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Part One. Perception and Purchasing Behavior

In the mini case study, Barbara’s decision to
purchase a wine for her boss was influenced by the
distinctive gold lettering on a rich burgundy
background, the slim and sophisticated “feel” of the bottle and its French
label. She also bought the white wine because she associated it with elegant
dinners. Moreover, Barbara evaluated the quality of the wine based on its
expensive price. Clearly, Barbara, not a wine drinker, is affected by her
perception in purchasing wine to impress her boss.

This decision process is influenced by the information available to the consumer
and the way in which the consumer processes that information. The decision
process is also influenced by the consumer's beliefs, attitudes, and intentions
as well as many other individual characteristics. Two stages in the decision
process are particularly relevant to this study: search, that is whether the
consumer seeks label information when selecting products and alternative
evaluation, that is, whether or not the consumer uses label information in
considering product alternatives.

Whether consumers will search for and use
label information will be influenced by both characteristics of the product and
of the buyer. Product characteristics include the extent to which the product's
probable performance can be assessed by visual inspection and its complexity,
that is, the number of decisions the consumer is required to make about it.
Consumer characteristics include experience with purchasing the product, and the
kinds of criteria the consumer uses in judging the product. The evaluative
criteria are shaped by the consumer's beliefs, attitudes, and perception of risk
in the purchase.

Research on sensation and perception,
attention, categorization, inference making, information search, memory,
attitude and behavior, attitude formation and formation, conditioning and
satisfaction have been undertaken to understand consumer behavior (Jacobi, Johar
& Motrin, 1998). In the area of sensation and perception and attention, most
works are confined primarily to visual or auditory processes. Barbara’s
attention may have affected her decision-making process. Attention refers to the
momentary focusing of processing capacity on a particular stimulus. Among the
studies on this area include those of Russo and Leclerc (1994) who examined
attention to packages on store shelves, as measured by eye fixations. In
Barbara’s case, her gaze directly falls on a group of bottles displayed at eye
level. These bottles immediately caught her attention.

Barbara’s attitude toward
white wine further validates her choice of wine. According to the most
frequently used definition offered by Allport (1935), attitudes are a learned
predisposition to respond to an object or class of objects in a consistently
favourable or unfavourable way. Although an attitude is a complex construct, in
simple terms it represents the kind of things people like or dislike (Allport,
1935). For example, Barbara’s negative attitude toward sweet wines is due to her
experience in college when she when drinking too much sweet wine made her sick.
As stated by Cobanoglu, Ekinci & Park, 2001, attitudes towards purchase
behaviour are believed to be shaped by many factors such as direct experience
with the product, information acquired from others, exposure to mass media etc.

Another factor
that affects Barbara’s decision is her memory. Research on memory suggested that
memory plays an important role in consumer decision processes. Specifically,
research on memory and advertising states that consumer memory remained steady
or improved as number of ads increased, although it is generally thought that
advertising clutter reduces recall Brown and Rothschild (1993). Moreover, Singh
et al. (1994) found that it is better for ads to have been spaced with a
significant time lag when memory is measured after a long delay.

The name of the
wine label which is French and the elegance of its form suggest that for
Barbara, the brand that she is about to purchase is of high quality. According
to Tibetts (2003), brand equity reflects the good things and positive
associations that accrue because the brand has delivered on its stated promises.
Brand valuation, on the other hand, attempts to attach a measurable value to
that asset. Brands that have created equity command a price premium in the
marketplace. Most equity research tries to assess the strength of a brand
through price premium or market share. Moreover, strong brands build emotional
attachments; they attempt to develop a relationship.

The ways in which consumers retrieve or compute personal brand ratings play an
important role in the assessment. A certain product conjures up certain
associations that may not only be about the product. Such associations can be
about the merchandise, the setting, or the social ambience (Tibetts, 2003). The
strength of the brand of the white wine relies on the associations built in
Barbara’s mind.

Researchers on
consumer behavior are increasingly turning to the study of the use of metaphors.
In the French label, Barbara sees the distinct gold lettering. She thinks that
the color gold represents wealth or anything that is associated with
expensiveness. She immediately purchases this because she thinks that this will
impress her boss. In line with Barbara’s purchasing behavior, Jacobi, Johar and
Motrin (1998) state that the interest in metaphors and analogies is likely to
increase as advertisers of ever more technological products seek ways to
communicate product features in an easily understandable manner. The advertisers
of the wine in Barbara’s decision making are successful in this matter. Barbara
is under time pressure so part of her decision to purchase lies in the
effective, simple and easy communication (shape and form of the bottle, color of
the lettering, price, position of the bottle, and its label).

For more than four decades,
advertising and marketing researchers have been intrigued by the symbolic
properties of products (e.g., Umiker-Sebeok 1987). During that period, it has
become increasingly clear that the consumption of any product is richly
embroidered by the symbolism of the practices, rituals, and texts surrounding it
and, further, that the meanings associated with products are crucial to
understanding their exchange value in the marketplace (Hirschman, Scott and
Wells, 1998).

One of the dominant areas of consumer theory rests on the notion of the consumer
as `chooser' (Gabriel and Lang, 1995: 26). Those objects with which one chooses
to surround oneself in the home setting are more often than not products of
careful choice and selection and may also be freely discarded (Csikszentmihalyi
and Rochberg-Halton, 1981: 17). Time plays a significant role in purchasing
behavior. In Barbara’s case, she could have chosen a wine more practically only
if she was not in a hurry.

Part Two. Consumer Loyalty and Satisfaction

Coca-Cola Company

According to Coca-Cola’s Annual
Report (2002), the Coca-Cola Company in 2002 achieved worldwide unit case volume
growth of five percent; the growth rate was 4.5 percent. Cash from operations
was a record $4.7 billion, a 15 percent increase over 2001. Reported earnings
per share were $1.23 after a reduction of $0.54 resulting from accounting
changes and several other items, including $0.11 per share impact from stock
option expense.

Supported by strategic investment
and innovation, brand Coca-Cola products achieved 3 percent volume growth in
North America, led by the introduction of Vanilla Coke and the continued rollout
of diet Coke with lemon. Vanilla Coke brought in eight million new consumers who
were not drinking

Coca-Cola; in addition,
diet Coke with lemon attracted over three million consumers to diet Coke.

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Such a pace of
innovation around the Coca-Cola brand is unprecedented. It was nearly 100 years
before the company launched the first extension of Coca-Cola—diet Coke, in 1982.
It took another ten years to build diet Coke into a worldwide brand. It’s now
the number-three soft drink in the world, and number-two in some markets.

Responsibility for the world’s most beloved and valuable brand requires extreme
care in how, when, and why we extend it. The company does not risk consumer
loyalty to the brand or seek an artificial bump in volume by spinning out
product after product to chase the latest fad. By staying close to the brand’s
identity, Coca-Cola has created new products such as Vanilla Coke,
diet Vanilla Coke, and diet Coke with lemon. These products have lasting appeal
that are expected to generate equally lasting value for share owners. Further,
the quality and reliability of Coca-Cola products, the unparalleled brand appeal
and distribution, combined with valuable consumer insights and strong customer
relationships have generated sustained profitability for Coca-Cola, Fanta,
Sprite and our other carbonated soft drinks for many years.

Over the
past three years, Coca-Cola has grown internally and through strategic
acquisitions to become the world’s largest producer of ready-to-drink juices and
juice drinks. Outside the United States, its share of sales for the sports-drink
category is one of the largest in the world. Across 70 countries, POWERADE
grew 25 percent and increased its share of the category. Moreover,
the company has been
successful in strategically building a water business that enhances our
offerings to our customers. Together with Dasani, which grew volume 40 percent
last year as the number-two bottled water brand, we have become one of the
leading players in the water category in North America, both in terms of share
of sales and dollar value.

Coca-Cola is a classic example of a brand with long-term consumer
loyalty. Coca-Cola has revolutionized the way people think about soda. Through
proper brand building and the introduction of related offerings such as Diet
Coke, Fanta, and Sprite, the Coca-Cola Company made worldwide impact. It
catapulted beverage sales to more than one billion servings per day. What
separate Coke from other brands are its name, identity, and loyal following--all
of which are marketing creations. The company's comprehensive business strategy
revolves around the fact that the Coca-Cola brand is the core, and that consumer
demand drives all.

Consumer Loyalty

A better appreciation of the underlying forces that influence the
loyalty of customers--particularly their attitudes and changing needs—helps the
Coca-Cola Company develop targeted efforts to correct any downward migration in
their spending habits long before it leads them to defect. Such an appreciation
also helps the company improve its current efforts to encourage other customers
to spend more.

Differentiating and measuring degrees of loyalty is an evolving
craft. Companies first tried to measure and manage their customers' satisfaction
in the early 1970s, on the theory that increasing it would help them prosper. In
the 1980s, they began to measure their customers' rates of defection and to
investigate its root causes. By measuring the value of the customers themselves,
some companies also identified high-value ones and became better at preventing
them from defecting. These ideas are still important, but they are not enough.
Managing migration--from the satisfied customers who spend more to the downward
migrators who spend less--is a crucial next step.

Service delivery is an interactive and dynamic process, that from
the consumer's point of view is much more than a passive exchange of money for a
particular service. Characteristics of services often require customers to be
actively involved in helping to create the service value -- either by serving
themselves or by cooperating and often working collaboratively with service
personnel (Claycomb, Inks & Lengnick-Hall 2001). In high-contact systems
customers can influence the time of demand, the exact nature of the service, and
the quality of service (Lovelock & Young 1979). If consumers somehow become
better customers -- that is, more knowledgeable, participative, or productive --
the quality of the service experience will likely be enhanced for the customer
and the organization (Bowers, Martin & Luker 1990).

Organizations that capitalize on customers' active participation in
organizational activities can gain competitive advantage through greater sales
volume, enhanced operating efficiencies, positive word-of-mouth publicity,
reduced marketing expenses, and enhanced customer loyalty (Reichheld & Sasser,
1990). Customers who actively participate in organizational activities can
directly increase their personal satisfaction and perceptions of service quality
(Bowers, Martin & Luker 1990).

Brand and Consumer Loyalty

More businesses are considering the importance of building and
managing brand names because of the intense competition within the globalized
economy, emerging trends in marketing, brand extension, acquisitions, and many
other activities that cause confusions in the business (Laforet & Saunders,
1999). Consequently according to Balmer and Wilson (1998), researchers in
marketing, public relations, and corporate communications are concerned with
corporate identity management and the benefits branding bring to the business.
Moreover, building brand names means announcing the identity of a company
(Asher, 1997). The focus in building brand names therefore is to develop an
intuitive and memorable image of the firm, services or products by presenting
what is unique and special about the company.

When
it comes to the buying preferences of today's consumers, a major new business
study reveals that what keeps Americans buying a particular brand has less to do
with pricing and merchandising than with how well the company treats its
customers (Kara, 1998). Conducted for SOCAP by The Center for Client Retention,
the study finds a direct correlation between buying intent and a customer's
experience with a company's consumer affairs department. Specifically, 90
percent of those consumers who were delighted with their experience say they
will continue to buy the product/service while only 37 percent of the customers
who were dissatisfied with their experience say they will remain brand loyal.

Underscoring the importance of these "relationship" factors, the study charts
the influence of these attributes on brand loyalty and finds a direct
association. Specifically, 88 Percent of respondents who gave "ability to
demonstrate concern and interest" the highest ranking said they would be very
likely to repurchase a company's products, while only 3 percent would be very
unlikely to repurchase. The reaction to representatives who "show enthusiasm"
was the same: 88 percent would be very likely and only 3 percent very unlikely
to repurchase a company's products.

In
fact, the SOCAP study finds that when customers are satisfied with the way a
company handles their questions or complaints, they sometimes become more loyal
than customers who never experience a problem. Another way that customer service
impacts sales is through the "word of mouth" factor, whereby consumers tell
their family and friends about their positive and negative experiences with a
company. In this study, 58 percent of all respondents told others about their
experience with a consumer affairs department, with most telling three or more
people.

Consumer Satisfaction

In today’s
business world, the value and importance of customers is not something that
should be set aside by companies. Marketing plans and strategies would be
incomplete without paying much consideration to the customers. Customers will
and should always be a part of the agenda in any marketing plan of any company.
Because of the implications for profitability and growth, customer retention is
potentially one of the most powerful weapons that companies can employ in their
fight to gain a strategic advantage and survive in today's ever increasing
competitive environment (Lindenmann, 1999).

Nowadays, companies’ concern does
not only evolve around managing finances and operations. Companies have realized
the importance of managing reputational risk. Business image and reputation are
considered as intangible assets which are as equally important as tangible
assets. These assets are founded on the companies’ relations with their
customers. Integrity, transparency, and accountability are important elements in
this foundation. Hence, it is important for companies to be able to secure this
relationship by being able to keep the degree of these three elements high (Sercovich,
2003).

The companies’
commitment to further improve on their accountability, transparency, and
integrity should not be considered merely as an effort to serve Public Relations
purposes. Instead, this commitment should be regarded as an effort to maintain
the long-term sustainability of these companies. As the customers demand for
higher standards, any shortcomings on the part of the companies to deliver would
jeopardize the life of their respective company. Hence, it is really important
for companies to not only maintain and protect these intangible assets. It is
also a must that they increase these assets for future benefits (Sercovich,
2003).

The customer-company relationship is
based on a continuum wherein both “always-a-share” and “lost-for-good”
relationships occupy the two extremes of the continuum. In an “always-a-share”
relationship, transactions are arms-length and discreet. Customers are valuable
and at the same time, replaceable. On the other hand, in a “lost-for-good”
relationship, the probability that the customer will purchase again from the
same company is extremely low when the customer decides to terminate the use of
a product due to product defects or problems (Jacobs, Latham, & Lee, 1998).

The disconfirmation paradigm
has been the dominant model used in explaining
the customer’s satisfaction or dissatisfaction. There are actually 3 possible
reactions that may come from the customer. Two of them are positive reactions
while the other one is a negative one. A customer shows a positive reaction
either when the product is able to perform as what he/she has expected (zero
positive index) or the product is able to exceed its expected performance
(positive disconfirmation index). On the other hand, a negative reaction
(negative disconfirmation index) is expected when the product performs below the
expectation of the customer (Jacobs et al., 1998).

Customer satisfaction refers to the consumer’s
positive subjective evaluation of the outcomes and experiences associated with
using or consuming the product or service. Satisfaction occurs when the product
has been able to meet or exceed the conceived expectations that the customer has
(Padilla, 1996). Furthermore, customer satisfaction may also be considered as
the measure of the high degree of quality of the product (Jacobs et al.,
1998).

Consumer satisfaction may be considered as the
measure of quality of a particular product (Jacobs et al., 1998). However, it
should not be limited to the traditional concept of quality. In its traditional
concept, manufacturers view quality as inherent in the product or service. Once
a product or service has been delivered or sold, its quality is believed to have
been established (Leon & Crosby, 2003). However, Leon and Crosby (2003) argued
that a product’s quality still has some other dimensions that are under the
manufacturer’s control. These dimensions may still be modified and enhanced even
after delivery.

References

Allport, G.,
(1935). Attitudes in C.A. Murchinson, ed., A Handbook of Social Psychology.
Worcester: Clark University Press.

Annual Report 2002
(2003). New Value is Taking Shape. The Coca cola Company. Available at
[http://www2.coca-cola.com]. Accessed [12/12/03].

Balmer, M. T. J. 7 Wilson, A.
(1998). Corporate identity: there is more
to it than meets the eye. International Studies of
Management & Organization, Vol. 28.

Bowers, M. R., Martin, C. L. & Luker, A. 1990,
Trading places: Employees as customers, customers as employees. Journal of
Services Marketing, 4 (Spring), 55-69.

Brown T J, Rothschild ML. 1993. Reassessing the
impact of television advertising clutter. J. Consum. Res. 20(1): 138-46

Claycomb, C., Inks, L.W. and Lengnick-Hall, C.A.
2001, The customer as a productive resource: A pilot study and strategic
implications, Journal of Business Strategies, Vol. 18, 2001 64+

Crosby, Leon B., Devito, Raffaele, and Pearson,
Michael J. (2003). Manage your customers’ perception of quality. Review of
Business, 24, (1), 18+.

Cobanoglu, C., Ekinci, Y., & Park, J. (2003) An
Empirical Analysis of Internet Users’ Intention to Purchase Vacations Online.
Available at [www.ttra.com].
Accessed [12/12/03].

Csikszentmihalyi, M. and E. Rochberg-Halton
(1981) The Meaning of Things: Domestic Symbols and the Self. Cambridge:
Cambridge University Press.

Gabriel, Y. and T. Lang (1995) The
Unmanageable Consumer: Contemporary Consumption and its Fragmentations.
London: Sage.

Hirschman, E., Scott, L. and Wells, W. (1998) A
model of product discourse: linking consumer practice to cultural texts.
Journal of Advertising, Vol. 27.

Jacoby J. 1976. Consumer psychology: an
octennium. Annu. Rev. Psychol. 27:331-58

Jacobs, Fred A., Latham, Claire, and Lee,
Choongseop. (1998). The relationship of customer satisfaction to strategic
decisions. Journal of Managerial Issues, 10, (2), 165+.

Kara, C. (1998) New report finds how companies
treat consumers is a major driver of brand loyalty and impacts future sales.25th
annual meeting of the Society of Consumer Affairs Professionals in Business (SOCAP).

Laforet, S. & Saunders, J. (1999). Managing
brand portfolios: Why leaders do what they do.
Journal of Advertising Research, Vol. 39.

Lindenmann, Walter. (1998). Measuring
relationships is key to successful public relations. Public Relations
Quarterly, 43, (4) 18+.

Lovelock, C. H. & Young, R. F. 1979, Look to
consumers to increase productivity. Harvard Business Review, 57
(May-June), 168-178.

Padilla, Rodrigo. (1996). Review of
literature on consumer satisfaction in modern marketing. Concordia
University. Available at [http://www.pages.infinit.net]. Accessed [12/12/03].

Reichfield, F.F. 1996, The Loyalty Effect.
Boston, MA: Harvard Business Press, 1996.

Russo JE, Leclerc F. 1994. An eye-fixation
analysis of choice processes for consumer nondurables, J. Consum. Res. 21 (2):
274-90

Sercovich, Tomas. (2003). Output of the
corporate responsibility policy and practice taskforce. Business in the
Community, Ireland. [On-line]. http://www.bitc.ie/attachments/engaging.pdf.
[12/12/03].

Tibbetts, K.
(2003) What's in a Brand Name? Cox Professor
Measures the Power of Positive Association. Southern Methodist University. SMU
Research, Vol. 10. Available at [www.smu.edu]. Accessed [12/12/03].

Umiker-Sebeok, Jean,
ed. (1987), Marketing and Semiotics, New York: Mouton de Gruyter.

Part One. Perception and Purchasing
Behavior

In the mini case study, Barbara’s
decision to

purchase a wine for her
boss was influenced by the

distinctive gold lettering on a rich
burgundy

background, the slim and
sophisticated “feel” of the bottle and its French

label. She also bought
the white wine because she associated it with elegant

dinners. Moreover,
Barbara evaluated the quality of the wine based on its

expensive price. Clearly,
Barbara, not a wine drinker, is affected by her

perception in purchasing
wine to impress her boss.

This decision process is
influenced by the information available to the consumer

and the way in which the
consumer processes that information. The decision

process is also
influenced by the consumer's beliefs, attitudes, and intentions

as well as many other
individual characteristics. Two stages in the decision

process are particularly
relevant to this study: search, that is whether the

consumer seeks label
information when selecting products and alternative

evaluation, that is,
whether or not the consumer uses label information in

considering product
alternatives.

Whether consumers will search for and
use

label information will be
influenced by both characteristics of the product and

of the buyer. Product
characteristics include the extent to which the product's

probable performance can
be assessed by visual inspection and its complexity,

that is, the number of
decisions the consumer is required to make about it.

Consumer characteristics
include experience with purchasing the product, and the

kinds of criteria the
consumer uses in judging the product. The evaluative

criteria are shaped by
the consumer's beliefs, attitudes, and perception of risk

in the
purchase.

 

Research on sensation and perception,

attention,
categorization, inference making, information search, memory,

attitude and behavior,
attitude formation and formation, conditioning and

satisfaction have been
undertaken to understand consumer behavior (Jacobi, Johar

& Motrin, 1998).
In the area of sensation and perception and attention, most

works are confined
primarily to visual or auditory processes. Barbara’s

attention may have
affected her decision-making process. Attention refers to the

momentary focusing of
processing capacity on a particular stimulus. Among the

studies on this area
include those of Russo and Leclerc (1994) who examined

attention to packages on
store shelves, as measured by eye fixations. In

Barbara’s case, her gaze
directly falls on a group of bottles displayed at eye

level. These bottles
immediately caught her attention.

Barbara’s attitude
toward

white wine further
validates her choice of wine. According to the most

frequently used
definition offered by Allport (1935), attitudes are a learned

predisposition to respond
to an object or class of objects in a consistently

favourable or
unfavourable way. Although an attitude is a complex construct, in

simple terms it
represents the kind of things people like or dislike (Allport,

1935). For example,
Barbara’s negative attitude toward sweet wines is due to her

experience in college
when she when drinking too much sweet wine made her sick.

As stated by Cobanoglu,
Ekinci & Park, 2001, attitudes towards purchase

behaviour are believed to
be shaped by many factors such as direct experience

with the product,
information acquired from others, exposure to mass media etc.

Another factor

that affects Barbara’s
decision is her memory. Research on memory suggested that

memory plays an important
role in consumer decision processes. Specifically,

research on memory and
advertising states that consumer memory remained steady

or improved as number of
ads increased, although it is generally thought that

advertising clutter
reduces recall Brown and Rothschild (1993). Moreover, Singh

et al. (1994) found that
it is better for ads to have been spaced with a

significant time lag when
memory is measured after a long delay.

The name of the

wine label which is
French and the elegance of its form suggest that for

Barbara, the brand that
she is about to purchase is of high quality. According

to Tibetts (2003), brand
equity reflects the good things and positive

associations that accrue
because the brand has delivered on its stated promises.

Brand valuation, on the
other hand, attempts to attach a measurable value to

that asset. Brands that
have created equity command a price premium in the

marketplace. Most equity
research tries to assess the strength of a brand

through price premium or
market share. Moreover, strong brands build emotional

attachments; they attempt
to develop a relationship.

The ways in which consumers
retrieve or compute personal brand ratings play an

important role in the
assessment. A certain product conjures up certain

associations that may not
only be about the product. Such associations can be

about the merchandise,
the setting, or the social ambience (Tibetts, 2003). The

strength of the brand of
the white wine relies on the associations built in

Barbara’s
mind.

Researchers on

consumer behavior are
increasingly turning to the study of the use of metaphors.

In the French label,
Barbara sees the distinct gold lettering. She thinks that

the color gold represents
wealth or anything that is associated with

expensiveness. She
immediately purchases this because she thinks that this will

impress her boss. In line
with Barbara’s purchasing behavior, Jacobi, Johar and

Motrin (1998) state that
the interest in metaphors and analogies is likely to

increase as advertisers
of ever more technological products seek ways to

communicate product
features in an easily understandable manner. The advertisers

of the wine in Barbara’s
decision making are successful in this matter. Barbara

is under time pressure so
part of her decision to purchase lies in the

effective, simple and
easy communication (shape and form of the bottle, color of

the lettering, price,
position of the bottle, and its label).

For
more than four decades,

advertising and marketing
researchers have been intrigued by the symbolic

properties of products
(e.g., Umiker-Sebeok 1987). During that period, it has

become increasingly clear
that the consumption of any product is richly

embroidered by the
symbolism of the practices, rituals, and texts surrounding it

and, further, that the
meanings associated with products are crucial to

understanding their
exchange value in the marketplace (Hirschman, Scott and

Wells, 1998).

One of the dominant areas
of consumer theory rests on the notion of the consumer

as `chooser' (Gabriel and
Lang, 1995: 26). Those objects with which one chooses

to surround oneself in
the home setting are more often than not products of

careful choice and
selection and may also be freely discarded (Csikszentmihalyi

and Rochberg-Halton,
1981: 17). Time plays a significant role in purchasing

behavior. In Barbara’s
case, she could have chosen a wine more practically only

if she was not in a
hurry.

Part Two. Consumer Loyalty and
Satisfaction

Coca-Cola
Company

According to Coca-Cola’s Annual

Report (2002),
the Coca-Cola Company in 2002 achieved worldwide unit case volume

growth of
five percent; the growth rate was 4.5 percent. Cash from
operations

was a record
$4.7 billion, a 15 percent increase over 2001. Reported
earnings

per share were $1.23
after a reduction of $0.54 resulting from accounting

changes and several other
items, including $0.11 per share impact from stock

option expense.

Supported by strategic investment

and innovation, brand
Coca-Cola products achieved 3 percent volume growth in

North
America, led by the
introduction of Vanilla Coke and the continued rollout

of diet Coke
with lemon. Vanilla Coke brought in eight million new consumers who

were not
drinking

Coca-Cola; in addition,

diet Coke with
lemon attracted over three million consumers to
diet Coke.

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Such a pace of

innovation around the
Coca-Cola  brand is unprecedented. It was nearly 100 years

before the company
launched the first extension of Coca-Cola—diet Coke, in 1982.

It took another ten years
to build diet Coke into a worldwide brand. It’s now

the number-three soft
drink in the world, and number-two in some
markets.

 

Responsibility for the
world’s most beloved and valuable brand requires extreme

care in how, when, and
why we extend it. The company does not risk consumer

loyalty to the brand or
seek an artificial bump in volume by spinning out

product after product to
chase the latest fad. By staying close to the brand’s

identity, Coca-Cola has
created new products such as Vanilla Coke,

diet Vanilla Coke,
and diet Coke with lemon. These products have lasting appeal

that are expected to
generate equally lasting value for share owners. Further,

the quality and
reliability of Coca-Cola products, the unparalleled brand appeal

and distribution,
combined with valuable consumer insights and strong customer

relationships have
generated sustained profitability for Coca-Cola, Fanta,

Sprite and our other
carbonated soft drinks for many
years.

Over the

past three years,
Coca-Cola has grown internally and through strategic

acquisitions to become
the world’s largest producer of ready-to-drink juices and

juice drinks. Outside the
United States, its share of sales for the sports-drink

category is one of the
largest in the world. Across 70 countries,
POWERADE

grew 25 percent
and increased its share of the category. Moreover,

the company has been

successful in
strategically building a water business that enhances our

offerings to our
customers. Together with Dasani, which grew volume 40 percent

last year as the
number-two bottled water brand, we have become one of the

leading players in the
water category in North America, both in terms
of share

of sales and dollar
value.

 

           
Coca-Cola is a classic example of a brand with long-term consumer

loyalty. Coca-Cola has
revolutionized the way people think about soda. Through

proper brand building and
the introduction of related offerings such as Diet

Coke, Fanta, and Sprite,
the Coca-Cola Company made worldwide impact. It

catapulted beverage sales
to more than one billion servings per day. What

separate Coke from other
brands are its name, identity, and loyal following--all

of which are marketing
creations. The company's comprehensive business strategy

revolves around the fact
that the Coca-Cola brand is the core, and that consumer

demand drives
all.

 

Consumer
Loyalty

 

           
A better appreciation of the underlying forces that influence the

loyalty of customers--particularly
their attitudes and changing needs—helps the

Coca-Cola Company develop
targeted efforts to correct any downward migration in

their spending habits
long before it leads them to defect. Such an appreciation

also helps the company
improve its current efforts to encourage other customers

to spend more.

 

           
Differentiating and measuring degrees of loyalty is an evolving

craft. Companies first
tried to measure and manage their customers' satisfaction

in the early 1970s, on
the theory that increasing it would help them prosper. In

the 1980s, they began to
measure their customers' rates of defection and to

investigate its root
causes. By measuring the value of the customers themselves,

some companies also
identified high-value ones and became better at preventing

them from defecting.
These ideas are still important, but they are not enough.

Managing migration--from
the satisfied customers who spend more to the downward

migrators who spend
less--is a crucial next step.

 

           
Service delivery is an interactive and dynamic process, that from

the consumer's point of
view is much more than a passive exchange of money for a

particular service.
Characteristics of services often require customers to be

actively involved in
helping to create the service value -- either by serving

themselves or by
cooperating and often working collaboratively with service

personnel (Claycomb, Inks
& Lengnick-Hall 2001). In high-contact systems

customers can influence
the time of demand, the exact nature of the service, and

the quality of service
(Lovelock & Young 1979). If consumers somehow become

better customers -- that
is, more knowledgeable, participative, or productive --

the quality of the
service experience will likely be enhanced for the customer

and the organization
(Bowers, Martin & Luker 1990).

 

           
Organizations that capitalize on customers' active participation in

organizational activities
can gain competitive advantage through greater sales

volume, enhanced
operating efficiencies, positive word-of-mouth publicity,

reduced marketing
expenses, and enhanced customer loyalty (Reichheld & Sasser,

1990). Customers who
actively participate in organizational activities can

directly increase their
personal satisfaction and perceptions of service quality

(Bowers, Martin &
Luker 1990).

Brand and Consumer
Loyalty

 

           
More businesses are considering the importance of building and

managing brand names
because of the intense competition within the globalized

economy, emerging trends
in marketing, brand extension, acquisitions, and many

other activities that
cause confusions in the business (Laforet & Saunders,

1999). Consequently
according to Balmer and Wilson (1998), researchers in

marketing, public
relations, and corporate communications are concerned with

corporate identity
management and the benefits branding bring to the business.

Moreover, building brand
names means announcing the identity of a company

(Asher, 1997). The focus
in building brand names therefore is to develop an

intuitive and memorable
image of the firm, services or products by presenting

what is unique and
special about the company.

When

it comes to the buying
preferences of today's consumers, a major new business

study reveals that what
keeps Americans buying a particular brand has less to do

with pricing and
merchandising than with how well the company treats its

customers (Kara, 1998).
Conducted for SOCAP by The Center for Client Retention,

the study finds a direct
correlation between buying intent and a customer's

experience with a
company's consumer affairs department. Specifically, 90

percent of those
consumers who were delighted with their experience say they

will continue to buy the
product/service while only 37 percent of the customers

who were dissatisfied
with their experience say they will remain brand loyal.

Underscoring the
importance of these "relationship" factors, the study charts

the influence of these
attributes on brand loyalty and finds a direct

association.
Specifically, 88 Percent of respondents who gave "ability to

demonstrate concern and
interest" the highest ranking said they would be very

likely to repurchase a
company's products, while only 3 percent would be very

unlikely to repurchase.
The reaction to representatives who "show enthusiasm"

was the same: 88 percent
would be very likely and only 3 percent very unlikely

to repurchase a company's
products.

In

fact, the SOCAP study
finds that when customers are satisfied with the way a

company handles their
questions or complaints, they sometimes become more loyal

than customers who never
experience a problem. Another way that customer service

impacts sales is through
the "word of mouth" factor, whereby consumers tell

their family and friends
about their positive and negative experiences with a

company. In this study,
58 percent of all respondents told others about their

experience with a
consumer affairs department, with most telling three or more

people.

Consumer
Satisfaction

In today’s

business world, the value
and importance of customers is not something that

should be set aside by
companies. Marketing plans and strategies would be

incomplete without paying
much consideration to the customers. Customers will

and should always be a
part of the agenda in any marketing plan of any company.

Because of the
implications for profitability and growth, customer retention is

potentially one of the
most powerful weapons that companies can employ in their

fight to gain a strategic
advantage and survive in today's ever increasing

competitive environment
(Lindenmann, 1999).

Nowadays, companies’ concern does

not only evolve around
managing finances and operations. Companies have realized

the importance of
managing reputational risk. Business image and reputation are

considered as intangible
assets which are as equally important as tangible

assets. These assets are
founded on the companies’ relations with their

customers. Integrity,
transparency, and accountability are important elements in

this foundation. Hence,
it is important for companies to be able to secure this

relationship by being
able to keep the degree of these three elements high (Sercovich,

2003).

The companies’

commitment to further
improve on their accountability, transparency, and

integrity should not be
considered merely as an effort to serve Public Relations

purposes. Instead, this
commitment should be regarded as an effort to maintain

the long-term
sustainability of these companies. As the customers demand for

higher standards, any
shortcomings on the part of the companies to deliver would

jeopardize the life of
their respective company. Hence, it is really important

for companies to not only
maintain and protect these intangible assets. It is

also a must that they
increase these assets for future benefits (Sercovich,

2003).

The customer-company relationship is

based on a continuum
wherein both “always-a-share” and “lost-for-good”

relationships occupy the
two extremes of the continuum. In an “always-a-share”

relationship, transactions
are arms-length and discreet. Customers are valuable

and at the same time,
replaceable. On the other hand, in a “lost-for-good”

relationship, the
probability that the customer will purchase again from the

same company is extremely
low when the customer decides to terminate the use of

a product due to product
defects or problems (Jacobs, Latham, & Lee,
1998).

The disconfirmation paradigm

has been the dominant model used in
explaining

the customer’s
satisfaction or dissatisfaction. There are actually 3 possible

reactions that may come
from the customer. Two of them are positive reactions

while the other one is a
negative one. A customer shows a positive reaction

either when the product
is able to perform as what he/she has expected (zero

positive index) or the
product is able to exceed its expected performance

(positive disconfirmation
index). On the other hand, a negative reaction

(negative disconfirmation
index) is expected when the product performs below the

expectation of the
customer (Jacobs et al., 1998).

Customer satisfaction refers to the
consumer’s

positive subjective
evaluation of the outcomes and experiences associated with

using or consuming the
product or service. Satisfaction occurs when the product

has been able to meet or
exceed the conceived expectations that the customer has

(Padilla, 1996).
Furthermore, customer satisfaction may also be considered as

the measure of the high
degree of quality of the product (Jacobs et al.,

1998).

Consumer satisfaction may be considered
as the

measure of quality of a
particular product (Jacobs et al., 1998). However, it

should not be limited to
the traditional concept of quality. In its traditional

concept, manufacturers
view quality as inherent in the product or service. Once

a product or service has
been delivered or sold, its quality is believed to have

been established (w:st="on">Leon & Crosby,
2003). However, Leon and Crosby (2003) argued

that a product’s quality
still has some other dimensions that are under the

manufacturer’s control.
These dimensions may still be modified and enhanced even

after
delivery.

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Balmer, M. T. J. 7 Wilson,
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(1998).
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Hong Kong Essays

Tuesday, February 26, 2008

Allport, G.,
(1935). Attitudes in C.A. Murchinson, ed., A Handbook of Social Psychology.
Worcester: Clark University Press.

Tibbetts, K.
(2003) What's in a Brand Name? Cox Professor
Measures the Power of Positive Association. Southern Methodist University. SMU
Research, Vol. 10. Available at [www.smu.edu]. Accessed [12/12/03].

No comments:

Blog Archive

Hong Kong Essays

Tuesday, February 26, 2008

Allport, G., (1935). Attitudes in C.A. Murchinson, ed., A Handbook of Social Psychology. Worcester: Clark University Press.

Tibbetts, K. (2003) What's in a Brand Name? Cox Professor Measures the Power of Positive Association. Southern Methodist University. SMU Research, Vol. 10. Available at [www.smu.edu]. Accessed [12/12/03].

No comments:

Blog Archive

Allport, G.,
(1935). Attitudes in C.A. Murchinson, ed., A Handbook of Social Psychology.
Worcester: Clark University Press.

Tibbetts, K.
(2003) What's in a Brand Name? Cox Professor
Measures the Power of Positive Association. Southern Methodist University. SMU
Research, Vol. 10. Available at [www.smu.edu]. Accessed [12/12/03].