Category: Consumer Behavior

Company Background

Mitsubishi was first established as a shipping company by Yataro Iwasaki (1834-1885) in 1870. In 1873, its name was changed to Mitsubishi Shokai Mitsubishi’s name consists of two parts: ‘Mitsu’ which means ‘three’ and ‘hishi’ (which being ‘bishi’ which means under ‘my title’) and therefore there are three rhombus, which are reflected in the famous company logo. This is also interpreted as ‘three diamonds’. Mitsubishi as a broad-based company, plays an important role in the modernization of Japanese industry.

At first it was a brilliant idea that sparked from a way of thinking brilliantly in taking advantage of opportunities. This opportunity arises in line with government policies to finance investment, both foreign capital and domestic capital. On May 19, 1973 PT. Mitsubishi Krama Yudha Motors and Manfacturing which has authorized capital, and the capital is paid for $ 42,866,250. Approval of a joint venture occurred on January 18, 1973 between PT. Krama Yudha (KY), Mitsubishi coorporation (MC), and Mitsubishi Motors and Manufacturing. PT. Mitsubishi Krama Yudha Motors and Manufacturing is a company with foreign investment. (Mitsubishi, 2019).

Vision Statement

1. Making a global company by producing and remaining in the fierce competition and emerging in the Asian market where growth is very good.
2. Manage a safe and advanced factory by implementing QCD (Quality, Cost, Delivery) control by having responsibility for the environment and placing top priority to gain consumer trust.
3. Increase satisfaction to Shareholders, Shareholders, Government, Directors, and all Employees (Mitsubishi, 2019).

Mission Statement

1. Decrease in Costs.
2. Quality Improvement.
3. Supervision of delivery schedules.
4. Conduct smooth and good preparation for new capital products.
5. Improvement in the fields of management, safety and environment (Mitsubishi, 2019).

Market Situation

Automotive industry in Indonesia

The automotive industry sector is predicted to still grow positively in 2019. The stretch of road infrastructure development from west to east Indonesia is expected to become one of the catalysts for the growth of the automotive industry next year with a target of achieving 1.1 million units of new car sales.

In addition, with the target of economic growth in the range of 5.3%, it still gives entrepreneurs hope for improving economic conditions. Especially with Indonesia’s vehicle ownership ratio still low at around 87 vehicles per 1,000 populations, the potential for vehicle ownership is still large (Investments, 2019).

Competitors

The tight competition in the Low Multi-Purpose Vehicle (LMPV) segment has made producers compete to be the best. But most recently, the competition converged to belong to the Toyota Avanza and Mitsubishi Xpander as the two best-selling LMPVs. The LMPV class is a favorite for consumers, because it can accommodate all family needs in activities. Therefore, other manufacturers also do not want to miss enlivening, such as the Honda Mobilio and Suzuki Ertiga. Nissan Livina and Chinese manufacturer Wuling with Confero.

Problem/Need Recoqnition

Market induced

Typically, the majority of Indonesian people is when a new product is launched, it did not take long for them to think of having. Having a new car seems to elevate their status in the public eye. Sometimes they do not see in terms of needs and only satisfy the appetite of consumers. They easily get their vehicles by means of installments.

New Stage in life

A new stage in life raises new ways to meet needs. Before marriage, people will choose small cars that can accommodate their mobility. There is no need to load many passengers but can be reached by their financial condition. For those who live in urban areas, they may prefer to use a motorbike because they can avoid severe congestion in Indonesia. But when people get married they start glancing at LMPV or MPV to accommodate family members or be used to support their business.

Information Search

Level of Risk

Before Mitsubishi manufacturers launched Xpander, the consumer stigma towards Mitsubishi vehicles was quite risky. From maintenance costs, which are relatively expensive, compared to competitors, the resale value has declined considerably. However, it seems that at this time consumer perceptions of the Mitsubishi brand began to change. This was demonstrated by consumer enthusiasm from when Xpander was launched. Xpander is considered to be a ‘game changer’, so the stigma about risk that was previously understandable.

Level of Product Knowledge

Using the internet is the fastest and most accurate way to get product information. Another way to go to automotive exhibitions is immediately see physical products. Alternatively, you can also go to the dealer to test the drive product. Prospective buyers are now very critical and they will compare all the advantages and disadvantages of the product with its competitors’ products.

3.3 Evaluation

List of evoked set and why

Customers evoked sets are the main competitors like Toyota, Honda, Suzuki and Nissan. This is all because all Japanese manufacture provides vehicles for all needs. Consumers end up with some evoked sets because many information channels can accessed as a comparison material, this will help consumers when making a purchase decision.

Compensatory and non compensatory rules

Potential buyers in Indonesia mostly use compensation rules when buying vehicles. Example: in addition to mobilizing activities, vehicles can converted to support business activities or become online taxis. This can provide benefit and compensation for the owner.

Evaluation criteria

The evaluation criteria includes a dimension or the specific attributes that are used in assessing alternative options, criteria alternative can appear in various forms, for example, in buying a car a consumer may consider the criteria, safety, comfort, price, brand, country of origin of the manufacturer and also the spec as prestige , happiness, pleasure and so on (Gerber & Bothma, 2008).

Purchase

Availability of products

The persistently high consumer interest in Xpander, of course, has an impact on the length of the pivot period for consumers. The high demand for Xpanden and the length of the queue, has made Mitsubishi increase its production capacity to 10,000 units per month by building new factories in Indonesia. So that customers can enjoy this variant within 1 month of ordering (Charm, 2019).

Retail factor

Mitsubishi’s big name is certainly often heard, especially in the automotive world. Mitsubishi often wins the world rally championship (WRC). Many models are a mainstay for the people of Indonesia. However, actually Mitsubishi is more known as a manufacturer of powerful cars. Some of the cars that are quite well known in the era are the Mitsubishi Lancer, Eterna, Galant, and Pajero, which are quite popular models in Indonesia (Mitsubishi, 2019).

Post purchase evaluation

Post purchase feeling

The customer experience after having xpader, most of them are very satisfied with the comfort and features that Mitsubishi attaches. When compared with competitors in the segment, Mitsubishi Xpander provides a very high standard and changed the game in low MPV segment. Complacency certainly perceived by the customer, because according to the expectations of what they expect (Gerber & Bothma, 2008).

Post Purchase Cognitive Dissonance.

When there are some people who feel that Xpander is not in line with expectations. He could sell his car, because the used car market for Xpander demand is still very high and this variant is still relatively new on the market (Gerber & Bothma, 2008).

Social Influence of buying behaviour

Family

The family is quite large influential factor in the purchase of vehicles, especially in the segment LMPV. Because most of them have considerable financial condition. So that the vehicle purchased must accommodate the needs of every member of the family, even for business. When going to buy a car they will exchange ideas on the desired car (Ahmed, Ameen, Shaikh & Memon, 2015).

Social class

Indonesians are greatly affected by the recognition of social status. They want to be seen by their community for their achievements. Vehicles can be used as a benchmark for their status, even if they get it in installments. But the car is their own pride (Shavitt, Jiang & Cho, 2016).

Psychological influences on Buying Behaviour

Motivation

Several aspects that motivate customers in choosing a vehicle are in terms of the delivery process, delivery time, negotiation process, dealer facilities, document/administrative handling, salespeople, and sales initiation. Mitsubishi in its press release said that since 2008, they revitalized passenger vehicles by making improvements and improving overall quality in all aspects starting from increasing product variants and quality, developing networks and dealer facilities, and the main ones, of course, followed by an increase in mindset and human resource capabilities. itself thoroughly (Durden, 2018) .

Perception

Customer perceptions of the Mitsubishi Xpander that are considered important and in accordance with customer expectations are robust engine performance, smooth car suspension, using environmentally friendly engines, adequate safety features,, high comfort features, comfortable acceleration, versatile family car that meets the needs of its users, and customers are satisfied with Mitsubishi Xpander products (Durden, 2018) .

Personal factor influences on buying behavior

Personality

The characteristics of Avanza owners are definitely family-oriented people, because this variant includes family cars. Then have a modern lifestyle, because of its futuristic design coupled with features with the latest technology. Love the high engine performance, because Mitsubishi is famous for its reliable engine power. The last is risk taking, negative stigma such as expensive maintenance costs, low resale prices that are not a barrier for people to choose Mitsubishi (Juneja, 2019).

Ages

The age range for this variant is in the age of 25-35 years. When someone starts a family and starts doing business. Especially for those who live in urban areas. They need a means of mobilization that suits their needs (Juneja, 2019).

Marketing Strategies Recommendations

Product

• Design is a very important factor, many prospective buyers choose Mitsubishi Xpander because it has a dashing and futuristic exterior design. Unique dynamic Shield design with no mainstream lighting layout.
• Field Cabin: With the largest dimensions, the Expander has the most spacious cabin, even the second row seats can be sliding sideways.
• Ground Clearance Height: Xpander is the highest in its class, which is 205 mm, moreover there is no axle bump at the bottom, making its cruising better than Avanza.

By presenting quality products that are very good, indirectly is a means of promoting the product itself. People are interested in buying Xpander because of the quality and performance that it has on the product (Mitsubishi, 2019).

Price

The price of Mitsubishi Xpander cars is able to compete and is in accordance with the ability of consumers to buy. Price conformity indicators with benefits according to consumers are appropriate for Mitsubishi Xpander products, this is due to the many latest features that are owned by Mitsubishi Xpander cars so consumers feel the price offered is in accordance with the benefits felt by consumers (Gerber & Bothma, 2008).

Place

In total there are approximately 320 motorcycle dealerships scattered across Indonesia. Prospective customers can easily visit Toyota showroom for purchase. Additionally Mitsubishi is also actively participates in the exhibition event held yearly regular vehicles such as Indonesian international motor show (Mitsubishi, 2019).

Promotion

The new campaign for Mitsubishi Xpander, starting with ad impressions on various national television channels and witnessed on the official Mitsubishi Motors Indonesia YouTube channel starting July 1, 2018. ‘Roadshow tons of real happiness’, is a form of unique and fun promotion in the form of an amusement park carnival. To show Xpander as the only full-featured Small MPV and a great power capable of bringing tons of happiness to Indonesian families (Mitsubishi, 2019)..

Conclusions

The discussion above is a bit much gives an overview of consumer behavior in Indonesia against the decision to buy a vehicle LMPV Mitsubishi Xpander. It also exposes the business strategies undertaken by Mitsubishi automotive manufacturer to the automotive industry in Indonesia. Proven Mitsubishi has managed to attract the attention of consumers, this is indicated with a huge enthusiasm and the very high demand from variant Xpander. Where this segment for more than 15 years ruled by the other Japanese manufacturers, namely Toyota. Mitsubishi managed to map the needs and desires of consumers in Indonesia. Xpander be the answer to the needs of the family, affordable transportation but has full features and exceptional comfort. So that a high level of customer satisfaction that can be beneficial for Mitsubishi to produce other new variants in the future.

Reference List

1. Ahmed, R., Ameen, N., Shaikh, E., & Memon, F. (2015). Influence of Children on Family Purchase Decisions (1st ed.). GRIN Verlag GmbH Cite this publication.
2. Carnews. (2017). All-New Mitsubishi Xpander Debuts In Indonesia. Retrieved from https://carnews.types-cars.com/2017/08/all-new-mitsubishi-xpander-debuts-in.html
3. Charm, N. (2019). Mitsubishi aims to build 120,000 Xpander MPVs this year to cut waiting list | BusinessWorld. Retrieved from https://www.bworldonline.com/mitsubishi-aims-to-build-120000-xpander-mpvs-this-year-to-cut-waiting-list/
4. Durden, O. (2018). Psychological Factors That Influence Consumer Buying Behavior. Retrieved from https://smallbusiness.chron.com/psychological-factors-influence-consumer-buying-behavior-80618.html
5. Gerber, K., & Bothma, N. (2008). Consumer behaviour. Cape Town: Pearson Education South Africa.
6. Indonesia Investments, I. (2019). Indonesia Has 100 Million Internet Users, Internet Penetration at 40% | Indonesia Investments. Retrieved from https://www.indonesia-investments.com/id/news/todays-headlines/indonesia-has-100-million-internet-users-internet-penetration-at-40/item6827?
7. Investments. (2019). Automotive Manufacturing Industry Indonesia – Car Sales | Indonesia Investments. Retrieved from https://www.indonesia-investments.com/business/industries-sectors/automotive-industry/item6047?
8. JakartaPost. (2018). Government praises Mitsubishi for exporting 21,000 Xpander vehicles. Retrieved from https://www.thejakartapost.com/news/2018/04/26/government-praises-mitsubishi-for-exporting-21000-xpander-vehicles.html
9. Juneja, P. (2019). Personal Factors affecting Consumer Behaviour. Retrieved from https://www.managementstudyguide.com/personal-factors-affecting-consumer-behaviour.htm
10. Mitsubishi. (2019). Mitsubishi – Homepage | Mitsubishi Motors Indonesia. Retrieved from https://www.mitsubishi-motors.co.id/
11. Ratriyana, I. (2018). Global Brand Perception in Indonesian Young Consumer. Kne Social Sciences, 3(10), 357. doi: 10.18502/kss.v3i10.2921
12. Shavitt, S., Jiang, D., & Cho, H. (2016). Stratification and segmentation: Social class in consumer behavior. Journal Of Consumer Psychology, 26(4), 583-593. doi: 10.1016/j.jcps.2016.08.005

Introduction

Consumer perception is known as a marketing concept, which includes the opinion that consumers have about products and the knowledge and understanding they have regarding these offerings (Izadi Manesh et al., 2015).

Consumer perception includes how consumers view different products and services provided. Several factors affect consumer perception such as advertising, personal experiences, reviews, social media and public relations. Businesses are successful when it is able to retain consumers who continue to purchase its products that helps the business to be profitable. Consumer behaviour is often influenced by consumer perception, which is why businesses consider it as something significant and hence spend a lot of resources to know about it more and use it to their advantage (Mahajan, 2018).

Chocolate is one product that people love and have not stopped buying despite the economic situation being difficult in the world. Chocolate industry continues to grow although there are more people who are health-conscious these days. In fact, most customers consider chocolate as their most craved food worldwide. Consumer preferences for chocolate are different in various parts of the world (Mitrovic, 2014).

For this research, a blind product taste test was conducted for a group of consumers in Fuvahmulah for three different chocolate brands that is Lindt, Mars, and Cadbury. The purpose of the study is to understand consumer perception of customers toward these chocolate brands. The aim is to understand why consumers have different preferences when eating chocolates and to see if assumptions made prior to the study is true or correct.

This report contains various parts. In the next section, the hypotheses formulated for the study will be explained. After that, the procedure used to carry out the study will be described. Later, findings from the study will be interpreted and analysed. Finally, the report will end with the conclusion, marketing implications and limitations of the research.

Procedure / Methodology

For the study, primary data collection method was used with a questionnaire. To conduct the blind taste test for three chocolate brands that is Lindt milk chocolate bar, Mars, and Cadbury dairy milk, a group of 10 participants from Fuvahmulah in Maldives were selected to take part in the study voluntarily. The participants included family members and friends, as they were accessible. The sample for the study consisted of five female consumers and five male consumers between the ages of 18-44 years old. Since the purpose was to understand the perception of these customers about the chocolates without seeing the brand, the chocolate names were not revealed to them at any point during the test while they were taking part in it. However, a chocolate number was given to each chocolate that represented a particular chocolate brand used in the study. To get better results, the participants were also blindfolded so that no participant could look at the chocolate secretly.

Before the taste test began, the procedure for the study was explained to all of the 10 participants once they were gathered around a table and seated. Once everyone was ready, each participant was asked individually to answer the first four questions in the questionnaire that was developed for the study. These questions were basic such as the gender, their age, their favourite chocolate name and the type of chocolate they prefer. After this was filled, they were asked to keep the questionnaire somewhere safe and close by to answer remaining questions in it.

After that, all participants were blindfolded one by one and once everyone was prepared, a single plate was kept on the table in front of each person with a piece of chocolate on it. The participants were told that the first piece of chocolate they taste would be named chocolate number 1 although it was really Lindt milk chocolate bar whose name was kept hidden from them. They were told that chocolate number 2 would be given the second time when in fact it was Mars. Finally in the final stage of the test, they were told that the last one was named chocolate number 3 although it was Cadbury dairy milk chocolate. The actual brand name was not revealed to participants at any time during the study. However, participants were asked to remember the chocolate number along with its taste to help themselves when filling out the questionnaire later.

Participants were asked not to give their opinions aloud during the test as it could affect the perception of others taking part in the study. Once the final stage of taste test was completed, participants were given back their questionnaire to answer remaining questions they had left out earlier and it was collected for analysis once done.

References

1. Izadi Manesh, F., Naami, A., & Hajipoor Shoshtari, A. (2015). Investigating the effect of CRM factors on consumer perception: Evidence from banking industry. Uncertain Supply Chain Management, 3(2), 117-122. https://doi.org/10.5267/j.uscm.2014.12.010
2. Mahajan, E. (2018). Consumer Preference and Perception Chocolates in North Karnataka. International Journal of Latest Technology in Engineering, Management & Applied Science, 7(3), 146-149.
3. Mitrovic, J. (2014). How different chocolate brands influence our chocolate perception and buying behavior? (Doctoral dissertation).

ABSTRACT

Lifestyle is an approach centered on way one leads life. Lifestyle is the way in which the people live, spend their time and money. Lifestyle of an individual is his way of expressing his feelings, attitudes, interests and opinions. The Lifestyle of individuals has always been of great interest to marketers. They deal with everyday behaviorally oriented facets of people as well as their feelings, attitudes, interests and opinion. A lifestyle marketing perspective recognizes that people sort themselves into groups on the basis of the things they like to do, how they like to spend their leisure time and how they choose to spend their disposable income. There is transition of positioning the products from functional attributes to featuring the product as representing a lifestyle. The research study aims to study the various lifestyle factors influencing purchasebehaviour and findings from this study will provide useful insights to enable marketers to understand lifestyle segments of youth in India.

Introduction to Lifestyle

Lifestyle is. the interests, opinions, behaviours, and. behavioural orientations of an individual, group or culture. The term “Lifestyle” was first introduced in 1929 by Austrian psychologist Alfred Adler in his book “The Case of Miss R”. Alfred explained the meaning of lifestyle as “a person’s basic character as established early in childhood”. The broader sense of lifestyle. as a “way or style. of living” has been documented. since 1961.The first to introduce the concept of lifestyle patterns and the potential of its relationship with marketing, was Lazer (1963) as credited by Plummer (1974). Lazer defines lifestyle “…a systems concept. It refers to the distinctive mode of living, in its aggregative or broadest sense….it embodies the patters that develop and emerge from the dynamics of living in a society.” The usage of the term ‘lifestyle’ has gained momentum since 1963 and various methods of determining lifestyle patterns and its relationship to consumer behavior. It has been used and developed in multiple facets of consumer behavior. The lifestyle concepts were related to interest of people have, how they spend their time and resources, and views they hold about themselves and other people (Kucukemiroglu, 1999).

Invariably it is necessary for the marketers to understand consumer lifestyle. With the frequent change and adoption of different lifestyles marketers continue to understand these changes to get closer to consumer insights. Lifestyle trends and pattern in India were way different when compared to pre and post liberalization. Indian consumers today have numerous choices, alternatives and are well informed and knowledgeable. Marketers are catering to their demands and today consumer is controlling market trends. Post liberalization, the high rate of industrialization, growth of service sector and better employment opportunities have increased the consumer’s disposable income, developed new lifestyles. Customers are accepting the global brands, trends and adopting global lifestyle gradually. There has been growing demand for multinational products/brands in all the categories of products in the last two decades.

Lifestyle in India is being increasingly used in various business sectors such as professional services, consultations, Retail, Apparels, FMCG, Credit card Users etc., India is fasting growing economies in Asia. In A brief report on Lifestyle Products in India, (2013), the Indian consumer today is not price sensitive and prefers a life full of luxury and comfort. The demand for luxury products is expanding its ambit from conspicuous-consumption consumers of the early years to the truly affluent households that wish to stand apart from the crowd. The report “A brief report on Lifestyle Products in India” (2013) indicates that India’s consumer class to grow nearly twenty-fold (from 50 million at present) to 583 million by 2025, with more than 23 million people likely to be listed among world’s wealthiest citizens. The increase in young working population especially the women and growing opportunities in service sector will be the growth drivers for luxury products. 60 percent of India’s population is below 30 years and the demand for lifestyle products among the youth will be growing rapidly.

Problem Statement

The lifestyles of the people who comprise each segment are an important consideration. The extent of their purchasing power and their decision making process in allocating their discretionary income are of paramount concern. Individuals associate themselves to different lifestyles to express themselves or their personality. It is important to study the lifestyle of Indian youth and how marketers can use lifestyle segmentation to strategies to reach out the consumer at the primitive level. Therefore, this study to understand lifestyles factors that influence the purchase decision and buying behavior of Indian youth.

Objective of the Study: To investigate the relationship of lifestyle and purchase decision of youth in India.

Review of Literature

Lazer (1963) was the first to introduce the concept of lifestyle patterns and the potential of its relationship with marketing. The same is been credited by Plummer (1974). Lazer defines lifestyle “…a systems concept. It refers to the distinctive mode of living, in its aggregative or broadest sense….it embodies the patters that develop and emerge from the dynamics of living in a society.” Joseph T. Plummer defines (Plummer J. , 1974) as a single system, Lifestyle can be differentiated into two concepts, one being the model of lifestyle and other being market segmentation, and that in order to understand lifestyle segmentation, every element in the system under investigation, such as activities, interests, opinions and demographic variables, can be used to understand the overall market. Harold W. Berkman and Christopher Gilson define lifestyle as “unified” patterns of behavior that determine and are determined by consumption. They referred the term “unified pattern of behavior” as behavior in broad sense.

The market segmentation based on Psychographics it’s a behavioral approach to market segmentation based on an analysis of what people activities, their buying behaviors, and the media exposure; also how they feel about life, based on attitudes, opinions, interests, and values. The psychographics concepts started with the classic study of buyers’ personality traits by Koponen (1960), which lead to several research attempting to correlate consumer behavior with standardized personality inventories (Wells, 1975).

Plummer, (1974) credits Lazer (1963) as first to introduce the concept of lifestyle pattern. Since 1963, methods of, measuring lifestyle pattern and their relationship to consumer behavior has been developed and refined. Lifestyle as used in lifestyle segmentation research measures people’s activities in terms of (1) how they spend their time; (2) their interests, what they place importance on in their immediate surroundings; (3) their opinion in terms of their view of themselves and the world around them; and (4) some basic characteristics such as their stage in life cycle, income, education, and where they live. The term lifestyle is used in literature in three different spellings (Veal, 1993) as mentioned in the research paper by A.J.Veal, it is presented as two separate works: life style, as a hyphenated word: life-style, and as one work: lifestyle. As per the Oxford English Dictionary the earliest use of the term ‘life-style’ was by Alfred Adler, the psychologist, who used it in the year 1929 to ‘denote a person’s basic character as established early in the childhood which governs his reactions and behaviour’.

Methodology of study

The study is descriptive in nature and the data is collected in Bengaluru. Bengaluru is the most heterogenic and cosmopolitan mix of people. The youth in Bengaluru represent people from all parts of the country and are a clear mix of people. Youth are defined as those aged 15-29 in the national youth policy 2014. This age of people constitutes 27.5% of India population. In 2011 census counted 563 million young people from 10 to 35yrs, according to the 12th five-year plan Vol II (2013). This study included Shopping Goods. All the products that consumers desire to compare the product features, price, brand and information about the product are included in shopping goods. In this study the shopping goods were categorized as electronic products, home décor, apparel, personal / beauty care, wellness, and healthcare products.

This research study adopted Survey Method for data collection. Sample collection technique adopted is multistage random sampling technique from 100 respondents. A structured and pre-tested questionnaire was adopted as tool of data collection. All the questions were closed ended and five point Likert scale was used to measure the degree of agreement (Strongly Agree, Agree, Neutral, Disagree, Strongly Disagree). The data collected and was tabulated for analysis. The statistical tools used for analyzing the data are Percentage analysis, correlation and factor analysis. This study includes both Primary and secondary data.The study included shopping goods (as defined in the conceptual definition). The questionnaire constituted of four sections, Part A consisted of questions based on demographic and personal data of respondents, Part B constituted the buying behavior for shopping goods, Part C constituted the questions related to youth lifestyle and last Part D consisted of statements related to lifestyle. The reliability of the scales was tested by calculating their coefficient alphas (Cronbach’s alphas) to determine the degree of internal consistency between the multiple measurements.The Cronbach alpha calculated for the study is was found to be 0.833 indicating reliability value. The finding obtained from the analysis is used to represent a conceptual model wherein the relationship among the variables is established.

Limitations and Scope of Study

The study was conducted in Bengaluru, hence cannot be generalized to other territories. The limitations of data collection for field survey is applicable to this study. The various data collected is subjected to the respondent biasness. The respondents included students, working professionals and housewife. A further detailed classification can be included for further studies. Considering the time and cost factor the study included only few shopping goods only. There is also a wide scope for conducting further research in the display of brands of shopping goods in rural and urban areas. The study was also limited to shopping goods, there is further scope of conducting similar studies for other types of products.

Data Analysis and Findings

To examine the appropriateness of factor analysis KMO measure of sampling adequacy is an indicator. The values between 0.5 and 1.0 indicate that factor analysis is appropriate. The values below 0.5 indicate that factor analysis would not be meaningful. It is clearly seen that Kaiser – Meyer – Olkin measure of sampling adequacy index is 0.723. And hence factor analysis is appropriate for the data collected for the study.

To study the factors influencing the lifestyle of youth factor analysis was used to identify the factors. With the Eigen value greater than one though Varimax rotation the principal component method of factor analysis was used. The result was obtained through rotated component matrix.

The total of 5 independent groups were extracted accounting to total of 76.93% of variations in the 27 lifestyle variables. The six factors constitute of 22.78%, 18.16%, 13.49%, 12.39% and 10.12% respectively.

Factor – I: It is inferred that out of 27 lifestyle variables, 7 variables have a relatively high tightly grouped factor loadings on Factor I and this factor is termed as “Brand Consciousness”. Factor II is formed with six variables is termed as “ProductCompetency Consciousness”. Factor III also includes six variables and is termed as “Product Facade Consciousness”. Factor IV is formed with three variables and is termed as “Price Consciousness”. Factor V is formed with five variables and is named as “Product Information Consciousness”.

Results and Discussions

The youth lifestyle and their buying behavior has been of great interest to the marketers to know and understand their consumers better and to get into their insight. The aim is always to build relationship to get closer to the consumers to understand them better and to influence their purchase decision. The way the product is placed and displayed plays an important role in decision making.

The changing consumer lifestyle and its influence on buying behavior, makes it important to marketers to understand these changes. Consumers exhibit their lifestyle by using the brands there are loyal. Building brand image would enable the marketers to want the consumer to associate their lifestyle to their brands. Consumer use brand image as a tool to display their lifestyle.

Price has been a crucial element when it is referred with purchase of shopping goods. Youth are exhibiting lifestyle of price consciousness. The demographic variables and lifestyle and their relationship enables the marketers to develop lifestyle products. Price being one of the 4Ps need to the positioned in the minds of consumers to enhance their lifestyle. Discount and offers attracts the youth and is one of the tool of promotion. The deep relationship between demographics and lifestyle variables helps the marketers to create apt consumer profile. All the other marketing strategies can be aligned to the consumer profile for effective targeting and positioning.

The consumers today are more curious to know about the product, with the help of internet huge data is available. It becomes important to the marketers to provide relevant information to the consumers to assist them to take decisions in their favor. The information gathering is part of the youth lifestyle to be updated and modernized. Thus it is important to understand that the factors influencing the lifestyle are relevant and has an influence on the purchase decisions.

Conclusion

Brand and product appearance has become part of the lifestyle of youth in India. It has become evident from the study that consumers are looking for the products that reflect their lifestyle. According to the study it can be concluded that consumer give importance to brand, product components, product price and product competency. The consumers are keen and take interest in gathering the information about the products that reflects their lifestyle. Lifestyle has become a means to express oneself.

References

1. Adnan, A., Ahmad, A., & Khan, M. N. (2016). ‘Examining the role of consumer lifestyles on ecological behavior among young Indian consumers. Young Consumers.
2. Atchariyachanvanich, K., & Okada, H. (2007, June). How Consumer Lifestyles Affect Purchasing Behavior: Evidence from Internet Shopping in Japan. Journal of Entrepreneurship Research, 2(2), 63-78.
3. Anitha, N., (2016). ‘ Influence of lifestyle on consumer decision making with special reference to organized retail formats in Chennai’. Indian Journal of Commerce & Management Studies. Volume VII (1)
4. Bennett, G., & Lachowetz, T. (2004). Marketing to Lifestyle: Action sports and generation Y. Sport Marketing Quarterly, 13, 239-243.
5. Berkman, H. W., & Gilson, C. (1986). Consumer Behavior, Concepts and Strategies (3 ed.). Boston: Kent Pub Co.
6. Brannon, E. L. (2005). Fashion Forecasting: Research, Analysis, and Presentation. New York: Fairchild.
7. Chernev, A., Hamilton, R., & Gal, D. (2011, May). Competing Consumer Indentity: Limits to Self-Expression and the Perils of Lifestyle Branding. Journal of Marketing, 66-82.
8. Christensen, P. (1997). Different Lifestyle and their impact on the Environment. Sustainable Development, 5, 30-35.
9. Copeland, M. T. (April 1923). Relation of Consumers’ Buying Habits to Marketing Methods. Harvard Business Review, 282-289.
10. Day, R. L. (1968, July). Preference Tests and the Management of Product Features. Journal of Marketing, 32, 24-29.
11. Domzal, T., & Unger, L. (1987). EMERGING POSITIONING STRATEGIES IN GLOBAL MARKETING. Journal of Consumer Marketing, 23-37.
12. Gordon R, F. (1980). The Logic of Price Decision‐Making. Management Decision, 18(5), 235-245. Retrieved from https://doi.org/10.1108/eb001243
13. Gunter, B., & Furnham, A. (1992). Consumer Profiles: An Introduction to Psychographics. London: Routledge.
14. Hawkins, D., Best, R., & Coney, K. (1986). Consumer behavior implications for marketing strategy. Texas: Texas Business Publications.
15. Henny, C., & Ozaki, R. (2004). Culture, Lifestyle and the meaning of a Dwelling. Adequate & Affordable Housing for All. Toronto.
16. Hsu, J. L., & Change, K.-M. (2008). Purchase of clothing and its linkage to family communication and lifestyles among young adults. Journal of Fashion Marketing and Management: An International Journal, 12(2), 147-163. Retrieved from https://doi.org/10.1108/13612020810874854
17. Joseph, S., & Singh, V. (2013). Changing Lifestyles Influencing Indian Consumers: Conceptualizing and Identifying Future Directions. Global Journal of Management and busines Studies, 3(8), 861-866.
18. Kavak, & Gumusluoglu. (2007). Segmenting Food Markets: the role of life style in understanding the buying intentions. International Journal of Marketing Research, 49, 71-94.
19. Kaynak, E., & Kara, A. (1996). Consumer life-style and ethnocentrism: a comparative study in Kyrgyzstan and Azarbaijan. 49th Esomar Congress Proceeding (pp. 577-96). Istanbul: Esomar Congress Proceeding.
20. Kotler, P. (1999). Marketing Management: Analysis, Planning, Implementation and COntrol. New Delhi: Prentice Hall if India Pvt.Ltd.,.
21. Kotler, P., & Amstrong, G. (2007). Principles of Marketing. NJ: Prentice Hall International, Englewood Cliffs.
22. Krishnan, J. (2011). Lifestyle – A Tool for Understanding Buyer Behavior. Int. Journal of Economics and Management, 5(1), 283-298.
23. Kucukemiroglu, O. (1997). Market segmentation by using consumer lifestyle dimensions and ethnocentrism. European Journal of Marketing, 470-487.
24. Kucukemiroglu, O. (1999). Market segmentation by using consumer lifestyle dimensions and ethnocentrism: an empirical study. European Journal of Marketing, 470-87.
25. Kumari, P. (2012, November). Changing Purchase Behavior of Indian Custormers. Arth Prabhand: A Journal of Economics and Management, 1(8).
26. Lazar, Anderson Thomas (1963). Lifestyle and Psychographics: a critical review and recommendation, Advances in Consumer Research, Vol. 11.
27. Ma, F. (2004). Lifestyle Segmentation of the Chinese Consumer. Sinomonitor International. China: World Asociation of Research Professionals.
28. Mitchell, A. (1983). The Nine American Lifestyles. New York: Macmillan Publishing Company.
29. Moore, C. M., & Birtwistle , G. (2004). The Burberry business model: creating an international luxury fashion brand. International Journal of Retail & Distribution Management, 412 – 422.
30. Mukherjee, A., Satija, D., Goyal, T. M., Mantrala, M. K., & Zou, S. (2012). Are Indian consumers brand conscious? Insights for global retailers. Asia Pacific Journal of Marketing and Logistics, 24(3), 482 – 499.
31. Plummer, J. (1974). The Concept Application of Life Style Segmentation. Journal of Marketing, 33-37.
32. Richard H, H. (1958). The Distinction between Convenience Goods, Shopping Goods, and Specialty Goods. Journal of Marketing, 23, 53-56. doi:10.2307/1248017
33. Sathish, S., & Rajamohan, A. (2012, October). Consumer Behaviour and Lifestyle Marketing. International Journal of Marketing, Financial Services & Management Research, 1(10).
34. Sett, R. K. (2012). Urbanized young Indians: are they goal oriented?: A scale‐validation study of the regulatory focus questionnaire in the Indian context. Asia Pacific Journal of Marketing and Logistics, 24(3), 500-514.
35. Shufeldt, L., Oates, B., & Vaught, B. (1998). Is lifestyle an important factor in the purchase of OTC drugs by the elderly? Journal of Consumer Marketing, 15(2), 111-124.
36. Sun, T., Horn, M., & Merritt, D. (2004). Values and lifestyles of individualists and collectivists: a study on Chinese, Japanese, British and US consumers. Journal of Consumer Marketing, 21(5), 318-331.
37. Wells, W., & Tigert, D. (1977). `Activities, interests, and opinions”. Journal of Advertising Research, 27-35.
38. Statistics, C. (2017). Youth in India. New Delhi: Ministry of Statistics and Programme Implementation, Government of India.
39. Veal, A. (1993). The concept of lifestyle: a review. Leisure Studies, 12(4), 233-252.

Meaning of Social Media Advertising

Social media platforms. Social networking websites

Social networking refers to the use of applications and websites to find people to establish communication with each other and build a good relationship with others. It enables the firm to directly communicate with its customers. People around the world can communicate in an informal manner, share ideas and interests among themselves. This strategy makes the consumers to feel better than the traditional methods of selling and advertising. Eg. Facebook, Telegram, LinkedIn, Skype are some of the social media platforms used by businesses to promote and sell their products.

Following are the social media platforms:

• Facebook is the largest social networking widely used. It is the first app to have surpassed the landmark of 1 billion users accounts. Apart from connecting with friends all over the world, one can also access different apps on Facebook to sell or buy products online, to market or promote a business, brand or any other products or services by using Facebook ads.
• Telegram is a site that is used for messaging and it is available in more than 8 languages. Telegram is focused on the privacy and security of the messages that are sent to others using its platform. Telegram can be used on multiple devices at the same time. The users of telegram can also send photos, videos, stickers, and audio of any type.
• LinkedIn: LinkedIn is one of the most popular professional social networking sites and it is available in 20 different languages. LinkedIn is used by most of professionals across the globe as it serves as an ideal platform to connect with different kinds of businesses; LinkedIn also helps companies to hire ideal candidates. It has around 400 million members and it revolves primarily around the B2B market. It is a site that is uniquely suited for social media marketing campaigns. LinkedIn has 3 types of ads i.e. sponsored content, sponsored in mail and text ads.
• Skype is an app which is specialized in providing video chat, voice calls between computers, tablets and mobile devices through the internet. Video conference calls can also be done by using Skype. Skype-to-Skype calls are free of charge whereas the calls made through mobile phones and telephones are charged through debit – based user account system called Skype credit.2.

Microblogging

In this type of social media a user can post or broadcast short messages, updates or news on social networking sites by the company or by entrepreneurs to other subscribers of the service all around the world. Blogs are Web pages developed by the company that contains information about the product & services and allow customers to view and share information to others. It allows the user to create some innovative online pages and share the contents using hashtags. Eg:- Twitter and tumbler

• Twitter has provided unparalleled access for users around the world to share short messages, posts, photos etc. It has also revolutionized breaking news to connect with both niche and mainstream influencers. It is a viable network for organic engagement, it helps to advertise and promote their product and service. There are no charges a company or a brand needs to pay in order to reach their followers. It enhances the value of the platform even when running paid ads.
• Tumbler has been owned by yahoo since 2013. These apps serve as social media cum microblogging platforms. This is used to find and follow things that people like. It moreover provides the flexibility to customize almost everything. It can be also used for posting any kind of news, lifestyles also include multi-media to a short-form blog.

Media sharing

Media sharing is publishing the user’s own digital photos & videos. This type of apps enables the user to share photos and videos with other users either publicly or privately. Media sharing services can help businesses to show their product and service to potential customers. It raises awareness of the company brand, builds closer relationships with the customer. Some people use media sharing just for their personal purpose while companies are also using the same as part of their marketing strategy. Showing people a picture or a photo or a video of the product or service will often be more powerful and appealing than writing about it. Eg:-Instagram, Snapchat, Pinterest, Youtube.

• Instagram was launched as a unique special networking platform that is completely based on sharing photos and videos. Sellers of the product who are able to incorporate visual media into their campaigns tend to perform best on this social media channel.
• Snapchat This is an app of an image messaging social platform that enables users to chat with friends by using pictures and posts. It also allows users to explore news and even check out the live stories that happening around the world.
• Pinterest is an American social media platform. Pinterest enables people to discover information of products or services by using images, videos, etc. As of August 2019, Pinterest had reached over 300 million users. Pinterest was launched on March 2009 and has over 1600 employees.
• YouTube is a platform where different kinds of videos in various languages can be shared. Companies can also upload their videos and can get feedback, likes, and dislikes for the video. People can also subscribe to the videos of brands or companies to be updated whenever a company comes out with a new ad of a product or feature. The headquarters of Youtube is located in San Bruno, California.

Blogging

Weblog shortened to a ‘blog’, is a Web page that contains dated posts, by one or multiple users often pertaining to a particular topic. Like most new innovations on Internet, many entrepreneurs saw a marketing potential in having a blog and blogging took off from there, but also, a blog can be a home business in and of itself. A blog features diary-type commentary and links to articles on other websites. Eg:- blogger, MySpace BloggerBlogger is a blog-publishing service that allows multi-user blogs with time-stamped entries. Google is hosting these blogs and they are generally accessed from a subdomain of Blogspot.com, MySpace

• MySpace is a social media website that is available in 14 different languages. It was founded on August 1st, 2004. The headquarters of MySpace is located in Beverly Hills, California. The largest social networking site from 2005 to 2008 was MySpace. MySpace helps users to interact with people around the globe.
• Blogs are web pages that are developed by companies and which contain information about the products and allow customers to view and share useful information to people around the world. Blogs have a positive impact as well as negative impacts which are doing the job of marketing: When consumers post their views, comments, and feedback through blogs it helps the businessman to understand their customers’ likes and dislikes regarding their product. And it also helps the companies to understand how they can improve their product which is a positive impact.

Crowdsourcing

This is a source that provides or obtains needed services, ideas or content by soliciting contributions from a large group of people, particularly those from the online community. It can be in the paid form or unpaid typically via the Internet. Crowdsourcing often leads to innovation, problem-solving, or efficiency. It is powered by new technologies, social media, and the Web. It can take place on many different levels and across various industries. For example, Designhill is one of the largest crowdsourcing websites that provide services to clients in the field of graphic designing. Clients can choose from the packages that the company provides to avail the services.

Reasons why Social Media Advertising is better than traditional advertising

1. Marketing ExpenseTraditional advertising is expensive (print, TV ads, etc). Companies have to frequently market for long periods of time and use prime space thereby rendering it very expensive for businesses with limited budgets. Social Media Marketing is more affordable. Companies can advertise and can test various campaigns with any sized budget.
2. FlexibilityIt’s hard to change traditional advertising. From a tactical perspective, you may still be in a contract to execute multiple advertisement insertions and can’t make changes without a penalty. From a creative standpoint, it takes longer and more money/time to change your messaging. Social media, and digital marketing in general, is much more flexible. Companies can change tactics, be more creative. Companies can edit, pause and generate new messages, even test variables on social media.
3. Generating a DialogTraditional Media is a one-way street. Companies do not get into a dialog with potential customers. There’s no chance for immediate contact through this advertising medium. Social Media Marketing, is just that: SOCIAL. It’s built for a two-way conversation. Marketers can engage in a dialog with customers online by hosting an online event. Queries of potential customers can be answered and this helps to generate business which is not possible in traditional mediums of print or tv advertisements.
4. Measurement & AnalyticsAttribution models have improved for ancient media, however, the action somebody took which may be directly attributed to ancient ads continues to be a bit fuzzy. And often the analytics and reporting are not in real-time or as detailed as needed to make strong business decisions. Reporting and analytics area unit vise on digital platforms and specifically Social Media Selling platforms like Facebook. Statistics are updated in real-time, with detailed information on actions taken down to specific ads and specific targets and companies can clearly see which ad messages or audiences are performing better.
5. Target AudienceTraditional media is still very wasteful. Marketers do their best to target their audience based on demographics, geographies, and listening, watching, or reading habits, but it’s still a pretty broad audience. They are often left communicating to groups who may never show any interest in their product or service. Audience targeting is wherever social media selling platforms like Facebook, LinkedIn, and Twitter extremely shine. Due to tools available online for segmenting and predicting a behavior pattern of customers who browse particular products online it provides businesses with the ability to build very specific messages or advertisements to target their potential consumers. In addition, marketers can segment audiences in order to serve each one the message that resonates most with them.

Advantages of Social Media Marketing

Following are the advantages of social media marketing.

• Builds brand credibility. Social media allows regular interaction between companies and customers. Constant interaction with customers enables a company to know about their problems and also devise suitable strategies to provide better services/products. This will help the company enhance its credibility in the market.
• Customer loyalty. To run any business nowadays one should have a strong customer loyalty base. People can address their problems through social media easily. By listening to customer opinions, customer satisfaction rises thus creating brand loyalty.
• Less Advertisement cost. The best way for a company to cut down marketing costs is to advertise online. By doing so saves on cost and also gives the marketer a wide reach. It only focuses on the key customers by narrowing down the target customer, thus avoiding wasteful expenditure.
• Large customer base. Almost half of the world’s population is on social media. A company can tap maximum target customers through social media itself if they use the right plans which can increase their sales thus increasing profits.

Disadvantages of Social Media Marketing

Following are the demerits of social media marketing.

• Clarity of Message The message a marketer wants to convey about its products and services has been clear and concise. The customers looking at it should be able to connect to it. If it is not the attractive audience will not pay attention as the internet is flooded with online advertisements.
• Negative Feedback It is possible to tarnish the image of business competitors who may engage in negative publicity on social media. News and messages spread like wildfire on social media and hence can ruin the reputation of a company within no time.
• Works only on a targeted segment of online users. A huge segment of customers is still not on social media. Hence a company has to marketer even in the traditional modes along with online marketing thereby not bringing down the cost of advertising.
• Trust, privacy, and security issues. This is one of the major hurdles when it comes to marketing through social media. Consumers are sometimes hesitant to shop online due to the increasing number of online frauds like hacking, phishing, etc most consumers prefer not to purchase products or transact online. Trust builds up when there are no security issues. At the same time, there are chances of leak of private information of the consumer which can hamper the buying process.

Pricing is an important aspect to market a product or service such that it reaches the maximum targeted customers as well as profits the organization to keep continuing its production. Being an integral part of marketing, it is critical to decide and come up with sound pricing strategies that “facilitates customer value creation, structure price decisions, and earn profit” (Kienzler and Kowalkowski, 2016). It drives the supply and demand of a product of service in the market or can be other way around, i.e. supply-demand will influence pricing. Many researches have established that demand is directly proportional to customer’s desire and thus, it is important to understand the psychology behind prices and sales. As a result, prices are often focused on cost-base or competition-base. There is a need to shift this to value-based pricing which considers how consumers perceive a product’s benefits in relation to price. Moreover, other aspects like numbers, colors, and other presentation factors also play an important role in how customers perceive a price. This paper summarizes various psychological aspects of pricing.

Pricing usually starts with setting up a calculated initial price by analyzing its break-even point while considering that the price corresponds to the value delivered to the customer. Although these numbers and values show how prices and profitability relate, it is still based on assumptions on how customers react to the product. The economic and psychological approaches to study consumer behavior cannot be perfectly logical and can differ from what was initially assumed. Hinterhuber (2015), in his research mentions that customers as well as managers violate principles of rational choice since no all customers check prices before purchases or not all pricings are shortsighted or based on market rates. As mentioned before, managers try to manipulate customers’ perspective to influence purchase decisions. Some customer perceptions assumed during pricing are discussed in this paper.

Features of Customer Perception of Pricing

The Price-Quality effect

Studies suggest that there is significant relationship between price and quality (price as an indicator of quality). Purchasing expensive products instills increased brain activity of pleasantness for picking better products, and thus, increase demand.

Adding Irrelevant Attributes

Managers often add irrelevant attributes to a product and increase price to give it a dramatic and meaningful differentiation from other products. Although customers realize that attributes associated with the brand or product do not have value, increase in price makes it relevant. For example, taurine is added with several energy drink brands like Red Bull, Monster and Rock Star as an evidence that it helps muscle function and aid athletic performance.

Framing

This concept is a method of changing context of price presentation without changing the price itself. It is based on the theory that when outcome is framed to be a gain relative to part or reference price, customers become risk-averse whereas, when framed as a loss, they become risk-seeking. A few ways this strategy is used includes framing savings as a free bonus pack or percentage price reduction.

The Price-Precision Effect

Precise prices increase sales by 0.6% since it increases the customer’s willingness to pay. Hence, even though the exact price would round off to a whole number, prices avoid the last digits to be zero.

Endings

When prices end with 9, they are read from left to right (lower digits read first), giving a perception of discount or less price and leading to increase in sales (Asamoah & Chovancová, 2011).

Sale Signs, Deal Obsession and ARPs

Presence of ‘Sale’ sign increases probability of purchase because of the feeling of getting a deal. It is for the same reason marketing something free or showing advertised reference prices (ARP) clouds customer judgement and induces willingness to pay.

Discount or Unit Representation Format, Color, Size

Studies suggest that representing discounts as a percentage for low-priced products and as a monetary savings for high-priced products increases perceived attractiveness of an offer. Moreover, attributes that involve numbers, like guarantee/warranty, when expressed as a higher digit (12 months instead of 1 year), increases willingness to pay. Prices in red are attractive to males. Lower sale prices in smaller fonts increases likelihood of purchase. Smaller price values include cents whereas expensive goods eliminate longer syllabic length.

Happily Paying More

Customers prefer paying flat-fee over variable billing. They also feel more satisfied to qualify for minimum purchase requirement and offered lower discounts over larger discounts without purchase requirements.

Price Partitioning

Partitioned prices with each attribute priced relative to its perceived benefit helps to underestimate the total price.

Scarcity, Decoy and Compromise Effect

If a product is perceived to be scares, it will be bought in higher quantities. When it is placed in market as either an intermediate option between the best and worst products, they are preferred through compromise effect. Decoy effect includes introducing an irrelevant option to make an unappealing option look more attractive.

Practical Application

The various findings of customer perceptions of pricing are the major reasons for a success or failure of product/service in the market. It is established that these perceptions can change, vary and be contrasting among different people and target segments. Hence, the findings can be used relative to target customers. Value-based pricing, which considers these researched psychological effects as well as information about customer perceived values can help to understand what pricing strategies would work on a product of service and provide maximum profits to the organization. (Kienzler, 2018) The various strategies listed in the paper helps with increasing sales through bulk purchases, attracting customers through visuals and discounts, providing anchoring and justified discounts or positive perception of increased price by relating it to quality or making them feel happy about paying more for convenience. Since they are all based on intangible and variable aspects of psychology, they need to be continuously studied and determined with changing trends, psychological studies as well as customer feedbacks to ensure pricing strategies are conveyed in favorable manner to the end users. Kienzler & Kowalkowski (2017), also summarize the need for continual behavioral and psychological research for the same.

Conclusion

Prices set the position of brand by setting different expectations among consumers which can attract, repel or target different segment altogether through tactics like quantity discounting. It is necessary to understand and use these tactics to ensure that products are marketed in the right manner with attractive prices.

Introduction:

Costco Wholesale Corporation is the largest membership warehouse club in the United States. Today, the firm has more than six hundred numbers of warehouses, with more than twenty areas of operations around the world, including the more than four hundred warehouses in the United States, and there were more than 70 million cardholders and the annual revenue reached at $105.2 billion (Costco Wholesale Corporation, 2014).

Costco is open only to members with either of these types of membership: Business, Gold Star (individual), and Executive membership which could lead to the purchase of product offerings and various consumer services such as auto and homeowner insurance, auto buying, mortgage, refinancing, boat and RV loans, identity protection, personal check printing, and business services at discounted price offers (Costco Wholesale Corporation, 2014).

Therefore, Costco enjoys the opportunity to generate higher margins, lower marketing costs and low over-head of private-label products (Peter and Olson, 2007). In other words, it is clear that the success of this firm lies in its ability to achieve a large scale leading to its competitive advantage and a high value for customers. For this reason, Costco must eventually have a substantial idea of consumer behavior as integrated into its marketing strategy. This is the most crucial idea that the work at hand, emphasizes, but prior to seeing the big picture about it, it is also important to learn the other significant things about Costco.

History:

Costco was originally operated under the name of Price Club in 1976. The firm is founded by James Sinegal and Jeffrey H. Brotman. In 1983, the first Costco warehouse was instituted in Seattle Washington. In 1993, Costco merged with Price Club, calling it PriceCostco, while dominantly employing the business model and size of Price Club, which generated billion dollar sales every year. However, Robert Price, the founder of Price club left PriceCostco and started Price Enterprises in 1994. This left Costco alone and led it to rebrand the firm as Costco Wholesale in 1997 including all those Price Club locations it had already established.

Costco is the second largest retailer in the US and the fifth largest retailer in the world (Said, 2013). Today, Costco is known for its ability to provide high value for customers, especially when it comes to its highly affordable and varied product offerings.

The company carries a “broad line of product categories including groceries, appliances, television and media, automotive supplies, toys, hardware, sporting goods, jewelry, cameras, books, housewares, apparel, health and beauty aids, tobacco, furniture, office supplies, and office equipment” (Sander & Bobo, 2011). Perhaps, one will call Costco a one-stop shop, with high affordability, enough to help the small to medium-sized businesses save on their purchases for them to be able to resell. However, Costco’s leading sales came from individual consumer, the firm’s ultimate growth driver (Sander & Bobo, 2011).

About the organization:

There are many things to understand about Costco, which primarily include its values, mission, vision and objective. However, aside from this, ideas concerning its current related-marketing moves, and SWOT and stakeholders analysis are also vital considerations in understanding this firm.

Values, mission, vision and objective:

Costco’s ability to acquire profits and offer prices is in line with ethics, which can be depicted in the following mission statement.

“Costco’s mission is to continually provide our members with quality goods and services at the lowest possible prices. In order to achieve our mission, we will conduct our business with the following Code of Ethics in mind: obey the law, take care of our members, take care of our employees and respect our vendors. If we do these four things throughout our organization, then we will realize our ultimate goal, which is to reward our shareholders – Costco Mission and Code of Ethics” (Farfan, 2014).

Costco saw the opportunity that when they keep costs down, they can pass the savings on to their members and when membership base is large enough leading to tremendous buying power, the result will be efficiency for the firm and the best possible prices for their customers (Costco Wholesale, 2014).

It is clear in the mission statement on Costco that the firm values how the idea of becoming responsible of the society, primarily to their stakeholders and how it would conduct itself before them. Costco is after of implementing rules and obeying them, while continuing provision of the kind of respect that their stakeholders deserve.

On the other hand, Costco’s mission elaborates how it is important for them to continuously provide high quality of goods and services even at a lower cost. Employing this leads Costco to obtain their goal of successfully rewarding their customers. In other words, Costco’s mission is integrated with its ultimate goal of enticing the actual need of their customers.

Current marketing:

According to Costco’s website, one can be a Gold Star Member, Business Member, or an Executive Member. Business membership and Gold Star membership both cost $55 while Executive membership costs $110. Costco wholesale mainly targeting and focusing more heavily on individual consumers who are willing to pay more for higher end quality products.

Costco entry is associated with higher grocery prices at incumbent retailers, and that effect is strongest in cities with small populations and high grocery store densities. This is consistent with the retailers competing with Costco along non-price dimensions such as product quality or the quality of the shopping experience. In addition, Costco has much power in cities with low populations and a large number of grocery stores per capita.

Price is assumed to be the most pivotal element in order for the exchange process to be initiated (Peter & Olson, 2007). Therefore, this leads to the idea that the actual pricing strategy is relevant to the link existing among price affect and cognition, price environment and price behavior. The actual current marketing of Costco without question is linked to the importance of pricing strategy.

Good quality merchandise at low prices is what Costco would want to offer to its customers in order to provide them the value and reward that they deserve. In order to make this happened, Costco ensures to acquire more members to widen its scale. When this scale is widened, as a wholesaler, Costco will also generate remarkable savings on costs from its prospective suppliers. This potential savings on costs, as stated in Costco’s vision and mission, will be rewarded to the members, allowing them to enjoy low prices on branded and high quality product offerings. The business model associated with Costco’s current marketing is simple, but since it is the first to initiate this in the industry, the firm remains to be the largest membership retailer in the US, which is due to its ability to acquire higher margins, lower marketing costs and low over-head of private-label products.

SWOT analysis:

Costco has many strengths, of which the strongest is their robust membership retention at 86%, with over 67 million cardholders worldwide. They have seen unyielding revenue and membership growth from year-to-year along with lower pricing than that of their competitors. Costco also has the lowest employee turnover rates in the industry, employees receive some of the highest paychecks and best medical insurance (Shields, A. 2012). Happy employees equate to a better and healthier environment for customers.

When it comes to weaknesses, Costco’s major issue is their lack of substantial warehouses to meet customer demand. This weakness forces many customers take a full day out of their busy lives to make the trip to Costco. The company has a relatively low urban presence, which produces this phenomenon. Furthermore, with little to no advertisements or promotional events the company does not promote themselves well to new or potential customers.

There are numerous opportunities Costco’s can look forward to. Costco’s low presence in evidently potential warehouse locations can lead to abundant opportunities for future growth. The company’s success in worldwide expansion will likely continue in future efforts. Moreover, the addition of an online membership option at a reduced price might greatly increase the company’s membership, while also helping to curb Amazon as a major threat.

Costco’s threats are retailers that provide on price and customer experience in the same as Costco. Indirectly Wal-Mart is Costco’s biggest threat, since they own Sam’s Club, which is a direct warehouse competitor. In fact, Apple products will soon be stocking the shelves at Sam’s Club, which could change the game for Costco (Shields, A. 2012). Amazon along with other online such sales organizations are threats to Costco as well. Although becoming a national supermarket is a lot of work it is still possible, so Costco must keep an eye out for threats from new organizations entering the field as well.

The 4 P’s of Costco:

In most price comparisons Costco is on the top for overall lowest price, they do this by “buying in huge quantity and never marking up any product more than 15 percent” (Logan & Beyman. 2013). Recently channel 5’s WPTV West Palm Beach decided to do a price comparison between Costco and its closest threat Sams Club; “The grand total was $262.05 for Costco; $274.31 cents for Sam’s Club” (Munro & Jackson, 2014). Costco does their best to keep the price low for their customers.

The promotions Costco endorses to its Costco club members are enumerable and enticing, but lacking when it comes to non-members of the club. Costco is “a store that never advertises, has no signs in its aisles, doesn’t bag what you purchase, and charges you a fee just to walk in the door” (Logan & Beyman, 2013). They have incredible weekly coupons and discounts on food, vitamins, jewelry, and travel among many other products and services.

The number of products carried by Costco is surprisingly small, most would be surprised to find that such a large warehouse has only about 4,000 SKU’s on their selves. In comparison to an average of 15,000 to 60,000 at most other supermarkets, Costco’s 4,000 is quite a low number. Another interesting aspect of Costco’s warehouse method is that almost all products stocked on their shelves can only be purchased in bulk.

Costco’s location placement is found in thickly settled areas with a specific demographic variation. Costco keeps its warehouse numbers low so there are only approximately 460 locations in the United States. Costco is the “largest warehouse chain in the world, with more than 600 locations and $93 billion in annual revenue” (Logan & Beyman, 2013). Costco’s worldwide locations include Mexico, Japan, United Kingdom, South Korea, Puerto Rico, Taiwan, Australia and Spain.

Stakeholder analysis:

Originally, Costco was open for small to medium enterprises because of its wholesale. However, individual customer is later part of its stakeholders. For this reason it would be safer to include the members, vendors and employees as Costco’s ultimate stakeholders. Below are the general stakeholders of Costco and their individual impact on Costco’s business. It was found that each of these stakeholders has an impact on Costco’s finance, organization, legislation and business as usual.

Impact on

Stakeholder group

Finance (gain/loss)

Organization

Legislation (planning)

Business as usual

Small to medium enterprises

√

√

√

√

Individual/loyal customers/members

√

√

√

√

Retailers

√

√

√

√

Government

√

√

√

Employees

√

√

√

√

Generally, the stakeholder groups can be categorized further as internal stakeholders and external stakeholders.

The small to medium enterprises, customers and members, retailers and employees are the internal stakeholders because of their direct impact on the organization, giving them higher power of influence in the organization, higher legitimacy and even a higher opportunity to ignite or demand action from the company.

The government on the other hand is the external stakeholder because of its indirect influence on the company. However, the government has a strong influence to demand action from the company when it comes to legal matters and socio-political concerns. There are other potential stakeholders of Costco that will have substantial influence, especially in the socio-political context. This might include the society as a whole, and the other organizations that try to protect the welfare of consumers or the people.

Below is the summary of the above points.

Internal Stakeholders

External Stakeholders

Enterprises (high power, strong influence)

Government (strong influence – urgency, legitimacy)

Customers/members (high power, strong influence – legitimacy)

Society (strong influence – legitimacy)

Retailers (high power, strong influence)

Other organizations (strong influence – legitimacy)

Employees (high legitimacy, strong urgency)

Marketing ideas:

The very basic ideas that are observed in Costco’s actual marketing activity are in line with the consideration of consumer costs and business costs. The actual marketing exchange is assumed to take its place when there is an important consideration between the consumer costs and business costs (Peter & Olson, 2007). Peter and Olson argued that marketing exchange will usually be the product of the interaction between consumer costs and business costs.

In the case of Costco, and particularly in its mission and ultimate goal and values for the customers, providing the lowest price for quality and branded products seems to be a way of ensuring the highest value satisfaction for the target market. This is a relevant competitive advantage of Costco.

Costco is trying to ensure overall cost leadership in the process, allowing customers to be enticed by its product offerings. In theoretical consideration, overall cost leadership is a source of competitive advantage for an organization (Porter, 1980). However, what is clear in the case of Costco with its low-price offerings is the consideration of value. A logical consumer based on the idea of Peter and Olson will find for a higher value, and a logical company will find for a higher profit. Costco, because of its scale will still ensure a higher profit margin, because of its ability to cut costs in its value chain.

Costco, captures price-sensitive consumers who are willing to drive longer distances to obtain offers and discounts. In this case, it is possible if the prices staty to rise at Costco they will start losing shoppers who are more price-sensitive and serve shoppers who are less price-sensitive. According to Ellickson(2004, 2007), large grocery chains compete on the basis of quality and variety, which requires substantial fixed investments in retail services.

Conclusion:

The work at hand just presented the important details on how exactly the pricing strategy of Costco provides the potential value of the customers and the significant value this has added to the target market. As found, customers are after of finding the right value for their money, which is a relevant factor that could ignite the actual exchange. On the other hand, an organization providing product offerings is looking forward to realize a profit, but in the case of Costco, providing low-cost offerings was made possible because of the firm’s large scale leading to its ability to generate higher margins, lower marketing costs and low over-head of private-label products.

References

1. Bauner, C., & Wang, E. (2014). Strategic Retailer Reactions to Wholesale Club Market Presence.
2. Costco Wholesale (2014). Why Become a Member. Retrieved from http://www.costco.com/membership-information.html
3. Costco Wholesale Corporation (2014). Company Profile. Retrieved from http://phx.corporate-ir.net/phoenix.zhtml?c=83830HYPERLINK ‘http://phx.corporate-ir.net/phoenix.zhtml?c=83830&p=irol-homeprofile’&HYPERLINK ‘http://phx.corporate-ir.net/phoenix.zhtml?c=83830&p=irol-homeprofile’p=irol-homeprofile
4. Farfan, B. (2014). Costco Wholesale Mission Statement – Profits and Prices Revolve Around Ethics. Retrieved from http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/Costco-Stores-Mission-Statement.htm
5. Peter, J. P., and Olson, J. C. (2007). Consumer Behavior & Marketing Strategy (7th Ed.). New York, NY: McGraw Hill.
6. Porter, M. E. (1980). Competitive Strategy. New York, NY: Free Press.
7. Said, S. (2013). The Top Ten Best Selling Magazines in the United States. Retrieved from http://www.therichest.com/business/the-top-ten-best-selling-magazines-in-the-united-states/
8. Sander, P., & Bobo, S. (2011). The 100 Best Aggressive Stocks You Can Buy 2012. Avon, MA: Adams Media.
9. Shields, A. 2012. Costco Remains the Wholesale King, but Is It an Ideal Investment?.
10. Minyanville media Inc. Retrieved from http://www.minyanville.com/business-news/markets/articles/Costco-Remains-the-Wholesale-King-But/11/12/2012/id/45776#ixzz30V3xNcST
11. Munro, D., & Jackson, Q. 2014. Costco vs. Sam’s Club: Which has the best prices?. MPTV West Palm Beach. Retrieved from http://www.wptv.com/money/consumer/costco-vs-sams-club-which-has-the-best-prices
12. Logan G., & Beyman M. 2013. Costco: Breaking all the retail rules. CNBC. Retrieved from http://www.cnbc.com/id/47175492

Abstract

Social media is growing in size continuously from its introduction, as well as the number of people using it increases – there has been an increase of 9% since last year. Several impacts on consumer behavior are thought to arise from social media advertising, for example, Duffett (2017) argues for increased attitudinal responses from frequent exposure to social media marketing communications, meanwhile Ioanăs & Stoica (2014) write about added influence on other buyers and an easy impact on attitude emerging from just a small amount of negative information. Both papers (Duffett, 2017; Ioanăs & Stoica 2014) agree that the biggest impact is done on younger consumers, thus this paper will aim to examine and evaluate the scale and reality of the impact on young consumer behavior from social media advertising. The intention of the two following literature’s review is to show a decisive outlook on social media advertising largely in relation to the aforementioned effects.

Keywords: Social media; advertising; attitude; consumers

In Duffett’s (2017) research paper, the key goal to was to access the impact of social media communications on teenager’s (later specified as generation Z) cognitive, affective and behavioral attitude components. The approach of the study was to supply self-administered questionnaires at various colleges and high schools, throughout a sample size of over 13,000 young minds, ranging from 13 years old to 18. This assumption of importance of adolescents for social media advertising is also seen in the results from Ioanăs & Stoica (2014) paper – after analyzing the collected data, the conclusion that was ultimately found was that most of consumers who buy online are indeed young. There are many variables that can affect the attitudes of consumers, therefore some things may vary, but in general, as mentioned in Duffett’s article, attitudes toward advertising is a frequently postulated theory that states positive attitudes toward advertising results in analogous attitudes toward the brands, which in turn have a favorable influence on purchase intention (MacKenzie et al., 1986; Bruner and Kumar, 2000). In this case, we can hypothesize that the behavioral impact of social media advertising will act in accordance to the purchase funnel model, consequently impacting the younger participants more than the older ones.

Literature review

To further drive the hypothesis, as quoted in Duffett’s (2017) article, it is apparent that more experienced teenagers had become accustomed to social media marketing communications because their higher attitude components were not as readily positively affected as those with less familiarity who were, therefore, found to be more susceptible in this study (Cox, 2010). Relating to these findings, it is fair to say that the impact on consumers behavior is likely to diminish over time compared with experience, therefore, in this age, where most people already have internet access, the younger consumers are the most relevant audience for social network advertising (SNA). This view is further strengthened in the study. Those young consumers who had used social media for 1 year or less exhibited the greatest positive behavioral attitudes toward SNA (Duffett, 2017).

Knowing that social media is growing disruptively, a few questions arise – what is the frequency of usage of social media and how does that impact the behavior of consumers in relation to advertising? According to Ioanăs & Stoica (2014) paper, majority of the respondents access social networks very often (53%) or often (29%). This shows that the abundant majority of social media users use it frequently, thus giving way to potentially large influences from social media advertising. Based on Duffett’s (2017) research, the teenagers who use social media more frequently than compared to others displayed the most favorable attitudinal responses to social media advertising. The most logical way to interpret these findings is to state that the most impacted by social media advertising group of consumers are young teenagers, who frequently and actively use social media.

Social media has a lot of direct and indirect interaction between consumers, so it likely is fair to assume that there must be an apparent influence on other consumers taking part. As quoted in Ioanăs & Stoica (2014) paper, Social media provides a new channel to acquire product information through peer communication (Kozinets, 1999). In this paper it is stated that one way consumers may change the purchasing behavior of others are through reviews of products or services used. According to Ioanăs & Stoica, a study of Deloitte Touche USA revealed that 62% of US consumers read consumer generated online reviews and 98% of them find these reviews reliable enough; 80% of these consumers said that reading these reviews has affected their buying intentions (Industry statistics). Referencing that data, we can see that impact could sway consumer behavior rather significantly, thus negative reviews may create a big impact on whether the consumer decides to buy an item or not. As mentioned in the article, previous research has indicated that even a small amount of negative information from a few postings can have substantial impacts on consumer attitudes (Schlosser, 2005).

Discussion

The authors of both papers (Ioanăs & Stoica, 2014; Duffett, 2017) came to similar conclusions, even though Duffett’s study was conducted only on generation Z participants whereas Ioanăs & Stoica research took a view at all age varieties. This could be because the conclusions are universally true or the limitations of the studies limited both to similar conclusions.

Limitations of the studies

Some of further limitations may have impacted the results of the studies. Both studies did not have a significant enough sample of participants from rural areas. Apart from focusing solely on generation Z, Duffett’s research did not consider the number of social media types and bunched them in together. In Ioanăs & Stoica paper, a limitation could also be the underrepresentation of men, since women accounted for 3 times more numerous responses compared to men.

Conclusions

The impact of social media advertising has clearly been demonstrated throughout the summary of previous research papers, presenting a decisive show of large impact for younger adolescent consumers, especially for those who use social media actively. In combination of both research papers, it is not wrong to suggest that the behavioral impact of social media advertising will act in accordance to the purchase funnel model, as particularly pointed out in his findings by Duffet (2017).

References

1. Elisabeta Ioanăs, Ivona Stoica, (2014). Social Media and its Impact on Consumers Behavior. International Journal of Economic Practices and Theories, Vol. 4, No. 2, 2014, Special issue on Marketing and Business Development, e-ISSN 2247–7225, 295-303.
2. Duffett, Rodney Graeme (2017). Influence of social media marketing communications on young consumers’ attitudes. Young Consumers, Vol. 18 Issue: 1, 19-39

Introduction

When an individual starts a business or is running a business, it becomes necessary for him to let people know about it. Promoting is essential to let others know about the business. Either offline or online, any sort of business needs customers to enjoy a healthy business turnaround. However, advertisement is the only way to reach customers. That’s why for a company, advertisement is essential. A business will be able to operate in a competitive setting, only if it advertises its products or services.

But why Shock Advertisement? One of the biggest challenges for brands is to gain public interest. Shock advertisement, using controversies and shocking images, continues to be a promotional tool currently used. ‘You can say the right things about your product and nobody’s going to listen. You have got to say it in a manner, you feel in your gut.’

We live in a world of images, and we are exposed to thousands every day. The majority of it comes from advertisements, and it would be logical to say that most of them go unnoticed. But the ones, which stay, are the shocking ones. These shocking images intended to influence customers by creating controversies and thus make a campaign.

Is Shock Advertisements a current trend?

No, this form of advertisement peaked back in the ’80s and ’90s, thanks to the United Colors of Benetton brand for producing the first advertising campaigns that talked publicly about problems such as STD prevention, racism, and Gulf War. These advertisements put forward the cruel aspects of reality, rather than representing an idealized way. And later were followed by many organizations to portray common social issues. Initially, such disturbing images were deterred by the common public and many complaints were filed. But the primary objective of such advertisements was fulfilled i.e. attract attention. This paid way for other businesses to advertise their brand more effectively.

Elements of Shocking Advertisements

Shock advertisements by definition is an advertisement type that deliberately violates the general personal ideas or social norms to attract attention and influence its viewers to re-think about it. Content in these ads ranges from disgusting images to religious taboos which are discussed below.

• Disgusting Images – Images which gives a strong feeling of dislike and gives a strong feeling of unpleasantness. References to death and decay, blood, disease.
• Sexual References – Promoting or portraying nudity or partial nudity.
• Profanity – Commonly known as curse words or swearing or irrelevant behavior.
• Vulgarity – The state of being vulgar concerning disrespectful acts by humans such as farting, liking.
• Impropriety – Improper character or behavior which violates social convention such as inappropriate dress or manner.
• Moral Offensiveness – In general, offending others in a way that provokes violence such as victim exploitation or putting children in a very provocative situation.
• Religious Taboos – Inappropriate use of religious symbols or rituals to provoke a particular religious group such as advertising Beef burger in India.

According to Dahl, Frankenberger, and Manchanda (2003), the below 7 components of Shocking Advertisements form a base for various researches and helps to analyze positive or negative customer views on shock ads.

Theoretical Approach

The concept of Shock Advertisement ranges from the primary objective of attracting an audience to the hidden agenda of creating awareness in society. Various researches have been conducted in the past to explore the effectiveness of Shock advertisement in social media and its effects on consumer buying behaviors.

Consumer buying behavior can be divided into positive and negative, based on their perspective on Shock Advertisements. According to Waller (2006), positive consumer behavior would encourage consumers to purchase the advertised brand and spread positive information about the brand. Whereas, negative consumer behavior would result in consumer’s resistance and negative publicity of the advertised brand. To understand the reasons for consumer buying behavior, according to Virvilaitė and Matulevičienė (2013), it becomes essential to evaluate various sociodemographic variables like age, gender, religiosity, and moral principles.

Influence on Age

Age plays a very crucial role in shaping consumer purchasing behavior and hence it becomes necessary to evaluate the influence of Shock advertisements on various age groups. According to Liu, Cheng, and Li (2009), younger consumer’s view on Shock Advertisement is more positive than older consumers. This was further confirmed by Prendergast and Hwa (2003), that younger consumer’s positive view on Shocking Advertisements will not impact their buying behavior of the advertised brand, whereas buying behavior of older consumers tend to switch to other brands and avoid any kind of association with the advertised brand. According to a survey by Worldometers, the median age in India is 27 years, which would motivate a marketer to focus these ads for younger consumers in India.

Influence on Gender

Shocking Advertisements have different influence on genders. Research conducted by Swani, Weinberger and Gulas (2013), points violation of social norms as a key factor behind the difference from a gender perspective. Female consumers view violent advertisements as a violation of social norms and hence develop a negative attitude towards the advertised brand. Whereas in the case of male consumers, their positive attitude towards Shock Advertisements is related to the perception of humor in humorous advertisements and greater violence. The difference in gender attitudes towards Shock Advertisement can be related to their biological differences as the majority of females being perceived as soft and emotional, whereas males being derived from such feelings generally. Marketers advertising such ads should focus their target audience before advertising their brand. Apart from biological difference for differences in gender perception about Shock Ads, according to Mahajan, Poddar, and J (2015) ads that depict gender-stereotypical also plays a great role in shaping consumer behavior and positive/negative view. Hence the choice of appeals and gender becomes very crucial in placing advertisements before customers.

Influence on Religiosity

Various studies have suggested that Religiosity plays a very vital role in shaping consumer behavior. Sabri (2012) investigated that more religious consumers tend not to acknowledge Shocking Advertisements and also advertised brand. This scenario is more profound in Muslim countries. Sabri’s (2012) research reveals that consumers in Morocco have feelings such as guilt, shame, and confusion when they view Shocking Advertisements. Such kinds of ads are viewed as a violation of their religious principals and associating with such advertised brands would be very inappropriate contrary to countries like France, where people are less religious and liberal. Sabri (2012) emphasizes that more religious people would develop a negative attitude towards Shock Advertisements, which would reflect in a negative impact on consumer buying behavior towards the advertised brand and vice versa. Such emotions can be related to personal, interpersonal and situational factors that are different in different countries. Thus, it brings in a challenge for brands to advertise their products keeping in mind the religiosity of a particular country. In a country like India, which comprises of multiple religions, brands should be even more clear with their prospective audience before advertising.

Influence on Moral Principals

Moral Principals play a key role in shaping consumers’ perception of Shock Advertisements. Individual morals are closely related to the morality levels in their country or culture. Sabri (2012) revealed that if the morality level in a particular country or culture is high, consumers will have a negative opinion of Shocking ads, which will have an adverse effect on their purchasing behavior. Not just the religiosity, but morals also impact the consumer’s positive or negative opinion of shocking ads, which constantly affects consumer buying behavior.

Need for the Study

With the rise of competition in the marketing world, business confronts difficulties from internal and external environment and to maximize their profits and create a brand name, use a variety of marketing strategies and gimmicks to attract existing and potential customers. To gain a competitive advantage, marketers need to focus their attention on product awareness. Product awareness is mostly dependent on the advertisement, be it emotional, humor or sexual.

This research tends to determine the effectiveness of Shocking Ads on purchasing behavior and which elements play a vital role in decision making and which elements play a lesser role. This will help market researchers, Companies, etc. to understand this relation, which in turn can help them focus and improve their brand by concentrating on the content of Shock Ads in the best possible way.

References

1. Dahl, D. W., Frankenberger, K. D., & Manchanda, R. V. (2003). Does it pay to shock? Reactions to shocking and nonshocking advertising content among university students. Journal of Advertising Research, 43(3), 268–280.
2. Waller, D. S. (2006). A Proposed Response Model for Controversial Advertising. Journal of Promotion Management, 11(2–3), 3–15.
3. Virvilaitė, R., & Matulevičienė, M. (2013). THE IMPACT OF SHOCKING ADVERTISING TO CONSUMER BUYING BEHAVIOR. ECONOMICS AND MANAGEMENT, 18(1).
4. Prendergast, G., & Hwa, H. C. (2003). An Asian perspective of offensive advertising on the web. International Journal of Advertising, 22(3), 393–411.
5. Liu F., Cheng H., Li J. (2009). Consumer responses to sex appeal advertising: a cross-cultural study, International Marketing Review, Vol. 26, No. 4-5, pp. 501-520
6. Mahajan, R., Poddar, A., & J, R. (2015). Effects of Sexual Advertising on Customer Buying Decisions. IOSR Journal of Business and ManagementVer. III, 17(7), 2319–7668.
7. Sabri, O. (2012). Preliminary investigation of the communication effects of “taboo” themes in advertising. European Journal of Marketing, 46(1), 215–236.
8. Sabri, O., & Obermiller, C. (2012). Consumer perception of taboo in ads. Journal of Business Research, 65(6), 869–873.
9. Swani, K., Weinberger, M. G., & Gulas, C. S. (2013). The impact of violent humor on advertising success: A gender perspective. Journal of Advertising, 42(4), 308–319.
10. https://www.worldometers.info/world-population/india-population/

In this assignment we will mainly talk about customer care in the hospitality and tourism industry, we have to analyze the needs and wants of both external and internal customers and we must also talk more about internal and external customers what they are all about, and what they are. We will also get to know more about what the moment of truth is in a business or organization, and also, we will explain the impact of service on customers, how customers should be treated, and what kind of service they deserve in an organization

Customer care in hospitality and tourism

Demonstrate an understanding of the scope of customer care, including customer segmentation within hospitality and tourism organization

Customer care is all about how well your customers are taken care of while they interact with your business, and customer segmentation is the practice of building a customer base into groups of individuals that are similar in specific ways relevant to marketing such as age, gender, interest, and spending habits. Market segmentation is the strategic tool to account for heterogeneity among tourists by grouping them into market segments which includes members similar to each other and other dismissal to members of other segments. Tourism market segmentation is also a strategic tool for getting a clear picture of diversity among tourists. Tourism researchers and the tourism industry use market segmentation information to study the opportunities for competitive advantage in the marketplace.

Analyze the needs and wants of both internal and external customers

An internal customer is someone who helps the organization serve the end customer, they are an internal part of the valve chain. As profit is the main motive of an organization, the organization needs to take care not only of the end customer but also of the people who are serving the end customer. Internal customers’ needs can be divided into two different forces, the motivational force which includes opportunity to grow, responsibility, recognition, and also opportunity for promotion and the hygiene force includes supervision, salary, status, pay, and benefits, and lastly relationship with co-workers. External customers are the people who pay for and use the product and service your company has to offer. The goals for your external customers can depend on the product or service such as positive reviews and otherwise supporting your company. An external customer is a person who purchases a company’s product or service but is not part of the organization. The external customers need to always get good service and always get treated fairly because they are the image of the company and the customer’s opinions matter.

Describe how customer information can be collected and used

Companies can capture data in many ways from many services. Customer information can be collected in three different ways firstly by asking the customer, secondly by indirectly tracking the customer and you can do by contacting the customer via telephone or by sending an email to the customers, and lastly by appealing to other sources of customer data on your own by making an order forms, warranty cards, customer rewards programmed, feedback cards, customer satisfaction, survey and also customer competitions. You can then use the information you have collected to see what your customers think about your organization, and what they did not like so you can try to change that and make your organization a better place and what they enjoyed so you can keep on serving the good things and try to deal with the negative also. Organizations need to listen to what your

Design a customer care program for a department in a hotel or travel agency that includes why customer care is important

Customer care is all about how well your customers are taken care of while they interact with you and your organization. Customer care is actually about caring for customers, you have to listen to their needs and find the right solution. Customer care also involves building emotional trust and a relationship between the organization and the customer so it is very important that a business takes care of its customers and always treats them equally and fairly, having a relationship with your customer is also a positive thing for your organization.

The chosen department of Hotel 224 is the Food and Beverage department. The food and beverage are the service of food made in the kitchen and drinks prepared in the bar for the guests. Therefore, the waiters and waitresses have to:

• Provide excellent wait service to ensure satisfaction
• Make menu recommendations
• Answer questions calmly and share additional information
• Be friendly to customers
• The uniform must always be clean
• Handle every situation professionally
• Serve the right food and drinks to customers
• Serve the guests in an accommodating manner

Explain the moment of truth

A moment of truth is usually defined as an instance where the customer and the organization meet one another in a manner that allows the customer to either form or change an impression about the organization. A moment of truth is simply any interaction during which a customer may form an impression of your product or brand. This impression is either positive or negative. A moment of truth is very important because it can either break or make the organization’s relationship with its customers. It is finding feasible actions to improve customers’ experience, it is learning about the critical points where a customer decides about the business and lastly moment of truth is critical as the determines a customer’s perception of and reaction to a brand. There are four different types of moments of truth firstly it’s the zero moment of truth, which is when a company recognizes a need and goes online to gather information regarding a potential purchase. Then we have the first moment of truth, this represents the a-ha moment when confronted with the products and related alternatives, assumed to be in real life. Thirdly we have the second moment of truth, this happens after the customer has bought and started using the brand or products, the resulting experience supports the pre-purchased promises, helping to build a relationship with the audience. And lastly, we have the third moment of truth, this is when the customers become true fans and give back to the brand with new content, word of mouth, reviews, and ratings.

Explain the impact of service on customers

Customer perspectives are defined in a way that customers usually view or feel about certain services and products. Bad customer service can have a very serious impact on the overall health of your business. In the short term, it can affect sales and in the long term it can affect your business in a myriad of ways for example, it can harm your brand, your reputation, and more. The number of reason why customer service is important in a business is because it correlates to revenue. Customer satisfaction does not just impact the business bottom line, it also impacts terms morale and retention rate. Business needs money to survive, to make money the business needs customers, ideally, these customers are happy, and they will then tell their friends about your business and keep coming back. By providing top-notch customer service businesses recoup customer acquisition costs and cultivate a loyal following that refers customers.

Conclusion

In conclusion, with the information mentioned above, it is obvious that customer care is an important factor in the hospitality and tourism industry, customer care is the tool that keeps the customers coming and coming in your business so it can be a success and we also learned about the moment of truth, what it is and how important it is on an organization.

Introduction:-

Consumers are moving outside the purchasing funnel— changing the way they research and buy your products. If your marketing hasn’t changed in response, it should, says a McKinsey study.

Every day, people form impressions of brands from touch points such as advertisements, news reports, conversations with family and friends, and product experiences. Unless consumers are actively shopping, much of that exposure appears wasted. But what happens when something triggers the impulse to buy? Those accumulated impressions then become crucial because they shape the initial consideration set: the small number of brands consumers regard at the outset as potential purchasing options.

The funnel analogy suggests that consumers systematically narrow the initial consideration set as they weigh options, make decisions, and buy products. Then, the postsale phase becomes a trial period determining consumer loyalty to brands and the likelihood of buying their products again. Marketers have been taught to “push” marketing toward consumers at each stage of the funnel process to influence their behavior. But our qualitative and quantitative research in the automobile, skin care, insurance, consumer electronics, and mobile-telecom industries shows that something quite different now occurs.

Step 1: Need Recognition

The business must know it needs a new product, whether from internal or external sources. The product may need to be reordered, or it may be a new item for the company.

Step 2: Specific Need

The right product is critical for the company. Some industries have standards to help determine specifications. Part numbers help identify these for some businesses. Other industries have no point of reference. The company may have ordered the product in the past. If not, then the business must specify the necessary product by using identifiers such as color or weight.

Step 3: Source Options

The business needs to determine where to obtain the product. The company might have an approved vendor list. If not, the business will need to search for a supplier using purchase orders or research a variety of other sources such as magazines, the Internet, or sales representatives. The company will qualify the suppliers to determine the best product for the business.

Step 4: Price and Terms

The business will investigate all relevant information to determine the best price and terms for the product. This will depend on whether the company needs commodities (readily available products) or specialized materials. Usually, the business will look into three suppliers before it makes a final decision.

Step 5: Purchase Order

The purchase order is used to buy materials between a buyer and seller. It specifically defines the price, specifications, and terms and conditions of the product or service and any additional obligations.

Step 6: Delivery

The purchase order must be delivered, usually by fax, mail, personally, email, or other electronic means. Sometimes the specific delivery method is specified in the purchasing documents. The recipient then acknowledges receipt of the purchase order. Both parties keep a copy on file.

Decision-making journey for the following products: (a) Luxury Watch (b) Breakfast Cereal (c) Protein Shake

At the time of purchasing these products, we follow these six steps which we explained above these steps are:

• Step 1: Need Recognition
• Step 2: Specific Need
• Step 3: Source Options
• Step 4: Price and Terms
• Step 5: Purchase Order
• Step 6: Delivery

Types of Consumer Decision Making

Consumers are faced with purchase decisions nearly every day. But not all decisions are treated the same. Some decisions are more complex than others and thus require more effort by the consumer. Other decisions are fairly routine and require little effort. For example, students give a lot more thought to buying a college education or a vacation trip than they do to buying cheese or car wash. In general, there are three types of consumer decision-making; routine decision making, limited decision making, and extensive decision making.

To purchase low-cost goods and services, the consumer typically applies routine decision-making, requiring little search and decision time. Consumers do not consider this type of purchase an important one and are not highly involved in it. Usually, buyer knows a few brands of products but stick with one.

To attract consumers who use routine decision-making, marketers must what characteristics consumers evaluate. For example, if some buyers choose whatever brand of bread or soda is cheapest, marketers may focus on setting a low price or offering frequent discounts.

Limited decision-making usually occurs when the consumer has a previous product

Factors That Affect the Consumer Buying Process

Consumers are different, the products that they buy are different, and the situations in which consumers make purchase decisions are different. Several factors affect the consumer buying process, including social factors, situational factors, personal factors, and psychological factor. Of these four influences, the social influence is the strongest. Marketers must understand the role played by the buyer’s culture, subculture, social class, reference groups, and family. Among these social influences, none is more important than family. Growing up in a society, a child learns basic values, perceptions wants, and behaviors from the family and other important institutions.

A person’s buying decisions are also influenced by personal characteristics that are unique to each individual, such as gender and personality. Physiological differences between men and women result in different needs, such as health and beauty products.

Conclusion:-

In the concluding lines, I would like to say that the Consumer decision-making process involves the consumers identifying their needs, gathering information, evaluating alternatives, and then making their buying decision. Consumer behavior may be determined by economic and psychological factors and are influenced by environmental factors like social and cultural values.

Consumer decision-making behavior is a complex procedure and involves everything starting from problem recognition to post-purchase activities. Decisions can be complex, comparing, evaluating, selecting as well and purchasing from a variety of products depending upon the opinion of a consumer over a particular product. This renders understanding and realizing the basic problem of the consumer decision-making process for marketers to make their products and services different from others in the marketplace.