Chapter 2

Review of Related Literature

Related Studies

According to Lin (2011), to cope with change in consumer’s behavior, the number of fast

food in Taiwan has increased year by year, from 260 stores in 1995 to more than 700 stores in

2011 the growth of which is three times more that the former. There were even four or five fast

food stores in one kilometer, which shows an austere competition environment. In such severe

state of competition, some fast food store has stood out but some fast food stores withdrew from

the market due to bad business operations.

A study by Palade (2011) concluded that there is no significant association between the

respondent’s purchasing mode and occupation. The reason behind that any person, regardless of

his employment or education status can order and buy the products.

In the event of financial crisis, destroying the market leader’s pricing strategies are most

effective for business like groceries, produce and bread. However, market penetration would be

barely significant (Chen, 2011). Moreover, his study found that pricing is strongly correlated to

promotions strategies and most respondents claimed that they raised their prices to maximize

profit and lower the same to entice more customers.

The basic needs of individuals will continue to grow in terms of total outlets and a

number of product concepts. Changing food habits among consumers, stimulated by the massive

media advertising and the growing number of working classes, which include women, both

single and married, young and old, have created more demand for food services away from home
at affordable price. Thus, fast food chains have expanded to cater to the needs of these working

classes and their families (M. Flores, 2014).

From marketing perspective, location for the fast food service to the potential customers

is most important according to Maritz Marketing Research. The recent study showed the location

has to be convenient. The analysis said that adults under the age of 65 prefer convenient location

for their fast food choice. Customers look forward for a superior quality. As a matter of fact

pricing also becomes a very significant factor along with quality. Fast food chains are now

highlighting on the value meals. This value meal is a combined package of different items within

a very suitable pricing range, which can be afforded by mass customers (Bartleby, 2018).

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) latest

Industry Trends, a regular publication produced by IDEA, food is always viewed as

indispensable household necessity. Based on the 2009 Family Income and Expenditure Survey

(FIES), around 42.6 % of the total expenditure of a typical Filipino household is solely being

allocated for food. Changing consumer behavior and lifestyle, however, are some of the factors

that continuously shape and influence households’ decisions on food consumption. The

increasing numbers of white-collars workers, the women’s changing role in the society, the

shifting consumers’ preference towards leisure and convenience, and urbanization have

heightened consumer demand for food services-particularly for fast food services (E. Limtingco,

2012).

Marketers must make critical decisions regarding the tactical components of their

promotional plans. They must decide which promotional tools to employ and to what extent. The

vagaries of marketing are such that no single promotional tool offers a guarantee of marketplace

success. Each promotional tool has strengths and weaknesses and marketing budgets are limited.
However, an experienced marketer is aware of the best theoretical and experiential practices,

which helps him to better select among the array of promotional mix options (Marla Currie,

2017)

Advertisement is one of the major tools sellers use to stimulate consumers demand for

goods and services. In order to know the impact of advertisement on consumers buying behavior,

it is necessary to know what advertising itself is and its goal and purpose. Advertisement is ant

paid form of non-personal pre-sensation and promotion of ideas, goods, and services by an

identified sponsor. Advertisement is a process, it is a or series of activities necessary to prepare

the message and get it to intended market. Another point is that the public know-how is behind

the advertising because the sponsor is openly identified in the advertisement and also payment is

made by the sponsor to consider, differentiate advertising propaganda and publicity. The major

goal of advertising is to communicate ides or promote goods and services, its major objectives is

to facilitate the work of the salesman by stimulating demand (S. Fatima and S. Lodhi, 2015).

According to Rai (2013), there are several national and international brands which people

recognized and have strong perception in their minds. These perceptions are pinched in their

mind because of their culture, life styles and surroundings. Also advertisements have very

important role in shaping the consumer behavior. Advertisements are the source of motivation

which forces them to buy a particular product. Advertisements are also a source of building trust.

Consumer is induced significantly if he is looking for the quality and prices of the products.

Purchase attitude can also be build up by product evaluation and brand recognition.

Advertisement is an attempt at creativity which influences the consumer’s motive to buy

a particular product and change or make the perception of the product in the mind of the

consumers. Advertisement appeal act as a supplier to arouse the psychological motive of the
consumer for buying. Advertisement involves rational and emotional appeals. In rational appeals

the product can be emphasized mainly on its benefits and the problems which it can solve while

on the other hand emotional appeal meet the consumer’s psychological, emotional and social

requirements (Gunjan Baheti, 2012).

Product mix and availability impact demand and cost considerations in many markets,

particularly those for which storage costs or capacity constraints matter. For example, the choice

of product mix, stocking levels, product placement, and shelf-space coverage impact almost all

retail markets; transportation and performance event industries face critical decisions about

capacity and mix of seating types; and capacity decisions also impact the provision of health care

and school choice. Firms in these markets may optimize over product mix and availability to

influence consumer decisions about where to shop and when to make purchasing decisions. In

vertically-separated markets, optimal product and stocking choices for downstream firms may

differ substantially from those of the competing manufacturers whose products the downstream

firms carry. In such settings, manufacturers tend to produce a wide array of product varieties and

to use vertical arrangements to try to align the stocking decisions of the downstream firms with

their own interests (C. Conlon and J. H. Mortimer, 2010).

Advertisements have been used for many years to influence the buying behaviors of the

consumers. Advertisements are helpful in creating the awareness and perception among the

customers of cosmetic products; both of these variables are lethal combination to influence the

buying behaviors of the consumers. This particular research was conducted on the 200 young

male or female who use different brands of cosmetics to check the influence of advertisement on

their buying behavior while creating the awareness and building the perceptions. Correlation and

regression analysis were used to identify the relationship between these variables. The results
revealed provide the new way to managers to devise suitable strategy for the marketing of

cosmetic products. These results show that advertisements are very useful in creating the

awareness among the people but they are failed to build strong perceptions in the mind of

consumers. Both of these variables such as consumer awareness and consumer perceptions will

motivate the consumer to buy a certain product, as there is a positive relationship present in

between them (S. Fatima and S. Lodhi, 2015).

With the purpose of a business to sustain in highly competitive market, customer

satisfaction is one of the elements that need to be taken into consideration. Khan et al. (2013)

defined customer satisfaction as the feeling of pleasure or disappointment, when the products or

services met their expectations levels, therefore, their level of satisfaction also higher, if not, they

will feel disappointed. Sabir, Ghaafoor, Hafeez, Akhtar, and Rahman (2014) mentioned that

customer satisfaction has a very significant effect in business field today because it will reflect

the businesses’ profits. In addition, Lee, Ruby and Rajdeep (2004) stated that customer

satisfaction may represent the firm’s performance and their long-term commitment.

To maintain a competitive edge in industry, players spend milliond on advertising. There

are different kinds of gimmicks like a toy in every set meal for kids, discounted food items if you

purchase two items, free gift items, raffle draws and a lot more. Some food companies even get

celebrity endorser to create brand consciousness and market loyalty (M. Flores, 2014).

Another marketing strategy practiced by leading fast food restaurants is attracting and

retaining right customers and developing long term relationships by offering loyalty and reward

programmers to retain the old customers. Frequency card programs are a popular type of loyalty

programs for fast food restaurants. These programs help in increasing the revisit incidence of the
customers by rewarding their repeat behavior in conjugation to their enhanced loyalty towards

the organization (S. S. Chib, 2012).

Consumer behavior is a process that involves the personal choice of purchasing, using or

abandoning the products, services, ideas, or experiences to meet the needs and wants itself

(Solomon, 1998). Consumers are defined as any individual; of all ages participate in the process.

According to Solomon (1998), buying behavior of consumers is the behavior that occurs when a

consumer decides to buy a product. It is an internal thought process (a process often called

buying process) and it starts when consumers recognize a need or desire to buy something, the

study of factors before purchase and include the following actions when the consumer purchase

experience consider before deciding whether to use products services again in the future

(Destiny, Cheuk Man LUI, 2012).

Marketing Mix theory of McCarthy (1964, In Goi, 2009) which was often referred to as the

4Ps –Product, Promotion, Place and Price. McCarthy’s model can be utilized in both long-term

strategies and short-term tactics. The marketing mix can be altered depending on the type or

nature of the business and differ from business to business (Palmer, 2004 In Goi, 2009). This

theory of McCarthy was further expanded by several theorists adding to it several elements of

the marketing mix: Booms and Bitners’ (1980) 7Ps which added people, physical evidence and

process; Kotlers’(1986), which included political power and public opinion formation to the Ps;

12 P’s and Baumgartner’s (1991) 15 P’s which was composed of product (or service), price,

promotion, place, people, politics, public relations, probe, partition, priorities, position, profit,

plan, performance, and positive implementation.

Product differentiation is the process of distinguishing a product or service from others, to

make it more attractive to a particular target market. This involves differentiating it from
competitors' products as well as a firm's own products. The objective of differentiation is to

develop a position that potential customers see as unique. Differentiation primarily affects

performance through reducing directness of competition: As the product becomes more different,

categorization becomes more difficult and hence draws fewer comparisons with its competition.

A successful product differentiation strategy will move your product from competing based

primarily on price to competing on non-price factors (Stuyck, 2013).

Marketing is one of the key ways in which companies try to create awareness of their

products or services (Fuerderer, Herrmann and Wuebker, 2013). Marketing is undertaken

through the five key elements known of the marketing mix. With the ever rising significance of

the financial sector, there has been a rise in pressure for efficient marketing management and

regulation of company’s financial services. According to Green, Whitten and Inman (2014), it is

vital to point out that marketing strategies are very important in the long run performance of an

organization. The marketing targets should be specific, measurable, attainable, relevant and

timely (SMART).

According to Owomoyela, Oyeniy and Ola (2013), marketing strategy is a strategy that

organizations use to provide their target customer with quality products at affordable price, offer

effective promotional strategy and interact with their distribution outlets. Hence, creating

demand for their products and increasing performance. Marketing mix is a business tool that is

used by organizations to achieve a competitive advantage. Marketing mix refers to 4P’s that

organizations use in their marketing process to achieve organizational goals and meet customers’

needs and wants. It is a set of tactical marketing tools that includes product, price, place and

promotion that marketing.