final reseach report......12304000002341041

8/6/2019 FINAL RESEACH REPORT......12304000002341041

1/105

1

A

RESEARCH REPORT ON

CHILDREN INFLUENCES ON PURCHASE OFCONSUMER DURABLES / GOODS

Submitted by:Prakhar Kumar

MBA-II0925770032

Specialization: International Business & Marketing

Under the Guidance of:

Faculty GuideProf. Vinay Pratap Singh

Organization:SITM

FINAL RESEARCH REPORT IN P ARTIAL F ULFILLMENT OFTHE AWARD OF F ULL T IME M ASTERS IN BUSINESSADMINISTRATION (2009-2011)

Saraswati institute of Management & Technology, Luck now


2/105

2

ACKNOWLEDGEMENT

I wish to express my most sincere thanks to Prof Vinay Pratap Faculty of Management in

Saraswati Institute of Technology and Management , UNNAO for making my help in the

research topic knowledge in the field of CONSUMER DURABLES.

A special note of thanks is also reserve to, Director of Saraswati Institute of technology and

Management Campus. Moreover I am also indebt to DR Manu Johari, H.O.D, and Saraswati

Institute of technology and Management for their kind help and co-operation for completing this project work.

I indeed thanks to Saraswati Institute of technology and Management campus for giving me an

opportunity to have experience.


3/105

3

Executive Summary

Although the influence of children in the family decision making process has been accepted as a

force which neither academics nor practitioners can gnore, the degree and nature of this

influence has not been satisfactorily established. This hiatus in the body of marketing knowledge

provides the topic for this study. A conceptual model linking the variables that affect household

purchase decisions was formulated by surveying the relevant literature. This model serves both

as a pedagogical framework within which to discuss the literature and as a guide to theformulation of a set of research hypotheses for the work reported here. Eighty-nine observations

of family interactions during a simulated decision situation were recorded in the families' homes,

using a video camera. The videotapes were later content-analyzed by three independent judges.

Self-report data about perceived influence structwes were collected at the same time. The

development of the Observed Influence Scale (OIS) takes primacy here. The scale was tested for

reliability and validity and the results using the scale were compared to those generated by the self-

report scales. The OIS was then applied to provide dat4 over three stages of the decision process, to test

the series of hypotheses about family decision-making mentioned above. Multivariate analysis of

variance was performed for each farnily role player, using the three stages of the influence process as

the dependent variables and social class, sex-role orientation (sRo), wife's occupation, Involvement

Decision styles and Gender composition of the children as the independent variables. Several patterns of

behavior emerged. Significant effects were found for all the variables tested, although not all the

research hypotheses were supported In the expected manner. The effects upon influence of social class,

SRo and Wife's occupation are interactive, the other three variables stand alone. It was found, inter


4/105

4

alia, that mothers and elder sons, and fathers and elder doubters work together to gain influence in the

family decision. The implications of the research for consumer behavior theory and practice are

discussed.


5/105

5

PREFACE

Any kind of learning is incomplete till it is practically applied in the concerned field. Only then

does a person understand and get hold of even the minutest details of what he/she has learnt in

his stay at the institute doing his/her MBA. So, to practically apply what I had gained in the past

one year in the MBA programme,

It has been a wonderful learning experience, which has given me an insight into Management of

modern business which requires an appreciation of multidisciplinary concept and in-depthknowledge of specific analytical tools, geared to the solution of real life problems. No doubt

every real situation is unique but a set of theoretical tools of knowledge, itself based on empirical

foundation, can help in developing the mechanism for handling such situation. So the MBA

curriculum has been desired to provide to the future managers ample practical exposure to the

business world.

The Research Report is essential for the fulfillment of MBA curriculum; it provides an

opportunity to the student to understand the industry with special emphasis on the development

of skills in analyzing interpreting practical problems through application of management.


6/105

6

CONTENTS

S e l f D ec la r a t io n

Ac k no w le d g me n t

E x e c u t iv e su m ma r y

y P r e f a c e

1 C h a p t e r 1 - I n t ro d u c t i o n

0 . 0 Industry overview

0.1 History

0.2 Characteristics of Consumer Durable Industry

0.3 Emergence of Consumer Durable Industry

0.4 Major Industry

0.5 Trends affecting the Consumer Durable industry

0.6 Research Objective of the Study

2 Chapter 2 Theoretical background of the Report

2 .1 Role of children in making decision

2 .2 FUTURE PROSPECTS IN THIS INDUSTRY

2 .3 SWOT Analysis of Consumer Durable Industry

3 C h a p t e r 3 - R e s e a r c h M e t h o d o l o g y

3 . 1 R e s e a r c h M e t h o d o l o g y

3 . 2 D a t a C o l l e c t i o n M e t h o d

3 . 3 O b j e c t i v e s

3 . 4 S a m p l e D e s i g n

4 C h a p t e r 4 - D a t a C o l l e c t i o n

4 . 1 L i s t o f P e o p l e I n t e r a c t e d

4 . 2 MI CHE AL PORTERS FIVE FORCES OF COMPETITIVE MARKET MODE


7/105

7

5 C h a p t e r 5 - D a t a A n a l y s i s

5 . 1 S i g n i f i c a n c e o f t h e S t u d y

5 . 2 L i m i t a t i o n o f t h e S t u d y

6 C h a p t e r 6 - F i n d i n g s a n d C o n c l u s i o n

6 . 1 F i n d i n g s

6 . 2 C o n c l u s i o n

9 C h a p t e r 9 - B i b l i o g r a p h y


8/105

8

Chapter 1

Introduction

INDUSTRY OVERVIEWThe Consumer Durable industry is huge! Think of a typical day then you wake up to make coffee

that has been brewed by your-controlled coffee maker. You pop a couple of slices of bread into

your electric toaster, grab some juice from the refrigerator and throw a load of laundry into your


9/105

9

washing machine. You dry your hair with your electric hair dryer; brush your teeth with your

electric toothbrush and head of your job. At lunchtime, you prepare your lunch in the microwave

oven and then leave early to head homework in your yard with your lawnmower, leaf blower and

trimmer. Dinnertime means your need to put that roasts in your electric oven, open a can

of vegetable with the electric can opener and mix up a cake with your electric mixer. After the

dishes have been put in the automatic dishwasher, it is time to relax with the TV and VCR, but

only after you put the clothes into the dryer and iron the clothes you will need for tomorrow.

Time to set that timer on the coffee maker again and prepare for a brand new morning! The

number of household appliances grows every year, but there is one sector of the industry, themajor appliance sector, that remains fairly constant. This is the sector that I have chosen to

analyze. The appliance that comprise this sector re ranges, refrigerators, washers, dryers, and

dishwashers the SIC that relate to them are. Indian consumer durables market used to be

dominated by a few domestic players like Godrej, Allwyn, Kelvinator, and Voltas. But

post-liberalization many foreign companies have entered into India, dethroning the Indian

players and dominating the market. The major categories in the market are CTVs, refrigerators,

air-conditioners and washing machines. India being the second fastest growing economy with a

huge consumer class has resulted in consumer durables as one of the fastest growing industries in

India. LG and Samsung, the two Korean companies have been maintaining the lead in the

industry with LG being the leader in almost all the categories. The rural market is growing faster

than the urban markets, although the penetration level in rural area is much lower. The CTV

segment is expected to the largest contributing segment to the overall growth of the industry. The

rising income levels, double-income families and increasing consumer awareness are the main

growth drivers of this industry.This report highlights the significance this industry has for the


10/105

10

Indian economy, throwing light onthe pre and post liberalization scenario. It discusses the

important segments of this industry and the growth patterns, trends and the demand drivers. The

report also profiles the key players of this industry, with a discussion of their business strategies.


11/105

11

HISTORY

Home Appliances industry is one of the most lucrative and fast-growing industries. The Indian

economy witnessed a proliferation of global companies in the National Scene. Liberalization of

Indian economy coupled with the media explosion ushered in a new era of consumerism.

Increased purchasing power and a fluid taste led to the creation of budding Home Appliances

market. The growth rates were as high as 22% in the white goods segment compared to a merely

2 -3% growth in the European and American market. Home Appliances industry scenario in India

is a totally different from what it was one decade back. Consumer Industry Scenario in India is

totally different from what it is in European Countries. Demand in developed countries is mainly

constituted by replacement demand white goods market in India was dominated by indigenous

industrial houses like Videocon, BPL, ONIDA, Kelvinator, and many other, but the entrance of

multinationals in Indian market because of opening up of Indian economy gave these companies

a big blow. MNCs that are gaining good market share are Samsung, LG, and Electrux. T he

expression "consumer durables" has become a standard terminology in financial analysis where

it represents the category of goods that is not replaced by a consumer over a life span longer than

three years. Durables depreciate during their life although financial models assume that the value

remains the same while in use. This contradiction has introduced instability in computer financial

models designed to predict the market growth and pricing changes. This issue has been

investigated over the past 40 years. The Cease conjuncture of 1 972 became a seminal paper that

first tried to resolve this problem. This matter remains open today.


12/105

12

Charac te r i s t i cs o f Consumer Durab le Indus t ry

Rapid Innovation

Dynamic market place

H ighl ycompetitive industr y

S ignificant time to market pressure

S ignificant cost pressure

Rapid rate of market penetration

Rapid transition of technolog y


13/105

13

EMERGENCE OF CONSUMER DURABLE INDUSTRY

Indian Home Appliances industry is growing at an overall rate of 1 2 -13 percent. If we consumer

each product market individually, the Color Television market has shown a growth rate of

25% .Refrigerator market is growing at a rate of 8 -10% . Reason for high growth rate CTV market

is that now a days TV is not used as source of entertainment but also source of knowledge and

education. All these factors act as accelerator. If we take the case air conditioners, today air

conditioner is not only referring to a cooling machine but also an air fresher. In proportion to

growing incidence of working couples, refrigerators are gaining significance, more and more as

an instrument to store and recycle readymade victuals. In spite of many value added Service that

are being offered by most of the brand, the refrigerator market is still biting the dust. Electronics

is the fastest growing industry in India. In the liberalized economic scenario, electronics has

entered every walk of our lives and has enhanced the quality of life that is enjoyed by the Indian

consumer. India is no longer a country, a market where the consumer has to rely almost entirely

on the influx of smuggled electronic items to satisfy his needs. The Indian electronics industry

has thrown up competitive players who are not only able to cater to the desires of the Indian

consumer successfully, but have also emerged as very successful exporters of electronic goods to

the rest of the world. This has all happened in the last 2 0 years or so. A couple of decades ago,

nobody in his wildest dreams could have imagined that consumer goods bearing Indian brands,

built up assiduously by Indian companies would come to dominate Indian industry. There could

have been two reasons for so little faith in Indian goods. Firstly, the Indian publics unhidden

groups like BPL, Videocon, India, that Indian brands now dominate the markets. These corporate

houses have upset the apple cart of foreign companies by establishing Home Appliances


14/105

14

manufacturing companies that have not only consistently produced superior products but have

also created in a very short span, brand equities capable of taking on international brands. That

is, the Indian consumers perception of brands originating in his own backyard has evolved from

one of shame to one of trust, pride, identification, all of which translate into patronage - or

achievement of a companys core business objectives. The Electronics industry is one of the

bedrocks of global industrial development. The electronics industry was for long the domain

of First World economics. The 1 96 0s saw a shift, with Japans emergence. Subsequently Hong

Kong, South Korea, Taiwan and Singapore, then Brazil, India and Mexico followed of late by

China, Indonesia, Malaysia, Philippines and Thailand have entered the fray After economicliberalization our country lowered entry barriers and brought global companies into the countrys

marketplace, it was realized that the core of the corporate world must change, to focus, the first

time ever in India, on the consumer. And to stop chasing revenues, profits and market shares,

which will flow only from the new consumer competence. Forget too, forever, the silent

consumer who, before of alternatives, uncomplainingly bought whatever products were made

available. In todays and tomorrows new unforgiving marketplace it is the choice - empowered

consumer who will decide the fate of the corporations. And competition, global quality and new

economic realities are conspiring to limit success only companies that are focused completely on

their consumer. For, only these companies and continuously monitor and meet changing

consumer needs: streamline processes; cut costs and restructure for quicker response to the

consumers demands. All of which will add up to an unmatched competitive edge, enabling them

to conquer tomorrows marketplace today. However, the consumers and spending wisely not

indiscriminately. Changing personal, social, familial and cultural influences - for instance, the

advent of satellite TV, internet and the information age bringing with them rich, real - time


15/105

15

images and data about global lifestyle- have made the consumer an individualistic, iconoclastic

and irreverent wielder authority over the fate of Corporate attempts to fulfill their needs. Which

is why in this new buyers market, the marketer has no choice but to make the consumer his

lodestar.


16/105

16

M ajor Industries


17/105

17

S ome Pictures of Consumer Appliances


18/105

18

Trends affecting the Consumer Durable industry

The booming economy gives consumers more real disposable income, which has increase since

2 004. This is an important factor in major appliance sales as it is estimated that U.S. consumers

spend about 5 0 cents of every $100 on major appliances. The economy also does well for

consumer loans. In good times, consumers are less afraid to borrow money for major purchases,

and as appliances. Many may even decide to but while the economy is good, rather than waiting

until they are forced to make purchase when an appliance wears out. Changing demographics

will play a significant role in the major appliance market over the next few years. The baby

boom generation will be in the 35 -to-55 age group during the next 5 years. Household headed by

consumers in this age range are in their prime earning years and tend to spend more on

household durables than any other age group.

Philips India

Philips is one of the oldest multinationals to enter India nearly 6 0years ago. Philips

has had a fairly successful run as a major player in the television market. The

company has identified domestic Electronics, personal computers and monitors,

software as its target business. In the year ending Dec0 5 Philips India has notched

up sales of Rs. 1 683 crore.

S amsung Electronics

Samsung electronics entered India with a stake of $ 5 million in the India

subsidiary Samsung India electronics Ltd., in which it holds a 5 1 per cent

controlling share. The product portfolio of Samsung Electrons ranges from

Multimedia products, home Electronics and telecommunication product systems.


19/105

19

In India the company has established a leadership position in the product

categories in Home Electronics 440 watts Mixer Grinder CD based systems,

washing machines, microwave over and VCDs. In 2 004 it had a market share of

8% . The company has manufacturing facility for home appliance at the Noida

complex. This facility has a production capacity of 5 0,000 units each

for refrigerator and washing machines.

V ideocon

Videocon International Ltd., company having a market share of 14.1 % in the

Home Electronics market. Estimated to be among the top three companies in the

country in the Home Electronics, Citrus Juice and Mixer Grinder segment VIL is

now up against major international brands which have entered India. In 2 004, it

had tied Up with Toshiba for the marketing of the premium 1 6 .9 double window

Home Electronics Costing about Rs. 1. 9 lacks.The market share in 2 004 were:

Home Electronics 1 8% ; refrigerator 11 % ; Citrus Juicer 32 .7% ; air conditioner

12 .7% .

Whirlpool

This company invested in India in 1 987 beginning with the venture with TVS

private limited. In 1 99 4, TVS Whirlpool Ltd. changed its name to Whirlpool Citrus

Juicer Ltd. Its dominance is mainly in the white goods industry. It 1 995 Whirlpool

required controlling interesting Kelvinators of India, one of country largest


20/105

2 0

manufacturing and marketer of refrigerators. Its market shares in 2 001 were;

Mixer Grinder 1 9 .3% ; Citrus Juicer 14. 6% .

Amtrex Hitachi

It has strategic alliance with Hitachi Ltd., of Japan. It entered whiteand brown

goods market in India few years back and is aiming at a market share growth by

16% . It is majority into the marketing of high-end ACs each in split and windows

segment. Its market shares in 2 004 were: air conditioner 1 3% .

ELECTROLUX

AB Electrolux, reached an agreement to obtain majority ownership inane Indian

Citrus Juicer manufacturer, Intone Ltd. Electrolux invested US $ 2 .4 million in the

step to obtain 5 1% ownership in Intone Ltd. In1 995 it took majority control of

Maharaja Intl Ltd., an Indian refrigerator manufacturer. With these two

manufacturing bases it even has 40 % stake in Eureka Forbes Electrolux The

Company has presence mainly in the refrigerator and Citrus Juicer segment. It has

been launching world class products in India at regular intervals. 2 002 witnessed

the launch of seven upgraded world class models of Kelvinator refrigerator. In

2 003 it launched premium Gold collection from Kelvinator. Market shares in

2 005 were: refrigerator 1 3 .7% .


21/105

2 1

B PL

BPL Group was promoted by the founder, TPG Nambiar. The flagship company,

BPL Limited was incorporated in 1 963 as a private limited company under the

name British Physical Laboratories India Private Limited for the manufacture

of electronic test and measuring instruments in collaboration with BPL

InstrumentsLtd. UK. The company further expanded into such electronic products

as medical systems and equipments, power line carrier communication equipments,

copiers, monitors etc. Making its foray into consumer electronics in 1 982 , BPL

quickly established itself as one of Indias most trusted consumer durable brands.

Huge Investment in manufacturing, marketing & distribution

infrastructure, and brand building have made BPL a trusted name in the

consumer durable industry. BP today enjoys one of the highest brand

awareness amongst consumer electronics brands and also has one of the

highest preference shares in the CTV industry.BPL is currently engaged in

the production and sales of televisions, home theatresystems, medical

equ ipment , au tomot ive par t s , and e lec t ron ic components and

alkaline batteries.


22/105

22

COMPARISON MAJOR PLAYERS

BRITISH PHYSICAL LABORATORIES LTD.( BPL )INTRODUCTION

BPL Home Appliances Limited is the Flagship Company of the 4 6 00cr. BPL

Group is Indias largest consumer electronics conglomerate. The group has a long-

standing strategic alliance with Sanyo (Japan)for a variety of consumer durables.

BPL Limited has a principal presence in the manufacture and the sale of Color TV

sets. The company also produces black and white TV sets, alkaline batteries and

gas tables.BPL Group was incorporated in 1 963 and started manufacturing

hermetically sealed panel meters for defense and subsequently diversified into

medical instruments. In 1 97 0, with technical collaboration with Siemens and ITT,

BPL began manufacturing professional grade relays and switches and later

expanded into manufacture of power line carrier communication equipment for the

government of India. In 1 982 , BPL group grew steadily in the fieldsof medical

instrumentation, communication and power systems largely due to a reputed in-

house R&D facility and component development center for in-house requirements.

BPL witnessed a newera in 1 982 -83 with groups entry into Consumer Electronics

and with formal technical collaboration with Sanyo Electric Company Japan. Since

then the growth has been phenomenal with sales turnover nearing US $ 9 00 MN in

2 004 to 2 005 .To combat competitive pressures, the company launched the latest

models in the market and went in for heavy advertising to maintain its leadership


23/105

23

in the market for a quality product company from its earlier image of medical

equipment company.Sensing the consumer electronic industry is going to be

fiercely,competitive in the years to come and growth rate will slow down, BPL is

diversified itself into other industries like power and cell phone networks. Both of

these are unrelated diversifications for the group and group resources are stretched

to the limit as both the segments entail heavy investments.

B PL GROUP M ission S tatement

BPL is committed to achieve a leadership position in all its businessgroup through

utilisation of the best and most appropriatetechnologies, applying the finest

manufacturing disciplines and mostefficiently marketing high quality products and

services toconsistently give its customers the best value for their money.

Objectives of the Company

To ensure customer confidence through product quality, efficient marketing and

effective service

To continually enhance the Companys growth to its shareholdersand investors

through sound investments and profitable operations.


24/105

2 4

To demonstrate a real concern for its employees and constantlyimprove the quality

and value of their jobs and career advancement.

To be a good corporate citizen who contributes positively to itscommunity by

protecting the environment and working for publicwelfare.

To respect the laws, rules and customs of the land and to ensurethe conduct of all

company activities will always be to the highestethical standards.

BPL HOME APPLIANCES ITEMS

Consumer Electronics - Televisions

A wide range both in Color and in Black and White, Catering to individual

customer needs in terms of features, looks and styling housed in fully molded

plastic cabinets and incorporating critical components manufactured in technical

collaboration with Sanyo of Japan, BPL Television are leaders in the market-in

quality and in performance.


25/105

25

CURRENT M ARKETING & B RANDING PLAN OF B PL LTD

The group has always been seen as an electronics engineering group, unlike many

of its competitors. Today it makes every thing from the cabinet to the electronic

tuner itself and buys the picture tubes from Indian supplier. This in itself is seen as

a transition of BPL from an engineering group to more diversified group dealing

right from consumer electronics to cellular services which in short span of time the

group ha achieved with tremendous success. The BPL group is lot shy, introverted,

but excited about the quality of its products. It is not surprising that over the past

years, the group has quietly set in motion a wide ranging, strategic plan to establish

itself as the undisputed leader in consumer electronics. Over the last couple of

years BPL has introduced a stunning array of new products; washing machines,

vacuum cleaners, refrigerators, microwave ovens. In audio, it has widened its range

dramatically. Soon to come gas stoves with built in lighters, mixer-grinders,

mineral water machines. In just 10 years, sales have zoomed from Rs. 1 9 crores to

Rs. 1000 crore. BPL in the field of colour TVs has left behind old time rivals

Videocon & Onida. In audio segment the sales of BPL is second only to PHILIPS

who is the market leader. In VCD, BPL SANYO was the market leader with a 1 7

percent share of Indian made machines.. In color TV components, the group has

65 percent of the market for electronic tuners, fly back transformers and deflection

yokes, supplying to many of its competitors. In medical electronics, it has 6 0


26/105

26

percent of the electronic tuners, fly back transformers and deflection yokes,

supplying to many of its competitors. In medical electronics, it has 55 percent of

the electrocardiogram market and 5 0-6 0 percent of the ICU monitor market. In the

Epbaxs, the group has the largest user base in the country. Some conservative and

shy which now to a large extent has been able shed its image to largely because of

the involvement of BIG B in the advertisement which in itself was seen as mega

coupor event. BPL has always invested money first into factories and then into

marketing. The group has high belief in vertical integration, which shows the

confidence of the company which takes pride a in work and that belief is reflected

prominently in the advertisement as BELIEVE IN THE BEST. The group believes

in using engineering superiority to offer the best, trouble free products in the

marketplace. Stress consumer pull, not dealer push. In the long run, this is the most

profitable route of everyone manufacturer, dealer, consumer. Smoother the

competition with range as it keeps both the consumer and dealer happy. It uses the

top-of-the-line products to gain attention. The rub-of on the entire range down the

line will work wonders. BPL is also running dealer promotion schemes but not to

the extent their competitors indulge instead they believe more on advertising due to

the fact that if the promotional spend crosses and spend that means they are cutting

their brand in the long run. So for dealer they look at high margins trouble free

performance so the customer wont hassle him and a constant flow of new products


27/105

27

on all factors BPL has got its act together. BPLs range strategy works on two

levels. At the first one, the group is pushing into everyconsumer durable category

in an attempt to create an all-encompassing umbrella brand much like those of

leading Japanese companies. It is selecting dealer showrooms at price locations

across the country and turning them into BPL Galleries that stock and display only

and all BPL products. The main objective of the BPL Galleries is to show the

public the width of BPLs product range, build corporate image and sales. The

second level of BPLs range strategy is most obvious in the Rs. 1, 5 00 crore audio

markets. The one with Rs. 1 5 00-3 000 stereo portable segment (popularly known as

two-in-ones) will become the largest segment volume wise overtaking mono

portable. The BPL group is slowly moving away from its core areas

of entertainment electronics and consumer durable. But not all its diversification

have been successful. It was this same tenacity that helped the BPL group float a

high-technology company in a very short time. BPL Mobile, one of the cellular

service providers in Bombay, stands out for jumping into the fray without any

foreign partner. BPL Mobile and simultaneous diversifications into the power

skills of its the BPL groups attempt to move away from the highly competitive

entertainment electronics sector, its mainstay all along. They have entered power

sector because of its high entry barriers for smaller players. Since telecom and

power are high turnover areas the dependence on entertainment electronics will


28/105

28

reduce but very gradually. The various companies are in six main areas of

operations entertainment electronics, appliances, telecom, power, electronics and

TV components and international operations.

S TRATEGY

Faced with a market where products are converging on the technology front, BPLs

strategy to zero in on two critical differentiates; brand building and cost leadership.

Together, this isexpected to deliver the ultimate strategic weapon, value.

Differentiation :

last four years along, the BPL group has splurgedRs. 2 14 crore on advertising

campaign. To good effect. A recent survey by the Bangalore based market

research firm, Gallup MBAIndia, reveals that BPL is the sixth most popular in the

country today. Not surprisingly, the group has valued the BPL brand at Rs. 6 11

crore. According to Trisys Research, the marketing consultancycompany, which

did the valuation for BPL: The huge amount of money spent by the group in

strengthening its brand must be seen as an investment and insurance? Investment

because this will drive future sales and insurance because the strong brand is

expected tokeep the competition at bay and protect BPLs earnings in the process.

To small extent has that helped BPL actually expand its CTV market share in the

fact of transnational competition. In 2 002 -03 , when the consumer electronics

industry reported stagnant sales BPLs CTV sales grew by 1 5 per cent. But BPL


29/105

29

did not have a straightforward brand positioning strategy. On the other, to

effectively set itself apart as an Indian electronics major capable of being on its

own.BPL cannot afford to overplay the Sanyo part. In fact, the entirestrategy

revolves around positioning BPL as the best India has tooffer. Hence the choice of

Amitabh Bachchan, and signature line,Believe in The best. The campaign conveys

on clear message: anyBPL product you pick up is the best in terms of quality,

technologyand value for money.

Technology Leadership

: Underscoring the differentiation strategy is, of course, BPLs technology

leadership. While an annual R&D budget or Rs. 6 .45 core in 2 004-0 5 ford not

show great commitment to R&D, that hasnt stopped it from shopping for

technology to keep pace with market demand. For instance, the groups first

venture into instrumentation came in the wake of a technology partnership with

British Physical Laboratories of the UK. The foray into consumer electronics in

1982 , and subsequently, into the domestic appliances segment was driven by a tie-

up with Sanyo Electric and the proposed color picture tube plant will be set up in

technological collaboration with the $ 4 8 .41 billion Toshiba Corp. of Japan. Once

it enters a segment, the group makes it a point to quickly broad base its product

portfolio.


30/105

3 0

Economies of S cale :

Behind BPLs high,. Market presence in consumer electronics are two critical

factors: Its global scale manufacturing and high vertical integration. In CTVs.

Which contributes 29 per cent of the five listed companies sales of $ 3 ,102 crore,

BPL has consolidated capacities under the flagship BPL Ltd.Besides the total

capacity has been expanded from 8 .3 0 lakhs CTV sa year to 10. 3 0 lakhs, and BPL

plans to double it. If scale economies lower per unit cost, BPLs high degree of

vertical integration enables it to attain higher value addition for every rupee of

sales; the group manufactures most critical components like deflection yokes,

transformers, and tuners- in house. In 2 002 , in partnership with Videocon, it took

over the Uttar Pradesh governments ailing color picture tube manufacturing

facility, Uptron, under a rehabilitation package formulated by the Board

for industrial and Financial Reconstruction. The unit, which was set upin technical

collaboration with Toshiba in 1 989 , has already been refurbished and put on

stream. The effect of BPLs cost management is evident in 2 003 -04 despite a high

interest burden and the large discounts offered to the consumers, the average

margin on CTVswent up by Rs. 4 5 0.


31/105

3 1

B usiness Portfolio

Clearly, the groups cash-cow is its TV business, which contributes 33 per cent of its

sales. According to MARG-ORG, the market research firm, BPL has a market

share of 1 9 per cent. For at least three to four more years, CTVs will continue to

drive BPLs revenues and earnings. Efforts have been made within the company to

improve its distribution network and systems with a view to achieve improvement

of quality and they have also effected a reorganization of markets and distribution

teams of its various group companies by building a central marketing organization

which ensures that the company continues to react fast to changing market

conditions. Thisre-organisation was completed in March 0 3 .

THE 4PsPRODUCT ANALY S I S CT VS

Color televisions account for 37% of all TV sets sold in India , 2 1CTV is the

largest selling product in CTVs. At present the market isin a growth stage and

currently there is a boom in the market. BPL is producing expected products which

has a set of attributes and conditions that buyers normally expect and agree to

when they purchase a product. In this category BPL offers features such as 15

0 programs (channels), Cable readiness, Bass expander, Child locking and a host of

others. But of late, it has started making Augmented products that meets the

customers desires beyond their expectations. The up gradation of product quality is


32/105


33/105

33

them. BPL has priced its products in such away that it can cater to all category of

buyers. The company has-been very aggressive in its pricing which has led to a

sales strategy of receiving 100 % advance payment from its dealers and giving its

dealers a margins of about 10 % on the MRP. Though the effective margin received

by the dealers is effectively the lowest for BPLCTVs, yet it gives them higher

turnover which ultimately leads to higher profits. Recently three successful pricing

strategies which received overwhelming consumer response were:

Financing at 0 % rate of interest

No profit No loss sale scheme for its best dealers in Delhi.

Attractive price reduction due to in-house development of somecomponents.

CTV industry is witnessing a general trend towards lower prices. New CTV sets

come cheap, thanks to exchange meals and easy finance offered by leasing CTV

manufactures. Pricing of CTVs is done more on values perceived by the customer

and less on cost-plus markup basis BPL is trying to reduce costs as a result of

concentrated effort byte companys designers, engineers and vendors to reduce


34/105

3 4

them. Itis using optional feature pricing, special event pricing and low interest

financing as forms of promotional pricing.

PRO M OTION M IX

The increasing competition in color television industry has forced the marketers to

go for innovative promotional schemes. The total amount to be spent on

advertising and promotion by BPL is Rs. 3 10crore this year. It spent Rs. 2 40 crore

in 2 003 .BPL relies more on consumer pull type of promotional strategy.

Theeffectiveness i.e. balance of push vs pull tends to vary across regions in India.

In consumer electronics industry, the north and west are seen to respond more to

push and the east and south are comparatively brand loyal. As competition

heightens, companies arebeing compelled to continually widen their product range.

Their investment in tools, used to make dies and kits of CTVs, are rising, BPL

launches four to five models each year. They have five tools and each tool costs

Rs. 5 crore to set up. The brand building activity has become important for all the

companies and this basically to keep them updated with consumers perception of

a particular brand. BPL has around 1 6 0 exclusive showrooms at prime locations

acrossthe country called BPL galleries that stock and display only BP products.

The main objective of BPL galleries is to show the public the width of BPLs

product range, build corporate image and sales.BPL had announced end of its


35/105

35

multi-crore association with Amitabh Bachchan in 2 003 since his popularity is on a

down swing in TV commercials and media campaigns, especially in metros and

urbancenters. Currently BPL is using Amitabh Bachchan only for its

ruralmarketing campaigns. BPL will also exit from niche programs likeBPL Oye,

the popular Hindi film song countdown show on Channel Vdue to the fact that it

has been unable to qualitatively differentiate from competition and retain edge in

this genre of progamming. It istrying to build an emotional bond with consumers.

It moved toestablish a bond with the younger generation the key to future market

lay in tying the brand in inextricably with entertainment. The commercial inspired

by the blockbuster movie, Home Alone evoked sympathies (thanks to the kid)

and warmed its way inside every families heart BPL is projecting itself as a

company manyadvertising entertainment products.BPL has decided to capitalise on

Indias near religious fever for the game and get into cricket related

sponsorship in a big way in the Cricket World Cup in 2 003 . BPL has also launched

its Player of-The Week program for international cricketers on which it

isspending Rs. 2 .56 crore.

Competitors:

Samsung has announced that it would significantlyincrease its advertisement and

promotion spending and have newpromotions during the forthcoming Cricket

World Cup Phillips is alsofocussing on brand building riding on the back of the


36/105

36

youthful image them and offering the latest technology products at competitive

price. Akai is offering various exchange schemes to boost its sales. In last 2 years it

had come out with more than 11 such schemes

ANALY S I S

It is the tendency of company to acquire a major share in the market. Now question

arises how to achieve it ?Any consumer able product that has been launched in the

market toface competitions, whether it is Videocon International, Daewoo or BPL

all have to face neck to neck competition. In the company during Deewali festival,

all the companies are engaged in evolving technologies to attract the customers.

Even they are ready to sponsor the national and international games. Recently

Companies like BPL and Videocon have announced an average of its

advertisement and promotional spending.


37/105

37

V IDEOCON INTERNATIONAL LI M ITED

IntroductionVideocon international Ltd (VIL), the flagship company of theVideocon Group is a

leading producer of television sets, audio and video systems, Aggressive

marketing, launch of international quality goods at lower prices, and a strong

distribution network have made Videocon a household name. It enjoys 27% market

share in color TV during Fy0 3 -04, Videocon Narmada Electronics, a group

company engaged in the manufacture of picture tubes was merged with the

company. The merger will result in backward integration benefits

for videocon.Videocon has tied up with international giants like Sansui for

middlerange audio products, Toshiba for CTVs and VCD Players. Videocon has

also announced a tie-up with Kenwood Corp., Japan to manufacture and market

Kenwoods premium range of audio products in India. The company faces a stiff

competition following the entry of international leaders like Sony, Akai, Samsung,

and Panasonic into the Indian markets. Videocons proposed diversification into

unrelated areas like construction, power generation, oil extraction, and

petrochemicals have been shelved following a cash crunch within the group.

Videocon, however has focused only on its core business of consumer

electronics.Videocon keeps in touch with the times, to ensure that thecustomers


38/105

38

stay ahead over the years, Videocon has offered state-of-the-art technology and

international quality with venavkableconsistency. Now it has a host of innovative

products like the Plasma TV, the WebTV, Digital Video Disc, Double cascade

washing machine, combo refrigerator, and the dishwasher - which are bond to

revolutionize the life style. Videocon has always, and will always push the

frontiers of technology to give products that improve the quality of your life. No

wonder, it enjoys the trust and confidence of millions of

satisfiedcustomers.Videocon has a strong commitment spanning the rapidly

surging are of Business Electronics. It aims to revolutionize the corporate world by

launching products that lend the cutting edge to business professionals. And help

them be ready for the various challenges that the arena of modern business

demands Videocon has got together with leading organizations in the world with

an unfaltering dedication of bringing only the best to be customers. Videocon was

a relatively new entrant to the TV market as compared to others. Still, it managed

to carve out a significant share of the market by essentially utilizing two tactics.

One, it managed to sellcheaply playing on volumes and second, it outsourced many

of theappliances it sold and managed to get long tax brakes on its manufacturing

units locations because of the groups political connections. These strategies paid

rich dividends in the price sensitive domestic market, and the company managed to

carve out significant shares inmost of the consumer durables segments. But as the


39/105

39

market opened and became technologically driven, Videocons image of being a

lowcost supplier became its bane, as the consumer normally associates price with

quality. Thus, it lost its leadership in the CTV market to BPL which was associated

more with quality than Videocon.

India Today, the world tomorrow

The Videocon symbol. It reiterates the ethos of a company dedicated to

maintaining the highest international standards of excellence through quality,

technology and innovation. For over a decade now, Videocon has been bringing

the latest and very best in Consumer Electronics and Home Appliances.

Successfully adapting the best of technology to suit. Indian needs and crafting it to

improve quality of life The new Symbol of Videocon asserts its passion for global

impact,and the two Es on other side represent to groups wide spectrum

of interests ranging from Electronics to Energy. A symbol that proclaims a

paradigm shift. A sign that represents the new force that is Videocon. Thus

recapitulating own principle of reaching out and touching the time of millions of

people worldwide.


40/105

40

THE CO M PANY S TATU S : IT S PENETRATION IN THE M ARKET

Business for Videocon International Ltd. (VIL) has always been a game of growth

through rapid widening of the field of opportunity. While training out wide and

penetrating India to the deepest possible depths was once the natural future course

for this distribution driven company, now it is an imperative and it involves every

department including R&D.Videocon believes that they are the leaders in their

respective product categories, But growth made a minor come-back in 2 003 -

04thanks to the buoyant CTV market with VILs turnover rising by 23% .In 2 004-

05 its turnover increased by 1 2% .Videocon has how diversified itself into power,

petroleum, information technology and Real estate.Videocon doesnt consider

competition as a weakness according toit, it is the dominant brand that gets

affected by the entry of new comes Thats the reason they were not surprised

when their CTVshare slipped. They were anticipating it. Videocon has been

describing itself as a leader over. the years. Having established itself as a powerful

brand. It has launched many sub-brands catering to defined market segments. They

have Bazooka for the Top-end of the market. For the middle they have Turbo-

tough and finally for the younger consumers, they have the 14 Private. The

image Videocon is of as aggressive technological leader it was the 1 st brand to

launch PIP, Surround sound and now Bazooka Videocon is using its brand equity

built over the years to help its sub-brands. All Videocons products are


41/105

41

manufactured in India, The Companys state of art plants. The level of automation

in Videocon plants incomparable to the best plants in the world. The company

entered into technical collaborations with various internationally renownedMNCs

for its wide products. This collaboration could be further straightened to maintain

Videocons, leadership position as well as take care of the new brands being

introduced in the market. As for as a consumer is concerned. There is no difference

betweena Sony made in India and a Videocon made in India. In the big cities

Videocon is making first enough efforts to hang on its current market share. The

number it wants will come from products designed specifically for low end use

Videocon downs to be far ahead particularly on engineering productsto suit

localized needs. Videocon says that the stripping down jobhas to be acutely

market sensitive. So it has got a fix on small town value perceptions and cut-down

those features deemed irrelevant. According to Videocon - Satellite TVs bringing

new complexities to demand patterns. Five years ago small towns accounted for

first 1 % of the brands TV volumes now the proportion stands at over 1 7% . The

upshot;higher price realizations. Dealer margins and sundry selling costs are lower

in small towns, so VLL gees a layer fraction of the price the consumer pays. This

is one reason that the strategy is sound at least from a medium term point of

view. According to Videocon competition, is less severe further down the town

hierarchy somore in smaller towns the higher is the profitability,


42/105

42

better margins, better logistics and costs. It could be ages before everyone is ready

to buy a TV. Videocon is also trying to break new ground with refrigerators and

washing machines by playing the "price point game"Videocon believes that

strictly geographical urban rural divisions are unrealistic in a country where

lifestyles are so disparate. For

Videocon its not geographical any more but a function of socio-economic

behaviours.Videocon had started selling Toshiba and Sansui as premium CTV

brands while Sansui flanks Videocon, the brand Toshiba willspearhead the

companys projection of quality.Needles to say, Videocon is banking heavily on

efficient operations, with money being purified mainly into things which deliver

results, to maintain the price advantage it enjoys in so many markets.

Better computer software is another big help. The company invested Rs. 6 0crores

on software in 2 005 .Domestically, by 2 005 -06 , the company expects to be selling

16 million CTVs. But, by seeing the commanding heights the consumer electronic

business it wants its annual capacity of CTV to be 3 .5 millions.

PRO M OTION

As competition increases, companies are forced to continually increase their

product range with an increase in the number of sub-brands and continuously

advertise and promote their product so it reaches to the right customers. Therefore

it has forced the marketers or the producers to go in for new promotional schemes


43/105

43

and incentives which might look attractive to the buyers.Few years back, Videocon

was Okay with umbrella brand advertising, with the spotlight on CTVs .Videocon

created sub-brands such as Bazooka, Challenger, Budgeting and Freedom and the

communication went from genericto specific it happened with all the product

categories andaccording to the company, it was the first to take a lead.

Thoughthere was sub-brands innovation and technology were to remain the

two key factors in accentuating the overall brand image.In CTVs Bazookas

campaign plays on sound quality. Private the14-inch CTV is aimed at young

people who want their own CTV sets Videocons urban advertising continues to

build brand values for the products, and dealers are offered mega incentives.-They

wereoffered Mercedes car and foreign trips in 2 004-0 5 But Videocon was drawn

into promotions ring to . In March 2 004 it launched its Money back offer a

unique scheme for the 2 1-inchBazooka (Rs. 14, 99 0) and the 14-inch private (Rs.

5 ,99 0), throughwhich Videocon promises to return the entire money in six years

for Bazooka and 5 years for the other two. Earlier in 2 004, Videocon learnt from

bankers that individuals were stashing away large sums of money in banks. A

qualitative study confirmed suspicion that much money was being saved to make

big-ticket purchases later. Replacement market buyers are all the more on with

postponement. So a reverse credit scheme was devised to get that money out of

the bank on the assured that the money would be returned later. Effectively VIL


44/105

44

has taken loans from customers and paid all the interest in kind (CTVs)

straightaway. Though Videocon is heavily into advertising but it is not into

celebrity advertising like BPL is but still it has left an impact on the consumers

mind about its products because they consider themselves as a dominant brand and

the leader in the CTV market


45/105

45

RESEARCH OBJECTIVES

The purpose of research is to discover answers to questions through the application of scientific

procedures. The main aim of research is to find out the truth which is hidden and which has not

been discovered as yet. Though each research study has its own specific purpose, we may think

of research objectives as falling into a number of following broad groupings:

Children Influences on Purchase of Consumer Durables

To find out the Role of Children in family Purchasing

To Know the Children affection for purchasing.

To find out that who makes purchasing decision in a family.

To find out the Children influences on which?

B rand Qualit y S hop Colour


46/105

46

CHAPTER 2

THEORITICALBACKGROUN D OF

THE PROJECT


47/105

47

R o l e o f c h i l d r e n i n m a k i n g d e c i s i o n

Children constitute three different markets: the primary, the influencer, and the

future market certain products are simply children's products for which they are the

primary users/buyers. They sometimes either purchase a product themselves or

select the product before it is purchased by the parents. For other products, such as

ones which are used by the entire family unit, they may influence purchases made

by the parents. There are some products where children wield direct influence or

pester power by overtly specifying their preferences and voicing them aloud. For

other products, parents' buying patterns are affected by prior knowledge of the

tastes and preferences of their children. This 'passive dictation' of choice is

prevalent for a wide variety of daily consumed product items as well as products

for household consumption. Also, decision making in households is seen to change

with the mere presence of children. The nature of joint decisions in couple decision

making units and family decision making units is seen to be different (Filiatrault

and Ritchie, 1 98 0). It is also observed that children are socialized by their parents

to act as rational consumers. After years of direct or indirect observation of

parental behaviour in the marketplace, they gradually acquire relevant consumer

skills from their parents.

The amount of influence exerted by children varies by product category and stage

of the decision making process. For certain products they are instrumental in


48/105


49/105

49

parameters also merit investigation in different cultural settings. Studies specific to

Indian marketing environment are necessary, as pointed by Webster ( 2 000), "India

is an interesting culture in which to explore the antecedents of marital power

because its social and intellectual grains operate in ways vastly different from

those the West takes for granted. For instance, unlike western culture, where the

nuclear and neo local families are both the ideological and factual norm, the joint

family has been and continues to be an important element of Indian culture" (p.

1037 ). Hence, the objective of this paper is to examine and critically evaluate the

avenues already explored by previous researchers in India and abroad, and identify

opportunities for future research. A brief summary of research on influence of

children in family purchase decision making in the West and in India has been

summarized in Table 1 and Table 2 respectively. Influence of children varies by

poduct, product sub-decision, stage of the decision-making process, nature of

socialization of children, families' gender role orientation, demographic features

such as age and gender, and also by respondent selected for investigation of

relative influence (Belch et al., 1 985 ). The following sections contain a brief

review of research carried out in this context.

INFLUENCE OF CHILDREN B Y PRODUCT CATEGORY

In Western literature, children have been reported to wield a lot of influence in

purchase decisions for children products such as snacks (Ahuja and Stinson, 1 993 );


50/105

5 0

toys (Burns and Harrison, 1 985 ; Jensen, 1 995 ; Williams and Veeck, 1 998 );

children's wear (Converse and Crawford, 1 9 49 ; Fox man and Tansuhaj, 1 988 ;

Holdert and Antonides, 1 997 ; Van Syckle, 1 95 1); and cereals (Belch et al., 1 985 ;

Berey and Pollay, 1 968 ). Children have been observed to influence decisions for

family products also, such as holiday/vacations (Ahuja and Stinson, 1 993 ; Belch et

al., 1 985 ; Dunne, 1 999 ; Holdert and Antonides, 1 997 ; Jenkins, 1 979 ); movies

(Darley and Lim, 1 986 ); and eating at particular restaurants or even decision

making for the family to eat out (Filiatrault and Ritchie, 1 98 0; Williams and

Veeck, 1 998 ). Some researchers investigated the role children play in purchase of

children and family products together (Forman and Tansuhaj, 1 988 ; Geuens et al.,

2 002 ; Hall et al., 1 995 ; Mangleburg et al., 1 999 ; McNeal and Yeh, 1 997 ). Jensen

(1995 ) studied three categories of products-those that are primarily for children

(e.g., toys, candy), products for family consumption (food, shampoo, toothpaste),

and parents' products (gasoline, coffee, rice). Similarly, Johnson (1 995 ) selected

products as categorized by Sheth (1 97 4)-products for individual use, those for

family use, and finally products for the household.

The influence of children across product categories and parental responses has

been studied with respect to various factors and some studies in this context have

been reviewed here. Berry and Polly (1 968 ) studied mother and child dyads

making purchases of ready-to-eat breakfast cereals. They noted that most products


51/105

5 1

are not directly available to a child and the parents generally act as intermediary

purchasing agents for the child. In such cases, the extent of influence a child may

have on a parent's purchase decision depends on at least two factors: the child's

assertiveness and the parent's child-centeredness. They hypothesized that the more

assertive the child, or the more child-centered the mother, the more likely the

mother will purchase child's favorite brands. However, they found that the mother

played a "gatekeeper" role and bought cereals that weighed strongly on nutrition.

In cases of disagreement with the child over brand decisions, the mother tried to

superimpose her preferences over those of the child. They reasoned such outcomes

stem from the mother's perception of the quality of information possessed by the

child. Yet, they found that assertiveness by a child could increase the likelihood of

the child having his/her favorite brands purchased. Chan and McNeal ( 2 003 ), in a

study of Chinese parents, also reported that parents indulged in considerable gate

keeping for children's products. They exhibited strict control over the kinds of

products that children can or cannot buy while at the same time allowing children

some freedom in choosing brands of permissible products. Atkin (1 978 ) pointed

out that children tend to rely on pre-established preferences based more often on

premium incentives offered on a purchase than the nutritional features of a cereal

at the time of influencing cereal purchases. Children's influence is also seen to

vary by who is the user and the perceived importance of the product to the user


52/105

52

(Beatty and Talpade, 1 99 4; Fox man and Tansuhaj, 1 988 ). Jensen (1 995 ) proposed

that parents' involvement is a function of financial risk, their role as users and their

perception of product differentiation whereas children are mostly involved in the

purchase due to their role as users. She explored the influence of children in

making purchases and concluded that besides products for direct consumption,

children display influence in purchasing products for family consumption where

parents are less involved and perceive little or no product differentiation (for food

products). Geuens et al. ( 2 002 ) observed that the relative influence of children

varies by the extent to which the parents are busy. Foxman et al. (1 989 ) concluded

that children tend to have more "say" in the purchase of products that are less

expensive and for their own use. Several factors were found to significantly affect

agreement among family members regarding adolescent purchase decision

influence: families witnessing greater influence had older fathers, a concept-

oriented communication style, fewer children, and a mother who worked fewer

hours outside the house.

Implications

Studies reporting children's influence across product categories have especially

focused on products directly consumed by children. In the Western literature, a

host of studies have dealt with breakfast cereals. Since ready-to-eat breakfast

cereals are less popular than preferred freshly cooked food in India, influence for


53/105

53

this product purchase has not been dealt with. The market for branded snacks, toys,

and confectionery is growing in India, making a need for future research. While

Western authors have categorized products for direct consumption by the child, or

parents, or for the household, Indian researchers have not followed this typology.

Researchers in India have generally focused on durable purchases (such as

computers or TVs). They have not specifically questioned whether this product is

for use by the child or for the family (since ownership affects involvement in

decision making). Moreover, purchase influence should be examined after

categorizing products as minor and major products (as proposed by Kim and Lee

(1997 )). Western researchers have also noticed discrepancies in reports of

children's influence in family purchase decision making. This can be attributed to

the fact that most researchers have not differentiated between active versus passive

influence and knowingly or unknowingly neglected the study of passive influence

by children. The study of both active and passive influence is important (Commuri

and Gentry, 2 000) and, though the study of passive dictation by children is more

challenging, it is an important facet deeming further research by Indian as well as

Western researchers.


54/105

5 4

CHILDREN' S INFLUENCE ACRO SS S TAGE S OF DECI S ION M AKING

PROCE SS

Since family decisions are dynamic and interrelated, Douglas (1 983 ) and Mangle

burg (1 99 0) suggested that the decision making process should be studied across

decisions rather than in relation to a given decision independently.

Szybillo and Sosanie (1 977 ), while examining family decision making processes,

observed that all members of the family (husband, wife, and children) were greatly

involved in all three decision stages (problem recognition, search for information

and final selection), when considering a fast food restaurant and a family trip (that

is, for products that affect the entire family). The wife/child dyad was very

important in initiating a purchase and providing information. Other researchers

have also observed that children exert considerable influence during the problem

recognition and search stages and the least influence in the final decision stage

(Belch et al, 1 985 ; Filiatrault and Ritchie, 1 98 0; Hempel, 1 97 4) for family

activities such as choice of vacations and restaurants and consumer durables.

However, Holdert and Antonides (1 997 ) reported that children's influence was

higher in the later stages of the decision making process; that is, at the time of

alternative evaluation, choice, and purchase for four purchases (holidays, adult and

child clothing, and sandwich filling). Recently, Belch et al. ( 2 005 ) proposed that

since teenagers are high users of the Internet, they have greater access to market


55/105


56/105

56

substantial. These effects are pronounced for products that teens care for (e.g.,

stereo) and use often (e.g., telephone).

While studying Indian families, Singh (1 992 ) noted that families differed with

respect to their roles in making purchase sub decisions. The "when to purchase"

decision was generally syncratic (decided by the husband and wife jointly) and

also influenced by children. Hundal ( 2 001) noted that brand selection decisions

were also made jointly by the couple but were importantly influenced by children

in the family. The store where the durables were purchased as well as the making

of the actual purchase decision was also decided jointly or by the husband

individually (for three durables, but not for air coolers). However, children also

"went to buy," that is accompanied their parents at the time of buying televisions,

washing machines, and refrigerators. Kapoor ( 2 001) collected information from

families in Delhi in regard to their roles across stages of purchase decision-making

for six durables-televisions, refrigerators, washing machines, personal computers,

audio systems, and cars. She found that individual members were associated with

multiple roles. The initiator for purchase in a family was typically a young female

member, who was likely to be the wife or one of the children. She illustrated that

the need for an audio system, personal computer, and television was likely to be

first expressed by the children in the family. As influencers, younger members,

especially children, were found to affect purchase of a personal computer, audio


57/105


58/105

58

have generally focused on spouses or all family members. Research centering on children

especially is needed.

M EDIA EFFECT S ON CHILDREN

There is great concern about children as viewers of advertisements primarily

because young children are exposed to thousands of commercials each year in

India (George, 2 003 ) as well as in the West (Kunkel et al., 2 004). Marketers use

television as a medium of communication since it affords access to children at

much earlier ages than print media can accomplish, largely because textual literacy

does not develop until many years after children have become regular television

viewers. Approximately, 8 0% of all advertising targeted to children falls within

four product categories: toys, cereals, candies, and fast-food restaurants (Kunkel

and Gantz, 1 992 ). Young children are able to differentiate between a TV program

and a commercial but are unable to understand the intent of an advertisement until

they are 8 -10 years of age (Goldberg et al, 1 978 ). According to Seiter (1 993 ),

advertising to children avoids any appeal to the rational, emphasizing instead that

ads are for entertainment and "enjoyable for their own sake" as opposed to

providing any real consumer information (p. 10 5 ). The most common persuasive

strategy employed in advertising to children is to associate the product with fun

and happiness, rather than to provide any factual product-related information.

Hence, children in the age category 8 -10 years have a positive attitude towards


59/105

59

advertisements. Knowledge of advertising tactics and appeals emerges only in

early adolescence and develops thereafter (Boush, Fries tad and Rose, 1 99 4). John

(1999 ) notes that "the ability to recognize bias and deception in ads, coupled with

an understanding of advertising's persuasive intent, results in less trust and less

liking of commercials" (p. 1 9 0). With increasing age, children's attitude towards

ads changes from being positive to negative and further as children step into

adolescence, they become skeptical of advertising. Boush et al. (1 99 4) concluded

that children in young adolescence even exhibited mistrustful predispositions

towards advertising. In adolescents, knowledge about advertiser tactics increased

with age. Higher levels of knowledge of advertiser tactics and certain personality

variables were positively related to adolescents' skepticism towards advertising.

Moschis and Churchill (1 979 ) and Moschis (1 987 ) also found that older

adolescents tended to-1) develop resistance to persuasive advertising, 2 )

understand better the marketing strategies related to the pricing of products, and 3 )

generally become more sophisticated as consumers. Attention to commercials has

also been found to be directly related to the perceived truthfulness of advertising.

Children who perceive commercials to be mostly true pay more attention to them

than those who suspect them (Chan, 2 001). Mizerski (1 995 ) found that adults-

oriented product trade characters were also readily recognized by children as

young as three years of age. Gorn and Florsheim (1 985 ) examined the effect of


60/105

6 0

commercials for adult products on children and found that such exposure does

have an effect but that it is mainly a function of the product category advertised. In

general, exposure to commercials led to only a small change in response. Mizerski

(1995 ) concluded that recognition, or the ability to match a cartoon trade character

and product, is positively related to age. Along with this, the level of recognition

and a favorable attitude towards the product were also found to be positively

associated with age. Jensen (1 995 ) also found that purchase requests by children

are strongly stimulated by commercials or by friends who have purchased the

product. Mallalieu et al. ( 2 005 ) reported that children born in the 1 99 0s appear to

have developed these cognitive abilities (for example, to differentiate between a

programme and a commercial or to understand the purpose and intent of

advertising) to a far greater extent than children reported in earlier studies

(Goldberg et al., 1 978 ; Boush et al., 1 99 4).

The impact of television advertising on preschool and elementary school-aged

children occurs at multiple levels, including the relatively immediate product-

persuasion effects intended by the advertiser, as well as broader and/or more

cumulative types of influences that accrue from exposure to large numbers of

commercials over time. For example, a cereal ad may have the immediate effect of

generating product-purchase requests and increasing product consumption, but it

may also contribute to outcomes such as misperceptions about proper nutritional


61/105


62/105

62

preferred from each source. Media are seen to serve as sources of socialization for

children, but their exact impact needs further investigation to help marketers in

framing and directing messages. In contrast to this, very few studies in India have

focused on the impact of media as sources of information and as a socialisation

agent, affecting family purchases. Given the exposure and influence of media

(including internet) on children, it is imperative that future research should be

planned to determine children's attitude towards advertising, and the impact of

creative elements. Although serious conflicts in family purchase decisions are rare,

some form of family conflict is highly probable, because forming joint preferences

requires combining individual preferences of family members (Lee and Collins,

1999 ). When various alternatives are being considered, each member attempts to

influence the other towards his/her preferred decision. A variety of influence

techniques are used depending upon the nature of purchase, the characteristics of

individuals participating in the purchase discussion, and its importance to the

individual. These situations, during negotiation, may result in a preference

agreement or a compromise. Nevertheless, differences in the desirability of a

purchase outcome may lead to disagreement or conflict. Such situations mean that

there will be attempts either to accommodate or resolve the conflict before a joint

decision outcome occurs. Sheth (1 97 4) suggests that family members' attempts to

resolve conflict(s) are tactically different and varied in appropriateness, depending


63/105

63

upon the cause of the conflict. A repertoire of such strategies has been proposed

and validated in the literature for spousal conflicts (Kim and Lee, 1 996 ; Nelson,

1988 ; Sheth, 1 97 4); some researchers have extended the same to include children

as well in the family. Belch et al. (1 98 0) found little disagreement among family

members, but there was some variation across product classes. The amount of

disagreement is relatively low for decisions such as where to buy and when to buy,

but it is higher for decisions concerning how much money to spend. Children

perceived the existence of conflict more than their parents. Buss and Schaninger

(1987 ) reported that conflict can be managed in two ways-by either using

avoidance tactics or resolution tactics. Since product type has been seen to effect

involvement and influence of children, the nature of the product can also be

important in determining the choice of conflict resolution strategy. Johnson (1 995 )

found that product type is an important variable in determining the way children

will behave in family decision making. She observed that bargaining was the most

common strategy adopted by children when trying to influence the purchase of

products for personal use. Conflict avoidance was most commonly used for family

use products. However, for products for home use, such as a personal computer,

they resorted to problem solving tactics to resolve conflicts. The author also

pointed out that while bargaining is most common in dyadic interactions (Qualls

and Jaffe, 1 992 ), problem solving is more frequent in triadic interactions between


64/105


65/105

65

mothers and sons were found to work together to gain influence. The influence of a

mother in the family was the strongest during the Negotiation and Outcome stage

when both her children were male. Her influence was also strong if her first child

was male and the second child was a female. The mother-son and father-daughter

pattern changed when parents had two daughters. The father had less influence

during the Configuration stage when they had a younger daughter and his influence

increased in the Outcome stage if the couple had an elder daughter and a younger

son. Moreover, mothers in two-girl families had greater decision power than when

the family had an elder daughter and a younger son. Williams and Burns ( 2 000),

using social power theory, investigated the ways in which children make direct

influence attempts. They found that when children feel 'entitled' or 'privileged' to

act in their own way, they resort to negative influence attempts such as deception,

displaying anger, begging, or pleading to exert influence. If they find that their

parents have the right or legitimate power to direct their actions, they utilize

positive influence attempts such as asking nicely, showing affection, or bargaining.

When they feel that they can manipulate their parents, they try to con/deceive the

parents, display anger, or beg and plead. If the children expect to be punished as a

result of non-compliance, they behave in ways as is perceived positive by the

parents. This implies that when parents resort to coercive tactics, the children try to

have their own way by asking nicely, bargaining, or showing affection. Many


66/105

66

times children also express compliance in exchange for a future gain; that is, they

bargain for a future reward in exchange for a present one. Conflicts have largely

been investigated in the West using self-report methods wherein the results tend to

get distorted by the tendency of family members to give out socially desirable

responses. A study of actual behavior of family members, as proposed by Johnson

(1995 ), can yield fruitful insights in this situation. However, in India, little or no

attention has been paid to conflicts, their cause, and/or resolution in family

purchase decision making. On one side, consumption levels have risen in India

owing to a decrease in size of families and second, this has led to children's

preferences being accorded greater importance by parents. In this light, children

tend to exert more direct influence attempts, i.e. they are more active participants

in family purchase decision making. In such cases, refusal to comply with

children's preferences can most often lead to conflicts between children and

parents. Hence, besides a stronger measurement approach, as required in the West,

Indian researchers need to understand and investigate this facet to understand fully

the process of family decision making. he most widely used definition of consumer

socialization is the one given by Ward (1 97 4): "It is the process by which young people acquire

skills, knowledge and attitude relevant to their functioning in the marketplace" (p. 38 0). The

process of consumer socialization begins with infants, who accompany their parents to stores,

where they are initially exposed to marketing stimuli. Within the first two years, children begin

to make requests for desired products. As kids learn to walk, they also tend to make their own


67/105

67

selections when they are in stores. By around the age of five, most kids are making purchases

with the help of parents and grandparents, and by eight most are making independent purchases

and have become full fledged consumers (McNeal and Yeh, 1 993 , cited in Solomon, 2 003 ).

Socialization of children is a function of parental style. Parental style is a

"constellation of attitudes toward the child that are communicated to the child and

that, taken together, create an emotional climate in which the parent's behaviors are

expressed" (Darling and Steinberg, 1 993 , p. 4 88 ). Differences in parental styles

account for differences as regards to the way parents attempt to control children's

behavior through use of emotions, use of authority, etc. at the time of socializing

them. Becker (1 96 4) took a dimensional approach in which parental style was

assumed to consist of different dimensions that are orthogonal to each other. He

suggested that parental discipline behavior could be reflected by a three-

dimensional model to conceptualize family socialization-warmth vs. hostility,

restrictiveness vs. permissiveness, and calm detachment vs. anxious emotional

involvement. On those dimensions, parents were categorized as Rigid Controlling,

Authoritarian, Organized Effective, Overprotective, Democratic, Indulgent,

Anxious Neurotic, and Neglecting (c f. Carlson and Grossbart, 1 988 ). Baumrind

(197 1) further developed a three-fold typology of parental styles and classified

parents as-Authoritarian, Authoritative, and Permissive. These two approaches

were merged further by Macoby and Martin (1 983 ) so that the parenting

classification could be generalized to most families. They defined parental style as


68/105

68

a function of two dimensions-'responsiveness' and 'demandingness.' The parents

were then classified as Indulgent, Authoritative, Authoritarian, and Neglecting.

Carlson, Grossbart, and Stuenkel (1 992 ) showed that parental style provides a

theoretical basis for explaining differences among parents regarding how they

communicate consumer skills and knowledge to their children. John (1 999 )

classified consumer socialization stages of children as being the perceptual stage

(3 -7 years), the analytical stage ( 7 -11 years), and the reflective stage (11-1 6 years).

On the basis of an exhaustive review, she contended that children in the perceptual

stage focus on perceptually salient features of products, use direct requests and

emotional appeals to influence purchases, and possess limited ability to adapt

strategy to a person or a situation. They are expedient in making decisions, are

egocentric (as validated by Johnson, 1 995 ), and have the emerging ability to adapt

to cost-benefit trade-offs. However, children in the analytical stage are more

thoughtful, focus on important attribute information to generate an expanded

repertoire of strategies (especially non-compensatory ones), and are capable of

adapting strategies to tasks. In the reflective stage, children have substantial brand

awareness for adult-oriented as well as child-oriented product categories, possess

ability to gather information on functional, perceptual, and social aspects, and are

capable of adapting strategies to tasks in adult-like manner. Paxton and John (1 995 ),

in their study of age differences in information search behavior of children, found


69/105

69

that older children gather more information for favorable product profiles and less

information when the cost-versus-benefit of acquiring information is high. Other

studies indicate that younger kids use few dimensions to compare and evaluate

brands (Bahn, 1 986 ; Capon a

final reseach report......12304000002341041

Documents