What is the power of internet on consumer buying behaviour?

| December 6, 2012

Introduction

In general, consumers are aware of origin, quality or prestige of a product just by hearing the name of the brand. For example, when we hear “Toyota”, first thing popped-up in our mind would be Japanese automotive brand. “Ford” would be American. “BMW”, “Mercedez-Benz”, “Ferrari” are European cars. “The Bodyshop” is UK-based cosmetic manufacturer. And so on.

When we talk about fashion, we all know that image of one brand is closely associated with the designer of the product. When we heard “Prada” or “Miu Miu”, we instantly remember Miuccia Prada as the person behind these brands. When we see “Dior”, the first thing we remember is John Galliano. Some fashion designers set up their own labels, so when we look at the brand we are directly linked to the designer such as Diane von Furstenberg, Tommy Hilfiger, Anya Hindmarch, and many more.

All of the above can be considered as a result of marketing and branding strategy. Positive attitude of a brand could create a good market with consumers who are satisfied with their buying and become fanatic to said brand. When many people become regular buyers, including public figures, celebrities or socialite, such brands will become popular and pricey. As an illustration: two bags – same materials, same quality. One is unbranded and the other is Chanel. The first bag is sold for only 10% of the Chanel bag. From this we can see that consumers tend to buy the brand instead of the product to fulfil their satisfaction in obtaining the prestige. However it is also known that branded or luxury products are having much better quality and re-sell price than unbranded ones.

Electronic media also plays an important role in marketing. The swift development of internet technology has influenced companies to use internet as a media to market their product. According to www.internetworldstats.com,Internet Usage and World Population Statistics as of June 30, 2010 is 1,966,514,816 users. Therefore the use of internet as one of marketing strategies is a common practice nowadays. When we surf the web, we see ad-banners of products with links to the original website of various brands. We sometimes receive promotions such as discount codes through internet. Even lately these kinds of promotions are sent to our e-mail inbox and sometimes in a form of junk mail and spam. Furthermore, online stores are getting popular among consumers as a method of shopping.

This paper will discuss about brand image and media influence on consumers buying behaviour with implementation on these brands: Tommy Hilfiger, Christian Dior (and John Galliano) and Christian Louboutin (vs Yves Saint Laurent).

Brands

Brand (or, mark) is one of important parts of a product that is considered as an added value to products, either goods or services. Similar to the previous illustration: two bottles of perfume filled with the same content, one labelled with famous brand and one left plain. The first one will attract consumer to buy it, especially because of the brand. This added value is an advantage to the producers, who keep trying to introduce their brands from time to time to the consumers as their target market. Kotler defined brand as a name, term, sign symbol or a combination of these, that identifies the maker or seller of the product and differentiate the goods and service from competitors.[3] It can be assumed that a product without brand is like a man without name. Producers can create similar products, but in the end, the one with well-known brand will likely attract more consumers. The one without brand does not have an added value to the consumers, because in practice, consumers have more relation with a specific brand rather than with the product itself.  In other words, brand is one of important assets of a company. It is found in literature that the value of brand names sometimes more than their business value. Therefore, a good brand management is very important so the consumer can easily identify a product and build a connection with such marketed product. Moreover, brand management is important for producer since brand can increase the number of selling and also easily compete with its rivals. When the consumers acknowledge the brand, the producer can increase the product selling price and higher sales volume that will maximize the profit at the end of the day.

Kirk Phillips from Conrad Phillips Vutech, Branding and Marketing Firm describes nine criteria for brand essence, as follows:

  1. Unique

People make decisions based upon how things are unique, not how they are the same. This gives the buyer the primary reason to choose a brand over competitors’ brands. A brand should be unique and owns a single idea. For example: 3M = Innovative, Visa = Everywhere. Further, Brand positioning is the relative differences between brands as perceived by the consumers. For example, in automotive brand positions, Hyundai known as affordable, Porsche is sporty, and Lexus is luxury.

  1. Intangible

Tap into what the consumer feels. For example, one is more comfortable wearing Dior flat than another brand, but one other feels that Chanel flats are the best.

  1. Single-minded

The ideal way to describe the essence of a brand is with one word only, or may be two. More than that will show that the brand has no focus, and because a brand delivers a unique experience, having no focus will make the brand weak.

  1. Experiential

The essence captures what the consumer feels during an experience with the brand. For example, a woman feels confident all day by wearing Louboutin’s heels.

  1. Meaningful

An essence must be relevant to the consumers. Lack of connection is the reason behind many failed brands. Therefore, research is important in developing brand essence.

  1. Consistently delivered

It is not the essence if the proposed essence is not consistently experienced. Example, every visit to Harrods in London is always entertaining. Consistency means that there is no surprise behind it. Consumers seek comfort, stability and predictability. Consistency of experience is the basis for brand loyalty, which is sometimes a major challenge for most producers or companies.

  1. Authentic

The essence must be credible or the brand will be rejected. The producers should ask the consumers in order to find out what the consumers believe in their brands.

  1. Sustainable

An essence of a brand is baked in and it does not change.

  1. Scalable

There are four questions to be asked by the producers to themselves: (1) Will the essence work for brand extensions? (2) Will it work as the brand’s opportunity grows? (3) How does your brand essence measure up to these criteria? And (4) What other criteria do you use?

In addition, brand image also plays an important role in influencing the consumer’s buying behaviour. According to Kotler, image is trust, idea and impression of someone into something. Image is an impression or perception of public to a company (producer), an object (product), a person or an institution (organization). From the company’s point of view, an image is understood as a public perception towards the company’s identity. This perception is based on consumers’ knowledge or understanding about such company. Based on this, the same company is not always having the same image in front of consumers. This image is one of the criteria for consumer to make a decision or buying behaviour. Good image will give a positive impact towards the company; on the other hand, bad image will weaken a company’s position in market competition.

Keller (2003) referred to brand image as follows:

  1. Perceptions about a brand as reflected by the brand associations held in consumer memory.
  2. The consumer’s way of thinking about a brand in their mind, even though they do not face the product directly when they think about it.

Strong marketing programs towards a specific product create a positive brand image that is unique and different with other products. Good combination of supportive essence as explained above will result to a strong brand image in favor of consumers. From the consumers’ perspective, It is found that consumers’ emotions are one of the major determinants which affect their buying behaviour.

Added to the earlier, there are four elements in building a successful brand, namely:

  1. Tangible product; refers to the commodity that meets the basic needs of the customers.
  2. Basic brand; considers the packaging of the tangible product so as to attract the attention from the potential customers.
  3. Augmented brand; The brand can be further augmented with the provision of credibility, effective after-sales services and the like.
  4. Potential brand; established through engendering customer preference and loyalty.

International protection of brands

For both consumers and producers, brands have their recognized value and are protected under established legal system, especially prepared to fight against counterfeiting. Many countries have set up laws to protect trade marks, patents, designs as well as copyright.

Trade marks can be seen as serving two main purposes: to protect business reputation and goodwill and, to protect consumers from deception, that is to prevent the buting public purchasing inferior goods or services in the mistaken belief that they originate from or are provided by another trader. Nowadays as we can see, brands play important roles in the industry. Not only to distinguish between similar products, but also as a tool to win the tough competition between producers and to secure their own market. In addition, a well-known brand can be considered as a goodwill and priceless asset of the company, and possibly can attract more consumers if it is supported with a good research and marketing strategy. This leads to those well-known brands becoming target of piracy. As a part of Intellectual Property Rights (“IPR”), trade mark rights are exclusive, where only the holder can do monopoly and no other person can use such brand without permission or acknowledgement of the legal holder.

Sherman explained that as a general rule, trade mark rights are based on actual use and/or registration in each country.However, producers of international brands can use an international system known as Madrid System, which allows the simultaneous registration of trade marks using a standardized application in fifty-six countries. This system consists of two treaties: Madrid Agreement concerning the International Registration of Marks and the Madrid Protocol for the International Registration of Trademarks. The World Intellectual Property Organization in Geneva, Switzerland administers these treaties.

Consumers buying behaviour

As a consumer, people consume many products throughout their lives. Starting with basic needs such as food and clothes to luxury products like electronics, jewellery, automotives and other valuable goods. Consumer behaviour is about a decision making by the consumer on buying, using and disposing products, services, ideas or experiences with the use of resources like money, effort and time.

According to Stylised Stage model, as far as the consumer buying process model is concerned, consumers need to go through the following steps before reaching their final decisions:

  1. Problem Recognition à experience, endogenous activation

In this step, consumers are aware with what they need, whether it is actual condition or only desired state. For example, when we see advertisement or information about Prada’s new collection, we are thinking to buy one of the signature bag because we really need a new bag or because we still do not have a bag in that specific color.

  1. Information Search à external, internal, alternative vs attribute based, global vs local

External search is when the consumers gain information from other consumers such as family and friends. This is called the power of word-of-mouth marketing, because it gives stronger influence towards a new consumer’s decision in purchasing a product. As in illustration, Oscar de la Renta, Dominican-born fashion designer, bought a property from Puntacana group, a resort and residential community founded by Dominican businessman Frank Raneiri and New York Attorrney Theodore Kheel in Punta Cana, Dominican republic. Shortly after that, he invited one of his best friends, Enrique Iglessias to be his neighbor. Soon after that, De la Renta further spread the word and invite his Russian Ballet dancer friend, Mikhail Baryshnikov, who feel in love with the property after he saw De la Renta’s. As results, now De la Renta is associated with Punta Cana.

  1. Consideration Set Formation à size, composition, construction process

Based on the gathered information, consumers try to narrow down the options before they decide to purchase the final product.

  1. Evaluation of Alternatives à sensitivity to content, strategy, endogenous activation

When the Prada bag illustrated in point 2 above is no longer available, consumer will seek alternatives, for example to substitute with other bag also from Prada (because of the Brand), or try to find other bag from other brand which has similar features e.g. color and dimension.

  1. Choice / Decision à rules, risk taking, context effect/variety seeking, status quo/default

Final decision is made by the consumer after serious consideration of step 4 above,

  1. Post Choice / Decision Process à satisfaction/dissatisfaction, emotional responses, process satisfaction

In this last step, consumer may experience satisfaction or dissatisfaction after purchasing the product. The consumer’s experience is very important because it may support the marketing of a product or brand in a positive way. When most consumers are satisfied with what they purchase they will spread the word and automatically will increase the selling number of said product. On the other hand, negative marketing can be triggered when the consumer dissatisfy with the product. The disappointed consumer will share his experience to every one around and with the help of technology and media such as internet, the opportunity to spread the disappointment become visible.

Internet as a media to influence consumer buying behaviour

As mentioned earlier, currently there are almost 2 billion active internet users every day. It is undeniable that people rely on internet in living their life. Paper-based newspaper is no longer popular because we can easily surf the latest updated news via internet. In communicating with each other, we use e-mail instead of postal mail. Furthermore, now we can communicate in real-time basis using a social networking media, chat, and video call. It is very easy for consumer to get information about a product they plan to buy. We can browse the official site of specific brand, unofficial ones, and most importantly we can read reviews from other consumers related to said products. There are numerous website as a forum to discuss about particular interest, such as branded items, cosmetics, and so on. Consumers can share their experience and give recommendation or comment to prospective buyers. They can even discuss whether the bag they bought, for example, is a counterfeit by sharing the pictures to other members of the forum. There are also individual blogs that are accessible by public so people can read review about any particular interest. No doubt that blogging, which is rapidly increasing in popularity, become the latest media for fashion and play an important role in influencing trends and fashion. Reviews on blogs can be classified as word-of-mouth marketing since consumer will trust such reviews better than advertisement and packaging of products because they are objective and based on real experience of previous consumers. Even though sometimes we can see that there are advertisement banners in the blogs hovewer readers/consumers still depend on popular bloggers’ review before they decide to purchase something, especially expensive ones. Bad reviews equal to negative word of mouth, that can affect the success of the product. Therefore producers have to pay attention to fashion blogs so criticism towards their product can be considered as a constructive input in order to enhance the quality of the products and also to adjust the products with public demands.

The following are samples of how internet has influenced the consumer buying behaviour towards the following brands:

Tommy Hilfigher

We may still remember rumors first spread in 1996 about eccentric racial comment from American designer, Tommy Hilfigher, circulated through chain email.

The content of chain email is more or less as follows:

The above e-mail was widely circulated around the world and believed has given negative influence to the consumers who are “colored” or just simply hate racist. It took several years for Tommy Hilfigher to investigate this defamation. Press released was issued in 2001 denying the allegation. Earlier on, Oprah in her own show on January 11, 1999 clarified that “Tommy Hilfigher has never been in her show nor has she ever met met him”. In 2006, Tommy Hilfigher firstly appeared on the show and Oprah suggesting the audience that “The next time somebody sends you an email or somebody mentions this rumor to you, you know what you’re supposed say to them? You’re supposed to say, ‘That’s a big fat lie.'”

It is noted that the hoax e-mail had given negative impact towards Tommy Hilfiger business, and surprisingly such e-mail is still circulated nowadays.The consumers who fall within the races mentioned by Tommy Hilfigher, especially the sensitive ones, most likely will no longer purchase Tommy Hilfigher products. This results to lower profit gained by the company. Not to forget, Tommy Hilfigher has to spend much time, energy and also money in defending his reputation.

Christian Dior and John Galliano

The world was shocked by a video firstly uploaded in the website of British newspaper, the Sun. In the video, John Galliano made illegal anti-semitic remarks in a Parisian café on February 23, 2011. This video along with the news were widely spread on the internet, through news website and social networks, and gained negative comments from public especially Jewish. One of the strong comments came from Natalie Portman who is Jewish and also brand ambassador for Dior perfume, Miss Dior Cherie. In her statement, she was ‘‘deeply shocked and disgusted by the video.’’ She added, ‘‘as an individual who is proud to be Jewish, I will not be associated with Mr. Galliano in any way.’’

As the Chief Designer of Christian Dior, John Galliano’s act is directly affecting the brand Christian Dior itself since he is always associated with that Haute Couture fashion house. Realizing the impact of his negative behaviour towards the company, Christian Dior house took a bold step by firing John Galliano within a week from the day the controversial video was leaked.

Christian Dior quick decision to fire John Galliano is considered as an appropriate act to protect its brand image. Similar to what happened with Tommy Hilfigher, becoming a brand that is associated with anti-semitic acts may damage its refined image and affect the consumers view and buying behaviour of Christian Dior products.

Christian Louboutin

When we hear “Christian Louboutin”, we all know that we are talking about a Parisian shoemaker with red-sole shoes as his trade mark. His luxury and high prices shoes are in the must-haves list of most woman, especially the ones who are really into fashion trends. Students, housewives, career women, celebrities, fashionistas and even politicians may feel more confident wearing a pair of Louboutin’s, especially when they flash the distinctive red soles.

Since the red-soled shoes become a trend, there are many counterfeits of Louboutin’s shoes, and also what we called “Louboutin wanna be” featuring the red soles from various brand, usually from high street fashion brands. Mr Louboutin seems does not really care about the fakes since he knows that there already a specific market of his shoes with loyal consumers who knows the quality and prestige of wearing a pair of Louboutin and are willing to pay the prices he offers. However, he is finally taking legal action when he found out that one of his competitors in luxury brands, Yves Saint Laurent America, has attempted to copy his trade mark.

It was discovered that Yves Saint Laurent (“YSL”) has created a range of shoes collection with identical red sole like Louboutin’s in the same prestigious stores in New York that sell Louboutin’s. In his lawsuit, Mr Louboutin seeks damages of $1 million in Manhattan federal court for alleged infringement of trade mark and counterfeiting his red sole feature. To date there is still no confirmation or comments from YSL or its owner, Gucci Group, towards the lawsuit.

The above information is extracted from UK’s news portal, www.dailymail.co.uk, Femail section dated April 8, 2011. However it is not only from this site. If you put keywords “Louboutin – YSL” in search engines such as google and bing, you will find similar articles from websites such as www.bloomberg.com (April 7), www.businessweek.com (April 7), abcnews.go.com (April 8), and many more. Assuming that consumers around the world have accessed internet within said period, the following are the possible impact of the news on the consumer buying behavior:

  1. New consumers learn that red-soled shoes are only associated with Christian Louboutin. Therefore they will only buy the original Louboutin’s and not other brands with similar red soles.
  2. Loyal consumers will stick to the original Louboutin’s and this will increase the number of selling of Louboutin’s worldwide.
  3. The situation can be considered as “free marketing” for both Louboutin and Yves Saint Laurent. Some people may take this opportunity to buy Yves Saint Laurent’s red-soled shoes before they are removed from the market, if Christian Louboutin wins the case. The YSL red-soled shoes may be rare collectible items with high re-sell price in the future.

Conclusion

Internet has played an important role in influencing the consumer buying behaviour.  Supported by up-to-date technology, consumer decision can be easily controlled. Moreover, the role of fashion blogs in giving product reviews is also essential, since word-of-mouth is believed as the best marketing strategy that influence a consumer buying behaviour. Therefore the producers have to seriously pay attention to the information available on the internet especially in relation to their product or brands and take a swift action in order to keep the consumer satisfy and become a loyal consumer.

Tags: brand essence, consumer, consumer behaviour, consumer knowledge, cosmetic manufacturer, cosmetic manufacturer essay, essay on cosmetic manufacturer, free essay, online shopping

Category: Free Essays, Information Technology