Teenage Purchasing Decisions for Cosmetics

Teenage Purchasing Decisions for Cosmetics Chapter 1: Introduction This introductory chapter is divided into five subsections. Firstly, a brief background of the research will be presented. Thereafter, the problem discussion will be provided, which in turn will lead to the purpose and objectives of the research. Finally, the delimitations and summary of the dissertation will be set. 1.1 Research Background According to Kotler (2008), consumer behavior is the study of how people buy, what they buy, when they buy and why they buy. It is a subcategory of marketing that blends elements from psychology, sociology, socio psychology, anthropology and economics. It attempts to understand the buyer decision-making process, both individually and in groups. It studies characteristics of individual consumers such as demographics, psychographics, and behavioral variables in an attempt to understand people needs. He also stated that it also tries to assess influences on the consumer from group such as family friends, reference groups, and society in general for example while consumers purchase the shoe, then they go for family decision, comfort, satisfaction, price and quality (Kotler, 2008). According to Baker (2002), consumers are not aware of the products and usage but constantly they are choosing among the various products. They are intentionally procuring the various new brands without any knowledge about the new products. Additionally if new company enters into the market, for every consumer it is very complicated to understand the features of the news products and this makes confusion among the consumers to obtain the information. For example: If one local company enters into the market then to increase the knowledge about the features of the new product, it will take long time for the consumers to recognise. Baker (2004) stated that the consumer will respond according to the product quality and reliability, the fundamental understanding of products is necessary to understand the product features, products reliability and product benefits. The consumer is the end user for the product; consumers buy the products in market; in order to execute flourishing sales operations in the market an efficient distribution channel and networks are required for the organisations. He also stated that advertisement, distribution channels and networks play an important role in the consumer goods industry. Manufacturing companies, retailer and suppliers do not have an idea about the consumer behaviour in the local market. Thomas (2004) suggested that direct marketing activities should be left to the local market leaders, because the local market leaders have best idea of local market and local consumer behaviour. In the current literature, there are two major approaches to studying consumer decision-making involving screening and choice. One approach is to extend the single-stage choice models by adding an explicit choice set from which the final choice is made (Swait Adamowicz, 2001). Another approach studies the process of screening prior to choice (Teder, 2000). Understanding consumer decision-making is important. From a practical perspective, marketing managers are increasingly concerned that their products/brands may not be considered or chosen over those of their competitors. From a research perspective, a more representative model of the staged decision process may significantly improve our ability to predict consumer choices (Roberts Lattin, 1991). Recently, the growth of cosmetic industry in the global beauty market represents a slight slowdown due to a weakened economic state in the most developed markets and declining penetration of emerging markets. However, among the gloomy picture of the worlds cosmetic industry, the Asian market emerges as the brightest star as according to the Euromonitors report (2009), the Asia Pacific markets value is up to more than US$70 billion which is the second highest after the Western European market. Among the European markets, UK is the fastest growing market with the compound growth rate of fourteen percent over the period of 2000 to 2005. The economic growth of more than seven percent a year since 1990 could be the reason why the UKs cosmetic market has attracted a lot of the worlds cosmetic leaders like Unilever, LOreal, Johnson Johnson and PG. These cosmetic companies activities in UK help creating an exciting and competitive cosmetic market (Euromonitor, 2009). Consumers unique shopping patterns are developed and affected by socialization agents, which include family, peers, and the media. According to Lachance et. al (2003), these socialisation agents may often impact whether or not the adolescents will buy certain products or brands.. However Miller et.al (2003) claims that celebrity endorsements do not influence consumers purchasing behaviour. In contrast Boyd and Shank (2004) maintain that consumers, particularly teenagers, are likely to select products or brands that are endorsed by celebrities. Moreover, peers are likely to exert normative and informative influence. Lachance et. al, 2003 identified that they may influence the teenagers brand and product choices. Additionally, an individual is likely to conform to a group if he or she shares beliefs and norms with the group (Arnould et.al, 2004). Also, a group is likely to effectively exert influence on an individual if the individual is highly committed to the group (Hawkins et al, 2004). 1.2 Reason Behind Choose the Topic The main reason behind chosen this topic is previous studies have not precisely conducted a focused investigation into the influence of peers and celebrities on fifteen to eighteen year-old females purchasing behaviour in cosmetic products. Most researches on peer influence were conducted on general consumers with general products (Elliott and Leonard, 2004). Moreover, As for researcher, she always felt that â€Å"Consumer Buying Behaviour† is one of the most interesting subjects for her and as a female she thought to do a dissertation on the influence of celebrities endorsement on female teenagers would suitable for her to work on. Researcher did previous semester in LSC and she took a course on Research and Methodology (RM) which helped her to know the format of the research paper. Moreover her supervisor Dr.Fahads motivation and encouragement had helped researcher to select this topic. Researcher have studied out many articles of Consumer Buying Behaviour and annual reports of different cosmetic company and tried to sort out a topic, which is going to be suitable for her dissertation according to supervisors suggestion. This dissertation will help cosmetics firms and retail stores develop a precise marketing strategy to appeal to teenage consumers and to understand their purchasing behaviour. 1.3 Research Problem According to the website of BHB (2009), beauty and cosmetics are not innovations of the 20th century. It is known from reports of old Egypt and the Roman Empire that people have ever since attached importance to a cultivated appearance. Numerous up to date studies prove that today more than 60 per cent of women really care much about beauty, cosmetics, skin and body care. Even men show an increasing interest and demand in products such as skin care cosmetics, creams or anti aging lotions. To place and keep a cosmetic product successfully in the market, it is vital for companies active in manufacturing and selling cosmetics to have extensive scientific pharmaceutical and market research done. It is crucial for manufacturers of natural cosmetics or make up to know about consumer behaviour, trends and demands in the sector. Consumers might decide for a product because of its characteristics, its care factor, its sensitivity or its branding and attractive packaging. Cosmetics companies use the desires, senses and images consumers have or want to experience. More and more often, companies let celebrities and super models act as testimonials for fragrances, organic cosmetics or anti aging make up cosmetics. Colourful and exciting advertisements on TV, the internet or in print media tremendously influence consumer purchasing behaviour and desires. Packaging and the design of, for example, perfume bottles, let a cosmetics product appear even more desirable and trendy. This di ssertation will focus on beauty products in order to help cosmetics industry and retail stores develop a precise marketing strategy to appeal to female teenagers and to understand their purchasing behaviour. Previous studies have not precisely conducted a focused investigation into the influence of peers and endorsers on fifteen to eighteen year-old males purchasing behaviour in cosmetic products. Most researches on peer influence were conducted on general consumers with general products (Cited in Escalas and Bettman, 2003). However, some research has investigated this influence among children (Piacentini and Mailer, 2004). According to Klein (2001), teenagers are mostly influenced by friends and may not necessarily be influenced by celebrities. Additionally, no research has been conducted on symbolic consumption in relation to beauty products among the above-mentioned age groups. The researches were conducted on general consumers with general products (Piacentini and Mailer, 2004). 1.4 Research Aim and Objectives The purpose of this study is to investigate internal and external influences on teenagers purchasing decisions on cosmetic products in London. This research also investigates that how celebrities influence the brand choice of teenagers buying behaviour towards cosmetics in London market. The key objectives of this study are outlined as follows: To investigate how consumer buying behaviour factors influence female teenagers when purchasing cosmetic products. To explore the role of peers and celebrities and their influence on female teenagers purchasing decisions of cosmetic product. To analyse how celebrities influence the brand choice of youth females buying behaviour towards cosmetic products in London market. To give recommendation and conclusion. 1.5 Research Limitations The delimitations of a research study indicate its parameters; that is what the study will include and not include (Creswell, 2003). The scope of the study was limited to female consumers aged fifteen to eighteen living in the UK, specifically London city. This was due to time and budget constraints. In addition, the study only examines beauty products as opposed to general products. Further, the focus of the research was on symbolic consumption, peer groups and aspiration groups including beauty products endorsements rather than all internal and external influences. 1.6 Structure of the Dissertation Chapter 1: In this chapter mainly it talks about introduction of this dissertation, which also includes brief introduction of the topic, research background, rationale behind choose the topic, problem statement, aim and objectives and limitations of this research. Chapter 2: The second chapter is the literature review of this dissertation concerned about, the works of various authors and scholars who have highlighted and discussed about the theories of consumer behaviour and celebrities endorsement from different dimension. Chapter 3: This chapter will analyse the overall market overview of cosmetics products in UK Chapter 4: This third chapter will discuss the research method used in this research paper. Research method allows the researcher to plan and design the whole research in a proper way and shows the right direction to achieve an outcome. So the chapter explains the reasons behind the use of selected research method and the advantages by using the specified research approach. Chapter 5: This chapter discusses and analyses the market information and survey for the sake of the research. It also shows the data those have been gathered through interviews of customers, sales representative, and analyse the data to provide a fruitful meaning of the research finding. Chapter 6: This chapter has been discussed the research recommendations, limitations, further research on this topic and also describe how managers can get benefit or managerial implications of this paper. Chapter 2: Literature Review This chapter is the theoretical foundations that underpin this research study. In this chapter the theoretical framework relevant to dissertation purpose and questions will be presented. The chapter starts with a presentation of the brief discussion on consumer buying behavior, followed by purchase decision process and teenagers learning process and thereafter theories regarding factors influencing the purchase decision will be discussed. The following chapter presents the theoretical foundation of this research. The framework of the literature review is outlined. 2.1 Consumer behavior Consumer behavior is the study of consumers as they exchange something of value for a product or service that satisfies their needs (Well Prensky, 2003, p.5). The study of consumer behavior focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption related items (Schiffman Kanuk, 2004, p.5). In short, the company should study and create the marketing campaign for their target group. But in the product life cycle, due to the consumer behavior the image, target audience or function of this product can be in change. This group of consumers have a diversity of needs, such as a need for belonging, independence, approval, and responsibility, as well as having the need for experimentation (Solomon et al. 2004). Teenagers are increasingly given the task of buying products for the family. They not only have more spare time but also enjoy shopping more than their parents do. For this reason, marketers are targeting their ads mainly at te enagers. To gain teenagers attention more effectively, advertising campaigns must be honest, have clear messages, and used with humour. Moreover, teenagers tend to be inconsistent and are likely to switch brand preference quicker than any other age group, as they have a high need to be accepted by their friends (Blackwell et al. 2001). Finally, teenagers are â€Å"easier targets, because they have grown up in a culture of pure consumerism. Because of this, they are way more tuned into media because there is so much more media to be tuned into† (Bush et al. 2004, p. 109). Teenagers enjoy advertisements; a McCann survey shows that 75% of a sample of mixed 15-25 year olds felt that advertising was entertaining and 68% said that they found it a useful source of ideas about what to buy (Piper, 1998). When youths needs and desires are understood, marketers can show young consumers how products improve their lives. Harris Interactive, a Rochester, New York-based market research firm, estimates that teens spend on average $94.7 billion yearly ($3,309 per capita), while young adults between ages 20 and 21 spend $61.3 billion yearly ($7,389 per capita) (Schadelbauer, 2006). He also stated that interestingly, 69% of the U.S. youth respondents of one survey said that their parents pay their bills and they have little or no idea of who provides their telecommunications services or how much they cost. In the databases mentioned above, there are studies about ethical aspects of marketing to youth, whether regarding clothing, soft-drinks, cosmetics, technology, movi es, records, food, and tapes exchange. Some companies use â€Å"cool† appeal in their advertisements. The young people distinguish themselves among social classes to the detriment of their â€Å"natural† behavior by purchasing â€Å"cool† products. Misleading advertisements change the behavior of young people and can affect them when they grow up. In the 1980s, Nike and Calvin Klein brands began to focus on brand capital rather than on products themselves. Now, the brand names become the objective of the purchase in itself (Bergadaa, 2007). In particular, cigarette and alcohol producers are criticized by those who say that they are marketing to immature consumers (Schadelbauer, 2006). According to the Keynote UK marketing report (2008), respondents were asked if they had used any so-called ‘celebrity fragrances, as industry comment has been made on the popularity of such brands. Those who used fragrances endorsed by celebrities, who tended to be in the you ngest age group, were most likely to have chosen Britney Spearss fragrance; others of popularity included the Beckhambranded fragrances, and the Jennifer Lopez and Kylie Minogue fragrances The report also stated that the retail chain The Perfume Shop names Stunning by Katie Price (the glamour model formerly known as Jordan) as its most popular female fragrance of 2007, with Shh by Jade Goody in second position and Coleen by Coleen McLoughlin (the celebrity girlfriend of Manchester United football superstar Wayne Rooney) in fourth place. The Fragrance Shop, meanwhile, lists Coleen, Curious (Britney Spears) and Kate (Kate Moss) among its ten bestselling womens brands in 2007. 2.2 Consumer Decision making theories Acoording to Shao (2006), the decision literature can be classified into three broad categories: 1) normative 2) behavioural, and 3) naturalistic. In this section the differences between the three different approaches to studying consumer decision behaviour is identified. 2.2.1 Normative decision theory Normative Decision Theory originated in the economic discipline. According to Shao (2006), earliest researchers viewed decision-making as gambles and decision makers as â€Å"economic† men striving to maximise payoffs. The word ‘normative describes how decision makers should behave in order to obtain maximum payoffs. Examples of Normative Decision Theory include Expected Utility Theory adapted by Neumann Morgenstern (1947) and Subjective Expected Utility Theory adapted by Savage (1954) (Cited in Shao, 2006). An important addition of the Expected Utility Theory is the Subjective Expected Utility Theory proposed by Savage (1954). The main difference between the two is that the former uses objective probabilities, while the final uses subjective probabilities. By substituting subjective probabilities for objective probabilities, Subjective Expected Utility Theory proposes that the decision maker may be uncertain about whether the various outcomes (payoffs) will actually occur if the option is chosen (Beach, 1997). On the other hand according to Schoemaker (1982), Normative Decision Theory is actually a family of theories and at their core is a rational decision maker. The implied decision process is a single-stage process of consistent calculations of the options utilities. He also stated that consumer decision-making is a complex process. However, the normative assumptions are imposing an order on the complexity of decision-making (Beach, 1997). Over time, there has been growing discontent with the normative approach to studying consumer decision-making because the observed decision behaviour often violate the underlying assumptions of Normative Decision Theory. 2.2.2 Behavioural decision theory Behavioural Decision Theory emerged when decision researchers observed that decision makers seldom make explicit tradeoffs, let alone explicit use of probability and their preferences are constructed, not invariant (Bettman et al., 1998). The rational decision maker depicted by Normative Decision Theory was challenged by Simon (1955) who argued that decision makers have only bounded rationality and is seeking to satisfy. He also argued that Normative Decision Theory put â€Å"severe demands upon the choosing organism and those consumers do not necessarily search for all available alternatives, but choose the first feasible alternative that exceeds a given amount of payoffs. However he also proposed classic Satisfying strategy that was employed on decision makers in complex choice situations† (Cited in Shao, 2006) 2.2.3 Naturalistic decision theory Naturalistic Decision Theory originated from the discipline of organisational behaviour. According to Shao (2006), many researchers have developed various naturalistic decision models based on their observations of how decisions are made by individuals in natural environments. For example, a decision maker such as a fire ground commander will first recognize the fire situation, generate a few potential plans of actions, use cognitive imagination to assess the appropriateness of each plan to controlling the fire, and then act on the plan that he believes is the most appropriate (Cited in Orasanu Connolly, 2009). 2.3 The Buying Decision Process The consumer decision making process consists of mainly five steps according to most researchers within the field (Peter and Olson 2005, p.169). They also stated that the steps included in the model are; need or problem recognition, information search, evaluation of alternatives, purchase and the post-purchase process. However, not all purchased require every step. Consumer can skip the evaluation of alternatives when considering low involvement products (Peter Olson 2005, p.168). According to Hawkins et al. (2001, pp.26-27) there are more aspects than only decision making process that affect consumer behavior which are external and internal influences. 2.3.1 Problem recognition The consumer decision making process generally begins when the consumer identifies a consumption problem that needs to be solved (Hoyer MacInnis, 2007, p. 195). Problem recognition is the perceived difference between an ideal and actual state. Ideal state is the way consumers would like a situation to be or the way they want to feel or be at the present time. An actual state is the way individuals perceive their feelings and situation to be at the present time (Hawkins et al., 2001, p.508). It can be said that consumer encounter the dissatisfaction or inconvenience situation and they would like to move to other preferable ones, problem is therefore recognized (Hawkins et al., 2001, p.508). 2.3.2 Information search Once the problem is recognized, relevant information from the past experience or long term memory is used to determine if a satisfactory solution is known, this is called internal search (Hawkins et al., 2001, p.528) and if the solution cannot be found in internal search then the external information relevant to the problem will be sought. Normally after problem recognition has been stimulated, the consumer will usually begin the decision process to solve the problem, typically from internal search because each consumer has store in memory a variety of information, feelings and past experiences that can be recalled when making a decision (Hoyer MacInnis, 2007, p.195). However, the stored memory can be decayed overtime, then they will be uncertain about their recalled information they will be engaged in external search, acquiring information from outside sources. According to Hoyer and MacInnis (2007, p.205), consumers can acquire information from five major categories of external so urces such as from retailers, media, other people and independent sources, and by experiencing the product. After searching for appropriate evaluation criteria, the consumers would probable seek appropriate alternatives-in this case brands, or possibly stores. They also identified that brands are affected in internal search and external search. In the internal search, consumers recall the sets of brands from their memory wherever the problem recognition occurred. Normally two to eight brands are tended to recall at a time and if they cannot recall brands from memory, the set of external factors such as availability on the shelf or suggestion from salesperson will then affected consumers purchasing. Additionally, well-known brands are more easily recalled during internal search than unfamiliar brands because the memory links associated with these brands tend to be stronger (Hoyer MacInnis, 2007, pp. 203-204). 2.3.3 Evaluation of alternatives The next step in the process is an evaluation of the alternatives which consumer compares the available options and information that has been gather through the searching process (McCall et. al., 2002) and seem most likely to solve the problem. There are two methods that consumers use when evaluating alternatives, which are attribute-based choice, this choice requires the knowledge of the consumers to compare the attribute of each available alternative and tends to exploit more effort and time, thus to be rational in the evaluation. And the other method applied is attitude-based choice, this method occur when consumers use their emotion, such as attitude and impression, in their evaluation (Hawkins et al., 2001, pp.560-562). 2.3.4 Purchase decision Consumers evaluate the stores image such as merchandise, service, physical facilities, convenience, promotion, store atmosphere, institution and post-transaction factors and make a selection to purchase at that specific outlet. On the other aspect, amount of the purchase, it is common that the consumers enter to one outlet with an intention to buy a particular brand but leave the store with a different brand or additional items. This shows the influences operating in the store effect consumers purchasing decision (Hawkins et al., 2001, pp.609-618). 2.3.5 Post purchase behavior After purchase, the customers evaluate their level of satisfaction or dissatisfaction with the product. Buyer satisfaction is determined by how close the products performance came to meet the buyers product expectations (Hoyer MacInnis, 2007). They also stated that consumers can experience dissonance (anxiety over whether the correct decision was made) or regret after a purchase (pp.272-273). One way of reducing dissonance is to search for additional information from sources such as experts and magazines. With searching for information to support and make the chosen alternative more attractive and the reject ones less attractive, thereby reducing dissonance (Hoyer MacInnis, 2007, p.272). Additionally, information that supports the consumers choice acts to bolster confidence in the correctness of the purchase decision (Hawkins et al., 2001, p.628). 2.4 Consumer Learning Process Learning is a progression by which consumers systematize their knowledge and it evolved over time. Consumers attitude and their future purchasing activities can be influenced by the learning process constantly. For gathering information from the stimuli in their environment consumers use their perceptual processes. According to Ganassali et.al (2009), consumer behaviour is approached by researchers adopting a variety of interpretative models and with a wide array of multidisciplinary frames, from economy to sociology, psychology and anthropology. According to East (1997), a shared perspective the different approaches to the understanding of consumer purchase decisions can be grouped. 2.4.1 Cognitive approach According to Ganassali et.al, (2009), this one is deeply rooted in the economic science and assumes a sensible behaviour of the decision maker, based on the price of the goods and on its attitude to respond to functional needs. The critical variable under this approach is the availability of sufficient information about purchase alternatives (price, product functionalities) to support the decisional process. So, from this approach, a main block of determinants concerning product characteristics drives the buying process. 2.4.2 External conditioning approach According to Foxall, 1990 cited in Ganassali et.al, (2009), this approach, the purchase decision is a response to external stimuli .The significant variable under this approach is which kind of external stimuli can influence purchase decision. From this second approach, a group of external determinants can influence the buying process, for example parents opinions or ads exposure. 2.4.3 Experience social interaction approach According to this approach, the present consumer decision aims at the construction of personal identity (Ganassali et.al, 2009). Following this idea, two main streams have been developed. One focuses on individual consumption decisions based on â€Å"emotional† explanation of consumer behaviour (Holbrook and Hirschman, 1982). Ganassali et.al, (2009) also stated that the other stream concentrates on consumption as a means of social interaction, building on the pioneer sociological contribution of Veblen (1899 cited in Ganassali et.al, 2009). From both streams, the idea is that each prospective consumer has an individual internal value schema (based on internal emotions and external social interaction) that manipulates what he/she buys. 2.5 Teenage Learning Process for Shopping According to Solomon et al. (2004), teenagers are group of consumers that has a variety of needs. Such as, need for belonging, independence, approval, and responsibility, as well as having the need for experimentation. He also states that teenagers are increasingly given the task of buying products for the family. Since they not only have more spare time but also enjoy shopping more than their parents do. Therefore, marketers are targeting their ads primarily at teenagers. In order to gain teenagers attention more effectively, advertising campaigns must be honest, have clear messages, and humorous. Moreover, teenagers tend to be fickle and are likely to switch brand preference quicker than any other age group, as they have a high need to be received by their friends (Blackwell et al. 2001). According to Moschis and Moore (2001), as people grow up from childhood to adulthood, they obtain the skills, knowledge and attitude relevant to form purchase behaviour. The conceptual model of consumer socialisation presented in figure 2.5 demonstrates this. It claims that an individual learns from a socialisation agent through interaction and that changes his or her cognitive organisation with age. The socialisation agent (Churchill and Moschis, 1979), can be a family member, peers, teachers, the media, and media personalities like athletes, movies stars, and rock stars (Mowen and Minor, 1998). They can exert strong influences on the individual due to frequent interactions, superiority or control over rewards and punishments. The individual is influenced by the agent during the process of learning. However, this depends on the individuals cognitive development or life stage and structural variables, like status, sex, age, social class and religious background. Additionally, the ind ividual will develop cognitions and behaviour, learning properties, which will form his or her consumer behaviour (Moschis and Moore, 2001). In Moschis and Moore study on teenagers decision-making (2001), it was found that for low involvement products young people depend largely on the mass media for information. The results of the study imply that socialisation agents may affect the consumers decision-making cognitions. The study also found that low-involvement products are bought with peers rather than parents (Moschis and Moore, 2001). Furthermore, teenagers are more likely to stand on their evaluation on the brand name and the sale price in their buying decisions. Males are more motivated by social consumption and characterised by materialistic attitudes than females. This may be because status, power and respect are important among the peers (Churchill and Moschis, 1979). 2.6 Influencing Factors of Purchase Decision 2.6.1 Advertisement Advertising informs consumers about the existence and benefits of products and services, and tries to persuade consumers to buy them (MacKenzie, 2004). Moreover, Kotler et al. (2005), claim that advertising aims at attaining target consumers to either think or respond to the product or brand. As a method of achieving advertisement goals, advertisements as well as their contents play an essential role in the process of commercial Teenage Purchasing Decisions for Cosmetics Teenage Purchasing Decisions for Cosmetics Chapter 1: Introduction This introductory chapter is divided into five subsections. Firstly, a brief background of the research will be presented. Thereafter, the problem discussion will be provided, which in turn will lead to the purpose and objectives of the research. Finally, the delimitations and summary of the dissertation will be set. 1.1 Research Background According to Kotler (2008), consumer behavior is the study of how people buy, what they buy, when they buy and why they buy. It is a subcategory of marketing that blends elements from psychology, sociology, socio psychology, anthropology and economics. It attempts to understand the buyer decision-making process, both individually and in groups. It studies characteristics of individual consumers such as demographics, psychographics, and behavioral variables in an attempt to understand people needs. He also stated that it also tries to assess influences on the consumer from group such as family friends, reference groups, and society in general for example while consumers purchase the shoe, then they go for family decision, comfort, satisfaction, price and quality (Kotler, 2008). According to Baker (2002), consumers are not aware of the products and usage but constantly they are choosing among the various products. They are intentionally procuring the various new brands without any knowledge about the new products. Additionally if new company enters into the market, for every consumer it is very complicated to understand the features of the news products and this makes confusion among the consumers to obtain the information. For example: If one local company enters into the market then to increase the knowledge about the features of the new product, it will take long time for the consumers to recognise. Baker (2004) stated that the consumer will respond according to the product quality and reliability, the fundamental understanding of products is necessary to understand the product features, products reliability and product benefits. The consumer is the end user for the product; consumers buy the products in market; in order to execute flourishing sales operations in the market an efficient distribution channel and networks are required for the organisations. He also stated that advertisement, distribution channels and networks play an important role in the consumer goods industry. Manufacturing companies, retailer and suppliers do not have an idea about the consumer behaviour in the local market. Thomas (2004) suggested that direct marketing activities should be left to the local market leaders, because the local market leaders have best idea of local market and local consumer behaviour. In the current literature, there are two major approaches to studying consumer decision-making involving screening and choice. One approach is to extend the single-stage choice models by adding an explicit choice set from which the final choice is made (Swait Adamowicz, 2001). Another approach studies the process of screening prior to choice (Teder, 2000). Understanding consumer decision-making is important. From a practical perspective, marketing managers are increasingly concerned that their products/brands may not be considered or chosen over those of their competitors. From a research perspective, a more representative model of the staged decision process may significantly improve our ability to predict consumer choices (Roberts Lattin, 1991). Recently, the growth of cosmetic industry in the global beauty market represents a slight slowdown due to a weakened economic state in the most developed markets and declining penetration of emerging markets. However, among the gloomy picture of the worlds cosmetic industry, the Asian market emerges as the brightest star as according to the Euromonitors report (2009), the Asia Pacific markets value is up to more than US$70 billion which is the second highest after the Western European market. Among the European markets, UK is the fastest growing market with the compound growth rate of fourteen percent over the period of 2000 to 2005. The economic growth of more than seven percent a year since 1990 could be the reason why the UKs cosmetic market has attracted a lot of the worlds cosmetic leaders like Unilever, LOreal, Johnson Johnson and PG. These cosmetic companies activities in UK help creating an exciting and competitive cosmetic market (Euromonitor, 2009). Consumers unique shopping patterns are developed and affected by socialization agents, which include family, peers, and the media. According to Lachance et. al (2003), these socialisation agents may often impact whether or not the adolescents will buy certain products or brands.. However Miller et.al (2003) claims that celebrity endorsements do not influence consumers purchasing behaviour. In contrast Boyd and Shank (2004) maintain that consumers, particularly teenagers, are likely to select products or brands that are endorsed by celebrities. Moreover, peers are likely to exert normative and informative influence. Lachance et. al, 2003 identified that they may influence the teenagers brand and product choices. Additionally, an individual is likely to conform to a group if he or she shares beliefs and norms with the group (Arnould et.al, 2004). Also, a group is likely to effectively exert influence on an individual if the individual is highly committed to the group (Hawkins et al, 2004). 1.2 Reason Behind Choose the Topic The main reason behind chosen this topic is previous studies have not precisely conducted a focused investigation into the influence of peers and celebrities on fifteen to eighteen year-old females purchasing behaviour in cosmetic products. Most researches on peer influence were conducted on general consumers with general products (Elliott and Leonard, 2004). Moreover, As for researcher, she always felt that â€Å"Consumer Buying Behaviour† is one of the most interesting subjects for her and as a female she thought to do a dissertation on the influence of celebrities endorsement on female teenagers would suitable for her to work on. Researcher did previous semester in LSC and she took a course on Research and Methodology (RM) which helped her to know the format of the research paper. Moreover her supervisor Dr.Fahads motivation and encouragement had helped researcher to select this topic. Researcher have studied out many articles of Consumer Buying Behaviour and annual reports of different cosmetic company and tried to sort out a topic, which is going to be suitable for her dissertation according to supervisors suggestion. This dissertation will help cosmetics firms and retail stores develop a precise marketing strategy to appeal to teenage consumers and to understand their purchasing behaviour. 1.3 Research Problem According to the website of BHB (2009), beauty and cosmetics are not innovations of the 20th century. It is known from reports of old Egypt and the Roman Empire that people have ever since attached importance to a cultivated appearance. Numerous up to date studies prove that today more than 60 per cent of women really care much about beauty, cosmetics, skin and body care. Even men show an increasing interest and demand in products such as skin care cosmetics, creams or anti aging lotions. To place and keep a cosmetic product successfully in the market, it is vital for companies active in manufacturing and selling cosmetics to have extensive scientific pharmaceutical and market research done. It is crucial for manufacturers of natural cosmetics or make up to know about consumer behaviour, trends and demands in the sector. Consumers might decide for a product because of its characteristics, its care factor, its sensitivity or its branding and attractive packaging. Cosmetics companies use the desires, senses and images consumers have or want to experience. More and more often, companies let celebrities and super models act as testimonials for fragrances, organic cosmetics or anti aging make up cosmetics. Colourful and exciting advertisements on TV, the internet or in print media tremendously influence consumer purchasing behaviour and desires. Packaging and the design of, for example, perfume bottles, let a cosmetics product appear even more desirable and trendy. This di ssertation will focus on beauty products in order to help cosmetics industry and retail stores develop a precise marketing strategy to appeal to female teenagers and to understand their purchasing behaviour. Previous studies have not precisely conducted a focused investigation into the influence of peers and endorsers on fifteen to eighteen year-old males purchasing behaviour in cosmetic products. Most researches on peer influence were conducted on general consumers with general products (Cited in Escalas and Bettman, 2003). However, some research has investigated this influence among children (Piacentini and Mailer, 2004). According to Klein (2001), teenagers are mostly influenced by friends and may not necessarily be influenced by celebrities. Additionally, no research has been conducted on symbolic consumption in relation to beauty products among the above-mentioned age groups. The researches were conducted on general consumers with general products (Piacentini and Mailer, 2004). 1.4 Research Aim and Objectives The purpose of this study is to investigate internal and external influences on teenagers purchasing decisions on cosmetic products in London. This research also investigates that how celebrities influence the brand choice of teenagers buying behaviour towards cosmetics in London market. The key objectives of this study are outlined as follows: To investigate how consumer buying behaviour factors influence female teenagers when purchasing cosmetic products. To explore the role of peers and celebrities and their influence on female teenagers purchasing decisions of cosmetic product. To analyse how celebrities influence the brand choice of youth females buying behaviour towards cosmetic products in London market. To give recommendation and conclusion. 1.5 Research Limitations The delimitations of a research study indicate its parameters; that is what the study will include and not include (Creswell, 2003). The scope of the study was limited to female consumers aged fifteen to eighteen living in the UK, specifically London city. This was due to time and budget constraints. In addition, the study only examines beauty products as opposed to general products. Further, the focus of the research was on symbolic consumption, peer groups and aspiration groups including beauty products endorsements rather than all internal and external influences. 1.6 Structure of the Dissertation Chapter 1: In this chapter mainly it talks about introduction of this dissertation, which also includes brief introduction of the topic, research background, rationale behind choose the topic, problem statement, aim and objectives and limitations of this research. Chapter 2: The second chapter is the literature review of this dissertation concerned about, the works of various authors and scholars who have highlighted and discussed about the theories of consumer behaviour and celebrities endorsement from different dimension. Chapter 3: This chapter will analyse the overall market overview of cosmetics products in UK Chapter 4: This third chapter will discuss the research method used in this research paper. Research method allows the researcher to plan and design the whole research in a proper way and shows the right direction to achieve an outcome. So the chapter explains the reasons behind the use of selected research method and the advantages by using the specified research approach. Chapter 5: This chapter discusses and analyses the market information and survey for the sake of the research. It also shows the data those have been gathered through interviews of customers, sales representative, and analyse the data to provide a fruitful meaning of the research finding. Chapter 6: This chapter has been discussed the research recommendations, limitations, further research on this topic and also describe how managers can get benefit or managerial implications of this paper. Chapter 2: Literature Review This chapter is the theoretical foundations that underpin this research study. In this chapter the theoretical framework relevant to dissertation purpose and questions will be presented. The chapter starts with a presentation of the brief discussion on consumer buying behavior, followed by purchase decision process and teenagers learning process and thereafter theories regarding factors influencing the purchase decision will be discussed. The following chapter presents the theoretical foundation of this research. The framework of the literature review is outlined. 2.1 Consumer behavior Consumer behavior is the study of consumers as they exchange something of value for a product or service that satisfies their needs (Well Prensky, 2003, p.5). The study of consumer behavior focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption related items (Schiffman Kanuk, 2004, p.5). In short, the company should study and create the marketing campaign for their target group. But in the product life cycle, due to the consumer behavior the image, target audience or function of this product can be in change. This group of consumers have a diversity of needs, such as a need for belonging, independence, approval, and responsibility, as well as having the need for experimentation (Solomon et al. 2004). Teenagers are increasingly given the task of buying products for the family. They not only have more spare time but also enjoy shopping more than their parents do. For this reason, marketers are targeting their ads mainly at te enagers. To gain teenagers attention more effectively, advertising campaigns must be honest, have clear messages, and used with humour. Moreover, teenagers tend to be inconsistent and are likely to switch brand preference quicker than any other age group, as they have a high need to be accepted by their friends (Blackwell et al. 2001). Finally, teenagers are â€Å"easier targets, because they have grown up in a culture of pure consumerism. Because of this, they are way more tuned into media because there is so much more media to be tuned into† (Bush et al. 2004, p. 109). Teenagers enjoy advertisements; a McCann survey shows that 75% of a sample of mixed 15-25 year olds felt that advertising was entertaining and 68% said that they found it a useful source of ideas about what to buy (Piper, 1998). When youths needs and desires are understood, marketers can show young consumers how products improve their lives. Harris Interactive, a Rochester, New York-based market research firm, estimates that teens spend on average $94.7 billion yearly ($3,309 per capita), while young adults between ages 20 and 21 spend $61.3 billion yearly ($7,389 per capita) (Schadelbauer, 2006). He also stated that interestingly, 69% of the U.S. youth respondents of one survey said that their parents pay their bills and they have little or no idea of who provides their telecommunications services or how much they cost. In the databases mentioned above, there are studies about ethical aspects of marketing to youth, whether regarding clothing, soft-drinks, cosmetics, technology, movi es, records, food, and tapes exchange. Some companies use â€Å"cool† appeal in their advertisements. The young people distinguish themselves among social classes to the detriment of their â€Å"natural† behavior by purchasing â€Å"cool† products. Misleading advertisements change the behavior of young people and can affect them when they grow up. In the 1980s, Nike and Calvin Klein brands began to focus on brand capital rather than on products themselves. Now, the brand names become the objective of the purchase in itself (Bergadaa, 2007). In particular, cigarette and alcohol producers are criticized by those who say that they are marketing to immature consumers (Schadelbauer, 2006). According to the Keynote UK marketing report (2008), respondents were asked if they had used any so-called ‘celebrity fragrances, as industry comment has been made on the popularity of such brands. Those who used fragrances endorsed by celebrities, who tended to be in the you ngest age group, were most likely to have chosen Britney Spearss fragrance; others of popularity included the Beckhambranded fragrances, and the Jennifer Lopez and Kylie Minogue fragrances The report also stated that the retail chain The Perfume Shop names Stunning by Katie Price (the glamour model formerly known as Jordan) as its most popular female fragrance of 2007, with Shh by Jade Goody in second position and Coleen by Coleen McLoughlin (the celebrity girlfriend of Manchester United football superstar Wayne Rooney) in fourth place. The Fragrance Shop, meanwhile, lists Coleen, Curious (Britney Spears) and Kate (Kate Moss) among its ten bestselling womens brands in 2007. 2.2 Consumer Decision making theories Acoording to Shao (2006), the decision literature can be classified into three broad categories: 1) normative 2) behavioural, and 3) naturalistic. In this section the differences between the three different approaches to studying consumer decision behaviour is identified. 2.2.1 Normative decision theory Normative Decision Theory originated in the economic discipline. According to Shao (2006), earliest researchers viewed decision-making as gambles and decision makers as â€Å"economic† men striving to maximise payoffs. The word ‘normative describes how decision makers should behave in order to obtain maximum payoffs. Examples of Normative Decision Theory include Expected Utility Theory adapted by Neumann Morgenstern (1947) and Subjective Expected Utility Theory adapted by Savage (1954) (Cited in Shao, 2006). An important addition of the Expected Utility Theory is the Subjective Expected Utility Theory proposed by Savage (1954). The main difference between the two is that the former uses objective probabilities, while the final uses subjective probabilities. By substituting subjective probabilities for objective probabilities, Subjective Expected Utility Theory proposes that the decision maker may be uncertain about whether the various outcomes (payoffs) will actually occur if the option is chosen (Beach, 1997). On the other hand according to Schoemaker (1982), Normative Decision Theory is actually a family of theories and at their core is a rational decision maker. The implied decision process is a single-stage process of consistent calculations of the options utilities. He also stated that consumer decision-making is a complex process. However, the normative assumptions are imposing an order on the complexity of decision-making (Beach, 1997). Over time, there has been growing discontent with the normative approach to studying consumer decision-making because the observed decision behaviour often violate the underlying assumptions of Normative Decision Theory. 2.2.2 Behavioural decision theory Behavioural Decision Theory emerged when decision researchers observed that decision makers seldom make explicit tradeoffs, let alone explicit use of probability and their preferences are constructed, not invariant (Bettman et al., 1998). The rational decision maker depicted by Normative Decision Theory was challenged by Simon (1955) who argued that decision makers have only bounded rationality and is seeking to satisfy. He also argued that Normative Decision Theory put â€Å"severe demands upon the choosing organism and those consumers do not necessarily search for all available alternatives, but choose the first feasible alternative that exceeds a given amount of payoffs. However he also proposed classic Satisfying strategy that was employed on decision makers in complex choice situations† (Cited in Shao, 2006) 2.2.3 Naturalistic decision theory Naturalistic Decision Theory originated from the discipline of organisational behaviour. According to Shao (2006), many researchers have developed various naturalistic decision models based on their observations of how decisions are made by individuals in natural environments. For example, a decision maker such as a fire ground commander will first recognize the fire situation, generate a few potential plans of actions, use cognitive imagination to assess the appropriateness of each plan to controlling the fire, and then act on the plan that he believes is the most appropriate (Cited in Orasanu Connolly, 2009). 2.3 The Buying Decision Process The consumer decision making process consists of mainly five steps according to most researchers within the field (Peter and Olson 2005, p.169). They also stated that the steps included in the model are; need or problem recognition, information search, evaluation of alternatives, purchase and the post-purchase process. However, not all purchased require every step. Consumer can skip the evaluation of alternatives when considering low involvement products (Peter Olson 2005, p.168). According to Hawkins et al. (2001, pp.26-27) there are more aspects than only decision making process that affect consumer behavior which are external and internal influences. 2.3.1 Problem recognition The consumer decision making process generally begins when the consumer identifies a consumption problem that needs to be solved (Hoyer MacInnis, 2007, p. 195). Problem recognition is the perceived difference between an ideal and actual state. Ideal state is the way consumers would like a situation to be or the way they want to feel or be at the present time. An actual state is the way individuals perceive their feelings and situation to be at the present time (Hawkins et al., 2001, p.508). It can be said that consumer encounter the dissatisfaction or inconvenience situation and they would like to move to other preferable ones, problem is therefore recognized (Hawkins et al., 2001, p.508). 2.3.2 Information search Once the problem is recognized, relevant information from the past experience or long term memory is used to determine if a satisfactory solution is known, this is called internal search (Hawkins et al., 2001, p.528) and if the solution cannot be found in internal search then the external information relevant to the problem will be sought. Normally after problem recognition has been stimulated, the consumer will usually begin the decision process to solve the problem, typically from internal search because each consumer has store in memory a variety of information, feelings and past experiences that can be recalled when making a decision (Hoyer MacInnis, 2007, p.195). However, the stored memory can be decayed overtime, then they will be uncertain about their recalled information they will be engaged in external search, acquiring information from outside sources. According to Hoyer and MacInnis (2007, p.205), consumers can acquire information from five major categories of external so urces such as from retailers, media, other people and independent sources, and by experiencing the product. After searching for appropriate evaluation criteria, the consumers would probable seek appropriate alternatives-in this case brands, or possibly stores. They also identified that brands are affected in internal search and external search. In the internal search, consumers recall the sets of brands from their memory wherever the problem recognition occurred. Normally two to eight brands are tended to recall at a time and if they cannot recall brands from memory, the set of external factors such as availability on the shelf or suggestion from salesperson will then affected consumers purchasing. Additionally, well-known brands are more easily recalled during internal search than unfamiliar brands because the memory links associated with these brands tend to be stronger (Hoyer MacInnis, 2007, pp. 203-204). 2.3.3 Evaluation of alternatives The next step in the process is an evaluation of the alternatives which consumer compares the available options and information that has been gather through the searching process (McCall et. al., 2002) and seem most likely to solve the problem. There are two methods that consumers use when evaluating alternatives, which are attribute-based choice, this choice requires the knowledge of the consumers to compare the attribute of each available alternative and tends to exploit more effort and time, thus to be rational in the evaluation. And the other method applied is attitude-based choice, this method occur when consumers use their emotion, such as attitude and impression, in their evaluation (Hawkins et al., 2001, pp.560-562). 2.3.4 Purchase decision Consumers evaluate the stores image such as merchandise, service, physical facilities, convenience, promotion, store atmosphere, institution and post-transaction factors and make a selection to purchase at that specific outlet. On the other aspect, amount of the purchase, it is common that the consumers enter to one outlet with an intention to buy a particular brand but leave the store with a different brand or additional items. This shows the influences operating in the store effect consumers purchasing decision (Hawkins et al., 2001, pp.609-618). 2.3.5 Post purchase behavior After purchase, the customers evaluate their level of satisfaction or dissatisfaction with the product. Buyer satisfaction is determined by how close the products performance came to meet the buyers product expectations (Hoyer MacInnis, 2007). They also stated that consumers can experience dissonance (anxiety over whether the correct decision was made) or regret after a purchase (pp.272-273). One way of reducing dissonance is to search for additional information from sources such as experts and magazines. With searching for information to support and make the chosen alternative more attractive and the reject ones less attractive, thereby reducing dissonance (Hoyer MacInnis, 2007, p.272). Additionally, information that supports the consumers choice acts to bolster confidence in the correctness of the purchase decision (Hawkins et al., 2001, p.628). 2.4 Consumer Learning Process Learning is a progression by which consumers systematize their knowledge and it evolved over time. Consumers attitude and their future purchasing activities can be influenced by the learning process constantly. For gathering information from the stimuli in their environment consumers use their perceptual processes. According to Ganassali et.al (2009), consumer behaviour is approached by researchers adopting a variety of interpretative models and with a wide array of multidisciplinary frames, from economy to sociology, psychology and anthropology. According to East (1997), a shared perspective the different approaches to the understanding of consumer purchase decisions can be grouped. 2.4.1 Cognitive approach According to Ganassali et.al, (2009), this one is deeply rooted in the economic science and assumes a sensible behaviour of the decision maker, based on the price of the goods and on its attitude to respond to functional needs. The critical variable under this approach is the availability of sufficient information about purchase alternatives (price, product functionalities) to support the decisional process. So, from this approach, a main block of determinants concerning product characteristics drives the buying process. 2.4.2 External conditioning approach According to Foxall, 1990 cited in Ganassali et.al, (2009), this approach, the purchase decision is a response to external stimuli .The significant variable under this approach is which kind of external stimuli can influence purchase decision. From this second approach, a group of external determinants can influence the buying process, for example parents opinions or ads exposure. 2.4.3 Experience social interaction approach According to this approach, the present consumer decision aims at the construction of personal identity (Ganassali et.al, 2009). Following this idea, two main streams have been developed. One focuses on individual consumption decisions based on â€Å"emotional† explanation of consumer behaviour (Holbrook and Hirschman, 1982). Ganassali et.al, (2009) also stated that the other stream concentrates on consumption as a means of social interaction, building on the pioneer sociological contribution of Veblen (1899 cited in Ganassali et.al, 2009). From both streams, the idea is that each prospective consumer has an individual internal value schema (based on internal emotions and external social interaction) that manipulates what he/she buys. 2.5 Teenage Learning Process for Shopping According to Solomon et al. (2004), teenagers are group of consumers that has a variety of needs. Such as, need for belonging, independence, approval, and responsibility, as well as having the need for experimentation. He also states that teenagers are increasingly given the task of buying products for the family. Since they not only have more spare time but also enjoy shopping more than their parents do. Therefore, marketers are targeting their ads primarily at teenagers. In order to gain teenagers attention more effectively, advertising campaigns must be honest, have clear messages, and humorous. Moreover, teenagers tend to be fickle and are likely to switch brand preference quicker than any other age group, as they have a high need to be received by their friends (Blackwell et al. 2001). According to Moschis and Moore (2001), as people grow up from childhood to adulthood, they obtain the skills, knowledge and attitude relevant to form purchase behaviour. The conceptual model of consumer socialisation presented in figure 2.5 demonstrates this. It claims that an individual learns from a socialisation agent through interaction and that changes his or her cognitive organisation with age. The socialisation agent (Churchill and Moschis, 1979), can be a family member, peers, teachers, the media, and media personalities like athletes, movies stars, and rock stars (Mowen and Minor, 1998). They can exert strong influences on the individual due to frequent interactions, superiority or control over rewards and punishments. The individual is influenced by the agent during the process of learning. However, this depends on the individuals cognitive development or life stage and structural variables, like status, sex, age, social class and religious background. Additionally, the ind ividual will develop cognitions and behaviour, learning properties, which will form his or her consumer behaviour (Moschis and Moore, 2001). In Moschis and Moore study on teenagers decision-making (2001), it was found that for low involvement products young people depend largely on the mass media for information. The results of the study imply that socialisation agents may affect the consumers decision-making cognitions. The study also found that low-involvement products are bought with peers rather than parents (Moschis and Moore, 2001). Furthermore, teenagers are more likely to stand on their evaluation on the brand name and the sale price in their buying decisions. Males are more motivated by social consumption and characterised by materialistic attitudes than females. This may be because status, power and respect are important among the peers (Churchill and Moschis, 1979). 2.6 Influencing Factors of Purchase Decision 2.6.1 Advertisement Advertising informs consumers about the existence and benefits of products and services, and tries to persuade consumers to buy them (MacKenzie, 2004). Moreover, Kotler et al. (2005), claim that advertising aims at attaining target consumers to either think or respond to the product or brand. As a method of achieving advertisement goals, advertisements as well as their contents play an essential role in the process of commercial

Interview of Insurance Ad :: essays papers

Interview of Insurance Ad Interview of an Insurance Field Adjuster As I fumbled through radio stations, the unforgettable memories of a horn blaring, tires screeching, and turning just in time to see a truck smashing into my car came flooding back. Glass shattering, the airbag deploying, I had gasped for breath from the sudden impact. It is sad that most people will have to go through a car accident like this one at least once in their lifetime. Kathy Highland was the insurance adjuster from Shelter Insurance Company who was assigned to my case. Her professionalism, courtesy, and understanding changed this horror story into just another chapter in my life, a chapter which I am now able to look back upon as a valuable learning experience. The morning sun warmed the air that April day. It was Thursday around nine a.m. when I arrived at the Shelter Insurance building. I looked around Kathy's office noticing her diploma from the University of Oklahoma and a couple of certificates for the insurance company hanging on the wall. Directly behind her was a quotation in a small frame. It read, "When looking for the reason why things go wrong never rule out sheer stupidity." I asked Kathy what it meant to her. Kathy looked at me and said, "People come into my office thinking I have all the answers and I can give them everything they want." It is easy to see that Kathy's knowledge is what people desire. With her professionalism and courtesy she is able to ease the suffering of her clients and not compensate them more than the company is willing to. About that time the phone rang, and she picked it up and said, "Kathy Highland." She listened for a few seconds as she tapped her pen on the desk, and finally said, "What is the claim number." As if she had done this a million times, Kathy told the person on the phone to go ahead and extend the car rental and then hung up the phone. Clearly Kathy handles her work swiftly and methodically easing the anguish of the ordeal as easy as possible. As I asked Kathy, "Where does the claim process begin?" She started to explain to me the claim process from beginning to end. First the adjuster will call both parties involved in the accident. Kathy said, "This could be the fun part. Most of the time you get two different stories of the accident." Then the adjuster will go to the scene of the

Essay --

This paper takes a case analysis approach to considering the ethical and legal implications of the â€Å"right† to health care in contemporary America. The case scenario assumes that the government has enacted a new national health care policy. All citizens are guaranteed an annual income of $20,000 and the right to purchase (at an annual cost of $1,500) a comprehensive health insurance policy covering all routine medical and hospital costs. People who fail to purchase this insurance plan must pay cash for all health services. If non-insured individuals do not have the money to pay for services, the hospital and/or physician will deny treatment. This â€Å"comprehensive† insurance package is not without certain important limitations and exclusions. Notably, no coverage is provided for illness or disability arising directly from the individual’s own unhealthy behaviors (e.g., smoking, overeating, drinking, etc.). This paper examines the legal and ethical implications of this health care system (for individual patients, hospital administrators, health care providers, and the society at large) by looking at the situation facing two hypothetical patients. The first patient, â€Å"Mr. Puffer† purchased the $1,500 plan but finds that costs related to the treatment of his lung cancer are not covered (because Mr. Puffer is a long-time smoker). The second patient, â€Å"Mr. Spender† has failed to purchase the insurance plan and is now being denied admission and treatment for his acute appendicitis since he has neither insurance coverage nor the cash to pay for the treatment. Both Mr. Puffer and Mr. Spender contend that the hospital has violated their right to health care. Health Care as a â€Å"Moral Duty† versus a â€Å"Moral Right† The two patients’ claim... ...only solution to the dilemmas posed in this case is to completely re-design the health care system. It must have as its starting point a system of distributing health care benefits based on moral values, not marketplace values. A good beginning would be adherence to the moral principle that health care is (as both Mr. Puffer and Mr. Spender asserted) a basic right not a privilege based on income level or â€Å"good behavior.† If health care is indeed a right and not a privilege, an ethical system should provide for universal access to health care. Having established these basic guiding principles, the system designers would then have to grapple with the logistics of rationing existing health care resources (as necessarily limited by technology, funding, etc.) in a manner which takes into account principles of distributive justice and the underlying values of the society.

511 Midterm

511Part 1. Zomeworks: Four Decades of Design-Driven Innovation in the New Mexico Desert 1. )I believe that no, Zomeworks should not aggressively pursue the solar water heater market. I believe this for many reasons. Number one being that natural gas is one of the most abundant natural resources that the world has and if individuals are not being compensated for using a different technology then they will not change, it is sad, but it is reality. In today’s present society individuals do not like change nor do they like more expensive change.What I mean by that is it is quite expensive to have a solar water heater installed. I think that Zomeworks has a great opportunity to further maximize their current portfolio as long as they really start to focus on it. Zomeworks is a leader in Passive Solar Technology. I feel that this type of technology is not well known and that by pursuing the solar water heater market they are going to jump their innovative wave too soon. I think a go od indication of this is the fact that Zomeworks is producing products right here in New Mexico and I have not heard about them until this midterm.Zomeworks need to capitalize on the very valuable assets it has to offer. For example, Zomeworks Passive Solar Tracker is a great product for them to get their brand name recognized. While all of this is just my opinion I believe that in order to really make an educated analysis on whether or not Zomeworks should pursue the water heater market, the first thing I would look into is the overall goals of the outside investors, since they hold the majority stake in the company. I would want to look at the actual finances of the company.I would conduct research to find actual amount of quantities sold, revenues generated by each product type, and production costs associated with each product. In addition, it would be important to know the firm’s costs of optimizing its existing portfolio and its benefits against the costs and benefits i nvolved in focusing on the solar water heater market. Minimum Winning Game is defined as, â€Å"the first major market opportunity for a new technology that is limited enough to provide a clear target for the technology and product development efforts in the short to medium term and, nd sufficiently large enough to establish the foundation for the long term business and financial success. It requires iterative double linking process of understanding the business opportunity for the technology and linking that to technical priorities. † For example, a minimum winning game for Zomeworks would include many different facets. A winning strategy at Zomeworks would include further product and technological development that energizes and inspires its target consumer.The company knows that its target consumer base is mostly comprised of either â€Å"going green† supporters or those off the grid who require their specialized products. Zomeworks simply needs to use a more effecti ve strategy to communicate its message of â€Å"why† consumers should purchase its solar water heater. El Bulli accomplished the communication of its vision by highlighting an expression of innovation and a team that â€Å"constantly sought new techniques and new equipment with which to experiment†, rather than the message of running a restaurant to make money.Zomeworks needs to focus on redesigning the core meaning behind its entire portfolio before it can successfully expand its reach in promoting its solar water heater, Zomeworks currently caters to the niche buyer who has a definitive need for a solar product. If Zomeworks is going to expand into the consumer solar water heater segment, work needs to be done on communicating the environmental benefits of this product. A winning strategy at Zomeworks would include leveraging their customer target segments that show the most growth potential. . ) Full Credit Leadership is one of the key drivers in running a company. Leaders have many techniques and organizational structures to choose from depending on the type and size of the firm. When it comes to Zomeworks I think that an informal organizational structure and leadership technique would be the best. What I mean by informal organizational structure is the acceptance of input from all employees. Since Zomeworks is of a smaller scale they can afford the diverse inputs of their employees.While it is important for a business to have a structure in place as it grows, I feel a formal structure can have unique drawbacks while a company is still small. Employees in a startup business need to feel more like partners in the company's vision. Placing employees in rigidly defined roles when the company is small enough to ensure that all employees’ work together can create a rift in the relationship between business owners and employees, which can greatly affect the performance of the company.Strategic decision-making is generally more centralized in smaller organizations than in larger companies, again due to the relatively fewer number of managers found in small companies. What I mean by informal leadership is very well illustrated in the Monnalisa Clothing Case. â€Å"The founder is an essential element of our system of control,† says a Monnalisa product manager. â€Å"He knows when to feed the creative forces of the company or when to draw attention to critical production, financial, or quality indicators. As stated in the case, Monnalisa is a medium-sized Italian company that designs and sells clothes and accessories for children. Monnalisa is a great example of a company that has formal (results control) and informal (social control) mechanisms to manage its concurrent and ongoing need for creative design and efficient production processes. At Monnalisa, there’s no intention to limit creativity, but increasingly the company is trying to offer the stylists a minimum structure by running a series of internal meetings at the beginning of every collection.This collection briefing enables the team to define the objectives in terms of what to create (and its quality standards), when to create it (fashion weeks and availability at the shops for the beginning of the season dictate the timing), and at what target cost. Significantly, the company has introduced new software that allows the stylists to monitor the consequences of their creation(s) in financial terms (through cost cards) and in development terms (through technical cards) as ideas progress. With this tool, we don’t want to limit creativity at all—actually we want to maximize our creative potential and avoid the problems we had in the past when collections ended up to be incomplete on the shelves because we decided not to produce some low margin prototypes,† the CFO emphasizes. I think that for Zomeworks this type of managing between creativity and business would actually be pretty easy. Zomeworks management str ucture seems like it is very strong and they understand what each of their roles is.I think that the hardest part for Zomeworks would be the fact that the employees that work there are so smart and have so many different ideas that if would be hard keeping input to a minimum and explaining why management chose one idea over the other. 3. ) Full Credit Today, in order to be competitive it is essential to recognize the value of â€Å"knowledge† and to strive for an improved ROI and better management of your organization’s knowledge assets. Perhaps your organization has already recognized the value of the knowledge that it has spent its hard-earned capital to obtain.If so, you may already be taking steps to formalize the collection of valuable knowledge gained from experience and organizing knowledge in ways that benefit the entire organization. These new approaches are collectively referred to as â€Å"Knowledge Management†. â€Å"The fact is [knowledge managemen t and best practice sharing] is good for business. The faster and more effectively we can share ideas, the better we can make our product, the better we can serve our customers, the better we can build a committed team of employees, and—bottom line—the better we can earn profits for our shareholders. One way that Zomeworks can increase its internal knowledge capture and internal knowledge sharing is to build their collaborative competency. Collaborative competency is a firm’s ability to realign its internal resources and capabilities to the changing environment by leveraging on external resources and capability-acquiring mechanisms such as strategic alliances, acquisitions, and joint ventures. Zomeworks could greatly benefit from collaborating and sharing their passive solar technology.For example, lets say that Zomeworks collaborates with the company that is selling the majority of the solar water heaters in Europe. They could use this collaboration to learn fl aws that the Europe product might have or vis versa. Also, if they partnered with this European company their brand name would be out there more and this type of collaboration could eventually lead to a joint venture and the entrance into a new economy for Zomeworks. 4. )When it comes to the question of determining your target market you have to take into consideration what your product is and how your product is going to be used.Whether or not suburban residential southwestern United States is the right target market for the solar water heater is not the biggest concern for me. I think the bigger question to ask is, is it the only target market for the solar water heater and the answer is no, it’s not. I would agree that solar water heaters are more effective in the southwestern United States. I do not think, however, that the southwestern United States is the only target market to approach.If we again refer back to the scenario of just the Albuquerque area we know that the residents that live close to the natural gas lines are the residents that are going to be using gas water heaters because it is extremely cost effective. Therefore these individuals will have no financial incentive to give up their gas water heater for a solar water heater (refer to figure 1. ) The real target market for residential Albuquerque would be those residential areas that are further away from the gas lines since they are most likely using electric and propane heaters, which are around 10X as much to use than gas water heaters.Since customers are spending a lot more on electric and propane heaters they would be the best residential target market for the solar water heaters since even though the instillation of a solar water heater will be expensive in the beginning it will quickly earn its value compared to how much the resident owner was originally paying to operate an electric water heater. Figure 1 The key to remember is that there has to be a real problem that solar wa ter heaters solve in order to warrant mass adoption, something I don’t see happening in the United States, at least in today’s society.It appears that Zomeoworks is best positioned to pursue emerging markets, because these markets have conditions that produce problems that Zomeworks can solve. The Chotukool refrigerator further exemplifies the importance of having used a product to solve a problem. In rural Indian villages, traditional refrigerators were too expensive and an unreliable power source made them unconventional. The Chotukool merged the gap between having a functional and inexpensive refrigerator (something the Tata nano also did). Obviously this product would never serve as a primary cooling unit in the U.S. and I feel like solar water heaters fall into a similar category. The only target markets worth actively pursing are either idealists and those homeowners living off the natural gas line (self-centered). Since people with no gas lines typically use cos tly and inefficient electric and propane water heaters, installing a solar water heater would be a cost effective solution. The difference of course is that idealists have an emotional drive toward the product while those living off the natural gas line have a functional, self-centered need for the product. . ) I think that currently the company has a reserve the right to play strategy see figure 3 below. This means that the company invests enough to stay in the game, but avoid premature damages. This strategy may work for them now, especially since customers find them due to very little outside advertising, besides of course a magazine ad that targets the same consumers who are already are knowledgeable in the technology. Basically, Zomeworks is following a strategy aimed at maintaining production for the relatively localized and sporadic level of demand.I don’t see the company having as much potential by encroaching on the traditional energy market. Instead of adapting, Zom eworks needs to use a shaping strategy to redefine what it means to actually use solar. Lets face it, at the end of the day consumers are going to buy what they are most comfortable with and whatever is most popular. Incidentally the people making decisions for businesses act the same way. People want to be energy conscious consumers. Zomeworks needs to step into the wave and excite customers about the solar philosophy.How about designing a marketing campaign that shows which companies use Zoneworks products and how it has impacted the earth. This creates a popular group where individuals and businesses get social recognition for supporting rentable sources of energy. If I was going to make a shaping view for Zomeworks the biggest part would be for the based of Steve Baer’s philosophy. I think that Steve could have his engineers work quite diligently on producing a solar water heater that could be a leading example in the industry.It would set out and educate that population of what a big deal this type of technology is and how good it is for our world. I would really push advertising since we want to create a lot of demand. Figure 3 6. )B2C is defined as any business who sells primarily to the end customer while, B2B refers to any business who sells primarily to other businesses both online and offline. B2B markets are generally small vertical markets, often niche in size, comprised of a few thousand sales prospects to maybe as large as 100,000 prospects.B2C markets are typically large broad markets of tens to thousands to millions of sales prospects. I believe that Zomeworks should try a B2B approach instead of a B2C for the solar water heater market. I think that a B2B approach would be better for Zomeworks to pursue for many reasons. I think that the greatest reason that Zomeworks should go to B2B is to benefit their Research and Development department. If Zomeworks uses a big-box retailer to sell their products than it can increase the funding it h as towards R;D projects.If Zomeworks wants to have better product placement it needs to improve dealer relationships and further relationships with businesses that are possible customers. The benefit of using a B2B approach is that more effort can be spent on support and instillation, assuming that B2B results in a lower number of buyers. Instead of trying to cater to individual consumers, Zomeworks could appeal to servicing multiple needs of entire organizations and cultivating lasting relationships with its clients. Zomeoworks also needs to find a partner in the appliance industry.A reputable business partner would add credibility to Zomeworks and its products, and marketing multiple variants of its products would help diffuse solar technology into the market. Plus since brand identity in B2B markets is created through personal relationships and consultative selling with the other business Zomeworks doesn’t have to worry about product advertising. They can use the other bus inesses and resellers to do the marketing for them if they used the B2B approach. With their client base typically being repeat customers the transition would be easy. The lifetime value of a B2B customer is much higher due to the higher cost of sales and the likelihood of repeat or add-on sales to the same customer. † I think that with a B2B approach it would be easier to have multiple product configurations. I think that my having multiple product configurations Zomeworks is helping sell more of their product without the annoyance of pushing all of their products onto the customer, which in return could make them not want to buy the product since they will then be locked in. I elieve that by having a B2B approach it will help facilitate the diffusion of technology. I believe this because if you have many or even just another business selling your product they are able to advertise and speak to the value of the product. I believe that the one of the greatest ways to diffuse t echnology is to educate people of that technology. When individuals are fully educated on what the different products are used for etc. , they will be able to make an educated decision on whether or not the different products would be a right fit for them and their needs.The ever-changing market that is technology can very easily influence people, so by having resellers be able to answer questions and explain the products they are helping Zomeworks diffuse the technology. I think that a good example of a situation in where technology was diffused is in the example that Everett Rogers gives, â€Å"the implementation of water boiling to obtain higher health and wellness levels of the individuals living within the village of Los Molinas. † In this case the residents of the village have no knowledge of the link between proper sanitation and reduced levels of illness. In Los Molinas, a stigma is linked to boiled water as being something that only the â€Å"sick† or â€Å"u nwell† consume, and thus, the idea of healthy residents boiling their water prior to consumption was frowned upon, and those who did so wouldn't be accepted by their society. †3 Much of the reason for the lack of success is because the social norms and standards of acceptance into society greatly outweighed the idea of taking on this innovation. Zomeworks could also levarge what there target market should be in order to diffuse technology. With the proper market the customer base will be very accepting of this new technology.For example, bringing the technology to individuals that are very environmentally friendly. 7. )I believe that although Zomeworks is great at the R&D aspect of their company. I think acting as an R&D laboratory and licensing out technology and products would be a smart move for Zomeworks. They currently have a limited manufacturing layout (I am assuming since the one location is in Albuquerque), so switching to a pure R&D structure would be relativel y easy. If Zomeworks focused more on the R&D aspect of the business they could contract out to companies that would pay very well.TTTech faced a similar problem when deciding to either license out its time triggered system or become an engineering partner. The benefits of licensing its technology would be faster diffusion into the marketplace through various product variants. Its possible that firms would see alternative uses for Zomeowrks technology and products, just like how coolcell was designed because of a outside firms asking for a solution to cool batteries and increase there usable life. Another benefit of licensing includes focusing more on invention and innovation, which would help Baer diffuse his solar philosophy into a wider range of products.They could become a B2B company, which would free up the amount and time it would take set up stores everywhere and sell directly to the customer. I think that if Zomeworks handed over the sales operations to one or multiple compa nies then it would be a lot better off in the sense that it would really have the opportunity to perfect the products that it currently has and the time to invent new ones. I think that there are pros and cons to both solely being a R&D company or readjusting their sales strategy. I feel that with R&D come two main types.The first type of R&D is going to be the hardcore image processing and specialized stuff, which is giving you substantial competitive advantage. This is usually less than 5 percent of all the software developed, takes years, and gives you an edge and the ability to do projects others just won't or can’t do. For example, I currently am an intern at Sandia National Laboratories and the company performs a lot of WFO (work for others) and R;D research, but at the same time Sandia has corporate tools that they would not share with anyone simply on the fact that the knowledge an product are so valuable and crucial for the company.The second type of R;D can be descr ibed as general utilities written to spare time. For everything that falls under section one you have to be careful since this kind of stuff can either simplify the life of your competitors too much. To have in-house SW of this kind also usually means hiring a master in computer science or a genuine mathematician to actually develop it. For everything under section two you are doing a proactive disservice to the community by keeping these closed. You could spare a lot of people a lot of grief by giving them access to what you have, and get the same in return.The pros and cons of just revamping the sales process would be the fact that you would be able to monitor how your products are being sold and used. You could know that the purpose of your product is being used for what it is actually meant for. I personal feel that for Zomeworks I wouldn’t become solely an R;D company, but a lot of my attention would go to this aspect of my business. 8. )Steve Baer I believe is a very go od leader. He takes care of his employees and values the company’s vision and mission.A deeper meaning of Zomeworks’ products is that they present society with a decreased dependence on high technology, and therefore a more direct relationship with the sun and the natural world. â€Å"Industrialist, manufacturers, and scientists have made man so successful that he is becoming rude to nature. Let us not allow this. Engineers and businesses must lead the way a to good manners. With more energy, more experiment, and more study, man can spread throughout the universe while being polite to nature at home. Appropriate industry utilizing science will allow part of the earth to be left alone.Packing up to leave would show good manners. † I believe that the above quote really emphasizes what Steve Baer is trying to convey with the hidden meaning in Zomeworks’ innovative technologies. I believe the true meaning of the solar water heater is not that we can passively heat our water by ourselves, but is more about the idea of not subsidizing our natural resources mainly the sun in this case. I think it is greatly related to the fact that we should be able to take care of ourselves and if we continue to deplete the world of our natural resources then we are going to destroy our species.For Steve Baer I believe that the acceptance of the passive solar water heater would show that the world is moving towards a place where they are starting to appreciate the world around themselves. Zomeworks needs to communicate its products reliability and functionality in ways that support and augment high technology. A big question would be, how does one publicize the purchase of a water heater and how will they be socially rewarded for the purchase that sits hidden in the home.A water heater is much different than sporting a recycled water bottle or eco friendly clothing, but what if there was a way to publicize the product? 9. ) Full Credit When thinking about how Zomeworks could help the public in understanding its products I think that one of the first questions they should ask themselves is â€Å"who are our customers? † By asking themselves this question they put into perspective whether or not their customer will have any questions about their product. Usually Zomeworks customers are highly inquisitive individuals so making sure that their products are explained well is very important.Also, since many of the customers are returning customers they will want to be consistent on how they explain their products. The case illustrates to us that the potential United States solar water heater market is lower in comparison to foreign markets such as the European Union. Solar water heaters definitely have a positive public image, but public awareness is low due to poor publicity. If Baer does decide to produce his solar water heater he will definitely have to explain the benefits well enough so that the general public would be interes ted and want to purchase one.One way that Baer could inform the public on his products is through quick vignette tapings that he could easily post to his website or you-tube. I think that if Baer did want to pursue the solar water heater market he would have to explain the product to the public more. I think that he could easily do this without compromising his vision. He doesn’t have to offer bribes or subsidiaries in order to communicate the benefit that the solar water heater has to offer. He just has to explain how great the solar water heater is that way people will want to buy it on their own.I think that explaining the products better will actually help Baer in the selling of his products because to be honest people don’t want to buy something they know nothing about. I believe that no, Zomeworks should not expand into producing educational tools; I believe that the market is too small to make anything more than breaking even. Plus I think that if they were to e xpand into any other market they should shoot for what they are passionate about which is solar water heaters. Whether or not Baer’s water heater is an invention or an innovation is a good question.An invention is defined as, â€Å"A new device, method, or process developed from study and experimentation. † An innovation is defined as, â€Å"The act of introducing something new. †So in essence innovations lead to inventions. An innovation is the idea and invention is the creation and actual outcome of innovation. So based on what I understand the differences between the two to be I believe that the solar water heater is an invention that was based on the innovation of having a more direct relationship with the natural world. I feel that Zomeworks models a design process like Bang and Olufsens.It is very similar to a â€Å"Manhattan Project† type production place. Manhattan project design is a type of production development where many ideas are explored in parallel in early stages. It is a very design driven process. I think that the amount of controls in Zomeworks is pretty spot on. I think that everyone in the company shares the same values, which leads them stay on route to the mission. I don’t believe that Zomeworks engages their customers like Lego did. I think that they rely really on only the engineers and Steve Baer for the designs and input of the designs.I think that it would be very beneficial if Zomeworks did decide to leverage its passionate customer base. I think that by leveraging their customers they would be able to gather very innovative and diverse responses on their current products, or they could get ideas for new products. 10. ) I believe that Zomeworks’ innovations are not too radical for conventional houses. I think that the products they design are good for any type of house I think that their designs may be too radical for the conventional person.Conventional people don’t need the produc ts that Zomeworks produces. There is little incentive to buy a solar product that requires a labor-intensive expensive instillation, and periodic adjustment. Furthermore, its not likely that Zomeworks would be able to convince consumers to purchase multiple products to install in their â€Å"conventional homes†. Again, there is no problem conventional homeowners have that need to be solved with solar technology, unless they live off the grid or in an area with unreliable electricity, which is unlikely in the U.S. In today’s world there are all sorts of different people you have minimalists compared to the materialistic, you have the environmentalists compared to the contaminator. Zomeworks sell product not for the general public it sells products to a very specific kind of person and although the world in moving towards more an an eco-friendly environment there are still many people out in the world that will not buy Zomework products based on the fact that they are re ally not value added in a personal way.Unless there is a cost benefit to use these products Zomeworks is going to have a hard time appealing to the individuals who are just concerned about how it affects their personal bottom line. I think that Zomeworks should continue to sell their products to anyone who will buy them I think that there is definetly not a big enough market for Zomeworks to bring back the production of Zomes. What would be smart is to make Zomes available as an order to make strategy. You could order custom homes such as Lego did with the custom lego sets.This way you could personalize your Zome with all or none of the other Zomeworks products. I feel that Zomeworks would increase they sales of products quickly because everyone would want the most up to date Zome. 11. ) Zomeworks technology is different than a Nintendo game system or smartphone operating system. Zomeoworks cannot lease out the sun in the same way that Nintendo can demand money and incentives from g ame developers. If Zomeworks decided to sell its technology as a platform it wouldn’t work the same way as traditional â€Å"conventional† products.Whereas game system manufactures usually have tight controls over their platforms, Zomeoworks technology is not that advanced. Likewise, why would you give your technology away so that others can imitate your products? This is one reason why TTTech decided against leasing out its technology or even co-engineer products using its proprietary technology. The only product that I think Zomeworks could position as a platform are the Zomes. They could encourage architects to purchase their Zomes to build modern, environmentally friendly homes.Just like Apple pushed third party developers to come up with different Apps that individuals can download to their different Apple products. I think that Zomeworks should keep all the other products and possible just have re-sellers for them because I feel like the other products are what g ives Zomeworks their competitive edge. A winner-take-all strategy is defined as; a company – usually in a new space that is growing very quickly – should spend a lot of money today in order to achieve the top spot in market share, because they will likely keep that spot in the future.The polarization of winners and underperformers is intensifying. Once, a chief executive officer could claim that the performance of the industry, not the company, was the prime mover for stock prices. But with the advance of globalization and technology, companies whose products or service models have the slightest edge over the competition can quickly exploit that advantage. Investors are scrutinizing companies one by one, screening out those with merely average performance and investing the bulk of their money with the top one or two players in each arena.This phenomenon has created a â€Å"winner-takes-all† dynamic. There will be many companies who will destroy their companies i n the next 18 months by pursuing a winner takes all strategy. They will think they are doing what’s needed now to assure their future success. Instead, their reckless spending will exhaust their cash and they will likely find investors are too skeptical to keep giving them more money in the future. I don’t believe that the solar water heater market is a winner take all. I don’t believe this because although it is new space it isn’t growing quickly.The solar water heater product is going to have to be perfected before if can even become its own market. Yes, Zomeworks is going to be up against network effects in the because as time moves on competitors are going to start coming out to the woodworks in American and put peer pressure on Zomeworks to develop faster and develop a better product. Also, I believe that the R&D segment at Zomeworks is going to constantly be pushing themselves on different innovations to become the best solar water heater available. 12. )I think that Zomeworks has a very loyal customer base and really need to optimize the relationship between them.Zomeworks could even reward companies or individuals who buy their products by advertising a list of â€Å"socially responsible companies†. I think that Zomeworks could mimic the practices of Bang an Olufsen especially how Bang and Olufsen â€Å"think how their customer lives. † When you work with very specialized products you are not going to sell to that general public you are going to be selling to individuals that believe in the product just as much as you do. I feel that a very smart tactic that Zomeworks could use in order to leverage their customer base is to develop a loyalty program.All loyalty programs are unique, and they require ongoing and complex communications. If customers don’t understand a program or if the terms change, they will become disinterested at best or feel betrayed at worst. The characteristics of a good loyalty progr am might include: †¢ Clear benefits †¢ Achievable rewards †¢ Consistency †¢ Sustainability †¢ A feeling of appreciation †¢ Engagement †¢ Personalized, ongoing communications (print and electronic) †¢ Reward for referrals Loyalty programs in general are a huge opportunity for print and value-added services.These programs can be used for program planning, creative collateral development, customer support, or rewards and redemption management. In today’s market, success requires defining a targeted market, becoming an expert in understanding customers’ business issues, taking a cross-media approach to engaging customers’ clients, leveraging cross-media to drive interaction between print and electronic communications to improve and measure campaign response, and leveraging loyalty programs to generate ROI for you and your customers. I used to work for BCBG Max Azria, which is a high-end clothing store for women.Because our pri ce points were so high our sales greatly relied on the consistent client. This company uses a loyalty program and that is why I think they do so well. They make sure that every client that goes into the store is treated like a queen with a personal shopping experience. All of the clients at BCBG Max Azria always get first choice on sale merchandise. They do this by having events strictly for clients the day before the sale actually begins for the general public. Also, Zomeworks could give out samples of its technology in the form of small prototypes.Recall that G&B tested out its product experiments at religious festivals attracting thousands of people. After considerable excitement stewed among the participant, G&B used community members to distribute its Chiotokool in Godrej. Zomeowrks is not leveraging its current customer base or future customer base. Current customers need to be rewarded and leveraged to promote the products to untapped markets. 13. ) Full Credit I think that Z omeworks should create a business model for the solar water heater like the business model Tequila Mobile has.I think that a multi-sided would be the best choice for Zomeworks because it would allow them to have the best of all worlds. Their technological environmentally friendly products would prosper in this type of market. They would be able to have an R&D side that could sell solar water heaters to large industrial firms, and other large entities. They could supply solar water heaters to construction companies that are building homes and along with the solar water heater look into selling Zomes to the construction companies.To take that scenario a step farther Zomeworks could contract out interior decorating companies that can make household decorations (couches, desks, beds, etc. ) to fit nicely in the odd shaped Zomes. Some of the Indirect/Direct network effects that Zomeworks would run into are the having lower operational/overhead costs since re-sellers will take over the du ties of selling most of the items. They will also have lower advertising costs since the re-seller would take on those costs too. Also they would benefit from developing the Zomes and specialized products to equip the Zomes for example, the solar water heater.Users Traffic Partners 3rd Party Developers Billing Partners Multi-sided Platform 14. ) I think that Zomeworks would never use social media as a way to commercialize their water heater. I feel that Zomeworks could either greatly benefit or greatly suffer. Let’s talk about the negative aspect of using social media firkst. I think that Zomeworks would suffer greatly if they even tried to. I believe this because of the simple fact that Zomeworks is so against the use of high technology just because it is available to us.I think that if Zomeworks did try to use social media it would send the wrong message to the customers that know what Zomeworks believes in and stands up for. I will discuss below, the underlying causes of s ocial failures may be very different. Social failures represent opportunities for firms to step in and provide social functionalities that enable people to pursue new relationships or strengthen existing ties. Most of us are not accustomed to think about the social world in terms of social failures. We have been conditioned to think about the world in terms of the relationships and interactions we do have, rather than those we do not have.However, a moment’s thought will reveal that you may be facing some of these social failures yourself. Maybe you and your closest friend wish you could spend more time together, but you cannot, because you are separated by thousands of miles. Perhaps you and your dad wish that you could confide in each other more, but both of you are afraid of making the first move for the fear of being rebuffed by the other. When talking about Zomeworks I believe that social media would not solve any social failure besides advertising.When even considering advertising Zomeworks would have to consider the fact that they are a company that is completely against the use of high technology because the company believes that â€Å"high technology has disempowered us†. The company could come off hypocritical if the advertising choice they decide to use is one that involves the idea of high technology. On the beneficial side, Zomeworks use popular issues such as climate change to create a Facebook presence. Increasing exposure is not a joke. Zomeworks needs to make an emotional appeal to people and Facebook is the easiest way to communicate it.A lot of ideas could be generated for the R&D team at Zomeworks and real time demand information could be obtained by following the social media posts. Part 2. : Expressing the Terroir of Rioja 15. )If you refer to figure 3 on page 6 you can see that with a shaping view we are trying to take on the leadership role of deciding how an industry operates. The winemaker that I choose to make a shaping view for is Maria Jose Lopez de Heredia who runs the Marques de Murrieta Bodega. The reason that I picked Maria is the fact that I believe from the way she talks in the case to be very passionate about Rioja.I would want to base the shaping view on the fact that her grandfather was very modern and had the courage to change many of the historical and traditional practices of Rioja. I feel that she would be the most accommodating winemaker to challenge the process, which is the main goal of a shaping view. I think that it would be a good start to come up with a mission and vision, as well as the values that could be held by all in the industry. Our vision would center on keeping the traditional style of Rioja with bringing in modern flavors. Since there isn’t much research on the grapes the use to be used there would be a lot of rial and error. I think that from being a family member of one of the region’s most historic estates, the other bodega owners will most likely respect Maria and follow in the values that we set up for the industry. 16. )The term ‘dynamic' refers to the capacity to renew competences so as to achieve congruence with the changing business environment; certain innovative responses are required when time-to-market and timing are critical, the rate of technological change is rapid, and the nature of future competition and markets difficult to determine.Innovation occurs in a network of relationships between firms. Collaborative competency is a firm’s ability to realign its internal resources and capabilities to the changing environment by leveraging on external resources and capability-acquiring mechanisms such as (strategic alliances, acquisitions, and joint ventures. ) Nintendo’s strategy is open innovation. Open innovation is where you start optimizing your secondary talents that in return it creates a brand new market. So instead of competing head on, you bypass the other competitors by creating your own market.Dynamic marketing competencies enable firms to move into new territories by market sensing and technological shifts. Apple’s strategy is one of simplicity that was greatly fostered by the former CEO Steve Jobs who was probably one of the greatest visionaries ever. The company executed this strategy of simplicity by executing the timing of their products to the â€Å"T†. Also all of their products are capable of doing pretty much anything and all with just one button. I feel that I would use a mixture of those approaches.I would not fully commit to the idea of open innovation because I don’t think that it would be wise to leave the market of Rioja. It is not like a game console to where you can switch into different markets quite easily. I like the idea of using Apple’s competencies of innovation and superior quality. When markets are dynamic and ever-changing two things that you want to stay constant are your ability to always be innovative and the reputation of superior products. If I were a winemaker in Rioja I would reach out to the other Bodegas and see if any of them would want to start a strategic alliance.First off there is power in numbers and secondly you get access to more resources during all the different phases of development. 17. ) Full Credit The first scenario is that if I had a client that didn’t have a budget or didn’t care about the mass market I would want them to follow the business model of Elbulli. Elbulli didn’t care about anything except making the best most innovative meals and providing the most amazing experience. The only reason that I think my client should model the elBulli model is because money isn’t an option and the only thing that is a requirement is high quality.Elbulli has a very unique model in the sense that it isn’t about the bottom line, in fact ElBulli went out of business for a period of time and is now currently out of business again. Elbulli serv es this meal that is worth at least 800-1000 euros but is only charging 230 Euros, why is that? Ferran Adria the owner and top chief of Elbulli says it isn’t about the money it is about the customers and what they get out of the experience. Adria also teaches many culinary students how to develop this menu throughout most of the year. My client would manage the organization and their innovation strictly by creativity.I think that my client would express the Rioja Terrior in a very positive light since their whole process is run by passion. The second scenario is that my client wanted to be â€Å"born global† and compete internationally in the mass market I would recommend that they run their business like nano. My client could make a first mover advantage into different foreign markets. The first step in this move is they would have to conduct a lot of research in order to determine the different demographics that they would be selling to. Different individuals have di fferent taste buds for wine.They would have to know about the different market drivers for each area. I think that their attitude toward expressing Rioja terrior would vary depending on which foreign market it chooses. I think that yes the same company could operate with both of the two preceding goals. I think that it would probably be more difficult but that it could be done. All the company would have to do is be able to be both creative and structured. I think that if a company did decide to operate with both goals the leader of the company would have to know the happy medium between how to lead with creativity and structure.This company that wants to operate with both of the two preceding goals would want to follow the business model of Monnalisa. Monnalisa is a great example of a company that has formal (results control) and informal (social control) mechanisms to manage its concurrent and ongoing need for creative design and efficient production processes. At Monnalisa, there ’s no intention to limit creativity, but increasingly the company is trying to offer the stylists a minimum structure by running a series of internal meetings at the beginning of every collection. 18. I don’t think that the expression of terroir should be limited by tradition, but I do think that it should be tied to regional identity. Terroir is a traditional view, but I think that when things get stuck in tradition they loose innovation and change is good. I think that terroir has been limited by tradition and that is probably why there are so many arguments between the different bodegas because some are ready to accept the change and some are not. I do think that terroir should be tied to regional identity because along with regional idea comes culture and along with culture comes values.When the Rioja winemakers have the same values it would be easier to discuss issues that might arise in the industry as a collective group. Yes, I believe that the marketplace shoul d determine which expressions of terroir are â€Å"classic†. The reason that I think this should be the case is because there is no one else more suited for judging what is â€Å"classic† or not than the actual individuals that are involved in the market. You would never ask clothes salesmen to change your oil just as you would never ask a mechanic to judge you wine. I think that the authority of this decision should be given to the local market.I also believe that terroir should be combined with â€Å"locally produced† I think that by giving your product a local background it adds to the value. For example in the Zomeworks case how they refused to offshore their production. By being made in the U. S it showed how much Zomeworks cares for the local community. I think that it would be wise to have a board of directors for the Rioja and they could meet and discuss what the breakdown of payment should be, but if all of the Rioja territory is going to be considered â€Å"locally produced† then they all need to make the necessary payments.Just because a market is transnational, doesn’t mean that the expression of terroir should be transnational. I don’t think that by selling your product internationally you have to give up your cultures identity. 19. ) Full Credit Terroir is concerned with the relationship between the characteristics of an agricultural product (quality, taste, and style) and its geographic origin, which might influence these characteristics. The concept of terroir is frequently used to explain the hierarchy of high-quality wines. It can be defined as an, â€Å"interactive ecosystem, in a given place, including climate, soil and the vine. To understand the way terroir functions, it is essential to take into account the interactions among the factors that contribute to terroir. While very high quality wines are grown in various climates, it is impossible to define the ideal climate for fine wines in terms of temperature, rainfall (amount and distribution), or solar radiation. Nor can one define the best possible soil for growing high-quality wines in terms of pebble, clay or lime content, soil depth or mineral content. These factors of the natural environment have to be considered in terms of their interaction with the vine.Human factors, such as history, socioeconomics, as well as viticulture and oenological techniques, are also part of terroir. I believe that the actual managing of the terroir is a technology and a process, but I do not believe that the expression the terroir is a technology. The expression of terroir to me is more of a value that in engraved in the local community and culture. I think that terroir should be both expressed and managed. This could also relate back to Apple. While simplicity is the company’s strategy on how they execute their products it is also a vision for their company.It’s the belief that this is how they execute and will always execu te. Same goes for terroir, it is much more than just managing the land a certain way. It is an expression of local history. 20. ) Full Credit Are the denominacion de origen and France’s appellation d’origine controlee effective examples of regulation. Products labeled Denominacion de Origen, apart from being of superior quality, are expected to carry specific characteristics of geographical region or individual producer and be derived from raw materials originating within the region.Like most of these designations, a fundamental tenet of a DO label is that no product outside of that region is permitted to bear the name. I believe that yes the denominacion is a good/effective way of regulation I just don’t believe that there will be any such regulation that will help the winemakers at Rioja. Each winemaker is always going to believe that they have the superior product no matter what regulation is being used. I think that the government has gotten involved enough on the regulation aspect.I feel that regulation or no regulation the marketplace is going to always have its own view. I feel that a simple solution of an unbiased tasting took place. Even with that thought I feel that every individual has very different tastes which could again not provide a solution to this ever heated debate. Another way the this matter could be resolved is from the article Peer Power, from Potholes to Patents, â€Å"For two centuries, we have lived in a mass society defined by passive consumption, vast corporate hierarchies and the centralized control of state power.Those organizations didn't seem artificial to us because we couldn't imagine alternatives. But now we can. Peer networks are a practical, functioning reality that already underlies the dominant communications platform of our age. They can do things as ambitious as writing a global encyclopedia or as simple as fixing a pothole. † The bodegas could start a peer-networking group that could listen to the problems that the Rioja territory is having and come to an unbiased solution. ——————————————– [ 1 ]. http://www. scribd. com/doc/61931601/Minimum-Winning-Game [ 2 ].Susan Elliott, â€Å"American Productivity & Quality Center Conference Attendees Discover the Value and Enablers of a Successful KM Program,† Knowledge Management in Practice, Issue 5, December 1996/January 1997, p. 1 [ 3 ]. http://www. mymarketingdept. com/comparing-b2b-versus-b2c-marketing/ [ 4 ]. Rogers, E. â€Å"Diffusion of Innovation† 1962 [ 5 ]. Baer, S. Appendix 1 [ 6 ]. http://www. answers. com/topic/invention [ 7 ]. http://www. answers. com/topic/innovation [ 8 ]. SEGUIN, G. (1986) ‘Terroirs’ and pedology of vinegrowing, Experientia, 42, 861–873. [ 9 ]. Johnson, S. Peer Power, from Potholes to Patents. 2012