Economic Implications of Consumption Behavior of China’s Older Population

Introduction

In a press release by the US Bureau of Census, it recounted that the United States ranks second in terms of the number of people 80 years and older. Not surprisingly, China ranks the first in the size of its older adult population. The challenge of global aging transcends its impact on government budgets ion China. It promises to restructure the economy, reshape the family, redefine politics and even rearrange the geopolitical order of the twenty-first century. As labor forces shrink, economic growth may stagnate or even turn negative in many countries--not just during cyclical downturns, but decade in and decade out.

Global aging poses fundamental economic challenges that reach far beyond public spending. When people retire, they begin to consume more of their income and save less for the future. As a larger share of the population enters its harvest years over the next three decades, the OECD projects that the private saving rate in the developed world could fall by more than half (OECD, 1996). Some economists say that this isn't a problem since societies with stationary or shrinking workforces won't need to invest as much to maintain the same rate of growth in output per worker. Others disagree. They argue that the pace of technological progress may be linked to the volume of investment a society undertakes. An optimistic outlook for productivity, moreover, assumes that growing fiscal deficits won't crowd out national savings and productive investment entirely.

Most studies of older consumers have focused on their economic status as a determinant of market place behavior with little emphasis on their intrinsic or interpersonal reasons for shopping or the effect of social activity on shopping behavior. In both the 50-to-64-year-old and the 65+ groups, consumers are often long-time members of the community with many social and business relationships that influence their patronage behavior (Miller and Kean 1995). Granovetter (1990) considered that economic-based activity was "embedded in" the networks of personal relationships and argued that each directly affected the other.

A study by Paulin (2000) showed that older consumers, who are expected to account for an increasing share of expenditures, do not differ significantly from younger consumers in their spending patterns; the underlying tastes and preferences of subgroups of older consumers did not change significantly.

Although previous studies offer some insight by recognizing and examining the importance of expenditures by older consumers, many of those studies concentrate on spending patterns at just one or two points in time. Furthermore, the consumption behavior of the older population in China shall be illustrated in this proposed study. This proposed study shall also include elements from earlier studies, but takes the analysis further: first, expenditure trends are analyzed for different age groups within the older population; second, experiments are designed to test whether tastes and preferences differ over time for older consumers in China.

 

Conceptual Framework

This proposed study shall utilize the consumer alienation theory on the older consumers in examining the economic effects of consumer behavior in China. The concept of consumer or marketplace alienation recognizes the emergence of a psychological attitude as the result of four underlying constructs (rather than discrete measurable subscales) - marketplace powerlessness, normlessness, isolation, and self-estrangement (Allison, 1978).

Allison (1978) offers the following descriptions of the underlying constructs of consumer alienation. Consumer powerlessness may be defined as feelings held by consumers that they are unable to help determine market practices, and are unable to control the market environment or events within the marketplace. Consumers may have a sense of powerlessness if they feel they cannot influence business behavior to be more consistent with a buyer's needs. Lambert (1981) suggests that an alienated consumer believes he has no control over any of the aspects he faces in dealing with the marketplace.

Research Aims

            This study seeks to achieve the following objectives:

1.    to illustrate the consumption behavior of China’s older population (65 years old and above)

2.    to assess the relationship between consumption behavior and age

3.    to determine the relationship between China’s older population and consumption behavior

4.    to evaluate the effects of China’s older population consumption behavior

5.    to evaluate the economic implications of the consumption behavior of China’s older population

 

Statement of the Problem

             This proposed study intends to investigate the consumption behavior of China’s older population (65 years old and above) and its economic effects on the businesses that specifically caters to their needs. Moreover, since the older population in China is huge, this proposed study posits that they affects the economic activities in China.

 

Hypothesis

            This proposed study shall test the following null hypothesis:

1. There is a significant relationship between consumption behavior and China’s older population
2. There are economic implications of the consumption behavior of China’s older population

 

Significance of the Study

 This study seeks to contribute in the literature in terms of the relationship between age and consumption behavior. In particular, it seeks to illustrate the economic implications of Chinese older populace. Since, there is a scarcity of research on this area. This study seeks to fill the gap in literature. This is also targeted to government planners and business strategists in developing their policies and plans that targets the older population since they constitute a bulk of consumers in the market today.

 

Review of Related Literature

Global aging is the result of two fundamental demographic forces (Peterson, 2002): rising longevity and falling fertility. The first is increasing the relative number of the elderly in the population, while the second is reducing the relative number of the young.

Beth Harrison (1986) compared consumer units in which the reference person was between the ages of 65 and 74 with those in which the reference person was 75 or older. Despite the brevity of her analysis, Harrison described an important finding: persons 65 years and older are not homogeneous. She also found that those 75 or older spent less for most goods and services than those 65 to 74.

Another study by Thomas Moehrle (1990) examined expenditure patterns by families with reference persons aged 62 to 74. Those whose reference person was involuntarily unemployed or working without pay were excluded from the sample. Moehrle (1990) found that, regardless of income class, workers had higher expenditures for most goods and services than nonworkers.

More recently, Mohamed Abdel-Ghany and Deanna L. Sharpe (1997) analysis to examine levels of expenditures for those same two age groups (62-74). Their analysis allowed them to make estimates about how tastes and preferences differed between the groups when characteristics such as income, family size, and region of residence were held constant. Abdel-Ghany and Sharpe found differences between the two groups in every expenditure category they examined.

Similarly, Rose M. Rubin and Michael L. Nieswiadomy (1997) combined results of several studies, into a book describing characteristics and expenditure patterns of older consumers. One of their more interesting extensions to the earlier analyses was that they attempted to measure the effects of change on the lives of older consumers, first by comparing regression results for pre- and postretirement families(8) and then by examining changes in tastes and preferences over time.

The senior citizen or elderly market is traditionally defined as consumers age 65 years and older (Kim, Miller, and Schofield-Tomschin, 1998). Analysis of age trends provides highly accurate projections for the future that will allow alert marketers to recognize potential opportunities years in advance. Moreover, it can also predict the products, services and goods that shall be in demand. In China, where the population of the older segment of the society is expected to increase more rapidly, it provides an impetus for businesses and the government to affect specially services and products that targets the market.

Little comparative research presently exists that has investigated whether or not behavioral differences between older consumers and consumers in other age categories are identifiable and measurable. Tongren (1988) suggested that comparative studies were needed to determine if the behavior of older consumers was affected by their activity level and whether or not these characteristics made them unique in the marketplace when compared with younger consumers.

Etzioni (1988) emphasized that the choices people made, including economic choices, were most often based on both the needs of the individual and the needs of his or her collective group or community. His theory proposed that moral commitment interacted with economic factors to influence the overall behavior of individuals within their social environment. Reasons for shopping locally have previously been found to result from attending loyalties (Miller and Kean 1997); thus, moral, social, and economic variables are all important considerations in studying the patronage behavior of late middle-age and elderly consumers.

Research on the current and future older market will have implications for small-sized locally-owned retail establishments who are struggling to maintain a customer base in communities (Stone 1995). Lumpkin and Greenberg (1982) and Lumpkin (1985) found consumers age 65 and older shopped more frequently in stores where they were known, and that older consumers depended more on assistance from store personnel than did younger consumers. Lumpkin's (1985) additional research on the elderly found that those who were more actively involved in the community, anti in general more socially active, enjoyed shopping locally, and that they shopped locally because of the merchants' reputation rather than their pricing structure or brand offerings.

It was important to first differentiate those individuals who were in the later part of middle age (50-to-64 years old) from those who would be classified as older age (age 65 and older) to see if differences existed in terms of social and market place exchange. In reviewing past research methodology, Tongren (1988) found research that compared older consumers with younger consumers problematic because multiple threshold ages had been used to describe entry into the older age category. The majority of the 67 articles he reviewed designated age 65 as the threshold for the older market. Tongren proposed age 65 as the entry into older age in light of past research applications.

Several business decisions are based on misconceptions about the older consumer. With the number of mature consumers increasing, such findings should be of particular concern to marketers (Johnson, 1996). Two criteria commonly considered by marketers when evaluating a possible market are size and income. While much is known about the increasing size and market potential of older consumers and the markets to which they devote their consumption resources, very little is known about their overall attitudes toward the marketplace.

 

Methodology

This proposed study shall utilize the descriptive of research which allows for a critical examination of a certain phenomena. It seeks to describe what is taking place and provide an evaluation of the events based on examination and observation (Creswell, 1994). The descriptive type of research allows for the use of interviews, questionnaire and observations.

The research described in this document is based fundamentally on quantitative research methods. This permits a flexible and iterative approach. During data gathering the choice and design of methods are constantly modified, based on ongoing analysis. This allows investigation of important new issues and questions as they arise, and allows the investigators to drop unproductive areas of research from the original research plan. Moreover, the result of the study shall be compared and verified based on the existing literature on the subject.

This study basically intends to investigate economic impact of consumption behaviour of the older population in China. By older, this study shall utilize the standard bracketing that old population refers to those 65 years old and above. China which maintains of the highest population of old population had been adapting its marketing, production of services and products specifically to target the older population. This study shall outline the consumption behaviour of the older population using a survey and shall use official statistics from business that specifically caters to the older population in assessing the impact of their consumption on the companies.

The primary source of data will come from survey and interviews conducted by the researcher on the older Chinese population. Moreover, economic analysts shall also be interviewed to provide predictions on the impact of the adult population on economics. The secondary sources of data will come from published articles from business and economic journals, books and related studies on consumption behaviour, economics of consumption and economic impact of older population consumption.

            For this research design, the researcher will gather data, collate published studies from different local and foreign universities and articles from health and college journals; and make a content analysis of the collected documentary and verbal material.  Afterwards, the researcher will summarize all the information, make a conclusion based on the null hypotheses posited and provide insightful recommendations on the dealing with issues on consumption of the older population in China.

References

 

Abdel-Ghany, M. and Sharpe, D. (1997) Consumption Patterns Among the Young-Old and Old-Old. Journal of Consumer Affairs, summer 1997 pp. 90-112.

 

Ageing in OECD Countries: A Critical Policy Challenge, Social Policy Studies no. 20 (Paris: OECD, 1996).

 

Allison, Neil K. (1978). "A Psychometric Development of a Test for Consumer Alienation From the Marketplace," Journal of Marketing Research, 15, 565-75.

 

Etzioni, Amitai (1988), The Moral Dimension: Toward a New Economics, New York: Free Press.

 

Granovetter, Mark (1990), "The Old and the New Economic Sociology: A History and an Agenda," in Beyond the Marketplace, Roger Friedland and A. F. Robertson (eds.), New York: Aldine de Gruyter: 89-112.

 

Harrison, B. (1986) "Spending patterns of older persons revealed in expenditure survey," Monthly Labor Review, October 1986, pp. 15-17.

 

Johnson, E. (1996) Cognitive age: understanding consumer alienation in the mature market. Review of Business, Vol. 17.

 

Lumpkin, James R. (1985), "Shopping Orientation Segmentation of the Elderly Consumer," Journal of the Academy of Marketing Science, 13(2, Spring): 271-289.

 

Lumpkin, James R. and Barnett A. Greenberg (1982), "Apparel-Shopping Patterns of the Elderly Consumer," Journal of Retailing, 58(4, Winter): 68-89.

 

Kim, S., Miller, N. and Schofield-Tomschin, S. (1998) The effects of activity and           aging on rural community living and consuming. Journal of Consumer  Affairs, Vol. 32.

 

Miller, Nancy J. and Rita C. Kean (1995), "Reciprocal Consumer Behavior Intentions in Rural Communities: Inducements to Shop with Local Retailers," paper presented at the Rural Retailing: Emerging Community Issues Conference, Salt Lake City, UT.

 

Miller, Nancy J. and Rita C. Kean (1997), "Factors Contributing to Inshopping Behavior in Rural Trade Area: Implications for Local Retailers," Journal of Small Business Management, 35(2): 80-94.

 

Moehrle, T. (May 1990) Expenditure patterns of the elderly: workers and nonworkers. Monthly Labor Review, pp. 34-41.

 

Paulin, G. (2000) Expenditure patterns of older Americans, 1984-97. Monthly Labor Review, Vol. 123.

 

Peterson, P. (2002) The shape of things to come: global aging in the twenty-first century. Journal of International Affairs, Vol. 56.

 

Rubin, R. and Nieswiadomy, M. (1997) Expenditures of Older Americans (Westport, CT, Praeger Press.

 

Stone, Kenneth E. (1995), Competing with the Retail Giants: How to Survive in the New Retail Landscape, New York: John Wiley and Sons.

 

Tongren, Hale N. (1988), "Determinant Behavior Characteristics of Older    Consumers," Journal of Consumer Affairs, 22(1): 136-157.

Consumer Loyalty and Satisfaction

 

Coca-Cola Company

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

 

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

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

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

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

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

 

Consumer Loyalty

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

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

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

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

Brand and Consumer Loyalty

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

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

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

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

Consumer Satisfaction

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

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

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

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

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

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

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

 

Perception and Purchasing Behavior

 

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

 

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

 

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

 

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

 

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

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

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

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

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

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

 

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