MKTG6005 Marketing Communications

Summer, 2010

Lecture 2Influencing Consumer and

Stakeholder Decisions(2)

11/0 1

Law 10 5

Influencing Consumer & Stakeholder

Decisions

Chapter F5

& F6Kitchen,

Kim and Schultz 2008

“Discussion Points Trial”Please read this paper

and come prepared with some discussion

points

Today’s Objectives

Flesh out any issues related to the subject

Get Facebook working to our needs

Marc Omms is the facebook name

Communications

How do they work?

Can they really influence consumer decisions and purchase?

Habits…..moderating cognitive decisions?

Stable Markets

Kitchen, Kim and Schultz (200), ‘Integrated Marketing Communications: Practice Leads to Theory”, Journal of Advertising Research, December, 531-546.. (NOTE: to be read for the discussion “trial”)

Assign research topics, and meet your new group and exchange numbers

Feedback for Marketers (Criteria for success, are the ads working?)

Source: Belch, Belch, Kerr & Powell, Advertising & Promotion, 1st ed.

How Ads Work –

Debatable From East 1997……..

Advertising Awareness

Might indicate the strength of advertising

Channon (1985) notes advertising for Cadbury's Fudge that was very effective on sales - little effect on

awareness

Broadbent and Colman (1986) found little relationship between ad awareness and sales effectiveness in a study of eighteen campaigns in the confectionery market

McQueen (1991) found that recall scores for ads had little or no relation to the sales impact revealed by copy tests

And an ad may produce brand recall without itself being recalled

Explaining Ad Effects

AIDA: Attention -

Interest -

Desire -

Action

The Lavidge and Steiner Model Awareness

↓

Knowledge ↓

Liking ↓

Preference ↓

Conviction ↓

Purchase

Problems With Hierarchical Models:

These models combine the logic of pre-conditions with a less explicit implication of psychological process which is more contentious

Not appropriate for familiar brands, categories (Ehrenberg 1974). Krugman (1965) shallow processing, not reasoned

Not empirically supported: IRI research did not support ad recall or brand attitude change measures of effect (Lodish and Lubetkin 1992)

But any ad effect is going to be weak and not easy to find

Conversion and Reinforcement

The ATR Model (Ehrenberg, 1974)

Leaky bucket idea. Ads as defensive, little leakage, main force on take-up is product appeal, ads have weak effect and operate after purchase to remind routine purchasers

Awareness ↓

Trial ← Advertising

↓ Reinforcement

↓

Repeat Purchase

Psychological Process IssuesInvolvement and Processing

High involvement more likely to fit the sequential model, low involvement, the ATR model

Batra and Ray:

Low involvement, operating on brand salience.

Any attitude change is consequential High involvement, dissonance process, behaviour

led High involvement, Ajzen and Fishbein (1980),

ideas led The Elaboration-Likelihood Model

Peripheral and direct routes to persuasion:

Direct route creates internal elaboration of arguments, anchoring beliefs. High involvement

Peripheral, based on associations, no elaboration. Low involve’t

Relating Ads to Purchase

Degree of Involvement. If the purchase is involving, does the ad have to be more persuasively argued? Car ads on TV

Necessary Content. What needs to be in the ad that will be re-kindled in the purchase context?

The Five Communication Effects (Rossiter and Percy 1987) Advertising →

Category need

→

Brand awareness

→

Brand attitude

→

Brand purchase intention

→

Purchase facilitation

Relating Ads to PurchaseCategory Need

Most people do not buy the brands they see advertised. Ads must relate consumer motives to the brand/category

Brand Awareness

Cued memory. Recall or recognition of brand.

Recall needed when brand not present, buyer initiated,

Recognition needed when product present and observable, sales context initiated, eg Overall effect of pack important

Recognition advertising requires visual media;Brand Attitude

The brand must be preferred to other brands in the same price range.

Relating Purchases to Ads

R&P distinguish between negative condition avoidance (aspirin) and positive benefit (a novel, wine). The first needs informational copy, the second `transformational' - a more personally relevant and emotionally charged approach

Purchase Intention

A self-instruction to buy. Needed for one-off purchases from outlets used rarely, eg the purchase of a water purifier or a new mattress. Less important for supermarket goods where the purchase context may remind

Purchase Facilitation

Actions often depend upon facilitating factors, eg credit card purchase of cinema tickets. Ads need to answer questions about cost, where to buy, ease of installation

Evaluating The Rossiter

And Percy Approach

Presented as a logical, cognitively based account.

The sequence is: Brand awareness →

Brand attitude →

Brand purchase intention →

Purchase

BUT leaves aside mechanisms such as: direct associations (music, Gorn) framing availability effects exposure effects affect primacy (Fazio)

Securing Attention And Understanding

Some campaigns much more effective than others (Levi)

Problem of `relevant attention' (dissonance work, Fazio and Zanna, Chapter 7)

Classifying Purchase

Ad effectiveness will be conditional on a number of factors

Widely held view that the ad should relate to the purchase situation. The Rossiter-Percy Grid

TYPE OF MOTIVATIONInformational Transformational(Negative motivations) (positive

motivations) aspirin a new novel

TYPE OF DECISIONLow Involvement High

Involvementroutine industrial products/cosmetics (search and conviction

required)Brand Loyals New Category UsersRoutinized Favorable BrandExperimental or RoutinizedOther-brand Switchers Other-brand Loyals

Classifying Purchase

Ad effectiveness will be conditional on a number of factors

Widely held view that the ad should relate to the purchase situation. The Rossiter-Percy Grid

TYPE OF MOTIVATIONInformational Transformational(Negative motivations) (positive motivations)

aspirin a new novel

TYPE OF DECISIONLow Involvement High Involvementroutine industrial products/cosmetics (search and conviction required)Brand Loyals New Category UsersRoutinized Favorable Brand Experimental or

Routinized Other-brand Switchers Other-brand Loyals

Evaluating The Rossiter

And Percy Approach

Presented as a logical, cognitively based account.

The sequence is: Brand awareness →

Brand attitude →

Brand purchase intention →

Purchase

BUT leaves aside mechanisms such as: direct associations (music, Gorn) framing availability effects exposure effects affect primacy (Fazio)

Securing Attention And Understanding

Some campaigns much more effective than others (Levi)

Problem of `relevant attention' (dissonance work, Fazio and Zanna)

The FCB Grid

Source: Belch, Belch, Kerr & Powell, Advertising & Promotion, 1st ed.

Figure 7.2 The elaboration likelihood modelSource: Based on Aaker et al. (1992). From Fill 4th ed.

Figure 6.6 Promotional strategies for different levels of involvement

From, Fill 4th ed.

Classifying Purchase –

Another view

The Sales Effects Of Advertising Over Time

Repeated exposure may give diminishing returns because of habituation (serial coffee ads reduce habituation).

Adams (1916), Burnkrant and Unnava (1987) showed more effect from three different ads than from the same ad three times

Implications Of Response Curve

Affects ad schedules, media use and coverage targets

Diminishing returns favours coverage over frequency. More media, more time slots to gather more people.

Also favours spreading ads over time - drip rather than burst.

Also favours more varied copy, Jones' Evidence

Which Brands Respond Best To Advertising?

Those with a large user group

Those with a large fairly loyal following (Raj 1982)

New products

Those with category growth potential, eg food and confectionery (but not toothpaste and detergent)

The Importance of Ad Research

Media spending has been a declining proportion of the A&P budget

Now evidence shows that ads give a better return when the long-term effects on sales and the price-support function are included

Trade promotion usually fails to cover costs

Research may help raise support for media advertising

How do ads work? Recognition Processes

Seek to understand the processes which draw attention to recognition - why??

Human Processing: in our brains, memory & processing are distributed as part of the structure with interconnection via neuronal links

Stimulus can set off many simultaneous activities in the brain.

Recognition must occur when this activity converges onto a particular structure

Dominant stimuli is the fastest

Ambiguity (response competition) delays recognition

Recognition

Response competition increases with cognitive difficulty; caused by stimuli - unexpected, incongruous, blurred, changing, complex

Problem for mass communications - response competition gets the most attention, but is often disliked and hard to understand

MERE EXPOSURE

Zajonc showed that exposure increased liking for the stimulus

this process may operate in brand name acceptance & low-involvement advertising

Mere Exposure cont’

Zajonc (1980) showed that thought & feeling responses are relatively independent; feelings may occur before knowledge

Preferenda (feeling) was processed faster that discriminanda (cognition)

May be parallel processed

There can be affective response without recognition (Marcel, 1976)

Some alternative debate: recognition is only one part of cognitive processing & other parts may underpin evaluative response

Schemata

Structures or moulds of thought that are needed for recognition, selection, classification, inference & memory (chunking of information)

Images, Roles (Yuppie, wimp),

recognition is aided when incoming stimuli are aggregated into ‘chunks’ that relate to schema

Ads use schema (e.g about class, sex diffs, young execs)

Ads may be designed to revise ideas or change the schema used to assess the product

eg. The BUGAUP Campaigns & cigarettes

Stable Markets: Brands & Buying

Brands “behave” in certain ways

Possible to predict this behaviour (under certain conditions)

Sources of Data (e.g Panel Data)

Research Indicates

Over long periods most markets change slowly;

Over short periods sales may fluctuate quite substantially in response to promotions but usually return to an equilibrium level

Over medium terms (eg a year) they are quite stable because fluctuations average out and long-term change is small

Single Brand Purchases

Effect of Last Purchase

Not much effect of recency

Kuehn (1962) found some first-order effect but Bass et at (1984) found mostly zero-order

Definitions

The penetration, b, is the proportion of possible households who buy at least once in a period. (Think b for buyers)

The purchase frequency, w, is the average number of purchases made by those who purchase at least once in a period. (Think w for weight). The reciprocal of the inter- purchase interval

Single Brand Purchases

These variables are linked by the sales equation: m=bwwhere m is the mean population purchase rate. (m for mean)

We usually assume that households buy one unit each purchase occasion but we can use a multiplier to correct for multiple purchase (or to convert volume to value)

ExampleAmong 26 students on a marcoms course, 16 drank beer in

the student bar over a week. What is the weekly penetration for beer drinking in the student bar?

Single Brand Purchases

b = 16/26 = 0.62

Given that the frequency of drinking beer, w, was 3.23 what was the mean drinking rate m, for the whole group?

m = bw= 0.62×3.23 = 2.0

Do We Buy Brands at Regular Intervals?

Newspapers, cigarettes are bought daily, shopping trips often weekly

But most brands are bought at approximate random intervals because of brand alternatives, variable consumption rate, stockpiling, and forgetting

Single Brand Purchases

There is often a `dead period' after purchase

with the purchase pattern approximates to a Poisson distribution over periods longer than the mean interpurchase interval

Do Some People Buy More Than Others?

There are consistent differences between people. The distribution across people is a Gamma pattern. Relatively few heavy buyers account for a large fraction of sales

Single Brand Purchases

Table 3.1. Quarterly sales of Kellogg's Corn Flakes in the US (from Ehrenberg and Goodhardt, 1979)

Out of 100 purchasers, the number buying:Pen% Freq One Twice 3 4 5 6+ Total20 2 .1 55 22 8 5 5 5 100

Giving sales of: 55 44 24 20 25 42 210

Majority do not buy even Nabisco Corn Flakes in the period

Most buyers are light buyers

Single Brand Purchases

55% are responsible for only 55/210 sales

Fits heavy half : the light 50% responsible for about 80% sales

Longer periods include more light buyers and the ratio becomes more extreme (moving towards 80/20)

Repeat Purchase.

Many people do not buy every period.

"lapsed" and "new" buyers are mostly light buyers.

heavy buyers are more likely to be repeat purchasers

New and lapsed buyers have to have the same purchase pattern in stationary markets. Repeat rates for new buyers are not much more than 1.5

Repeat purchase of a brand depends on the purchase

frequency.

Single Brand Purchases

A change in penetration has little impact on repeat purchase (the number of repeat purchasers is affected).

Changes in purchase frequency has a substantial effect on repeat purchase

NBD (Negative Binomial Distribution) Theory

Based on individual purchase Poisson and across- consumer Gamma distributions

Programs calculate either from aggregate statistics (NBD), or from raw data (BUYER).

For program NBD you need:

the penetration,

the purchase frequency,

the period

ExampleAmong 26 students on a marcoms course,

16 drank beer in the student bar over a week.

What is the weekly penetration for beer drinking in the student bar?

Example

b = 16/26 = 0.62

Given that the frequency of drinking beer, w, was 3.23 what was the mean drinking rate m, for the whole group?

m = bw= 0.62×3.23 = 2.0

NBD –

very applicable

Milk: 1 month, r=0.884; b=.98; w=3.9

Another NBD

Eggs: 1 month, r=0.876; b=.89; w=2.62

Discussion Time

Kitchen, Kim &Schultz (200), ‘Integrated Marketing Communications: Practice Leads to Theory”, Journal of Advertising Research, December, 531-546.. (NOTE: to be read for the discussion “trial”)

Break into groups (ideally, people you haven’t worked with before)

Discussion Points

Prepare a set of 5 discussion questions for each of the 5 class readings

Look at:

Clearly related to the readings (demonstrated knowledge of the week’s reading)

Introduced something new to the discussion (e.g. related to another theory, example of application in industry)

Ability to Stimulate Discussion

Clear and Concisely Phrased

Implications for Marketing Practice (if any, explain)

The Blue Sky Perspective – future directions

Submit at the start of class

Random marking of assessment…….