BPMM 3013 CONSUMER BEHAVIOUR GROUP PROJECT

ADVERTISEMENT OF PHILLIPS LCD TV The study is about the effect of advertisement by ...............................................appeared in................. on weekly/monthly/daily etc. The study is divided into five sections. The group of the study comprised of : 1. ..... 2. .... 3. ..... 4. ..... The study is made as part and parcel for the completion of course in Consumer Behaviour (BPMM 3013) which led to the award of Bachelor of Business Administration (Hons) from University Utara Malaysia. PART A i. Descriptions of product Cut n Paste your product description here.

There are four types of consumer products, classified by how consumers buy them: a. Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort. b. Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style, e.g Furniture, Cars, Appliances c. Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort, e.g Designer watches, Branded fashion wear, High-end electronics d. Unsought products are consumer products that the consumer does not know about or knows about but does not normally think of buying, e.g Life insurance, Funeral services, Blood donations. Consumer buyer behavior refers to the buying behavior of final consumers individuals and households who buy goods and services for personal consumption. Consumer purchase behavior (Consumer Black Box) depends on two major factors:

BPMM 3013 Consumer Behaviour

a.

the external stimuli comprising Marketing stimuli consists of the 4 Ps, and other stimuli which include Economic Forces, Technological Forces, Political and Cultural forces. b. Consumer Character. Characteristics Affecting Consumer Behavior: 1. Culture is the learned values, perceptions, wants, and behavior from family and other important institutions.Subcultures are groups of people within a culture with shared value systems based on common life experiences and situations.ChineseIndiansMalaysEurasians Social classes are societys relatively permanent and ordered divisions whose members share similar values, interests, and behaviors. Measured by a combination of occupation, income, education, wealth, and other variables 2. Social Factors The following affect consumers in terms of their social factors: Groups Membership groups have a direct influence and to which a person belongs. Aspirational groups are groups to which an individual wishes to belong.

Reference groups are groups that form a comparison or reference in forming attitudes or behavior. Opinion leaders are people within a reference group with special skills, knowledge, personality, or other characteristics that can exert social influence on others. Buzz marketing enlists opinion leaders to spread the word. Social networking is a new form of buzz marketing MySpace.com Facebook.com Family is the most important consumer-buying organization in society.

BPMM 3013 Consumer Behaviour

Social roles and status are the groups, family, clubs, and organizations to which a person belongs that can define role and social status. 3. Personal Factors which include Personal characteristics, Age and life-cycle stage, Occupation, Economic situation, Lifestyle and Personality and self-concept Age and life-cycle stage RBC Royal Band stages: Youthyounger than 18 years Getting started18-35 years Builders35-50 years Accumulators50-60 years

Preserversover 60 years Occupation affects the goods and services bought by consumers. Economic situation includes trends in: Personal income Savings Interest rates

Lifestyle is a persons pattern of living as expressed in his or her psychographics. Measures a consumers AIOs (activities, interests, and opinions) to capture information about a persons pattern of acting and interacting in the environment.

4. Psychological Factors Motivation Perception Learning Beliefs and attitudes

There are five types of consumer buying decision behavior:

BPMM 3013 Consumer Behaviour

1. Complex Buying Behavior Occurs when consumers are highly motivated in a purchase and perceive significant differences among brands. Purchasers are highly motivated when: Product is expensive Product is risky Product is purchased infrequently Product is highly self-expressive

2. Dissonance-reducing buying behavior occurs when consumers are highly involved with an expensive, infrequent, or risky purchase, but see little difference among brands. 3. Post-purchase dissonance occurs when the consumer notices certain disadvantages of the product purchased or hears favorable things about a product not purchased. 4. Habitual buying behavior occurs when consumers have low involvement and there is little significant brand difference. 5. Variety-seeking buying behavior occurs when consumers have low involvement and there are significant brand differences.

ii.

Aspect of consumer needs does the product appeal.

iii.

Targeted consumers for the product

PART B i. Consumer Decision Making process

There are five steps in consumer buying decision process:

BPMM 3013 Consumer Behaviour

1. Need recognition occurs when the buyer recognizes a problem or need triggered by both internal and external stimulus (refer buying behavior process) 2. Information search is the amount of information needed in the buying process and depends on: The strength of the drive, The amount of information you start with, The ease of obtaining the information, The value placed on the additional information, and The satisfaction from searching.

Sources of information: Personal sourcesfamily and friends Commercial sourcesadvertising, Internet Public sourcesmass media, consumer organizations Experiential sourceshandling, examining, using the product

3. Evaluation of alternatives is how the consumer processes information to arrive at brand choices. 4. The purchase decision is the act by the consumer to buy the most preferred brand. The purchase decision can be affected by: Attitudes of others Unexpected situational factors

5. The post-purchase decision is the satisfaction or dissatisfaction the consumer feels about the purchase. Relationship between: Consumers expectations Products perceived performance

The larger the gap between expectation and performance, the greater the consumers dissatisfaction. Cognitive dissonance is the discomfort caused by a post-purchase conflict.

BPMM 3013 Consumer Behaviour

Customer satisfaction is a key to building profitable relationships with consumersto keeping and growing consumers and reaping their customer lifetime value. Consumers rely on various information cues or attributes of products in their product evaluations (Richardson et al.,1994; Schellinck, 1983). Product attributes are classified as either intrinsic involving the physical attributes of a product, such as taste, design and performance or extrinsic referring to product-related information which are not part of the physical product itself, such as brand name, price, warranties and country of origin (Dawar and Parker, 1996; Dodds and Monroe, 1985; Miyazaki et al., 2005; Monroe and Krishnan, 1985; Monroe and Chapman, 1987; Olson and Jacoby, 1972; Stokes, 1985; Zeithaml, 1988). A considerable amount of research in consumer behaviour has been devoted to examining what information cues consumers use most often when evaluating products, as well as the relative roles and impacts of extrinsic cues (country of origin, price, brand name, store name, etc.) versus intrinsic cues (materials, design, style, performance, workmanship, etc.). In the past, research results suggest that consumers often rely on brand name (e.g. Dodds et al., 1991; Jacoby et al., 1977), price (e.g. Dodds et al., 1991; Wheatly et al., 1981; Kitchen and Schultz, 2001), or country-of-origin (e.g. Chao, 1989b; Hamin, 2006; Han and Terpstra, 1988), and country of design (Acharya and Elliot, 2001; Hamzaoui and Merunka, 2006) in relation to the product being evaluated. Research in marketing has provided evidence that consumers often use extrinsic cues as the basis for their evaluation of product quality (for example see Dodds et al., 1991; Miyazaki et al., 2005; Rao and Monroe, 1989). Based on the research outcomes of previous studies (e.g. Bilkey and Nes, 1982; Chao, 2001; Iyer and Kalita, 1997; Tse and Gorn, 1993), country of assembly (COA) or country of manufacture (COM) are important evaluative dimensions for consumers. They suggest that consumers view products from developed countries more favourably than products from less developed countries, hence increasing the perceived value of room air conditioners branded by manufacturers from developed countries. Similarly one would expect consumers perception of purchase value to be higher for well known brand names compared to less known brands. Brand name is
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commonly used by buyers when making judgments about purchase value (Johansson and Nebenzahl, 1986; Kitchen et al., 2006). In addition, brand names carry some of the information usually associated with country of origin, with their implicit reference to corporate headquarters. Brand names provide customers with readily recognisable information about a firms product and it is seen as providing tangible and intangible benefits. Technological advancement serves as the intrinsic cue in this study. Technology advancement refers to innovativeness in product and design dimensions (Roth and Romeo, 1992). This attribute encompasses the use of new technology and engineering advances, including the design of appearance, style, colour and variety. The notion that products made using higher technology increases buyers perceived purchase value and vice versa is well accepted. Generally quality is an important characteristic that consumers consider when making purchase decision for products and for durables in particular. Quality is defined as consisting primarily of reliability, workmanship and performance dimensionality (Han and Terpstra, 1988; Li and Dant, 1997; Roth and Romeo, 1992). Good quality positively affects buyers evaluation of products. Another important attribute closely related to quality is product warranty that tends to have a positive impact on perceived purchase value. Warranty has been found to be an effective extrinsic cue that gives assurance about product quality (e.g. Bearden and Shimp, 1982; Feldman, 1976). Warranties give assurance to consumers about possible redress if the product does not perform as expected. Excellent warranty terms result in positive evaluation of product by most consumers. It increases consumers confidence in making purchases (Armstrong et al., 1975) by reducing their perceptions of risk of purchase (Erevelles, 1993; Perry and Perry, 1976). Consumers were also found to rely heavily on the length of warranty as a reliable cue to product quality when they are not highly knowledgeable about the particular product (Blair and Innis, 1996). Finally, purchase value has an inverse relationship with price such that higher price represents a monetary measure of what must be sacrificed to purchase the item, and leads to consumers decreased willingness to buy (Zeithaml, 2000). Demonstrably, however, price can also be taken as a proxy for quality in association with the brand name.

BPMM 3013 Consumer Behaviour

ii.

How advertisement uses the element to appeal the consumers needs and wants.

The degree of consumer involvement in a product category has widely been recognized as a major variable relevant to advertising strategy (Laurent and Kapferer 1985, Ray 1982, Rothschild 1979, Vaughn 1980). Thus, to know the level of consumer involvement is very important to a manager. However, how can a manager know whether a group of consumers has high or low involvement in a product category? Many researchers have proposed measurement scales to divide consumers into various levels of involvement with product categories and explored their behaviour (Engel and Blackwell 1982, Wright 1973, 1974, Sheth and Venkatesen 1968, Lastovicka and Gardner 1978, Traylor 1981). Some literature has suggested that a person could be involved with products (Howard and Sheth 1969, Hupfer and Gardner 1971). Involvement with products has been hypothesized to lead to a greater perception of attribute differences, greater product importance, and greater commitment to brand choice (Howard and Sheth 1969). Sheth and Venkatesen (1968) measured involvement with products by product rank -or- ordering. Hupfer and Gardner (1971) rated products using an eight-point concentric scale relating the product importance in the subjects life. Other researchers measured the importance of a particular brand or product to the level of involvement (Cohen and Goldberg 1970, Lastovicka and Gardner 1978, Traylor 1981). Zaichkowsky (1985) developed the systematic relative conception and methods and then proposed the PII scale (Personal Involvement Inventory). The PII scale has been successfully used by many researchers to measure the level of consumer involvement since it effectively meets the standards for internal reliability, reliability over time, content validity, criterion-related validity, and construct validity (Zaichkowsky 1985). Many researchers measured the level of consumer involvement for product categories and divided the products by the various involvement groups (Bowen and Chaffee 1974, Tyebjee 1979, Vaughn 1980, 1986, Bloch 1981, Laurent and Kapferer 1985, Zaichkowsky 1985, 1987, Wells 1986, Zinkhan and Fornell 1989). Few researchers segmented the various consumer involvement clusters for the same product.

BPMM 3013 Consumer Behaviour

Lavidge and Steiner (1961) developed an effect hierarchy model to describe the steps consumers complete before they purchase a product. The purpose of this model was to determine how consumers used advertising in their purchase processes (Wells and Prensky 1996). The hierarchy model described seven steps in the purchase process: 1. Unawareness, 2. Awareness, 3. Knowledge, 4. Liking, 5. Preference, 6. Conviction, 7. Purchase. These steps can be grouped into three general processes: 1. Gaining awareness and knowledge about a product, 2. Developing an attitude toward the product, and 3. Making a purchase decision. In other words, they are thinking, feeling and doing. Some researchers have criticized the hierarchy of effects model assuming that consumers move in a linear fashion from thinking to feeling to action. In response, researchers have developed other models of the consumer purchase process which build on the same steps but arrange them in a different order or describe the transitions between the steps in a different way (Palada 1966, Smith and Swinyard 1982, Greenwald and Leavitt 1984, Barry 1987). For example, a consumer may make a low involvement purchase based on reference group influence. On the other hand, consumers are more likely to think before feeling and acting in a high involvement purchase process. Consumers might first act and then evaluate their feelings when buying a low involvement product. This study examined if there are significant differences between various consumer involvement clusters in the advertising effect hierarchy. High involvement and low involvement products were examined to explore the relationship between consumer involvement and advertising effectiveness.

PART C i. Effectiveness of the appeal.

A better understanding of preferences among Malaysian consumers in this consumer durable category, in particular the relative importance of quality, brand name, and country of manufacture, price, warranty, and technological advancement can be exploited for more focused marketing strategies. New product development, positioning or re-positioning, and effective integrated
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marketing communication strategies (Kitchen and Li, 2005) may need to be reassessed and reformulated to take into consideration market dynamics potentially in different cultural circumstances.

ii. iii.

Is it the right appeals? Suggestion to improve the effectiveness of the advertisement

PART D Conclusion

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BPMM 3013 Consumer Behaviour