Consumer Demand and Advertising Strategy - Case Study Example

The role of advertising in consumer behavior a case study of Samsung smartphones

Background

According to Katke (2007), advertising has the most impact on the minds of the viewers and realizes a lot of exposure for brand. Advertising is a component of the promotional mix decided upon by a business to achieve desired marketing objectives and meet revenue and profitability goals. Samsung has achieved tremendous success in the global arena having achieved the highest market share of smartphones and maintaining the huge market share for the last few years as shown in the table below.

Market share of smartphone companies

The success of Samsung in the global marketplace offers a good case for the study of the role of advertising in consumer behavior. The choice of the research topic is based on the ever increasing costs of advertising for companies, and there is a need to understand if this advertisement pays off for these companies regarding an influence on consumer behavior towards the purchase of the advertised products. According to Miceli (2016), the price of super bowl ads has increased by 76% in the past decade and is getting higher. The cost of a 30-second Super Bowl ad was $ 4.4 million in 2014 and is expected to cost $ 5 million in 2016 up from $ 2.38 million in 2007 (Miceli, 2016). Samsung does massive advertising as evident by the huge advertising expenditure the company uses with the 2013 advertising expenditure at Samsung reaching $ 14 billion, which is larger than Iceland’s GDP (Gilbert, 2013). The percentage of the advertising expenditure at Samsung to its revenue is very large compared to advertising expenditure as a percentage of revenue for any company ever. Coca-cola, the most recognized brand globally by 94% of the world’s population, spent only $3 billion in advertising in 2012 depicting a huge difference between the advertising expenditure of Coca-Cola and Samsung (Gilbert, 2013). Apple is among the most valuable companies globally spent only 0.6% of its revenue translating to $ 1 billion and competes with Samsung with Apple’s revenue surpassing that of Samsung. The differences between the achievement of Samsung with highest advertising expenditure and Apple are evident. Finding put the role of advertising in consumer behavior will aid in offering a view on the payoff from companies undertaking massive advertising requiring a lot of funds and using Samsung as case study being the largest company in advertising budget.

Preliminary review of the literature

According to Niazi et al. (2012), advertising is a major platform for the promotion of products and services and communication between the company and the consumer. Advertising plays a huge role in the achievement of company objectives and driving the agenda of business especially in a hugely competitive global operating environment. To become a market leader, a company has to invest a lot in promotional services mainly advertising as is the case with Samsung a market leader in the smartphone market despite competing with one of the most valuable brands globally, Apple (Hussainy et al., 2008). Kumar and Raju (2013) define advertising “as a form of communication intended to convince an audience (viewers, readers or listeners) to purchase or take some action upon products, information, or services. The definition takes into consideration the main purpose of advertising, to convince an audience to undertake some purchase related to the products being purchased. The purchase decision-making process is a process that is undertaken under risk requiring decision-makers in this case consumers to have adequate information to iron-out the risk. The advertising by companies for marketing purposes and as a communication channel seeks to offer more information for the consumer to augment their chances of choosing the product of the company in the purchase decision process. According to Kumar and Raju (2013), advertising has a lasting impact on the viewer’s mind owing to a broader exposure. Advertising as a promotional tool serves at creating product awareness for potential consumers and augmenting information for customers improving chances of purchase decision favoring the advertised product (Kumar & Raju, 2013).

Advertising reaches the consumers through different channels, but television has proven to the most effective channel owing to mass reach. Advertising via television and other channels results in the influence of individual’s attitude, lifestyle, behavior, exposure, and eventually the culture of the country. Kumar and Raju (2013) agrees with Hussainy et al.’s (2008) assessment that for a company to achieve the status of a well-known brand, it has to invest a lot in promotional activities in the consumer market through advertisements. This is because of the aim of advertising is to reach prospective customers and make an influence on their awareness, buying behavior, and attitudes augmenting chances of customers choosing a given product or brand over others while making purchase decisions. The provision of information and persuasion of a customer to make a given purchase decision via advertising could also result in consumer brand preference and develop brand loyalty for a given company.

Advertising is part of a company’s marketing mix, and its success depends on the consideration of the customer as the center of the marketing process. The success of marketing rests with the satisfaction of the consumer, and there is a need to understand consumer behavior in a means to explain the consumer decision-making process. Consumer behavior takes into consideration the different aspects of consumer decision-making process with emphasis on what the consumer buys and reasons behind the purchase, how, where, and under what circumstances the purchase is being made. According to Trehan and Trehan (2010), consumer behavior affects the whole buying process and involves the readiness of the consumer on spending the money; decide what to be bought owing to limited resources and unlimited wants and then making a decision on where to buy and the brand to purchase. The success of an advertising program in influencing consumer behavior has to consider the different aspects of consumer behavior and use techniques aimed at promoting the ranking of the brand or product in the consumers mind to feature and be chosen in the purchase decision-making process.

There are different aspects of advertising that achieve the intended aim of affecting consumer behavior. The message in the advertisement has to be persuasive, creative and informative to attract the attention of the audience and is an important aspect of advertising (Khan, 2007). Khan (2007) also states the importance of control in advertising to ensure the advertising is effective and purposive. The message in an advertisement also has to be identifiable where the receivers and the consumers can recognize the message. The target group for an advertisement is also an important consideration to play a role in consumer behavior with the advertisement framed in consideration of the target group. The success of the advertisement in influencing the consumer behavior has to meet the different aspects considered with emphasis on meeting the different needs and consumer tastes to succeed in influencing purchase decisions.

The role of advertising in consumer behavior is also affected by the medium of advertising. Technological advancement has allowed advertisers to utilize the internet in achieving advertising objectives of market and revenue increase. Internet advertising affords companies benefits including two-way communication between advertiser and audience, relatively low cost, easy improvement and easy to update, and universal access (Dashti, 2009 and Wong, 2010). Internet marketing is also an important channel for advertisers because it offers a low-cost platform to communicate with a large audience and convince them on brand and product choices influencing consumer behavior (Karimi et al., 2013). According to Dinu and Dinu (2012), online advertising influences consumer purchase decisions by increasing the desire to buy.

Research question and objectives

This research aims at answering the question: What role does advertising play in influencing consumer behavior?

The research question will be answered using different data collection and analysis methods with the view of determining what role advertising plays in consumer behavior. The research will aid in meeting the needs for an understanding of the impact of advertising on the consumer decision process giving companies a reason for the continued spending on consumer-targeted advertising. The role of advertising in improving the chances of consumers making purchase decisions regarding brands and products purchased will form the focus of the research. The different aspects of the consumer decision-making process including consumer perception and awareness of products and services will aid in explaining the role of advertising in consumer behavior as outlined by the research objectives stated below.

The research objectives that the research will meet are:

To identify the role of advertising on consumer behavior

To determine the role of advertising in developing consumer perception

To determine the role of consumer awareness and perception on their purchase behavior

Methodology and research methods

An inductive approach was chosen for the achievement of the research objectives with attention to the views of the respondents in the data collected allowing the research to develop a pattern of meaning. The research involves a descriptive research design of cross-sectional type owing to the collection of data from a cross-section of the study population. A survey allows for the collection of descriptions of the study population with a concern for the relationships between variables in this case advertising and consumer behavior. Survey research design will be used in the research to aid in the collection of data from a facet of the customers and employees of Samsung allowing for the understanding of the role of advertising in consumer behavior. Andres (2012) defines survey research as the collection of data from a part of the population which is a group of elements. Data collection will involve the sending of questionnaires to a section of employees and customers of Samsung Inc. to allow for the collection of representative and all-round information. According to Kombo and Tromp (2006), data collection in surveys entails asking structured and predefined questions from a section of the population. The choice of the research design was based on the ability to collect data rapidly, offers a clear understanding of the sample, and makes use of limited costs for the research data collection process (Vito et al., 2008).

Kombo and Tromp (2006) define sampling design as the process that allows for the selection of several individuals/items from a population ensuring the selected group of elements has representative characteristics found in the entire group. Participants in the consumer decision-making process and advertising efforts at Samsung are the populations of the study with 200 employees and customers of Samsung chosen as the sample for inclusion in the study. The first-hand understanding of the advertising role in consumer behavior by employees and customers of Samsung form the main reason for the choice of the population. The different aspects of the decision-making process and advertising impact are also understood by the population that forms the different sides of the process. Employees at Samsung are involved in the development and delivery of advertising content while consumers are the audience of the advertisement. It is the researcher’s belief that the sample of 100 employees and 100 customers of Samsung will be adequate to allow the realization of information that will be adequate to understand the role of advertisement in consumer behavior. The selection of the sample will make use of probability sampling to achieve a representative unbiased sample from a list of employees and customers of Samsung Inc. and include their views in the research to achieve the set objectives (Chambliss and Russell, 2003). The researcher will follow the guidelines from Barlett et al. (2001) on systematic sampling where the population is arranged in an ordered pattern and then starting from random point selection of the elements is done at regular intervals. In this study, every fifth customer/employee from an ordered list will be selected for inclusion in the required sample of 100 employees and 100 customers is achieved. The researcher also hopes that a response rate of above 70% will be achieved in the research to allow for many responses included in the research and significantly increase the chances of the views of the employees and customers of Samsung Inc. being represented adequately in the research. A high response rate will allow the research to meet guidelines on achieving high response for research effectiveness in achieving the set objectives.

Data collection and instrumentation

Document analysis and questionnaires will form the main data collection tools for use in the research. The data collection methods were decided upon based on the qualitative nature of the study, the kind of data to be collected, and the time allocated for the study. The opinions, views, and beliefs of the research respondents will form the main data to be collected and can be adequately collected using an open-ended questionnaire. Document analysis will allow for the incorporation of other data and information that will not be collected from the respondents and are important for understanding the role of advertisement in consumer behavior. The effect is a balance between the quantity and quality of the data collected in the research augmenting the chances of the research effectively meeting the research objectives.

Data analysis

The research will make use of descriptive data analysis owing to the qualitative nature of the study. The researcher will use pie charts, bar graphs, tables, and description of the results in the analysis section. Averages and percentages will form the other analysis mechanism for making an understanding of the data achieved and aiding in the formation of conclusions and development of proceeding sections of the report.

Limitations

The main limitation is the sample which was reached upon considering the time available, resources, and the importance of conducting a reliable and quality study. The sample may not be adequate to reach representative conclusions of all consumers globally.

The procedure for use in conducting the research is clearly stated allowing for the replicability of the study. It is the researcher’s hope that the sample will be representative allowing for the generalizability of the results to the population. The reliability of the research will be achieved by having different questionnaires for customers and customers to check on consistency in the answers provide by the two groups. Using different questionnaires in collecting data from customers and employees of Samsung Inc. will offer a mechanism to ensure the data collected seeks to establish a role of advertisement in consumer behavior. This will allow achievement of validity. Using random probability sampling in selecting the sample will also allow the achievement of high research validity. The reliability of the study will be achieved by conducting and presenting the research in a credible and concise manner.

Data Gathering Activity

Details of Sample

Method of Data Analysis

Which Research Objective This Data Informs.

Questionnaire

200

Descriptive analysis

To identify the role of advertising on consumer behavior

To determine the role of consumer awareness and perception on their purchase behavior

Document analysis

N/A

Descriptive analysis

To determine the role of advertising in developing consumer perception

Ethical considerations

The research will be conducted following the CU Ethical Approval Process to conform to ethical requirements for research. Other ethical considerations include anonymity of the respondents with the identity of the participants to be kept a secret in the course of the research, and they will be informed of this before consent to participate. The research will use pseudonyms to ensure anonymous participation in the research.

Privacy and confidentiality: information concerning the participants and personal information will not be revealed to third parties and will only be used for the study and not to meet other ends outside the research. The participants will be informed of intentions to ensure privacy and confidentiality in the course of their participation in the research.

Informed consent: the respondents will be offered information on the importance of the research and other aspects of the research to allow them to make informed choices when deciding to participate in the research.

Planning and special resources required

Time

One week

One week

Two weeks

Two weeks

One week

Two weeks

One Week

Two days

One Day

Planning

Questionnaire Development and Mailing

Document Analysis

Receiving responses

Data entry

Data Analysis

Writing the report

Proof reading

Submission

A problem that could be faced is responses taking more than two weeks before they are sent back affecting the schedule of the research.