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PROJECT REPORT
ON
MARKETING RESEARCH OF SONY WORLD
Submitted in partial fulfillment of the requirement of
Bachelor of Business Administration
Of
Guru Gobind Singh Indraprastha University
SUBMITTED TO: SUBMITTED BY:
MR. RAVI JAIN MOHIT BENIWAL 026761101712
Maharaja Agrasen Institute of Management StudiesAffiliated to Guru Gobind Singh Indraprastha University, Delhi
PSP Area, Plot No. 1, Sector 22, Rohini, Delhi – 110086
DECLARATION
I, MOHIT BENNIWAL certify that the Summer Internship Project Report entitled
“Marketing Research of Sony World” is an original one and has not been submitted to
any other Institution for the fulfillment of the requirement of a course of Management
Programme (BBA).
Place: _______________
Date: ____________
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Acknowledgement
“Acknowledgement are a bit like accepting speeches; predictable but from
the heart so here is some predictable prose direct from the heart.’’
A successful project can never be prepared by the single effort of the
person to whom project is assigned but it also demand the help and
guardianship of some conversant person who helped the undersigned activity
or passively in the completion of successful project . curiosity leads to
research, humans are curious by the nature .To satisfy his thirst for
knowledge, he goes on enquiring more and cooperation of other individual,
it is not possible to reach to any conclusion I would like to extend our
sincere gratitude towards MR. ANOOP KUMAR GUPTA under whose
guidance I undertook the project , for extending the advice and direction that
is required to carry on a study of this project, and for helping me with the
intricate detail of the every step of the way It is worthless if I do not pay my
sincere thanks to all faculty members for their positive co-operation to
complete my project in significant manner. This work is the result of the
direct and indirect co-operation of the various persons to whom we wish to
express our appreciation and gratitude. And lastly I would like to thanks to
the all my friends, my parents, my senior s, and all the person who have
helped me in completing my project
MOHIT BENIWAL
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EXECUTIVE SUMMARY
Possibly the most challenging concept in marketing deals with understanding why buyers
do what they do (or don’t do), but such knowledge is critical for marketers since having a
strong understanding of buyer behavior will help shed light on what is important to the
customer and also suggest the important influences on customer decision-making. Using
this information, marketers can create marketing programs that they believe will be of
interest to customers.
As you might guess, factors affecting how customers make decisions are extremely
complex. Buyer behavior is deeply rooted in psychology with dashes of sociology thrown
in just to make things more interesting. Since every person in the world is different, it is
impossible to have simple rules that explain how buying decisions are made. But those
who have spent many years analyzing customer activity have presented us with useful
“guidelines” in how someone decides whether or not to make a purchase.
However, buying behavior is not only a function of the product: it is also, and in some
cases perhaps more so, a function of the consumer, his social environment of other
consumers, the competing products in the marketplace, and the brand marketing strategy.
In order to design the best product, it is necessary to understand not just the physics and
chemistry of the product, but also the psychology of consumers and the sociology of
consumer groups or networks.
A customer's approach to purchasing a product or service is influenced by their situation -
whether they have money and how important, frequent, risky or urgent the purchase is to
them in their situation.
Imagine the difference between someone with plenty of money who can afford to make a
mistake when buying as opposed to someone who has scraped her last few pounds
together. They might both be buying the same product but their financial situation
suggests that their approach to buying will be very different.
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Customers make more of an effort, and become more involved, if the purchase is
relatively important to them - particularly if they have no previous experience of buying
such a product or service.
On the other hand, if the item being purchased is low value and frequently bought, like a
jar of coffee, it follows that the buyer will spend less time and effort and will have less
involvement with the purchase.
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TABLE OF CONTENTS
1. EXECUTIVE SUMMARY...................................................................................4
2. INTRODUCTION ................................................................................................6
3. INDUSTRY PROFILE........................................................................................10
4. COMPANY PROFILE........................................................................................19
5. RESEARCH OBJECTIVE & METHODOLOGY..............................................28
6. LITERATURE REVIEW....................................................................................29
7. PRIMARY FINDING AND ANALYSIS...........................................................51
8. RECOMMENDATIONS....................................................................................59
9. CONCLUSION & IMPLICATIONS..................................................................61
10. BIBLIOGRAPHY...............................................................................................63
11. COPY OF THE QUESTIONNAIRE..................................................................66
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INTRODUCTION
Marketing and sales departments carry out two separate functions; nevertheless, they
must interact closely with each other, as both are essential parts for the marketing
activities in each company. Each company has the goal to fulfill customer needs and also
to match the company’s sales target followed by financial success. In practice, the
working relationship between the sales and marketing functions is often described as
unsatisfactory, so that any improvement at the marketing and sales interface will have a
positive effect on top and bottom-line growth. So, in order to increase value for the
company it is essential to evaluate this interaction.
It has not only major impact on the generation of value for the company, but also on its
capabilities to adapt to the rapidly changing environment, as this requires active and
cross-functional teamwork, as well as even more focus on the customer. The body of
literature also suggests that implementing marketing as a strategic concept in all parts of
the company increases customer satisfaction which in turn leads to corporate success.
Marketing and sales have the overall common goal to understand customer needs and
solve customers’ problems better than the competition by offering superior value to
customers.
Therefore, in order to bring benefit to a company, marketing and sales should interact and
collaborate closely, so as to boost the overall business performance. Every company can
and should improve the relationship between sales and marketing” to bring about a great
positive impact on the company’s growth. In theory, marketing is often defined to include
sales, e.g. distribution being one of the 4Ps or 7Ps of the marketing-mix. In corporate
practice one can see all kind of structures involving marketing and sales usually as
separate entities. Here, sales assuming a dominant role in the organization in terms of
resource allocation. While the term ‘marketing’ being used for:
Product communication (including information material and merchandise) in
support of the sales force only. PR (‘Corporate Communication’) is usually one of
the core responsibilities of the CEO;
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Responsibility for product communication (‘Marketing Communication’) and
Business Development, i.e. identifying new market opportunities;
Responsibility for product communication, Business Development, and Product
Management (sometimes referred to as ‘Product Marketing’) with Pricing being
one of the responsibilities of Product Management (and sometimes also R&D);
Covering the role of Business Development and/or Product Management is often
combined with the responsibility for Market (Marketing) Research as well
As the terms marketing and sales are used in different ways, also the interaction between
the two functions raises a couple of questions which need to be addressed by marketing
researchers, e.g.: how can marketing and sales interaction best be organized? Is there an
ideal spread of marketing responsibility? What kind of processes need to be implemented
to assure a smooth co-operation between the two? Only recently, marketing and sales
interaction has gained more attention. Previously the academic focus was more on
marketing’s interaction with other functions such as R&D or finance, and researchers did
not differ between the marketing and sales functions at all.
This has changed recently, as in business reality they are mainly separate functions within
a company. Marketing and sales have different tasks within an organization and usually
have different goal orientations, an issue that has been recently addressed in
organizational research. There seems to be a lack of understanding as to what kinds of
processes are important for the marketing and sales relationship and how the two
functions can work together.
Sale Techniques:
The sale can be made through:
Direct Sales, involving person to person contact
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Buying Facilitation Method
Pro forma sales
Agency-based
sales agents (real estate, manufacturing)
Sales Outsourcing through direct branded representation
Transaction sales
Consultative sales
Complex sales
consignment
telemarketing or telesales
retail or consumer
Door-to-door or traveling salesperson
Request for Proposal is an invitation for suppliers, through a bidding process, to submit a
proposal on a specific product or service. An RFP is usually part of a complex sales
process, also known as enterprise sales. Business-to-business — Business-to-business
sales are much more relationship based owing to the lack of emotional attachment to the
products in question. Industrial/Professional Sales is selling from one business to another.
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INDUSTRY PROFILE
Overview of India’s Consumer Electronic Market:
The Indian consumer durables segment can be segregated into consumer electronics
(TVs, VCD players and audio systems etc.) and consumer appliances (also known as
white goods) like refrigerators, washing machines, air conditioners (A/Cs), microwave
ovens, vacuum cleaners and dishwashers.
Most of the segments in this sector are characterized by intense competition, emergence
of new companies (especially MNCs) and introduction of state-of-the-art models, price
discounts and exchange schemes. MNCs continue to dominate the Indian consumer
durable segment, which is apparent from the fact that these companies command more
than 65 per cent market share in the colour television (CTV) segment. In consonance
with the global trend, over the years, demand for consumer durables has increased with
rising income levels, double-income families, changing lifestyles, availability of credit,
increasing consumer awareness and introduction of new models. Products like air
conditioners are no longer perceived as luxury products.
Growth of Consumer Electronics Production in India
As more consumers grow comfortable with technology, companies need to build simpler
devices that offer more entertainment and convenience. These new machines need to
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work together readily, and should be as easy to set up and use as a telephone or a
television. Consumerization of technology could be a major phenomenon over the next 5
to 10 years. This could hasten industry consolidation, as healthy companies gain market
share by buying out weaker ones at attractive prices. Apart from steady income gains,
consumer financing has become a major driver in the consumer durables industry. In the
case of more expensive consumer goods, such as refrigerators, washing machines, colour
televisions and personal computers, retailers are joining forces with banks and finance
companies to market their goods more aggressively. Among department stores, other
factors that will support rising sales include a strong emphasis on retail technology,
loyalty schemes, private labels and the subletting of floor space in larger stores to smaller
retailers selling a variety of products and services, such as music and coffee.
Growth Scenario:
Rising disposable income and declining prices of durables have resulted in increased
volumes. An increase in disposable income is aided by an increase n the number of both
double-income and nuclear families. The market for consumer durables (including
entertainment electronics, communitarian and IT products) is estimated at Rs 32 billion
(US $7.1 billion). The market is expected to grow at 10 to 12 per cent annually and is
expected to reach Rs 60 billion (US$13.3 billion) by 2015. The urban consumer durables
market is growing at an annual rate of seven to 10 per cent, the rural durables market is
growing at 25 per cent annually. Some high-growth categories within this segment
include mobile phones, TVs and music systems.
Opportunities and Potentialities:
The rising rate of growth of GDP, rising purchasing power of people with higher
propensity to consume with preference for sophisticated brands would provide constant
impetus to growth of white goods industry segment. Penetration of consumer durables
would be deeper in rural India if banks and financial institutions come out with liberal
incentive schemes for the white goods industry segment, growth in disposable income,
improving lifestyles, power availability, low running cost, and rise in temperatures.
While the consumer durables market is facing a slowdown due to saturation in the urban
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market, rural consumers should be provided with easily payable consumer finance
schemes and basic services, after sales services to suit the infrastructure and the existing
amenities like electricity, voltage etc. Currently, rural consumers purchase their durables
from the nearest towns, leading to increased expenses due to transportation. Purchase
necessarily done only during the harvest, festive and wedding seasons — April to June
and October to November in North India and October to February in the South, believed
to be months `good for buying’, should be converted to routine regular feature from the
seasonal character. Rural India that accounts for nearly 70% of the total number of
households, has a 2% penetration in case of refrigerators and 0.5% for washing machines,
offers plenty of scope and opportunities for the white goods industry. The urban
consumer durable market for products including TV is growing annually by 7 to 10 %
whereas the rural market is zooming ahead at around 25 % annually. According to survey
made by industry, the rural market is growing faster than the urban India now. The urban
market is a replacement and up gradation market now. The increasing popularity of easily
available consumer loans and the expansion of hire purchase schemes will give a moral
boost to the price-sensitive consumers. The attractive schemes of financial institutions
and commercial banks are increasingly becoming suitable for the consumer. Consumer
goods companies are themselves coming out with attractive financing schemes to
consumers through their extensive dealer network. This has a direct bearing on future
demand. The other factor for surging demand for consumer goods is the phenomenal
growth of media in India. The flurry of television channels and the rising penetration of
cinemas will continue to spread awareness of products in the remotest of markets. The
vigorous marketing efforts being made by the domestic majors will help the industry. It
will help to sustain the demand boom witnessed recently in this sector. The ability of
imports to compete is set to rise. However, the effective duty protection is still quite high
at about 35-40 per cent. So, a flood of imports is unlikely and would be rather need
based. Reduction in import duties may significantly lower prices of products such as
microwave ovens, whose market size is quite small in India. Otherwise, local
manufacturing will continue to stay competitive. At the same time, there will be some
positive benefits in the form of reduction in input costs. Washing machines and
refrigerators will also benefit from lower input costs.
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SWOT analysis of Industry:
Strengths:
Presence of established distribution networks in both urban and rural areas
Presence of well-known brands
In recent years, organized sector has increased its share in the market Vis a Vis
the unorganized sector.
Weaknesses:
Demand is seasonal and is high during festive season
Demand is dependent on good monsoons
Poor government spending on infrastructure
Low purchasing power of consumers
Opportunities:
In India, the penetration level of white goods is lower as compared to other
developing countries.
Unexploited rural market
Rapid urbanization
Increase in income levels, i.e. increase in purchasing power of consumers
Easy availability of finance
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Threats:
Higher import duties on raw materials imposed in the Budget 2007-08
Cheap imports from Singapore, China and other Asian countries
The key growth drivers for Indian consumer electronic industry are:
Rise in disposable income: The demand for consumer electronics has been rising
with the increase in disposable income coupled with more and more consumers
falling under the double income families. The growing Indian middle class is an
attraction for companies who are out there to woo them.
Availability of newer variants of a product: Consumers are spoilt for choice
when it comes to choosing products. Newer variants of a product will help a
company in getting the attention of consumers who look for innovation in
products.
Product pricing: The consumer durables industry is highly price sensitive,
making price the determining factor in increasing volumes, at least for lower
range consumers. For middle and upper range consumers, it is the brand name,
technology and product features that are important.
Availability of financing schemes: Availability of credit and the structure of the
loan determine the affordability of the product. Sale of a particular product is
determined by the cost of credit as much as the flexibility of the scheme.
Rise in the share of organized retail: Rise in organized retail will set the growth
pace of the Indian consumer durables industry. According to a working paper
released by the Indian Council for Research on International Economic Relations
(ICRIER), organized retail which constituted a mere four percent of the retail
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sector in FY07 is likely to grow at 45-50% per annum and quadruple its share in
the total retail pie 16% by 2011-2012. The share will grow with bigger players
entering the market.
Innovative advertising and brand promotion: Sales promotion measures such
as discounts, free gifts and exchange offers help a company in distinguishing
itself from others.
Festive season sales: Demand for color TVs usually pick up during the festive
seasons. As a result most companies come out with offers during this period to
cash in on the festive mood. This period will continue to be the growth driver for
consumer durable companies.
Major hurdles and challenges plaguing the Indian consumer durables sector:
Threat from new entrants, especially global companies: The domestic
consumer durables sector faces threat from newer companies, especially from
global ones who have technologically advanced products to offer.
Rivalry and competition: Presence of a large number of players in the domestic
consumer durables industry leads to competition and rivalry among companies.
Threat from rivalry and competition poses a threat to domestic companies.
Potential markets remaining yet untapped: A large segment of the domestic
market, mostly the rural market is yet to be tapped. Tapping this yet untapped and
unorganized market is a major challenge for the Indian consumer durables sector.
Threat from substitute products/services: The domestic consumer durables
industry is plagued by threats from substitute products. Easy accessibility to
theatres/multiplexes, especially in urban areas has turned off the viewership from
TV to a large extent. With the advent of a horde of FM radio stations, radio sets
have now substituted TVs.
Customer power with respect to availability of choice: The availability of a
wide product line on account of most products being homogeneous, poses a threat
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for companies operating in the consumer durables sector. Customers have the
choice of both domestically produced and imported goods, with similar features.
Industry Classification:
The consumer durable industry can be broadly classified as consumer electronics and
consumer appliance. The consumer appliances category can be further segmented as
white goods and brown goods.
Industrial Growth:
The industrial sector grew in moderation during FY08 at 8.5% on the back of a
comparatively higher growth of 11.5% during the previous fiscal. The country’s real
GDP grew by 9% during FY11; a tad lower than 9.6% in the previous fiscal. The
consumer durables segment witnessed a fall in production particularly for items where
consumer preferences have shifted towards newer products. Shifting in the consumption
pattern coupled with rising input costs of steel, iron ore etc, may further affect the
production levels of these goods. On the supply side newer variants of consumer durables
on the back of technological advancements have flooded the market, whereas on the
demand side it is the prospering middle class and consumerism which have led to
changing demand patterns.
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Consumer durables: Industry size, growth and trends:
During FY 12, volume share of consumer durables was as follows...
The consumer durable market in India was estimated to be around US $ 4.5 billion in
2009 — 07. More than 700 million units have been sold in the year 2010-2011. LCD
T.V. forming the bulk of the sales with 30% share of volume. LCD TV, refrigerator and
Air conditioner together constitute more than 60 % of the sales in terms of the number of
units sold. The LCD TV production was 15.10 million units in 2010-2011 and is expected
to grow by at least 25 %. At the disaggregated level conventional LCD TV volumes have
been falling while flat TV’s have grown strongly. The flat segment of the LCD TV now
accounts for more than 60% of the total domestic LCD TV production High end products
such as Liquid crystal display ( LCD), and plasma display TV grew by 400 % and 150 %
respectively in 06-07 with sharp decline in the price of these products.
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Now let’s see who all the market players in this color T.V. segment are.
LCD TV Company and relative market share table and pie chart...
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COMPANY PROFILE
Sony India Pvt. Ltd., based in New Delhi, is the Indian subsidiary of Japan's
Sony corporation, headquartered in Tokyo.
Sony's principal Indian businesses include Marketing, Sales and After-Sales Service of
electronic products & software exports Products: LCD Televisions, Video and Digital
Still Cameras, Notebooks and Business Projectors, Personal Audio, Audio Video
Accessories, Hi-fi Audios and Home Theater systems, Car Audio and Visual Systems,
Game Consoles, Mobile Phones, Recording Media and Energy Devices, Broadcast and
Professional products.
In India, Sony has its footprint across all major towns and cities in the country through a
distribution network of over 10,400 dealers and distributors, 270 exclusive Sony outlets
and 23 direct branch locations. Moreover, Sony's 19 sales branches cover a total of 450
cities. It has also developed a network of 270 Sony Center and established 30 warehouses
across the country to manage it's supply chain effectively.
Sony Corporation is a multinational conglomerate corporation headquartered in Minato,
Tokyo, Japan, and one of the world's largest media conglomerates with revenue
exceeding ¥ 7.730.0 trillion, or $78.88 billion U.S. (FY2008). Sony is one of the leading
manufacturers of electronics, video, communications, video game consoles, and
information technology products for the consumer and professional markets. Its founders
Akio Morita and Masaru Ibuka derived the name from sonus, the Latin word for sound,
and also from the English slang word 'sonny', since they considered themselves to be
'sonny boys', a loan word into Japanese which in the early 1950s connoted smart and
presentable young men.
Sony Corporation is the electronics business unit and the parent company of the Sony
Group, which is engaged in business through its five operating segments – electronics,
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games, entertainment (motion pictures and music), financial services and other. These
make Sony one of the most comprehensive entertainment companies in the world. Sony's
principal business operations include Sony Corporation (Sony Electronics in the U.S.),
Sony Pictures Entertainment, Sony Computer Entertainment, Sony Music Entertainment,
Sony Ericsson, and Sony Financial. As a semiconductor maker, Sony is among the
Worldwide Top 20 Semiconductor Sales Leaders. The company's current slogan is
make.believe. Their former slogan was like.no.other.
History:
In late 1945, after the end of World War II, Masaru Ibuka started a radio repair shop in a
bomb-damaged department store building in Nihonbashi of Tokyo. The next year, he was
joined by his colleague, Akio Morita, and they founded a company called Tokyo Tsushin
Kogyo K.K., (Tokyo Telecommunications Engineering Corporation). The company built
Japan's first tape recorder called the Type-G.
In the early 1950s, Ibuka traveled in the United States and heard about Bell Labs'
invention of the transistor. He convinced Bell to license the transistor technology to his
Japanese company. While most American companies were researching the transistor for
its military applications, Ibuka and Morita looked to apply it to communications.
Although the American companies Regency and Texas Instruments built the first
transistor radios, it was Ibuka's company that made them commercially successful for the
first time.
In August 1955, Tokyo Tsushin Kogyo released the Sony TR-55, Japan's first
commercially produced transistor radio. They followed up in December of the same year
by releasing the Sony TR-72, a product that won favor both within Japan and in export
markets, including Canada, Australia, the Netherlands and Germany. Featuring six
transistors, push-pull output and greatly improved sound quality, the TR-72 continued to
be a popular seller into the early sixties.
In May 1956, the company released the TR-6, which featured an innovative slim design
and sound quality capable of rivaling portable tube radios. It was for the TR-6 that Sony
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first contracted "Atchan", a cartoon character created by Fuyuhiko Okabe, to become its
advertising character. Now known as "Sony Boy", the character first appeared in a
cartoon ad holding a TR-6 to his ear, but went on to represent the company in ads for a
variety of products well into the mid-sixties. The following year, 1957, Tokyo Tsushin
Kogyo came out with the TR-63 model, then the smallest (112 × 71 × 32 mm) transistor
radio in commercial production. It was a worldwide commercial success.
University of Arizona professor Michael Brian Schiffer, Ph.D., says, "Sony was not first,
but its transistor radio was the most successful. The TR-63 of 1957 cracked open the U.S.
market and launched the new industry of consumer microelectronics." By the mid 1950s,
American teens had begun buying portable transistor radios in huge numbers, helping to
propel the fledgling industry from an estimated 100,000 units in 1955 to 5,000,000 units
by the end of 1968.
Sony's headquarters moved to Minato, Tokyo from Shinagawa, Tokyo around the end of
2006.
Origin of name:
When Tokyo Tsushin Kogyo was looking for a romanized name to use to market
themselves, they strongly considered using their initials, TTK. The primary reason they
did not is that the railway company Tokyo Kyuko was known as TKK. The company
occasionally used the acronym "Totsuko" in Japan, but during his visit to the United
States, Morita discovered that Americans had trouble pronouncing that name. Another
early name that was tried out for a while was "Tokyo Teletech" until Morita discovered
that there was an American company already using Teletech as a brand name. The name
"Sony" was chosen for the brand as a mix of two words. One was the Latin word Sonus
which is the root of "sonic" and "sound" and the other was "sonny," a familiar term used
in 1950s America to call a boy. The first Sony-branded product, the TR-55 transistor
radio, appeared in 1955 but the company name didn't change to Sony until January 1958.
At the time of the change, it was extremely unusual for a Japanese company to use
Roman letters instead of kanji to spell its name. The move was not without opposition:
TTK's principal bank at the time, Mitsui, had strong feelings about the name. They
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pushed for a name such as Sony Electronic Industries, or Sony Teletech. Akio Morita was
firm, however, as he did not want the company name tied to any particular industry.
Eventually, both Ibuka and Mitsui Bank's chairman gave their approval.
Products, technologies and proprietary formats:
Sony has historically been notable for creating its own in-house standards for new
recording and storage technologies, instead of adopting those of other manufacturers and
standards bodies. The most infamous of these was the videotape format war of the early
1980s, when Sony marketed the Betamax system for video cassette recorders against the
VHS format developed by JVC. In the end, VHS gained critical mass in the marketplace
and became the worldwide standard for consumer VCRs and Sony adopted the format.
While Betamax is for all practical purposes an obsolete format, a professional-oriented
component video format called Betacam that was derived from Betamax is still used
today, especially in the film and television industry.
In 1968 Sony introduced the Trinitron brand name for its line of aperture grille cathode
ray tube televisions and (later) computer monitors. Trinitron displays are still produced,
but only for markets such as Pakistan, Bangladesh, India and China. Sony discontinued
the last Trinitron-based television set in the USA in early 2007. Trinitron computer
monitors were discontinued in 2005.
Sony launched the Betamax videocassette recording format in 1975. In 1979 the
Walkman brand was introduced, in the form of the world's first portable music player.
1982 saw the launch of Sony's professional Betacam videotape format and the
collaborative Compact Disc format. In 1983 Sony introduced 90 mm micro diskettes
(better known as 3.5-inch (89 mm) floppy disks), which it had developed at a time when
there were 4" floppy disks and a lot of variations from different companies to replace the
then on-going 5.25" floppy disks. Sony had great success and the format became
dominant; 3.5" floppy disks gradually became obsolete as they were replaced by current
media formats. In 1983 Sony launched the MSX, a home computer system, and
introduced the world (with their counterpart Philips) to the Compact Disc or CD. In 1984
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Sony launched the Discman series which extended their Walkman brand to portable CD
products. In 1985 Sony launched their Handycam products and the Video8 format.
Video8 and the follow-on hi-band Hi8 format became popular in the consumer camcorder
market. In 1987 Sony launched the 4 mm DAT or Digital Audio Tape as a new digital
audio tape standard.
In addition to developing consumer-based recording media, after the launch of the CD
Sony began development of commercially based recording media. In 1986 they launched
Write-Once optical discs (WO) and in 1988 launched Magneto-optical discs which were
around 125MB size for the specific use of archival data storage.
In the early 1990s two high-density optical storage standards were being developed: one
was the MultiMedia Compact Disc (MMCD), backed by Philips and Sony, and the other
was the Super Density disc (SD), supported by Toshiba and many others. Philips and
Sony abandoned their MMCD format and agreed upon Toshiba's SD format with only
one modification based on MMCD technology, viz EFMPlus. The unified disc format
was called DVD which was marketed in 1997.
Sony introduced the MiniDisc format in 1993 as an alternative to Philips DCC or Digital
Compact Cassette. Since the introduction of MiniDisc, Sony has attempted to promote its
own audio compression technologies under the ATRAC brand, against the more widely
used MP3. Until late 2004, Sony's Network Walkman line of digital portable music
players did not support the MP3 de facto standard natively, although the provided
software SonicStage would convert MP3 files into the ATRAC or ATRAC3 formats.
In 1993, Sony challenged the industry standard Dolby Digital 5.1 surround sound format
with a newer and more advanced proprietary motion picture digital audio format called
SDDS (Sony Dynamic Digital Sound). This format employed eight channels (7.1) of
audio opposed to just six used in Dolby Digital 5.1 at the time. Unlike Dolby Digital,
SDDS utilized a method of backup by having mirrored arrays of bits on both sides of the
film which acted as a measure of reliability in case the film was partially damaged.
Ultimately, SDDS has been vastly overshadowed by the preferred DTS (Digital Theatre
System) and Dolby Digital standards in the motion picture industry. SDDS was solely
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developed for use in the theatre circuit; Sony never intended to develop a home theatre
version of SDDS.
In 1998, Sony launched their Memory Stick format; flash memory cards for use in Sony
lines of digital cameras and portable music players. It has seen little support outside of
Sony's own products with Secure Digital cards (SD) commanding considerably greater
popularity . This is due in part to the SD format's greater throughput (which allows faster
devices), higher capacities, and significantly lower price per unit capacity compared to
Memory Sticks available at the same time. Sony has made updates to the Memory Stick
format with Memory Stick Duo and Memory Stick Micro.
Sony and Philips jointly developed the Sony-Philips digital interface format (S/PDIF) and
the high-fidelity audio system SACD. The latter has since been entrenched in a format
war with DVD-Audio. At present, neither has gained a major foothold with the general
public. CDs are preferred by consumers because of ubiquitous presence of CD drives in
consumer devices.
In 1994 Sony launched the PlayStation (later PS one). This successful console was
succeeded by the PlayStation 2 in 2000, itself succeeded by the PlayStation 3 in 2006.
The PlayStation 2 has become the most successful video game console of all time. It has
sold a total of over 140 million units and still going. The PlayStation brand was extended
to the portable games market in 2005 by the PlayStation Portable (PSP) and in 2009, the
PSP go. Sony developed the Universal Media Disc (UMD) optical disc medium for use
on the PlayStation Portable. Although Sony tried to push the UMD format for movies,
major-studio support for the format was cut back in spring 2006, though as of 2009 some
major-studio titles continue to be released on UMD.
In 2004, Sony built upon the MiniDisc format by releasing Hi-MD. Hi-MD allows the
playback and recording of audio on newly-introduced 1 GB Hi-MD discs in addition to
playback and recording on regular MiniDiscs. Recordings on the Hi-MD Walkmans can
be transferred to and from the computer virtually unrestricted, unlike earlier NetMD. In
addition to saving audio on the discs, Hi-MD allows the storage of computer files such as
documents, videos and photos. Hi-MD introduced the ability to record CD-quality audio
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with a linear PCM recording feature. It was the first time since MiniDisc's introduction in
1992 that the ATRAC codec could be bypassed and lossless CD-quality audio could be
recorded on the small discs.
Sony was one of the leading developers and remains one of the strongest proponents of
the Blu-ray Disc optical disc format, which eventually emerged as the market leader over
the competing standard, Toshiba's HD DVD, after a 2 year-long format war. The first
Blu-ray players became commercially available in June 2006, and Sony's first Blu-ray
player, the Sony BDP-S1, debuted in December 2006 with an MSRP of US $999.95. By
the end of 2007 the format had the backing of every major motion picture studio except
Universal, Paramount, and Dreamworks. The Blu-ray format's popularity continued to
increase, solidifying its position as the dominant HD media format, and Toshiba
announced its decision to stop supporting HD DVD on 19 February 2008.
On 10 September 2007 Sony unveiled Rolly, an egg-shaped digital robotic music player
which has colour lights that flash as it “dances” and has flapping wings that can twist to
its tunes. Movements along with the music downloaded from personal computers and
Bluetooth can be set. Rolly, which went on sale in Japan on 29 September 2007, has one
gigabyte of memory to store tunes. Sony also developed dog-shaped robots called AIBO
and humanoids and QRIO.
Manufacturing Base:
Slightly more than 50% of the electronics' segment's total annual production during the
fiscal year 2005 took place in Japan, including the production of digital cameras, video
cameras, flat panel televisions, personal computers, semiconductors and components such
as batteries and Memory Sticks. Approximately 65% of the annual production in Japan
was destined for other regions. China accounted for slightly more than 10% of total
annual production, approximately 70% of which was destined for other regions.
Asia, excluding Japan and China, accounted for slightly more than 10% of total annual
production with approximately 60% destined for Japan, the US and the EU. The
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Americas and Europe together accounted for the remaining slightly less than 25% of total
annual production, most of which was destined for local distribution and sale.
Sony's Sales and Distribution by Geographical Regions in 2009
Geographic Region Total Sales ( Yen in millions)
Japan 1,873,219
United States 1,827,812
Europe 2,307,658
Other Area 2,041,270
Global slowdown affects this year, Sony Corp suffered its first annual loss in 14 years
and could be grimmer in upcoming years too. On 9 December 2008, Sony Corp. said it
will cut 8,000 jobs, drop 8,000 contractors and reduce its global manufacturing sites by
10% to save $1.1 billion a year
Sony has received numerous awards and much recognition for their environmental efforts
throughout the world. Their achievements in the way of energy and environmental
conservation have earned them respect for their green campaign despite bad press from a
low ranking on Greenpeace's greener electronics report.
Improvement efforts
Since 1976, Sony has had an Environmental Conference. Sony's policies address their
effects on global warming, the environment, and resources. They are taking steps to
reduce the amount of greenhouse gases that they put out as well as regulating the
products they get from their suppliers in a process that they call "green
procurement".Sony has said that they have signed on to have about 75 percent of their
Sony Building running on geothermal power. The "Sony Take Back Recycling Program"
allows consumers to recycle the electronics products that they buy from Sony by taking
them to eCycle (Recycling) drop-off points around the U.S. The company has also
26
developed a biobattery that runs on sugars and carbohydrates that works similarly to the
way living creatures work. This is the most powerful small biobattery to date.
Green TV
For sale in Japan on 30 July 2008, Sony's green product, new flat-panel 32-inch
(810 mm) TV 150,000 yen (US$ 1,400; € 900) Bravia KDL-32JE1 offers ecological
consumers advantages of less energy consumption (70% less) than regular models with
the same image quality. Sony was able to reduce carbon dioxide emissions totaling 79
kilograms (174 pounds) a year, without sacrificing quality by developing a brighter back
light and better filtering, which produces light more efficiently. The TVs will have liquid
crystal displays along with high-definition digital broadcast capabilities.
Criticism
In 2000, Sony was ridiculed for a document entitled "NGO Strategy" that was leaked to
the press. The document involved the company's surveillance of environmental activists
in an attempt to plan how to counter their movements. It specifically mentioned
environmental groups that were trying to pass laws that held electronics-producing
companies responsible for the clean up of the toxic chemicals contained in their
merchandise. In early July 2007, Sony ranked 14th on the Greenpeace chart "Guide to
Greener Electronics." This chart graded major electronics companies on their
environmental work. Sony fell from its earlier 11th place ranking due to Greenpeace's
claims that Sony had double standards in their waste policies.
In 2005, it was made public that the videogame Full Spectrum Warrior, developed by
Sony Pictures Imageworks and Pandemic Studios, was paid for in whole by the United
States Department of Defense, for use as an urban combat trainer. Not only was the
simulation never used as intended, but the Army lost its full investment while Pandemic
Studios went on to release the simulation, now an entertainment game, through THQ and
it became a success. The wisdom of the Army's contract with both Sony and Pandemic
was questioned in the press at the time.
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RESEARCH OBJECTIVE AND METHODOLOGY
OBJECTIVE:
To analyze the factors influencing the customers to choose a sony.
To know the customers view towards sony
To understand the customer like and dislike about the sony
RESEARCH METHODOLOGY:
Secondary data: Company website, newspaper, magazines, books, articles and online
journals
Primary data: It will be collected through questionnaire survey.
Tool Used: A Structured Questionnaire will be used
Sampling Method: Random Sampling Method
Sample Size: 100
Target Audience: Marketers
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LITERATURE REVIEW
Why do customers buy?
What goes on inside a customer's mind before, during and after a purchase? How do
buyers choose? What are the hidden influences? How do buyers process information?
Unlocking these secrets opens the door to success.
Why buy a Coca-Cola? Is it because of thirst? Why buy Levi's jeans? Is it to avoid
hypothermia, or to conform to a social norm? Or do some brands offer other benefits -
emotional benefits? Are there hidden reasons?
Let's look at the other side. What do the advertisers promise? That Coca Cola will quench
your thirst or Levi's will keep your legs warm? Perhaps they appeal to other desires?
Look at the advertisements. Try to summarise exactly what you think they are saying.
This takes practice. Summarising advertisements is a skill which top marketing people
develop. It may give you an insight into society, its values and aspirations; that is, if you
believe that advertising reflects society.
We are not perfectly rational, sensible buyers. We do not always choose goods and
services solely on price, performance and availability. The truth is that many purchases
are influenced by a whole host of emotional reasons like esteem and image. Many of
these non-rational reasons are hidden deep in our subconscious.
In-depth research probes into the darker depths of our unconscious. Some research
presents such bizarre explanations that many marketers reject the findings. For example,
Ernest Dichter's 1964 handbook of motivations suggested that men buy open-top/
convertible cars as substitute mistresses! But even today, top companies use in-depth
research techniques to discover the hidden reasons why we buy or don't buy.
Common sense observation also provides useful insights into the minds of buyers.
Research helps find the real reasons why we buy what we buy. This requires time, money
and expertise. Surprisingly many other organisations don't really know exactly why their
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customers buy or don't buy from them. Yet understanding customers is at the heart of
marketing.
Once the reasons why people buy or don't buy are discovered, the marketing mix can be
changed to suit the buyer's needs and wants.
Buyer behaviour involves both simple and complex mental processes. Marketers cannot
capture human nature in its entirety but we can learn a lot about customers through
research, observation and thinking. Here's Professor Theodore Levitt:
I think it is a process of trying to think your way through why people behave in certain
ways. Or if not why, then what that behavior is likely to be given certain kinds of
products, certain kinds of... just stop to think.
Types of Consumer Buying Situation
A customer's approach to purchasing a product or service is influenced by their situation -
whether they have money and how important, frequent, risky or urgent the purchase is to
them in their situation. Imagine the difference between someone with plenty of money
who can afford to make a mistake when buying as opposed to someone who has scraped
her last few pounds together. They might both be buying the same product but their
financial situation suggests that their approach to buying will be very different.
Customers make more of an effort, and become more involved, if the purchase is
relatively important to them - particularly if they have no previous experience of buying
such a product or service. On the other hand, if the item being purchased is low value and
frequently bought, like a jar of coffee, it follows that the buyer will spend less time and
effort and will have less involvement with the purchase.
These frequent, inexpensive purchases generally have little risk, and require less
information. These kind of purchase situations are referred to as 'Low Involvement
Purchases'. In these situations, consumers can fall into a routine purchasing pattern which
requires little thought and even less effort.
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Whenever the need is stimulated - a particular brand is automatically purchased. This is
called 'Reutilized Response Behavior.' You can visit the Hall Of Fame later to see the
gurus explain how brands influence routine purchases.
Alternatively, an expensive high risk infrequent purchase like your first computer will
require a lot of detailed information and careful analysis before deciding which machine.
This is called 'High Involvement'. Here the consumer goes through an extensive problem
solving process - searching and collecting information, evaluating it and eventually
deciding on a particular choice.
There is a third type of buying situation. This is where the customer has had some
experience of buying a particular type of product or service before. There is less risk
attached and less information is required. This is called 'Limited Problem Solving'.
Customers require different marketing mixes in different buying situations. For example,
a routinised response purchase, like a can of cola, doesn't require much supporting
product literature but perhaps it needs wide distribution and easy availability. An
extensive problem solving Type of Purchase, on the other hand, would require detailed
product literature and trained sales people.
Time also affects the buying situation. If a purchase is urgent the purchasing pattern will
be different from another situation where there is more time available. For example, the
decision to call a plumber to install a new shower is different from calling a plumber to
stop a leaking pipe!
To summaries, the three types of consumer buying situation can be put onto a problem
solving continuum.
Stages of the Consumer Buying Process
Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual
purchasing is only one stage of the process. Not all decision processes lead to a purchase.
All consumer decisions do not always include all 6 stages, determined by the degree of
complexity...discussed next.
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The 6 stages are:
Problem Recognition (awareness of need)--difference between the desired state and the
actual condition. Deficit in assortment of products Hunger--Food Hunger stimulates your
need to eat.
Can be stimulated by the marketer through product information--did not know you were
deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that
you need a new pair of shoes.
Information search--
Internal search, memory.
External search if you need more information. Friends and relatives (word of
mouth). Marketer dominated sources; comparison shopping; public sources etc.
A successful information search leaves a buyer with possible alternatives, the evoked set.
Hungry, want to go out and eat, evoked set is
chinese food
Indian food
burger king
Klondike kates etc
Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer
wants or does not want. Rank/weight alternatives or resume search. May decide that you
want to eat something spicy, Indian gets highest rank etc. If not satisfied with your
choices then return to the search phase. Can you think of another restaurant? Look in the
yellow pages etc. Information from different sources may be treated differently.
Marketers try to influence by "framing" alternatives.
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Purchase decision--Choose buying alternative, includes product, package, store, method
of purchase etc.
Purchase--May differ from decision, time lapse between 4 & 5, product availability.
Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive
Dissonance, have you made the right decision. This can be reduced by warranties, after
sales communication etc.
After eating an indian meal, may think that really you wanted a Chinese meal instead.
Consumer Behavior
Consumer’s balancing between choices alternatives has been extensively studied in the
literature. Companies should be aware of the real signals and cues that are being used by
their consumers. Their cognitive maps make part of a more holistic context, in which they
face many complementary and competitive product settings, experiences and
social/cultural trends. This conceptual paper extended with examples and an empirical
study shows that consumers’ knowledge structures and cognitive maps may be totally
different from the company’s initial point of view. Competition among alternatives may
not be about new marketing mix related dimensions, but also about reinterpreted old
dimensions (within the consumer’s specific context). Moreover, marketing mix
instruments are strongly interrelated in the consumer’s mind. This implies that product;
price, communication and distribution efforts no longer can be treated as separate
elements of the marketing mix, as often presented in marketing plans. Instead they should
be integrated in “one marketing concept” that is based on all associations characterizing
consumers’ cognitive maps. Finally, the empirical study shows that lack of authenticity,
consistency and simplicity are three important drivers of cognitive discrepancies between
the company and the consumer.
Knowing why consumers truly buy is a hot topic.
Lindstrom (2008) even talks about the new discipline “buyology”. Moreover, consumer’s
balancing between choice alternatives has been extensively studied in the literature. The
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introduction of a new product alternative will often alter the consumers’ reference
framework. To learn about a new product, consumers will rely on their existing
knowledge from a familiar domain. This may imply that consumers with different
product knowledge will respond differently to new products. They illustrate this with the
digital camera. They find that consumers having limited camera knowledge, but
extensive computer knowledge are the most likely to purchase a digital camera, whereas
those having camera knowledge, but limited computer knowledge, are the least likely to
adopt it. They find that increasing the number of features of product alternatives may not
only lead to a capability gain, but also to a usability loss, because of increased
complexity. As complexity increases, consumers have to be convinced by the extra value
of the new product alternative, in order to be willing to buy the product. The complexity
level may be related to the number, order and interdependence/interaction of the various
subsystems (components and features at a lower level). As defined in Gatignon et al.
(2002) core subsystems are those that are tightly coupled to other subsystems. Peripheral
subsystems on the other hand, are weakly related. An innovation may involve a change in
the subsystems (general innovation) or in the linkages (architectural innovation). The
more subsystems make up the product, the more it may be dependent on new trends for
each of these subsystems and hence complicate a consumer’s purchase decision. The
more (fewer) linkages, the less (more) easily the innovation can be imitated by others.
For instance, modular architectures in the IT industry (decreasing the number of separate
linkages) increase the entry of imitators. Another important issue in analyzing consumers
facing product complexity is their bounded rationality, indicating that they have to
evaluate new products in a rapidly changing context with imperfect knowledge and
uncertainty about the future. Besides minimum threshold effects there may also be
maximum threshold effects for consumers, indicating that companies can over perform.
There may even be an installed base effect, which is the effect of an existing technology
that tends to preclude or slow down the adoption of a superseding technology or product.
These effects may be highly dependent on the customer profile. For instance, lead users
or innovators may be more motivated to innovate or experience new needs than the
majority of the target market. Resistance may occur in particular when characteristics of
the new product imply a change in behavior (more actions or more complicated actions to
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be performed by the customer). They also found that changes in consumption patterns are
“key factors” in affecting the customer’s evaluation of new products. The adoption of
new products can be explained by its relative advantage, compatibility, complexity, trial
ability and observability. In terms of observability, a key question however remains what
product related cues are being used by the consumers and how they are being processed
within their mental minds.
The real cognitive maps and knowledge structures of consumers
Companies should be aware of the real signals and cues that are being used by their
consumers such as indicators of quality and price. Consumers may infer a positive
correlation between the observed quality of a new feature and
Company perspective
It may also change the relational property schemes that are well-known in the literature.
According to the principle of regularity a non preferred alternative (for example, x
compared to y) cannot become preferred when new alternatives (for example, z) become
available. This implies: if y is chosen from the set (x, y) then one would expect that x
should not be chosen from the set (x, y, z). However, according to the decoy effect
theory, the introduction of a new alternative (a decoy), which is dominated (on a certain
dimension) by at least one of the original alternatives, may alter the preferences among
the original competing alternatives. This implies: If y is chosen from the set (x, y), based
on dimension a, then it is possible that x is chosen from the set (x, y, z), based on the
unobserved quality of the base product. It gives the example of a European battery
35
supplier, who noticed that its high tech/high-priced batteries showed nice sales results.
Believing that high-tech users were driving demand, the company started placing display
racks that describe the battery’s benefits for high tech applications such as in digital
devices. Unexpectedly, sales began to fell. It turned out that many users had bought these
high-tech/high priced batteries for another reason, believing that these batteries lasted
longer, and independent of the application. The fact that digital devices were mentioned
specifically now in the communication (displays), had an opposite effect on some users
looking for long-lasting batteries in all applications and not looking for batteries in
specific applications (from their perspective). This example shows that insight in
consumers’ knowledge structures and cognitive maps remains an essential part of
marketing, as the structures and maps may be totally different from the company’s initial
point of view
another dimension b that comes into the consumer’s consideration set (after the
introduction of z). The battery example shows that the new dimension b introduced by
the new alternative (in our example: high-tech dimension), may alter the perception
towards an old dimension a (in our example: durability). Therefore, competition among
alternatives may not only be about the new dimension, but also about a “reinterpreted”
old dimension. This extends the previous decoy theory. Moreover, consumers’ product
perceptions and preferences make part of a more holistic context, in which consumers
face many complementary and competitive product settings, experiences and
social/cultural trends.
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Holistic reference framework of customers
For instance, that consumers visit multiple retail stores to take advantage of two types of
store complementarity: i to balance transportation and handling costs against acquisition
costs (which all make part of the customer’s experience); i and/or to choose the best
value for different product categories in different stores. Moreover, today’s consumer
may choose the most expensive brand within a product category (not being very price
sensitive within that product category within the store), but expecting to buy the same
brand cheaper compared to competitive stores (hence being price sensitive from a
competitive point of view). It shows that in today’s competitive context, all marketing
mix related instruments are clearly interrelated in the consumer’s mind.
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The reasons of change in purchase behavior
These four categories show that there may be a discrepancy between the company’s
cognitive maps (reasoning) and that of the consumer, due to reasons related to brand
history, authenticity, complexity and inconsistency. The remaining (quite obvious)
reasons for leaving the brand or brand variety were: “better competitive offer”, “time for
a change (looking for variety)”, “bad service” and “price too high”.
Contributions of Psychology to Consumer Behavior
Identifying Parental Styles
For over seventy years child development psychologists have attempted to systematically
analyze the nature of parent-child interactions. Their preoccupation has been with the
consequences of these interactions on personality development of children. Early studies
which focused on disciplinary techniques have given way to examination of a broader
range of child rearing practices. In 1959, Schaefer noted the development of two
contrasting approaches to the study of parental behavior. One approach, typified by the
research of Sears, Macoby, and Levin (1957) analyzed molecular variables relating to
socialization of specific systems of behavior (e.g., oral, anal, sexual, etc.). A second
approach treated parental behavior in terms of molar social and emotional interactions.
38
This second approach, with its reliance on standardized measurement instruments, large
samples and multi-variate statistical procedures, has dominated the field since 1959.
Over the last two decades, researchers have made an effort to develop a parsimonious
model of parent-child relations. The method most commonly used involves factor
analysis of one of the parent-child relations instruments. Across studies, two orthogonal
dimensions have consistently emerged. These have been labeled the interpersonal
support/love axis and the authority/power axis.
Schaefer argues for a three, rather than two, dimensional representation of parent-child
relations, with the authority/power axis differentiated into psychological autonomy versus
psychological control and firm control versus lax control dimensions. Recent empirical
evidence supports a three dimensional configuration conceptualization is similar to
Schaefer's and also employs three dimensions: one pertaining to love/nurturance and two
to power/control. Becker, however, subdivides control into restrictiveness versus
permissiveness and anxious-emotional involvement versus calm detachment. The extent
to which Becker's and Schaefer's models describe the same conceptual space has never
been determined. The fact that these models employ different dimensions may simply
reflect "...differences in the labeling of identical factors or may indicate that neighboring
and overlapping sectors of the conceptual space emerged as factors because of different
samples of parent behavior".
Parent styles associated with the warm end of the warmth-hostility dimension tend to be
more accepting, understanding, and child-centered and make more frequent use of
explanations and reasons in discipline. Styles at the restrictive end of the restrictive-
permissive dimension place more restrictions on the child's behavior and tend to be firm
in enforcement of rules. Parent styles associated with the anxious end of the anxious-
emotional involvement-calm detachment dimension evidence high emotionality in child
relations and may baby and overprotect the child.
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Linkage to Personality
It appears that certain psychotic disorders are associated with the same psychotic disorder
in the parent. It is also known that authoritarian parents tend to have authoritarian
offspring. There is only limited, recent research of a longitudinal nature linking specific
parental styles to development of personality traits in the "normal" adult. There is ample
evidence, however, which links patterns of family relations to the personality
development of children and teenagers. Accepting the premise that personality is basic,
enduring, and formed relatively early in life, these effects might be expected to carry over
into adulthood. Similar results are found in other studies.
Application to Consumer Behavior
More important than the specific conclusions of this research on parent-child relations
and personality, is the manner in which it has contributed to the development of
personality theory. This approach could be easily adapted in the consumer behavior field,
given the interest that already exists regarding children's socialization as consumers.
Unfortunately, the literature on this subject is quite fragmented and needs a unifying
framework.
In terms of future research, initial efforts might be aimed at clarifying the structure of
parent-child interactions on consumption matters. Efforts to date have concentrated more
on the content than the structure of these interactions, although the latter may be more
important to personality development. There are 2 needs to catalog and classify the
multitude of ways that parents and children interact over consumption. Families then
need to be observed in situ, taking a representative sampling of their behaviors, with
measurements obtained on a wide variety of interaction variables. This would be
followed by attempts at data reduction. As Myers notes (1974), "theory development in
the behavioral sciences often begins with an attempt to locate fundamental axes or
dimensions as the basis for a framework for the representation of the behavioral unit."
The behavioral unit in this case is either the family or parent-child dyad.
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However, when the relevant space is found, it would be appropriate to examine the
distribution of families in that space with the goal of identifying clusters of parenting
styles or family environments (vis-a-vis consumption).
Involvement: Origins in Social Psychology
Involvement originates from social psychology and specifically from the persuasive
communication literature, where the social judgement-involvement approach has been
used to explain attitude and attitude change. Social judgement theory, which considers
how individuals judge received messages, is based on three attitude scales: the latitude of
acceptance, the latitude of rejection and the latitude of non-commitment (Sherif, et al.,
1965). For an individual to accept a position and change their attitude there must be a
discrepancy between the message and that person’s own position. The notion of ‘ego-
involvement’, which refers to the relationship between an individual and a social issue,
has been argued to systematically affect the structure of the three judgmental latitudes.
For example, highly involved individuals with wider latitudes of rejection (and smaller
acceptance and non-commitment latitudes), are not susceptible to persuasive
communication. The opposite is true for individuals with low involvement, who have
wider latitudes of acceptance and are therefore highly receptive In social psychology,
‘ego involvement’ refers to the centrality or importance of a social issue in a person’s
life. It is defined as “arousal singularly on, in combination of the individuals’
commitment or stands in the context of appropriate situations”. Thus a person is said to
be ‘ego involved’ when their position on an issue is intrinsically significant or central to
their self-identify or when a person is strongly committed to a position. In this respect,
ego involvement entails the elements of centrality, importance and commitment.
According to this conceptualization, ego involvement is seen as synonymous with
commitment and related to extremity, although the preferred position is that the three are
distinct concepts. For example, an individual may be committed to a position on a social
issue, or even take an extreme stand without necessarily being highly involved. However,
social judgement theory proposes that position extremity is positively correlated with ego
involvement in that extreme positions tend to be ego involving This conceptualization of
involvement has been the basis for applying and treating involvement in marketing,
41
particularly in the consumer behavior domain. As involvement is viewed as a
hypothetical or speculative concept, its conceptualization comes from social psychology
theory, in which it is grounded. However, the variation in nature, content, definitions and
nomology of involvement in social psychology, has complicated the construct’s
application in marketing and particularly consumer behavior. As a consequence, the
problems and confusion surrounding involvement in social psychology have been
transferred to the marketing domain. Social psychologists have examined involvement in
the context of persuasive communication addressing its ‘attitude object’, as a social issue
(e.g. involvement with health and safety). However, its application in consumer behavior
focuses on examining involvement in a broader context to include different aspects of
behavior and various attitude objects. For example, product involvement, purchasing
involvement, purchasing-decision involvement, brand involvement task involvement,
issue involvement, service involvement and advertising involvement. This practice has
resulted in a number of relatively ‘new’ definitions or conceptualizations and
measurements which have aggravated the confusion in understanding involvement in the
marketing context. Thus, involvement has been seen as overlapping with similar concepts
such as commitment, importance, proneness and cognitive effort. For example, they have
identified five distinct yet related concepts, which have been studied under the general
rubric of ‘involvement’. These included involvement, commitment, communication
involvement, purchase importance and response involvement
Situational Involvement: Extending the concept of Purchase Decision Involvement
Purchase decision involvement represents a ‘mindset’ that allows researchers to capture
situational variations in the purchase decision. An example would be an emergency
purchase versus a regular purchase of the same product. Unlike enduring involvement,
purchase decision involvement is not always predictive of information search. Thus a
routine purchase decision such as the purchase of a chocolate bar is not necessarily
described as low involvement, since the consumer may not be indifferent to the choice of
brands. Consumers may therefore be aware of differences between alternative brands
even for inexpensive products which marketing texts typically classify as low
involvement. Consequently, he suggests that consumers may base these brand decisions
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on the perceived level of similarity or difference between alternative offerings. The
essence of Mittal’s conceptualization of purchase decision involvement is that consumers
care about what they buy and are motivated to make the right choice. Purchase decision
involvement seems to be affected by the purchase situation. Different purchase situations
might include whether an item is being bought routinely, in an emergency, or for a gift.
The purchase situation thus affects the extent to which the consumer is motivated to make
the right choice. For example, a consumer who buys boxed chocolates as a gift may
exhibit a high level of motivation to make the right choice. On the other hand, when the
same consumer buys boxed chocolates for their own consumption, the level of motivation
may not be so great. In the first situation, the individual may be more concerned and
exhibit a higher degree of care over the brand choice. In the second instance, the
individual may be relatively indifferent. This implies that the type of purchase may
determine the level of motivation to make the right choice, and that this then determines
the degree of care taken over the selection. Mittal (1989) tested this proposition using
emergency and regular purchase scenarios for different products. The results indicated
that individuals show less concern and care in an emergency purchase scenario than in a
regular purchase scenario for the same products. Therefore, the purchase situation seems
to determine the effort consumers are willing to put in a purchase as well as the types of
promotional references (appeals) what consumers are likely to be receptive to. The
degree of interaction among the three factors (type of purchase/purchase situation, level
of motivation and care in relation to brand choice) apparently determines the level of
purchase involvement and captures any situational variations in behavior (e.g. routine,
gift, regular or emergency purchase behavior) [Mittal, 1989]. Consideration of these
issues is timely in view of the rising popularity of in-home shopping and the greater
shopping channel choice now facing consumers. Given this context, it seems that
consumers’ brand choice is sometimes affected by the availability of brands within a
specific channel, such as a retail store, catalog or the Internet. For example, consumers
making online purchases tend to have access to a wider range of brands than those buying
through other means. This implies that the shopping channel which consumers select is
likely to shape or affect their eventual brand choice. Thus an individual electing to shop
for a gift online may do so because this channel offers access to a larger number of
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alternative brands. This may even result in a brand being chosen which is only available
via the Internet. Similarly, consumers may select a particular shopping channel because it
enables them to engage in ‘trade off’ behavior between the range of available brands and
convenience. For example, a time-poor individual using catalog or direct mail may do so
because these channels enable more efficient shopping within the available time. It is
therefore argued that in particular purchasing situations, shopping channel selection can
impact upon brand choice behavior. Specifically, it is suggested that the chosen shopping
channel may moderate the level of purchase decision involvement. In other words,
shopping channel choice can be considered to aggravate situational variations in
behavior. Consider the following scenario: When the gift purchase of boxed chocolates
via Internet is compared with a similar purchase from a retail store, the level of care and
concern displayed by the purchasers may differ. This may reflect differences in
involvement levels and in information search behavior. The implication is that purchase
decision involvement may not be bound solely by the situation, but also by the shopping
channel which can become part of an individual’s decision making process.
Information Search and Decision Making
Problem Recognition: One model of consumer decision making involves
several steps. The first one is problem recognition—you realize that something is not as it
should be. Perhaps, for example, your car is getting more difficult to start and is not
accelerating well. The second step is information search—what are some alternative
ways of solving the problem? You might buy a new car, buy a used car, take your car in
for repair, ride the bus, ride a taxi, or ride a skateboard to work. The third step involves
evaluation of alternatives. A skateboard is inexpensive, but may be ill-suited for long
distances and for rainy days. Finally, we have the purchase stage, and sometimes a post-
purchase stage (e.g., you return a product to the store because you did not find it
satisfactory). In reality, people may go back and forth between the stages. For example,
a person may resume alternative identification during while evaluating already known
alternatives.
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Consumer involvement will tend to vary dramatically depending on the type of product.
In general, consumer involvement will be higher for products that are very expensive
(e.g., a home, a car) or are highly significant in the consumer’s life in some other way
(e.g., a word processing program or acne medication).
It is important to consider the consumer’s motivation for buying products. To achieve
this goal, we can use the Means-End chain, wherein we consider a logical progression of
consequences of product use that eventually lead to desired end benefit. Thus, for
example, a consumer may see that a car has a large engine, leading to fast acceleration,
leading to a feeling of performance, leading to a feeling of power, which ultimately
improves the consumer’s self-esteem. A handgun may aim bullets with precision, which
enables the user to kill an intruder, which means that the intruder will not be able to harm
the consumer’s family, which achieves the desired end-state of security. In advertising, it
is important to portray the desired end-states. Focusing on the large motor will do less
good than portraying a successful person driving the car.
Information search and decision making: Consumers engage in both internal and
external information search.
45
Internal search involves the consumer identifying alternatives from his or her memory.
For certain low involvement products, it is very important that marketing programs
achieve “top of mind” awareness. For example, few people will search the Yellow Pages
for fast food restaurants; thus, the consumer must be able to retrieve one’s restaurant
from memory before it will be considered. For high involvement products, consumers
are more likely to use an external search. Before buying a car, for example, the consumer
may ask friends’ opinions, read reviews in Consumer Reports, consult several web sites,
and visit several dealerships. Thus, firms that make products that are selected
predominantly through external search must invest in having information available to the
consumer in need—e.g., through brochures, web sites, or news coverage.
A compensatory decision involves the consumer “trading off” good and bad attributes of
a product. For example, a car may have a low price and good gas mileage but slow
acceleration. If the price is sufficiently inexpensive and gas efficient, the consumer may
then select it over a car with better acceleration that costs more and uses more gas.
Occasionally, a decision will involve a non-compensatory strategy. For example, a
parent may reject all soft drinks that contain artificial sweeteners. Here, other good
features such as taste and low calories cannot overcome this one “non-negotiable”
attribute.
The amount of effort a consumer puts into searching depends on a number of factors such
as the market (how many competitors are there, and how great are differences between
46
brands expected to be?), product characteristics (how important is this product? How
complex is the product? How obvious are indications of quality?), consumer
characteristics (how interested is a consumer, generally, in analyzing product
characteristics and making the best possible deal?), and situational characteristics.
Two interesting issues in decisions are:
Variety seeking (where consumers seek to try new brands not because these
brands are expected to be “better” in any way, but rather because the consumer
wants a “change of pace,” and
“Impulse” purchases—unplanned buys. This represents a somewhat “fuzzy”
group. For example, a shopper may plan to buy vegetables but only decide in the
store to actually buy broccoli and corn. Alternatively, a person may buy an item
which is currently on sale, or one that he or she remembers that is needed only
once inside the store.
A number of factors involve consumer choices. In some cases, consumers will be more
motivated. For example, one may be more careful choosing a gift for an in-law than
when buying the same thing for one self. Some consumers are also more motivated to
comparison shop for the best prices, while others are more convenience oriented.
Personality impacts decisions. Some like variety more than others, and some are more
receptive to stimulation and excitement in trying new stores. Perception influences
decisions. Some people, for example, can taste the difference between generic and name
brand foods while many cannot. Selective perception occurs when a person is paying
attention only to information of interest. For example, when looking for a new car, the
consumer may pay more attention to car ads than when this is not in the horizon. Some
consumers are put off by perceived risk. Thus, many marketers offer a money back
guarantee. Consumers will tend to change their behavior through learning—e.g., they
will avoid restaurants they have found to be crowded and will settle on brands that best
meet their tastes. Consumers differ in the values they hold (e.g., some people are more
committed to recycling than others who will not want to go through the hassle). We will
consider the issue of lifestyle under segmentation.
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Families and Family Decision Making
The Family Life Cycle: Individuals and families tend to go through a "life cycle:" The
simple life cycle goes from
For purposes of this discussion, a "couple" may either be married or merely involve
living together. The breakup of a non-marital relationship involving cohabitation is
similarly considered equivalent to a divorce.
In real life, this situation is, of course, a bit more complicated. For example, many
couples undergo divorce. Then we have one of the scenarios:
Single parenthood can result either from divorce or from the death of one parent. Divorce
usually entails a significant change in the relative wealth of spouses. In some cases, the
non-custodial parent (usually the father) will not pay the required child support, and even
if he or she does, that still may not leave the custodial parent and children as well off as
they were during the marriage. On the other hand, in some cases, some non-custodial
parents will be called on to pay a large part of their income in child support. This is
particularly a problem when the non-custodial parent remarries and has additional
48
children in the second (or subsequent marriages). In any event, divorce often results in a
large demand for:
Low cost furniture and household items
Time-saving goods and services
Divorced parents frequently remarry, or become involved in other non-marital
relationships; thus, we may see
Another variation involves
Here, the single parent who assumes responsibility for one or more children may not
form a relationship with the other parent of the child.
Integrating all the possibilities discussed, we get the following depiction of the Family
Life Cycle:
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Generally, there are two main themes in the Family Life Cycle, subject to significant
exceptions:
As a person gets older, he or she tends to advance in his or her career and tends to
get greater income (exceptions: maternity leave, divorce, retirement).
Unfortunately, obligations also tend to increase with time (at least until one’s
mortgage has been paid off). Children and paying for one’s house are two of the
greatest expenses.
Note that although a single person may have a lower income than a married couple, the
single may be able to buy more discretionary items.
Family Decision Making: Individual members of families often serve different roles in
decisions that ultimately draw on shared family resources. Some individuals are
information gatherers/holders, who seek out information about products of relevance.
These individuals often have a great deal of power because they may selectively pass on
information that favors their chosen alternatives. Influencers do not ultimately have the
power decide between alternatives, but they may make their wishes known by asking for
specific products or causing embarrassing situations if their demands are not met. The
decision maker(s) have the power to determine issues such as:
Whether to buy;
Which product to buy (pick-up or passenger car?);
Which brand to buy;
Where to buy it; and
When to buy.
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PRIMARY FINDINGS AND ANALYSIS
1. Which product you are selling the most?
51
2. Which brand is popular in the market (1 to 5)?
52
3. Which one of the brand is more advanced in technology?
53
4. Which one is good value for money?
54
5. Which brand is preferred by customer?
55
6. How much percentage of the each brand you selling & which one is more in
demand?
56
7. Which scheme is preferred by customer?
57
8. Which brand is more preferable to you?
58
RECOMMENDATIONS
Finally, customers with expectations too discrepant to shape need to be abandoned.
Customer selection can be an effective means of managing customer expectations. A firm
that serves a broad range of customers with widely varying expectations cannot focus its
efforts on any particular level of service, and divergent customers make divergent
demands and thereby confuse and strain the service provider system. Both
accommodation and alteration approaches are utilized by business firms; in the academic
literature, however, the alteration approach has not received much systematic attention.
Segmentation has been the second accommodation mechanism, particularly useful when
needs, wants, and expectations increase in diversity across consumers. Businesses have
two possible avenues to managing customer expectations: (i) accommodating the
expectations, and (ii) altering (i.e., shaping) them, Of course, when either approach fails,
a third option exists, namely to abandon the customer. Target marketing and allow firms
to exploit market segments most suited to their skills and resources, and to in turn meet
market needs in a more tailored fashion. Finally, quality and satisfaction enhancement
efforts also are governed by pragmatics of technical and economic viability. Airlines
cannot entirely eliminate flight delays or overbooked flights, stores cannot entirely ensure
short checkout lines, and low price offerings cannot offer the amenities of full-service
offerings some customers inadvertently assume and come to expect. Increasingly,
marketers are questioning a runaway obsession with quality improvement to satisfy
customer expectations without regard to bottom-line impact of quality efforts. The best
known divorce of quality upgrade and bottom-line outcome is the case of Wallace
Clearly, many market offerings need enhancement (by product innovations, by segment-
specific customization, or by quality improvements) so as to meet or exceed customer
expectations. Indeed, we cannot overemphasize the first requisite for firms to attempt to
accommodate as many of customers’ expectations as economically feasible. However,
many expectations are infeasible or costly to accommodate, and instead require altering.
Expectations too discrepant from the performance reality are counter-productive for the
marketer. If they are too low (as happens with firms who acquire bad reputation), they
59
hold no appeal for the firm’s offering. If too high, they lead to customer dissatisfaction
with the firm’s performance. Therefore, both low and high expectations need to be
shaped rather than accommodated.’ Selectivity allows not only well-fitting product or
service offering, but it also permits more realistic promises to lure customers. In the
absence of selectivity, advertising regresses toward trying to promise everything to
everyone, an approach that cannot but “over promise.”
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CONCLUSION & IMPLICATIONS
A significant portion of the study of real estate deals with the consequences of consumer
decisions regarding real estate assets and services. Appraisal attempts to estimate the
value of property to consumers. Market analysis attempts to predict consumer demand for
real estate services. Investment analysis must determine the required rate of return to an
investor. Finance analyzes consumers’ mortgage choices and expected repayment pattern.
Brokerage studies the transactions between buyers and sellers. All of these elements of
real estate study stand to benefit from a better understanding of consumer behavior.
The study of consumer behavior involves trying to understand complex human beings
and the reasons they act the way they do in the marketplace. It recognizes that consumer
decisions take place inside a person who has a distinctive personality and attitudes, yet is
similar to other consumers exposed to the same external influences of culture and society.
Rather than using simplifying assumptions to ignore these complexities, real estate
educators should embrace the study of consumer behavior to better understand the
reasons behind market choices.
The relevance of consumer behavior to real estate studies is best accepted, perhaps, in the
areas of development, brokerage and leasing. These segments of the real estate discipline
have traditionally had the closest ties to the consumer. Still, real estate transactions are
often modeled as solely economic transactions.
Within appraisal, the sales comparison approach estimates the value of a property based
on what consumers are willing to pay for individual components of the property. The
study of consumer behavior examines which people value what components and why
preferences change over time. Buyer attributes can be explicitly considered in appraisal
to determine properties considered as having the same utility and amenities (Ratcliff,
1965, 1972).
Attitudes, lifestyle and tastes affect consumer preferences for space. Market analysts
should not rely exclusively on census-based economic and demographic data from which
they infer information about consumers (Rabianski, 1995). Incorporating information
about consumer attitudes, preferences and perceptions into economic models of housing
61
demand is critical to any reduction of the large margin of unexplained variance in
housing consumption behavior (Megbolugbe, Marks and Schwartz, 1991).
While this article serves as an introduction to consumer behavior applications to real
estate study with an emphasis on residential real estate and homebuyers, the concepts are
equally valuable to the study of other types of real estate and other decisionmaking
situations. For example, the value of a particular property to an individual
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COPY OF THE QUESTIONNAIRE
1. Which product you are selling the most?
Branded
Others
2. Which brand is popular in the market (1 to 5)?
Sony
Samsung
LG
Videocon
Others
Intex
Iball
3. Which one of the brand is more advanced in technology?
Sony
Samsung
LG
Videocon
Others
Intex
Iball
65
4. Which one is good value for money?
Sony
Samsung
LG
Videocon
Others
Intex
Iball
5. Which brand is preferred by customer?
Sony
Samsung
LG
Videocon
Others
Intex
Iball
6. How much percentage of the each brand you selling & which one is more in
demand?
Sony
Samsung
66
LG
Videocon
Others
Intex
Iball
7. Which scheme is preferred by customer?
EMI
Extended warranty
Budled offer
8. Which brand is more preferable to you?
Sony
Samsung
LG
Videocon
Others
67
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