Brand Switching free essay sample

Findings show that there is a difference depending upon whether switching behavior was induced by extrinsic (e. g. , price, coupon) or intrinsic (e. g. , a desire to try a new brand) incentives. Unlike intrinsically induced switching, extrinsic incentives motivated consumers to switch despite a high level of satisfaction with the last purchased brand. However, this switching behavior resulted in weaker intentions to repurchase the new brand. INTRODUCTION INTRODUCTION: Consumer decision to purchase a product brand different from that previously or usually purchased. Brand switching can be instigated by price promotions, in-store displays, superior availability, perceived improvements or innovations in competitive brands, desire for novelty, number of available brands, perceived risk, frequency of purchase, changes in quality, or level of satisfaction with the most recent purchase. Brand switching is most common with products that have no great perceived variation in quality across brands such as bottled water, dairy products, or paper towels. brand loyalty. Sometimes known as brand jumping, brand switching is the process of choosing to switch from routine use of one product or brand to steady usage of a different but similar product. Much of the advertising process is aimed at encouraging brand switching among consumers, thus helping to grow market share for a given brand or set of brands. Convincing consumers to switch brands is sometimes a difficult task. It is not unusual for customers to build up a great deal of brand loyalty due to such factors as quality, price, and availability. To encourage switching brands, advertisers will often target these three areas as part of the strategy of encouraging brand switching. Price is often an important factor to consumers who are tight budgets. For this reason, advertisers will often use a price comparison model to entice long time users of one brand to try a new one. The idea is to convince the end user that it is possible to purchase the same amount of product while spending less money. Ideally, this means that the consumer can use the savings for other purchases, possibly even a luxury item of some sort. The idea of more discretionary resources in the monthly budget can be an effective in the encouragement of jumping brands. OBJECTIVES OF THE STUDY: 1. To find out the reason why consumers switch brands. 2. To analyse the frequency of switching the brands. 3. To analyse whether the brand switching behaviour of the customer is affected by marketing mix. SCOPE OF THE STUDY: 1. To analyse the brand switching behaviour of the consumers. 2. REVIEW OF LITERATURE REVIEW OF LITERATURE: The importance of customer value and brand switching are highlighted by combining these concepts in one study. The influences and antecedents of brand switching have been researched extensively. Brand switching is primarily attributed to an inherent variety drive referred to as ‘variety seeking’. This implies that sometimes the consumers do not evaluate the product characteristics when making a choice, they rather satisfy an inherent need for variety regardless of the product attributes of the objects switched to or from. Psychological variables influencing brand choice include preference, attitude, satisfaction and intention. Although the consumer evaluates objects favorably, brand switching still occurs. Many authors stress the importance of situational variables on brand choice, but still some unexplained variance remains. In the recent past much research focussed on customer value delivery on multiple dimensions, namely benefits. They include functional, emotional and social benefits. This viewpoint on perception of benefits is different from evaluation of mere product attributes in that customer value includes judgements of a branded product on a more abstract basis, that is, the consumer translates these characteristics into a subjective meaning. For example, the consumer interprets the objective price as cheap or expensive, which is reflected in value for money of the branded product. Furthermore the consumer might not switch brands because of different colors or shapes of the product or the brand name but rather because of what these attributes communicate to others, which is reflected by social benefit. Accordingly, it is postulated that consumers are guided by benefits sought when choosing branded products and customers perceive brands in terms of benefits provided. Thus, the present study addresses the question of whether benefits sought by consumers influence brand switching behavior. This relationship is investigated across four frequently purchased product groups. Furthermore, in order to shed more light into benefits sought by various consumer groups, consumer characteristics such as demographics and lifestyle are included in the research. This thesis also investigates if consumer characteristics determine brand choice. The phenomenon of brand switching has long been of interest to marketing researchers (Bass 1974). A knowledge of the pattern of switching among brands serves as the basic input in studying a variety of marketing issues including market structure analysis (Grover and Srinivasan 1987; Jain, Bass, and Chen 1990; Kalwani and Morrison 1977; Lehmann 1972; Rao and Sabavala 1981), determining the effectiveness of marketing actions and developing marketing strategies (Carpenter and Lehmann 1985; Colombo and Morrison 1989; Zufryden 1986), and understanding household purchase behavior (Givon 1984; Jeuland 1979; Lattin and McAlister 1985). The early efforts at modeling brand-switching behavior (e. . , Kuehn 1962; Morrison 1966) provided a useful, parsimonious representation of the influence of the immediate past purchase on the current purchase. However, those studies were limited to the extent that they did not incorporate the effects of explanatory variables such as price, feature advertisements, special displays, and household-specific characteristics on the transition probabilities. A co nsiderable body of evidence shows that choice probabilities are influenced by marketing and other variables (e. g. , Guadagni and Little 1983). Such explanatory variables therefore must be included in any analysis of brand-switching behaviour. When marketing mix variables have a significant impact on brand-switching behaviour and when they change over time, the transition probabilities will be non stationary. This property adds an extra element of complexity to the empirical analysis as it is not possible to estimate the transition probabilities from an aggregate brand-switching matrix. One of our objectives, therefore, is to present a framework that can accommodate non stationary transition probabilities. Another important component of the dynamics of a households purchase behaviour is the purchase-timing decision. Accordingly, several models have been developed over the years to characterize the probability distribution underlying the interpurchase times (e. g. , Chatfield and Goodhardt 1973; Dunn, Reader, and Wrigley 1983; Ehrenberg 1959; Helsen and Schmittlein 1989; Herniter 1971; Jain and Vilcassim 1991; Jeuland, Bass, and Wright 1980; Lawrence 1980; Zufryden 1978; among others). A noteworthy aspect of these studies is that the brand choice decision is not investigated jointly with the purchase-timing decision. Likewise, most studies that have analyzed brand choice behavior (e. g. , Guadagni and Little 1983; Krishnamurthi and Raj 1988; Zufryden 1986) have not modeled the timing of purchases. The exception is the study by Gupta (1988), in which brand choice and purchase timing are both considered. As argued by Hauser and Wisniewski (1982), purchase timing and brand choice are mutually dependent and both household-level decisions are influenced by managerial controls such as coupons, price, special displays, and feature advertisements, as well as by household-specific characteristics. Household brand-switching and purchase-timing decisions may be affected by unobserved factors. For example, the brand choice decisions of a household are influenced by the structure of preferences of household members, but the preference structure cannot be observed. Only choices made or the revealed preferences can be observed. Further, two households with the same household characteristics, when confronted with the same choice situation, may make different choicesthey respond differently to the marketing controls of sellers. One way of capturing this phenomenon of unobserved heterogeneity is to develop and estimate a model for each household. However, in most practical situations this approach would not be feasible because of the lack of a sufficient number of observations on purchases for each household. If the parameters were estimated with short purchase strings for each household, the estimates would have serious small-sample problems (i. e. , bias, inefficiency). Moreover, a homogeneous aggregate model would fail to capture the heterogeneity across households. A reasonable compromise is to allow some parameters to be the same for all households, but let certain other parameters (generally, a single parameter) vary across households. The latter set of parameters would capture the unobserved heterogeneity across households. Substantively, this compromise is important because the estimates of the included explanatory variables would be contaminated if unobserved heterogeneity were omitted from the specification (Heckman and Singer 1984; Lancaster 1979). We note that previous studies of brand switching have not considered the effects of unobserved heterogeneity. The objective of our study therefore is to build on previous studies and complement them by developing a single framework to analyze brand-switching patterns and purchase-timing decisions of households, while incorporating the effects of marketing mix variables, household-specific characteristics, and unobserved heterogeneity. We analyze brand-switching behavior as a Markov process. The brand choice decision is handled via a finite discrete-state space. However, unlike a Markov chain formulation in which the time between transitions is fixed, our analysis treats the time between transitions as a random variable that follows some probability distribution. The resulting formulation is therefore a semi-Markov model that incorporates in a single framework both purchase timing and brand switching. We note that such a general semi-Markov formulation has been suggested by Hauser and Wisniewski (1982). However, their formulation posed certain difficult, if not intractable, econometric estimation problems. Our work builds on their approach, but we reformulate the semi-Markov model as a proportional hazard model in continuous time (Cox 1972). The advantage is that the econometric estimation of a proportional hazard model is more tractable than that of a semi-Markov model. Further, the proportional hazard formulation enables us to test easily among competing probability distributions for the inter purchase times that have been proposed in the literature. The proportional hazard model has been used widely in the social sciences to analyse problems involving duration data (Heckman and Singer 1984; Lancaster 1979; among others). Such a model has been used to study household purchase-timing decisions at the product-category level (Jain and Vilcassim 1991). Helsen and Schmittlein (1989) describe the usefulness of this methodology in analysing a variety of marketing problems. In the next section we describe the model formulation and show how the semi-Markov model can be reformulated as a proportional hazard model in continuous time. We also briefly describe the methodology for estimating the parameters of the model. In the third section, we discuss the marketing implications of the empirical results obtained from analysing the IRI household There are many theories that are available to explain how consumers make product and/or brand choices. 1. The expectance-value model argues that consumers assign scores to two parameters and make a mental calculation before making a decision. The first parameter is the degree to which consumers expect a pleasurable outcome. The second parameter is the value the consumers ascribe to a favorable outcome. This model is insufficient to explain the phenomenon because people have limited brand information and limited mental processing capabilities. . The economists view of consumer behavior hypothesizes that consumers seek information until the marginal value that is gained is less than the cost of securing knowledge of the product. This model is also not acceptable since in many cases consumers are unable to acquire perfect information. 3. Chernatony and McDonald propose a more accepted model for brand buying behavior. It argues that the making of a brand purchase is determined by consume rs seeking and evaluating small amounts of information. Consumer relies only on few piece of information with which they feel confident to help them decide how the brand might perform. The amount of information that consumer seek may be determined by various factors such as time pressure, previous experience, advice from friends and the level of involvement in the brand purchase. In recent years many researchers have studied brand choice and switching. The scope of these studies not only includes the analysis of the factors that affect the consumers brand choice and switching, but it also helps to analyze the future demand situation. There has been always a shift in consumer brand loyalty and favors it can be because of lack of consistency in quality, high cost of raw materials or profit motives so as to increase the sales figure. STATEMENT OF THE PROBLEM: 1. The impact of variety of advertisements of various products can deeply affects the minds of the customers to switch brands. Most of the customers aren’t loyal. And even if they are loyal they tend to use the other product and finally get attached to it. 2. One bad experience with the product can make the consumers do brand jumping from one product to another. . Intrinsic desire of variety and situational factors can often lead to brand switching. 4. The customers determine their preferred brands but tend to switch among them just to satisfy their need for variety or to refresh their memories about brands purchased in the past. CONCLUSION CONCLUSION: 1. They switch among brands in order to learn about the product offer and to seek information 2. Brand switcher who are high in price consciousness (shown high perception for value for money), tend to prefer free gift, price discount. It means that high price consciousness customers are more likely to switch to other brands when they are attracted by these promotional tools which are not the case with brand loyal customers. Thus price discount and free gift plays important promotional tool for customer to switch to other shampoo brand. 3. Brand loyal customers are more likely to change to other brands because of the contents about good product quality and good brand image, whereas the effectiveness of the aspects about good value for money impacts brand switchers. 4. It can change depending upon the demographic and lifestyle characteristics. BIBLIOGRAPHY: 1. An analysis of models for consumer brand-switching behaviour,P. Kotler, Marketing Management (Prentice-Hall, 7th edn, 1991) 2. Jacoby, J. and Chestnut, R. W. , 1978, Brand Loyalty: Measurement Management (John Wiley amp; Sons, New York). 3. Punniyamoorthy, M and Prasanna Mohan Raj, An empirical model for brand loyalty measurement, Journal of Targeting, Measurement and Analysis for Marketing, Volume 15, Number 4, September 2007 , pp. 222-233(12) 4. Dick, Alan S. and Kunal Basu (1994), Customer Loyalty: Toward an Integrated Conceptual Framework, Journal of the Academy of Marketing Science, 22 (2), 99-113. 5. Evaluating the effect of Consumer Sales Promotion on Brand Switching and Brand Loyal segments by Komal Nagar 6. Brand Relationships and Switching Behaviour for Highly Used Products in Young Consumers by Arvind Sahay and Nivedita Sharma 7. Examine the Factors Influencing Brand-switching: the Effects of Advertising and Promotion by Xueling Luo(2006) 8. Other sources from the internet.