Essay title - Advertising Consumers Purchase

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Chapter 2 Review of Literature

2.1 Introduction

The objective of commercial advertising is mainly to influence the purchasing practices of the consumers. Advertising is an essential element for the survival and growth of profit-making organizations. Accordingly it becomes important for the corporate entities to devote their resources for developing commercial messages which have the effect of influencing particular group of people. The purpose again of such messages is to encourage the consumers to consider the purchase of a particular product or service. The other purpose of advertising is to promote a general perception about the particular product or service the advertisement refers.

These messages in fact make the customer form an opinion on the quality and durability of product or service and arrive at his/her decision on the purchase. The type of the messages contained in the advertising may be subtle or overt depending on the advertising strategy adopted by the manufacturer. For instance the advertising message of an automobile manufacturer while highlighting the safety aspect of their vehicles may coin an overt advertising message saying that their vehicles scored high in the safety tests conducted by the government. Alternatively the manufacturer may choose just to highlight the safety features of the vehicles which will be a subtle message for the customer. This chapter makes a detailed presentation of a review of the available literature on the marketing and advertising strategies of automobile manufactures in UK for creating a positive attitude in the mindset of customers in the country.

2.2 Advertising – A Background

Advertising is the mechanism used to create a desire for different products in the minds of the customers. Jhally (1987) considers advertising is working to create a false need among the consumers and in fact such needs are of the manufacturers rather than the consumers. However this view is refuted by the advertising professionals by pointing out that the purpose of advertising is to inform the public about the availability of the products in the market. According to Campbell (2000) the consumers do not merely act on the basis of advertising but use their discretion makes their decisions on a purposeful manner. Just like the consumption of material items, advertising has the ability to solve the problems being encountered by the consumers with respect to the products and it also guarantees the consumers that emotional happiness and well-being within the act of consumption. Anderson (1995) comments this aspect prevents the understanding of the working of the economic world by distracting the attention of the consumers. Baudrillard (1998) considers advertising as consisting of messages which describe the products as evidence of ‘miraculous abundance’.

It is the presumption of the advertisers that the consumers have become more advertising savvy with the ability to easily identify and reject advertising messages which have been crafted to create false needs for the products with the aim of selling the products which the consumers are not in actual need of. The recent phase of advertising has become more sophisticated which is in line with the consumer sophistication. One example of this development can be found in the television advertising where 10 second product advertisements are designed just in the same way as other television programs. This according to the experts does not induce the consumers to skip them (Fetto, 2000). Other trend in advertising is the advertising through internet search engines where the advertisers pay the search engine company. It is the function of the advertising company to put the advertisements at the top of the recommended websites to catch the attention of the prospective consumers (Lemmons 1996). Yet another variation of internet advertising takes the form of information on message boards, discussion groups and news groups about the product superiority and the intention of such mode is to create false peer recommendations (O’Leary, 2000)

Advertising also creates and uses the negative feeling against some practices or actions of mankind and try to sell the products which prevent such practices or actions. Anderson (1995) severely criticizes the hypocrisy behind advertising and cites several examples of on that score. One example as cited by Anderson is the promotion of Nike shoes through its advertising campaign as the shoes equate human dignity and spiritual fulfillment which is considered more ironic as Nike uses the sweatshops in the third world countries for the manufacture of its products.

Another factor which is incorporated in to the marketing strategy is the environmental concerns. The environmental concerns which are the direct responses of the pressures from the environmental groups or the governments concerned have been converted into marketing devices through which the companies market their products and maintain their earning levels. For instance the domestic electrical goods companies use the energy saving mechanisms of their washing machines and dish washers as unique selling points of their products. (Edwards 2000)

Frank (1997) identifies the marketing strategy of last few decades include the creation of a hostility among youngsters towards the established tastes and preferences. It is argued that in fact this attitude of the advertisers has enhanced the consumer desirability for frequent changes in tastes and preferences. As Whiteley (1993) rightly puts this in turn has created a more rapid pace of changes in designs and this has resulted in the creation of a socio-economic system where the presumption of limitless growth and continued state of desire prevails among the consumers. (Miles, 1998)

As far as the advertising in automobile industry is concerned, the advertisements are so designed to promote the mythic dimensions of comfortable driving. They perpetuate the feeling that the driving a car is associated with man’s freedom and the feeling of independence or personal success of the person driving the car. All the automobile advertisement are careful in avoiding the dismal reality of the tiresome, uninspiring and costly features of owning a car and promotes the feeling relaxation, safety and joyfulness for the people driving a car. Thus due to advertising messages in automobile advertising the fantasy or ideal of car driving is made to shadow the detailed significance of the automobile itself. (Edwards, 2000)

2.3 Role of Advertising and Consumer Behavior

Villas-Boas (2004) consider advertising to have the effect of influencing the aggregate demand, as the consumers will start thinking of buying any product or service only when some advertisement of the product or service reaches them. According to the author the cost of advertising will have its own impact on the optimal number of products being sold as well as the levels of quality of the products which are differentiated vertically. It is a commonly accepted fact that advertising will have an impact on the consumer behavior through different ways. There is the informative role of advertising advocated by several research scholars (e.g., Stigler (1961), Telser (1964), Nelson (1970, 1974), Stigler and Becker (1977).

Others have debated on the persuasive role of advertising (e.g. V Dixit and Norman (1978), Kotowitz and Mathewson (1979), Shapiro (1980), Schmalensee (1986), Becker and Murphy (1993) The fundamental difference between informative and persuasive role of advertising is brought out by the fact whether the consumption utility of the consumer is can undergo a change by a possible change the weight of consumer preferences as a result of advertising. The impact of advertising on price elasticity could be varied based on underlying effect of advertising. Banerjee and Bandyopadhyay (2003) recently have developed the study of dual role of advertising and have found different ways of modeling the effect of persuasive advertising on the consumer preferences.

Advertising is considered as the second important area for consideration of allocating incremental resources next to product development. Every year the automobile manufacturers spend billion of dollars in various modes of advertising with the sole aim of influencing the consumers for making a decision to buy their products. The focus of this paper is on the advertising strategies which influence the consumer preferences towards the advertised product as against the advertisements which details product information. Some of the automobile advertising does not contain detailed information about the product attributes, product pricing or financing the purchase of the products.

Instead the advertisements serve the purpose of persuading the potential buyers about the passion of owning specific brands of automobile and deriving the driving pleasure out of such vehicles. However there are other automobile manufacturers like Toyota which provide detailed information on the product attributes and financing terms. This is the general pattern of advertising strategies being followed by most of the automobile manufacturers. The idea is to inform the suitability of the products to meet the consumer preferences and needs and at the same time the firms use the advertisements to impact the valuation of the product by the consumers.

2.4 Advertising and Branding

Considerably large investments are required in brand advertising for building up strong brands in the market amidst stiff competition (Aaker, 1995) Al though, large corporations are more careful about their advertising budgets, the investment in advertising spends represents a vitally important element in the economy. Advertising Age news service have identified the automobile industry has spent at least 27.3 percent of the global advertising expenditure in the year 2001. This makes the automobile industry ranking the first one in the industries to spend on advertisements. It is a fact to be noted that advertising in automobile industry is more brand centered.

It is the practice in the automobile industry to use a single or limited number of brands to market a number of different products. The industry is found to have been adopting the practice of promoting the brand in parallel to their individual models having distinct features and for this purpose the manufacturers use different advertising media. In fact the specific models of automobiles are marketed by the manufactures using their brand image. This has resulted in the creation of considerable brand value for successful automobile manufactures. For example Business Week has ranked Mercedes Benz as the most valuable car brand having a value of $ 21.1 billion in the year 2002 among the top 10 automobile brands. At that point of time Ford had a brand value of $ 20.4 billion and Toyota $ 19.4 billion. (Business Week)

Luo and Donthu (2001) argue advertising accountability has become a vital issue in automobile industry considering the enormous amount of spending on advertising by auto manufacturers. Aaker and Carman (1982) comment since there is always over advertising by the automobile companies the advertising efficiency measure as a ratio of output in the form of consumer awareness or purchase intention to the input in the form of advertising budget is always low.

2.5 Marketing Theories

For conducting this study it is important to consider some marketing theories which will be applied while analyzing the responses from the respondents of the survey as well as while conducting the interviews with some of the major automobile dealers. One of the theories is the one constructed by Homans (1974). This theory involves concepts of reward frequency, reward value, critical mass of rewards and approving behavior. The approving behavior model is being used for analyzing and describing the consumer loyalty. According to this model wherever there is greater value of rewards being received by the buyer, there will be a stronger display of approving behavior. Another model developed by Levy & Zaltman (1975) uses six types of social changes table involving time and societal levels to explain the social changes, which corporations take into account while marketing of their products. “These include attitude and behavior change, normative and administrative change, invention/innovation and revolution, life-cycle change, organizational change, and socio-cultural evolution”.

Similarly marketing pricing strategies cannot be overlooked while detailing the advertising strategies of automobile manufacturers. Pricing is an important factor that the auto manufacturers take into account while positioning their products in the market. With the change in the class of a car, the price may be fixed high without any significant change in the design or features. But the image projected of the car would automatically change making a positive influence in the mindset of the consumer. This change often equates a change in the quality and prestige although in fact there may not be any significant variation in the utility or comfort.

According to Marchand (1985) there are eight hidden needs of the consumers which need to be satisfied with the products they select for buying which the marketers use for their product marketing campaign. This research will take into account five out of the eight needs; the needs are selling emotional security, assurance of the worth of the product, ego-gratification, sense of power and sense of roots. By emotional security, the consumer is provided the satisfaction that the purchase of a car would give the consumer a dependable mode of transportation. This mode of transportation would be used by the consumer for both leisure and professional activities. Reassurance of worth, ego-gratification and sense of power are the inner feelings of the consumers which identifies the self-esteem of the consumers as related to other people. A sense of roots refers to the better part of lives of the consumer may be relating to their younger periods.

Huitt (2002) refers to the findings of Maslow a researcher in psychology who advocated the presence of a distinct hierarchy of human needs which could impact the human behavior. According to Maslow there are deficiency needs and growth needs; deficiency needs include physiological, safety, belongingness and love. The growth needs get activated only when the deficiency needs are met fully. Maslow recognized the self-actualization as the only growth need. “This need is defined as realizing one's potential, being concerned about personal growth, being problem-focused and appreciating life” (Allegience Telecomm, 2003)

Perhaps these are the needs that the advertisers and marketers use in their advertising strategies by which they would like their potential customers to feel good by purchasing their products. In fact these eight needs are subtly included in the advertisements to show how a product could make the consumer happy by meeting the needs. The broad strategy under which the marketing works is that if the consumer feels that he needs to be appreciated and feel a part of the group and if a product will be able to meet these objectives then the consumer would not hesitate to buy the product. (Marchand 1985) However it is vitally important that the companies think of advertising strategies which promote the satisfaction of the needs having a direct connection with the product.

It is for the advertisers to create advertisements having the effect of capturing the attention of the customers and making them feel that the advertisements are intended for interacting with them only. Thus the advertisements should represent the current social conditions of the times during which the advertisements are displayed. This would make the advertisements which were relevant six months back irrelevant now. According to Marchand (1985) the advertisements should present a picture of life which the consumers would like to live in or at best they can identify themselves with.

It is possible that all the above discussed marketing theories can be combined with a discussion of priming effects. According to Pan& Kosnicki (1997) priming theory is based on the media coverage of an issue which describes the important feature of that issue in the content of the media. Miller & Krosnik (1997) point out priming can be invoked by drawing the attention of the consumers to an issue or object without taking a position on the issue.

In the case of advertising for automobiles, there is a significant usage of marketing theories to attract the attention of the consumers. The automobile advertisements in general describe the product attributes and distinguishing features of the products and allow the consumers to form an opinion about the products. All the criteria pertaining to the advertisements like display of current conditions of time and presentation of a picture of life for the consumers are being followed by the advertisements in respect of automobile advertisements.

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2.6 Market Segmentation

The latest strategy in marketing being adopted by the advertisers is the lifestyle marketing which has gained popularity in recent times. According to Hanan (1972) lifestyle marketing is a strategy that seizes “the concept of a market according to its most meaningful, recurrent patterns of attitudes and activities”. The strategies are then tailor-made as promotional ones to fit into these patterns. Even though this concept of designing the marketing strategies exists for quite some time, there has been a recent fillip to the use of this marketing strategy. The reason for such insurgence is that the marketers are now indulging in segmenting their advertising messages to varied audiences who share similar backgrounds along with similar patterns of purchasing and common interests. According to Michman (1991) lifestyle and personality are two multidimensional ways of viewing consumer behavior.

This allows for the consideration of factor interrelationships. Various social influences and individual personal value system are the root cause for the emergence of life styles. This puts a responsibility on the marketers to study their target market needs carefully. They must also consider the way in which target customers live, the ways in which they are spending their money and the ways in which they make purchase decisions. The knowledge about these things makes the marketers to gain the necessary knowledge for positioning their products to result in the most successful marketing.

2.7 Brand Loyalty

Brand loyalty is the decision of the consumer taken consciously or unconsciously to continuously purchase a product. The consumer expresses this decision through his/her intention or behavior. Brand loyalty arises from the perception of the consumer about the brand that offers best features of the product, image of the product or the quality levels of the products at an attractive price which is the right one for the product. It is job of the marketers to break the consumer habits, enable them to acquire new habits and persuade them to continue to buy their products in the future. This persuasion is being effected by the marketers by reinforcing the new habits acquired by the consumers.

There has been consensus among scholars that the final step of brand-building process is the establishment of a strong relationship between the brand and the consumers. (Dyson et al., 1996; Franzen, 2001; Keller, 2001a, 2001b, 2003) and a vitally important element in this relationship is the brand loyalty. Studies have been undertaken by several authors on the term loyalty and there have been numerous findings on the determinants of brand loyalty (Day (1969), Lutz & Winn (1974), Jacoby & Chestnut (1978), Dick & Basu (1994), Oliver (1997) and Fornell et al. (1996)

According to these studies the concept of loyalty consists of both attitudes and behaviors of the consumers. Jacoby & Chestnut (1978) define brand loyalty as a result of two components: “1) A favorable attitude toward the brand, and 2) Repurchase of the brand over time”. Therefore according to this definition the positive mindset of the consumer is an important aspect of brand loyalty and it is not enough if there is only a repurchase activity. It is quite possible that a customer despite having a negative attitude towards a brand would still end up with buying that brand due to different reasons like the out of stock situation of his favorite brand or limited means of the customer to buy his favorite brand. Johnson (1998) points out attitudes while are more tangible than the behavior it becomes important that they are combined to study the loyalty instead of being disregarded in the context of building loyalty.

2.7.1 Determinants of Brand Loyalty

Considering the brands in the automobile industry, the brand image of the products of a company forms the principal source of its competitive strength. Therefore it is considered as one of the strategic assets of the company. It is always the endeavor of the automobile companies to disseminate information containing a strong and clear message which marks their products distinct from those of the competitors as well as deliver the message in a memorable and positive manner so that a positive mindset is created among the customers. In this process the companies face the challenge of not creating a muddled or negative image among the consumers.

At the same time the advertisement strategies should be so framed that they create a brand vision or identity that promotes a brand as something greater than a set of attributes that cannot be easily surpassed. This emphasizes that it is for the automobile companies to make their brands to be viewed as more than a product or service but as an overall brand image. This brand image should possess the capabilities of projecting the identity of the company and should also possess a distinct personality. Just in the same way a person should posses characters that could easily draw the attention of other people, the brand should also possess such a personality which could easily attract the customers and make them buy the products represented by the brand. The creation of a strong symbol or logo should go a long way in creating brand loyalty among the customers by projecting the brand easily identifiable.

The loyalty of the customers is considered to exist when the customer has a continued relationship with the company. This relationship at best can be measured by the repurchases the customer makes and such repurchases represent the purchasing intention of the customer as well as his future behavior. Another condition for identifying the customer loyalty is the possibility of the customer buying other products of the company due to his continued relationship with the company. This is known as the possibility of additional cross sales due to customer loyalty.

The increased purchase activity by the buyer thus represents the behavioral intention of the customers. (Anne Martesan, 2004) However the brand loyalty is also identified by certain kind of attitudinal loyalty where the customer is guided by the feeling that the products under some brand are unique in nature and thus become attractive as compared to those of the competitors. These may be considered as more general ways of perceiving what loyalty is. However according to Keller (2001) ”the strongest affirmation of brand loyalty is when customers are willing to invest time, energy, money, or other resources into the brand beyond those expended during purchase or consumption”

2.7.2 Marketing Strategies and Brand Loyalty

It has been established that at all stages of a product life cycle from the design of the product till the extension of a brand which is already matured, the marketing strategies to remain effective should be based on a thorough and clear understanding of the motivation, learning, memory and decision process of the customers which influence the purchasing decisions of the customers.

All the theories of consumer behavior have been made to depend largely on the “managerial decisions involving development and launching of new products, segmentation, timing of market entry, and brand management”. This has necessitated the study and detailed examination of the subject of brand loyalty to great extent. Marketing strategies that have taken into account the concept of branding have proved successful as branding so far has been one of the most influencing factors in deciding the consumer behavior and the consequent success o failure of the product in the market. Branding has a large impact on the perception of the consumers on the company owning specific brands. Therefore it can be stated that brands just do not represent the company’s products but they are considered as the symbol of the company. This is where exactly the marketers could find the core of the values of the company’s products.

2.7.3 Brand Loyalty in Automobile Market

According to Light (1991) a customer who is loyal to particular brand will be nine times profitable as compared to one who is non-loyal. In respect of automobile industry Jacoby’s (1971) definition of brand loyalty can be regarded as more fitting one. Jacoby (1971) defines brand loyalty as “the biased (non-random) behavioral response (purchase) expressed over time by some decision-making unit with respect to one or more alternative brands out of a set of brands and is a function of psychological processes”. In order to develop loyalty among customers for a specific car brand, the product must possess certain unique features and values which make customers irresistible buying the product.

Nilson (1998) opines tangible values of products in the form of benefits, abstract values in the form of emotional attraction and intangible values in the form of unique character form a combination of factors on which successful brands are built. The combination among the three factors that is more important for the marketing success of any automobile brand. Ha (1998) provides a new dimension to the brand loyalty in attributing the success of brand loyalty to a combination of cognitive response from the consumer, subjective norm and purchase behavior of the customers. According to Vincent (2002) marketing a brand which has acquired a legendary value seems to be more difficult than the efforts put on marketing a brand which is a non-legendary one.

In the case of automobiles, the personal narrative of a person that coincides with the mythology of any specific brand induces him/her to make the purchasing decision in favor of that product. This purchase also results in a reaffirmation of a self-concept in relation to the product and the customer tends to relay the same image to friends and acquaintances. This implies that a brand should have a personal narrative just in the same way people have their own narratives.

2.8 Brand Associations

Another important factor that needs consideration by the advertisers and marketers is that the automobile companies in order to create a positive mindset in the consumers should be able to develop a strong brand association among the consumers. Aaker (1996) defines brand association as anything that is linked in the memory in connection with the brand. Automobile manufacturers use brand associations to create strong feelings in the minds of the consumers and by doing this they differentiate their products. This gives them an opportunity to create a strong position for their products in relation to the competition. On the part of the consumers the brand association enables them to collect and assimilate information to organize and control information in their memories so that at the time a purchasing decision is to be made this information becomes handy. In this process the brand association forms the starting point for any customer to form an opinion about a brand. This also aids the decisions of the customer with respect to the buying of any specific brand.

2.9 Consumer Behavior in Automobile Industry

In respect of automobile purchases most of the consumers are often inspired by the previous purchase and this contributes for the development of an attitude towards the automobiles. In this case ‘attitude’ becomes the evaluating ability of the customer based on the judgment of prior or current experience. This experience encompasses the satisfaction derived by the consumer from the dealers, or the products and services of dealers like after sales service and service during warranty period, driving experience of the automobile owner and also the socio-economic status of the buyer. In some cases it may also become possible that the consumer develops an attitude based on his/her prior information without having an actual experience. This attitude leads to the development of preferences or biases on the part of the consumers guided by the brand image of the specific product in the market place.

The purchasing power of an individual also has a large influence on the behavior of the consumers. For instance in some cases the consumers may have a favorable attitude towards specific brands of cars especially luxury cars but may not have sufficient purchasing power. In some other cases specific brands in the luxury car segments might get neglected by the consumers who possess an over-purchasing power. In defining the customer attitude towards purchase of automobiles there are objective and subjective factors that influence the mindset of the customers. The objective factors are; (1) reliability, (2) quality, (3) durability, (4) safety, (5) security, (6) performance, (7) efficiency, (8) technology and (9) handling. The subjective variables are; (1) value, (2) style, (3) comfort, (4) prestige, (5) status and (6) visual impact. (Jakrapan Anurit et al,)

According to Markin (1969) different types of consumers are influenced differently by these attributes, due to the reason that “the cognition, feelings and response dispositions of the customers are organized into a set of patterned emotional reactions”. This influence is largely driven by the variations in demographic, geographic, psychographic or lifestyle factors. Therefore the mindset of buyers changes from individual to individual even in the same society. This necessitated the supply chain agents of automobile like manufacturers, companies and dealers to focus on the type of customers who will buy their products so that proper market segmentation for the products can be established. In fact this forms the basis of the advertising strategies for the automobile manufacturers to change the mindset of the customers into positive ones.

2.10 Advertising Theories

The most common assumption about advertising and marketing theories is that they are capable of making alterations in the attitudes of the consumers with respect to any particular product. There are a number of theories totaling approximately four hundred and fifty that have been evolved as the manner in which advertising works and effects the consumer behaviors. (Broadbent, 1992) Out of these the AIDA advertising effects model is considered as more authentic and forms the standard for describing the influence of advertisements on consumers. According to this model, the customer passes through the stages of awareness, interest, desire and action before he/she takes a purchasing decision in respect of any specific product over the others. Therefore it follows that the customers should have awareness about a product before they can make a purchasing decision in the product’s favor. It is the job of advertising to be creative enough to affect the attitudes of the customers towards any brand that results in an eventual purchase of the product.

2.11 Conclusion

This chapter presented a detailed review of available literature on the basic marketing and advertising concepts including brand loyalty and brand association the study of which are considered very vital to influence the customer behavior and attitudes. Building brand loyalty thus is seen as an important prerequisite for successful marketing of automobile brands. In the next chapters the consumer behavior and their presumptions on the automobile brands will be analyzed based on the information and data gathered by adopting suitable research methods.

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