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Consumer Behaviour

Consumer Behaviour

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Published by Mohit Mehndiratta
Figure and ground, differential threshold and brand extension
Figure and ground, differential threshold and brand extension

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Published by: Mohit Mehndiratta on Aug 05, 2012
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Consumer Behaviour
Q. Identify a recent brand extension and discuss how selection, organization and interpretationprocesses influence effectiveness of brand extension.
Brand extension means the use of an established brand name to enter into a new product category.There are significant benefits to a successful brand extension:
 
Identify logical new product possibilities
 
Capitalize on the paid-for equity in established brand names
 
Enable a company to enter new categories at significantly lower cost
 
Reduce the risk of failure given the already established awareness and trust
 
Create a positive synergistic effect with the efficiencies of umbrella branding and advertising
 
Rei
nforce the consumers’ percept
ions of the parent brand name
 
Bring news to existing brands when there is otherwise nothing new to say about them
Google, the world’s largest search engine company has redefined telecom mobility across the world
with its android OS which is used to run various phones and has beaten previously popular SymbianOS by Nokia, has announced its refreshingly new gamut of operations under the brand extension of 
‘Google Nexus’. The new product category is the
tablet market.The perception affects the brand extension to some way. Perception process is:
 
 The selection, organising, Interpretation can influence the effectiveness of brand extension.
 
Launching a new product is not only time consuming but also needs a big budget to createawareness and to promote a product's benefits. Brand extension is one of the new productdevelopment strategies which can reduce financial risk by using the parent brand name to enhanceconsumers' perception due to the core brand equity.While there can be significant benefits in brand extension strategies, there can also be significantrisks such as:
 
Resulting in a diluted or severely damaged brand image
 
Poor choices for brand extension may dilute and deteriorate the core brand and damage thebrand equity.
 
Negative association and wrong communication strategy do harm to the parent brand evenbrand family.
Selection stage:
This stage is triggered by the stimulus. In this stage information is acquired in twoways: active search and passive search. For a new product under same brand consumers alreadyhave a defined behaviour towards the brand. So most of the times during the brand extensionbecause it is relatively easy and people have a formed opinion about the brand so they scan theirmemory for the stored information about the brand under consideration. Nature of stimulus andexpectations are the way to select information in this case. Both cheap and maximum features arethe stimulus here. For Google the consumer has a perception that they offer the best software andare priced less for maximum features. This is the information selected at the end of the stage.
Organising:
Once the consumer is aware of the brand and the product and has gathered theinformation he sought, he/she tries to organise the information into certain way. Hence theconsumer in brand extension would try to group the product with the attributes of the brandproduct line which was prevalent or to which the consumer associated himself to. Now that the
Process of perceptionSelection
Nature of stimulusExpectationsMotivesSituational factors
Organising
Figure and groundClosureGrouping
Interpretation
RelativeCognitive or affectiveSubjective
 
consumer had grouped it to previous product line features he/ she tries to interpret it in the nextstage
Interpretation:
Consumers interpret the information they have in an organised manner. Nowinterpretation in our case of Google Nexus follows the cognitive and affective as:
Expectations:
Quality
Cognitive aspect:
Specifications
Belief:
One of the bestNow the consumer already have some idea about the company products and once he has theinformation required and after that information gets organised the consumer tries to relate this towhat he holds in his memory already. So specifications may include:
 
3G enabled: yes
 
Screen Resolution: 1280 by 800 pixels
 
Battery Backup: 9 hours
 
Screen size: 7 inch
 
Screen quality: Capacitive 5 Point Multi Touch Screen
 
Processor: 1.2 GHz
 
OS: Android v4.1 (Jelly bean)
 
Primary camera:
1.2-megapixel camera
 
 
Memory of 8 GB or 16 GB
 
Full HD Video Playback up to 1080p
 
Colour: Silver grey back and black sides
 
Price 199$
Describe how marketers can apply their knowledge of differential threshold in packaging,pricing and promotional decisions of chocolate bars and detergents.
Differential threshold:
Consumers have limited sensitivity for noticing the changes betweendifferent stimulus value. This limited sensitivity is defined in terms of differential threshold
as thesmallest detectable difference between two values of the same stimulus.
This threshold value is aboon for a marketer to gain competitive advantage. This threshold is calculated by slightly changingthe stimulus until the difference is noticeable to the consumer. The difference between the startingpoint and the point where he first notices the change is called
 just noticeable difference (jnd).
 Though this differential threshold varies with the consumer and conditions but numerous studies
have revealed a relationship between called Webber’s law which can be expressed as:
 
∆s∕S = K
 
where S= the initial stimulus value
∆s= the smallest change in stimulus capable of being detected.
 

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