Close Loop Supply Chain

Most developed countries have environmental regulations prescribing the responsibilities of manufacturers, generators and users of chemicals to properly dispose of chemical wastes.

Regulatory drivers exist in Europe, the US and Japan, dictating the prevention of waste and to promote the recovery of waste for reuse, remanufacturing or recycling of materials including electronic equipment and batteries, chemical products, glass, paper, plastics, and heavy metals. Europe in particular is leading the way in its drive to reduce automotive end-of-life, electronic and packaging waste in its landfills by requiring manufacturers and distributors to ‘‘take-back’’ the environmentally hazardous products and packaging for recycling or reuse. This producer responsibility is driving companies to put plans in place for product returns, recycling and for redesigning their products and packaging to meet these requirements in order to participate in the European marketplace.

Additionally, as third world countries develop and consumption increases, raw materials will be in short supply (steel, aluminum, copper and oil). New commodity markets will develop to extract these commodities from end-of service life products.

There has been a long history of steel, aluminum and copper recycling in the US and around the world. Recycling of these materials is market driven due to their value. Global prices of steel have risen sharply in the past several years as China’s economic growth has surged. Iron ore prices have raised significantly in past years (19% in 2004, 71% in 2005 and 19% in 2006, respectively) and the availability of steel scrap is in short supply. Steel is the world’s most recycled material and it is cheaper to recycle steel scrap

than to mine virgin ore. Approximately half of the steel produced is recycled through the steel-making process.

The automotive and appliance industry substantially drive and rely on recycled steel. These two segments report nearly 100% recycling rates. Steel can be recycled and reused over and over again

When producers are made responsible for the extended end-of-life phase of products, they have more motivation to facilitate other members of the supply chain, the users, and the stakeholders of end-of-life processing. They have the opportunity to make the process more effective and cost efficient. The regulated/socialist waste management approach to paying for recycling is very different from the recycling for profit point of view.

Closed-loop supply chains and competition

Remanufacturing also forms the foundation for closed loop supply chains. In some industries, experience has shown that if there is a used item market then that market may compete with the original manufacturer’s market and its supply chain. As OEMs compete for market share they may coordinate their supply chain and reverse logistics to maintain their market share by facilitating the refurbishing, remanufacturing or recycling of the products. This has occurred in the automobile, copy machine and printer toner industries. As the competition increases, the OEM may manufacture less and the OEM is motivated to find ways to increase the competing re-manufacturer’s cost of remanufacture. This is often done by increasing the opponent’s costs and by making it more difficult to the competitor to obtain OEM returns and to collect end-of-life product. The OEM begins to compete more on the remanufactured products. Competition may derive additional environmental benefits because the competitors often react by increasing the durability of the product or they may give the product multi-lifecycles in order to increase remanufacturing and associated profits. This impacts the entire OEM supply chain and must be carefully managed

Some of the literature available today has begun to highlight future services associated with reverse logistic needs. It is expected that some companies will outsource reverse logistics in the supply chain. The reverse supply chain is often more complex than the forward supply chain models, so expertise and specialization are demanded. Often the third-party service provider is selected based on its ability to respond to the complexity and randomness of the reverse supply chain. Information systems and physical infrastructures are also key factors in the success of the reverse supply chain. Several sources identified opportunities for reverse logistic services. Typical service needs of the reverse logistics chain include—customer service, depot repair, end-of-life manufacturing, IT management, recycling, refurbishing/screening, replacement management, returns authorization, spare parts management, transportation, warehousing and warranty management. Of particular note, manufacturers are interested in outsourcing field service support infrastructures such as call center services, field swaps, parts repair and screening for refurbishment/ remanufacturing.



Communication is the transmission of a message from a sender to a receiver via a medium (or channel) of transmission.


ð The sender, as the initiator of the communication, can be a formal or an informal source. A formal communication source is likely to represent either a for-profit (commercial) or a not-for-profit organization; an informal source can be a parent of friend who gives product information or advice. The sender is perceived as having nothing to gain from the receiver’s subsequent actions. For that reason, word-of-mouth communications tend to be highly persuasive.


ð The receiver of formal marketing communications is likely to be a targeted prospect or a customer (E.g: a member of the marketer’s target audience). Intermediary and unintended audiences are also likely to receive marketer’s communications. Examples of intermediary audiences are wholesalers, distributors, and retailers.


ð The medium, or communications channel, can be impersonal (E.g: a mass medium) or interpersonal (a formal conversation between a salesperson and a customer or an informal conversation between two or more people that takes place face-to-face, by telephone, by mail, or online. Mass media are generally classified as print (newspaper, magazines, billboards0, broadcast (radio, television), or electronic (primarily the Internet). Direct Marketers – often called database marketers – also seek individual responses from advertisements they have placed in all the mass media: broadcast, print, and online, as well as from direct mail.


ð The message can be verbal (spoken or written), nonverbal (a photograph, an illustration, or a symbol), or a combination of the two. A verbal message, whether it is spoken or written, can usually contain more specific product (or service) information than a nonverbal message.

ð Nonverbal information takes place in both interpersonal channels and in impersonal channels and often takes the form of symbolic communication. The Coca-Cola Company, for example, has trademarked both the word Coke in a specific typographic style and shape of the traditional Coke bottle, and both are instantly recognizable to consumers as symbols of the company’s best selling soft drink.


ð Feedback is an essential component of both interpersonal and impersonal communications. Generally, it is easier to obtain feedback (both verbal and nonverbal) from interpersonal communications than impersonal communications. For example, a good salesperson usually is alert to nonverbal feedback provided by consumer prospects. Such feedback may take the form of facial expressions.


ð In general, a company’s marketing communications are designed to make the consumer aware of the product, induce purchase or commitment, create a positive attitude toward the product attitude toward the product, give the product a symbolic meaning, or show hoe it can solve the consumer’s problem better than the competitive product (or service).


ð The sponsor (initiator) of the message first must decide to whom the message should be sent and what meaning it should convey. Then the sponsor must encode the message in such a way that its meaning is interpreted by the targeted audience in precisely the intended way. The sources of impersonal communications usually are organizations (either for-profit or not-for-profit) that develop and transmit appropriate messages through special departments (E.g: marketing or public relations) or spokesperson.


ð The credibility of the source affects the decoding of the message. The sponsors of the communication – and his or her perceived honesty and objectivity – have an enormous influence on how the communication is accepted by the receiver(s).

ð Credibility is built on a number of factors, of which the most important are the perceived intentions of the source.


ð One of the major reasons that informal sources such as friends, neighbors, and relatives have a strong influence on a receiver’s behavior is simply that they are perceived as having nothing to gain from a product transaction that they recommend. That is why word-of-mouth communication is so effective. Interestingly enough, informal communications sources, called opinion leaders, often do profit psychologically, if not tangibly, by providing product information to others.

ð Even with informal sources, however, intentions are not always what they appear to be. Individuals who experience post purchase dissonance often try to alleviate their uncertainty by convincing others to make a similar purchase.


ð Not-for-profit sources generally have more credibility than for profit (commercial) sources. Formal sources that are perceived to be “neutral” – such as Consumer Reports or newspaper articles – have greater credibility than commercial sources because of the perception that they are more objective in their product assessments.

ð Because consumer recognize that the intentions of commercial sources (E.g: manufacturers, service companies, financial institutions, retailers) are clearly profit oriented, they judge commercial source credibility on such factors as past performance, reputation, the kind and quality of service they are known to render, the quality and image of other products they manufacture.

ð The ability of a quality image to invoke credibility is one of the reasons for the growth of family brands. Recognizing that a manufacture with a good reputation generally has high credibility among consumers, many companies spend a sizable part of their advertising budget on institutional advertising, which is designed to promote a favorable company image rather than to promote specific products.


ð Consumers sometimes regard the spokesperson who gives the product message as the source (or initiator) of the message. Many studies have investigated the relationship between the effectiveness of the message and the spokesperson or endorser employed (that is male or female, a person who appear in a commercial that is why there are celebrities in the ads to promote the product). Here are some of the key findings of this body of research.

· The effectiveness of the spokesperson is related to the message itself.

· The synergy between the endorser and the type of product or service advertised is an important factor.

· Endorsers who have demographic characteristics (E.g: age, social class, ad ethnicity) that are similar to those of the target audience are viewed as more credible and persuasive than those that do not.

· The endorser’s credibility is not a substitute for corporate credibility; one study discovered that although the endorser’s credibility strongly impacted the audience’s attitudes toward the ad, the perceived corporate credibility had a strong impact on attitudes toward the advertised brand.

· Marketers who use celebrities to give testimonials or endorse products must be sure that the specific wording of the endorsement lies within the recognized competence of the spokesperson.


ð The reputation of the retailer who sells the product has a major influence on message credibility. The aura of credibility generated by reputable retail advertising reinforces the manufacturer’s message as well.

ð The reputation of the medium that carries the advertisement also enhances the credibility of the advertiser. The reputation of the medium for honesty and objectivity also affects the believability of the advertising. Consumers often think that a medium they respect would not accept advertising for products it did not “know” were good.

ð The consumer’s previous experience with the product or the retailer has a major impact on the credibility of the message.


ð Receivers decode the messages they receive on the basis of their personal experiences and personal characteristics. A number of factors affect the decoding and comprehension of persuasive message including the receiver’s personal characteristics, involvement with the product or product category, the congruency of the message with the medium, and the receiver’s mood.


ð The amount of meaning accurately derived from the message is a function of the message characteristics, the receiver’s opportunity and ability to process the message, and the receiver’s motivation. A person’s demographics (such as age, gender, marital status), socio cultural memberships (social class, race, religion), and lifestyles are key determinants in how a message is interpreted.

ð Personality attitudes and prior learning all affect how a message is decoded. Perception, based as it is one expectations, motivation, and past experience, certainly influences message interpretation.


ð People who have little interest (that is a low level of involvement) in golf, for example, may not pay much attention to an ad for a specially designed putter; people who are very interested (highly involved) in gold may read every word of a highly technical advertisement describing the new golf club. One study discovered a relationship between low involvement and the style and context of an ad. Subjects with low involvement with the product preferred message placed within a congruent context. Another study showed that the congruency between the nature of the television program and the advertisement affected the level of viewer recall.


ð Mood, or affect, plays a significant role in how a message is decoded. A consumer’s mood (E.g: cheerfulness or unhappiness) affects the way in which an advertisement is perceived, recalled, and acted upon. Marketers of many image-centered products such as perfume, fashion, and liquor have found that appeals focused on emotions and feelings associated with these products are more effective than rational appeals depicting the product’s benefits. Advertisers have found that emotional appeals work well even for technologically complex products.


ð Various “barriers” to communication may affect the accuracy with which consumers interpret messages.


ð Consumers selectively perceive advertising messages and tend to ignore advertisements that have no special interest or relevance to them. Further more, technology provides consumers with increasingly sophisticated means to control their exposure to media.


ð Just as telephone static can impair reception of a message, so too cans psychological noise (E.g: competing advertising messages or distracting thoughts). A viewer faced with the clutter of nine successive commercial messages during a program break may actually receive and retain almost nothing of what he has seen. E.g: a student daydreaming about a Saturday night date may simple not hear a direct question by the professor. So there are various strategies that marketer’s use to overcome psychological noise.

  • Repeated exposure to an advertising message (through repetition or redundancy of the advertising appeal) helps surmount psychological noise and facilitates message reception.
  • Copywriters often use contrast to break through the psychological noise ad advertising clutter.
  • Broadcasters and marketers also use teasers to overcome noise. E.g: Trivia quizzes show at the start of the commercial break to design the viewers in sticking with the channel in order to find out at the end of the break whether their own answers were right.
  • Where possible, marketers place ads in specialized media where there is less psychological noise.

ð The most effective way to ensure that a promotional message stands out and is received and decoded appropriately by the target audience is through effective positioning and a unique selling proposition.


ð It is essential for the sender to obtain feedback as promptly and as accurately as possible. Only though feedback can the sender determines whether and how well the message has been received.

ð An important advantage of interpersonal communication is the ability to obtain immediate feedback through verbal as well as nonverbal cues. Experienced speakers are very attentive to feedback and constantly modify their messages based on what they see and hear from the audience. Immediate feedback is the factor that makes personal selling so effective.

ð Obtaining feedback is an important in impersonal (mass) communications as it is in interpersonal communications. Indeed, because of the high costs of advertising space ad time in mass media, many marketers consider impersonal communication feedback to be even more essential. Unlike interpersonal communications feedback, mass communications feedback is rarely direct; instead, it is usually inferred. Senders infer how persuasive their messages are from the resulting action (or inaction) of the targeted audience.


ð In evaluating the impact of advertising, marketers must measure the persuasions effects (that was the message received, understood, and interpreted correctly?) and the sales effects (that is, did the ad increases sales?) of their advertising messages.


ð In order to create persuasive communications, the sponsor (who may be a individual, a for-profit company, or a not-for-profit organization) must first establish the objectives of the communication, then select the appropriate audiences for the message and the appropriate media through which to reach them, and then design (encode) the message in a manner that is appropriate to each medium and to each audience.


ð There are numerous models claiming to depict how persuasive communications work. The cognitive models depict a process in which exposure to a message leads to interest desire for the product and ultimately to buying behavior.

ð The authors of this paradigm maintain that it reflects the interrelationship among the key factors of persuasion – perception, experience, and memory – in a manner more consistent with how the human mind really works than the older cognitive models, and the advertising messages based on this model are more likely to generate consumption behavior.


ð An essential component of a communications strategy is selecting the appropriate audience. It is important to remember that an audience is made up of individuals – in many cases, great numbers of individual Because each individual has his or her own traits, characteristics, interests, needs, experience, and knowledge, it is essential for the sender to segment the audience into groups that are homogenous in terms of some relevant characteristics. Segmentation enables the sender to create specific messages for each target group and to run them in specific media that are seen, heard, or read by the target group.

ð Companies that have any diverse audiences sometimes find it useful to develop a communications strategy that consist an overall (or umbrella) communications message to all their audiences, from which they spin off a series of related messages targeted directly to the specific interests of individual segments.


ð Media strategy is an essential component of a communications plan. It calls for the placement of ads in the specific media, read, viewed, or heard by each targeted audience. Media organizations regularly research their own audiences in order to develop descriptive audience profiles.

ð Before selecting specific media vehicles, advertisers must select general media categories that will enhance the message they want to convey. Which media categories the marketer selects depends on the product or service to be advertised, the market segments to be reached, and the marketer’s advertising objectives.


ð The message is the thought, idea, attribute, image, or other information that the sender wishes to convey to the intended audience. The sender must also know the target audience’s personal characteristics in terms of education, interests, needs, and experience. The sender must then design a message strategy though words and/or pictures that will be perceived and accurately interpreted (decoded) by the targeted audience.

ð The righteous buyer (who looks to recommendations from independent sources such as Consumer Reports), the social buyer (who relies on the recommendations of friends, on celebrity endorsements, and testimonials), and the pragmatic buyer (who looks for the best value for the money, through not necessarily the least expensive.

ð Nonverbal stimuli (such as photographs or illustrations) tend to reinforce verbal message arguments.


ð Involvement theory suggests that individuals are more likely to devote active cognitions effort to evaluating the pros and corns of a product in a high involvement purchase situations. The Elaboration Likelihood Model (ELM) proposes that, for high-involvement products, marketers should follow the central route to persuasion; that is, they should preset advertisement with strong well-documented.


ð Some marketers must make in designing the message include the use of resonance, positive or negative framing, one-sided or two-sided messages, comparative advertising, and the order of presentation.


ð Advertising resonance is defined as wordplay, often used to create a double meaning, used in combination with a relevant picture.


ð Should a marketer stress the benefits to be gained by using a specific product (positive message framing) or the benefits to be lost by not using the product (negative message framing)? Research suggests that the appropriate message framing decision depends on the consumer’s attitudes and characteristics as well as the product itself.

ð Another study found that an individual’s self image impacts the type of framing that he or she finds more persuasive. Individuals with an independent self-image.


ð Should marketers tell their audience only the good points about their products, or should they also tell them the bad (or the commonplace). There are very real strategy questions that marketers face every day, and the answers depend on the nature of the audience and the nature of the competition.

ð If the audience is critical or unfriendly (E.g: if it uses competitive products), if it is well educated, or if it is likely to hear opposing claims then a two-sided (refutational) message is likely to be more effective. Two-sided advertising messages tend to be more credible than one-sided advertising messages because they acknowledge that the advertised brand has shortcomings. Two-sided messages can also be very effective when consumers are likely to see competitor’s negative counterclaims or when consumer attitudes toward the brand are already negative.

ð Some marketers stress only positive factors about their products and pretend that competition does not exist.


ð Comparative advertising is a widely used marketing strategy in which a marketer claims product superiority for its brand over one or more explicitly named or implicitly identified competitors, either on an overall basis or on selected product attributed. Comparative advertising is useful for product positioning, for target market selection, and for brand positioning strategies.


ð Is it best to present your commercial first or last? Should you give bad news first or last? Communications researchers have found that the order in which a message is presented affects audience receptivity.

ð When just two competing messages are presented, one after the other, the evidence as to which position is more effective is somewhat conflicting.

ð Order is also important in listing product benefits within an ad. If audience interest is low, the most important point should be made first to attract attention.


ð Repetition is an important factor in learning. Thus, it is not surprising that repetition, or frequency of the ad, affects persuasion, ad recall, brand name recall, and brand preferences. It also increases the likelihood that the brand will be included in the consumer’s consideration set. Another regard claims that are repeated frequently as more truthful than those repeated with less frequency.

ð A study examined the effects of repetition of the same ad versus repetition of varied ad executions (holding the number of repetitions for each variable constant) found that varied ad executions enhanced memory for the brand name over repeated same-ad executions.


ð Some times objective, factual appeals are more effective in persuading a target audience; at other times emotional appeals are more effective. It depends on the kind of audience to be reached and their degree of involvement in the product category. The following sections examined the effectives of several frequency used emotional appeals.


ð Fear is an effective appeal used in marketing communications. Some researchers have found a negative relationship between the intensity of fear appeals and their ability to persuade, so that strong fear appeals tend to be less effective than mild fear appeals. Strong fear appeals concerning a highly relevant topic (such as cigarette smoking) cause the individual to experience cognitive dissonance, which is resolved either by rejecting the practice or by rejecting the unwelcome information. Marketers must also consider that the mention of possible detrimental effects of using a product while proclaiming its benefits may result in negative attitudes towards the product itself.


ð Many marketers use humorous appeals in the belief that humor will increase the acceptance and persuasiveness of their advertising communications.

Impact of Humor on Advertising:

Humor attracts attention.

Humor does not harm comprehension.

Humor is not more effective at increasing persuasion.

Humor does not enhance source credibility.

Humor enhances liking.

Humor that is relevant to the product is superior to humor that is unrelated to the product.

Audience demographic factors affect the response to humorous advertising appeals.

The nature of the product affects the appropriateness of a humorous treatment.

Humor is more effective with existing products than with new products.

Humor is more appropriate for low-involvement products and feeling-oriented products than for high-involvement products.


ð => How effective can unpleasant or annoying ads are? Studies of the sleeper effect, discussed earlier suggest that that memory of an unpleasant commercial that antagonizes listeners or viewers may dissipate over time, leaving only the brand name in the minds of consumers. All of us have at one time or another been repelled by so-called agony commercials.

ð The Sleeper Affect à The idea that both positive and negative credibility effects tend to disappear after a period of time.


ð In our highly permissive society, sensual advertising seems to permeate the print media and the airwaves. Advertisers are increasingly trying to provoke attention with suggestive illustrations, crude language, and nudity in their efforts to appear “hip” and contemporary.


ð The provision of feedback changes the communications process from one way to two way communication. This is important to senders because it enables them to determine whether and how well communication has taken place. But feedback also is important to receivers because it enables then to participate, to be involved, to experience in some way the message itself.



ð “It is a relatively permanent change in behavior caused by experience”.


ð “Process by which individuals acquire the purchase and consumption knowledge and experience that they apply to future related behavior”.

ð Consumer learning is a process that continuously evolves and changes as a result of newly acquired knowledge (which could be gained from reading, from discussions, from observations, from thinking) or from actual experience. Both newly acquired knowledge and personal experience serve as feedback to the individual and provide the basis for future behavior in similar situation.



“It is the processes that lead people to behave as they do”.

It occurs when a need arises that a consumer wishes to satisfy. Motivation is based on needs and goals. It acts as a spur of learning. Uncovering consumer motives is one of the prime tasks of marketers, who then try to teach motivated consumer segments why and how their products will fulfill the consumer’s needs.


“It is a stimulus that suggests a specific way to satisfy a silent motive”.

If motives serve to stimulate learning, cues are the stimuli that give direction to these motives. In the marketplace, price, styling, packaging, advertising and store displays all serve as cues to help consumers fulfill their needs in product-specific ways. Cues serve to direct consumer drives when they are consistent with consumer expectations. Marketers must be careful to provide cues that do not upset those expectations.


“Response means how individuals react to a drive or cue or how they behave”.

Learning can occur even when responses are not overt. The automobile manufacturer that provides consistent cues to a consumer may not always succeed in stimulating a purchase. A response is not tied to a need in a one-to-one fashion. If the manufacturer succeeds in forming a favorable image of a particular automobile model in the consumer’s mind, when the consumer is ready to buy, it is likely that he or she will consider that make or model.


“A positive or negative outcome that influences the likelihood that a specific behavior will be repeated in the future in response to a particular cue or stimulus”.

It increases the likelihood that a specific response will occur in the future as the result of particular cues or stimuli. Through positive reinforcement, learning has taken place.


ð Behavioral learning theories are sometimes referred to as stimulus-response theories because they are based on the premise that observable responses to specific external stimuli signal that learning has taken place.


ð “A behavioral learning theory according to which a stimulus is paired with another stimulus that elicits a known response that serves to produce the same response when used alone”.

ð Early classical conditioning theorists regarded all organisms as relatively entities that could be taught certain behaviors through repetition or conditioning. The word conditioning mean a kind of “knee-jerk” or automatic response to a situation built up through repeated exposure. E.g., If you get a headache every time you think of visiting a doctor. Pavlov’s demonstration of conditioned learning in his studies with dogs is also a good example of it.

ð An unconditioned stimulus might consists of a well-known brand symbol (such as Neutrogena name) that implies demonstration of dermatologists’ endorsement and pure. This previously acquired consumer perception of Neutrogena is the unconditioned response.

ð Conditioned stimuli might consist of new products bearing the well-known symbol (such as the items depicted in new products bearing the well-known symbol and the conditioned response would be trying these products because of the belief that they embody the same attributes with which the Neutrogena name is associated.

Ivan Pavlov’s Dogs Experiment:

Unconditioned stimulus (UCS) – Naturally capable of causing a response.

Conditioned stimulus (CS) – Does not initially cause a response

Conditioned response (CR) – Response generated by repeated paired exposures to UCS and CS. Eventually, through learned association and repetition, the CS will cause the CR.


Pairing a likeable celebrity with a new product in advertising or associating a likeable song with a particular product.

Pairing product purchase with the use of a credit card.

§ Researcher’s Argumentation:

Researchers have argued that the examples given are really nothing more than mood encoding, and that the positive affect tag is the effective mechanism.

Cognitive Associative Learning:

ð “Classical conditioning is viewed as the learning of associations among events that allows the organism to anticipate and represent its environment”.

ð From this viewpoint, classical conditioning is not reflexive action, but rather the acquisition of new knowledge.

ð Contemporary behavioral scientist view classical conditioning as the learning associations among events that allow the organisms to anticipate and represent its environment. According to this view, the relationship or contiguity between the conditioned stimulus and the unconditioned stimulus influence expectations, which in turn influence their behavior.

Neo-Pavolvian Theory:

ð Optimal conditioning-is the creation of a strong association between the conditioned stimulus (CS) and the unconditioned stimulus (US)-requires:

1) Forward Conditioning (i.e., the CS should precede the US);

2) Repeated pairings of the CS and the US;

3) A CS and US that logically belong together;

4) A CS that is novel and unfamiliar;

5) A US that is biologically or symbolically salient.

ð This model is known as NEO-PAVLOVIAN CONDITIONING.

ð Under NEO-PAVLOVIAN theory, the consumer can be viewed as an information seeker who uses logical and perceptual relations among events, along with his or her own preconceptions, to form a sophisticated representation of the world.


ð The three basic concepts derive from classical conditioning are:

1) Repetition

2) Stimulus Generalization

3) Stimulus Discrimination


ð “Repetition increases strength of associations and slows forgetting but over time may result in advertising wear out”. Cosmetic variations reduce satiation.

ð Research suggests that there is a limit to the amount of repetition that will aid retention. Although some over learning (i.e., repetition beyond what is necessary for learning) aids retention, at some point, an individual can become satisfied with numerous exposures, and both attention and retention will decline.

Substantive Variations:

ð “These are changes in advertising content across different versions of an advertisement”. For Example, Stressing two different attributes of the same product.

Three Hit Theory:

Repetition is the basis for the idea that three exposures to an ad are necessary for the ad to be effective.

Some marketers just focus on three exposures of advertisement. 1) Product Awareness 2) Showing of Relevance of the product 3) Remainder of products’ benefits.

Other marketers focus on at least 11 to 12 repetitions to increase the likelihood that consumer will actually receive the three exposures basic to the so-called Three hit theory.

The effectiveness of repetition is somewhat dependent upon the amount of competitive advertising to which the consumer is exposed.


ð “It is the inability to perceive differences between slightly dissimilar stimuli”.

ð It is defined as making of same response with slightly different stimuli-not much learning takes place. Stimulus generalization explains why some “me too” products succeed in the marketplace. Consumer confuse them with the original product they have been advertised. It also explains why manufacturers of private-label brands try to make their packaging closely resemble the national brand leaders.

· Product Line, Form, and Category Extensions:

Marketers to product line, form, and category extensions apply the principle of stimulus generalization. Marketers also offer product category extensions that generally target new market segments. If the image of the parent brand is one of quality and the new item is logically linked to the brand, consumers are more likely to bring positive associations to the new offerings introduced as product line, form, or category extensions.

· Family Branding:

The practice of a whole line of company products under the same brand name-is another strategy that capitalizes on the consumer’s ability to generalize favorable brand associations from one product to others.

· Licensing:

Allowing a well-known brand name to be affixed to products of another manufacturer-is a marketing strategy that operates on the principle of stimulus generalization. The names of designers, manufacturers, celebrities, corporations and even cartoon characters are attached for a fee (i.e., “rented”) to a variety of products, enabling the licensees to achieve instant recognition and implied quality for the licensed products. E.g. Calvin Kline or McDonalds.


ð “The ability to select a specific stimulus from among similar stimuli because of perceived differences”.

ð Stimulus discrimination is the opposite of stimulus generalization and results in the selection of a specified stimulus from among similar stimuli. The consumer’s ability to discriminate among similar stimuli is the basis of positioning strategy that seeks to establish a unique image for a brand in the consumer’s mind.

· Positioning:

The image or position that a product or service holds in the mind of the consumer is critical to its success. When a product or service holds in the mind of the consumer is critical to its success. When a marketer targets consumers with a strong communication program that stresses the unique ways in which its product will satisfy the consumer’s needs, it wants the consumer to differentiate its product will satisfy the consumer’s needs, it wants the consumer to differentiate its product from among competitive products on the shelf.

· Product Differentiation:

Most product differentiation strategies are designed to distinguish a product or brand from that of competitors based on an attribute that is relevant, meaningful, and valuable to consumers. Many marketers successfully differentiate their brands on an attribute that may actually be irrelevant to creating the implied benefit, such as a noncontributing ingredient or a color. It is often difficult for a marketer to unseat a brand once stimulus discrimination has occurred.

One explanation is that leader usually the first in the market and had to teach customer for a longer period to associate with the brand name.


ð “A behavioral theory of learning based on a trial-and-error process, with habits forced as the result of positive experiences (reinforcement) resulting from certain responses or behaviors”.

ð It requires a link between a stimulus and a response. In Instrumental Conditioning, the stimulus that results in the most satisfactory response is the one that is learned. In consumer behavior terms, it suggests that consumers learn by trial and error process in which some purchase behaviors results in more favorable outcomes (i.e., rewards) than other purchase behaviors. A favorable experience is “instrumental” in teaching the individual to repeat a specific behavior.

Occurs as the individual learns to perform behaviors that produce positive outcomes and avoid behaviors that yield negative outcomes.

This learning process is most closely associated with psychologist B.F. Skinner, who demonstrated the effects of instrumental conditioning by training pigeons to dance and play Ping-Pong.

Operant conditioning is the process in which the frequency of occurrence of a behavior is modified by the consequences of the behavior. That is, the consequences of a purchase will affect the probability of a re-purchase.

· Reinforcement of a behavior:

Positive Reinforcement:

“Positive outcomes that strengthen the likelihood of a specific response”.

Negative Reinforcement:

“Unpleasant or negative outcomes that serve to encourage a specific behavior”.

ð Skinner distinguished two types of reinforcement (or reward) that influence the likelihood that a response will be repeated. The first type, positive reinforcement, consists of events that strengthen the likelihood of a specific response. E.g., using a shampoo that leaves your hairs, feeling silky and clean is likely to result in a repeated purchase of the shampoo. Negative reinforcement is an unpleasant or negative outcome that also serves to encourage a specific behavior. E.g., buying of an antivirus software for you computer. Fear appeals in ad messages are examples of negative reinforcement such as life insurance commercials rely on negative reinforcement to encourage consumers to encourage the purchase.

· Punishment:

Choose reinforcement rather than punishment”.

· Forgetting and Extinction:

- Forgetting à “Combat with repetition”.

- Extinction à “Combat with consumer satisfaction”.

· Factors Involving Forgetting:

Time: à Forgetting is rapid at first and then levels off

Interference à Old information in memory interferes with learning similar, new material.

When a learned response is no longer reinforced, it diminishes to the point of extinction, that is, to the point at which the link between the stimulus and the expected reward is eliminated. If a consumer is no longer satisfied with the service a retail store provides, the link between the stimulus (the store) and the response (expected satisfaction) is no longer reinforced, it is “unlearned”. There is a difference, however, between extinction and forgetting. Forgetting is often related to the passage of time; this is known as the process of decay. Marketers can overcome forgetting through repetition and can combat extinction through the deliberate enhancement of consumer satisfaction.

· Strategic/Marketing applications of instrumental conditioning:

Marketers effectively utilize the concepts of consumer instrumental learning when they provide positive reinforcement by assuring customer instrumental learning when they provide positive reinforcement by assuring customer satisfaction with the product, the service, and the total buying experience.

· Customer Satisfaction (Reinforcement):

The objective of all marketing efforts should be to maximize customer satisfaction. Marketers must be certain to provide the best possible product for the money and to avoid raising consumer expectations for product (or services) performance beyond what the product can deliver. Aside from the experience of using the product itself, consumers can receive reinforcement from other elements in the purchase situation, such as the environment in which the transaction or service takes place, the attention and service provided by employees, and the amenities provided. E.g.: most frequent shopper programs are based on enhancing positive reinforcement and encouraging continued patronage. The more a consumer uses the service, the greater the rewards.

· Relationship Marketing:

Relationship marketing develops a closed personalized relationship with customers-is another form of non product reinforcement. Knowing that she will be advised of a forthcoming sale that selected merchandise will be advised of a forthcoming sale, or that selected merchandise will be set aside for her next visit cements the loyalty that a consumer may have for a retail store.

· Reinforcement Schedules:

Marketers have found that product quality must be consistently high and provide customer satisfaction with each use for desired consumer rewards do not have to be offered each time the transaction takes place; even an occasional reward provides reinforcement and encourages consumer patronage. The promise of possibly receiving a reward provides positive reinforcement and encourages consumer patronage. Marketers have identified three types of reinforcement schedules:

1) Total or Continuous Reinforcement:

An example of total or continuous reinforcement schedule is the free after-dinner drink or fruit plate always served to patrons at certain restaurants. The basic product or service rendered is expected to provide total satisfaction (reinforcement) each time it is used.

2) Systematic (Fixed Ratio) Reinforcement:

A fixed ratio reinforcement schedule provides reinforcement every nth time the product or service is purchased. (Say every third time). For example, a retailer may send a credit voucher to account holders every three months based on a percentage of the previous quarter’s purchases.

3) Random or Variable Ratio Reinforcement:

This schedule rewards consumers on a random basis or an average frequency basis (such as every third or tenth transaction). Variable ratios tend to engender high rates of desired behavior and are somewhat resistant to extinction-perhaps because, for many consumers, hope springs eternal. Other examples of variable ratio require certain consumer behaviors for eligibility.

- Shaping:

“It is the reinforcement for incremental steps toward the desired behavior. This is the same principle that underlies animal training”.

Reinforcement performed before the desired consumer behavior actually takes place is called shaping. Shaping increases the probabilities, that certain desired consumer behavior will occur. Many retailers provide some form of preliminary reinforcement (shaping) to encourage consumers to visit only their store. For example, some retailers offer loss leaders-popular products at several discounted prices-to the first hundred or so customer to arrive, since those customers are likely to stay to do so much of their shopping.

· Massed versus Distributed Learning:

Timing has an important influence on consumer learning. Should a learning schedule be spread out over a period of time (distributed learning), or should it be “bunched up” all at once (massed learning)? The question is important for advertisers planning a media schedule, because massed advertising produces more initial learning, whereas a distributed schedule usually results in learning that persists longer. When advertisers want an immediate impact (e.g., to introduce a new product or to counter a competitor’s blitz campaign), they generally use a massed schedule to hasten consumer learning. When the goal is long-term repeat buying on a regular basis, a distributed schedule is preferable.

Other Strategies:

· Frequent flyer miles:

Rewarding consumers with frequent flyer miles is an effective way to reinforce them and build brand loyalty.

· Brand loyalty

· Slot machines

· ‘Sales’


ð “It is a process by which individuals observe the behavior of others, and consequences of such behavior. It is also known as modeling or vicarious learning”.

ð Occurs when people watch the actions of others and note reinforcements received for their behaviors. Learning occurs as a result of vicarious, rather than direct, experience.

ð Learning theorists have noted that a considerable amount of learning takes place in the absence of direct reinforcement, either positive or negative, through a process called by psychologists modeling or observational learning (also called vicarious learning).


ð It is the process through which individuals learn behavior by observing the behavior of others and the consequences of such behavior. Their role models are usually people they admire because of such traits as appearance, accomplishments, skill, and even social class.

ð Consumer models with which the target audience can identify are shown achieving positive outcomes to common problem situations through the use of the advertised product.


ð Holds that the kind of learning most characteristic of human beings is problem solving, which enables individuals to gain some control over their environment.

ð A considerable amount of learning takes place as a result of consumer thinking and problem solving. Sudden learning is also a reality. When confronted with a problem, we sometimes see the solution instantly. We are likely to search for information on which to base decision possible for our purposes. Learning based on mental activity is called “cognitive learning”. It holds that the kind of learning most characteristics of human beings is problem solving, which enables individuals to gain some control over their environment.

Information Processing:

ð A cognitive theory of human learning patterned after computer information processing that focuses on how information is stored in human memory and how it is retrieved.

ð Information processing is related to both the consumer’s cognitive ability and the complexity of the information to be processed. Consumer processes product information by attributes, brands, comparisons between brands, or a combination of these factors.

ð Consumers also differ in terms of imagery-that is, in their ability to form mental images- and these differences influence their ability to recall information. Individual differences in imagery processing can be measured with tests of imagery vividness (the ability to evoke clear images), processing style (preference for and frequency of visual versus verbal processing), and daydream (fantasy) content and frequency.


ð Of central importance to the processing of information is the human memory. A basic research concern of most cognitive scientists is discovering how information gets stored in memory, how it is retained, and how it is retrieved.

Structure of Memory:

ð Because information processing is kept temporarily before further processing: a sensory store, a short term store, and a long-term store.

· Sensory Stage:

ð All data come to us through our senses; however, the senses do not transmit whole images as a camera does. Instead, each sense receives a fragmented piece of information (such as the smell, color, shape, and feel of a flower) and transmits it to the brain in parallel, where the perceptions of a single instant are synchronized and perceived as a single image, in a single moment of time. The image of a sensory input lasts for a just a second or two in the mind’s sensory store. If it is not processed, it is lost immediately.

· Sensory Memory à “It is a temporary storage of information from our senses”.

· Short-Term Store: (Knowing Memory):

ð It is a temporary storage of info while being processed which holds about 7 (plus or minus 2) chunks of information at a time (Miller’s Law). It has a limited capacity that may lead to information overload.

ð It is the stage of real memory in which information is processed and held for just brief period. If information in the short-term store undergoes the process known as “Rehearsal” (i.e., the silent, mental repetition of information), it is then transferred to the long-term store. The transfer process takes from 2 to 10 seconds. If information is not rehearsed and transferred, it is lost in about 30 seconds or less. The amount of information that can be held in short-term storage is limited to about four or five items.

· Long-Term Store:

ð It can retain information for a long period of time and transfer from STM to LTM which is facilitated by chunking, rehearsal, recirculation, and elaboration. E.g., Pictures are more memorable than words.

ð The long-term store retains information for relatively extended periods of time. Although it is possible to forget something within a few minutes after the information has reached long-term storage to last for days, weeks, or even years.

· Rehearsal and Encoding:

ð The amount of information available for delivery from short-term storage to log-term storage depends on the amount of rehearsal if it is given. Failure to rehearse an input, either by repeating it or by relating it to other data, can result in fading and eventual loss of the information. Information can also be lost because of competition for attention.

· Encoding

ð It is the process by which we select a word or visual image to represent a perceived object. When consumers are presented with too much information (called information overload), they may encounter difficulty in encoding and storing it all.

· Retention:

ð Information does not just sit in long-term storage waiting to be retrieved. Instead, information is constantly organized and reorganized as new links between chunks of information are forged. In fact, many information-processing theorists view the long-term store as a network consisting of nodes (i.e., concepts), with links between and among them.

ð The total package of associations brought to mind when a cue is activated is called a schema. Product information stored in memory tends to be brand based, and consumers interpret new information in a manner consistent with the way in which it is already organized. Consumers are confronted with thousands of new products each year and their information search is often dependent upon how similar or dissimilar (discrepant) these products are to product categories already stored in memory. Consumers recode what they have already encoded to include larger amounts of information (chunking).

ð Information is stored in long-term memory in two ways: episodically (by the order in which it is acquired) and semantically (according to significant concepts).

· Retrieval:

ð “Retrieval is the process by which we recover information from long term storage”. In this process, the person accesses the desired information. Marketers maintain that consumers tend to remember the product’s benefits rather than its attributes, suggesting that advertising messages are most effective when they link the product’s attributes with the benefits that consumers seek from the product.

ð Incongruent elements that are not relevant to an ad also pierce the consumer’s perceptual screen but provide no memo ability for the product.


ð Old information in memory interferes with learning similar, new material. The greater the number of competitive ads in a product category, the lower the recall of brand claims in a specific ad. These interference effects are caused by confusion with competing ads and make information retrieval difficult.

Limited and Extensive Information Processing:

ð For a long time, consumer researchers believed that all consumers passed through a complex series of mental and behavioral stages in arriving at a purchase decision. These stages ranged from awareness (exposure to information) to evaluation (preference, attitude formation), to behavior (purchase), to final evaluation (adoption or rejection). This same series of stages is often presented as the consumer adoption process.


ð “It is a theory of consumer learning which postulates that consumers engage in a range of information processing activity from extensive to limited problem solving, depending on the relevance of the purchase”. Involvement theory developed from a stream of research called hemispheral lateralization, or split-brain theory.


ð Building on the notion of hemisphere lateralization, a pioneer consumer researcher theorized that individuals passively process and store right-brain (nonverbal, pictorial) information-that is, without active involvement. E.g., T.V is primarily holistic processing of images viewed on the screen), and TV itself was therefore considered a low-involvement medium. This research concluded that passive learning occurs through repeated exposures to TV commercial (i.e., low-involvement information processing) and produces changes in consumer behavior (e.g., product purchases) prior to changes in the consumer’s attitude towards the product.

ð The right-brain processing theory stresses the importance of the visual component of advertising, including the creative use of symbols. Under this theory, highly visual TV commercials; packaging, and in-store displays generated familiarity with the brand and induce purchase behavior. Pictorial cues are more effective at generating recall and familiarity with the product, whereas verbal cues (which trigger left-brain processing) generate cognitive activity that encourages consumers to evaluate the advantages and disadvantages of the product. Some individuals are integrated processors (they readily engage both hemispheres during information processing).


ð From the conceptualization of high and low involvement media, involvement theory next focused on the consumer’s involvement theory with products and purchases. It was briefly hypothesized that there are high and low involvement consumers; then, that there are high and low involvement purchases. These two approaches led to the notion that a consumer’s level of involvement depends on the degree of personal relevance that the product holds for that consumer. Under this definition, high-involvement purchases are those that are very important to the consumer (e.g., in terms of perceived risk) and thus provoke extensive problem solving (information processing). Highly involved consumers find fewer brands acceptable (they are called narrow categorizers); uninvolved consumers find fewer brands be receptive to a greater number of advertising messages regarding the purchase and will consider more brands (they are broad categorize).

Central and Peripheral Routes to Persuasion:

ð “It is a theory that proposes that highly involved consumers are best reached through ads that focus on the specific attributes of the product (the central route) while uninvolved consumers can be attracted through peripheral advertising cues such as the model or the setting (the peripheral route)”.

ð For low-involvement purchases, the peripheral route to persuasion is likely to be more effective. In this instance, because the consumer is less motivated to exert cognitive effort, learning is more likely to occur through repetition, the passive processing of visual cues, and holistic perceptions.

The Elaboration Likelihood Model (ELM):

ð “It is a theory that suggests that a person’s level of involvement during message processing is a critical factor in determining which route to persuasion is likely to be effective”.

ð The elaboration likelihood model suggests that a person’s level of involvement during message processing is a critical factor in determining which route to persuasion is likely to be effective. For example, as the message becomes more personally relevant (i.e., as involvement increases), people are more willing to expand the cognitive effort required to process the message arguments.


ð Involvement theory evolved from the notion of high and low involvement media, to high and low involvement consumers, to high and low involvement products and purchases to appropriate methods of persuasion in situations of high and low product relevance. There is a great variation in the conceptualization and measurement of involvement itself. Involvement can be defined and conceptualize in a variety of ways, including ego involvement, commitment, communication involvement, purchase importance, extent of information search, persons, products, situations, and purchase decisions. It makes more sense to develop an environmental profile rather than to measure a single involvement level.

Marketing Applications of Involvement:

ð People process information extensively when the purchase is of high personal relevance and engage in limited information processing when the purchase is of low personal relevance. Uninvolved consumers appear to be susceptible to different kinds of persuasions than highly involved consumers.


ð Many marketers, the dual goals of consumer learning are increased market share and brand-loyal consumers. These goals are interdependent: Brand-loyal customers provide the basis for a stable and growing market share, and brands with larger market shares have proportionately larger groups of loyal buyers. Following are some measures of consumer learning:

· Recognition and Recall Measures:

ð Recognition and recall tests are conducted to determine whether consumers remember seeing an ad, the extent to which they have read it or seen it and can recall their purchase intentions. Recognitions tests are based on aided recall, whereas recall tests use unaided recall. In recognition tests, the consumer is shown an ad and asked whether he or she remembers seeing it and can remember any of its salient points.

· Starch Readership Service:

ð Each analyzed ad is assigned an index number for each category (noted, associated, read some, and read most). An index number of 100 means that the ad scored the same as the average of all ads in the magazine issue. Index numbers higher than 100 indicate the ad scored better than average and numbers lower than 100 indicate that the ad scored below average. Some critics question the Starch method, saying that it relies entirely on consumer memory, and memories are often inaccurate.

· Starch Readership Service Sample:

ð This company measures reader awareness of magazine ads. A reader eligible for the survey is one that has glanced through the magazine prior to the interview and who meets the demographic requirements set by the client. Interviewers turn the pages of the magazine inquiring about the ads. Do you remember seeing or reading any part of this ad? If “yes,” then further questions follow.

Noted – is the % of people who remember having seen the ad in the magazine issue.

Associated – is the % of people who noted the ad and also read the brand or advertiser.

Read Some – is the % people who read any part of the ad’s copy.

Read Most – is the % of people who read half or more of the written material in the ad.

· Cognitive Response to Advertising:

ð It is the degree to which consumers accurately comprehend the intended advertising message. To ensure a high level of comprehension, many marketers conduct copy testing either before the advertising is actually run in media (called protesting) or either it appears or after it appears (post testing).

· Attitudinal and Behavioral Measures of Brand Loyalty:

ð Brand loyalty is the ultimate desired outcome of consumer learning. However, there is no single definition of this concept. Marketers agree that brand loyalty consists of both attitudes and actual behaviors toward a brand and that both must be measured. Attitudinal measures are concerned with customers’ overall feelings (i.e., evaluation) about the product and the brand and their purchase intentions. Behavioral measures are based on observable responses to promotional stimuli-repeat purchase behavior rather than attitude toward the product or brand.

ð Behavioral scientists who favor the theory of instrumental conditioning believe that brand loyalty results from an initial product trial that is reinforced through satisfaction, leading to repeat purchase. Cognitive researchers, on the other hand, emphasize the role of mental processes in building brand loyalty. They believe that consumers engage in extensive problem-solving behavior involving brand and behavior.

Phases of Brand Loyalty:

Cognitive, Affective, Conative and Action.

· Brand Equity:

ð The term brand equity refers to the value inherent in a well-known brand name. This value stems from the consumer’s perception of the brand’s superiority and the social esteem that using it provides and the customer’s trust and identification with the brand. The most valuable assets are brand names. Well-known brand names are often referred as mega brands.