CB ASSIGNMENT-2

Submitted by: Jaison Joseph Pgp02.083

Q1. Describe how marketers can apply their knowledge of differential threshold in packaging, pricing and promotional decisions of chocolate bars and detergents. Differential threshold is the minimum discernible difference in the stimuli. Marketers use the knowledge of differential threshold both to make sure that the customers not notice the stimulus in some case and to understand the minimum noticeable in some case. It must be noted that the Webbers law states that the more the initial stimuli the more will be the differential threshold. Application of differential threshold in pricing In case of pricing the marketers use this principle both while increasing and decreasing the price.IN case of increasing the price the effort is to increase the price only to that extent to which there is not just noticeable difference. Almost all FMCG products have increased their prices keeping this in mind. In fact many offer a discount over the increased price for a period of time to amplify this effect. In case of decrease price the idea is to make sure that the customer notices the change in price while making sure there is no wasteful lose to the company this is mostly done during predatory pricing of products. Eg Normal in case of chocolates the size shrinks rather than increasing the price. Tide detergent had introduced a 3.3 kg package for Rs 242 in 2009 which was way lower that their normal pricing of 80 kg(source : Mouthshut) The application of differential threshold to that of promotion In case of promotion differential threshold is used to differentiate the companies to that of competitor with minimum cost. In many cases the products which are running in the same segment would be having similar features and so the factors which differentiate them would be very less. The companies use two tactics in this case. The first is to amplify an already existing aspect of the product or add some new factors in to the product and then amplify the same before the customer for example horlics does the same by the promoting the presence of essential nutrients. In case of chocolate perk glucose differentiates itself from the rest of the chocolates by promoting the presence of higher glucose which provides energy to the user. In case of the detergents similar case can be noticed in case of surf excel matic which promotes it feature of better cleaning in washing machine. Application of differential threshold to packaging There are various areas of promotional decisions in which the principle of differential threshold is used the most common among them is to differentiate ones product from others for examples the for example in case of chocolate bars bournville differentiate itself from dairy milk with a very dark exterior which sort of exudes its dark chocolate nature. Yet another aspect may be of that of change of packaging in this case the company might want to change the looks of the packaging without changing the over all brand image a change in packaging over the years for Cadbury dairy milk one of the most popular chocolates is given below :

It can be seen that the changes that have been made over the years are not easily discernible and so the customer wont feel the change. A similar change can be observed in case of surf excel whose package has changed over time. This concept has thus helped in maintaining a uniform and stable identity for both the products over the years. Q2. Discuss implications of figure and ground with the help of a print ad. The figure ground perception is the tendency to discriminate between target and background stimuli. The stimulus which we want to project or promote and the background of the advertisement is called the ground mostly this is given to be less perceptible than the figure so as to divert the attention of the customer to that of the product. Implication of figure and ground approach for the Rolls Royce print ad : An example for the same is provided in the advertisement below wherein the product rolls Royce is the figure and the background is the ground it can be noted that most of the background is slightly blurred and there is nothing which diverts the attention of the customer in the back ground. The only other thing which can be noticed by the customer would be the man sitting in the adjacent car noticing the Rolls Royce with admiration which help in proving the point that the company is trying to make.

The above advertisement shows the principle. Q3. Identify a recent brand extension and discuss how selection, organization and interpretation processes influence effectiveness of brand extension. Brand extension is the processes of extension of brand to more products. It may be done in three ways : 1) Brand extension to a similar product line : eg : The extension of Cadbury dairy milk to similar products such as Cadbury dairy milk silk, dairy milk buttons etc. This is also called line extension. The main reason for selection of this type of extension is the proven experience of the company in the segment and the established brand. 2) Brand extended to related product : e: the brand extension of vediocon into mobile which is also an electronics item. The advantage o this is that the customer already perceive Videocon to be a good electronics company which will help in the establishment of the brand. 3) Brand extension to unrelated products eg: The extension of brand kingfisher into the airlines industry. In this case the company has no experience in the product but the name of the business house help in attaching the business to the customer. The selection of this sort of approach is purely strategic in nature. The impact of selection organisation and interpretation on the effectiveness of brand extension : Selection organisation and interpretation are the three phases of perception the section refers to the first phase perception of stimuli in which we select the stimuli to be perceived. This may be done through any of the five senses. Organisation is the second stage in which we mentally

organise the stimuli to make sense out of it. Interpretation is the third phase of stimuli in which we attach meaning to the stimuli. This depends on the values ideas, beliefs experiences expectations etc. As an example lets take the brand extension of vediocon into the mobile segment it is a related brand extension and along with the brand extension vediocon also went for a brand rejuvenation with a new logo and new ads. In this case the stimulus provided to the customer would be that of a rejuvenated brand with new products and improved quality. This may be provide to the company by the new logos and the large amount of advertisement the company used during this period. One the stimulus is provided by the company and it has grabbed the attention or is selected by the potential customers then they organise the same to obtain meaningful information out of it. This may be the sum total of all the selected stimulus which are linked together. The third process is the most important stage of that of interpretation in this stage the customers may use their experiences values beliefs etc to interpret the collected image the over all result of whether the brand extension is taken positively or not by the customers comes from this and its is essential therefore for the companies to take note of these environmental factor before designing a brand extension campaign. In case of vediocon the fact that the customers already know of vediocon as a great electronics brand helps the company in pulling of the brand extension effectively