Relationship between functional needs and emotional needs
The basic riddle that every marketer wants to solve is what actually motivates a customer to loosen his purse strings and how does he think while making a purchase. But there is a basic ground rule. For a product to be of any value to a customer it must be able to satisfy some need of his and it is a common knowledge to all students of marketing that needs are primarily of two types – functional and emotional.
Functional needs are some basic requirements – generally of a physical nature, of a customer that he satisfies by purchasing goods. A car, for example, satisfies the basic need of transportation from one place to another. Thus the functional need of transportation will be satisfied if a customer buys a car, any car for that matter. A BMW M5 that has a top speed of 205 miles an hour might have no extra appeal to a customer who is looking for a luxury car for intra city movement and obviously he would not pay anything extra for the speed factor for which BMW M5 is renowned world over. But for a connoisseur, a BMW M5 is a dream car and he would not mind paying a fortune for it.
So, a product can be marketed only if it is primarily capable of satisfying functional needs of a customer. Only after these needs are satisfied, would a customer proceed to satisfy his emotional needs that are mainly a matter of the mind and vary widely from person to person.
The functional needs have an upper limit, one cannot simultaneously ride in two cars, but emotional needs are unlimited. There is really no upper limit to how many cars one might like to be parked in one’s garage. (Hawkins, Best, & Coney, 1992)
Consumer Loyalty
One of the most important constituents of Brand Management is a proper understanding of the concept of consumer loyalty. Many marketers make the mistake of labeling consumer loyalty as a decided preference of consumers towards a particular brand but it might not necessarily always be so. Consumers might be loyal to a particular size, form or flavor like many housewives prefer to buy detergents only in packages of two kilos as they feel they are able to keep a tighter control on monthly quantity consumed that way. There are also some consumers that want their domestic cleaner to have a particular flavor, while being reasonably flexible about manufacturer.
The other aspect in studying consumer loyalty is to assess how loyal frequent buyers are as this is the most important group that determines the turnover level. If a manufacturer is able to garner loyalty of a sizeable group of frequent buyers, he can be assured of a steady inflow of revenue for a long time to come as consumers will search out that manufacturer’s products and will also be willing most of the times to pay a considerable premium for those. Thus the manufacturer will also be able to maintain a slightly higher price level than his competitors and this will add an esteem value to its already popular products.
A marketer with a progressive mindset will also analyze the entire mix of the bundle of products that a consumer buys in order to properly understand the dynamics between his brand and the competitive set and also to correctly evaluate the impact complementary products might have on the demand of his output. Retailers are very much dependent on consumer loyalty for sustenance and they pay a lot of attention on the specific issues of pricings and promotions that affect store loyalty. (Espejel, Fandos, & Flavian, 2008)
The impact of consumer loyalty on consumer behavior
One thing is absolutely clear that a loyal consumer will skip competing brands and choose the preferred brand even if that means paying a premium for making that purchase. Thus a producer or, more particularly, a retailer would not mind going extra lengths to cultivate a dedicated band of loyal consumers who would make it a point to do all their purchases from a particular retail outlet.
Marketers have agreed to certain basic techniques of winning over and retaining consumer loyalty and experts from all schools of marketing management feel that constant communication with consumers in a way that engages them and makes them feel important and innovations in product presentation are the two most effective means of nurturing and retaining consumer loyalty. Innovativeness also plays a decisive role in winning over the large chunk of consumers who generally remain undecided before making a purchase and decide upon the product on an impulse at the actual point of purchase.
Consumers have traditionally been loyal to brands they have trusted over the years but it has been observed that a sizeable group of consumers are progressively becoming more and more cynical about large companies and their underlying motivations. So, it is becoming increasingly crucial that a company must appear to be authentic and genuine in serving the consumers especially if the products are of a nature that affects consumers’ interests immediately. The phenomenal growth of private labels and their increasing fan following is enough of an indication of growing disenchantment of consumers with established brands and large manufacturers should start taking notice of this shift in marketing trend if they are to retain their preeminence in the marketplace. The competition is no longer from another established brand but from localized products that have a small but fiercely loyal band of consumers. (Wright, 2006)
What is a brand?
A brand might be symbol or a logo or a combination of words and pictures that immediately conjure an image or cause a recall of some previous experience the consumer might have had that prompts him to choose a particular product over other competing goods or services. This brand recall might not be restricted only to the physical experiences and it could very well spill over to the image of the company as a whole. (Schmidt & Ludlow, 2002)
There has been a long running debate among management experts about whether brand recall is restricted to only the physical experiences or it has some allied mental perceptions as well. Many marketers feel that preconceived notions play a large part towards creating a brand image and are convinced that properly orchestrated advertisement campaigns highlighting the unique selling points of a particular product can effectively create a positive brand image leading to higher and steadier sales turnover.
Branding thus can create a favorable impression in the minds of prospective consumers about either a specific product or the company in general and these consumers might become ready to pay a premium for this perceived superiority of the product or its manufacturer. This would surely defy the standard laws of market price mechanism but the producer of a popular brand usually enjoys this sort of extra benefit and it becomes rather difficult for competing producers to catch up with the market leader.
This sort of preeminence among competitors is usually termed as brand value and it requires a considerable time to slowly build it through meticulously managed and planned advertising and publicity campaigns. When a brand is able to stand on its own, without the backup of the producer, it is said to have obtained a brand franchise. (Olins, 2001)
How many among us know Ferraris are manufactured by Fiat?
Functions of a brand
A brand is a consistent image that a company projects of itself and its products in a competitive marketplace to set it apart from competition. Some management experts term brand as a business card of a company. It indeed plays a huge role in creating an elevated position in a highly competitive scenario and is possibly the best and most efficient way of conveying to all stakeholders of a business enterprise the core values and principles the organization stands for.
Brands fulfill following functions from a consumer’s perspective:
- Brands are best means of communication between consumer and manufacturer as the consumer is aware of what he can expect from a branded product. Thus it becomes easier for a consumer to make an informed choice while making a purchase.
- The risks associated with purchasing are thus minimized and a bond based on mutual trust and faith between producer and consumer gradually develops and gets stronger by the day.
The functions of brands when viewed from company’s perspective are:
- Brands generate and nurture customer loyalty that makes consumer less sensitive to price changes and these brand conscious consumers would neither mind paying a premium for the branded products nor would drastically reduce their consumption in the face of price rises thus making them very valuable to the producers. All marketers dream of such a dedicated band of consumers who would never shift to an alternative source irrespective of the provocation.
- A brand is a form of goodwill that can be effectively milked by the producer in obtaining licenses and permissions, especially in the area of international expansion, as there have been instances of otherwise restrictive regimes like China opening their doors wide open to internationally reputed brands when they expressed a desire to set up production facilities in Chinese mainland. (Malaval, 2001)
Brand Positioning
Positioning in marketing implies creating a niche position of the product and the producer in the minds of consumers. A brand is successful when it results in immediate recall and a properly positioned brand most certainly brings to sharp focus certain uniqueness of that particular brand which creates strongly favorable ripples in the minds of consumers that almost always result in sale. A properly positioned brand lets the consumer know what he might expect after purchasing the product and the producer takes all measures to ensure that the consumer actually experiences the advertised result. So, a product that has the potential to consistently deliver certain proclaimed values easily creates a special position in the consumers’ minds and creates a committed band of loyal customers. One of the most preferred marketing techniques to properly position a brand is to create four or five short (not more than five words) phrases that convey the spirit of the brand in a pithy and attractive way so that a consumer can immediately visualize what lay in store for those who consume the branded good or service.
This sort of recalling or constructing a mental picture is known in marketing terms as brand resonance where a strong psychological bond comes into existence between consumers and the producer through a properly positioned brand.
Producers need to be proactive in order to survive in highly competitive environs of modern day markets. Any management must create certain uniqueness in its products and services for the brand to achieve any strength. This is true also in case of generic products where the producer’s image of an honest and sincere operator often motivate customers to buy (sometimes at a premium) a generic product from that particular producer when competitors are willing to sell the same generic product at lower prices. (Trout, 1969)
Brand programs and positioning used by H&M in western markets
H&M AB (originally known as Hennes and Mauritz) is one of the world’s most famous producers of apparels and dresses for men and women. The dresses from the house of H&M are conspicuous for the uniqueness of their designs and an appeal that is slightly off the beaten track. This company has dedicated online stores through which it serves fashion conscious and aesthetically inclined numerous men and women in US, UK and Europe with all the exquisitely designed apparel. Possibly the main reason for the mind boggling popularity of H&M is its ability to cater to subtle differences in tastes and preferences that invariably occur as one traverses through the countries that dot the European mainland. H&M seems to have a finger on the pulse of each and every country’s culture and tastes of people and almost invariably seems to supply apparel that have been made as if to specifically suit that particular country’s tastes and preferences. This strategy of supplying only those clothes that would appeal to the citizens of a particular country or region has elevated H&M almost to the status of a myth in marketing. (Concepcion, 2008)
H&M specializes in apparels and dresses that are moderately priced but made from fabrics of good quality and, most importantly, exclusively designed to perfectly satisfy the sartorial desires of the population of various countries and continents. H&M would have had to invest huge amounts if it went about designing dresses for each country on its own, so it took the most prudent way out of this crisis by entering into joint ventures with renowned retailers like Gap (to keep distribution costs at a minimum) and established companies and persona in the field of apparel designing like Stella McCartney. The planned brand ambassador of this new clothing line of Stella McCartney which was to be introduced in 2005 was Kate Moss. H&M did not hesitate to drop Kate Moss late in 2005 when allegations regarding drug abuse began to surface about this renowned personality of the glamour world thus sending a clear signal about its corporate stand on dubious and avoidable matters as drug addiction. This action of the company immediately generated enormous amounts of goodwill in entire western world and positioned the brand at an enviably high perch. (H&M, 2004)
H&M has become one of the largest retailers in Europe. It has reached this iconic status by targeting each member of the consumer group by primarily dividing them into convenient groupings as men, women, teenagers, children and future mothers and has exclusive offerings to satisfy each group. Moreover, the company slots its customers into two distinct categories – practical consumers and fashionable and trendy consumers and caters to requirements of each group separately. While clothing never exceeds basic physical requirement for the former group, it becomes a matter of sartorial elegance in case of the latter. Keeping this basic difference of these two groups in mind, H&M stocks its stores with clothes of distinct categories so that not one member of either group return unsatisfied. Thus H&M pursues a policy of uniqueness and differentiation from its competitors and manages to create a unique position for itself in the minds of consumers. It never refrains from surprising the consumer as it did when it entered into a partnership with Karl Lagerfield, one of the hot names in the field of haute couture, to design one of its new lines of collections. None could ever imagine Lagerfield would associate himself with such a non-exclusive label but this partnership was a win-win proposition for both as Lagerfield got a publicity he would have never ever been able to manage on his own and H&M got a veneer of respectability that was not a part of its portfolio till then. (Schultz, Antorini, & Csaba, 2005)
H&M realizes that any promotion that does not take into account specialties of the region where the advertising campaign is being carried out is bound to have little effect on the population that is being targeted by the advertising campaign. So, H&M conjures up unique campaigns that seamlessly merge with the local flavor without losing out on the essence and personality of the corporate image of H&M that strongly sends out a message of customer satisfaction at minimum expense. (Roberts, 2004)
Do consumers treat H&M as Mcfashion?
Mcfashion is a word coined to reflect as correctly as possible the current trend of international retailers to swamp markets with clothes and apparel that are mass manufactured. This has lead to a situation of unfailing similarity in what people wear across continents. A young lady from Thailand is wearing a dress that is exactly similar to that worn by her counterpart in Germany. The situation has an uncanny similarity with McDonald outlets. No matter which part of the world you are, fries and burgers would taste just the same without any variation or any hint of a local flavor.
The clothes peddled by international retailers are, exactly like the output of McDonalds, neither costly nor exclusive and, just as you crumple the disposable plastic and paper cutlery and crockery that come with McDonald fries, these giant retailers like Gap and H&M expect you to throw away the clothes you had bought off one of their ubiquitous outlets once the fashion changes. Somewhere in the entire process, fashion crushes whatever individuality one had in the form of style and we are faced with a terribly boring proposition of one individual getting dressed up exactly as the other with words like ‘ethnicity’ and ‘local flavor’ being consigned to the dump of history. (Lee, 2003)
But, some diehard fans of H&M try to draw a line of distinction between Gap and H&M by saying that the latter is an apparel house of some distinction that caters to local sensibilities and tastes instead of forcing the same design down everyone’s throat. But the reality is somewhat different. It is indeed true that H&M does not stock their stores with khakis and plain sweaters but what in effect it does is mass produce and mass market so-called individualistic apparel. You will find young men and women all across the world wearing those studded belts and ‘cool’ T-shirts bearing those ‘exclusive’ and ‘intensely personal’ messages as ‘Service before Self’ and huge tinted shades that cover half of their faces with the other half being hidden by those chunky cotton hoodies.
There is however no doubt in anyone’s mind that the difference between an apparel from H&M and that from an exclusive and respected boutique are as much wide apart as a Big Mac and a candle-lit five-course dinner. The former is forever unsatisfying, ubiquitous and hence, utterly forgettable while the latter, immensely satisfying, once in a blue moon occurrence and hence etched indelibly in memory.
Consumers also do not consider H&M as the ultimate in luxurious clothing. They consider it to be a convenient outlet where you could grab a decent looking (it really does not matter whether every other person in the town is wearing something that is an exact replica or very near to it) outfit at a really affordable price. While every lady would pounce on a £3 tank top from H&M surely none would ever step in for her bridal gown. (Law, 2007)
H&M’s success is based on the infallible model of supplying cheap products while removing the stigma attached to outfits that are cheap. The retailer has been able to mix and match affordability with aesthetics to a great extent where one would not think twice before splurging $5.99 on a red and white gingham miniskirt and be happy with the new acquisition and even show it off to friends and associates. Again one is tempted to draw a parallel with Big Mac that everyone knows is not exactly good for health but nobody feels guilty of binging on during lunch time.
Cheap clothes in H&M have also allowed it to continually turn the wheel of high fashion so that the consumers are forever kept running to keep up with all that is latest in order to look ‘cool’ and be a part of the fashion conscious slick urbanite. An average customer would not think twice to dump a dress bought a month ago for $40 and go for the new fashion that is singeing the town. H&M is aware of it and hence markets a new line of clothing almost in every quarter to keep its outlets full of eager beaver customers and ensure that its cash registers keep ringing all the time. (McFASHION, 2006)
Are consumers in western markets loyal to H&M?
The serpentine queue of customers in front of the cash counters in any of the numerous H&M outlets that throng any city worth the name in any country of the world are not customers who would remain loyal to H&M come what may. They will surely drop in at Gap or at Wal-Mart in search of a bargain and if they get something that they were looking for at an acceptable price, they would not hesitate even once to purchase the merchandise.
Customers who very often visit H&M outlets do so in search of fashionable dresses and accessories at vastly affordable prices. These people know that they cannot or will not buy a £350 slingback from Jimmy Choo, but they have no hesitation in buying an almost similar pair (at least superficially) at Nine West by paying £40. Thus, it is the irresistible combination of affordability and fashion that make people rush towards H&M outlets, but no appreciable sense of brand loyalty have been observed till now among this huge crowd of regular customers that have in some cases become compulsive shoppers who very often end up buying things that they do not need or may not try out in near future.
These shoppers expect customer service and a worthwhile shopping experience. H&M has been able to provide a neatly choreographed; as it were superior marketing experience with its brightly lit stores flaunting inviting interiors complemented by a relentless, but very carefully calibrated advertisement campaign featuring celebrities. Customer do feel they are actually dealing with high fashion and spend hours in H&M outlets (it is always a pleasurable experience given the exemplary levels of customer service that they maintain), but the bottom-line still remains affordability and discount campaigns that run throughout the year in H&M.
A black T- shirt for women if bought from the Armani section of a Bloomingdale’s store might cost $275 while if you drop in at Gap you may find a similar T-shirt for $14.50 ($20 if you buy two) and if you want to slash your budget even further, step inside a H&M outlet and you will surely find a black T-shirt for women for only $7.90. Why is the difference in price? In case of Armani it is surely a case of the status and glamour that is associated with the brand and in case of H&M it is mass production that thrives in volumes with a consequent steady reduction in per unit prices. H&M is surging ahead of competition in retail sector simply by serving customers that are least brand sensitive and are only concerned with reasonably tailored garments at very cheap prices. H&M has also mastered the fine art of remaining fashionable and constantly keep changing their window displays to remain firmly within the focus of bargain hunters. (Sarkar, 2007)
The customers that throng H&M outlets can broadly be divided into following categories:
- Road Runner – These customers love to shop but are not compulsive shoppers and would like to spend time in other activities also. This group would not hesitate in buying if they are able to locate products that are fashionable, cheap and, most importantly, conveniently located for quick purchase.
- Rainbow – These customers love variety, a lot of collections and almost always buy accessories along with dresses and lay more emphasis on fashion and style while making a purchase.
- Tailor Fit – These customers are on the lookout for trendy styles and attractive designs. Good quality of fabric and fit and finish is a must for this group of customers and they simply do not mind to pay a little extra for that perfect cut and fit.
- Bargain Basement – This group is purely on the lookout for bargains and all that they are concerned with is price, discounts and sales. The best way to attract and retain this group is to provide special offers that promise to provide more than what the customer pays for.
The common determinants that would motivate all these four categories to enter an H&M store and buy its products are:
- A well thought out and innovatively planned layout of the store that would allow customers to get a clear idea of the different varieties that are on offer and related prices without becoming too much dependent on store assistants.
- Regular stream of offers and discounts that would wean customers away from competitors
- Conveniently located stores that can be easily accessible
- A sales staff that would bend over backwards in assisting customers to choose from available products and provide helpful tips to clear confusion in the minds of consumers. This is the single most important criterion for many to drop in regularly at H&M outlets. (sifires5525, 2008)
Thus, it is service and not product loyalty that seems to continually attract customers to H&M outlets.
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