BEEB1013 PRINCIPLES OF ECONOMICS

GROUP G

SECOND SEMESTER SESSION 2021/2022 (A212)

TOPIC: CONSUMER BEHAVIOR DURING COVID-19

SUBMITTED TO:
DR. WAN ROSHIDAH BINTI FADZIM

PREPARED BY: GROUP 12

NO. NAME MATRIC NUMBER
1 VESHNAVI A/P S.SUBRAMANIAM 284989
2 YAP XIANG YUN 287103
3 NURAIN BINTI ABDUL HADI 287248
4 CH’NG HUI YING 287669
5 NUR ADRIANNA ELLINA BINTI AHMAD 288110

Campus: UUM Sintok, Kedah

1.0 INTRODUCTION

1.1 Definition

Pandemics and natural disasters are extremely stressful events that can quickly trigger

negative feelings. Since the COVID-9 pandemic, all economic operations have been halted or

suspended worldwide to preserve human safety and health. It also has drastically altered our

understanding of the world.

Consumers are reacting in a number of ways to the issue. Some people are concerned and

worried, which leads to panic in shopping for necessities and hygiene goods. The majority of

countries take the initiative to resume economic activity, although with caution. People are

buying, living, and thinking differently in many ways. Supply chains were put to the test.

Retailers are shutting their doors. Consumers worldwide are taking a fresh look at products and

companies. People all throughout the world are terrified as they try to adjust to a new normal.

Fear is running high as people consider what this crisis means for them, but more importantly,

for their families and friends, as well as society as a whole.

On the other hand, other consumers are unconcerned about the pandemic and are going

about their daily lives, as usual, ignoring government and medical advice. Companies will need

to know how their own customers react and design tailored and personalized marketing tactics

for them. When consumers are unable to get to the store, the store comes to them. While

consumers return to old habits, new guidelines and procedures in the way consumers shop and

buy items and services are likely to change them.

1.2 Research Objectives

The goal of this research is to learn what consumers went through during the pandemic of

COVID-19. It deals with the elements that drive consumer behavior and their consequences.

Throughout the COVID 19 epidemic, we're also looking into ways to address challenges that

affect consumer behavior.

1.2.1 To Investigate Factors That Influence Consumer Behavior During The Pandemic of

Covid-19

Consumer behavior referred to the decision-making processes and actions of persons

involved in the purchase and use of products. It has changed as a result of the COVID 19

epidemic. Hence, this study aims to discover the elements that influenced consumer behavior

during the Covid 19 pandemic.

1.2.2 To Identify Impact on Consumer Behavior during Covid-19

This objective is to identify the effects faced by consumer behavior during covid 19. This

is because, this epidemic has had a huge impact on how businesses operate and how consumers

behave.

1.2.3 To Investigate Steps to Overcome the Impact of Covid-19

This objective also is to investigate steps to handle consumer behavior during covid-19.

These steps are important so that it can change consumer behavior during this epidemic.
2.0 ANALYSIS AND DISCUSSION

2.1 Factor that influence consumer behavior during covid-19

The ability to understand consumer behavior is critical to a company's success. Knowing

how customers behave and what influences them allows businesses to better manage the

marketing mix, branding and communication with them. It can be difficult to precisely identify

the things that influence consumers because they are frequently internal factors. External causes

like as the COVID-19 epidemic, the effects of political and legislative actions, and the economic

condition are all influencing the current scenario in global markets.

Internal and external factors influence customer behavior, according to Zamazalová

(2008). The marketing macro environment is one of the external elements that influences the

implementation and development of marketing activities directed at target customers. The

environment is always evolving at a rapid pace. According to Douchova et al. (1993), the most

important aspects influencing consumer behavior are individual economic environment and

objective economic status, as well as consumer personality, social environment, and situational

tuning.

First and foremost, pandemics and natural disasters are highly stressful situations that can

easily trigger negative feelings and undesirable mental health states such as a sense of loss of

control and instability, both of which are common in emergency situations. As a result, research

has revealed that stress plays a significant role in shaping consumer behavior. Individuals may

retreat and become passive in reaction to stress, according to previous research, and this inaction

can lead to a decline in purchasing. However, other research suggests that stress might trigger an

active reaction, resulting in more impulsive purchasing. Furthermore, event-induced stress might

result in depression. In some situations, a depressed mood can lead to the development of
dysfunctional consumer behavior, such as impulsive buying, which is defined as a sudden

impulse to buy something accompanied by an exaggerated emotional response, or compulsive

buying, which is defined as the inability to control the urge. Importantly, a recent study

conducted during the COVID-19 pandemic found that depression predicted the phenomenon of

over-purchasing, which was defined as the extent to which people increased their purchases of

certain necessities such as food, water, sanitary products, pharmacy products and other items as a

result of the pandemic. In brief, one of the factors that has been hypothesis to cause changes in

consumer behavior toward needs and non-necessities is stress. Consumers that are stressed may

exhibit increased spending behavior, which is specifically focused toward things that the

consumer considers to be necessities and that provide control in an otherwise unpredictable

world. Stress plays a unique role in anticipating changes in consumer behavior when it comes to

requirements, but not when it comes to non-essentials. When fear was added to the regression

model, however, the influence of stress was no longer significant. It's worth noting that we

concentrated on dread for COVID-19, so it's feasible that fear played a larger role than stress in

such an extraordinary setting.

Self-justification methods are another psychological element implicated in consumer

behavior that demands specific consideration. The cognitive reappraisal process by which people

try to alleviate cognitive dissonance caused by a contradiction between beliefs, values and

behaviors is known as self-justification. To prevent the feeling of being incorrect and keep a

positive sense of self, people frequently strive to rational their decisions. It is commonly

accepted in consumer behavior studies that consumers emphasize positive reasons that support

their choices and ignore counterarguments that call their conduct into question. According to

earlier study, self-justifications for purchasing non-essential items may include pursuing
independence and avoiding boredom in the setting of the COVID-19 epidemic. Based on these

factors, self-justification tactics for non-essentials may be useful in the context of the COVID-19

pandemic, as products for fun or amusement may be more suited to the goal of freedom and

avoiding boredom. Due to the nature of the products, self-justification tactics relating to

necessities could be employed to a lower extent. The pandemic's unusual environment may

suffice to justify the procurement of those critical commodities.

In addition, various studies have found that household income has a major impact on

people's costs. The study found a positive association between income and spending levels,

which is unsurprising. Money earned on a regular basis from labor or investments is referred to

as income. Surprisingly, another line of research found that self-perceived economic stability is a

better predictor of consumer behavior than real income. People frequently report subjective

emotions of financial inadequacy, even though their real financial status contradicts such

feelings. The social comparison process is an intriguing explanation for this prejudice. Indeed, a

study by Karlsson et al. found that, compared to families who thought they were in good

financial shape, those who thought they were in worse shape reported fewer purchases of goods,

a greater perception of the impact of their most recent purchase on their finances, and more

careful planning of purchases. Furthermore, a recent study conducted during the COVID-19

situation found that persons who believed they had limited financial means were the ones who

were most concerned about the future. As a result, we examined both the respondents' income

and their perceived economic status in the current study to take into account both factual

economic data and subjective perceptions.

Finally, personality features are likely to play a role in deciding consumer behavior, in

addition to situational circumstances relevant to the specific emergency. According to previous

research, the Big Five personality traits can predict consumer behavior in different ways.

Compulsive buying, impulsive buying, and utilitarian shopping were all linked to

conscientiousness, openness, and emotional stability.

2.2 Impact on Consumer Behavior during Covid-19

2.2.1 Digital Commerce

During the covid-19 pandemic with the implementation of the Movement Control Order

(MCO), online purchases were used by consumers to purchase necessities. The growing use of

digital commerce indicates consumers ’dependence on digital commerce which offers a wide

selection of products to consumers. For example, Go Shop, one of the well-known digital trading

platforms in Malaysia has understood the need for consumers to obtain essential items during a

pandemic such as fruits, vegetables, frozen foods and so on to customers. The increasing use of

digital commerce has indicated a high demand among consumers. This has resulted in an

increase in web traffic by an average of 135% and transaction growth of 40%.

In addition, cashless payments were also widely used by consumers during the Covid-19

pandemic. Restrictions on mobility and the health crisis have led to increased cashless payments.

Examples of cashless payment types are Touch 'n Go eWallet, GrabPay, use of credit cards and

debit cards and so on. A total of 1.72 billion digital payment transactions worth RM13.9 billion

were recorded between January and October 2019 compared to RM11 billion in 2018.

2.2.2 Consumer Health Behavior

During the covid-19 pandemic period, consumers have become more understanding and

have the awareness to buy the necessary goods based on their respective needs. They are more

focused on purchasing health-related products. This pandemic also changed the minds of

consumers to be more willing to buy health care products or items such as vitamins and dietary

supplements that can give immunity to the body.

In addition, a survey has shown that there has been a 91% increase of the consumers

getting products that provide well -being to the body. They have shown a high increase in
interest in buying personal hygiene items. As many as 86% of consumers have purchased face

masks, hand sanitizers or disinfectants. All of these have suggested that the pandemic outbreak

of covid-19 has influenced consumer purchasing behavior toward needs and wants.

2.2.3 Hoarding

During the covid-19 pandemic, panic buying has occurred among consumers. This has

led to the occurrence of hoarding which is the concept of buying and storing market goods in

large quantities which eventually leads to shortage of the goods. As a result, the price of goods

will increase as the quantity of products becomes limited and the value of resources increases.

This is because the business needs to increase the price of goods to avoid incurring losses. Price

increases should be avoided as the people are experiencing financial constraints during the

Covid-19 pandemic. Nevertheless, panic buying that resulted in hoarding has had an impact on

the less stable economy due to consumer behavior affected by this pandemic.

2.3 Steps to Overcome the Impact of Covid-19

2.3.1 Purchase of goods according to priority and ability

Consumers should buy goods based on their own priority and ability to avoid excessive

spending. Consumers need to think rationally and know clearly with their own needs and wants.

The wise consumer should also avoid getting into debt in spending. For example, the use of

credit cards is not recommended if you do not have strong financial resources. This is because

credit cards offer high interest rates that may result in an inability to repay the debt within a

certain period of time.

2.3.2 The habit of saving

The attitude of extravagance should not be practiced by consumers. Consumers need to

have the habit of saving for the future. The Covid-19 pandemic is not a barrier to saving but an
incentive for consumers to instill the spirit of saving. Therefore, the habit of saving should be

practiced by consumers to help in alleviating the problem of anxiety if faced with a situation of

financial constraints in the future.

2.3.3 Expenses planning

Before making a decision in the purchase of goods, for consumers can make a price

comparison. However, consumers also need to make judgments in terms of the quality of goods

to get goods that are worth the price and good quality. Therefore, price comparison needs to be

done as a wise consumer to ensure that consumers can make the right purchase choice. In

addition, consumers also need to record daily expenses by making an estimate or allocation of

expenses before purchasing as well as a record of overall expenses after making a purchase for

the sake of orderly financial management.

3.0 CONCLUSION AND SUGGESTIONS

3.1 Conclusion

Based on the findings, it can be inferred that consumer behavior has changed as a result

of the limits put in place to combat the spread of Covid-19. In pandemic, consumers forcefully

change their main way of shopping because of need to maintain social distance and quarantine.

To begin, psychological, personal, social, and cultural aspects all impact consumer

behavior. Psychological and personal factors are the key influences on consumer behavior in this

pandemic. This sudden changes that bring from this pandemic that effect the whole world and

each individual face the difficulties to change in order to survive bring them highly stressful. Due

to changes in salary, many people lost their employment, working hours, and family seclusion,

consumers began to buy products based on needs rather than wants. Then there's another

psychological factor to consider, which is self-justification strategies that are linked to consumer

behaviour. In the context of the Covid-19 epidemic, self-justifications for purchasing non-

essential products could include pursuing independence and escaping boredom. Following that,

household income has a significant impact on people's costs. A study of the pandemic's income

and perceived economic position found that both true economic data and subjective perceptions

were taken into account in the current study.

Global changes of covid-19 make a huge impact on consumer behavior. Mainly the

impact is seen in digital commerce. A massive increase in digital platforms as people prefer

buying online and for other services. In the Movement Control Order (MCO), has impacted

consumers shopping trends drastically change to digital platforms. This pandemic also changed

the minds of consumers to be concern on their health. This increase consumers focusing on

health care products and hygiene-based things. This shows that consumers have become more
understanding and have the awareness to buy the necessary goods based on their respective

needs. Clearly we know that the pandemic outbreak of covid-19 has influenced consumer

purchasing behavior toward needs and wants. In this covid-19 pandemic, panic buying occurred

among consumers. This bring to the occurrence of hoarding which is buying and storing things in

huge amount that leads to shortage of the goods in the market.

Lastly, there are several steps to overcome the impact of Covid-19. One way to overcome

this situation is to purchase of goods according to priority and ability. Consumers should avoid

excessive spending and should buy goods according to their own ability and priority. As a wise

consumer should do planning before purchasing the needs and wants to avoid overspending.

Next step is consumers need to practice a habit of saving for emergency purposes and for their

future. Last but not least, consumers should have decision making skill in order to purchase

goods that can make expenses planning. Consumers should available to make price comparison,

the quality of goods with price and also the quantity of goods that need with the goods sold.

Mainly, price comparison needs to be done as a wise consumer to ensure that consumers can

make the right purchase choice.

3.2 Suggestions

First and foremost, I believe that businesses should begin developing new habits with

new goods. Furthermore, the Covid-19 problem has caused customers to become more health-

conscious. This is because, in order to protect themselves against the corona virus, individuals

began to use surgical masks, hand sanitizer, shield masks, vitamin C, Panadols, and other

measures. Companies may enhance their products and innovate to meet the demands of their

customers. In addition, packaged-food firms may encourage people to prepare for themselves.

The Covid-19 virus can be controlled by home chefs.

Second, according to behavioral research, the key to influencing customer behavior will

be their beliefs. Consumers' good new views should be reinforced, in my opinion. With the

massive changes that Covid-19 has brought to the globe, consumer views have shifted

dramatically. Beliefs are under psychological influence, and it is widely known that they impact

customers from logically evaluating alternatives and from sticking to their previous routines and

habits. The Corona Virus forces customers to adjust their behavior and exposes them to new

experiences. This has an impact on a wide range of daily activities, from socializing to buying.

Even if the Covid-19 epidemic has passed, this is a once-in-a-lifetime opportunity for businesses

to reinforce and develop behavioral changes in order to better position their brands and goods in

the future.

Additionally, I believe that customer behaviors and attitudes should be studied at a

granular level. Consumer behaviors and attitudes will persist as a result of the epidemic in the

following years. Companies should not focus just on product development and sales, since this

will never be enough. Companies must also do primary consumer-insights research with an eye

on recognising behavior shifts and shifts in customer views as the consumer choice journey
evolves. Digital data collection and monitoring strategies, such as social media, will be critical

tools for all types of businesses to better understand their customers' evolving behaviors and

psychological truths. Larger scale surveys are well-structured and can spark new ideas inside a

company. Moreover, businesses may fine-tune their product marketing and providing messaging

as a result.

Furthermore, new habits should be maintained, and contextual signals should be used to

respond to changes in customer behavior. When a consumer begins to link a specific activity

with a specific situation, the behavior might become automatic and habitual. Contextual signals

that help drive behaviors into habits should be investigated by businesses. Some businesses

should develop and identify new contextual cues that are relevant in the present and future.

Contextual signals include a specific task, item location, and the time of day. For example,

everyone must wear surgical masks and hand sanitizer, which are also provided at entryways as a

reminder that it is mandatory and easy to be conscious and clean from virus.
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