final sem 1

A PROJECT REPORT ON

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

SUBMITED BYNISHA RADHAKRISHNANENROLLMENT 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: 30/10/2007Place: 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: 30/10/2007Place: Mumbai

ACKNOWLEDGEMENT

I here by take this opportunity to thank all thosepeople 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 Influence Of Children In Family Decision Making Process

3 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 having enough time for their kids.

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.

"We're relying on the kid to pester the mom to buy the product, rather than going straight to the mom."

Barbara A. Martino, Advertising Executive

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.

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

"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

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 regarding advertising to kids, the Internet is unregulated.

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

o Chinese food o Indian food o 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.

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 FMCG ELECTRONICS VEH1ICLES FURNITURE TOTALBELOW 5 4 2 1 0 75-10 7 6 3 1 1710-15 9 9 11 5 34TOTAL 20 17 15 6 58

Ho: Children Influence the buying behavior of productsH1: 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 2.4137 2.5163 1.04252 2.0517 0.00267 0.00131 1.8103 0.6565 0.36260 0.7241 0.5243 0.19987 5.862 1.2950 0.22096 4.9827 1.0348 0.20763 4.3965 1.9502 0.44351 1.7586 0.5754 0.32729 11.7241 7.4207 0.63299 9.9655 0.9321 0.093511 8.7931 4.8704 0.55385 3.5172 2.1986 0.6250

X2cal= 4.7106

Degrees of freedom df = (r-1) (c-1)=6

X2 tab at 5 % and df = 6 = 12.592Therefore, x2cal <x2tabAccepting the null hypothesis.

Conclusion: Children do influence the buying behavior of products.

AGE GROUP OF CHILDREN

AGE GROUP NO OF RESPONDANCE PERCENTAGEBELOW 5 7 12.065-10 17 29.3110-15 34 58.62TOTAL 58 100

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

0

5

10

15

20

25

30

35

40

BELOW 5 5 to 10 10 to 15

Age Group

No

of

resp

on

dan

ce

KIND OF FAMILY

TYPE NO OF RESPONDANCE PERCENTAGE

NUCLEAR 24 80

JOINT 6 20

TOTAL 30 100

Kind of Family

NUCLEAR

JOINT

KIND OF FAMILY (According to Income)


SINGLE INCOME 19 63.33

DOUBLE IINCOME 11 36.67

TOTAL 30 100

KIND OF FAMILY (According to Income)

SINGLE INCOME

DOUBLE IINCOME

MONTHLY INCOME

TYPE(‘000) NO OF RESPONDANCE PERCENTAGE

15-25 12 40

25-35 8 26.67

ABOVE-35 10 33.33

TOTAL 30 100

monthly income

0

5

10

15

20

25

30

35

15-25 25-35 ABOVE-35 TOTAL

salary

resp

on

dan

ce

Series1

BUYING DECISION OF GOODS WHICH INVOLVES THE CHILDREN INFLUENCE


FMCG 20 66.67

ELECTRONICS 17 56.67

VEHICLES 15 50

FURNITURE 6 20F

MC

G

ELE

CT

RO

NIC

S

VE

HIC

LES

FU

RN

ITU

RE

S1

0

5

10

15

20

goods

respondance

Buying Decision of Goods Which Involves the Children Influence

Series1

ARRIVING AT A DECISION TO PURCHASE OF CONSUMER DURABLES


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


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

0

2

4

6

8

10

12

14

16

LOW AVERAGE HIGH EXTREMELYHIGH

resp

on

dan

ce

Series1

SOURCE OF CHILDREN AWARENESS OF BRAND


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

you ownCompany Type When did

you buy it?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

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 Sometimes

Limitation

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

final sem 1

Documents