Chapter 3

Understanding Consumer

Consumer Behavior - Meaning And Important Concepts

What Is Consumer Behavior

Consumer Behavior is a branch which deals with the various stages a consumer goes through before purchasing products or services for his end use. Why individual buys a product

Need Social Status Gifting Purpose

Why individual does not buy a product

No requirement Income/Budget/Financial constraints Taste

When consumers purchase products

Festive season Birthday Anniversary Marriage or other special occasions

There are infact several factors which influence buying decision of a consumer ranging from psychological, social, and economic and so on. The study of consumer behavior explains as to:

Why and why not a consumer buys a product? When a consumer buys a product? How a consumer buys a product?

During Christmas, the buying tendencies of consumers increase as compared to other months. In the same way during Valentines week, individuals are often seen purchasing gifts for their

Chapter 3

Understanding Consumer

partners. Fluctuations in the financial markets and recession decrease the buying capacity of individuals. In a laymans language consumer behaviour deals with the buying behaviour of individuals. The main catalyst which triggers the buying decision of an individual is need for a particular product/service. Consumers purchase products and services as and when need arises. According to Belch and Belch, whenever need arises; a consumer searches for several information which would help him in his purchase. Following are the sources of information:

Personal Sources Commercial Sources Public Sources Personal Experience

Perception also plays an important role in influencing the buying decision of consumers. Buying decisions of consumers also depend on the following factors:

Messages, advertisements, promotional materials, a consumer goes through also called selective exposure.

Not all promotional materials and advertisements excite a consumer. A consumer does not pay attention to everything he sees. He is interested in only what he wants to see. Such behaviour is called selective attention.

Consumer interpretation refers to how an individual perceives a particular message. A consumer would certainly buy something which appeals him the most. He would remember the most relevant and meaningful message also called as selective retention. He would obviously not remember something which has nothing to do with his need.

Chapter 3

Understanding Consumer

The behavior that consumers display in searching for, purchasing, using, evalauting and disposing of products and services that they expect will satisfy their needs. - Schiffman and Kanuk ..the decision process and physical activity engaged in when evaluating, acquiring, using or disposing of goods and services." - Loudon and Bitta The study of consumers as they exchange something of value for a product or service that satisfies their needs - Wells and Prensky Those actions directly involved in obtaining, consuming and disposing of products and services including the decision processes that precede and follow these actions. -Engel, Blackwell, Miniard

Nature and scope of consumer behavior Nature of Consumer Behavior: i. The subject deals with issues related to cognition, affect and behavior in consumption behaviors, against the backdrop of individual and environmental determinants. The individual determinants pertain to an individuals internal self and include psychological components like personal motivation and involvement, perception, learning and memory, attitudes, self-concept and personality, and, decision making. The environmental determinants pertain to external influences surrounding an individual and include sociological, anthropological and economic components like the family, social groups, reference groups, social class, culture, sub-culture, cross-culture, and national and regional influences. ii. The subject can be studied at micro or macro levels depending upon whether it is analyzed at the individual level or at the group level.

Chapter 3

Understanding Consumer

iii. The subject is interdisciplinary. It has borrowed heavily from psychology (the study of the individual: individual determinants in buying behavior), sociology (the study of groups: group dynamics in buying behavior), social psychology (the study of how an individual operates in group/groups and its effects on buying behavior), anthropology (the influence of society on the individual: cultural and cross-cultural issues in buying behavior), and economics (income and purchasing power). iv. Consumer behavior is dynamic and interacting in nature. The three components of cognition, affect and behavior of individuals alone or in groups keeps on changing; so does the environment. There is a continuous interplay or interaction between the three components themselves and with the environment. This impacts consumption pattern and behavior and it keeps on evolving and it is highly dynamic. v. Consumer behavior involves the process of exchange between the buyer and the seller, mutually beneficial for both. vi. As a field of study it is descriptive and also analytical/ interpretive. It is descriptive as it explains consumer decision making and behavior in the context of individual determinants and environmental influences. It is analytical/ interpretive, as against a backdrop of theories borrowed from psychology, sociology, social psychology, anthropology and economics, the study analyzes consumption behavior of individuals alone and in groups. It makes use of qualitative and quantitative tools and techniques for research and analysis, with the objective is to understand and predict consumption behavior. vii. It is a science as well as an art. It uses both, theories borrowed from social sciences to understand consumption behavior, and quantitative and qualitative tools and techniques to predict consumer behavior.

Scope of Consumer Behavior: The study of consumer behavior deals with understanding consumption patterns and behavior. It includes within its ambit the answers to the following: - What the consumers buy: goods and services

Chapter 3

Understanding Consumer

- Why they buy it: need and want - When do they buy it: time: day, week, month, year, occasions etc. - Where they buy it: place - How often they buy it: time interval - How often they use it: frequency of use The scope of consumer behavior includes not only the actual buyer but also the various roles played by him/ different individuals. Example 1: A child goes to a kindergarten school. She comes back home and asks her parents to buy her a set of color pencils and crayons. Now the roles played are: 1. Initiator: the child in nursery school 2. Influencer: a fellow classmate 3. Decider: the father or the mother 4. Buyer: the father or the mother 5. User: the child Example 2: The lady of a house who is a housewife and spends her day at home doing household chores watches TV in her free time. That is her only source of entertainment. The TV at home is giving problem. She desires a new TV set, and says that she wants an LCD plasma TV. Now the roles played are: 1. Initiator: the housewife (mother) 2. Influencer: a friend / neighbour 3. Decider: the husband or the son

Chapter 3

Understanding Consumer

4. Buyer: the husband or the son 5. User: the family Cultural Factors affecting Consumer Behavior Consumer behavior deals with the study of buying behavior of consumers. Consumer behavior helps us understand why and why not an individual purchases goods and services from the market. There are several factors which influence the buying decision of consumers, cultural factors being one of the most important factors. Cultural Factors Cultural factors comprise of set of values and ideologies of a particular community or group of individuals. It is the culture of an individual which decides the way he/she behaves. In simpler words, culture is nothing but values of an individual. What an individual learns from his parents and relatives as a child becomes his culture. Example - In India, people still value joint family system and family ties. Children in India are conditioned to stay with their parents till they get married as compared to foreign countries where children are more independent and leave their parents once they start earning a living for themselves Cultural factors have a significant effect on an individuals buying decision. Every individual has different sets of habits, beliefs and principles which he/she develops from his family status and background. What they see from their childhood becomes their culture. Let us understand the influence of cultural factors on buying decision of individuals with the help of various examples. Females staying in West Bengal or Assam would prefer buying sarees as compared to Westerns. Similarly a male consumer would prefer a Dhoti Kurta during auspicious ceremonies in Eastern India as this is what their culture is. Girls in South India wear skirts and blouses as compared to girls in north India who are more into Salwar Kameez.

Chapter 3

Understanding Consumer

Our culture says that we need to wear traditional attire on marriages and this is what we have been following since years. People in North India prefer breads over rice which is a favorite with people in South India and East India. Subcultures Each culture further comprises of various subcultures such as religion, age, geographical location, gender (male/female), status etc. Religion (Christianity, Hindu, Muslim, Sikhism, Jainism etc) A Hindu bride wears red, maroon or a bright colour lehanga or saree whereas a Christian bride wears a white gown on her wedding day. It is against Hindu culture to wear white on auspicious occasions. Muslims on the other hand prefer to wear green on important occasions. For Hindus eating beef is considered to be a sin whereas Muslims and Christians absolutely relish the same. Eating pork is against Muslim religion while Hindus do not mind eating it. A sixty year old individual would not like something which is too bright and colorful. He would prefer something which is more sophisticated and simple. On the other hand a teenager would prefer funky dresses and loud colours. In India widows are expected to wear whites. Widows wearing bright colours are treated with suspicion. Status (Upper Class, Middle class and Lower Class) People from upper class generally have a tendency to spend on luxurious items such as expensive gadgets, cars, dresses etc.You would hardly find an individual from a lower class spending money on high-end products. A person who finds it difficult to make ends meet would rather prefer spending on items necessary for survival. Individuals from middle class segment generally are more interested in buying products which would make their future secure. Gender (Male/Female)

Chapter 3

Understanding Consumer

People generally make fun of males buying fairness creams as in our culture only females are expected to buy and use beauty products. Males are perceived to be strong and tough who look good just the way they are. Social Factors affecting Consumer Behavior Social factors play an essential role in influencing the buying decisions of consumers. Human beings are social animals. We need people around to talk to and discuss various issues to reach to better solutions and ideas. We all live in a society and it is really important for individuals to adhere to the laws and regulations of society. Social Factors influencing consumer buying decision can be classified as under:

Reference Groups Immediate Family Members Relatives Role in the Society Status in the society

1. Reference Groups Every individual has some people around who influence him/her in any way. Reference groups comprise of people that individuals compare themselves with. Every individual knows some people in the society who become their idols in due course of time. Co workers, family members, relatives, neighbours, friends, seniors at workplace often form reference groups. Reference groups are generally of two types: a. Primary Group - consists of individuals one interacts with on a regular basis. Primary groups include:

Friends

Chapter 3

Understanding Consumer

Family Members Relatives Co Workers

All the above influence the buying decisions of consumers due to following reasons: They have used the product or brand earlier. They know what the product is all about. They have complete knowledge about the features and specifications of the product. Tim wanted to purchase a laptop for himself. He went to the nearby store and purchased a Dell Laptop. The reason why he purchased a Dell Laptop was because all his friends were using the same model and were quite satisfied with the product. We tend to pick up products our friends recommend. A married individual would show strong inclination towards buying products which would benefit not only him but also his family members as compared to a bachelor. Family plays an important role in influencing the buying decisions of individuals. A consumer who has a wife and child at home would buy for them rather than spending on himself. An individual entering into marriage would be more interested in buying a house, car, household items, furniture and so on. When an individual gets married and starts a family, most of his buying decisions are taken by the entire family. Every individual goes through the following stages and shows a different buying need in each stage:

Bachelorhood: Purchases Alcohol, Beer, Bike, Mobile Handsets (Spends Lavishly)

Newly Married: Tend to purchase a new house, car, household furnishings. (Spends sensibly)

Chapter 3

Understanding Consumer

Family with Children: Purchases products to secure his as well as his familys future.

Empty nest (Children getting married)/Retirement/Old Age: Medicines, Health Products, and Necessary Items.

A Ford Car in the neighbourhood would prompt three more families to buy the same model. b. Secondary Groups - Secondary groups share indirect relationship with the consumer. These groups are more formal and individuals do not interact with them on a regular basis, Example - Religious Associations, Political Parties, Clubs etc. 2. Role in the Society Each individual plays a dual role in the society depending on the group he belongs to. An individual working as Chief Executive Officer with a reputed firm is also someones husband and father at home. The buying tendency of individuals depends on the role he plays in the society. 3. Social Status An individual from an upper middle class would spend on luxurious items whereas an individual from middle to lower income group would buy items required for his/her survival.

Personal Factors affecting Consumer Behaviour Personal Factors play an important role in affecting consumer buying behaviour 1. Occupation The occupation of an individual plays a significant role in influencing his/her buying decision. An individuals nature of job has a direct influence on the products and brands he picks for himself/herself.

Chapter 3

Understanding Consumer

Tim was working with an organization as Chief Executive Officer while Jack, Tims friend now a retired professor went to a nearby school as a part time faculty. Tim always looked for premium brands which would go with his designation whereas Jack preferred brands which were not very expensive. Tim was really conscious about the clothes he wore, the perfume he used, the watch he wore whereas Jack never really bothered about all this. That is the importance of ones designation. As a CEO of an organization, it was really essential for Tim to wear something really elegant and unique for others to look up to him. A CEO or for that matter a senior professional can never afford to wear cheap labels and local brands to work. An individuals designation and his nature of work influence his buying decisions. You would never find a low level worker purchasing business suits, ties for himself. An individual working on the shop floor cant afford to wear premium brands everyday to work. College goers and students would prefer casuals as compared to professionals who would be more interested in buying formal shirts and trousers. 2. Age Age and human lifecycle also influence the buying behaviour of consumers. Teenagers would be more interested in buying bright and loud colours as compared to a middle aged or elderly individual who would prefer decent and subtle designs. A bachelor would prefer spending lavishly on items like beer, bikes, music, clothes, parties, clubs and so on. A young single would hardly be interested in buying a house, property, insurance policies, gold etc.An individual who has a family, on the other hand would be more interested in buying something which would benefit his family and make their future secure. 3. Economic Condition

Chapter 3

Understanding Consumer

The buying tendency of an individual is directly proportional to his income/earnings per month. How much an individual brings home decides how much he spends and on which products? Individuals with high income would buy expensive and premium products as compared to individuals from middle and lower income group who would spend mostly on necessary items. You would hardly find an individual from a low income group spending money on designer clothes and watches. He would be more interested in buying grocery items or products necessary for his survival. 4. Lifestyle Lifestyle, a term proposed by Austrian psychologist Alfred Adler in 1929, refers to the way an individual stays in the society. It is really important for some people to wear branded clothes whereas some individuals are really not brand conscious. An individual staying in a posh locality needs to maintain his status and image. An individuals lifestyle is something to do with his style, attitude, perception, his social relations and immediate surroundings. 5. Personality An individuals personality also affects his buying behaviour. Every individual has his/her own characteristic personality traits which reflect in his/her buying behaviour.A fitness freak would always look for fitness equipments whereas a music lover would happily spend on musical instruments, CDs, concerts, musical shows etc. Psychological Factors affecting Consumer Behaviour Consumer Behaviour deals with the study of buying behaviour of consumers. Let us understand the effect of psychological factors on consumer behaviour: Motivation Nancy went to a nearby restaurant and ordered pizza for herself. Why did Nancy buy pizza ?

Chapter 3

Understanding Consumer

Answer - She was feeling hungry and wanted to eat something. In the above example, Hunger was the motivating factor for Nancy to purchase pizza. There are several other factors which motivate individuals to purchase products and services. An individual who is thirsty would definitely not mind spending on soft drinks, packaged water, juice and so on. Recognition and self esteem also influence the buying decision of individuals Why do people wear branded clothes ? Individuals prefer to spend on premium brands and unique merchandise for others to look up to them. Certain products become their status symbol and people know them by their choice of picking up products that are exclusive. An individual who wears a Tag Heuer watch would never purchase a local watch as this would be against his image. Perception What an individual thinks about a particular product or service is his/her perception towards the same. For someone a Dell Laptop might be the best laptop while for others it could be just one of the best brands available. Individuals with the same needs might not purchase similar products due to difference in perception. Catherine and Roselyn had a hectic day at work and thus wanted to have something while returning from work. Catherine ordered a large chicken pizza with French fries and coke while Roselyn preferred a baked vegetable sandwich. Though both Catherine and Roselyn had the same motivation (hunger), but the products they purchased were entirely different as Roselyn perceived pizza to be a calorie laden food. Individuals think differently and their perceptions do not match. Individuals perceive similar situation differently due to difference in the way they interpret information. There are three different processes which lead to difference in perception: 1. Selective Attention - Selective attention refers to the process where individuals pay attention to information that is of use to them or their immediate family members. An

Chapter 3

Understanding Consumer

individual in a single day is exposed to numerous advertisements, billboards, hoardings etc but he is interested in only those which would benefit him in any way. He would not be interested in information which is not relevant at the moment. 2. Selective Distortion - Consumers tend to perceive information in a way which would be in line to their existing thoughts and beliefs. 3. Selective Retention - Consumers remember information which would be useful to them, rest all they forget in due course of time. Michael wanted to purchase a watch for his wife and thus he remembered the RADO advertisement which he had seen several days ago. Learning Learning comes only through experience. An individual comes to know about a product and service only after he/she uses the same. An individual who is satisfied with a particular product/service will show a strong inclination towards buying the same product again. Beliefs and Attitude Beliefs and attitude play an essential role in influencing the buying decision of consumers. Individuals create a certain image of every product or service available in the market. Every brand has an image attached to it, also called its brand image. Consumers purchase products/services based on their opinions which they form towards a particular product or service. A product might be really good but if the consumer feels it is useless, he would never buy it.

Chapter 3

Understanding Consumer

Customer relationship management (CRM) is a model for managing a companys interactions with current and future customers. It involves using technology to organize, automate, and synchronize sales, marketing, customer service, and technical support Features of CRM Customer Relationship Management is a strategy which is customized by an organization to manage and administrate its customers and vendors in an efficient manner for achieving excellence in business. It is primarily entangled with following features: 1. Customers Needs- An organization can never assume what actually a customer needs. Hence it is extremely important to interview a customer about all the likes and dislikes so that the actual needs can be ascertained and prioritized. Without modulating the actual needs it is arduous to serve the customer effectively and maintain a long-term deal. 2. Customers Response- Customer response is the reaction by the organization to the queries and activities of the customer. Dealing with these queries intelligently is very important as small misunderstandings could convey unalike perceptions. Success totally depends on the understanding and interpreting these queries and then working out to provide the best solution. During this situation if the supplier wins to satisfy the customer by properly answering to his queries, he succeeds in explicating a professional and emotional relationship with him. 3. Customer Satisfaction- Customer satisfaction is the measure of how the needs and responses are collaborated and delivered to excel customer expectation. In todays competitive business marketplace, customer satisfaction is an important performance exponent and basic differentiator of business strategies. Hence, the more is customer satisfaction; more is the business and the bonding with customer. 4. Customer Loyalty- Customer loyalty is the tendency of the customer to remain in business with a particular supplier and buy the products regularly. This is usually seen when a customer is very much satisfied by the supplier and re-visits the organization for business deals, or when he is tended towards re-buying a particular product or brand over times by that supplier. To continue the customer loyalty the most important aspect an organization should focus on is customer satisfaction. Hence, customer loyalty is an influencing aspect of CRM and is always crucial for business success.

Chapter 3

Understanding Consumer

5. Customer Retention- Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business. Usually a loyal customer is tended towards sticking to a particular brand or product as far as his basic needs continue to be properly fulfilled. He does not opt for taking a risk in going for a new product. More is the possibility to retain customers the more is the probability of net growth of business. 6. Customer Complaints- Always there exists a challenge for suppliers to deal with complaints raised by customers. Normally raising a complaint indicates the act of dissatisfaction of the customer. There can be several reasons for a customer to launch a complaint. A genuine reason can also exist due to which the customer is dissatisfied but sometimes complaints are launched due to some sort of misunderstanding in analyzing and interpreting the conditions of the deal provided by the supplier regarding any product or service. Handling these complaints to ultimate satisfaction of the customer is substantial for any organization and hence it is essential for them to have predefined set of process in CRM to deal with these complaints and efficiently resolve it in no time. 7. Customer Service- In an organization Customer Service is the process of delivering information and services regarding all the products and brands. Customer satisfaction depends on quality of service provided to him by the supplier. The organization has not only to elaborate and clarify the details of the services to be provided to the customer but also to abide with the conditions as well. If the quality and trend of service go beyond customers expectation, the organization is supposed to have a good business with customers.

Customer Relationship Management (CRM) and Marketing CRM leverages and amplifies customer base of an organization through efficacious and efficient marketing. In fact CRM has brought up new dimensions in the field of marketing by significantly improving marketing functioning and execution. Intuitive CRM associated marketing strategies like direct marketing; web marketing, e-mail marketing etc. have been matured during the recent past. These marketing strategies are more promising as compared to the traditional ways on marketing as they help delivering higher-up performance and walloping business. They also help

Chapter 3

Understanding Consumer

meliorating response rates in marketing campaigns, cut cost on promotions due to low asset values and provide higher scrutiny on organizational investments. The various aspects of CRM oriented marketing are discussed below. 1. Web Marketing- With the growing popularity of web, customers are tending towards web marketing or web shopping. This helps both customers and suppliers to transact in a real time environment irrespective of their locations. Some of the major advantages of Web Marketing are listed below:

It is relatively very inexpensive as it reduces the cost for physically reaching to the target customers for interaction.

Suppliers can reach to more number of customers in lesser amount of time. The online marketing campaigns can be easily tracked, traced, calculated and tested.

The selection process of any product or brand is simplified due to proven online research and analysis techniques.

Online marketing campaigns are more promotional as compared to manual campaigns.

2. Email Marketing- Email marketing has turned out to be more efficacious and inexpensive as compared to mail or phone based marketing strategies. Email marketing is direct marketing which is data driven and leads to more accurate customer response and effective fulfillment of customer needs. More attractive features include newsletters, sending of eCoupons, cards, provision of saving events into calendars etc. 3. Analyzing customers buying behavior online- A CRM system provides a platform to analyze the customers buying behavior online. This interactive strategy provides great accuracy with high speed which includes profiling services furnishing elaborated bits of information regarding customers purchasing habits or behavior. Individualized analysis of this behavior also helps to identify to which product or brand the customers are more tended. For example an online selling website www.xyz.com can analyze the customers buying behavior by installing an in-house service with the help of a full-fledged CRM that checks what all products are being purchased by a particular customer and under

Chapter 3

Understanding Consumer

which specific group they fall. This is achieved by personalized analyzing the buying history of customers in the past which predicts the future business with those customers also. This accomplishes to build a long-term relationship with customers by properly canvassing customer needs and resulting in customer satisfaction. Analyzing this particular buying behavior of customers online also helps to fix or change of marketing techniques or strategies to mould the system according to the future perspectives. 4. Forecasting future marketing strategies- Down the line marketing strategies keeps on changing according to the emotional behavioral change of customers. CRM market forecasting techniques help to understand this change through regression and statistical analysis of customer behavior online. These are some complex but more accurate analysis techniques provided by CRM system which are proved to be one of best marketing strategies. This innovative approach is carried out with greater risks but is believed to outturn astonishing rewards. 5. Building business impact models- It is important for an organization to have check on marketing performance regularly so that the techniques never deteriorate and always match to yield greater results. These CRM oriented models help in delivering accurate measurement of marketing performance throughout the organization and to do better every time. These synergistic marketing strategies make a part of CRM system to develop high-end marketing business. Hence it is very important for an organization to incorporate them by carefully anticipating change, testing their performance and assembling the best possible combination of these strategies to meet the needs of the customers and maximize its marketing growth. Types of CRM:Sales force automation Sales force automation (SFA) uses software to streamline the sales process. The core of SFA is a contact management system for tracking and recording every stage in the sales process for each prospective client, from initial contact to final disposition. Many SFA applications also include insights into opportunities, territories, sales forecasts and work flow automation

Chapter 3

Understanding Consumer

Marketing CRM systems for marketing track and measure campaigns over multiple channels, such as email, search, social media, telephone and direct mail. These systems track clicks, responses, leads and deals Customer service and support CRMs can be used to create, assign and manage requests made by customers, such as call center software which help direct customers to agents.[2] CRM software can also be used to identify and reward loyal customers. Appointments Appointment CRMs automatically provide suitable appointment times to customers via e-mail or the web, which are then synchronized with the representative or agent's calendar. Small business For small businesses a CRM may simply consist of a contact manager system which integrates emails, documents, jobs, faxes, and scheduling for individual accounts. CRMs available for specific markets for professional markets (legal, finance) are frequently touted for their event management and relationship tracking opposed to financial return on investment (ROI). Social media Some CRMs coordinate with social media sites like Twitter, LinkedIn, Facebook and Google Plus to track and communicate with customers who share opinions and experiences about their company, products and services.

Brand:Brands are different from products in a way that brands are what the consumers buy, while products are what concern/companies make. Brand is an accumulation of emotional and functional associations. Brand is a promise that the product will perform as per customers expectations. It shapes customers expectations about the product. Brands usually have a trademark which protects them from use by others. A brand gives particular information about the organization, good or service, differentiating it from others in marketplace. Brand carries an assurance about the characteristics that make the product or service unique. A strong brand is a means of making people aware of what the company represents and what are its offerings.

Chapter 3
To a consumer, brand means and signifies:

Understanding Consumer

Source of product Delegating responsibility to the manufacturer of product Lower risk Less search cost Quality symbol Deal or pact with the product manufacturer Symbolic device

Brands simplify consumers purchase decision. Over a period of time, consumers discover the brands which satisfy their need. If the consumers recognize a particular brand and have knowledge about it, they make quick purchase decision and save lot of time. Also, they save search costs for product. Consumers remain committed and loyal to a brand as long as they believe and have an implicit understanding that the brand will continue meeting their expectations and perform in the desired manner consistently. As long as the consumers get benefits and satisfaction from consumption of the product, they will more likely continue to buy that brand. Brands also play a crucial role in signifying certain product features to consumers. To a seller, brand means and signifies:

Basis of competitive advantage Way of bestowing products with unique associations Way of identification to easy handling Way of legal protection of products unique traits/features Sign of quality to satisfied customer Means of financial returns
A brand, in short, can be defined as a sellers promise to provide consistently a unique set of characteristics, advantages, and services to the buyers/consumers. It is a name, term, sign, symbol or a combination of all these planned to differentiate the goods/services of one seller or group of sellers from those of competitors. Some examples of well known brands are Mc Donalds, Mercedes -Benz, Sony, Coca Cola, Kingfisher, etc. A brand connects the four crucial elements of an enterprise- customers, employees, management and shareholders. Brand is nothing but an assortment of memories in customers mind. Brand represents values, ideas and even personality. It is a set of functional, emotional and rational associations and benefits which have occupied target markets mind. Associations are nothing but the images and symbols associated with the brand or brand benefits, such as, The Nike Swoosh, The Nokia sound, etc. Benefits are the basis for purchase decision. Brand Name:Brand name is one of the brand elements which help the customers to identify and differentiate one product from another. It should be chosen very carefully as it captures the key theme of a product in an efficient and economical manner. It can easily be noticed and its meaning can be stored and triggered in the memory instantly. Choice of a brand name requires a lot of research. Brand names are not necessarily associated with the product. For instance, brand names can be based on places (Air India, British Airways), animals or birds (Dove soap, Puma), people (Louise Phillips, Allen Solly). In some instances, the company name is used for all products (General Electric, LG)

Features of a Good Brand Name

A good brand name should have following characteristics: 1. 2. 3. 4. 5. 6. 7. 8. It should be unique / distinctive (for instance- Kodak, Mustang) It should be extendable. It should be easy to pronounce, identified and memorized. (For instance-Tide) It should give an idea about products qualities and benefits (For instance - Swift, Quickfix, Lipguard). It should be easily convertible into foreign languages. It should be capable of legal protection and registration. It should suggest product/service category (For instance Newsweek). It should indicate concrete qualities (For instance Firebird).

Chapter 3
9.

Understanding Consumer

It should not portray bad/wrong meanings in other categories. (For instance NOVA is a poor name for a car to be sold in Spanish country, because in Spanish it means doesnt go).

Process of Selecting a renowned and successful Brand Name

1. Define the objectives of branding in terms of six criterions - descriptive, suggestive, compound, classical, arbitrary and fanciful. It Is essential to recognize the role of brand within the corporate branding strategy and the relation of brand to other brand and products. It is also essential to understand the role of brand within entire marketing program as well as a detailed description of niche market must be considered. Generation of multiple names - Any potential source of names can be used; organization, management and employees, current or potential customers, agencies and professional consultants. Screening of names on the basis of branding objectives and marketing considerations so as to have a more synchronized list - The brand names must not have connotations, should be easily pronounceable, should meet the legal requirements etc. Gathering more extensive details on each of the finalized names - There should be extensive international legal search done. These searches are at times done on a sequential basis because of the expense involved. Conducting consumer research - Consumer research is often conducted so as to confirm management expectations as to the remembrance and meaningfulness of the brand names. The features of the product, its price and promotion may be shown to the consumers so that they understand the purpose of the brand name and the manner in which it will be used. Consumers can be shown actual 3-D packages as well as animated advertising or boards. Several samples of consumers must be surveyed depending on the niche market involved. On the basis of the above steps, management can finalize the brand name that maximizes the organizations branding and marketing objectives and then formally register the brand name.

2. 3.

4.

5.

6.

Brand Equity:Brand Equity is the value and strength of the Brand that decides its worth. It can also be defined as the differential impact of brand knowledge on consumers response to the Brand Marketing. Brand Equity exists as a function of consumer choice in the market place. The concept of Brand Equity comes into existence when consumer makes a choice of a product or a service. It occurs when the consumer is familiar with the brand and holds some favourable positive strong and distinctive brand associations in the memory

Brand Equity can be determined by measuring:

Returns to the Share-Holders

1. Evaluating the Brand Image for various parameters that are considered significant. 2. Evaluating the Brands earning potential in long run. 3. By evaluating the increased volume of sales created by the brand compared to other brands in the same
class.

4. The price premium charged by the brand over non-branded products. 5. From the prices of the shares that an organization commands in the market (specifically if the brand name is
identical to the corporate name or the consumers can easily co-relate the performance of all the individual brands of the organization with the organizational financial performance.

6. OR, An amalgamation of all the above methods.

Chapter 3
Factors contributing to Brand Equity Brand Awareness

Understanding Consumer

Brand awareness is the probability that consumers are familiar about the life and availability of the product. It is the degree to which consumers precisely associate the brand with the specific product. It is measured as ratio of niche market that has former knowledge of brand. Brand awareness includes both brand recognition as well as brand recall. Brand recognitions the ability of consumer to recognize prior knowledge of brand when they are asked questions about that brand or when they are shown that specific brand, i.e., the consumers can clearly differentiate the brand as having being earlier noticed or heard. While brand recall is the potential of customer to recover a brand from his memory when given the product class/category, needs satisfied by that category or buying scenario as a signal. In other words, it refers that consumers should correctly recover brand from the memory when given a clue or he can recall the specific brand when the product category is mentioned. It is generally easier to recognize a brand rather than recall it from the memory. Brand awareness is improved to the extent to which brand names are selected that is simple and easy to pronounce or spell; known and expressive; and unique as well as distinct. For instance - Coca Cola has come to be known as Coke. There are two types of brand awareness: 1. 2. Aided awareness- This means that on mentioning the product category, the customers recognize your brand from the lists of brands shown. Top of mind awareness (Immediate brand recall)- This means that on mentioning the product category, the first brand that customer recalls from his mind is your brand.

The relative importance of brand recall and recognition will rely on the degree to which consumers make productrelated decisions with the brand present or not. For instance - In a store, brand recognition is more crucial as the brand will be physically present. In a scenario where brands are not physically present, brand recall is more significant (as in case of services and online brands). Building brand awareness is essential for building brand equity. It includes use of various renowned channels of promotion such as advertising, word of mouth publicity, social media like blogs, sponsorships, launching events, etc. To create brand awareness, it is important to create reliable brand image, slogans and taglines. The brand message to be communicated should also be consistent. Strong brand awareness leads to high sales and high market share. Brand awareness can be regarded as a means through which consumers become acquainted and familiar with a brand and recognize that brand.

Brand Associations
Brand association is anything which is deep seated in customers mind about the brand . Brand should be associated with something positive so that the customers relate your brand to being positive. Brand associations are the attributes of brand which come into consumers mind when the brand is talked about. It is related with the implicit and explicit meanings which a consumer relates/associates with a specific brand name. Brand association can also be defined as the degree to which a specific product/service is recognized within its Product/service class/category. While choosing a brand name, it is essential that the name chosen should reinforce an important attribute or benefit association that forms its product positioning. For instance - Power book

Brand associations are formed on the following basis: Customers contact with the organization and its employees; Advertisements; Word of mouth publicity; Price at which the brand is sold; Celebrity/big entity association; Quality of the product; Products and schemes offered by competitors; Product class/category to which the brand belongs;

Chapter 3
POP ( Point of purchase) displays; etc

Understanding Consumer

Positive brand associations are developed if the product which the brand depicts is durable, marketable and desirable. The customers must be persuaded that the brand possess the features and attributes satisfying their needs. This will lead to customers having a positive impression about the product. Positive brand association h

Brand Loyalty
Brand loyal consumers are the foundation of an organization. Greater loyalty levels lead to less marketing expenditure because the brand loyal customers promote the brand positively. Also, it acts as a means of launching and introducing more products that are targeted at same customers at less expenditure. It also restrains new competitors in the market. Brand loyalty is a key component of brand equity. Brand loyalty can be developed through various measures such as quick service, ensuring quality products, continuous improvement, wide distribution network, etc. When consumers are brand loyal they love you for being you, and they will minutely consider any other alternative brand as a replacement. Examples of brand loyalty can be seen in US where true Apple customers have the brand's logo tattooed onto their bodies. Similarly in Finland, Nokia customers remained loyal to Nokia because they admired the design of the handsets or because of user- friendly menu system used by Nokia phones. Brand loyalty can be defined as relative possibility of customer shifting to another brand in case there is a change in products features, price or quality. As brand loyalty increases, customers will respond less to competitive moves and actions. Brand loyal customers remain committed to the brand, are willing to pay higher price for that brand, and will promote their brand always. A company having brand loyal customers will have greater sales, less marketing and advertising costs, and best pricing. This is because the brand loyal customers are less reluctant to shift to other brands, respond less to price changes and self- promote the brand as they perceive that their brand have unique value which is not provided by other competitive brands. Brand loyalty is always developed post purchase. To develop brand loyalty, an organization should know their niche market, target them, support their product, ensure easy access of their product, provide customer satisfaction, bring constant innovation in their product and offer schemes on their product so as to ensure that customers repeatedly purchase the product.

Perceived Quality:
refers to the customers perception about the total quality of the brand. While evaluating quality the customer takes into account the brands performance on factors that are significant to him and makes a relative analysis about the brands quality by evaluating the competitors brands also. Thus quality is a perceptual factor and the consumer analysis about quality varies. Higher perceived quality might be used for brand positioning. Perceived quality affect the pricing decisions of the organizations. Superior quality products can be charged a price premium. Perceived quality gives the customers a reason to buy the product. It also captures the channel members interest. For instance - American Express.

Other Proprietary Brand Assets:

Patents, Trademarks and Channel Inter-relations are proprietary assets. These assets prevent competitors attack on the organization. They also help in maintaining customer loyalty as well as organizations competitive advantage