Literature Review The Role and Impact of Advertisement On The Consumer Buying Behavior

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Acknowledgement

Any accomplishment requires the efforts of many people and this work is not different. I thank Astt. Prof. Zia Foley my guide, whose patience and support was instrumental in accomplishing this task. I also thank Astt. Prof. Bharat Bhushan, other faculty members and my friends who actually helped me and provided me the valuable information for the study. Many research studies conducted by various authors across the globe have been of great importance for giving an insight about the topic taken. Every effort has been made to give the credit where it is due for the material contained her ein. If inadver tently I have omitted giving credit to someone, I am heartily sorry for that negligence.

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Topic: Role and Impact of Advertisement on Consumer Buying Behavior

Int roduction As being incorporated or associated with the marketing process, advertising finds its position in every organization. Advertising can be defined as another strategy as an approach towards competitive advantage. Various advertising concepts are in the stream of the media and papers but still there is a little evidence that advertising can significantly help the organization boosts its performance. In ter ms of sales, it is true that the application of the marketing and its associate strategies can gain the consumer s trust and loyalty, and in return, can enjoy the benefits of the market share.

Background of the Study Many businesses explore various options in order to achieve the success. From the traditional research and development, to the training of the people, and the intervention of the various technologies, there is no doubt that organizations ar e trying make a difference against the other. Obviously, the organizations actions towards the threats and challenges in globalization enable the pr opellers and the people to work to meet their corporate objectives and long-ter m goal. However, the simple marketing concept is viewed by the business analysts as an effective str ategy if the organization is planning to gather and/or keep the loyalty of the consumer. The use of the advertising within an organization is interestingly growing and various researches value its importance as an important factor that can influence the buying behavior of the consumers.

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Rationale The interest paid by the past researchers on the function of the advertising in the organization is considered as one reason of the study. In addition, maintaining and extending the purpose of the advertising from the simple operation of the organization creates the similar interest. If the idea on how powerful the advertising can be, the organization can find its own place in the market and can play with the other competitors. The study understands the various point-of-views of the business leaders and marketers regarding the application of the advertising in their organization. In this case, the study prepared several questions that can help the study meet its own objectives. 1. What the factors that usually contributes to the buying perception and behavior of

the consumers? 2. What is the common goal of advertising?

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Literature Review Jet hwaney, J.; Jain, S.: Advert ising Management (pp. 7) Advertising is one of the largest generators of revenue in the world economy. It generates employment directly and indirectly and influences a large section of people. An advertisement interest, entices, intrigues, and entertains; and creates life style.

Definitions: Amer ican Mar keting Association (1948 ); Advertising is any paid form of nonpersonal presentation and promotion ideas, goods, or services by an identified sponsor. Dorothy Cohen(1988); Advertising is a business activity, employing creative techniques to design persuasive communication in mass media that promote ideas, goods, and services in a manner consistent with the achievem ent of the advertiser s objective, the delivery of consumer satisfaction and the development of social and economic welfare. S. A. Chunawalla; K. C. Sethia: Foundation of Advertising (pp15) John E. Kennedy (1904) mination. described advertisement as salesmanship in print. Till the term salesmanship in print was coined, advertising was viewed as information disse-

Compare and contrast: A working definition could be; Advertising is the mass paid communication for the brand building thr ough persuasive communication and position them into consumers perception, besides taking consideration of market environment and consumer expectation.

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Web: ntu education The role of advertisement changes unto what the organization wants them to do. Ther e were times that an organization wants them to do. There were times that organizations use the advertising to help them survive fr om the impacts of economic trends. Still, the economists views that the advertising plays a significant effect on the consumer behavior. And in a long process, the advertising can lead the or ganization to competition. Based on the understanding regarding the advertising, the approach rooted in the organizations search for the right answer on the effects of the competition. Consequently, the accepted basic role of the adver tising is to provide the consumers with the r ight amount of infor mation regarding the product or services, which is related to the objective of the competition and that is to deliver the consumer satisfaction. In this view, the level of advertising affects the consumer who is the focus of the organization (Park, 1996). Based on the previous studies regarding the consumer behaviors, there ar e three influential factors that affect the consumer decision when buying. They are enumerated as external influences, internal influences and the marketing influences in which the advertising, product promotion, and pricing technique are found. Definitely, the marketing activity such as advertising affects both internal and external behavior of the consumer. Most especially, the consumers per ceptions are influence through the exposure such as seeing an adver tisement; attention which means that the consumer recognizes the advertisement; awareness which is common if the advertisement involves some humor; and the retention that keeps or stays in the mind of the consumer (Chen and Lee 2005). Advertisements also affect the knowledge by giving information, attitude, personality, lifestyles of the consumers, and the cultur e of the consumer. The concept of advertising makes it possible to involve the consumer s which greatly affect the buying decisions of the consumers (Tsai, Liang, and Liu, 2007).

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Khan, M. Consumer Behavior and Advertising Management (pp266-67) Role of advertisement a) It stimulates demand. This stimulation is because of the availability of the product, discounts offered if any and the expectation of the fulfillment of latent and aroused needs. b) It supports other promotion mix elements. It does preselling and helps the sales promotion and personal selling activities. c) It counters competitive moves. By combining with other promotion elements it acts as a competitive weapon. It differentiates the companys offer fr om other products and builds a brand personality and image of its own. d) It develops brand preference. When the products deliver the desir ed quality, service and value it creates a satisfied customer. With consistent advertising, the brand preference gets reinforced. The satisfied customers spread a favorable word of mouth and ar e an asset to the company. e) It cuts costby increasing sales, more units are produced and the cost of production comes down (economies of scale). Even the selling costs ar e decreased because there are a less number of wasted calls by the salesman. With lower prices offered by the company there are more penetration markets and more demand for the product. f) It builds brand imagesImages are built in the minds of the consumer. There ar e positive images and are for different segments. A brand is a promise of a certain level of consistency, quality, service and other benefits like warranty etc. Manufacturers are proud of their brands and want to have greater brand equity for them . g) InnovationIt encourages innovation and new product development and reduces the risk of the product becoming obsolete. With more innovation there is more sales which offset the cost of innovation. Innovation leads to more sales and the business expands.

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Web: Encyclopedia The Functions of Advertising Although the primar y objective of advertising is to persuade, it may achieve this objective in many different ways. An important function of advertising is the identification function, that is, to identify a product and differentiate it from others; this creates an awareness of the product and provides a basis for consumers to choose the advertised product over other products. Another function of advertising is to communicate information about the product, its attributes, and its location of sale; this is the information function. The third function of advertising is to induce consumers to try new products and to suggest reuse of the product as well as new uses; this is the persuasion function. The identification function of advertising includes the ability of advertising to differentiate a product so that it has its own unique identity or personality.

Web: Encyclopedia.jrank

Advertising and Psychology Walter Dill Scott of Northwestern University wrote the book The Theor y Advertising (1903), which sought to build a theoretical understanding of advertising based on the principals of psychological science. Scott suggested that advertisers should develop certain fundamental pr inciples on which to construct a rational advertising theory of . of

The application of psychological theories to advertising provides an under standing of how consumers process advertising messages and make pur chase decisions. Theories of attention, information processing, attitude formation, and decision making all have relevance to understanding how advertising affects consumers. Another important application of psychological principals is to develop an understanding of consumer needs

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so that products can be developed, designed, and communicated in a manner that reflects the relevant and important needs of consumers.

How Advertising Works Advertising is a form of communication. Like all forms of communication, it has many different effects and these effects are often related to one another. The message in an advertisement, no matter how strong and persuasive, will have no effect if the consumer does not see the advertisement or pay attention to it. One useful framework for understanding these multiple effects and their interrelationships is called the hierar chy of effects model. The hierarchy of effects model identifies different stages in the communication process. Getting Attention The advertiser should know where a communication should be place to increase the odds of reaching a par ticular type of consumer; this is the media decision. Advertisers often refer to characteristics of advertisements that gain attention but distract the viewer from the primary message as cr eative clutter. Consumers are less likely to attend to advertisements they have already seen, and the more often an individual consumer has seen an advertisement previously the less likely they are to pay attention to it when exposed again. This phenomenon is referred to as advertising wear out. Compare and contrast: Psychology theories of behavior, motivation, learning, attitude formation etc. is certainly helpful in the study of the behavior of a consumer and his behavior can be predicted to some extent.

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Getting pr oduct in the attention is the big challenge to the advertisers and also the biggest challenge is that to maintain the curiosity of the consumer s. Exposure to an advertisement still does not mean that a consumer will attend to it. A consumer may simply turn the page of a magazine, look away from the television, or click on a banner advertisement on the Internet to make it go away without ever paying attention to the advertisement. Thus, obtaining the attention of consumers who are, in fact, exposed to an advertisement is a significant challenge for advertisers.

Rajgopal; International Marketing: How to developing a media plan?(321-330)

Build a profile of consumers in reference to their location, accessibility, and demographic composition. Study media profiles for audience coverage, reach and frequency of viewing. Match consumer profile to media profiles based on its coverage in terms of readership or viewership. The preliminary selection should be with regard to product and cost considerations. The final selection of media should maxi mize the achievement of media objectives.

Web: online encyclopedia Processing Inf ormation: Advertising research has demonstr ated that the message must be clear and meaningful to the consumer; if the consumer does not comprehend the message, it will not have the desired effect. Thus, it is important when creating the advertisement to understand how consumers think about products and product benefits and to use language that the consumer will understand. It is also important that the product and the product message

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be the focal point of the advertisement.

Information Evaluation: The consumer s will need to determine how believable the information is and how relevant it is to their individual situation in life and to their behavior as consumers. This evaluation phase poses significant problems for advertisers. Most consumers tend to discount the information in advertising because they understand that the purpose of the advertising is to persuade.

Att itude Format ion: In some cases, the objective of the advertiser is immediate action by the consumer; this is typical of direct-response advertising where the goal is to have the consumer do something immediately (buy a product, make a pledge, and so on). In most cases, however , there is a lag between advertising exposure and any action on the part of the consumer. In such cases, an important communication goal of an advertiser is to create a positive attitude toward their product. Attitudes are predispositions or tendencies to behave or r eact in a consistent way over time. There is an affect, or feeling, dimension associated with attitudes, and there are generally various beliefs that provide justification for the feeling and predisposition. in some cases, the goal of advertising may be to create negative attitudes. For example, in various antidrug and antismoking public-service announcements, the objective of the communication is to r educe the likelihood that the viewer will use drugs or smoke. Compare and contrast: Ultimately, the success of advertising rests on whether it influences or not, the behavior of the ultimate consumer. Product advertisers want consumers to buy their product; political advertiser s want voters to vote for their candidate; and sponsors of public-service announcements related to the harmful effects of smoking wants the smoking to decline.

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Such effects are of primary interest for understanding the influence of advertising; it is only one of many factors that influence such behaviors. A consumer might want to buy an advertisers product, but may not find it in the store, or another less-desirable product is so much less-expensive than that the consumer chooses it instead. It is possible, in some cases, to identify the direct effects of advertising on behavior, but in most cases, there are too many other factors that can influence behavior of consumer. It is for this reason that most advertising research focuses on other effects in the hierarchy of effects. When measur ing the direct effect of adver tising on behavior is of interest, it is necessar y to design carefully controlled experiments to control for all factors other than advertising.

Web: Goliath: ADVERTISING'S ROLE IN HOW HUMAN BEHAVIOR COMES ABOUT

Advertising, as currently practiced, and ignores all that has been learned by cognitive psychologists in the past 30 or 40 years. Consumers process all incoming information, including advertising, in a very complex yet instantaneous manner. Adver tising is not a stimulus in the outmoded behavioral psychology stimulus- response model of human information pr ocessing. Advertising, if it is attended to at all, is nothing more than a net addition to everything the consumer has previously learned and retained about the brand. The challenge for advertising is to find ways and means to bypass or upset business as usual in the consumer's brain and to build an enduring perceptual representation of the brand as one that is acceptable and desirable When an advertisement shows up in a consumer's immediate envir onment, it may or may not be perceived consciously. If it is attended to at all, it will be in the context of whatever the consumer already has retained about the advertised brand and the product category in which it competes. What he already knows about the br and will depend on what he has processed and remembered from previous advertising for it as well as other sponsored marketing communications for it, past experience with the brand (either per sonal or secondhand as reported by family members, fr iends, acquaintances, stran-

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ger s, or imper sonal outside evaluator s like Consumer Reports), and whatever past information has come to him about the brand from other non-advertising marketing. Compare and contrast: Tr aditional view of how advertising works as the dominant brand information sour ce for consumer s is based on the explanation developed in the first half of the 20th century by behaviorist psychologists. To the behaviorists, all human (and animal) behavior can be explained in terms of the external stimuli to which individuals are exposed and the responses that these stimuli evoke. Cognitive psychology has, in the past 30 or 40 years, revolutionized how psychologists conceptualize the ways in which human beings acquire and process information and the relation between such information processing and subsequent behavior. Marketer s' view of how adver tising and marketing communications work has not kept up with this revolution in understanding how humans process information, think, and behave.

Web: Tepper education; Baohong Sun: The Impact of Advertising on Consumer Price Sensitivity in Experience Goods Market s Advertising can affect consumer demand in many different ways. Becker and Murphy (1993) have argued that the "presumptive case" should be that advertising works by raising marginal consumers' willingness to pay for a br and. This has the effect of flattening the demand curve, thus increasing the equilibrium price elasticity of demand and then lowering the equilibrium price. Thus, advertising is profitable not because it lowers the elasticity of demand for the advertised good, but because it r aises the level of demand. There have been many prior studies of how adver tising affects two equilibrium quantities: the price elasticity of demand and/or the price level. Our work is differentiated from

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previous wor k primarily by our focus on how adver tising shifts demand curves as a whole. As Becker and Murphy pointed out, a focus on equilibrium prices or elasticities alone can be quite misleading. Indeed, in many instances, the observation that advertising causes prices to fall and/or demand elasticities to increase, has misled authors into concluding that consumer price sensitivity must have increased, meaning the number of consumers willing to pay any particular price for a brand was reduced perhaps because advertising makes consumers more awar e of substitutes. But, in fact, a decr ease in the equilibrium price is perfectly consistent with a scenario where advertising actually raises each individual consumers willingness to pay for a brand. Compare and contrast: Advertising actually works one need to estimate how it shifts the whole distribution of willingness to pay in the population. This means estimating how it shifts the shape of the demand curve as a whole , which in turn means estimating a complete demand system for all brands in a category. Advertising is profitable because it reduces the market share loss that the brand would suffer from any given price increase.

Web: Global Issues; Anup Shah: Media and advertising global issue Ben H. Bagdikian, The Media Monopoly, Sixth Edition, (Beacon Press, 2000), p.150 Mass advertising is no longer solely a means of introducing and distributing consumer goods, though it does that. It is a major mechanism in the ability of a relatively small number of giant corporations to hold disproportionate power over the economy. These corporations need newspapers, magazines, and broadcasting not just to sell their goods but to maintain their economic and political influence. The media are no longer neutral

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agents of the merchants but essential gears in the machinery of corporate giantism. And increasingly they are not only needed but they are owned by the corporate giants As globalization becomes ever more prominent, the role of media and advertising and consumer ism also increases. Ideal for the large multinationals that can take best advantage of globalization include the even larger market to which products can be sold. However, diverse cultur es could sometimes be an obstacle to easy selling.

Advertainment Advertisements disguised as Entertainment! We are also seeing more sophisticated techniques, such as short films where the aim is to sell a product but to cleverly do the advertising in a subtle way. These mini films can be very entertaining and exciting, but also promote a product behind the main theme. While it could be argued that there is nothing wrong with this, it is just a mor e sophisticated way to sell products, more forthcoming and explicit mention that this is a commercial would be good for more people to be aware of what they ar e watching. (Although, that might be as hard as asking a gover nment to tell their audience that they are about to watch some propaganda and to take it in appropriate consideration!) Compare and contrast: The media plays a vital role in the advertising of the consumer goods and services, whether it may be print, audio, electronic media or the web. There is a flood of information from all sides towards the consumer. Most of the times it is noticed that media manipulate and use the source of information according to its or clients will or they ser ve incomplete information. This is certainly harmful for the consumer point of view.

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Web: Michael Schudson; Center for Media Literacy Advertising: Hit or Myth? Advertising is much less powerful than advertisers and critics of advertising claim, and advertising agencies are stabbing in the dark much more than they are practicing precision microsurgery on the public Consciousness. One of the mor e striking examples concerns television advertising for the 1984 Olympics and the 1985 Super bowl. The nave observer must assume that businesses reap extraordinary rewards for their elabor ate and expensive sponsorship of these events. But, it turns out; no one really if they do knows With most Americans most of the time, this notion about consumer choice explains scarcely anything about why consumers buy what they do. Never theless, there may be ways that advertisements indirectly affect consumer buying decisions. NULL This article originally appeared in Issue# 37

Its effects on product sales may be questionable, but where advertising succeeds is in selling consumers on the purchase of happiness. If business people think ads affect consumers directly, their belief serves as a spur to an advertising program This self-fulfilling pr ophecy" also works with a company's own sales force, distributors and retailers. A salesperson finds it easier to say "I'm selling Proctor and Gamble," rather than "I'm selling Product X you probably haven't heard of it.' And retailers prefer to stock well-advertised goods because they think consumers ar e influenced by advertising.

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As a result, widely advertised brands become the brands most widely available. Consumers confirm the supposed influence of adver tising by picking the brands off the shelf It is entirely plausible, then, that advertising helps sell goods even if it never persuades a consumer of anything. So long as investors, salespeople, and retailers believe that advertising affects consumers, adver tising will influence product availability and this, by itself, shapes consumer choice. Availability, as marketers sometimes say, equals sales. Advertising may be an important signal system within the business world.

Compare and contrast: The question we need to ask is not whether advertising works but under what conditions it wor ks. Ii should not be forgotten that numerous sour ces of information influence consumers decisions to buy. Normally, advertising is only one of many influences on consumer decisions. However, this changes completely in certain cir cumstances, some consumer s sometimes and all consumers under some cir cumstances are deprived of alter native information sources and are more dependent on and vulnerable to advertising. This is the case with children, with people in transitional states in their lives and with Third World peoples relatively new to the world of mass-marketed consumer goods and less pr otected by government agencies and regulations. It's hard to make this point too strongly: Different groups are differentially vulnerable to advertising; and their vulnerability varies not so much with the character or quantity of advertisements as with claim by age, education, station in life and gover nment guarantees of consumer protection.

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