POM: Session10 Marketing Strategy - Segmentation

Zara, a Spanish retail brand is very popular in almost all age groups. As compare to other retail brands they are low on advertising and discount offers, still able to do well in the competitive market. Why people buy from Zara? It is their marketing and distribution strategy that keeps them ahead. Fast fashion as they are perceived in the minds of their patrons, concentrate on three winning formulas:

• Short leading time that results in more fashionable cloths.
• Lower quantities increase in demand and scare supply
• more choice, i.e. something for everyone

Most companies, like Zara, have moved away from mass marketing and toward target marketing—identifying market segments, selecting one or more of them, and developing products and marketing programs tailored to each.

SM: Session 7A Revenue Management in Services

Revenue Management

Revenue Management (Yield management) is the process of understanding, anticipating and influencing consumer behavior in order to maximize profits from a fixed, perishable resource. The goal of yield management is to produce the best possible financial returns from a limited available capacity. It attempts to allocate the fixed capacity of a service provider, such as airline seats or hotel room reservations.

Revenue Management is effective in the following conditions:

1. High fixed cost structure
2. Relatively fixed capacity
3. Perishable inventory
4. Variable and uncertain demand
5. Varying customer price sensitivity

Revenue management (RM) is price customization as it charge different value segments different prices for same product based on price sensitivity. It uses mathematical models to examine historical data and real time information to determine

• What prices to charge within each price bucket
• How many service units to allocate to each bucket
• Rate fences deter customers willing to pay more from trading down to lower prices (minimize consumer surplus)

Yield Calculation

Yield = Actual Revenue / Potential revenue
Actual revenue = Actual capacity used x average actual price
Potential revenue = Total capacity x Maximum price
A hotel has 200 rooms and the maximum possible price is $ 200 per room
Potential revenue is $ 40000
But if 200 rooms are rented at $ 150 each then,
Yield = 30,000 / 40,000 = 75%

Multiple demand and capacity management strategies help service firm to obtain optimal usage and hence maximize profits. However, determining an appropriate mix can be difficult as different parameters like service quality, customer loyalty and customer demand can be crucial in finding revenue buckets.

Relating Price Buckets and Fences to Demand Curve

Key Categories of Price Fences

Rate Fences	Examples
Physical (product-related) Fences
Basic product	§  Class of travel (business/economy class) §  Size and furnishing of a hotel room §  Seat location in a theater
Amenities	§  Free breakfast at a hotel, airport pickup, etc. §  Free golf cart at a golf course
Service level	§  Priority wait-listing §  Increase in baggage allowances §  Dedicated butler service §  Dedicated account management team
Nonphysical Fences - Transaction Characteristics
Time of booking or reservation	§ Requirements for advance purchase § Must pay full fare two weeks before departure
Location of booking or reservation	§  Passengers booking air tickets for an identical route from different countries are charged different prices
Flexibility of ticket usage	§  Fees/penalties for canceling or changing a reservation (up to loss of entire ticket price) §  Nonrefundable reservation fees
Nonphysical Fences - Consumption Characteristics
Time or duration of use	§  Early-bird special in restaurant before 6PM or 7PM §  Must stay over on Saturday for airline, hotel §  Must stay at least 5 days
Location of consumption	§  Price depends on departure location, especially  in international travel

Challenges in Revenue Management

On one side revenue management can improve revenues but it can bring many risk.

1. Loss of competitive focus: Overfocus on profit maximization can neglect the long term competitiveness of the firm. Price buckets gives number of price points to competitors.

2. Customer alienation: Customer may perceive price buckets unfair. In some cases customers are informed about unavailability of tickets for a particular flight two weeks prior because the tickets are kept for last minute bookings!

3. Overbookings: The success of revenue management system lies heavily on the accurate demand analysis. Due to some situational factors, if the demand is wrongly assessed and overbooking is done foreseeing some cancellations, the firm may face problems. In such cases, proper compensation mechanism should be devised.

4. Incompatible incentive and reward system: Employee may not any performance based incentives as they are not able to sell many.

5. Inappropriate organization of yield management system: Revenue management system requires a centralized booking and reservation system that may not be feasible for small firms.

Designing Fairness into Revenue Management

A service firm should design clear, logical, and fair price schedules and fences. They should use high published prices and present fences as opportunities for discounts rather than quoting lower prices and using fence as basis to impose surcharges. They can optimize revenue management by communicating consumer benefits. Bundling can be used to “hide” discounts so that customers don’t misunderstand reference prices. All the policies must be designed to take care of loyal customers. In case of overbooking due to inaccurate demand analysis there should be provision for compensation.

Reference: Services Marketing: People, Technology, Strategy - Lovelock, Wirtz & Chatterjee & Service Marketing - Zeithmal, Bitner, Gremler & Pandit

SM: Session 7 Pricing In Services

In services prices are known by many name. They are rate of interest in bank or other loans, fees in education, consultancy, brokerage as in commission on sale or purchase of shares. They are termed as rent in property deals, toll in road or bridge use, premium in insurance, commission in advertising, admission fee in Museums, tourist attractions and honorarium for guest speakers.

Issue in Pricing Decisions

Reference Prices

In case of services it is difficult for customers to predict the price for a service. They may have some internal price reference, which is based on a price point in a memory for a good or service and can be price last paid, the price most frequently paid, or the average of all prices customer have paid for similar offerings. But these reference prices rarely give accurate idea of prices. The reasons for that are:

1. Service Variability

An important characteristics of service is its variability. Service products are usually designed considering number of permutations and combinations and offered by different people. For example, a hair spa may contain different product use (Kerastase, Schwarzkopf and Wella), given by different people (master stylist, senior stylist, trainee) and for different duration ( 30 mins, 45 mins and 1 hour) that itself comes to 3 X 3 X 3 = 27 combinations. If a customer asks for any additional service like hair wash ( 3 types of shampoos) or anti dandruff treatment (4 varieties) its adds up to 27X3X7 = 324 combinations. In such cases it is very difficult to predict reference prices.

2. Inaccurate Advance Price Estimations

In many cases the service provider can give an idea of the base price in advance. They are usually unwilling to discuss prices in advance as they themselves don't know what service will involve until the service is delivered. For example, a legal practitioner can't predict in advance how much time and efforts are required and hence can't predict the price. 

3. Varying Individual needs

Another reason for customer lack accurate reference prices are their individual needs. For example, if the reference prices are based on previous experience, next time the service combination may be different. If the reference prices are based on recommendations of a friend, for a hair care service, the quality of hair may be the different and hence a different product may be used. 

4. Contrasting Information

Reference price estimation is also difficult due to amount of information is available for various service products and providers. This leads to a lot of references for a given category and results in customer confusion. At times consumer confuses promotional prices (special offers and discounted prices) to reference prices. 

5. Hidden Prices

In service price visibility may be limited. In many service like financial and banking services, many elements of costs are hidden or implicit. For example their may be a penalty clause or taxes. 

Price Calculations - Non Monetary Costs

Service prices calculation is difficult as compared to that of physical goods. The reason being difference in consumer perception regarding pricing for the two. In case of services there are other considerations also and with monetary price other non monetary costs also play a role.

NON MONETARY COSTS

1. Time costs

The time cost is important in the services where customers physical presence required. The customers has to invest time to avail the service and there is waiting time also. For example, long waiting hours on a visit to a physician.

2. Search costs

The efforts put in identifying the desired service are also non monetary costs. Due to intangibility of services, it is difficult to evaluate various options. Initially, the customer may contact number of service providers and compare different prices and schemes. The search may also be done on internet. For example, for booking a tour customer may inquire with many travel agents for the desired itinerary and compare prices.

3. Convenience Cost

The other element of non monetary cost is the cost of convenience (or inconvenience) If the customer is traveling far to a preferred service providing, there is traveling time (to and fro) involved. Heavy traffic in most of the cities cause further inconvenience.

4. Psychological costs

These non monetary cost involve the fear of rejection (application of bank loan), fear of not understanding (using an ATM), fear related to making a choice. Towards the end of it all the customer may feel that there can be better service.

Also price determination take into account the perishibility aspect of the service.

Price a Service Quality Indicator

žIn the absence of other forms of communication from the company, price becomes the sole decisive factor in selection of a service. Customers look for cues like information through advertising, brand image etc. žIn certain services which are perceived as high risk like consultancy services and medical treatment the customers associate pricing with quality assurance.ž Too low a pricing can act as a repellent. It could send negative signals. Too high a price can set very high expectations.

Price Determination

Following three criteria are used to determine prices in services:

1. Cost Based Pricing

A company determines the prices on the basis of expenses adds profit margins and overhead and arrives at prices. The expenses may include human costs, overhead costs are share of fixed costs. 

Price = Direct Cost + Overhead Cost + Profit Margin

This type of pricing is used in services like advertising, contracting etc.

Cost plus pricing is used in services where component costs can be calculated and a markup is added. In complex product lines – like retail banking products, Activity Based Costing is used to determine the price. Cost of the time involved in providing the Service. Example professional services where charges are per hour like consultants, lawyers psychologists etc.

Most services are sold by hour as it is difficult to determine unit price. Also variability of services make it difficult to ascertain uniform cost per hour. 

2. Competition based pricing

This approach is based on using the competitors’ price as the point of reference and used in services where services are standard across providers such as E.g: Fitness clubs, Driving classes, Computer classes Tourist bus services, Car hires etc. 

However, this type of pricing makes competition difficult for small firms as they can't keep prices as large firms. Further heterogeneity of service make it difficult for different service providers and within the service firm. 

Going rate pricing: In this type of pricing strategy the charges offered are the ones that are prevalent in the market for the same type of service. 

Price signaling: Found in markets where there are a number of competitors. If any one company offers a lower cost advantage others immediately match the price. For example when in airlines industry spicejet drops the price, indigo and goair quickly follow.

In some cases there may be an unstated understanding among competitors (group called Cartel, which is illegal) for example Cell phone operators.

3. Demand Based Pricing or Value Based Pricing

This criteria is based on establishing prices consistent with customer perception of value i.e. pricing depends on what customers are likely to pay for the services provided.

Unlike in cost based and competition based pricing, demand based pricing is customer focused and not company or market focused. žThis type of pricing is fixed keeping in mind what the customers are likely to pay for the perceived value offered by the service.

žFor the determination of demand based pricing non monetary costs also have to be considered, as these contribute to the perception of value.

Understanding VALUE

1.Value is low Price.

2.Value is what I want in a service.

3.Value is the quality I get for the price I pay.

4.Value is what all I get for what I give

STRATEGIES FOR EACH PERCEIVED VALUE

Value is Low Price

For some customers the perception of value is to get the product at lowest cost. The monetary price considerations are more important than quality of service. This can be understood as production concept in services. Some of low pricing strategies are:

DISCOUNTING: Price sensitive customers often perceive discounted or reduced prices as value. The service marketers offer number of discounts like off-season discounts, festival discounts, patronage discounts and so on. The problem with such strategy is that over period of time the customers starts considering these discounted price as reference prices. In such cases, it is very difficult for the service provider to go back to original prices.

ODD PRICING: Many time a service is strategically priced just below the rupee to give a feel of a lower price. It is also known as psychological prices. The idea is to make consumer feel that he/she is paying low price.

SYNCHRO-PRICING: This pricing is used to manage the fluctuations in demand. Time, place quantity and incentive differentials are used to attract the price to price sensitive customers.

1. Time differentials: Price variations are offered depending on the time when the service is utilized, so as to gain optimum advantage. For example morning show in movie theaters are less prices than to evening shows.

2. Place differentials: Here location sensitive customers are willing to pay a higher price for the service. Soft drinks and snacks are charged more in a theater or inside a stadium than to a local store. In movie theaters front seats are less priced than higher seats and vice-versa in plays.

3. Quantity differentials: In this strategy higher the purchase in terms of volume, lower is the price per unit. Many hotel charge for minimum number of days of stay. The price per day decreases as number of days increases. 

PENETRATION PRICING : This is the strategy where new services are introduced at very low prices to attract customers. It is useful when sales volume are price sensitive. Economies of scale are achieved by selling large volumes. This strategy is appropriate for the services where there is threat of strong potential competitor. In such markets, no one is willing to pay a higher price for the service.

INCENTIVE PRICING - Low or discounted prices are offered to loyal customers to retain them or to new customers to entice them. Some professional like lawyers, dentists and some physicians offer free service to encourage them to use service and to help them overcome the fear of high prices.

Value is Everything I Want in Service

Here the customer is willing to pay any price for the quality that he expects, the perception being that higher the price better the quality.

PRESTIGE PRICING: Pricing for exclusive services which have a status value. For certain services - restaurants, health clubs, airlines, and hotels - a higher price is charged for luxury. 

PRICE SKIMMING : This strategy is deployed when services are being launched at very high prices or improvised services are launched for which a category of customers is willing to pay the highest prices.

Value is What I Get for the Price I Pay

Here the price and quality are matched depending on the targeted segment. 

VALUE PRICING: It is the scenario when the customer feels "getting more for less". The concept of value meal is practiced by McDonald with their Rs. 20 burgers. Taco Bell also have $0.59 value meal.

MARKET SEGMENTATION PRICING: Customers are charged based upon client category or service version, both used to segment the customers. For example, economy class in airlines.

Value is All that I Get for What I Give

PRICE BUNDLING: – An assortment of services are priced in such a way that buying the services individually would be more expensive. There may be bundling of accompanying services like extended warranties, training and expedited delivery.

The effectiveness of such method depends on how well service firm understands the bundle of value that the customer segments perceive.

COMPLEMENTARY PRICING: – In this method two complementary products are priced are priced together. The three related strategies are: 

1. Captive Pricing: In captive price base service or product and then provides the supplies or peripheral services needed to continue them using the service. For example, Gynecologist, Dentist

2. Two-part Pricing: The firm offers  very low price in the beginning and then charge heavy fees. For example, DTH service providers charge installation fee as the base price and then charge monthly fees.

3. Loss leader Pricing: Typically used in retail stores when service providers place some service on special discount to draw customer to the store. For example, Dry cleaner can offer discount for men formal shirts. 

RESULT BASED PRICING: In some services the outcome is very important but uncertainty is high. Here, the most relevant aspect of value is the result. For example, employment agencies, property dealer charge fee only if the result is achieved.

Contingency Pricing:  A term used for result based pricing in case of a lawyer fighting an accident case.

Result-based pricing are also demonstrated in Google's products - Adsense and Adwords, where they charge their clients on Pay-per-click(PPC) or Pay-per-thousand-impressions (PPMI) methods.

Reference: Services Marketing: People, Technology, Strategy - Lovelock, Wirtz & Chatterjee & Service Marketing - Zeithmal, Bitner, Gremler & Pandit

CB: Session 9 : Personality

Personality is defined as those inner psychological characteristics that both determine and reflect how a person responds to his or her environment. The emphasis in this definition is on inner characteristics—those specific qualities, attributes, traits, factors, and mannerisms that distinguish one individual from other individuals. The identification of specific personality characteristics associated with consumer behavior has proven to be highly useful in the development of a firm’s market segmentation strategies.

Personality Reflects Individual Differences

An individual’s personality is a unique combination of factors; no two individuals are exactly alike. Personality is a useful concept because it enables us to categorize consumers into different groups on the basis of a single trait or a few traits.

Personality is Consistent and Enduring

Marketers learn which personality characteristics influence specific consumer responses and attempt to appeal to relevant traits inherent in their target group of consumers. Even though an individual’s personality may be consistent, consumption behavior often varies considerably because of psychological, sociocultural, situational and environmental factors that affect behavior. Personality is only one of a combination of factors that influence how a consumer behaves.

Personality Can Change

An individual’s personality may be altered by major life events, such as the birth of a child, the death of a loved one, a divorce, or a major career change. An individual’s personality also changes as part of a gradual maturing process. Personality stereotypes may also change over time. There is a prediction, for example, that a personality convergence is occurring between men and women. The reason for this shift is that women have been moving into occupations that have been dominated by men and have increasingly been associated with masculine personality attributes.

Freudian Theory of Personality

Sigmund Freud’s psychoanalytic theory of personality is one of the cornerstones of modern psychology. This theory was built on the premise that unconscious needs or drives, especially biological and sexual drives, are at the heart of human motivation and personality.

Freud proposed that the human personality consists of three interacting systems: the id, the superego, and the ego. 

The Id

The Id is the “warehouse” of primitive and impulsive drives, such as: thirst, hunger, and sex, for which the individual seeks immediate satisfaction without concern for the specific means of that satisfaction. 

The Super Ego

Superego is the individual’s internal expression of society’s moral and ethical codes of conduct. The superego’s role is to see that the individual satisfies needs in a socially acceptable fashion. The superego is a kind of “brake” that restrains or inhibits the impulsive forces of the id. 

The Ego

Ego is the individual’s conscious control, which functions as an internal monitor that attempts to balance the impulsive demands of the id and the sociocultural constraints of the superego. 

According to Sigmund Freud’s theory, human drives are largely unconscious, and that consumers are primarily unaware of their true reasons for buying what they buy. These researchers focus on consumer purchases and/or consumption situations, treating them as an extension of the consumer’s personality.

Neo-Freudian Theories of Personality

Sigmund Freud’s faced a strong criticism from his colleagues who disagreed with his contention that personality is primarily instinctual and sexual in nature. They argued that social relations are fundamental to personality development. Individual's actions are driven by its social and status needs. Some of these works are classified as Neo-Freudian Theories of Personality.

Alfred Alder Theory of Personality

Alfred Adler viewed human beings as seeking to attain various rational goals, which he called style of life. This theory emphasize on the individual’s efforts to overcome feelings of inferiority. Therefore product promotions are majorly aiming at confidence boosting appeals. 

Harry Stack Theory of Personality

Harry Stack Sullivan stressed that people continuously attempt to establish significant and rewarding relationships with others, placing emphasis on efforts to reduce tensions. Therefore products are selected to win admiration of others.

Karen Horney Theory of Personality

Karen Horney focused on the impact of child-parent relationships, especially the individual’s desire to conquer feelings of anxiety. She proposed three personality groups: compliant, aggressive, and detached.

Compliant individuals are those who move toward others—they desire to be loved, wanted, and appreciated. 

Aggressive individuals move against others—they desire to excel and win admiration.

Detached individuals move away from others—they desire independence, self-sufficiency, and freedom from obligations.

A personality test based on Horney’s theory (the CAD) has been developed and tested.  It reveals a number of tentative relationships between scores and product and brand usage patterns.

It is likely that many marketers have used some of these neo-Freudian theories intuitively. They focus on different personality types for their products with an aim to target specific segments.

Trait Theory of Personality

Trait theory is a significant departure from the earlier qualitative measures that are typical of Freudian and neo-Freudian theory. It is primarily quantitative or empirical, focusing on the measurement of personality in terms of specific psychological characteristics called traits.

What is a Trait? A trait is defined as any distinguishing, relatively enduring way in which one individual differs from another.

Selected single-trait personality tests increasingly are being developed specifically for use in consumer behaviour studies. The purpose is to identify distinct market segments.

Types of Traits

1. Self Confidence

How confident people are of their actions. People high in self-confidence are first adopters of new products. They do not show high brand or store loyalty. For such people marketers need to maintain brand fluidity.

This trait is also linked to the concept called as Consumer Innovativeness. It is measure of personality traits provide important insights into the nature and boundaries of a consumer’s “willingness to innovate.” Consumer innovativeness has been linked to the need for stimulation, novelty seeking, and the need for uniqueness. Previous studies treated innovativeness as a single trait. 

Research indicates a positive relationship between innovative use of the Internet and buying online. Consumer innovativeness can be an important consideration when firms consider brand extensions.

Individuals low in self-confidence relies on others for their decisions. Appeals like doctor tested, approved by a known institution, works well for such people.

2.  Self-Conscious

Individuals are very highly sensitive about the image they communicate to others. For such individuals marketers offer products that can reduce their social anxiety. Cosmetics, clothing, perfumes, are the targeted to such individuals

3. Self Esteem

Individuals high on self-esteem feel positive about themselves. They prefer products that attract their attention in contrast to people who prefer more generic products.

4. Self-Monitoring

People with high self-monitoring are ready to adapt changes. They can easily switch choices based on situations on the basis of the impression they want to create. They are also known as Visualizers as they prefer visual information and products that stress the visual. Marketers target such individuals with celebrity endorsement and image advertising. Low self-monitors are conscious of inner feelings, attitudes and beliefs. They are required to be targeted using quality and rational appeal. They are known as Verbalizers as they are consumers who prefer written or verbal information and products that stress the verbal. This distinction helps marketers know whether to stress visual or written elements in their ads.

 A recent research effort found that there are two distinctly different types of visualizers.

a) Object visualizers encode and process images as a single perceptual unit.

b) Spatial visualizers process images piece by piece.

5. Dogmatism

Consumer Dogmatism is a personality trait that measures the degree of rigidity an individual displays toward the unfamiliar and toward information that is contrary to their established beliefs. A person who is highly dogmatic approaches the unfamiliar defensively and with considerable discomfort and uncertainty.

A person who is low dogmatic will readily considers the unfamiliar or opposing beliefs. Consumers low in dogmatism (open-minded) are more likely to prefer innovative products to established ones and tend to be more receptive to messages that stress factual differences, product benefits, and other forms of product-usage information. Consumers high in dogmatism (closed-minded) are more likely to choose established product innovations and tend to be more receptive to ads for new products or services that contain an appeal from an authoritative figure.

 6. Social Comparison

Social Comparison is a personality trait that ranges on a continuum from inner-directed to other-directed. Inner-directed consumers tend to rely on their own “inner” values or standards in evaluating new products and are likely to be consumer innovators. They also prefer ads stressing product features and personal benefits. Other-directed consumers tend to look to others for direction and are not innovators. They prefer ads that feature social environment and social acceptance.

7. Need for Cognition

Need for cognition (NFC) is the measurement of a person’s craving for or enjoyment of thinking. Consumers who are high in NFC are more likely to be responsive to the part of an advertisement that is rich in product-related information of description. They are also more responsive to cool colors. Consumers who are relatively low in NC are more likely to be attracted to the background or peripheral aspects of an ad. They spend more time on print content and have much stronger brand recall. Need for cognition seems to play a role in an individual’s use of the Internet.

Optimum Stimulation Level

Some people prefer a simple, uncluttered, and calm existence, although others seem to prefer an environment crammed with novel, complex, and unusual experiences. 

Persons with high optimum stimulation levels (OSLs) are willing to take risks, to try new products, to be innovative, to seek purchase-related information, and to accept new retail facilities.

OSL scores also seem to reflect a person’s desired level of lifestyle stimulation. Consumers whose actual lifestyles are equivalent to their OSL scores appear to be quite satisfied. Those whose lifestyles are understimulated are likely to be bored. Those whose lifestyles are overstimulated are likely to seek rest or relief. 

This suggests that the relationship between consumers’ lifestyles and their OSLs is likely to influence their choices of products or services and how they manage and spend their time.

8. State Vs Action Oriented

Action oriented are more prone to advertising as they can easily change their thoughts into actions.

State Approach to Personality

This is individual response to particular situation. How individuals react to changing situations and degree to which they are influenced by others. 

Reference; Consumer Behaviour by Schiffman, Kaunk and Kumar and Consumer Behaviour by Soloman

Session 7C: Attitude Formation and Change

Attitude Formation

The study of attitude is of very high importance to the marketers. How do people, form their initial general attitudes toward “things”? How do family members and friends, admired celebrities, mass media advertisements, even cultures, influence the formation of their attitudes concerning consuming or not consuming different products and services? Why do some attitudes seem to persist indefinitely, while others change fairly often? 

HOW ATTITUDES ARE LEARNED

The formation of an attitude is studied as the shift from having no attitude toward a given object to having some attitude toward it. Consumers often purchase new products that are associated with a favourably viewed brand name. Their favourable attitude toward the brand name is frequently the result of repeated satisfaction with other products produced by the same company.

SOURCES OF INFLUENCE ON ATTITUDE FORMATION

The formation of consumer attitudes is strongly influenced by personal experience, the influence of family and friends, direct marketing, mass media and the Internet. A primary means by which attitudes toward goods and services are formed is through the consumer’s direct experience in trying and evaluating them. As we come in contact with others, especially family, close friends, and admired individuals (e.g., a respected teacher), we form attitudes that influence our lives. The family is an extremely important source of influence on the formation of attitudes. Personality Factors, like high need for cognition (information) are likely to form positive attitudes in response to ads or direct mail that are rich in product-related information. Consumers who are relatively low in need for cognition are more likely to form positive attitudes to ads that feature attractive models or well-known celebrities. 

Strategies of Attitude Change

Attitude changes are learned; they are influenced by personal experience and other sources of information, and personality affects both the receptivity and the speed with which attitudes are likely to be altered. Altering attitudes is a key strategy for marketers, especially when taking aim at market leaders. Marketers have several attitude-change strategies from which to choose.

CHANGING THE BASIC MOTIVATIONAL FUNCTION

An effective strategy for changing consumer attitudes toward a product or brand is to make particular needs prominent. One method for doing this is called the functional approach and can be classified into four functions: the utilitarian function, the ego-defensive function, the value-expressive function, and the knowledge function.

The Utilitarian Function

We hold certain brand attitudes partly because of a brand’s utility. When a product has been useful or helped us in the past, our attitude toward it tends to be favourable. One way of changing attitudes in favour of a product is by showing people that it can serve a utilitarian purpose they may not have considered.

The Ego-Defensive Function

Most people want to protect their self-images from inner feelings of doubt – they want to replace their uncertainty with a sense of security and personal confidence. The ego-defensive function offers reassurance to the consumer’s self-concept.

 The Value-Expressive Function

Attitudes are an expression or reflection of the consumer’s general values, lifestyle, and outlook. By knowing target consumers’ attitudes, marketers can better anticipate their values, lifestyle, or outlook and can reflect these characteristics in their advertising and direct-marketing efforts.

The Knowledge Function

Individuals generally have a strong need to know and understand the people and things they encounter. The consumer’s “need to know,” a cognitive need, is important to marketers concerned with product positioning. Many product and brand positionings are attempts to satisfy the need to know and to improve the consumer’s attitudes toward the brand by emphasizing its advantages over competitive brands.

Combining Several Functions

Combining several functions involves using more than one of the above because different consumers may like a product for different reasons.

ASSOCIATING THE PRODUCT WITH A SPECIAL GROUP

It is possible to alter attitudes toward products by pointing out their relationships to particular social groups, events, or causes. Research findings seem to indicate that it is likely to be a good idea for a sponsor to reveal to target consumers the reasoning behind their sponsorship, so that consumers know the sponsor’s motives rather than form their own potentially inaccurate or negative motives.

RESOLVING TWO CONFLICTING ATTITUDES

Attitude-change strategies can sometimes resolve actual or potential conflict between two attitudes. If consumers can be made to see that their negative attitude toward a product, a specific brand, or its attributes is really not in conflict with another attitude, they may be induced to change their evaluation of the brand (i.e., moving from negative to positive).

ALTERING COMPONENTS OF THE MULTIATTRIBUTE MODEL

Multi-attribute models provide marketers with insights as to how to bring about attitude change.

Changing the Relative Evaluation of Attributes

The market for many product categories is structured so that different consumer segments are attracted to brands that offer different features or beliefs. In these market situations, marketers have an opportunity to persuade consumer’s to “crossover,” or to shift their favorable attitude toward another version of the product.

Changing Brand Beliefs

This is the most common form of advertising appeal. Advertisers constantly remind us that their product has “more,” or is “better,” or “best” in terms of some important product attribute.  Within the context of brand beliefs, there are forces working to stop or slow down attitude change. Therefore, information suggesting a change in attitude needs to be compelling and repeated enough to overcome the natural resistance to letting go of established attitudes.

Adding an Attribute

This cognitive strategy pivots on adding a previously ignored attribute, or adding an attribute that reflects an actual product or technological innovation. Adding an attribute reflects an actual product change or technological innovation is easier to accomplish than stressing a previously ignored attribute. Sometimes eliminating a characteristic or feature has the same enhancing outcome as adding a characteristic or attribute.

Changing the Overall Brand Rating

Another cognitive-oriented strategy is altering consumers’ overall assessment of the brand directly, without attempting to improve or change their evaluation of any single brand attribute. Such a strategy frequently relies on some form of global statement that “this is the largest-selling brand” or “the one all others try to imitate,” or a similar claim that sets the brand apart from all its competitors.

CHANGING BELIEFS ABOUT COMPETITOR’S BRANDS

This strategy involves changing consumer beliefs about attributes of competitive brands. One tool is comparative advertising. But comparative advertising can boomerang by giving visibility to competing brands.

Reference; Consumer Behaviour by Schiffman, Kaunk and Kumar and Consumer Behaviour by Soloman