Final Sem 1

A PROJECT REPORT ON A STUDY ON PESTER POWER “CHILDREN INFLUENCING THE PARENTS BUYING DECISION OF CONSUMER DURABLES”

SUBMITED BY NISHA RADHAKRISHNAN ENROLLMENT NO: 6NBMM005 MBA 2007-2009 ICFAI NATIONAL COLLEGE

CERTIFICATE We hear by certify that Ms. Nisha Radhakrishnan of ICFAI NATIONAL COLLEGE has completed the project on Study on Pester Power: “Children Influencing The Parents Buying Decision Of Consumer Durables” in the Academic Year 2007-2009. The Information submitted is true and original to the best of my knowledge.

SIGNATURE OF THE PRINCIPAL MRS.VIDHYA NAIR Date: 30th October, 2007. Place: Mumbai

CERTIFICATE

I, here by certify that Ms. Nisha Radhakrishnan of ICFAI NATIONAL COLLEGE has completed the project on Study on Pester Power: “Children Influencing The Parents Buying Decision Of Consumer Durables” in the academic Year 2007-2009. The information submitted is true and original to the best of my knowledge.

SIGNATURE OF THE FACULTY GUIDE

Date: 30/10/2007 Place: Mumbai

DECLARATION

I, NISHA RADHAKRISHNAN student of ICFAI NATIONAL COLLEGE here by declare that I have completed the project on “STUDY ON PESTER POWER:CHILDREN INFLUENCING THE BUYING DECISION OF CONSUMER DURABLES” in the academic Year 2007-2009. The information submitted is true and original to the best of my knowledge.

SIGNATURE OF THE STUDENT NISHA RADHAKRISHNAN

Date: 30/10/2007

Place: Mumbai

ACKNOWLEDGEMENT

I here by take this opportunity to thank all those people including my friends and colleagues who have helped me for the successful completion of this project. I express my gratitude to my entire project guide for the continuous support and guidance they have rendered for the successful completion of this project. I express my gratitude towards my parents and brother for their encouraging support, incandescent sprit and endurance towards the making of this project. In the end, special thanks to all members who are directly or indirectly associated with the project.

Executive Summary

Children constitute an important target segment and merit attention from a marketing perspective. The amount of influence exerted by children varies by product category and stage of decision making process. For some products they are active initiators, information seekers and buyers whereas for other product categories, they influence purchases made by the parents. The purchasing act is governed by how they have been socialized to act as consumers. Family and media are key socializing agents for children. This project mainly identifies direction for future research.

SR No

Index

1

Introduction

2 3

Influence Of Children In Family Decision Making Process Media Effects On Children

4

Marketing Strategies To Target Kids

5

Pester Power

6

Tools Used To Target Kids

7

Stages Of Consumer Buying Process

8

Analysis And Interpretation

9

Annexure

10

Limitation

11

Conclusion

12

Bibliography

. Can children influence parents decisions? Nokia has a naughty eight-year-old girl looming large from the billboards thrusting the 3210 in your face.

Papa finds it hard to decline his six-year-old’s request to give half the school a ride back home in his squeaky new uno.

When papa nicks his chin while shaving,the toddler crawls up with a tube of boroline in its cute hands.

Of course,whenever mom hears “mummy,mummy,bhook lagi hain”she knows what’s cooking.

Influence of Children in Family Decision Making Process Research on family decision making has been largely confined to spouses, who have been considered as the relevant decision making unit in a family. However, the role of third party influences, such as children, on decision making strategies and negotiations is essential to taking a broader view of the relevant unit of analysis. Traditionally, women were seen to be the purchasing agents for the family. Nonetheless, increasing participation of women in the workforce has prompted a shift in this role as children are increasingly the "buyers" for the entire family. Even in families where women do not work, children are observed to share this role with their mothers. Children enjoy greater discretion not only in making routine consumption decisions for the family but also in pestering their parents to buy other products desired by them. Contemporary researchers express that children constitute a major consumer market, with direct purchasing power for snacks and sweets, and indirect purchase influence while shopping for big-ticket items. Indian children have recently attracted considerable attention from marketers because the market for children's products offers tremendous potential and is rapidly growing. Children constitute three different markets: the primary, the influencer, and the future market. Certain products are simply children's products

for which they are the primary users/buyers. They sometimes either purchase a product themselves or select the product before it is purchased by the parents. For other products, such as ones which are used by the entire family unit, they may influence purchases made by the parents. There are some products where children wield direct influence or pester power by overtly specifying their preferences and voicing them aloud. For other products, parents' buying patterns are affected by prior knowledge of the tastes and preferences of their children. This 'passive dictation' of choice is prevalent for a wide variety of daily consumed product items as well as products for household consumption. Also, decision making in households is seen to change with the mere presence of children. The nature of joint decisions in couple decision making units and family decision making units is seen to be different. It is also observed that children are socialized by their parents to act as rational consumers. After years of direct or indirect observation of parental behavior in the marketplace, they gradually acquire relevant consumer skills from their parents. The amount of influence exerted by children varies by product category and stage of the decision making process. For certain products they are instrumental in initiating a purchase, while for others, they make the final selections themselves. The purchasing act is governed by how they have been socialized to act as consumers. Family peers and media are key socializing agents for

Children. The structure of Indian families has been previously characterized as joint families with traditional SRO (that is, the husband predominated in all family affairs). However, owing to influences from the West, the structure of Indian families has changed to nuclear or extended families (nuclear families plus grandparents). The Indian families have become more modern now. Such a shift in family composition and structure has a bearing on the strength in the role that children are expected to play as buyers in the family. In a study of buying behavior, family members make purchase decisions for durables including refrigerators, televisions, air coolers, and washing machines. Findings projected that product selection decisions in families were mostly made by spouses together but they were highly influenced by children.

Kids have a lot of information because of exposure to television, other media, and friends. This reflected that parents sought their opinion even in making purchase of products not directly related to the children, such as cars, because of their higher knowledge of brands, models, and the latest trends. Also, children stated that parents bought products that made the kids happy. The store where the durables were purchased as well as the making of the actual purchase decision was also decided jointly or by the husband individually (for three durables, but not for air coolers). However, children also "went to buy," that is accompanied their parents at the time of buying televisions, washing machines, and refrigerators. The initiator for purchase in a family was typically a young female member, who was likely to be the wife or one of the children. She illustrated that the need for an audio system, personal computer and television was likely to be first expressed by the children in the family. As influencers, younger members, especially children, were found to affect purchase of a personal computer, audio system, and television. The final purchases were found to be decided upon after consultation with other family members, mainly the husband. Children have not been observed to have a large impact on instrumental decisions such as how much to spend but rather play a role while making expressive decisions such as color, model, brand, shape, and time of purchase. Children are individually active in initiating the idea to purchase a durable. In other stages of the decision making process, they exhibit joint influence along with other members of the family. This implies that they provide support to the member exerting influence to increase pressure but do not wield much influence individually. This concludes that in the older age group household's sons and daughters emerge as key persons to introduce new products in the house. Media effects on children There is great concern about children as viewers of advertisements primarily because young children are exposed to thousands of commercials. Marketers use television as a medium of communication since it affords access to children at much earlier ages than print media can accomplish, largely because textual literacy does not develop until many years after children have become regular television viewers.

Young children are able to differentiate between a TV program and a commercial but are unable to understand the intent of an advertisement until they are 8-10 years of age. Advertising to children avoids any appeal to the rational, emphasizing instead that ads are for entertainment and "enjoyable for their own sake" as opposed to providing any real consumer information. The most common persuasive strategy employed in advertising to children is to associate the product with fun and happiness, rather than to provide any factual product-related information. Hence, children in the age category 8-10 years have a positive attitude towards advertisements. Celebrities and cartoon characters are commonly used by marketers, as children's views of advertising appeals are largely influenced by them. Since ads are particularly effective in persuading children to like and request the product, rejection of requests further enhances chances for arousal of conflicts between parents and children. Purchase requests by children are strongly stimulated by commercials or by a friend who has recently purchased a product. The most reliable source for discussion, before buying products, was the family and the child also used his own intelligence and experience to solve the purchase problem Implications The impact of media: The attitude of children towards commercials for adult products has been dealt with, with the conjecture that children's involvement in commercials leads to their purchase behavior as adults. This interest in adult products could also be aroused since one or more members in the family may be buying and using the product/brand and the child) is also involved in its purchase, either directly or subtly. Therefore, the cause for the attention and interest in commercials, such as humor or the use of a celebrity, should be investigated. The importance of media as a source of information and influence over children should be compared with other elements of the social group such as to know the type of information preferred from each source. Media are seen to serve as sources of socialization for children, but their exact impact needs further investigation to help marketers in framing and directing messages. In contrast to this, very few studies in India have focused on the impact of media as sources of information and as a socialization agent, affecting family purchases. Given the exposure and influence of media (including internet) on children, it is imperative that future research should be planned to determine children's attitude towards advertising, and the impact of creative elements.

How Marketers Target Kids Kids represent an important demographic to marketers because they have their own purchasing power, they influence their parents' buying decisions and they're the adult consumers of the future. Industry spending on advertising to children has exploded in the past decade, increasing from a mere $100 million in 1990 to more than $2 billion in 2000. Parents today are willing to buy more for their kids because trends such as smaller family size, dual incomes and postponing children until later in life mean that families have more disposable income. As well, guilt can play a role in spending decisions as time-stressed parents substitute material goods for time spent with their kids. Here are some of the strategies marketers employ to target children and teens:

Pester Power The direct and indirect influence that kids have on parents buying decisions. Today's kids have more autonomy and decision-making power within the family than in previous generations, so it follows that kids are vocal about what they want their parents to buy. "Pester power" refers to children's ability to nag their parents into purchasing items they may not otherwise buy. Marketing to children is all about creating pester power, because advertisers know what a powerful force it can be.

According to the 2001 marketing industry book ‘Kidfluence’ pestering or nagging can be divided into two categories—"persistence" and "importance." Persistence nagging (a plea, that is repeated over and over again) is not as effective as the more sophisticated "importance nagging." This latter method appeals to parents' desire to provide the best for their children, and plays on any guilt they may have about not "We're relying on the having enough time for their kids. kid to pester the mom to buy the product, rather than going straight to the mom." Barbara A. Martino, Advertising Executive

TOOLS USED TO TARGET KIDS: The marriage of psychology and marketing To effectively market to children, advertisers need to know what makes kids tick. With the help of well-paid researchers and psychologists, advertisers now have access to in-depth knowledge about children's developmental, emotional and social needs at different ages. Using research that analyzes children's behavior, fantasy lives, art work, even their dreams, companies are able to craft sophisticated marketing strategies to reach young people. Brand loyalty Marketers plant the seeds of brand recognition in very young children, in the hopes that the seeds will grow into lifetime relationships. New babies as young as six months of age can form mental images of corporate logos and mascots. Brand loyalties can be established as early as age two, and by the time children head off to school most can recognize hundreds of brand logos.

While fast food, toy and clothing companies have been cultivating brand recognition in children for years, adult-oriented businesses such as banks and automakers are now getting in on the act. Buzz or street marketing The challenge for marketers is to cut through the intense advertising clutter in young people's lives. Many companies are using "buzz marketing"—a new twist on the tried-and-true "word of mouth" method. The idea is to find the coolest kids in a community and have them use or wear your product in order to create a buzz around it. Buzz, or "street marketing," as it's also called, can help a company to successfully connect with the savvy and elusive teen market by using trendsetters to give their products "cool" status. Buzz marketing is particularly well-suited to the Internet, where young "Net promoters" use newsgroups, chat rooms and blogs to spread the word about music, clothes and other products among unsuspecting users. "Brand marketing must begin with children. Even if a child does not buy the product and will not for many years... the marketing must begin in childhood." James McNeal, The Kids Market, 1999

Commercialization in education School used to be a place where children were protected from the advertising and consumer messages that permeated their world—but not any more. Budget shortfalls are forcing school boards to allow corporation’s access to students in exchange for badly needed cash, computers and educational materials. Corporations realize the power of the school environment for promoting their name and products. A school setting delivers a captive youth audience and implies the endorsement of teachers and the

educational system. Marketers are eagerly exploiting this medium in a number of ways, including:

•

Sponsored educational materials: for example, a Kraft "healthy eating" kit to teach about Canada's Food Guide (using Kraft products); or forestry company Canfor's primary lesson plans that make its business focus seem like environmental management rather than logging.

•

Supplying schools with technology in exchange for high company visibility.

•

Exclusive deals with fast food or soft drink companies to offer their products in a school or district.

•

Advertising posted in classrooms, school buses, on computers, etc. in exchange for funds.

•

Contests and incentive programs: for example, the Pizza Hut reading incentives program in which children receive certificates for free pizza if they achieve a monthly reading goal; or Campbell's Labels for Education project, in which Campbell provides educational resources for schools in exchange for soup labels collected by students.

•

Sponsoring school events: The Canadian Company ShowBiz brings moveable video dance parties into schools to showcase various sponsors' products.

The Internet The Internet is an extremely desirable medium for marketers wanting to target children: •

It's part of youth culture. This generation of young people is growing up with the Internet as a daily and routine part of their lives.

•

Parents generally do not understand the extent to which kids are being marketed to online.

•

Kids are often online alone, without parental supervision.

•

Unlike broadcasting media, which have codes advertising to kids, the Internet is unregulated.

regarding

•

Sophisticated technologies make it easy to collect information from young

•

People for marketing research, and to target individual children with personalized advertising.

•

By creating engaging, interactive environments based on products and brand names, companies can build brand loyalties from an early age.

A television or a washing machine, a cola, a fast food restaurant, a confectionery product or even an insurance policy - the one thing common to all these products is the use of kid power or what has come to be called `pester power' in most of their advertising campaigns. Lately, kids are at the centre of the strategy of most marketers.

Most products in India be it credit cards, banks, FMCG products or consumer durables such as a television or a refrigerator, are selling to families. Children today are at the core of the family and hence, can't be ignored. Moreover, research has shown that in India, if a child is used in a particular commercial, the likeability of the ad immediately increases. “Advertising has always sold anxiety and it certainly sells anxiety to the young. It’s always telling them they’re losers unless they’re cool” (Mark Crispin Miller, The Merchants of Cool, 2000)

Stages of the Consumer Buying Process Six Stages to the Consumer Buying Decision Process: Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, determined by the degree of complexity. The 6 stages are: 1. Problem Recognition (awareness of need)--difference between the desired state and the actual condition. Deficit in assortment of products. Hunger--Food. Hunger stimulates your need to eat. e.g.: see a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes. 2. Information search-o Internal search, memory. o External search if you need more information. Friends and relatives (word of mouth). Marketer dominated sources; comparison shopping; public sources etc. A successful information search leaves a buyer with possible alternatives, the evoked set. E.g.: Hungry, want to go out and eat, evoked set is Chinese food Indian food burger king 3. Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer wants or does not want. Rank/weight alternatives or resume search. May decide that you want to eat something spicy, Indian gets highest rank etc. If not satisfied with your choice then returns to the search phase. Can you think of another restaurant? Look in the yellow pages etc. Information from different sources may be treated differently. Marketers try to influence by "framing" alternatives. 4. Purchase decision--Choose buying alternative, includes product, package, store, method of purchase etc. 5. Purchase--May differ from decision, time lapse between 4 & 5, product availability. o o o

Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have you made the right decision. This can be reduced by warranties, after sales communication etc. After eating an Indian meal, may think that really you wanted a Chinese meal instead

ANALYSIS AND INTERPRETATIONS

AGE GROUP BELOW 5 5-10 10-15 TOTAL

FMCG 4 7 9 20

ELECTRON ICS 2 6 9 17

VEH1ICL ES 1 3 11 15

FURNITU RE 0 1 5 6

TOTAL 7 17 34 58

Ho: Children Influence the buying behavior of products H1: Children Do Not Influence the buying behavior of products Therefore, By Applying Chi-Square Test, X2 cal= (fo-fe) 2/fe fo

fe

(fo-fe)2

(fo-fe)2/fe

4 2 1 0 7 6 3 1 9 9 11 5

2.4137 2.0517 1.8103 0.7241 5.862 4.9827 4.3965 1.7586 11.7241 9.9655 8.7931 3.5172

2.5163 0.00267 0.6565 0.5243 1.2950 1.0348 1.9502 0.5754 7.4207 0.9321 4.8704 2.1986

1.0425 0.0013 0.3626 0.1998 0.2209 0.2076 0.4435 0.3272 0.6329 0.0935 0.5538 0.6250 X2cal= 4.7106

Degrees of freedom df = (r-1) (c-1) =6 X2 tab at 5 % and df = 6 = 12.592 Therefore, x2cal <x2tab Accepting the null hypothesis. Conclusion: Children do influence the buying behavior of products.

AGE GROUP OF CHILDREN AGE GROUP BELOW 5 5-10 10-15 TOTAL

NO OF RESPONDANCE 7 17 34 58

PERCENTAGE 12.06 29.31 58.62 100

12.06% of children belong to the age group below 5, 29.31% belong to group of 5-10 and 58.62% belong to group 10-15.age of children influence the parents decision making.

Age Group of Children 40

No of respondance

35 30 25 20 15 10 5 0 BELOW 5

5 to 10

10 to 15

Age Group

KIND OF FAMILY

TYPE

NO OF RESPONDANCE

PERCENTAGE

NUCLEAR

24

80

JOINT

6

20

TOTAL

30

100

Kind of Family

NUCLEAR J OINT

KIND OF FAMILY (According to Income) TYPE

NO OF RESPONDANCE

PERCENTAGE

SINGLE INCOME

19

63.33

DOUBLE IINCOME

11

36.67

TOTAL

30

100

KIND OF FAMILY (According to Incom e)

SINGLE INCOME DOUBLE IINCOME

MONTHLY INCOME

TYPE(‘000)

PERCENTAGE

15-25

NO OF RESPONDANCE 12

25-35

8

26.67

ABOVE-35

10

33.33

TOTAL

30

100

40

monthly income 35 30

respondance

25 20 Series1 15 10 5 0 15-25

25-35

ABOVE-35

TOTAL

salary

BUYING DECISION OF GOODS WHICH INVOLVES THE CHILDREN INFLUENCE

TYPE

PERCENTAGE

FMCG

NO OF RESPONDANCE 20

ELECTRONICS

17

56.67

VEHICLES

15

50

FURNITURE

6

20

66.67

Buying Decision of Goods Which Involves the Children Influence 20 15 10 5 Series1

goods

S1 FURNITURE

VEHICLES

ELECTRONICS

FMCG

0 respondance

ARRIVING AT A DECISION TO PURCHASE OF CONSUMER DURABLES TYPE

NO OF RESPONDANCE

PERCENTAGE

SINGLE

3

10

JOINTLY WITH SPOUSE

13

43.33

WITH ENTIRE FAMILY

14

46.67

TOTAL

30

100

ARRIVING AT A DECISION TO PURCHASE OF CONSUMER DURABLE

SINGLE JOINTLY WITH SPOUSE WITH ENTIRE FAMILY

INFLUENCE OF CHILDREN IN BUYING DECISION TYPE

NO OF RESPONDANCE

PERCENTAGE

LOW

2

6.67

AVERAGE

14

46.67

HIGH

12

40

EXTREMELY HIGH

2

6.67

TOTAL

30

100

INFLUENCE OF CHILDREN IN BUYING DECISION 16 14

respondance

12 10 8

Series1

6 4 2 0 LOW

AVERAGE

HIGH

EXTREMELY HIGH

SOURCE OF CHILDREN AWARENESS OF BRAND TYPE

NO OF RESPONDANCE

PERCENTAGE

FRIENDS

14

46.67

POSTERS/BANNERS

10

33.33

T.V

30

100

RADIO

13

43.33

INTERNET

8

26.67

SOURCE OF CHILDREN AWARENESS OF BRAND

FRIENDS POSTERS/BANNERS T.V RADIO INTERNET

ANNEXURE “CHILDREN INFLUENCING THE PARENTS BUYING DECISION OF CONSUMER DURABLES” 1. Name of the Parent :_________________________ 2. Number of children :_________________________ 3. Age group of children Below 5year

5-10

10-15

4. Kind of family Nuclear

Joint

5. Kind of family (according to earning) Single income

Double income

6. Monthly family income 15-25

25-35

above 35

7. Where do you go for shopping? Malls

local retailers

any other

8. Do you take them with you while going for purchasing\shopping? Yes

No

9. Do your child/children influence you while buying the following goods? • • • • •

FMCG ELECTRONICS VEHICLES FURNITURE APARTMENTS/FLATS

10. Which of the following do you own? Which type &brand? Product Tick Which Company Type you own Television Refrigerator Music system/DVD/ VCD Washing machine Microwave Owen Air conditioner Computer/laptop Mobile phone 11. How do you arrive at a decision to buy the above items? • Single • Jointly with spouse • With entire family 12. Has your child/children initiated you to purchase any of the above items? Yes

No

When did you buy it?

13. When arriving at a decision to buy any of the above, how much was the influence of your child/children? • Low • Average • High • Extremely high 14. Please rate the awareness of your child/children regarding branding in the above product categories. (1. Bad

2.Average

3.Good

4.Very Good)

________________________________ 15. Has your child influenced you to buy a specific brand? Yes

No

16. How did your child/children come to know about the brand? • Friends • Posters banners • T.V • Radio • Internet 17. How many hours of T.V does your child/children watch in a day? Below 2hrs

2-4

above 4hrs

18. Have you ever made any unplanned purchase of above goods at a shopping mall, supermarket etc. due to the insistence of your child/children? Yes

No

Limitation

Sometimes

• • •

The survey was restricted to 30 samples The survey was restricted to areas of Mumbai The time limit was too short for the project

Conclusion

The study shows that due to the increasing number of nuclear families and monthly income, the working condition of parents gives more priority to their children. The availability of better education, exposure to media as related to past years has increased the children’s knowledge about the products. An analysis of children as consumers helps in the formulation of marketing strategies by identifying the motivation, interests and attitude of children who show greatest involvement in making purchases in specific product category. These reasons increase the influence of children in the buying decision of parents.

BIBLIOGRAPHY / WEBILOGRAPHY

SEARCHING ENGINE: Bibliography: • •

Advertising express Organizational behavior – icfai

Webilography: www.google.com