Role Advertising Plays In The Buyer Purchase Decision

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25th Apr 2017 Marketing Reference this

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Sorina-Raula, Liviu and Madalina(0000) opined that the purchase decision is a decision making process under risk and that to purchase a product, buyers need a certain level of information. Social scientists develop many sophisticated theories of consumer behaviour and they give a variety of theoretical models to explain the sequence of behaviours involved in making a purchase decision. The first task in promoting any new product is to create awareness i.e. perception that the product exists, the second is to provide enough information about the product for the prospective customer to make an informed decision. Finally the marketer wants to be persuasive enough to stimulate the customer’s desire to satisfy his or her needs or wants by purchasing and repurchasing the product. These three personal processes of consumer behaviour which are perception, learning and motivation are extremely important to advertisers (Arens & Bovee, 2005).

In a paper written by Max Sutherland(1981), he stated that to get a better understanding of advertising, one has to understand and measure the much more subtle effects. Most purchases imply the decision to buy a product or service. This purchase decision process includes:

A goal to be reached (i.e. lessening the tension created by an unsatisfied need or desire).

A number of alternatives (i.e. competing products and brands).

Some evaluation criteria for choosing the best alternative.

A state of doubt, arising from the impossibility of possessing all relevant information on the different products and brands. Buyers are also uncertain about how well a given product or brand will satisfy their needs and desires.

As earlier stated above, the first task in promoting new products is to create awareness i.e. the perception that a certain product exists amongst prospective buyers and this is where advertising comes to play.

Advertising is a form of communication intended to persuade an audience (viewers, readers or listeners) to purchase or take some action upon products, ideals or services. It includes the name of a product or service and how that product or service could benefit the consumer, to persuade a target market to purchase or to consume that particular brand. These messages are usually paid for by sponsors and viewed via various media.

Advertising as defined by Givon &Horsky(1990) is the vehicle by which producers inform consumers of the existence and attributes of their brands. Bovee (1992) defined advertising as the non-personal communication of information usually paid for and usually persuasive in nature about products, services or ideas by identified sponsors through the various media.

An advertisement reaching a potential buyer while the buyer is seeking information will have a greater impact, since the buyer is spared the time and effort needed to seek out this information himself and is less likely to turn to competing brand advertisements while they are seeking information on these brands. In most of these definitions, specific reference is being made to brand advertising which may lead to an oversight about the existence of generic advertising. Generic advertising may be defined as any type of advertising that is not specific to an occasion. For example, a milk association encouraging people to drink milk as it makes one healthy. It could also be referred to as advertising for a whole sector such as tourism rather than a specific product. Operationally, generic advertising generates new sales by targeting beliefs about the product category while downplaying or oftentimes not mentioning the sponsoring brand. In contrast, brand advertising provides consumers with information about the brand’s value proposition that differentiates it from its competitors thereby encouraging consumers to choose the advertised brand over competing brands (Krisnarmoothy 2000,2001). According to Marks (2009), the more generic your marketing is, the less interesting it becomes and the more it fades away into the background. A pertinent question to be asked should then be ‘Are buyers more responsive to brand advertising rather than generic advertising?’ This is one of the many questions this study would be trying to provide an answer to.

Zufryden(1982) proposed a stochastic model to study the effect of advertising on consumer purchase dynamics by specifically relating the distribution of exposures from a brand media’s schedule to brand purchase incidence behaviour patterns overtime. This approach is based on underlying individual consumer behaviour assumptions that reflect the dynamics of exposures to advertising and brand purchase behaviour, conditional on the level of advertising exposure received. Much buying behaviour is more or less repetitive and the buyer establishes purchase cycles for various products which determine how often he/she will buy. Howard& Sheth (1969) proposed a theory of buyer behaviour and they identified the elements of a buyer’s decision process which are a set of motives, several alternative courses of action and decision mediators by which the motives are matched with the alternatives. Motives are specific to a product class and reflect the underlying needs of the buyer. The alternatives are the various brands that have the potential of satisfying the buyer’s motives. Decision mediators are the set of rules that the buyer employs to watch his motives and his means of satisfying those motives.

The effect of advertising on mental states like purchase intention or belief about product attributes is often treated as a direct consequence of exposure to advertising. Yet much of the effect may depend not on the immediate acceptance of advertising propositions but on a confirmatory diagnosis of product experience thereby stating that the reception of advertising is often interwoven with experience (Deighton, 1984). For example the typical coke audience has tasted coke before and expects to do so again.

The primary purpose of this dissertation is to examine the role advertising plays in the decision of a buyer to purchase a product. This research work which would attempt to describe the impact of how advertisements by Coca-Cola Plc affect consumers will provide some information on the feasibility of developing a hypothesis and therefore contributing to the existing literature by analyzing questionnaire which will be administered to consumers.

SCOPE OF THE STUDY

This study focuses on the role advertising plays in the buyer-purchase decision. The scope of this study concentrates on Coca-Cola (Coke) consumers to whom questionnaires would be administered to achieve the objectives stated below.

OBJECTIVE OF THE STUDY

This dissertation has outlined various objectives that will be used to explore the rrole of advertising in buyer purchase decision using Coca-Cola Plc as a case study. Such objectives include:

To study the effectiveness of advertising on buyer-purchase decisions.

To explore what influences consumers to purchase products or services.

To critically examine the specific forms of advertising and how they affect the buyer purchase decision.

To determine what mode of advertising has more appeal to consumers.

To provide an additional platform for further studies or researches.

RESEARCH QUESTIONS

This dissertation seeks to provide answers to the following questions;

Is there a need for that which has been advertised?

Do consumers have a preference for either generic or brand advertising?

What mode of advertising has more appeal towards consumers?

What influences consumers to purchase products or services?

Do consumers have a preferred payment plan to enable purchase action?(In terms of payment via web, Pos terminals or cash at the store)

Is there any value placed on that which has been advertised by the consumer?

What other factors influence consumer behaviour during advertisements that will affect the buyer purchase decision.

LITERATURE REVIEW

INTRODUCTION

This dissertation covers two main domains which are advertising and buyer purchase decisions. Several studies differ in advertising that they analyze, the methodology used and the results of variables used. However, even though similar variables are utilized, several procedures are used which makes comparisons complex. On that note, this literature review will explore issues on advertising and review studies on what role it has played in the buyer purchase decision.

LITERATURE ON THE ROLE OF ADVERTISING IN THE PURCHASE DECISION PROCESS.

As studied by Girboveanu,Circiun and Meghisan(0000),Needs and motivations are the starting points of purchase decisions. For a purchase to take place, buyers must experience sufficiently positive attitudes toward the product and the brand and consciously felt needs. When all elements of the marketing program are properly designed, a buyer will include the advertised brand in his or her chosen set of brands which refers to all the brands that are considered for purchases. The elements of the marketing program includes designing the product to have the qualities buyers seek, ensuring that the product is readily available to buyers and setting a price that buyers perceive as reasonable.

Social scientists develop many sophisticated theories of consumer behaviour. They give a variety of theoretical models to explain the sequence of behaviours involved in making a purchase decision. The first task in promoting any new product is to create awareness – perception – that the product exists. The second is to provide enough information – learning -about the product for the prospective customer to make an informed decision. Finally, the marketer wants to be persuasive enough to stimulate the customer’s desire -motivation – to satisfy his or her needs or wants by purchasing and repurchasing the product. These three personal processes of consumer behaviour – perception, learning, and motivation – are extremely important to advertisers (Arens & BovĂ©e, 2005).

Most purchases imply the decision to buy a product or service. This purchase decision process includes:

1. A goal to be reached (i.e., lessening the tension created by an unsatisfied need or desire).

2. A number of alternatives (i.e., competing products and brands). Products and brands are

perceived, evaluated, and compared on the basis of their distinctive attributes and on their ability to satisfy a set of needs. These alternatives also include the non-purchase decision.

3. Some evaluation criteria for choosing the “best” alternative.

4. A state of doubt, arising from the impossibility of possessing all relevant information on the different products and brands. Buyers are also uncertain about how well a given product or brand will satisfy their needs and desires.

When they buy a specific brand, buyers have expectations. This notion of expectation is intimately related to any purchase decision. A consumer who buys a product has developed definite expectations about the consumption of this product. Consumers buy a certain brand because it is preferable to competing brands; they have implicitly or explicitly anticipated that the selected brand will yield more satisfaction than the other brands and that it will respond more appropriately to the relevant set of felt needs.

Advertising is an integral part of marketing and its relevance as a basis for sales cannot be over-looked. The effect of advertising on sales is an oft-researched topic but the bulk of this literature is devoted to brand advertising while neglecting the existence of generic advertising. Do buyers tend to go for brands or just the product? It has been stated that there are various factors that determine whether a consumer will purchase a certain product or not.

LITERATURE ON THE THEORY OF BUYER BEHAVIOUR

Howard and Sheth(1969) proposed a theory of buyer behaviour and this theory tries to explain the buying behaviour of individuals overtime. They opined that much buying behaviour is more or less repetitive and the buyer establishes purchase cycles for various products which determines how often he will buy. They assume that brand choice is not random but systematic. To elaborate on their assumption, first they assume that buying behaviour is rational in the sense that it is within the buyer’s bounded rationality (March&Simon,1958) that is his behaviour is rational within the limits of his cognitive and learning capacities and within the constraint of limited information. Secondly, they attempted to build a positive theory and not a normative theory. Thirdly, if the brand choice behaviour is assumed to be systematic then it can be observed in certain standard ways. Later on, they describe a series of measures of the buyer’s behaviour generally labelled purchase behaviour, attitude towards a brand, comprehension of the brand, attention to impinging stimuli and intention to buy a brand. Fourthly, if behaviour is systematic, it is caused by some event- a stimulus either in the buyer or the buyer’s environment. This event or stimulus is the input to the system and purchase behaviour is the output, this can be likened to the role of advertising in buyer purchase decision with advertising being the input ad buyer purchase decision the output. What we must then describe is what goes on between the input and the output.

LITERATURE ON THE INFLUENCE OF GENERIC ADVERTISING ON BRAND PREFERENCES

Chakravarti& Janiszewski (2004) stated that the legislative goal of generic advertising is to increase the primary demand of a product without influencing the market share of any one producer. Generic advertising is designed to enhance category beliefs and if generic advertising is differentially influencing the demand of individual brands, it is likely doing so by increasing or decreasing the perceived differentiation between the brands. They carried out two different experiments and they found out that generic advertising of a product decreases access to information about non advertised product attributes. As a consequence, generic advertising can increase or decrease brand differentiation. The ability of generic advertising to decrease access to information about non advertised attributes also results in an increased importance of price. As a consequence, generic advertising leads to increased responsiveness to changes in price.

LITERATURE ON THE TARGETING OF ADVERTISING

Iyer, Soberman and Villas-Boas (2003) posited that an important question that frims face in advertising is developing effective media strategy. Consumers are endowed with preferences over product attributes but without advertising, do not know which products exist or their characteristics. The role of advertising about a product is to convey information that the product exists and its product attributes which might also include the price so that an originally uninformed consumer can evaluate its degree of preference for the product and decide whether to buy it or not. Advertising directed toward these consumers provides them with information on the product and its characteristics. For example, in the soft drinks market, one might argue that the product features of Coke and Pepsi are known to most consumers. Yet these brands spend a significant amount of their budget on reminder advertising aimed at keeping the brand top of mind. With targeted advertising, they find that firms advertise more to consumers who have a strong preference for their products than to comparison shoppers who can be attracted to the competition. They further stated that when firms reduce advertising to price elastic consumers who comparison shop, they endogenously create additional market differentiation, which reduces the intensity of competition. The targeting of advertising also provides firms with the direct benefit of eliminating wasted advertising to customers who have a distinct preference for the competing product. For this reason, the ability to target advertising increases the equilibrium profits of firms. Targeting also improves the effectiveness of advertising. Finally the ability to target advertising does not necessarily mean that advertising spending will drop as implied in Esteban et. al(2001). Their findings showed that competing firms benefit more from targeting of advertising than from targeting of pricing.

LITERATURE ON GENERIC AND BRAND ADVERTISIING STRATEGIES IN A DYNAMIC DUOPOLY

Bass, Krisnamoorthy, Prasrad&Sheti(2005) stated that when the relevant marketing instrument is advertising, we define advertising whose effect is to increase category sales as ‘generic advertising’ and advertising whose effect is to gain market share as ‘brand advertising’. Operationally, generic advertising generates new sales by targeting beliefs about the product category while downplaying or oftentimes not mentioning the sponsoring brand. In contrast, brand advertising provides consumers with information about the brand’s value proposition that differentiates it from its competitors, thereby encouraging consumers to choose the advertised brand over competing brands (Krishnamurthy 2000,2001).

Generic advertising increases primary demand by attracting new consumers, increasing per capita consumption of the product and lengthening the product rite cycle (Friedman and Friedman,1976). Krishnamurthy (2000,2001) examines the relationship between generic and brand advertising but in a non dynamic setting. Espinosa and Maniel (2001), Fruchter (1999) and Piga (1998) have proposed dynamic models of advertising competition with market expansion. However in these models, both generic and brand advertising are modelled using a single advertising variable so their separate effects on sales are not distinguished. Because sales respond differently to generic and brand advertising, their effects on sales should ideally be modelled separately.

Future research should consider including these effects and other alternative or more general specifications, including models with interaction between generic and brand advertising and the use of contracts to achieve the cooperative optimal generic advertising.

LITERATURE ON INTERACTIVE ADVERTISING

Pavlou and Stewart (2001) stated that The past decade has witnessed the development of information and communication technologies that enable easy and rapid interaction between customer and advertiser. As a result, advertisers are increasingly relying on various modes of interactive technology to advertise and promote their products and services.

At the most general level, feedback via sales reflects interactivity. Interactivity is, therefore, a characteristic of the consumer, not a characteristic of the medium; consumers can choose to respond or not. Thus, in this sense interactivity is not really new. What is new, are the speed, scope, and scale of interactivity that is provided by new information and communication technologies. The Internet is a new technology that makes some things simpler, cheaper and easier. It is a new way to communicate with consumers, for consumers to communicate with one another, and a new way to sell products and services to consumers, but it joins other media and distribution channels as vehicles for these tasks. It does have some features, such as hyperlinks, that are different from those found in other media, but other media also have unique characteristics. The increasing technological integration of telephones and television with the Internet also suggests that interactive media, and hence, interactive advertising, are not unique to the Internet.

Cutler(1990) defines the new interactive media as media that provide the opportunity to instantaneously advertise, execute a sale, and collect payment. With the advent of the Internet and other technologies, the interaction between and among consumers and marketers is becoming increasingly more pronounced. Consumers can collect and provide information by searching and navigating through commercial Web sites, they can post and customize their preferences, and they can communicate with other consumers as well as product and service providers. Similarly, marketers can use information obtained from consumers to customize their advertisement messages, to segment their audiences, to facilitate consumer search for selected types of information and products, and to collect information about consumers’ preferences to improve future products and services. Moreover, marketers can potentially provide consumers with a more enjoyable experience by offering such services as information, entertainment, customer service and technical support through e-mail, Web sites, live operators, and soon via video-conferencing.

Use of interactive advertising through new media such as the Internet, also draws attention to the contrast between traditional assumptions about advertising and its effects and the realities of communication in the market place. Traditional approaches to advertising practice and research implicitly assume that advertising is something the firm does to the consumer. Interactive advertising makes it clear that this is a very limited view of advertising and highlights the need to understand what consumers do to advertising. The reasons consumers seek information, self-select information for attention, process and use information, and respond to information are critical for understanding the effects of advertising and for designing measures of advertising effectiveness in an interactive context. Self-selection of both the sources from which information may be obtained, and the way this information is processed, is an increasingly important determinant of consumer behavior. Market information systems that fail to consider the impact of customer control of information will, at best, be incomplete, and potentially misleading. Interactive advertising poses new and difficult challenges related to the measurement of its effects and effectiveness. The reciprocal communication between marketer and consumer will make it difficult to isolate the influence of any one advertising exposure. This means that the focus of advertising evaluation will need to shift from a focus on outcomes to a focus on both process and outcome. The role of the consumer in selecting advertising, in choosing when and how to interact (if at all), and the goals and purposes of consumers involved in the interaction will be especially important dimensions of advertising that will require new measures and new conceptualizations of how advertising works. It is also likely that as the marketing mix becomes increasingly integrated and the same vehicles assume multiple functions (communication, distribution etc.), it will become increasingly difficult to conduct relevant research on advertising without consideration of the larger context of the full marketing mix.

METHODOLOGY OF THE STUDY

RESEARCH HYPOTHESES

The hypotheses to be tested in this dissertation are;

H0 : Advertising has a positive impact on buyer purchase decision.

H0 : Brand Advertising is more effective than Generic Advertising in the buyer purchase decision.

H0 : Consumers will not buy products they do not need.

To achieve the objectives, research questions and hypotheses of this dissertation, respondents will be chosen from consumers of coca cola. The sample will consist of about 100 respondents where questionnaires will be administered and used to make valid conclusion about the role of advertising in purchase decision. This type of approach is referred to as qualitative research methodology. The use of triangulation approach will be used to test the reliability and validity of the findings. Chi square which is a major statistical tool will be used to analyse and estimate the data collected from the respondents.

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