Theories and relevant models about branding

Theories and relevant models about branding In this chapter, concepts, theories and relevant models about branding, brand perception and customer buying behaviour will be discussed in detail. An individual who buys products for personal use and not for manufacture or resale is said to be a consumer. A consumer is someone who can make the decision whether or not to purchase an item at the store, which can be influenced by marketing and advertisements. Each and every consumer is influenced by their own brand perception and buying decisions which depends on various number of factors. 2.2 Branding Brand is the image that consumers have in mind (Aaker, 1991). It is also the unique characteristics that have been developed all the time in order to differentiate actual products from the competitors (Murphy, 1990). In addition, The American Association defines a brand as a name, term, sign, symbol or design, or a combination of them intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. A brand is thus a product or service that adds dimensions that differentiate it in some way from other products or services designed to satisfy the same need. These differences may be functional, rational, or emotional or intangible related to what the brand represents. Brand concepts must address customer interests and lifestyles. Factors that affect its brand image and brand perception among marketing communication program that implementing to the public to create brand perception, brand characteristic, brand image and bran d equity. De Chernatony and McDonald (1992) define a brand as an identifiable product, service, person or place, augmented in such a way that the buyer or user perceives relevant, unique added values which match their needs most closely. There have been two basic values identified by de Chernatony (1999) that contribute towards the brand premium. One is the functional value such as the price, technology, design and store layout. This functional value is a distinct attribute that a customer adds to the brand and distinguishes the brand from the rest. The second form of added value comes from emotional value. This value is derived from notions like advertising, internal branding, translating the retail brand into consumer taste, and even the shopping experience itself at the retail outlet. 2.3 Brand Perception Perception is how we see ourselves and the world we live in. However, what ends up being stored inside us doesnt always get there in a direct manner. Often our mental makeup results from information that has been consciously or subconsciously filtered as we experience it, a process we refer to as a perceptual filter. To us this is our reality, though it does not mean it is an accurate reflection on what is real. Thus, perception is the way we filter stimuli (e.g., someone talking to us, reading a newspaper story) and then make sense out of it. Perception has several steps. Exposure sensing a stimuli (e.g. seeing an ad) Attention an effort to recognize the nature of a stimuli (e.g. recognizing it is an ad) Awareness assigning meaning to a stimuli (e.g., humorous ad for particular product) Retention adding the meaning to ones internal makeup (i.e., product has fun ads) Brand perception is consumers ability to identify the brand under different conditions, as reflected by their brand recognition or recall performance (Kotler Lane, 2006). Brand recall refers to consumers ability to retrieve the brand from the memory (Keller, 1993). According to the improvement of measurement for brand equity, consumer-based brand equity was described for four dimensions; brand awareness, brand association, perceived quality, and brand loyalty (Pappu, et al, 2005). Brand awareness was defined as the consumers ability to identify or recognize the brand (Rossiter and Percy, 1987). It refers to the strength of a brand presence in consumers minds. Brand awareness has several levels starting from the less recognition of the brand to dominance (Aaker, 1991). Perceived quality was evaluated and decided by consumers. Perceived quality is another valuation of brand to push the customer to buy products. Brand building has been around for centuries as a means to distinguish the goods of one producer from those of another. The earliest signs of branding in Europe were the medieval guilds requirement that craftspeople put trademarks on their products to protect themselves and consumers against inferior quality. In the fine arts, branding began with artists signing their works. Brands today play a number of important roles that improve consumers lives and enhance the financial value of firms (Kotler Lane, 2006). Brand awareness and brand perceived quality as the significant factors to create and maintain brand equity. There are positive relationship among brand awareness, perceive quality and brand equity (Aker, 1996, Buzzell Gate, 1987). The marketing program has effect to improve the perceive quality of brand for different customers. Brand perception is consumers ability to identify the brand under different conditions, as reflected by their brand recognition or recall performance (Kotler Lane, 2006). Brand recall refers to consumers ability to retrieve the brand from the memory (Keller, 1993). According to the improvement of measurement for brand equity, consumer-based brand equity was described for four dimensions; brand awareness, brand association, perceived quality, and brand loyalty (Pappu, et al, 2005). Brand awareness was defined as the consumers ability to identify or recognize the brand (Rossiter and Percy, 1987). It refers to the strength of a brand presence in consumers minds. Brand awareness has several levels starting from the less recognition of the brand to dominance (Aaker, 1991). Perceived quality was evaluated and decided by consumers. Perceived quality is another valuation of brand to push the customer to buy products. Brand building has been around for centuries as a means to distinguish the goods of one producer from those of another. The earliest signs of branding in Europe were the medieval guilds requirement that craftspeople put trademarks on their products to protect themselves and consumers against inferior quality. In the fine arts, branding began with artists signing their works. Brands today play a number of important roles that improve consumers lives and enhance the financial value of firms (Kotler Lane, 2006). Brand awareness and brand perceived quality as the significant factors to create and maintain brand equity. There are positive relationship among brand awareness, perceive quality and brand equity (Aker, 1996, Buzzell Gate,1987). The marketing program has effect to improve the perceive quality of brand for different customers. 2.4 Brand Equity Source: Aaker, 1991 Brand equity is the added value endowed to products and services. Aaker (1991) defined the brand equity as a set of brand assts and liabilities linked to brand that adds or detracts the product or service value based on the customers perspectives. This value may be reflected in how consumers think, feel and act with respect to the brand that consumers had perceive from marketing programs. Brand equity is an important intangible asset that has psychological and financial value to the firm. The value of brand equity depends on the number of same people who buy regularly (Aaker, 1996). The brand loyalty, brand awareness, and brand perceived quality are necessary to maintain the brand equity (Motameni Shahrokhi, 1998). There are two different perspectives of brand equity; financial and customer based. The first perspective evaluates the asset value of a brand name that creates to the business (Farquhar et al, 1991). Brand equity increased the discounted future cash flows and revenue comparing to the same product did not have the brand name (Motameni Shahrkhi, 1998). According to the second perspective, the premise of customer-based brand equity models is that the power of brand lies in what customers have responded, seen, read, heard, learned, thought and felt about the brand over time. In other words, the power of brand lies in the minds of existing or potential customers and what they have experienced directly and indirectly about the brand. The customer-based brand equity finally drives the financial return to the company (Lassar et al, 1995). The valuation of brand has been studied for different approaches, for example, marketing, premium pricing market value, customer factors, replacement cost perspective. According to the valuation based on consumer factors, the measurement of customers preference and attitude can be used to evaluate the brand equity (Aaker, 1991 and Kapferer, 1992). 2.5 Marketing Communication The marketing communication is considered as the strategic activities for brand managers to build and maintain the brand image of targeted customers (Duncan Mulhern, 2004). It is a significant driver of competitive advantage to create the ability of companies to attract, retain, and leverage customers (Kitchen, Joanne, Tao, 2004). Duncan (2002) explained that marketing communication is a process for managing the customer relationship that affects brand value lastly. Marketing communication programs are not only above the line activities such as advertising and sales promotions but also below the line activities such as public relations. Regarding recent concept of marketing communication, two-way communication as well as one way communication is a key determinant of brand strategies to stimulus the brand orientation process (Aaker, 1996 and Urde, 1994). 2.6 Consumer Behaviour Schiffinan and Kanuk (2004) define Consumer Behaviour as the behaviour that customers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. Consumer buying behaviour incorporates the acts of individuals directly involved in obtaining, using and disposing of economic goods and services including the decision process that precede and determine these acts (Huctings 1995). image0.jpg Source: (http://www.dummies.com/how-to/content/consumer-behavior-for-dummies-cheat-sheet.html, accessed on 20 /10/10 at 8.40pm) Lamb, Hair and McDartiel (1992) note that consumer behaviour is a study of the processes the consumer uses to make purchase decisions as well as the use and disposal of the purchased goods and services. It also includes the analysis of factors that influences purchase decisions and goods usage. Further more consumer behaviour is a process and purchase is only one step in that process. Santon,Etzel and Walker (1994) states that consumers are complex in nature and keep changing constantly. So it is a must for the marketers to constantly improve their understanding of consumers and understand what influences the needs of the consumers. In short, the understanding of the buying behavior of existing and potential customers is imperative for marketers (Lancaster 1998). It is also needed for the competitive survival. When the consumer is viewed in the proper perspective, the outcomes could be quite positive for the manufacturer. Lamb,Hair and McDaniel (1992),claim that the knowledge of consumer behavior reduces uncertainty when creating the marketing mix. The field of customer behavior covers a lot of ground: It is the study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires (Michael, 2003). Earlier, the field was referred to as buyer behavior, which emphasized o n interaction between consumers and producers at the time of purchase. Now marketers feel that consumer behavior is not merely a consumer handing over money in return for a service or good, but it is an ongoing process. The exchange of a transaction in which two or more organizations or people give and receive something of value is an integral part of marketing. 2.7 Consumer Decision Making Mahatoo (1985) defines Consumer Behavior decision making process consisting of a number of steps that begin before the purchase and reaches beyond the buying act. He suggests that marketers have to go beyond the various influences on buyers and develop an understanding of how consumers actually make their buying decisions .The ability to create a good service and to persuade the market to buy this offering instead of its competitors offering depends upon the insight into the consumer purchase decision on the understanding of how the target customers arrive at their purchase decisions. Price is one of the dominating factors when it comes to making a purchase decision. It generally plays a vital role in determining consumers brand choice while selecting a product. Consumers look into the price while taking a buying decision and check whether it is within their affordable limits. This helps them to maximize their immediate utility that they gain from the purchase. The consumers give relative importance to both price and quality, so while choosing a brand they make a choice consistent with the relative importance attached to both attributes (Nor Khasimah Alimana and Md Nor Othman, 2007). It is also known that consumers look upon the additional services and freebies which come along with the product rather than looking on the price factor. Customers were believed to put different weights on every factor when it comes to the evaluation process. Analysis shows that customers who had experienced bad customer service tend to consider more thoroughly all aspects of the serv ice when it comes to choice of product (Tor W. Andreassen and Line L. Olsen, 2008).   According to Kotler (2003), there are five roles people play during a purchase. They are Initiator: It is the person who gives the idea of buying the product or service. Influencer: It is the person who reviews or influences the decision. Decider: It is the person who makes the buying decision: what to buy, how to buy, when to buy and where to buy. Buyer: It is the person who actually makes the purchase. User: It is the person who consumes or uses the product or service. 2.8 Buying Behavior Buying behavior is a process in which consumers decide and act accordingly to buy certain products for their use. There are certain aspects which we need to understand. Why do consumers buy what they buy? What are the key factors for influencing consumers to buy the products? What are the changing trends in the society? Consumer buying behavior refers to what consumers buy at a certain point of time which involves their decision making. So it is important for any firm to keenly analyze on consumer buying behaviors as it has a great impact on the firms marketing strategy. It also plays a key role in the success of the firm. It is important for any firm to create a marketing mix that satisfies the customers. 2.9 Types of Consumer Buying Behavior There are few types of buying behaviors based on the type of products which needs to be purchased. Complex buying behavior is where an individual seeks lot of information about a high value branded product before purchasing it. Habitual buying behavior is where the individual buys the product out of habit. Variety seeking buying behavior is where the individual likes to shop around and experiment different products. Consumer buying behavior is determined by level of involvement in the purchase decision (Renjith, June 2004). According to Mahatoo (1985), the nature of the decision process varies depending upon the product and the consumer. The marketers need to determine the kind of decision making behavior that is involved with the particular product in order to understand the behavior of the consumer. Howard (1989) classifies consumer buying decision into three broad categories: Routine Response Programmed Behavior- A consumer generally uses a routine response behavior while frequently buying the low cost goods or services. These goods and services can be called low involvement products as the consumer spends little time on decision making and purchases easily. The consumer is familiar with different brands in this product category, but usually sticks on to one brand. The consumer usually skips many steps in the decision process as he buys the product out of habit. Limited Decision Making Buying product occasionally. When you need to obtain information about an unfamiliar brand in a product category. Requires a moderate amount of time for information gathering as it is compared with various brands. Acquiring information about an unfamiliar product category is called as limited decision making. Examples: books, clothes and cosmetics. Extensive Decision Making Consumers usually spend much time on extensive decision making with high involvement when they purchase an unfamiliar expensive product. This is the most complex type of consumer decision making as the consumers need a great deal of information to compare it with its alternate brands. Examples: cars, computers. Complex buying behavior involves three steps: The consumer develops belief about the product. The consumer develops attitude about the product. The consumer makes a thoughtful choice. Consumers usually engage in complex buying behavior when they are highly involved in a purchase, which usually happens when the product is expensive, risky, and highly self expressive. Many products do not carry features unless the buyer does some research. The marketer of a high involvement product must understand consumers information- gathering and evaluation process. According to this the marketer needs to develop strategies which will assess the buyer in learning about the products attributes and their importance. The marketer also needs to differentiate the brand features, motivate store keepers, and use proper print media to describe the brand and the buyers interaction to influence the brand choice. Dissonance-Reducing buyer behaviour According to Herbert (1965), the consumer sometimes gets highly involved in a purchase but see little differences in brands. The high involvement is due to the fact that the purchase is expensive, infrequent and risky. For this type of purchase the consumer will shop around to learn more about the product but purchase it quickly responding to the primary factors like price or convenience. After the purchase, the consumer might experience dissonance by hearing favourable things about other brands or noticing certain disquieting features. Now the consumer will alert the informants who support his or her decisions. For example, here, the consumer acted first then acquired new beliefs and ended up with a set of attitudes. Marketing communication should supply beliefs and evaluations that help the customer feel good about the brand of his choice. Variety-Seeking Buying Behaviour Henry (1987) states that some buying situations are characterised by low involvement but significant brand differences. Usually consumers do lot of brand switching. Take for example, cookies. The consumer has some knowledge about cookies, chooses them without much evaluation and evaluates the product during consumption. But next time the consumer may reach for another brand according to his taste. Brand switching occurs for the sake of variety rather than dissatisfaction. 3.10 Buying Decision Process The consumers engage in a decision process to deal with the marketing environment and make purchases. The consumer goes through a series of logical stages to arrive at the decision when he faces a problem which could be resolved through a purchase. A typical buying process consists of five stages. (Micheal and Elnora, 2000). 2.10.1 Problem Recognition The purchase process starts where the buyer recognises a problem or need. The need maybe triggered by internal or external stimuli. Marketers need to identify the circumstances that trigger a particular need (Micheal, 2003). People have unsatisfied needs and wants that create tension or discomfort, which can be satisfied by acquiring and consuming goods and services. Hence, the process of deciding what to buy begins when there is a need and it can be satisfied through consumption. Mahatoo (1985), states that when the consumer becomes aware of a discrepancy between the existing state and a desired state, a need is aroused. The existing state is the total situation of a consumer, the current needs, attitudes, motives. The desired state is the situation after the kinds of changes the consumer wishes. Both these states are the functions of consumers motivation, personality and past experience of cultural and social influences. Evans and Burman (1984), defines a stimulus as a cure intended to motivate a person to act. It can be social, commercial or non commercial. Need recognition shows a persons readiness to act by becoming aware of a need but does not guarantee that the decision making process will continue. Kotler (2003), suggests that by gathering information from a number of consumers marketers can identify the most frequent stimuli that triggers an interest in a product category, thereby developing marketing strategies that would create a spark in consumers interest. 2.10.2 Information Search When a consumer needs to gain knowledge about a product or service, he or she would be aroused to search for more information in the product category. Consumer information sources fall under four groups: Personal sources: Family, friends, neighbours Commercial sources: Advertising, sales person, dealers, display boards Public sources: Mass media, consumer-rating organizations Experimental sources: Handling, examining, using the product. The relative amount and influences of these information sources vary with product category and consumer characteristics (Peter, Daniel and Nancy, 1986). Customer decisions are based on a combination of past experiences and marketing information. Past experience is considered as an internal source of information. Greater the past experience, lesser the external information the consumer is likely to seek to make a decision. Baker (2000), states that if there is a sufficiently high level of involvement with the problem, the consumers are likely to engage in a complex and extensive information search. If the involvement level is low, they are likely to use a very simple information search. Kotler (2003), states that by gathering information the consumer learns about competing brands and their features. There will be lot of brands available to the consumer in a product category, in which only a few brands the consumer would be aware of (awareness set). Among these brands, few brands will meet consumers initial buying criteria (consideration set). As the consumer gathers more information only a few brands would remain (choice set). All the brands in the choice set might be acceptable. 2.10.3 Evaluation of Alternatives There is no single evaluation process used by all customers or by one customer in all buying situations. The consumers view each product as a bundle of attributes with varying abilities of delivering the benefits needed to satisfy them. The attributes of interest to buyers vary by product. Consumers will pay most attention to attributes that deliver benefits (Mary, James and John, 1997). Once a choice set has been identified, the consumer evaluates them before making a decision. The evaluation involves establishing some criteria against which each alternative is compared. The criteria that consumers use in the evaluation results from their past experience and feelings towards various brands as well as the opinions of family, friends, etc. (Stanton, Etzel and Walker, 1994). The product related attributes such as quality, durability, price, design, etc. Influence the buying decision of a consumer. A way to narrow down the products in the choice set is to pick an attribute and then excl ude all products in the set that does not possess that attribute (Lamb and McDaniel, 1992). Thus the choice which possesses all the required product related attributes can be selected. 2.10.4 Purchase Decision From the evaluation process discussed about, consumer will reach their final purchase decision which is made up of five purchase sub decisions: Brand decision, Vendor decision, Quantity decision, Timing decision and Payment method decision (Joseph and Howard, 1987). After evaluation, the first thing in mind would be to purchase the product or not. If the decision is to buy, a series of related decisions must be made regarding the features, where and when to make the actual transaction, how to take delivery, a mode of payment and other issues. So a decision to purchase starts an entirely new series of decisions that may be time consuming and difficult. Selecting a source from which a purchase can be made is also a buying decision (Stanton, Etzel and Walker, 1994). A consumers decision to modify, postpone or avoid a purchase decision is heavily influenced by risk. The amount of risk varies with the extent of money at stake, the amount of attribute uncertainty and amount of self confide nce. Marketers must understand the factors that create a feeling of risk in the consumer, thereby providing information and support to reduce the risk (Kotler, 2003). 2.10.5 Post Purchase Behaviour Every customer after buying a product will experience either satisfaction or dissatisfaction. Hence the marketers job does not end when the product is bought; it must be monitored for post purchase satisfaction and post purchase actions. A very important stage of the consumers decision is the impact of current decisions on the future purchasing behaviour. Mahatoo (1985) says that three general outcomes are possible. They are: 2.10.5.1 Satisfaction Satisfaction occurs when a product performs according to expectations. The brand chosen has served to fulfil the customers needs and thus reinforces the response of purchasing the brand, which also means that beliefs and attributes about the brand are positively influenced and the likelihood of repurchase is increased. 2.10.5.2 Dissatisfaction Dissatisfaction occurs in the reverse situation, when the products performance is not up to the expectation it leads to negative belief and attributes about the brand. A dissatisfied customer is not likely to recommend the product to others. The results of satisfaction and dissatisfaction are recorded in long term memory and become inputs to the internal search of the firm. So the marketers must be careful in satisfying the needs and expectations of the customers. 2.10.5.3 Cognitive Dissonance: Cognitive dissonance occurs when the consumer experiences a feeling of doubt or psychological discomfort about the choice made. It is often felt right after the purchase when the consumer begins to have second thoughts about the product chosen. Dissonance is more likely to occur in complex decision making with high involvement purchases. Dissonance can come from a personal source from advertisement or from experience with the product. Post purchase evaluation is important to marketers because positive evaluation increases the probability of repeat purchases and brand loyalty. Negative or doubtful thoughts increase the probability that different alternatives will be considered next time when the need arises (Husted, Varble and Lowry, 1989). 2.11 Factors influencing the behaviour of buyers http://www.ac.wwu.edu/~market/380dir/cbinfluence.jpg Source: (http://blog.oneshotmarketing.com/2010/08/consumer-buying-behavior-the-laws-of-attraction/ accessed on 20/10/10 at 9.15pm) Consumer behaviour is affected by many uncontrollable factors. Culture is one of the factors that influence behaviour. Culture can be defined as our attitudes and beliefs. It is developed along with age in the society. For an individual growing up, a child is influenced by their parents, brothers and sisters. They learn about their religion and culture which helps them to develop opinions, attitudes and beliefs (Richard, 1976). These factors will influence a buying behaviour of the consumer, other factors like friends or people they look up may also influence their choices of purchasing a particular product. Culture is the most basic cause of a persons wants and behaviour.   Culture is learned from family, church, school, peers, colleagues. It reflects basic values, perceptions, wants, and behaviours. Cultural shifts create opportunities for new products or may otherwise influence consumer behaviour. Peoples social status plays an important role in the consumer buying behaviour. Social class distinctions allow companies to position their products to appeal to certain social classes. The easiest example is automobiles. Marketing for Mercedes Benz is completely different from the marketing campaign from Honda or Toyota because they target individuals from the upper class. Another powerful and easy factor that companies manipulate in their marketing efforts is the social factor. To be part of a group, or represent a certain lifestyle, you must have certain possessions. Personal and Psychological factors are very specific realms and the target market segment becomes even smaller. That means even less amount of people can use these products. This reflects in higher prices to account for the decrease in volume 2.12 Models of Consumer Behaviour The various models of consumer behaviour as per (Ramasamy and Namakumari, 1990) are stated as follows 2.12.1 The Economic Model According to the economic model of buyer behaviour, the buyer is a rational man and his buying decisions are totally governed by the concept of utility. If the customer has certain amount of purchasing power, a set of needs to be met and a set of products in a very rational manner with the intentions of maximising the utility or benefits. 2.12.2 The Learning Model According to the learning model, buying behaviour can be influenced by manipulating the drivers, stimuli and responses of the buyers. The model rests on mans ability at learning, forgetting and discriminating. 2.12.3 The Psychoanalytical Model According to this model the individual consumer has a complex set of deep stated motives that drive him towards certain buying decisions. The buyer has a private world with all his hidden fears, suppressed desires and totally subjective longings. His buying action can be influenced by appealing to these desires and longings. 2.12.4 The Sociological Model According to the sociological model, the individual buyer is influenced by society, by inmate groups as well as social classes. His buying decisions are not totally governed by utility, he has a desire to emulate, follow, and fit in with his immediate environment. Several of his buying decisions may be governed by societal compulsions. 2.12.5 The Nicosia Model Efforts have been made by marketing scholars to build buyer behaviour models from the marketing mans point of view. The Nicosia model and the Howard and Sheth model are two important models. Both of them belong to the category called the systems model where the human being is analysed as the system with stimuli as the input to the system and behaviour as the output of the system. The Nicosia model tries to establish the link between a firm and its customers, how the activities of the firm influences the consumer and results in the buying decision. The information from the firm influences the consumer towar