Effects Of Advertisements On Consumer Behavior

Published Date: 02 Nov 2017

Hammad Naveed

09U0483

Section D

Ms. Zehra Raza

Research Methods

26/11/2012

Lahore School of Economics

Table of Content

Serial Number

Title

Page Number

1

Chapter 1: Introduction

3

2

Chapter 2: Literature Review

7

3

Chapter 3: Methodology and Framework

20

4

Bibliography

24

CHAPTER 1

INTRODUCTION

Overview of Effects of Advertisements on Consumer Behavior:

"Advertising is a form of message that typically attempts to influence potential consumers to buy or to consume more of a particular kind of product or service". a lot of advertisements are designed to produce improved using up of those products and services through the establishment of "brand image" and "brand loyalty". Every possible standard is used to put across these communications including "radio, television, cinema, magazines, newspapers, video games, the Internet and billboards". Marketing is often done by an advertising group on behalf of an organization. Another definition of advertisements is that "Advertising is a form of communication for marketing and used to encourage or persuade an audience (viewers, readers or listeners; sometimes a specific group) to continue or take some new action."

Consumer Behavior on the other hand is the "study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society".

There are different applications of consumer behavior but its major appliance is on the marketing strategy for creation of superior marketing campaign. By understanding that customers are extra amenable to food promotion while they are hungry, we learn to sketch snack advertisements in the afternoon.

So, advertising and consumer behavior are both closely related to each other hence having a direct relationship with each other. Further in the paper different types of advertisements for example humorous, serious etc would be discussed and also the mediums used by the companies for advertising and their effects on consumer behavior would be discussed to prove this relationship.

Background of Effects of Advertisements on Consumer Behavior:

Advertising is not a new concept and has been going on from a long time back and its importance can be realized from the fact that a course of ‘product marketing’ was offered by the University of Pennsylvania in 1905 so the phenomenon of the effects of advertisement on consumer behavior was known to people from about more than 100 years back and the first print ad was printed in 1631 further supporting the statement.

Many scientists have focused on motivation for centuries and come up with many motivation theories like Freud, Maslow etc and here we can account advertising also as a tool for motivating the consumers to buy different products. Some motivate through psychological advertising and some by looking at the celebrities who endorse different brands so all the big companies now leaders in their markets give great importance to marketing through ads and have been doing it from many years in order to target their customers or in other word influence the consumer behavior. However in the recent years consumer behavior concept has got a boost and all the large companies have realized its importance hence it has become a vital part of social sciences today.

Importance of the study with respect to the world:

The major aim of this study is to discover the effect of advertisements on customer behavior and so it would be of great importance to almost all the companies who have advertisement as an integral part of their marketing strategy as every firm want to attract as many people as it can and make them buy their products through mainly influencing their behavior in different ways. Businesses that cannot recognize how a customer’s brain functions will have a more demanding time figuring out how to aim a promotion that will grasp the interest of customers. Trying to determine what drives, attracts and motivates consumers is very precious information. Marketers who can effectively find out what makes potentially concerned customers tick will have gained a great prospect to apply the information in array to build up a well-built campaign.

The study will facilitate firms and organizations develop their marketing strategies by understanding issues similar to psychology of how customers "think, feel, reason and select between different alternatives".

Other benefits would include making better marketing Strategies that include grasping expert timing, efficient advertising techniques and satisfying consumers. Public Policy that is gaining acquaintance of public policy and how goods can impact is vital. Also another benefit would be that the study would tell about Social Marketing, to ensure thoughts are conceded to customers rather than forceful sales.

Importance of study with respect to Pakistan:

Having a population of 180 million in addition to per capita expenditure of $836.3, Pakistan surely justifies the potential for a raise in consumer expenditure, according to a global resource on retail; per capita consumer expenditure in Pakistan has gone up by 37% between 2006 and 2011. Advertising in print and electronic media, mushrooming of billboards discount offers and in store promotional campaigns all prove that consumer spending is definitely going up, so with all this happening this study would be very useful for the businesses in Pakistan as more and more new firms are entering are Pakistani markets and for them to be successful they need to know the consumers very well in order to influence them to buy their products.

Since 2002, the Pakistani media has develop into a powerful and an independent one and the figure of private television channels has developed from three state-owned channels in 2000 to 89 in 2012, according to the Authority, Radio channels are plentiful and are considered a very central source of information specially in the rural areas so this study would useful as the study consists of articles regarding the impact of television and radio on the consumer behavior.

Advertisements play an important role in influencing consumers in Pakistan an example of this can be seen from Ufone’s advertising campaign, which used humor in its ads and was very successful to attract customers and influencing them into buying their products.

Research Question:

What are the effects of advertisements on consumer behavior?

CHAPTER 2

LITERATURE REVIEW

Narbutas and Susnienė (2008) conducted the research to "analyze and to find out the psychological impact of the advertising on the customer behavior". On the base of theoretical investigation three aspects "cognitive, emotional and behavioral" were recognized and evaluated during the survey. The researcher also attempted to find out the theoretical study and review of "psychological impact of the advertising on the customer behavior to empirically test the psychological impact of the advertising on the customer behavior (based on the example of companies)". The study methods used in the piece of writing were: "the analysis of research literature and primary data, model of the advertising stages impact Attention, Interest, Desire, Action (AIDA) were also distinguished". The objective of the survey was to establish the impact of advertising on the customer behavior, the process of the research worn was a quantitative survey It can be accomplished that advertising influences the consumer through the cognitive aspects. The survey results discovered customer’s knowledge, as one of the psychological cognitive aspects, the paper has also emphasized that the second psychological feature which was (emotional) influences the respondents further since it caused optimistic thoughts for the prime part of respondents. It was accomplished that the absolute endeavor of advertising was achieved that ads do create a psychological vigor on the consumers.

Hashmi (2010) conducted a study to see the "impact and receptivity of electronic advertisement on university students" and uncover the receptiveness of advertisement owed to plea worn, search the effect of personality used in advertisements on consumer behavior and set up the brunt of advertisement on purchase behavior of customer. "Psychometric properties of scale" property of advertisement´ was also recognized on the sample of the learning. Self-explanatory questionnaires were used to gauge the effect of commercials. The sample comprised of "university students (NMIMS) and six brands were decided to be used as FMCGs unit". To examine the effectiveness of advertisements on the university students of NMIMS the researcher used a "self-explanatory questionnaire consisting of 25 fixed item responses that was adopted along with the instructions". The paper accomplished that advertisement appeal along with its success were optimistically related and it was also found out that natives shape attitudes towards objects on the basis of their "beliefs, perception and knowledge" about these objects. Results of the paper also exposed that the captions used in commercials in addition had immense sway on customers as they are used in commercials as a dominant and interest gaining factor. The researcher also concluded that there was a considerable relationship connecting persuasion and title of commercials.

Sukran and Gulmez (2002) they conducted the research to find out that whether the "degree of outdoor advertisements influences survey participants (consumers) who are living in Sivas Province and to measure the effects on participants' purchasing behavior". The researcher also attempted to position the diverse personality of outdoor advertisements in evaluation to additional advertising instruments along with its effect on consumers buying behaviors.

in addition, the researcher also aimed to find the designation given to the "status of outdoor advertisements among the advertisement instruments which are thought to have an effect on the purchasing behavior of consumers, and determines the effects and dimensions of outdoor advertisements on customers’ purchase behaviors and to point out the differences related with those dimensions in respect of some demographics". The paper put attention on customers living in the city center of Sivas. The data essential for the research was composed via face-to-face surveys. The researcher undertook a "beta-survey with a group of 30 individuals. A face-to-face interview survey was conducted on 400 people who live in Sivas city and who are selected with non-random sampling". Data in this article was analyzed by means of "T-test, variant analysis and factor analysis". The results of analysis indicated so as to the respondents with stumpy income do not observe the outdoor advertisements extraordinarily much and that they discover outdoor advertisements unproductive when they are compared to respondents by means of high incomes. The end result of the study also showed that public usually has positive opinions regarding outdoor advertisement. They believe that outdoor advertisements are extra striking and imaginative when compared to other advertisement types and their material size lends them a useful visual brunt. The paper in addition proposed so as to outdoor advertisements created dissimilar thoughts, which are successful in informing and persuading public and also between consumers with superior educational and income levels, outdoor advertisements are becoming prominent and their visibility is mounting.

Ayanwale and Ayanbimipe (2005) conducted a study to determine and look at the control of advertising on customer buying behaviors, conclude the influence of age on advertising and construct suggestion for added enhancement in advertising as well as brand management so as to help out Cadbury Nigeria PLC particularly and other firms in their marketing efforts to boost their market shares. The article weathered the hypothesis that the age group of customers does not decide the treatment of advertising efforts by Cadbury Nigeria PLC. This study, which was based on an examination of 315 randomly chosen customers of food, drinks in "Lagos, Ibadan and Ile-Ife, cities in Southwestern Nigeria", examined the task played by advertising in influencing customers liking for Bourn vita, which is "one of the leading food drinks in the Food and Beverage industry in Nigeria". In the study both expressive and inferential figures were used in analyzing the information composed. Percentage analysis was used in groping variables such as customer brand preference, media preference awareness sources. It was determined that brand liking does continue living in the food drink industry and various customers do not buy whatever is offered or inexpensive, if a merchandise is good value for its price it will command brand loyalty. Nonetheless, the study also anticipated that advertising helps in foretelling product quality and price before the consumers. The paper concluded that advertising has the foremost influence on consumers’ liking for Bourn vita and it has in no minute measure, contributed to its accomplishment.

Rasool and Rafique (2012) conducted a study to find out the effect of advertisements on consumer behavior in Lahore city and to look at the form of advertisement that effect the user behavior and whether the earnings is influencing the consumer behavior or not, whether the customer behavior changes by means of respect to sexual characteristics, and questionnaires were used to determine the effect of advertisements along with every age person was besieged in the study to get the awareness and knowledge of people about the (FMCG) toothpaste brands. 5 brands of toothpaste were chosen in this study. Designed for Analysis Chi-Square, Z test and descriptive analysis were also used within the study and presented in bar chart and Pi-Chart form. The questionnaire was intended to identify the point of view of public people concerning the impact of advertisement in altering the customer conduct. Non-random convince sampling technique was used during the survey and to complete the survey 150 samples of respondents from different areas of Lahore. The study accomplished that consumer behavior sustains owing to culture as when culture, ethnicity, trends and background will vary then the users transform their choices. Customers are quality aware so want improved tooth somewhat than freshness and they do brushing twice in a day. Public like media advertisement rather than banners or newspapers. Lastly, the paper in addition projected that customer behavior will catch the attention of products which are with no trouble available and contain more excellence rather than quality. Income is a key reason on which basis people obtain low price product brands of FMCG.

Bishnoi and Sharma (2009) conducted a study that aims to set up whether the "residential background of consumers has a varying influence on their buying decisions due to the influence of TV advertising". This research was conducted with an outlook to learn the impact of TV advertising on the buying manners of teenagers in India. The study was conducted on 866 teenagers of Haryana of which 440 were rural and 426 were urban. The data was analyzed through applying "counts, percentages, means and ANOVA". The present study was focused on the school/college going teenagers of Haryana to know the influence of TV advertising on their buying behavior. For this purpose the paper used a multistage sampling method and the study comprised of four districts of Haryana which were selected at random from all the administrative divisions. The data for urban respondents was collected from these districts. A total of 1000 questionnaires were distributed amongst the respondents in this research paper. In the paper a total of 866 questionnaires were considered of which 440 were from rural and 426 were from urban respondents. The study recommended that rural teenagers like television advertising more than their urban counterparts. television advertising has improved their participation in product assortment and purchase. It can also conclude that there is a considerable variation in the perception of both rural and urban teenagers on the issue that demand for product purchase is influenced by TV advertisements. Further, the study also revealed that the buying behavior of male teenagers is more influenced by television advertisements than their female counterparts.

Subhani and Mateen (2011) conducted a study to interrogate the effects of "deceptive advertising on consumer loyalty in telecommunication industry of Pakistan". Four variables, "Call Charges, Network Coverage, Network Quality and Customer Service" were used to measure dishonesty in Telecom Ads plus its consequence on consumer loyalty at the same time as the consumer preference is worn as the substitute of consumer loyalty. A questionnaire was premeditated to carry out the survey and collect information from the mobile phone users concerning their usage blueprint for the telecommunication services, at the same time as interrogating their views resting on the telecommunication advertisements, awareness of dishonesty in ads, and the effect of dishonesty on their preference intended for telecommunication services. The statistics was composed all the way through convenience based non-probability sampling as of 10,000 mobile phone users using personal survey technique. The composed information was analyzed through "One-sample t-test and Test of Moments". The conclusion of the article accomplished that "the whole outlined measuring constructs of deception drastically surface the means for establishing a breathtaking deception among customers as the promised coefficients of these construct significantly differ from the provided coefficients". The findings of this paper accomplished and authenticate that more or less all telecom network/ service provider is occupied in lifting fake claims and exaggerations which is so to converse as deception when promoting and campaigning for their products.

Burhan Ali Shah (2012) This research investigated the association linking the variables drawn in, by captivating the 200 responses in twin cities of Pakistan, and conclude the relationship connecting emotional response & environmental response with dependent variable consumer buying behavior. The article tells that customers who use diverse type of telecom services and who shop pioneering services from their franchises in Islamabad and Rawalpindi were taken as the population of this cram. 200 questionnaires were circulated to customers and questionnaires were adopted from preceding research and responses. This was a relational study so several regressions were used. The outcome showed that independent variable that was emotional response creates discrepancy in the customer buying behavior which is dependent variable. The outcome of this reading showed that there was a affirmative bond of emotional response with consumer buying behavior and no relationship connecting environmental response and consumer buying behavior. Consequently, it was accomplished that customers buy products by emotional response, rather than environmental response

Shum (1993) conducted a research concerning the "differentiated product markets where customer preferences are characterized by brand loyalty" a significant job for advertising may be to conquer brand loyalty by cheering consumers to toggle to less recognizable brands. Homogeneously the article mentioned that advertising decreases switching costs in this market. Counterfactual experiments established that in markets with brand loyalty advertising is a striking and valuable alternative, relative to different promotional activities like price discounts. In the article approximately 110 brands of cereals were found and analyzed. The major advertising information engaged in this study was "quarterly aggregate (i.e., national) brand-level advertising expenditures data from leading national advertisers (LNA)". In this paper, an significant outcome was to promote "switching" behavior at the household level, which overcomes brand loyalty by persuading households to undertake brands they have not purchased only just. Abundant marketing studies recommended that brand loyalty is a tough attribute of preferences across a diversity of regularly purchased consumer product markets. moreover, the findings in the article showed so as to advertising reduces switching overheads.

Abideen and Rashid (2009) they conducted a research to premeditate upon the impact of television advertising on children and to recognize those serious impacts which escort to behavioral and eating turmoil in children. Impacts of TV advertising were recognized as needless purchasing, little nutritional food and covetousness. The reason of the learning was to conscious upon the impact of TV promotion on children, to classify these serious impacts, and empirically check a few of the significant factors that how these factors impinge on children. Questionnaire using five point likert scale was administered to children aged between 9-14 years, and studying in schools. Samples were strained through convenience sampling approach as of four cities of Pakistan that is "Islamabad, Rawalpindi, Bahawalpur & Multan". Data was analyzed by means of SPSS software. Revelation to TV Advertising will be independent variable and dependent variable is "low nutritional food, unnecessary purchasing, and materialism". Television advertising on children could sway determinants such as needless purchasing, little nutritional food, and materialism. Research proof recommended that TV advertising consequences in obesity, shaped by taking food that is bad for you, low in nourishment, and high in SSF. It is also recommended that over an extensive time, serious watching of atrocious advertisements and programs increases the probability of a temperament towards violent behavior among children. The study also showed that children’s consciousness of TV advertising and manipulates on parents’ purchase choice are significant predictors of children’s attitudes to TV advertising even though the sway of television advertising is not the single consequence on children’s purchase behavior.

Ahmed and Hijazi(2010) the study concluded with sample from "7 dissimilar schools 330 children and 107 parents to come up with practical insight of advertising influence on children memory and behavior in Pakistani context". consequences showed attractive conclusion that ads do not impact disapprovingly to children remembrance and behavior but enhances the awareness of children plus the ads targeted to children are not useful, for successful positioning of children associated goods marketers ought to aim the parents and consist of decent point of reference along with environmental information to manipulate the buying activities of parents. The study provided numerous key market insights along with suggestions on behalf of practitioners as well as potential researchers of marketing field.

Zoubi and Bataineh (2010) the purpose of their study was to find the relationship between the celebrities on advertising and the buying decision of consumers. This study was based on a field work, of which population included economic faculty student in Jarash University who were enrolled in all BA programs. Other student Categories were not included in the study. The three main questions included when the companies use celebrity endorser in their advertising, how companies select the celebrity endorser and how companies handle the risks of using celebrity endorser in their advertising. The study used a convenience sample of 91 students from the mentioned university, questionnaire was designed to measure the effect of using celebrities on buying decision; it contains three main sections concerning the main variables of the study. A five-point Likert scale was used for measurement. The scale consisted of five levels of agreement, beginning with strongly disagree up to strongly agree This questionnaire was designed to measure the effect of using celebrities on buying decision; it contains three main sections concerning the main variables of the study. The result of the study aimed to explore the use of celebrities in advertising and their effect on the buying decision. The results showed that

Television advertising, which uses celebrities, is attractive. There was no effect found of using the celebrities on the buying decision, this indicate to the using the celebrities haven’t a significant effect on the buying decision.

Qun and Lun (2004) they conducted a research and aimed at turning down the negative effects brought by sexual appeal by adding humorous element in the advertising message. Provocative sexual appeals have been pervasively used in advertising in every country for many products in the past two decades. There were three variables used in the research: Gender, perceived humor and likability to the advertisement. An experiment was carried out using 64 undergraduates’ students from the Hong Kong Baptist University taking the course offered by the School of Communication. Convenient sampling was used since experiment strived for internal validity instead of external validity therefore representation of the population is not necessary. Each group was composed of 16 male and 16 female, exposing to two different stimuli and a questionnaire was given to each of the subjects as an instrument of measurement. There were two independent variables and one dependent variable. The two independent variables are gender and perceived humor to the advertisement and the independent variable is the likability to the advertisement. Reliability analysis was run for the two scales of likability and perceived humor. The study successfully tested that perceived humor of an advertisement is positively associated with the likability to the advertisement, although the direction of the casual flow is unknown. The research concluded that there was no significant difference on the likability between the groups exposed to advertisement with and without humorous elements, even though the manipulation check had ensured the two advertisements were perceived differently in humor and equally in sexiness.

Allan (2001) in his study concluded the effects of popular music in advertising to determine both the theoretical (the effect of popular music on the processing of advertising messages) and practical (the design of more effective advertisements using popular music) implications. A pilot test was conducted (Philadelphia) to select the popular music and brands to be used in this experiment. In the first part of the pilot test, the participants were asked to listen to 7-10 second ‘hooks’ from 100 different popular hit songs from Billboard magazine's Top 100 most-played Top 40 (radio) songs of 2002. In the second part of the pilot test, the individuals were given the Top 100 brands randomized from Business Week magazine (Ueland, 2002) and asked to rank them for likeability of the brand. An experiment was reported that tested the effects of three integrations of popular music in advertising that were original lyrics, altered lyrics, and instrumentals (plus a control treatment with no music) on attention and memory. Fifty-two percent of the subjects were female and 48 percent were male. Fifty-eight percent of the subjects were white, 27 percent were African American, 6 percent were Asian, and 7 percent defined themselves as other. The results of this study clearly indicated that popular music can be personally significant to some individuals, and when used in advertising can affect attention and memory. And finally, original vocals appear to be more effective when an individual finds personal significance in the popular music used in advertising, while altered vocals appear to be more effective when the opposite is true.

Rajagopal (2010) this study aimed at analyzing the impact of radio advertisements on urban commuters towards buying behavior in retail stores and attempts to determine the role of radio advertising on dissemination of information on the sales promotions. The impact of radio advertisements on the store choice and buying preferences are analyzed based on empirical investigation. This study was been conducted in 4 corporate offices of multinational companies in Mexico City with a total strength of 3492 employees, of which 1422 employees (40.72) were covered under this study. The study revealed that shopping behavior of urban consumer at retail stores in response to radio advertisements is highly influenced by the physical, cognitive and economic variables.

CHAPTER 3

METHODOLOGY

Research type

The research is quantitative in nature and the aim of quantitative research is to find out the relationship between the dependent variable and the independent variable. The study will be based on measuring the sample on the subject area, which is effect of advertising on consumer behavior, and then finally the relationship between the variable is to be build using statistical tools.

Data type and research period

Secondary data would be used for this research mainly the data for the literature reviews will be taken from the internet. The sample size mainly consists of samples from 2 universities; Lahore University of Management Sciences and Lahore School of Economics. Next the data relating to the variable will be found and then it would be analyzed and evaluated by studying the overall trends around the world. The time frame under consideration for this research would be the period from 2000 to 2012.

Sources of data

The data was collected from different web-based sources mainly including online libraries of different countries and other published articles.

Population, Working population and planned sample

The total population consists of generally all the consumers but the working population consists of 200 students from 2 universities i.e. LSE and LUMS will be considered

Research hypothesis

Ho: There is a significant relationship between technology and consumer behavior.

H1: There is no significant relationship between technology and consumer behavior.

Ho: There is a significant relationship between music and consumer behavior.

H1: There is no significant relationship between music and consumer behavior.

Ho: There is a significant relationship between celebrity endorsement and consumer behavior.

H1: There is no significant relationship between celebrity endorsement and consumer behavior.

Ho: There is a significant relationship between age and consumer behavior.

H1: There is no significant relationship between age and consumer behavior.

Ho: There is a significant relationship between residential background and consumer behavior.

H1: There is no significant relationship between residential background and consumer behavior.

Techniques

Regression would be used in order to examine the results. Our study would have combined effects of time series and cross sectional data.

Data analysis

The statistical package Minitab and stats graphics will be used to analyze the data. Regression will be conducted to check the relationship between the variable over the years. Graphs and tables would be used to represent the results.

Data interpretation

The results generated from the statistical software will be compiled. Graphs and tables will be used to find out the trends over the year

Theoretical framework and variables under consideration