The Impact of Branding on Customer Buying Behavior in Tobacco Industry in Azerbaijan - Coursework Example

 The Impact of Branding on Customer Buying Behavior in Tobacco Industry in Azerbaijan: The Case of “British American Tobacco” 2.1 Introduction Azerbaijan has reported sales in tobacco courtesy of British American Tobacco. There have been increased sales of cigarettes from British American Tobacco especially with the introduction of a number of brands with ultra-lower and slimmer cigarettes. However, despite the rising levels of sales in the cigarettes it is reported that many cigarette smokers are becoming more aware of health implications related to cigarette smoking. This has affected consumer behavior and many cigarette smokers are turning towards low and mid-tar variants in order to avoid health implications. British American Tobacco has on the other hand improved its marketing strategy especially in product branding to enhance their sales in Azerbaijan. This paper is going to discuss in details how branding continues to affect customers' behavior. This paper further analyzes models and frameworks to discuss product branding and its effect on consumer behavior. In addition to this, the paper highlights on various definitions of branding. It will further analyze brand equity in the second phase while including various literature reviews to enhance a good understanding of how consumer behavior affects branding. This paper will also discuss the case of Azerbaijan and relate to the concepts discussed above in relation to effect of branding on tobacco products and their behavior. 2.2 Understanding the Concept of branding American Marketing Association, defines branding as the design, sign, name or symbol meant to identify a good, product, and services and distinguish from one seller to another (Wood, 2000). According to this definition, branding is not just the concept of marketing your product and making it known but it is the concept of differentiating a product or a service from one seller to another. According to the American marketing Association, a good band must be able to deliver the intended message clearly in addition to confirming the credibility of the product or service (Mudie, 1999.). A good brand should also be able to connect your target prospects emotionally and motivate the buyer in addition to concreting customer loyalty (Weber, 2009). Since time in memorial, brand has been seen as a part of the product to cause fashion. With this in mind, communication strategy towards the brand, has been working on exposing brand image of a certain product. According to (Aaker & Joachimsthaler, 2000), the traditional way of branding was only concerned with building the brand image, which according to them was only leading to short-term results. According to (Kapferer, 1997), a brand is supposed to be disclosing hidden qualities of the product or the service that people cannot come into contact or see. According to (Davis Scott, 2002), the emotional nature appealing to emotional nature of the customers, as they must feel that their money is giving them a positive feedback. In this relation, Gambler suggests that branding must have something to do with the customer’s perceptions and their minds (Baker, 2003). Summarizes his argument in the following way; while branding it is important to consider: The first idea that a customer has regarding a product is based on branding The concept of branding should be dependent on the visitor's perception about the destination Cultivating good and mission statements are important while creating a brand name If the branding name satisfies the consumer, he/she remains a loyal customer and consumer (Hong-Bumm, 2003) describes branding as a promise. In this context, Hong Bumm suggests that branding is creating a promise to satisfy the consumers in terms of quality and satisfaction. Another interesting definition about branding is suggested by (Balmer, 2003) when they suggested that branding involves taking something that is common to the eyes of the consumer and making it more meaningful and valuable. This is a true concept according to the current trends in branding of products. This is because branding has everything to do with manipulating the consumer’s perceptions and understanding of the product. According to (Kapferer, 1997), there has been a chronological event of branding ranging from simply identifying a brand or a go better acing the consumer's or the good in the consumers mind. Kapferer further argues that brands are performing economic functions in the minds of the consumers (Kapferer, 1997) brands perform the following functions; Identification- which means that the product must be clearly seen an make sense out of the offer Practicality- functions by allowing savings in terms of resources through identical purchasing and loyalty Guarantee- to be able to access the product in any place at any time Optimization-functions by ensuring that the customers is buying the best product I its category with the best performance also in its category Characterization- functions by confirming one’s own image or the image of the product or the service Continuity- functions by creating a sense of satisfaction through continuity and familiarity hence creating an intimate relationship between the product and service to the customer Hedonistic-this function by creating satisfaction linking to the product or service logo and its communication appeal to the customer Ethical- functions by linking the responsible behavior of the brand with the relationship existing within the societal norms and cultural values. In summarizing Kapferer’s view of brand, we can say that it is more in a wider image and not only monetary hence creating value. (Doyle, 2001a) suggests that managers who pursues other strategies that are not aiming at maximizing the shareholders’ value should review their policies and ensure that their branding encapsulates the following key points. The level of perception and quality in comparison to the competitors, the level of confidence of the brand and service in the market, significance of empathy and the liking of the product or the service in the market (Kapferer, 2012). 2.3 Brand Equity Different attempts have been made to define the relationship that exist between customers and different brands. Brand equity concept has been a question of intensive debate by many scholars both in the field of accounting and marketing (Krüger, 2013). For this reason, the lack of a common definition of this term has consistently led to the breakdown of communication between the customer and brands. However, accountants define brand equity as the relationship between the customer and the brand. (Feldwick, 1996) defines brand equity with the following different meanings. Brand equity refers to the measure of strength that the consumers believe a given brand. Feldwick, (1996) also defines brand equity as a description of beliefs that different customers have in a given brand. According to (Feldwick, 1996) his first definition is related to the brand value where brand definition is related to brand loyalty. His final definition is related to brand image. Marketers always use the words brand description or strength in defining brand equity (Wood, 2000). The flow chart below shows the assumed relationship between the interpretations of brand equity. Brand description Brand strength Brand value Figure 1 Besides Feldwick’s definition of brand equity, there have been other definitions developed by other scholars. For example, (Farquhar, 1989), refers brand equity as the value endowed by a given product, it can also refers to the enhancement of a brand desirability and utility (Lassar, 1995). Most of the managers consider a high branding equity as a competitive factor in the marketing of a product since communication and campaigns become easy, good trade leverage, larger margins, and reduced vulnerability to competition (Aaker, 2009). A higher brand image therefore translates to higher brand knowledge with a differential effect and large consumer response (Kim, 2003). Figure 2 2.4 Brand Awareness There are various definitions of brand awareness according to different scales. For example, Keller defines brand awareness as “ability of the consumer to confirm prior exposure to the brand when given a brand as a cue” (Kent, 1994). In other words, Keller argues that the ability of the customer to recall the product from the memory is brand awareness. According to (Aaker & Joachimsthaler, 2000) brand awareness affects the customer’s perception and taste 2.5 Brand Association On the other hand, brand associations play the roles of attaching or connecting the brand with the customer. Brand associations according to (Aaker & Joachimsthaler, 2000), affects the brand's profitability. Keller 2003, argues that brand associations are not only controlled by marketing programs but also by the direct experience the customer encounters with the products or services. In this case, the direct experiences include the word of mouth, logo, name, the place, the channel of distribution with the respective company. 2.6 Brand Loyalty Brand loyalty is how the brand is valued by the customer in his heart. Marketers use brand loyalty to strengthen the brand value in the consumer’s heart. Customer based brand equity model was introduced by (Keller K. , 1992). This model approaches the brand equity from the consumer’s perspective. This is in relation to how they view the brand as an individual or organizational. In this model, Keller argues that the power of the brand relies on what the consumers has been feeling, seeing, and hearing concerning the brand for certain duration of time. 2.7 Perceived Quality The perceived quality of the brand is likely to raise higher profit margins and better access to the way the product or the food is distributed in addition to providing broader platforms for product line extensions (Aaker, 1996). Perceived quality is therefore, how the brand is able to produce value and quality services to the consumers of the brand. Brand quality is a major positioning ground that marketers use in order to gain comparative advantages while marketing their brands since it is able to influence the perceptions and associations that the product has with the customers (Papasolomou, 2006). 2.8 Customer Buying Behavior According to (Longman, 2004) the consumer buying decision process follows six stages, which include the following; Figure 3 According to the diagram above, his first stage of decision-making process involves problem recognition or the awareness of the need. This brings up the difference between what the consumer needs and the actual condition one is positioned as per that time. The second state of the buying process involves the information search. The consumer will search both internal and external information concerning the brand (Thomas C. O'Guinn, 2011). This will include consulting the brain internally and asking friends or secondary sources regarding the brand as the external information search. The third stage will involve the consumer evaluating all the possible available alternatives after conducting both internal and external research. If the consumer is not satisfied, he/she is likely to go back to the search phrase to look for alternatives again. The fourth stage involves the purchase decision and this is usually influenced by the product, the price, methods of purchasing, distance, the store and the packaging of the product or service. The fifth stage is the purchasing phase, which may be influenced by people near the buyer, and this may not be in accordance made in the above selected alternatives. The final stage of the purchasing process involves the post evaluation stage where the consumer analyzes the levels of satisfaction and dissatisfaction. (Longman, 2004) describes this stage as a cognitive dissonance stage where the consumer may build brand loyalty upon been satisfied with the product or reject the product of cases of dissatisfaction arises. There are four types of consumer buying behavior and they include the following; Routine response/programming behavior- this behavior is involved with the process of purchasing low cost items and this does not need much effort hence little research is conducted by the buyer. The purchase process is almost automatic and examples include buying soft drinks, snacks etc. Limited decision-making-this process involves the consumer purchasing goods occasionally. With this type of buying, the consumer conducts moderate amount of research concerning the good usually if it is built and unfamiliar product in a familiar category. Extensive decision making/complex high involvement- this type of buyers includes buyers who are purchasing high valued products or expensive products. The types of goods bought are of highly psychological and economic risk. The consumer is therefore involved in extensive research in order to make a good decision. Examples of the goods include homes, cars, education etc. Impulse buying- this type of buying behavior does not have any conscious planning and the consumers are usually under influence while making their buying decision in this category. 2.9 Factors Influencing Consumer Buying Behavior The influential actors affecting the consumer buying behavior can be grouped into 3 categories namely; personal, physiological and social factors. Personal factors Personal factors influencing consumer-buying behavior include age, sex, gender, occupation, and lifestyle. In relations to gender, women are more sensitive while conducting their purchases and tend to bargain as compared to men (Colin., 1997). Males on the other hand believe in quality and occasionally link to impulse buying. The age factor influences the consumer buying patterns (Kacen, 2002). For example, teenagers are mostly engaged in buying products lavishly with no considerations of the quality. However, older people buy goods and services in relation to satisfying basic needs first (Yoo, 2001). The occupation that one holds in the society dictates the social class and strata that one holds in the society. People with better occupations spend higher as compared to those with lower occupations. Lifestyles have a huge influence on how people purchase their goods and services (Berry, 2002). Those people with higher incomes and good occupations will live flashy lifestyles hence spend more as compared to their counterparts who earn less. Social Factors Consumer behaviors may be influenced by some social factors like the role an individual plays in a family, social status, family and culture (Koklic, 2009). Reference groups are people that one identifies with. They place a significant role in controlling ones values, attitudes and behavior. Similarly, they play a major role in influencing how one conducts his/her purchases (Kim, 2011). As already mentioned above, social class is divided into middle, lower, and upper class. The social differences in the society determines how people spend their money hence consequently determines a consumer purchasing behavior (Yurchisin, 2004). Different consumers belong to different cultures. Culture shapes the beliefs and norms that people follow in the society. In some cultures, it is not acceptable to purchase certain goods because of believes (Rawwas, 2001). For example, Muslims do not eat pig products; hence do not purchase any pig product. The role one plays in the family has a big way of influencing how one spends his/her money (Nørgaard, 2007). If you are the breadwinner in the family, it is expected that you provide almost everything in the family (Williams, 1999.). This means that your purchases will be linked to satisfying basic needs before engaging in other secondary needs. Opinion leader’s influences people’s purchasing power by their ability to convince and direct people (Blythe, 2008). This is because of the power bestowed upon him in the society. For this reason, they may influence people’s purchasing behavior. Psychological factors Psychological factors include factors such as motives, attitudes, perception, ability and knowledge, and one’s personality (Mooradian, 2006). Consumer’s poses different personalities ranging from confidence, aggression, friendliness etc. the differences in uniqueness influence one’s purchasing behavior (Ajzen, 2005). Due to variance in terms of knowledge and education, consumers develop both negative and positive attitudes towards good and services due to their tangible and intangible nature (Victoria Wells, 2012). Knowledge also influences consumer experience with a certain product or services and this influences their purchasing ability. 2.10 Customer Buying Behavior Driven by Brand Influence BAT Azerbaijan Customers buying behavior is the decision making process that people undergo while purchasing goods or products. In order to understand customers buying behavior, it is important to understand why the customer is purchasing the product or the service, what are the influencing factors, and the current changing societal factors (Mühlbacher, 2006). For this reason, firms are under obligation of ensuring that they study the customer’s buying behavior since buyers’ reactions towards a product or a service has a big impact on the success of the firm (Emiliani, 2000 ). Studying consumer behavior is also necessary since it helps in the marketing mix, which involves the product, place, promotion, and the price of the brand. Studying consumer buying behaviors are important since firms use them in strategizing and planning their marketing trends (Strizhakova, 2008). Tobacco branding has been playing a major role in influencing how people in Azerbaijan engage in smoking tobacco products from BAT. However, many smokers in the country are increasingly getting knowledgeable information regarding the risk factors involving tobacco smoking (Steptoe, 2002). Due to this, British American Tobacco has improved their brands by lowering the amount of tar in their cigarettes in order to appeal to customers (Euromonitor International, 2012). The company has engaged in producing branded of ultra-low tar and slimmer products, which has helped in stimulating growth. Some of the newly launched brands include Yava export and various brands from Kent Nanotek 2.0 all products of British American Tobacco. In 2011, the unit price for both exported and imported tobacco products increased by 17% due to the rising cost of imports (Frankel, 2012). It is also note worth noting that BAT has been experiencing more pressure in producing best quality cigarettes with low tar. This is because locally produced cigarettes like Shirvan are squeezing themselves in the market to win more customers. For this reason, BAT has increased its branding by opening newsagent kiosks in a number of stylish manners with their brands painted all over in order to increase sale. The company is aiming at bringing the product much closer to the consumers rather than them queuing in the supermarkets to buy cigarettes (Ang, 2000). 2011 annual data reveals increased sales of BAT products in this country due to penetration of slim and supers slim products which has low tar content. The tobacco-pricing segment also played a role in influencing BAT sale is Azerbaijan. There was a big difference in price between the locally produced products and imported products by such as Yava by BAT (Davenport-Hines, 2003). Lack of premium brands and prices for local tobacco cigarettes underpinned the local products hence giving foreign products a superior chance. This is in line with their quality (slim and super slim). Locally based tobacco products contain high tar and their prices are lower (Miller, 2005.). Researchers project a sharp decline of this product especially because of the increasing health awareness with respect to tobacco smoking. Despite the enormous benefits that BAT has received regarding tobacco sales, there was a shocking revelation in June 2013 when the Azerbaijan parliament decided to pass a law banning all advertisements of tobacco, tobacco products, and related accessories (International Business Publications, 2012). Similar warning laws also affected the customers purchase behavior regarding tobacco products when the Azerbaijan parliament passed a law in August 2012 allowing all cigarettes to be packed in the same way. According to social policy committee, Chairperson Milli Majilis this law is intended to fight smoking (News AZ, 2012). Currently in Azerbaijan, all tobacco products are packed in the same packages. Since 2011, water pipes have increasingly gained popularity in Azerbaijan. People of high income smoke classic pipes in private places especially due to ban on tobacco smoking in the country. Since these products are smoked in private places, their sales have not been affected (Chaloupka, 200). BAT has also been keen to change the flavor of these types of tobacco. Older people mainly consume non-flavored Tumbeki while younger people prefer flavored Galyan. Bibliography Aaker & Joachimsthaler, 2000. Brand Leadership. London : Free Press. Aaker, D., 1996. Building Strong Brands. 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Compulsive Buying Behavior and Its Relationship to Perceived Social Status Associated with Buying, Materialism, Self‐Esteem, and Apparel‐Product Involvement.. Family and Consumer Sciences Research Journal, 32(3), pp. 291-314. Read More