a i. l

t - .

{ : l-t

; "Srran'(oi

1r:*

INSTITUTE OF FORIIGN TITADE AND MANAGEMENTDcpartnrcnt of Mrurngolncnt fitud ics

MBA Third SemesterSession: - 2009-2010

0Sc,,rtioq lhnk

l'npor Codo : MIIA-034llrpcr T'itlc : Cionsumcr lScltrvior and Mar{cting CornrrrurricltiorrInstructor : Ms, Madhulika Gupta.

Q-l Explain Consunicr decision making process. Also cxplain the importance ofaonsumer behaviour.

Q-2 Explain the proccss of consumer information acquisition. What are the varioussources through which infbnnation nlay bc ucquirecl?

Q'3 Difl'erentiate between consumcr resetrch and markoting research, Explain theconsumer research process.

Q-4 Whut is the dilfercnco hstwccn prinrary uncl soconcllry rcsearch? undcr whatcirctlmslanccs might the availability . of secondary data make primary reseaichunneces$sry? whut or0 8om0 nujor sourccs nt'sccorrrllry tlirrir/Q'5 wh.t are the various pr's .ncr c.rrs o|currs.'cr rcsc'rcrr,/

/'

{ lNfil ' l ' l 'tj ' l ' l l l olr tioluttcN'l'l l^l)lf ANl) MA NAGRMnN.[Dcpnrtmcnt of Mrn:rgclnent Sturlics

MBA Third SemesterSr.:ssiorr: - 2009 -20t0

Workshee.t: lPapcr CodcPtpor Ti(loInctructor

: MBA,034: consurner Ilchavior urrcr Mad<cti,g corrrrrrrrrric:ir(i 'rr: Ms. Mudlrul ik ir Guntir ,

Introduction: The case examines the growth of Archies, leader in the Indian socialexpression industry' It explores the c'mpany's franchisi,ig nnJ^,,,;;ffi,u initiatives,The case also discussos tire measures trtt. ,o,npoiry-i..n t, rlrcct the threat of ncwtcchnologies i'e', c'groctinp a'cl sMS grr*ii,rgr, iri.irry, rhc cirsc ,rirrurr.r'iirc pr'blcr,sfaced by the oompti,ry Ju. to a revamp of its cli,stribution anJ ffii'opcr.utions.It also explores the futuie plans of the company in the light ol'thc above developments.A Company in Troublc!

In February 20a2' he Delhi High cour"t clisnrissecl.an application fur iniunction f.iled byleading Indian grccti,g ctt,t un,igitii,o,npuny, Archics ijr,cctirrgs & ciii; ilj, lrt.crrics;,' l 'hc

conLpi lry wurttcd a stol l , t , r . t ' , t , |cstnrirr l f i rrr l rr l i rrr t l i rrrrcrr( ir l ist r ,rrruDs - t l rc sl i ivsena. thc vish'"va Hinitrr poii.ri,J (vi-tp) on,r rr,. ' i i,,;,;;; t)irl - ti.rn tintrif.ring in thcValentinc's Day celcbrations ancl ,u1", pru,noti''s i' i't, ,1,,,ru,.,,,,r's a'cl outlets.,

Archies filed the application l'earing that the groups wiil va'crarize their outlets as theyhad in Februarv zootJ tn. Coui', a.ririoi rrr*r..d Archieslnanagement, for a,ydisruption of business on valentinr', Doy would transrate into huge revenue rosses for thecompany, Director vijayanr chhabra ,uid,. "Eurry;;;';;;*r. what happened rasr year.our outlets were targeirir i1 rtar'rrri o.ttri 1r1r .,1", pr,*, ,r,thc co,ntry. our busincsshas bsen'fl'Ected scvcrcly"' rrt' irituiir*l of tho irriurrori'' 'ppcnr 'irrr0,r n rirrtr wrre,rrthe company was f{ing a host "rpt"'ii.*s on various other li.onts trrat were taking a to,on its perlbrmanoc' In the rat.-lgqbs,l-.ur,t, rr.r*ii.'v.,y'iup,,r,,,,, Arorrics was rbrcccr tolaunch irs own c_grccrings *.ili.; ;;1;;;;ffi.:;,i,j,rrrurgrr irs wholty ow'otlsubsidiary Archies online.im Lil. i" hi,r -2000.

-" "..,

However, by late 20!.r^, the company made archiesonrine.c-orx a paid service. youhanDa*ab A'ia (Aria), chier;ofli*,ffirr1i.;,il'l;;;rn.-i,,,. ,r,c porrar comnrenrcd, ,,8_c'mmerc, was n't happcrrirg r'r,,,," or,," ,ir, u, ,rpLi*,t ,,,rct 'crs wcre nrso notfbrthcorning' we wantei'tu inJr*ur*',,u, ,rurrruc u'cr cirargirrg us.rs w*s thc sorution.,,As expcctcd, a Iargc nuntbcr ,,Lii" trlo',rrrrriu,i ,"gir;;;.;';i, sru,;rcd usirrg rhc sc.vicc,Aria admitted' "we..have su1l'erecl mas111e clr'ps in our registcrcd user base since webecame a paid site." In .aJiti."l"'tir. probrems, t;ril;r, initiatives to convert itsnetwork of franchise.e ogtlets into tonifuny-owned outr.t*iii4 it, distr.ibutor setup into aca*ying and forwartlir$2 {catt t-,il;.re prov.i'g to bc-,i.r.jor. burdens on its ii;ances.As a result' in 2000-01,'*,;iil;;,lil"i'; iill-fi#;illyenr ,isto,y, il,,rrnn,pnny

t(

{ experienced a n€gative growth. Turnover declined from Rs 710 million in lggg-2000 toRs 680 million in 2000'01, while not profits lbr thc surnc pcriocl clcolinccl by around 32%from Rs 130 million to Rs 9l million.3 Archies' market sliare remained at 45% between1998 and 2000' Analysts remarked that th. cornfany's leadership status in the Indiangreeting card and gifis market seemed to be doing ii no good iri increasing its marketshare and sustaining profi tability.

Background Notc

Archies wus thc bruinchild ol'Dcllti-busecl Anil Moolclrlrrdarri (Arril), wSosc liurrilybusiness wus sollirlg suris, Irt tlrc lltu 1970s, hc dccirlcd. (o lrrry irnrl scrll good-r1u'lityposters through mail-order catalogs, advertised in one of the pupulo, n.,ogo"i'n* in thosedays' sun' when the demand incieased; he started g.uing posters ol'film stars, naturalsceneries and other subjects of intelest,. printcd iy local printers. An avid musicenthusiast, Anil decided to sell books containing lyrics of hit English songs in addition t6the posters' lle wrote'down the lyrics or rJngr ltimscrt' while pluying them on ugramophone' He began to sell songbooks contoinlng iiirlyri.r.ir,ri, ilrrf groups suchas ABBA' Beatles and BoncyM. donrrrrcnting on ii is cxpcricrroos, A'il sAid, ,,1 woulclspend hourq listening to a sound track, meticukJusly truurri,,ti,,g lyrics which were initiallyincomprehensible, so when we finally managed to sell the entiie lot to a n uri, shop inchanakyapuri, we were so excited we-courd barely contain our emotio's.,,As customer awarcness increased, he

fart;f coming out with songbooks containing hitsof a particular year und he *ur'*rn sclling ;;;;: iido oopir.rs por yenr, Anil thondcsided to cntcr lhe greeting urrds hirrinc,rs,

l'fe observcd tlrut ilt htdiu, cut'tls wcrc typic.lly srkl ,rrr ,l'tlrrsry slrrcS,xr.:s rrr'rkctl'I l irthday'and'Anniversary; kr:pt in tl ic ,o'nu's ol'sratiorrcr.y slr.,s. ln 197(),A'il urrcl ' isbrother Jagdish Moolchanct*i'rlugllrr'rl g.rlar.r,,iir 6iii; & creetings, regisrered as apartnership concern

.for starting iire greeting cards uurl,r.rr. The name Archies waschosen after Anil took, a fancy 1i a neilhbor'r arg ".rr]irchie. During a visit to southBast Asia, Anir wus imprcssr;d ;iil; irr.:ryldr; "*ti,,g ,ur,t shops offering goodambience and soft backdiop music. He said, "rn. .uri'rtrois there *.r. rik. a Raymo'dor Bata showroom hcre' If we hacr toi.tuit, *. rrr.r tiruuJi, ,rruprL shop.,, He dcciderr t,try out this ctlrtcept in lndiu us wcll, whictir.,r t, tr,, ru|,,rrr, ,r'thc lirst ALchics, outlct inDelhi in 1984, named'Gift Cuflrry-l,""

The Story Behind the Success

According to analyst-s' Archies'franchisee model contributed a great deal to its success.Bharat shah, chiif Investmert ori"rr, nirra capi[i'l].,r-,"0,r1r fund company, said,"The key to understanding etrrrirrll.o realizetr*t ii lr'rrt in rhe business bf cartls orgilh, trul in li,firchi,tsunulrugolrrclrl,,,

Anil agrccd' "wc lnadc our .wn mddel sui(ablc firr r 'cri lur concJitio's. wc crcatecr abranded franchise' Now the tttnorlu"trus clra'ged i,r ruJiu a,cr evcrybocry tarks aboutfranchising' But we were the first to aolnat kinj oi;i;fi;, ilren went in for tie-ups soas to get a greater rafs! to support thesc storcs bccausc thcsc wcre oxclusivc storcs,,,commentins 0n the oe-cisioo i6 rpiror .r" nr*rtiriril;;i; ftonr rhc very beginning,

{ Anil said, "You don't have malls in India so we have to manage in limited area." Byfranchising, Archies was not only able to suvc ou ruul r.:stute costs, but slurc thgadvertising nnd promotion expenditures with franchisees, Archies franchisees made theirown invcstrncnt in thc busincss untl prrid rnyulty to Atclrics l irr t lro trrrnover gorrcrutcdfiom the sale o1'Archies products...

Tackling the B-Greetings Thrcat

Archiesonline,com had three major sections' mcet, greet ancl gil i . Under'meet,'Archiesoffered services such as free e-mail, chat, reminder services, and a greertings scheduler.T'he 'greet' section was a consunrer intcruotiorr arca whcrc rcgistcrccl custonrers corrlclsend and receive a variety of animated e-cards/greetings online fbr free.

Over 700 programmed e-sards availablc, whiolr wcro clritc clill'crent li.onr thc usual cardsavailable on the Internet - these cards had an average cight scoond long storyli'e withanimation and sound effbcts incorporated into them, In the 'gili' secticll, cilsupters oouldpurchase gifts and get them delivered at their doorstep

While residents of Delhi got free delivcry of their purchases, customers in other parts ol.the country had to pay Rs 25 as delivery chargcs, i'he minirnurn value of each pirrchasewas lls 250, Archics ticd up with corrricr ootttpurrics - l i lbcc 11d lJluc Dlrt to cl ' l ivgr t10gil is nnd Oflrdli purOhrtsctl by crtstotngl$, ' l 'hc

cornplny tictl rrp wirh l i lsy Nct Cor' l irr t lropayment gatcway,..

I lationalization Gonc Wrong,l

THE DISTIUI}U'I'ION ITIVAMP

During the financial year 1999-00, Archics cJccided to rcvanrp its distribution networkand rcplacc cxist ing distr ibutors l ,y a C&lrugcrr t r rctwor, l i , Accr l r ,4 i rg t , - t l rc 'cwdistribution systcm, in placc ol'6tJ i istritrutors i, i2l ,t,,t..,r, Arohics appointccl l0 c&l;agents in l0 states whcl catercd to clistributors who in tuln rcuclrcd out tn thc rctailcrs.

Manish Jain, company Secretary, Archies, said, "'l'he biggcst aclvantage of this rnodel isthat the company owns thc invlntory, so the ,onrun',.r"f, !.nsured of seeing the entireproducts range that is availablc," in.ths *,,rt irt 'rci irp, Archies hacl to"accept thedistributors' decision when they picked. up only those'ioducts, which they believedwould do well' As u result, Archics oould rrot pusn iis .:.'iii* range of proclucts into theretail .chimnel, Rfliesh syal, Mlrkcting . Mariagcr (wcstcr. ltcgion), Archios, saicl,"Distribution could not malch the pacc with rvhicl wo i'troclucccl pr.rducts and wit6 t6cirl imited rosourccs it was dil l ' icult. Now with thc c&lr ug.,rt, ,,,,,1 cxclusivc outlets wc 0a'at least continue to revamp our product portfblio...,,

The Retail Revamp

In 2001, Archios began an.'cxolusivity clrivc,' !I *uy ol'whioh all cxisting Archics0allcry lrilnchis0ss were nskcd tt kcr;p ,rrly Arcliie* r,1,'i* ,l 'p*rclucts, lf tlrqy dicf notwant to be an exclusive ourler, rhcy wcrc givc, trre ,pti'I,,r;rJ;;;;il; il,r';,iArcrricsPaprlr Rosc ShoppL: 0n a 'non-cxclrr,sivc' lrnsis,

The idea was to have only Archies Gallery and Archies Paper Rose Shoppe as thecompletely frlnchised outlcts, As u part of this oxuroisc, rnlrr.y sirops wcre rcvuntpcd undsomc ovcn had to b0 shut down, Archies hclicved thnt hcing in diroct oontact with the0u!tt0tll0r will ltclp ulJcrli l lrc tlcll i lurl rctlrrirrrrrrcrrls ol'vll iorrs prodrrct l irrus, urrtl lurvcbetter inventory managemcnt and produot mix systenrs. hr ucldition, thc company wasalso plalrnirtg to ittcrcase llrc rtunrhcr ol'Visiorr 2000 storcs orr a lnr51e scale . The Vision2000 stores were much bigger than any other Archies rctail outlets and according tocompany sources, brought in 40% more revcnues as wcll, 'l'hose stores had world-classinteriors and stocked all thc products rnarketcd by thc conrpany...

' l ' lrc ltulur0. Slrll l ing ltocut

'l 'hc Moolchandnrris bcliovcd that (lrc distritrtrtion lrrcl rctli l levlnrl) cxcrciscs will yicltlpositive rcsults alicr the transitit-rn phasc. Archics dcciclccl tu lbcus nlore on t6c gillssegment, as it believed the segment was under-exploited, The company planned todevelop and introduce new lines in the gift segment including higher end'items, whichwere lacking in the present setup. The idea was to make an nrchies gallery a 'one stopgift. shop' for people from all walks of life. The company had alread| begun importinghigh'end gift articles such as orystal, soli toys anct Flng- Shui items h.onr-Chi'u, FlongKong and Kores in uddition lo outsourcirrg fionr locnl vr,rxkrr.s,,,

Iur u cs:

Idcnti ly thc stratcgics that lrclpccl Archics er)rcrgc ancl rcnrain t lrc leaclcr in thc industrv.

Ol' loclivo T,vnJr (luottionr

I

Fi l l in the blanks :

is the person who first recognizes need to buy a product or a brand.(a) influencer

(c) decider

(b) initiator

2.|;:ar deodorants, markctcrs arc using bc:ncfjt inllrrcnccr.(a) Informational

(c) value expressive

(b) utilitarian

3' A prtlduct whiclt is a neccssity and cirrrrrot bc sccn by othcrs slroull lre lrdvcrtisccl on

' {1/'

, / l/ F

{ (u) rationul benefits

(c) emotional betrclils,

4.

(a)Latents

(c) late majority

j

(a) situational involvementI

(o) rioky involvemsnt

j6, For houschold produots

(c) Physioal disrribution

7. Promotion is also calledi -

(al l,Iarketing Communications(c) Publicity

(b) stutus

are the last people to adopt an irurovation.

(b) laggards

is a form of temporary involvement

6, ilhe 4 Ps of marketing mix are(a) Packaging (b) lrroducr

(b) persistent involvement

sol lli rnlgc is irrrptirtlrr t wh i lc, 1rr rr.clrirsilrg

(b) social

(d) l'coplc

(b) Sales promotion

(d) Itrcc pricc olls.

8 . 1 is the buying behaviour ol,flnal consumers,9' which step of the buyer decision process immediately precedes the purchase decision?l0: Another term I'or a motive (especially after it has become aotivutccl or clirccted) is _I l. Basic needs such as hunger and thirst are called

which step ol'the buyer clecision proc.ss irnrnecliatcly plcecclcs thc llurc6asc dccisio',i

f-

I

,f 14,If u consurncr has clisctlmfort ctuscd by postpurclrime conflict, lhe consumcr is

/ exPenenclng .-*-15, With respect to consurner behaviour, thc cenl.ral question lbr rnarkcters is: How do consunrersregpond to various markcting efforts the oompany might use? (True/F1lse)161 Acoording to Mnslow's llierarolry of Ncecls struclurc, scll'-uoruulizution ngcds ure sntisliod bcforcesdeem needs, ('l'ruc/False)

l7''The first step in the buyer decision process is need recognition. ('l'rue/fralse)

.18' consumers go through five stages in the process of adopting a new product. The first stage iscalled initiarion. (True/False)

l9'' fte fift step in the business buying process is generally thought to be one where general needdgflrnption occurs. (True/False)

201 considering the types ol'buying situutions in business buyirrg, thc stLuiglt rcbuy ollc' involvcsmgre decision participants than does the,moclified rebuy. (,l.rue/rrarss)

, l

ti.I

I

I