Saturday, 17 November 2012

Perspectives on Consumer Behavior


To understand perspectives on Consumer Behavior, we must first define "Consumer Behavior". It has been defined as the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires (Belch).

Hence, the consumer decision making process can be understood through the two models shown below-


As shown in the figure,  the consumer’s purchase decision process is generally viewed as consisting of stages through which the buyer passes in purchasing a product or service.

The first stage of the process is  - "Problem Recognition", the different sources of which can be summarized as - 



The causes of problem recognition may result from changes in the consumer’s current and/or desired state. They can be very simple or very complex in nature. They may be influenced by both internal and external factors.

Now, in order to understand the reasons underlying consumer purchases in a better way, the marketers try to examine the motives behind their actions.

One of the most popular approaches to understanding consumer motivations is based on the classic theory of  human motivation popularized many years ago by psychologist Abraham Maslow.




A somewhat more controversial approach to the study of consumer motives is the "Psychoanalytic Theory" pioneered by Sigmund Freud.


The question now is - What is perception?
 "Perception" is the process by which an individual receives, selects, organizes, and interprets information to create a meaningful picture of the world (Belch).
The Perception Process can be understood as -


Selectivity is an inevitable phenomena that happens occurs throughout the various stages of the consumer’s
perceptual process. Perception is essentially a filtering process in which internal and external factors influence what is received and how it is processed and interpreted. Selective perception may occur at either of the four stages of the process, as shown in figure below.



After acquiring information during the information search stage of the decision process, the consumer moves to Alternative Evaluation. In this stage, the consumer compares the various brands or products and services he or she has identified as being capable of solving the consumption problem.



Once the consumer has identified an evoked set and has a list of alternatives, the brands must be evaluated using an Evaluation Criteria.
This criteria can be in either of the two forms mentioned below - 


 The next important step is to understand the "Attitude" of the consumers. According to Gordon Allport, “attitudes are learned predispositions to respond to an object.” 
If not in the favor of the brand or product that the marketer is working on, the attitude of the consumers needs to be changed. Some of the attitude change strategies are - 


Another important aspect of the alternative evaluation stage, which is done by the way of Integration. "Integration process" is the way by which product knowledge, meanings, and beliefs are combined to evaluate two or more alternatives. Its analysis focuses on the different types of decision rules or strategies consumers use to decide among purchase alternatives. 

The Decision making process can be thus summarized as - 


Thus, it is the job of the marketer to understand the decision making process of the consumer in detail so as to make a plan which is effective.
They need to make the consumers "learn" about their product/ service in a manner which makes them not only develop a positive attitude towards it, bit also buy it.

Following are the ways in which a consumer learns - 


We hope that this will help the readers in understanding the role consumer behavior plays in the development and implementation of advertising and promotional programs.

Friday, 16 November 2012


The Communication Process


Communication is a process by which information, message or thought is exchanged between individuals through a common system of symbols, signs, signals, writing or behaviour.

                   

The process needs:
  • Two major participants: Sender or source and Receiver
  • Two major communication tools: Message and Channel
  • Four major communication functions and processes: Encoding, Decoding, Response and Feedback
  • Hindrance: Noise
Nature of communication
Sender or Source
In the communication process a person or organization that has information to share to other person is a sender. A sender could be an individual person like a salesperson or celebrity who talks about the product or a non-personal entity like a corporation or organization.


The process of communication starts as soon as the source select words, symbols, pictures, etc. to present the message to receiver. The sender has to be careful while selecting the communicator. He should know what knowledge the receiver has and with whom it can relate itself to. This process is known as encoding. The sender’s goal is to encode the message in such a way the receiver can decode it easily. Few brands have already established its image through symbols.

Few examples in this regard could be Apple’s logo of an apple’s silhouette with a bite taken out of it or the five coinciding circles of Olympics.


Receiver
The receiver is a person, in the communication process, to whom the sender shares his thoughts or message or information. They are involved in the process of decoding. Decoding is the process of transforming the sender’s message back into thought. The receiver is heavily influenced, to decode the message, by his experiences or references, which give birth to the perceptions, attitudes and values. It is very important in the process of communication that there should be some common grounds between the two parties. The more the sender has the information about the receiver, better he can put forth the message infront of the receiver.
There are two major problems in the communication process:
  1. No common ground between the sender and the receiver
  2. Age difference between the sender and the receiver
If there is no common ground, it often causes great difficulty in the advertising communications process. Normally, marketing and advertising people are often educated and lives in urban areas and they advertise often for the consumers who live in rural areas or small towns and are blue-collar occupants. This shows the cultural isolation. Both the category is not aware of the experiences shared by each other.
Another factor of age can lead to problems in establishing common ground between senders and receivers. There are possibilities that when a young person makes an advertisement for older customers it can have a youth bias in advertising
Message
The message is developed in the process of encoding. The message can be verbal or nonverbal, oral or written, or symbolic. In advertising, the message may range from simply writing some words or copy that will be read as a radio message to producing an expensive television commercial. The products and brands acquire meaning through the way they are advertised and consumers use products and brands to express their social identities. These days to understand the symbolic meaning that are communicated or advertised, the special focus is given to semiotics. Semiotic is the study of the nature of the meaning and how words, gestures, myths, signs, symbols, products/ services, theories acquire meaning.
Every marketing message has three basic components: an object, a sign or symbol and an interpretant. The object is the product that is the focus of the message (e.g., Marlboro cigarettes). The sign is the sensory imagery that represents the intended meanings of the object (e.g., the Marlboro cowboy). The interpretant is the meaning derived (e.g., rugged, individualistic, American).
Marketers must consider the meanings consumers attach to the various signs and symbols. Semiotics may be helpful in analysing how various aspects of the marketing program—such as advertising messages, packaging, brand names, and even the nonverbal communications of salespeople (gestures, mode of dress)—are interpreted by receivers
Channel
The sender communicates to the receiver through a medium. That medium is called a Channel. Channel of communications are of two types: personal and non-personal.
Personal channels are direct interpersonal contact with the receiver. For example salesman uses the personal channel to communicate to the target individual or group. Other goods examples of personal channel of communication are friends, co-workers, family members, etc. this kind of communication could be identified as word of mouth.
The non-personal communication occurs without the presences of interpersonal contact with the potential consumers. It is directed to the mass through TV commercial broadcast or print media. For example, on the television during the prime hour a commercial of 30 seconds can communicate to millions of household at a time. Print media includes newspapers, magazines, direct mail, and billboards; broadcast media include radio and television. 
Response/Feedback
The response is the result of the receiver reactions after seeing, hearing, or reading the message. It could be non-observable actions such as storing information in memory or immediate action such as dialling a toll-free number to order a product advertised on television. It is very essential for a marketer. The feedback can take different forms, closes the loop in the communications flow and lets the sender monitor how the intended message is being decoded and received. For example, in a personal-selling situation, customers may pose questions, comments, or objections or indicate their reactions through nonverbal responses such as gestures and frowns. The salesperson has the advantage of receiving instant feedback through the customer’s reactions. This method is used by Zara so as to be agile and responsive in their processes. 
This is not the case when mass media are used. As advertisers are not in direct contact with the customers, therefore they use other mediums to determine how their messages have been received through customer inquiries, store visits, coupon redemption  and reply cards. Research-based feedback analyses readership and recall of ads, message comprehension, attitude change, and other forms of response. With the information collected through feedback  the advertiser can determine reasons for success or failure in the communication process and modify accordingly.  Successful communication is accomplished when the marketer selects an appropriate source, develops an effective message or appeal that is encoded properly, and then selects the channels or media that will best reach the target audience so that the message can be effectively decoded and delivered. 
Noise
Any kind of distortion or interference, throughout the communication process, is noise. Errors or problems that occur in the encoding of the message, distortion in a radio or television signal, or distractions at the point of reception are examples of noise. When you are watching your favourite commercial on TV and a problem occurs in the signal transmission, it will obviously interfere with your reception, lessening the impact of the commercial. There may be other reasons as well for noises. May be the fields of experience of the sender and receiver don’t overlap. Lack of common ground may result in improper encoding of the message—using a sign, symbol, or words that are unfamiliar or have different meaning to the receiver.

Analyzing the Receiver
To make the communication effective, the marketers must know their target audience. How do they perceive the company’s’ products or services, how should the marketer communicate to influence their consumers’ decision making process or how the market responds to various forms communication? Before they make decisions regarding source, message, and channel variables, promotional planners must understand the potential effects associated with each of these factors. This section focuses on the receiver of the marketing communication. It examines how the audience is identified and the process it may go through in responding to a promotional message.
Identifying the Target Audience
Identifying the audience is the starting point of the marketing communication process. After identifying, the marketer can focus on advertising and promotion activities. The target audience may consist of individuals, groups, niche markets, market segments, or a general public or mass audience. To cater these groups the approach will be different.
The target market may consist of individuals who have specific needs and for whom the communication must be specifically tailored. Mostly requires person-to person communication and is generally accomplished through personal selling. A second level of audience aggregation is represented by the group. Marketers often must communicate with a group of people who make or influence the purchase decision. Marketers look for customers who have similar needs and wants and thus represent some type of market segment that can be reached with the same basic communication strategy. Very small, well-defined groups of customers are often referred to as market niches. They can usually be reached through personal-selling efforts or highly targeted media such as direct mail. The next level of audience aggregation is market segments, broader classes of buyers who have similar needs and can be reached with similar messages. As market segments get larger, marketers usually turn to broader-based media such as newspapers, magazines, and TV to reach them.
Mass communication is a one-way flow of information from the marketer to the consumer. Feedback on the audience’s reactions to the message is generally indirect and difficult to measure. TV advertising will only allow marketer to send the message but there is no guarantee that the information will be attended to, processed, comprehended, or stored in memory for later retrieval. Even if the advertising message is processed, it may not interest consumers or may be misinterpreted by them. The marketer must enter the communication situation with knowledge of the target audience and how it is likely to react to the message. This means the receiver’s response process must be understood, along with its implications for promotional planning and strategy.

The Response Process
The most important aspect of developing effective communication programs involves understanding the response process the receiver may go through in moving toward a specific behavior (like purchasing a product) and how the promotional efforts of the marketer influence consumer responses. In many instances, the marketer’s only objective may be to create awareness of the company or brand name, which may trigger interest in the product. In other situations, the marketer may want to convey detailed information to change consumers’ knowledge of and attitudes toward the brand and ultimately change their behavior.
Traditional Response Hierarchy Models

A number of models have been developed to depict the stages a consumer may pass through in moving from a state of not being aware of a company, product, or brand to actual purchase behavior. The figure shows four of the best-known response hierarchy models. While these response models may appear similar, they were developed for different reasons.

The AIDA model was developed to represent the stages a salesperson must take a customer through in the personal-selling process. The salesperson must first get the customer’s attention and then arouse some interest in the company’s product or service. Strong levels of interest should create desire to own or use the product and finally the action taken by the customer to buy the product or service.
The hierarchy of effects model shows the process by which advertising works; it assumes a consumer passes through a series of steps in sequential order from initial awareness of a product or service to actual purchase. A basic premise of this model is that advertising effects occur over a period of time. Advertising communication may not lead to immediate behavioural response or purchase; rather, a series of effects must occur, with each step fulfilled before the consumer can move to the next stage in the hierarchy.
The innovation adoption model evolved from work on the diffusion of innovations. This model represents the stages a consumer passes through in adopting a new product or service. The steps preceding adoption are awareness, interest, evaluation, and trial.
The information processing model of advertising effects assumes the receiver in a persuasive communication situation like advertising is an information processor or problem solver. The stages of this model are similar to the hierarchy of effects sequence; attention and comprehension are similar to awareness and knowledge, and yielding is synonymous with liking. In this model there is one more stage called retention. Retention stage is important since most promotional campaigns are designed to provide information to the customers to use later when making a purchase decision.
Each stage of the response hierarchy is a dependent variable that must be attained and that may serve as an objective of the communication process. Each stage can be measured, providing the advertiser with feedback regarding the effectiveness of various strategies designed to move the consumer to purchase. The information processing model may be an effective framework for planning and evaluating the effects of a promotional campaign.
The hierarchy models of communication response are useful to promotional planners from several perspectives.
  • They delineate the series of steps potential purchasers must be taken through to move them from unawareness of a product or service to readiness to purchase it.
  • Potential buyers may be at different stages in the hierarchy, so the advertiser will face different sets of communication problems.
  • The hierarchy models can also be useful as intermediate measures of communication effectiveness.
Alternative Response Hierarchies
Michael Ray has developed a model of information processing that identifies three alternative orderings of the three stages based on perceived product differentiation and product involvement. These alternative response hierarchies are the standard learning, dissonance/attribution, and low-involvement models.

The Standard Learning Hierarchy
In many purchase situations, the consumer will go through the response process in the sequence depicted by the traditional communication models. Ray terms this a standard learning model, which consists of a learn feel do sequence. Information and knowledge acquired or learned about the various brands are the basis for developing affect, or feelings, that guide what the consumer will do (e.g., actual trial or purchase). In this hierarchy, the consumer is viewed as an active participant in the communication process who gathers information through active learning.
The Dissonance/Attribution Hierarchy
This response hierarchy proposed by Ray involves situations where consumers first behave, then develop attitudes or feelings as a result of that behaviour, and then learn or process information that supports the behaviour. This dissonance/attribution model, or do feel learn, occurs in situations where consumers must choose between two alternatives that are similar in quality but are complex and may have hidden or unknown attributes.


 The consumer may purchase the product on the basis of a recommendation by some non-media source and then attempt to support the decision by developing a positive attitude toward the brand and perhaps even developing negative feelings toward the rejected alternative.

The Low-Involvement Hierarchy
In this model the receiver is viewed as passing from cognition to behavior to attitude change. This learn do feel sequence is thought to characterize situations of low consumer involvement in the purchase process. Ray suggests this hierarchy tends to occur when involvement in the purchase decision is low, there are minimal differences among brand alternatives, and mass-media (especially broadcast) advertising is important.







Understanding Involvement
It is important for the marketer to view involvement as a variable that could help in explaining how consumers process advertising information and how this information might affect message recipients. One problem that usually occurs in this study of involvement is how to define and measure it. Advertising managers must be able to determine targeted consumers’ involvement levels with their products.

The FCB Planning Model
An interesting approach to analysing the communication situation comes from the work of Richard Vaughn of the Foote, Cone & Belding advertising agency. They developed an advertising planning model by building on traditional response theories such as the hierarchy of effects model and its variants and research on high and low involvement. They added the dimension of thinking versus feeling processing at each involvement level by bringing in theories regarding brain specialization. The right/left brain theory suggests the left side of the brain is more capable of rational, cognitive thinking, while the right side is more visual and emotional and engages more in the affective (feeling) functions. Their model, which became known as the FCB grid, delineates four primary advertising planning strategies—informative, affective, habit formation, and satisfaction—along with the most appropriate variant of the alternative response hierarchies.
The FCB grid provides a useful way for those involved in the advertising planning process, such as creative specialists, to analyse consumer–product relationships and develop appropriate promotional strategies. Consumer research can be used to determine how consumers perceive products or brands on the involvement and thinking/feeling dimensions. This information can then be used to develop effective creative options such as using rational versus emotional appeals, increasing involvement levels, or even getting consumers to evaluate a think-type product on the basis of feelings.

Cognitive Processing of Communications
The Cognitive Response Approach
One of the most widely used methods for examining consumers’ cognitive processing of advertising messages is assessment of their cognitive responses, the thoughts that occur to them while reading, viewing, and/or hearing a communication. These thoughts are generally measured by having consumers write down or verbally report their reactions to a message. The cognitive response approach has been widely used in research by both academicians and advertising practitioners. Its focus has been to determine the types of responses evoked by an advertising message and how these responses relate to attitudes toward the ad, brand attitudes, and purchase intentions.
The below model depicts the three basic categories of cognitive responses researchers have identified—product/message, source oriented, and ad execution thoughts—and how they may relate to attitudes and intentions.

The Elaboration Likelihood Model and Its Implications
Differences in the ways consumers’ process and respond to persuasive messages are addressed in the elaboration likelihood model (ELM) of persuasion. According to this model, the attitude formation or change process depends on the amount and nature of elaboration, or processing, of relevant information that occurs in response to a persuasive message. The ELM shows that elaboration likelihood is a function of two elements, motivation and ability to process the message. Motivation to process the message depends on such factors as involvement, personal relevance, and individuals’ needs and arousal levels. Ability depends on the individual’s knowledge, intellectual capacity, and opportunity to process the message. For example, an individual viewing a humorous commercial or one containing an attractive model may be distracted from processing the information about the product.

The elaboration likelihood model has important implications for marketing communications, particularly with respect to involvement. For example, if the involvement level of consumers in the target audience is high, an ad or sales presentation should contain strong arguments that are difficult for the message recipient to refute or counter-argue. If the involvement level of the target audience is low, peripheral cues may be more important than detailed message arguments. An interesting test of the ELM showed that the effectiveness of a celebrity endorser in an ad depends on the receiver’s involvement level. When involvement was low, a celebrity endorser had a significant effect on attitudes.

Media Planning and Strategy


Media Terminology

Media Planning - A sequence of decisions involving the delivery of messages to audiences.
Media Objectives - Goals to be attained by the media strategy and program.
Media Strategy - Decisions on how the media objectives can be attained.
Media - The various categories of delivery systems, including broadcast and print media.
Broadcast Media - Either radio or television network or local station broadcasts.
Print Media - Publications such as newspapers and magazines.
Media Vehicle - The specific message carrier, such as the Washington Post or 60 Minutes.
Coverage - The potential audience that might receive the message through the vehicle.
Reach - The actual number of individual audience members reached at least once by the vehicle in a given period of time.
Frequency - The number of times the receiver is exposed to vehicle in a specific time period.

Problems in Media Planning

Lack of information
Inconsistent terms
Serious time pressure
Measurement problems

Developing the Media Plan

 


Analyse the Market
Establish Media Objectives
Develop Media Strategy
Implement Media Strategy
Evaluate Performance

Where to promote?
Brand & Category Analysis


Brand Development Index (BDI) = (%of brand sales to total US sales in market/% of total US population in market)*100
Category Development Index (CDI) = (% of product category total sales in market/% of total US population in market)*100

Media Planning Criteria Considerations

The media mix
Target market coverage
Geographic coverage
Scheduling
Reach versus frequency
Creative aspects and mood
Flexibility
Budget considerations
         
Target Audience Coverage                                            


Three Scheduling Methods

Continuity
Flighting
Pulsing

Reach & Frequency


Effects of Reach & Frequency




1. One exposure of an ad to a target group within a purchase cycle has little or no effect in most circumstances.
2. Since one exposure is usually ineffective, the central goal of productive media planning should be to enhance frequency rather than reach.
3. The evidence suggests strongly that an exposure frequency of two within a purchase cycle is an effective level.
4. Beyond three exposures within a brand purchase cycle or over a period of four or even eight weeks, increasing frequency continues to build advertising effectiveness at a decreasing rate but with no evidence of decline.
5. Although there are general principles with respect to frequency of exposure and its relationship to advertising effectiveness, differential effects by brand are equally important
6. Frequency response principles or generalizations do not vary by medium.
7. The data strongly suggest that wear out is not a function of too much frequency. It is more of a creative or copy problem.

Marketing Factors Important to Determining Frequency

Brand history
Brand share
Brand loyalty
Purchase cycles
Usage cycle
Competitive share of voice
Target group


Message or Creative Factors Important to Determining Frequency
                                                 
Message complexity
Message uniqueness
New vs. continuing campaigns
Image versus product sell
Message variation
Wear out
Advertising units

Determining Relative Cost of Media

Cost per thousand (CPM) = (Cost of ad space-absolute cost/Circulation)*1000
Cost per rating point (CPRP) = (Cost of commercial time/Program rating)

Various Communication Media Sources

Television
Radio
Magazine
Newspaper
Outdoor
Direct Mail
Internet/Interactive Media