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Economic consumption can be defined broadly as the utilization of economic goods to satisfy needs or desires. It is the branch of social science that deals with the production, distribution, and consumption of goods and their management. Consumers have used advice networks in all stages of their individual and household economic consumption, and advice networks have sought to enable, encourage, engage, or exemplify consumption decisions. Advice networks can range from formal, such as financial planners, to informal, such as community and family networks. Policy makers and marketers are increasingly aware of the influence of advice networks, the networks’ capacity to advocate behavior change, and the relationship with personal utility/ satisfaction.
Almost all consumption involves both a personal and a social aspect. Even if people think of consumption mainly, or even solely, in individual terms, consumers can seek advice on consumption matters or can even be inadvertently influenced by advice networks on their consumption decisions. Reliance on advice networks can depend on the urgency of the need being served. For example, if a person is starving and receives food, the value and satisfaction involved are primarily individual and not related to hunger in the rest of society. Similarly, the value of shelter as protection against the wind or cold is largely independent of a person’s neighbor’s situation; that is, a person’s exposure to cold is not affected by whether the neighbor is freezing to a greater or lesser extent. Fundamental needs are of this nature, and they involve an independent, or absolute, degree of satisfaction. Economists refer to these as nonpositional goods. However, consumption with a strong or relative social orientation or consumption that is beyond the basic survival needs can be different and can be referred to as the need for positional goods. Consumption of positional goods can be highly influenced by advice networks. An ever-increasing proportion of growth in wealthy societies is devoted to goods and services with a strong positional aspect. Status, social differentiation, and conspicuous consumption have been a part of the discourse on economic growth.
The majority of interventions available to advice networks include information, education, and incentives, aimed at affecting individual or household consumer choices. However, networks can still feature arms-length approaches to behavior change, such as leading by example and community action, which affects the social contexts in which individuals make choices. Dominant political, social, and economic forces and structures influence the context of decision making, as do technology and innovation. The development of the Internet saw widespread growth of online networks and social networks that changed the paradigm of consumption decision making to be more instant, less tangible, and ubiquitous. The Internet, also known as the World Wide Web, is a global computer network providing a variety of information and communication facilities, consisting of interconnected networks using standardized communication protocols. The Internet facilitates networking between individuals around the world, allowing virtually instant access to exponential consumer issues. One of the paradoxes of consumer choice, however, is that the more choice consumers have, the more decision-making paralysis grows, and consequently, consumers may seek more advice on their consumption decisions.
Practitioners and academics have speculated that as consumer decisions move to different modus operandi, such as online, the cognitive and social context of decision making will change in ways that will then need to be investigated. For example, at the individual cognitive level, the increasing availability of extensive, easily retrievable, and easily stored databases relevant to product/service purchases may lower the cost of information search for the typical online consumer, perhaps decreasing the proportion of consumers who engage in what some researchers consider a suboptimal degree of search. However, the sociocultural, not the cognitive, aspects of Internet participation have prompted the most discussion and interest in the media and have significant implications for consumer behavior online. For example, if Internet peers or connections are more influential in major and minor decisions than friends, coworkers, or even family, then consumers need to be more cognizant of the risks of trusting advice from a virtual community. Online communities do not have an ongoing commitment to computer-mediated social relations and may feel no sense of responsibility for the consequences or accuracy of their advice. Participants in discussion groups are usually anonymous, physically distant, and not involved in the ongoing exchanges that characterize many social relations in the face-to-face world.
Marketers have long known the critical role of interpersonal ties in a variety of phenomena studied, such as word-of-mouth, reference group influence, group decision making, and opinion leadership/diffusion of innovations. If interactive, computer-mediated discussion groups represent a new technical and perhaps cultural context for social relations, the study of community on the Internet, and its influence on the content, patterns, and structure of interchange, is vitally important for consumer-researchers to understand. Face-to-face communities include, minimally, social actors, social ties, and communications among the actors, channeled by the pattern of ties among them. Each of these, and their interrelations, can be viewed in the context of consumption-related communications in computer-mediated groups. The nature of communication is one aspect of consumer behavior in discussion groups, but it is created by individuals and channeled by their social ties.
Most models of behavior change that focus on individual cognitive processes and decisions vastly underestimate the impact of social contexts. There is a tendency to treat society as an externality, which may bring individuals to a decision-making process but is not as such a part of the mental accounting that constitutes that process. However, social context and social pressures inevitably play a role in consumer behavior, having an impact on the agency or power of individuals. Interventions by advice networks need to take into account both the individual as a decision maker and the wider social context in which that individual lives.
One of the strongest and most established ideas about the transmission of marketplace information is the importance of interpersonal communication, whether face-to-face or online. Traditionally, many consumers seeking expert, unbiased advice about a purchase have turned to their circle of social ties, family members, coworkers, neighbors, and friends. The family can be a particularly dominant network for consumer advice. The family is both a primary group (characterized by intimate, face-to-face interaction) and a reference group (with members referring to certain family values, norms, and standards in their behavior). These two factors, however, are not the sole reasons accounting for the strength of the family’s influence. Rather, it is, first, the fact that the bonds within the family are likely to be much more powerful than those in other small groups. Second, contrary to most other groups to which the consumer belongs, the family functions directly in the role of ultimate consumption. That is, the family operates as an economic unit, earning and spending money. In doing this, family members must establish individual and collective consumption priorities, decide on the products and brands that fulfill their needs, and also decide where these items are to be bought and how they are to be used in furthering family members’ goals. Also, consumers attitudes toward spending and saving, and even the brands and products purchased, have been molded, often quite indelibly, by the family’s influence on its members and the way in which purchase decisions are made by members so that they may effectively program their marketing mix.
However, the circle of close ties has been extended to online communities as well as to neighborhood communities, particularly if consumers’ circle of ties may be limited and include no one with expertise on their interests. The makeup of peer networks also affects consumption decisions differently. People at the center of the peer network influence more peers than people on the periphery. Marketers have utilized various forms of network marketing, that is, relying on a network to influence greater consumption of a product. In the area of new product marketing, the rationale of many such efforts rests on the assumption that some customers’ adoptions and opinions have a disproportionate influence on others’ behaviors and that firms are able to identify and target those influential or opinion leaders.
Seeking information from an advice network or hiring an expert is an acknowledgment that the expected benefit of informed choice exceeds that of uninformed choice or of increasing one’s own knowledge through time and effort. Factors that influence either the costs or the expected benefits of advice will affect the decision to seek advice from an advice network or hire an expert. Purchasing the services of a skilled expert also involves potential agency costs. Agents seeking to maximize their own utility may provide recommendations that are not perfectly aligned with those of their client. Higher agency costs will reduce the expected increase in informed consumption. In terms of economic consumption, management of money requires an increasingly complex understanding of financial concepts. Rather than investing scarce resources to acquire the financial knowledge needed to plan effectively, consumers have utilized advice networks to help make efficient and appropriate financial decisions, including the use of paid financial advice. In this context, the failure to understand the financial planning process (e.g., determining financial goals, managing and protecting resources) may lead to significant loss of welfare. However, increasing choice and complexity also can potentially benefit those with sufficient information and ability by providing additional options that may be better suited to unique household preferences and objectives. The likelihood of seeking help outside one’s social network tends to increase as the degree of complexity or the need for specialized knowledge increases.
The likelihood of seeking information from advice networks or experts is also influenced by cultural influences. Race and gender tend to affect help-seeking behavior. Some historically disadvantaged groups may be less trusting of an expert external to their social networks. They may also be less willing to trust the advice of an expert and incur higher agency costs. Many academics and practitioners working in economics and sociology have highlighted the importance of good advice for consumers. Some researchers have commented that excessive consumption can have negative social effects and detrimental environmental impacts. For example, excessive consumption can be associated with health problems, and our unwillingness to disrupt routines of both consumption and production has led to massive injections of greenhouse gases into the atmosphere over time. Growing awareness of sustainable development may lead to more sustainable consumption. Sustainable consumption can be broadly defined as the use of goods and services that respond to basic needs and bring a better quality of life while minimizing the use of natural resources, toxic materials, and emissions of waste and pollutants over the life cycle, so as not to jeopardize the needs of future generations. More broadly, sustainability is generally conceived as comprising three dimensions: (1) social (including cultural preservation and equity), (2) environmental (including clean air and water and biodiversity), and (3) economic (including household needs and industrial growth).
There is a growing level of awareness of the environmental costs of consumption and some broadly adopted responses to this awareness, even in the context of a strong marketing industry. Advice networks are one means of raising awareness of key consumer issues. Increasing global connectedness may also be assisting in giving new meaning to longer-range consumer issues such as environmental management.
Advice networks may assist consumers to make better informed consumption decisions, including abstaining from consumption. For example, reducing consumption and voluntary simplicity are methods for ending the destructive cycle of sacrificing more leisure time for higher wages to consume more. Commonality of values is important for such an advice network to function effectively. Furthermore, the idea that relationships have greater agency than individual actors also finds resonance in work on transformative politics, transformative activism, and social movement scholarship.
One challenge faced by advice networks and many other agencies is in assessing the need of consumers for consumer information and advice services. A needs assessment is required as a key element in the effective planning and development of services in each network to encourage networks to consider suitable solutions to meet the needs of people in their communities. Advice networks may form organically, that is, as an iterative response to a common issue. Or networks may be established as part of a reference group for consumers, whose presumed perspectives or values are used as a guide for behavior in a specific situation. There are different types of reference groups depending on the strength of the social tie. Primary reference groups typically involve lots of interaction and strong ties wielding considerable influence, with secondary reference groups having less interaction and influence. In spite of the commodifying effects of modern market systems, there are indications that some consumers are showing greater concern for the provenance of the products they consume. Some of the informational benefits recognized from consulting advice networks include providing solutions, metaknowledge, problem reformulation, validation, and legitimation.
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