statistics are the last available regarding the specific social activity – online purchasing. Currently, these figures can be expected to be further increased – although marginally – taking into account the global financial turbulences that have also affected British economy. Under the above terms, the online presence of firms is a major factor for the development of the consumer preferences regarding the online purchasing, a fact that also affects directly the rate of consumption within a specific country; in the case of Britain – where the level of online purchasing presents a continuous increase in accordance with the statistics presented above – the development of e-commerce is closely related with the increase of consumption across the country since many of consumers in UK prefer shopping online. At this point, there are certain issues that need to be addressed. In order for the online presence of a firm to influence the firm’s productivity it is necessary that specific rules are applied: a) the culture of the consumers targeted should be taken into consideration when the relevant online business strategy is designed and established. In the literature it has been proved that differences in the social/ cultural background could lead to differences in the level of online purchasing. More specifically, in the study of Lee et al. (2004) it was proved that significant differences can be identified in the online performance of firms in countries of the East when compared with the relevant performance of online sellers in the West. B) Other factors, related with the personal characteristics of the individual (gender, age and so on) are also expected to influence a consumer’s behaviour regarding the online purchase of products/ services. An indicative example is the study of Harris et al. (2003); in the specific study it is revealed that ‘gender differences have been of interest to advertisers and marketers for decades’ (Harris et al., 2003, 322). The specific study helps towards the explanation of the importance of advertising – a marketing tool used by entrepreneurs around the world – for the development of consumption. In fact, advertising can influence the levels of consumption not only through the Internet but also through the media and the press. Referring especially to the effectiveness of advertising through the Internet Balabanis et al. (2001, 114) noticed that ‘prior attitudes of consumers towards a brand transfer into attitudes towards the web site associated with that brand’. Advertising can affect the consumption rates within a region however it should follow specific ethical principles. The issue of the ‘coding of products and services according to standard classification conventions, such as the Universal Standards Products and Services Classification (UNSPSC)’ (Fairchild et al., 2002, 3201) is related with the need of ethical behaviour by entrepreneurs and advertisers when a particular product/ service is offered to the market. In any case, the potential failures of the specific product/ service will be identified by consumers (in the short or the long term) and their preferences are going to be adversely affected in case that the advertised characteristics of a product/ service are not in accordance with its current characteristics. In accordance with the above, consumption rates in a specific country (including Britain) can be influenced by the use of advertising (media, press, Internet) for the promotion of products/ services; however it is necessary that specific rules have been applied making sure that there will be no violation of the ethical standards set in the particular market; otherwise consumption will be negatively affected by advertising – in all its types as described above. The differences in the response of consumers worldwide in accordance with the advertising methods adopted by firms is emphasized in the study of Grunert et al. (2005) where the criteria used by consumers when having to buy food online were examined and it was revealed that the specific criteria ‘are sorted into the categories medium, product, consumer, firm, and environment’ (Grunert et al., 2005, 381). These criteria could be also regarded as factors that influence the customer preferences on all types of products/ services offered in a specific market (including the British one). In other words, these criteria could be characterized as factors influencing the development of consumption across UK. 4. Issues for consideration The development of consumption within a particular society requires that a high number of people in the specific country have access to the products/ services offered in the market. The term access used above refers not just to the physical access but also to the real access, in terms of the availability of the funds required for the purchase of products/ services. In the above context, in order for the consumption to be increased (at least equally) in a specific country it is necessary that most of people in the specific country have the chance to participate equally in the job market. In the case of Britain, equality in workplace has been an issue strongly doubted – the increase of the number of people belonging in minorities in UK has led to the development of phenomena of racial discrimination in enterprises across the country. We could indicatively refer to a report published by Devine (2008) where it is noticed that ‘in 2007, the Equal Employment Opportunity Commission received 30,510 charges of discrimination based on race; of those charges, 25,882 were resolved, culminating in $67.7 million in monetary benefits’ (Devine, 2008, online article). The above phenomenon could lead to the development of turbulences in the market since differentiations are expected to appear in the profits of markets across the country – in regions where minority communities are established the profits of firms of all sizes could be expected to be lower (at least at their average) if compared to the profits of the firms operating in Britain’s highly developed regions (e.g. profits of firms operating in Morden (greater London) and profits of firms operating in Bond Street/ Oxford Street. On the other hand, the financial development of Britain has been found to be related with the operation in the country of foreign enterprises. In accordance with a relevant report published by Eurostat about 71% of employees in Britain work in foreign-owned firms (Eurostat, online report). From this point of view, consumption in UK is depended on the activities in the country of foreign enterprises offering the funds necessary (through the form of the salary, compensation, benefits/ bonuses, and pension) for the purchase of products/ services in various market sectors. 5. Conclusion The increase of consumption in Britain has been found to be related with a series of factors. The role of the status of the national economy in the development of consumption across the country is crucial; however, there are also other factors that can influence consumer preferences and choices – and thus the consumption – within the particular market. The consumers’ personal perceptions need to be taken into consideration when any business strategy is planned; these perceptions are likely to influence the response of consumers to the specific firm’s products/ services. In this context, it could be stated that the levels of the consumption regarding these products/ services are changed in accordance with the effectiveness of the marketing strategies adopted by modern enterprises. Referring specifically to the methods used by entrepreneurs worldwide regarding the development of marketing plans, Milne (2003) notices that all firms around the world should ‘leveraging information’ i.e. they could ‘collect, process, and use information to add value to their business processes and outcomes’ (Milne, 2003, 468). The evaluation of consumers’ personal perceptions – as suggested above – should be based however on specific criteria. In this context, it is noticed by Jacoby et al. (1998, 319) that ‘the acquisition, consumption and disposition of products, services, time and ideas by decision making units’ should be used as criteria in order to identify the consumers’ role (this role it is characterized by Jacoby et al., 1998, as the consumer value) in the development of a particular market. In Britain, the government supports the entrepreneurial activity in all industrial sectors while incentives are offered to entrepreneurs in order to keep production and the provision of services at high levels; in this way the levels of unemployment in the country are kept are relatively low levels compared to other countries within the European Union. The state intervention in the business activities has been considered though to be rather negative leading to the lack of flexibility and the reduction of productivity of organizations that are partially owned by the state (see the energy and telecommunications sectors). The specific fact is highlighted in the study of Cannan (1994, 5) where it is noticed that ‘enterprise culture has underpinned policies designed to reduce state intervention and welfare dependence, and to stimulate economic growth’. In accordance with the above study, the development of business activities in a specific market can be achieved only through the independence by the state. However, the recent global financial crisis showed that the control of the state over the activities of the privately owned enterprises is necessary in order for the balance in the market to be kept (between the business capital and the funds available to individuals as salary, benefits, pensions, compensations). Under these terms, the rates of consumption – which have been increased in UK the last three years as explained above not being get out of control in any case – within a specific market, should be kept at specific levels in order for the particular market to retain its competitiveness – like in the case of British market. This is another aspect of the increase of consumption in Britain the last three years – not focusing on the recent crisis of the last 3 months – proving that in the specific country the public and the private sector cooperate effectively protecting the national economy the level of which can be reflected in the level of consumption within all sectors of the British market. Bibliography Balabanis, G., Reynolds, N. L. (2001). Consumer Attitudes towards Multi-Channel Retailers Web Sites: The Role of Involvement, Brand Attitude, Internet Knowledge and Visit Duration. 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