Over the past decade, the business world has been positively and negatively affected by several disruptive innovations. Disruptive innovation occurs when a new or underrated company initially at the bottom of an industry’s market moves up and eventually displaces the existing competitors. It alters the industry’s competition strategies by introducing completely new approaches. The term disruptive innovation was first coined in the book, The Innovator’s Dilemma. In the 1997 best-seller, a Harvard Business School professor wrote about “why some innovations that were radical in nature reinforced the incumbent’s position in a certain industry, contrary to what previous models would predict.”
New business adopts new layouts that cannot be mimicked by competitors making it the lead in that specific industry. This subsequently affects the entire market network and processes. For that reason, businesses have been striving to shift their means of operation to keep up with this competition.
Disruptive innovation has led to business shifts from traditional approaches to modern technological approaches. Technology is continuously experiencing a revolution. Technical changes or digital innovations lead to a technology disruption (Rachinger, Korajman, Vorbach & Guggenberger, 2019). An excellent example of how companies have shifted due to the internet and digital innovation is in the competition techniques.
Companies have adapted to a digital transformation strategy in which they integrate various digital technologies in all the main business operation areas. Offering customers an exemplary digital experience at a low operation cost demands new technological business applications. In the end, the market concedes these innovations. They speed up operations and convey businesses’ outcomes more effectively.
Digital transformation means a change in a business’s culture as well as a change in thought. This transformation has created a need for organizations to change their dynamics to swiftly cater to the industry’s changing needs. Today’s management teams are working hand in hand with IT experts to meet the industry’s competition by speeding up the company’s activities, lowering operational costs, and generally improving the whole business process.
DisruptiveInnovation
The digital transformation process positions the customer at the center of the business model (Kotarba, 2018). Businesses are taking advantage of technology to reach their customers more effectively and efficiently through mass media and advertisements. This new model shapes and changes the entire working and operations of a business. Technology has also made it easier to adapt to the changing demands of the market.
However, these technological disruptions have not been advantageous for all businesses. They are a great challenge for companies that have not been able to cope with the sudden changes followed by high paces. This has seen the disintegration of past business models and the closure of big businesses.
DisruptiveInnovation and Technological change
Technological change has influenced and pushed businesses beyond the traditional business models from the strategy to the operations. The Australian government is committed to delivering a stable, safe, and inclusive digital economy. It has seized all chances and opportunities brought about by the digital transformation. Most businesses have adapted to innovations such as remote sensors, blockchain, quantum computing, artificial intelligence, robots, and autonomous techniques into their processes, and the results are improved outputs.
More industries have been created for the production of more products and services. Endorsement of digital transformation has brought about more employment opportunities, improved life quality, better-paying jobs, and an improved ministry of industry.
Australia has laid out all the future opportunities and challenges brought about by technological changes. This has enabled businesses to maximize and augment the available opportunities. According to research, Australia’s digital technology innovations contributed to approximately 58 percent of the country’s economy in 2014, and the estimated improvement over the next ten years could be around 315 billion dollars (Fleischmann, Daniel & Welters, 2017). To ensure that all its citizens survive in the technological disruption and that no one is left behind, the government points out all work that is ongoing and analyzes more recommended efforts.
Australia’s digital future is fixated on four primary areas, which include the people, digital tools, digital services, and the regulatory system. The government focuses on people by ensuring that citizens have the right digital skills to operate on new technological innovations. It also ensures that digital tools are integrated by providing adequate infrastructure.
Regulatory systems are maintained by the government, providing an enabling environment that ensures cybersecurity. The government also focuses on better ways to deliver digital services to all citizens equally. Digital technologies have delivered benefits across the economy sectors, such as agriculture, services, health, mining, manufacturing, education, transport, tourism, and emergency services.
However, despite a significant increment in the employment rates, some jobs have definitely been lost. An example is the truck drivers in mine areas who have been taken over by automatic trucks that do not require personnel operation and are safer. The CEDA (Committee for Economic Development of Australia) has envisioned that of all the jobs that would be lost, 40 percent would be attributed to replacement by automation (Healy, Nicholson & Gahan, 2017). The benefit brought by disruption, however, oversee the disadvantages as more employment rates have been recorded since the technological advancements began.
References
Fleischmann, K., Daniel, R., & Welters, R. (2017). Developing a regional economy through creative industries: disruptive innovation capacity in a regional Australian city. Creative Industries Journal, 10(2), 119-138.
Healy, J., Nicholson, D., & Gahan, P. (2017). The Future of Work in Australia: Anticipating how new technologies will reshape labor markets, occupations, and skill requirements. Department of Education.
Kotarba, M. (2018). Digital transformation of business models. Foundations of Management, 10(1), 123-142.
Rachinger, M., Korajman, I., Vorbach, S., & Guggenberger, T. (2019, June). The Influence of Technological Disruptions in Business Ecosystems on Elements of Companies’ Business Models. In R&D Management Conference 2019.
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Risk Management Strategies MBA Project. Risk management is the process of identifying and evaluating the possibility of threats that are posed to operations of an organization. Every organization is faced with challenges whose potential could negatively affect the business. In this regard, the mandate of the organization is to ensure that the risks are identified and evaluated comprehensively so that the best measures can be put in place to prevent a possible spread and damage of those risks.
The management of risks in the operations of an organization includes making them a priority and coordinating resources to mitigate them and preventing damages that could come from them (Hopkin et al, 2018). These risks are posed to businesses and organizations from time to time, making it necessary for the respective organizations to come up with risk management strategies. In this report, the technical aspect of risk management in operations of an organization will be discussed in detail.
Identification of Information Assets using Risk Management Strategies
Every organization has information assets that are very important to them. They are tools of data that help the organization to run its activities and programs. Without the help of these information assets, it is not possible for the business to make progress and plans for the future. There are various types of information assets in a business that should be protected from risks. A lot of threats are posed to these information assets and hence the need to manage those risks. These information assets include;
Trade secrets: Every business has unique features and secrets of trade that makes them different from their competitors in business. These trade secrets include designs, formulas, procedures, processes, techniques and methods of production and operations. All these trade secrets are documented and kept secure for the good of the business. To businesses that keep leading in the market place, their greatest competitive advantage is the trade secrets. They are very unique to the operations and undertakings of the business. (Rampini et al, 2019). They are therefore kept safe and secure so that they cannot be assessed by third parties and intruders. In this way, the organization’s leadership puts measures in place to prevent the risk of having these trade secrets leaked. They form part of the most sensitive part of information assets within an organization and they are also not made available to every member of the team. They can only be accessed by the crucial and relevant team to avoid the aforementioned risk.
Strategies: Every organization has a strategy and a plan that outlines the goals and objectives of the company. They are kept as secret to act as pointers of direction towards a projected future. The quality of those strategies and plan determines the highest level of success and influence that a business can ever command in the marketplace. This piece of information asset is therefore very important to an organization. They help them to understand what is expected of them in every step of the way. The risk of having such information leaked would deprive the organization the chance of leading because the strategy could be implemented to the advantage of a competitor.
Support decision: This is one of the most important parts of information of the organization as far as data assets are concerned. It entails the decisions made the leadership of the organization and the decisions they make from time to time. All the styles of leadership and decisions of progress made are documented in this piece of information asset. There is therefore need to keep such information confidential and out of bound by intruders and third parties. It is very risky to have that information hacked because trade secrets and strategies would be accessed as well. The only way to manage such a risk is to improve security of the network systems and keeping the information with the radius on only relevant staff (Dang, et al, 2014).
Marketing media and techniques: To every organization, there is a marketing team that creates awareness of the brand to the market. Each team has its own techniques that keep them relevant in the pursuit of advertisements. In this way, the secrets of marketing have to be kept safe so that they are copied and implemented to favor competitors. The marketing media therefore and all their details are kept very safe and there is need to manage every threat can could be posed to them. Most marketing videos and posters of advertisement do not carry the trademark because they are raw and specific to the awareness they are intended to create (Louche et al, 2017). To prevent a case where they are tampered with or even stolen, managements ensure that they remain a top secret and safely kept within the organization data. This is done to ensure that all possible risks are mitigated and managed effectively.
Trademarks and copyrights: No matter how successful a business or an organization is, they are nothing without trademarks and copyrights. Every competitor is out to make a kill and the malicious ones don’t mind doing it the wrong way. One of the wicked encounters that face businesses and organizations is not securing their brands from trademark and copyright infringements. It is very necessary to ensure that the business and its copyright are secured through legal procedures that are within the jurisdiction of the rule of law. In this way, there will be consequences to everyone who tries to tamper with them. If the legal processes are well followed in this regard, the aforementioned risk is managed and mitigated.
Weighted Factor Analysis
This refers to the techniques used by businesses and organizations to assess and audit competing alternatives against each other before implementation. Every implementation especially regarding management of risk is evaluated comprehensively against other possible choices so as to come up with the most appropriate method. It is very important to ensure that proper auditing of alternatives is done before implementation. In risk management, weighted factor analysis is followed before the final decision is made on which path to go (Al-Zuheri et al, 2019).
In the decision-making process for instance, the management will assemble all the listed ideas concerning the best method to mitigate risks. Decisions are not just made without the process of weighted factor analysis. Members of the group might be required to come up with a strategy that would help the organization overcome various challenges. In this respect, they issue their opinions to the management for assessment. This is where the weighted factor analysis procedure comes in. after the various operational evaluations, the leadership of the business or the taskforce given that mandate can make a final decision and that will be the most appropriate in risk management.
The management of the company does not rely on analysis opinions of the members alone. They also engage the leadership team in the process through focus groups and individual assessments. They are allowed to showcase their beliefs and ideologies concerning matters of risk management and possible threats. This is a very important procedure because it puts the two groups under scrutiny and the idea is to assess the most appropriate idea to follow. They can assess and distinguish between the appropriate of ideas given by members against those given by the management. They also assess the possibility of future outcomes and the ideas that were relevant in successfully fighting former risks in business. After that, they are able to make the right decisions that will help in the mitigation of risks and their management (Cohen et al, 2019).
Risk Probability and Impact
Probability of risk is the likelihood of a threat to the business that carries a series of impacts with it. The probability of risk is always assessed and understood by the organization before it is made a priority. The probable risks fall under the category of operational risks, credit risks, market risks or even liquidity risks. Some of the risk probabilities and their impacts are discussed below.
Loss of suppliers and customers: No matter how influential a business can be, it is not functional without suppliers and customers. These two pillars are the working engine of business because it cannot be operated with suppliers and customers. Worse still, it is not possible to operate with one without the other. Businesses therefore need to need to check on all possibilities of losing these two important pillars of business (Wang et al, 2013). The impact of losing them would capsize the business and leave it on its knees. Businesses are not able to operate and the result could be to shut them down.
Natural disasters: Some occurrences are very unavoidable and human control is almost irrelevant. Floods or fire damages are possible risks that face businesses from time to time. Diseases and sicknesses like the current global pandemic of corona virus have brought economies of most businesses to their knees. Some of the business risks from natural disasters are unprecedented and it is important to mitigate the risks as much as possible. The impact felt from these disasters is that businesses lose control and focus. Customers change priorities as they focus on cushioning themselves against those disasters. Nonetheless, the flow of supply and items is affected to a great extent making it hard for businesses to maintain momentum of operation (Lawler et al, 2019).
Bankruptcy and financial loses: Working capital in most businesses is borrowed from financial institutions. Some businesses thrive on those loans and are able to pay them back. However, there is a risk possibility especially when they are not able to clear those debts. More so, business has very many shades and circles that affect its operations and profit making strategy. They are supposed to be managed in the most possible ways and convenient times (Jung et al, 2017). The overall impact of this possible risk is shutting down of businesses, auctioning of property, people losing jobs and filing for bankruptcy.
Acceptance Risk Control
Acceptance risk control is the deliberate approval of strategies put in place to manage risks. There are various processes that the management of an organization uses to implement decisions that pertain to the risks identified and their possible threats. Every taskforce within an organization has the mandate of coming up with the best strategies of risk management and mitigation so as to spearhead approval through acceptance risk control (Rampini et al, 2016).
Risk Management Strategies Dissertation
To accept risk control comes in various shapes and sizes. A good example is avoidance of a certain agenda. If an organization was overspending on budgets, the possible risk is loss of finances whose aftermath would be chaotic to the whole business. There are other negative operational strategies that don’t make economic sense according to the management. The acceptance risk control measure in this case will be to avoid the strategy. Avoidance helps to manage the risk and come up with alternatives methods of operation. This has everything to do with taking action to ensure that all the risks are managed.
Transference and change of tact is part of acceptance risk control. Nothing saves the business from losses and risks better than this tack. Accepting the control measure is simply characterized by action and management-oriented practices. There is transfer of operations within the group and the taskforce is supposed to ensure that the measures put in place can eliminate the probability of extended risks to a great extent. Mitigation techniques are very important at this stage and this call for massive action to curb the threat of various business risks. It is recommended to use the most appropriate methods to ensure that the risks are mitigated through control acceptance (Giannakis et al, 2019).
Microsoft Risk Management Approach
This refers to the technical aspect of risk management strategies and the approach taken by an organization within a network system. There are various security baselines that need to be protected from cyber threats that have been advanced with technological improvements. The possible risk control management approach is to ensure that the best has been done to secure the systems of cyber threats. The approach is to put measures that can possibly deal with cyber crime and that have an aspect of security. These approaches are specific to the intended use as described below.
Putting Up Security Firewalls
Installation of firewalls on computers is important in securing a network system from threats of attacks. Every business faces the danger of being attacked by cyber criminals through malwares and malicious virus (Aven et al, 2016). These viruses are dangerous and they might hack a lot of details that would otherwise cripple the business.
Educating the Team of Cyber Threats
The management should ensure that all members working in their various teams are enlightened on how to avoid these risks. They are supposed to be taught how to control threats like phishing attacks and avoiding to open strange emails, attachments of following suspicious links to avoid entertaining the possibility of installing viruses on computers without knowing.
Keeping Confidential Information Safe
There are very important pieces of data and information that should be kept safe. These pieces of information include trade secrets, trademarks & copyrights, support decisions, strategies and plans and organizational goals and objectives of the projected future. Legal licenses, list of customers and suppliers and financial database also falls under this category. These forms of information should not be let loose to members they don’t concern. They should be kept confidential to avoid the threat of leakage which could otherwise be used to plot a second stage attack to the organization (Giannakis et al, 2016).
Factor Analysis of Information Risk
To every organization, the magnitude of risk posed to them can only be controlled is factor analysis of information is put in place. A lot of data within an organization is at risk considering that the cyber criminals know that it is the epitome of the organization. There is therefore need to have the best mechanisms in place so as to assess the risk that comes with information assets. The aforementioned information assets are supposed to be secured and the best way to do that is through factor analysis.
Accurate possibilities of risk management can only be enhanced through factor analysis. It is not possible to have the best proposal of solutions and this can only be achieved if the analysis is done comprehensively. The assessment of these risks follows a certain pattern that is prominent to the organization in question. In most cases, the proximity of a successful endeavor is determined by the factor analysis of information risk (Leisen et al, 2019).
Information assets are the greatest pillars the organization. They hold the company together through documentation of data that is crucial to the organization. To avoid loss of such data, the most appropriate methods should be put in place to ensure that risks are mitigated in the best ways possible. This can only be achieved if the management is willing to implement factor analysis of information risk.
Conclusion
In conclusion, robust risk management strategies are very important in business. Risks are bound to occur in groups, companies and organizations from time to time. They present in various forms and high-level mitigation is required to avoid getting overwhelmed. In the above-mentioned recommendations, risks can be managed and mitigated effectively if followed through. The quality of business standing and its relevance and longevity in the marketplace is determined by how well risks are managed. In fact, the ability to manage risks in business effectively is a competitive advantage.
References
Hopkin, P. (2018). Fundamentals of risk management strategies: understanding, evaluating and implementing effective risk management. Kogan Page Publishers.
Cohen, D., Plonsky, O., & Erev, I. (2019). On the impact of experience on probability weighting in decisions under risk. Decision.
Aven, T. (2016). Risk assessment and risk management strategies: Review of recent advances on their foundation. European Journal of Operational Research, 253(1), 1-13.
Rampini, A. A., Viswanathan, S., & Vuillemey, G. (2019). Risk management in financial institutions. The Journal of Finance.
Giannakis, M., & Papadopoulos, T. (2016). Supply chain sustainability: A risk management approach. International Journal of Production Economics, 171, 455-470.
Lawler, S., & Bright, D. (2019). ‘It’s just business’: Leaders’ strategies for risk management in criminal networks. In Criminal Networks and Law Enforcement (pp. 55-74). Routledge.
Dang, Q. T., Jasovska, P., & Rammal, H. G. (2014). International business-government relations: The risk management strategies of MNEs in emerging economies. Journal of World Business, 55(1), 101042.
Wang, L., & Ahsan, D. (2013). Stakeholders’ perceptions on risk and risk management strategies: the case of Chinese dock-less bike-sharing enterprise. International Journal of Green Economics, 13(2), 146-165.
Louche, C., & Idowu, S. (2017). Innovative CSR: From risk management to value creation. Routledge.
Clarke, J. E., & Liesch, P. W. (2017). Wait-and-see strategy: Risk management strategies in the internationalization process model. Journal of International Business Studies, 48(8), 923-940.
Al-Zuheri, A., Amer, Y., & Vlachos, I. (2019). Risk Assessment Strategies and Analysis of Healthcare System Using Probability-Impact Matrix. Nur Primary Care, 3(4), 1-4.
van de Water, S., van Dam, I., Schaart, D. R., Al-Mamgani, A., Heijmen, B. J., & Hoogeman, M. S. (2016). The price of robustness; impact of worst-case optimization on organ-at-risk dose and complication probability in intensity-modulated proton therapy for oropharyngeal cancer patients. Radiotherapy and Oncology, 120(1), 56-62.
Jung, Y. S., Park, C. H., Kim, N. H., Lee, M. Y., & Park, D. I. (2017). Impact of age on the risk of advanced colorectal neoplasia in a young population: an analysis using the predicted probability model. Digestive diseases and sciences, 62(9), 2518-2525.
Leisen, R., Steffen, B., & Weber, C. (2019). Regulatory risk and the resilience of new sustainable business models in the energy sector. Journal of cleaner production, 219, 865-878.
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Technological Change in Construction Affecting Sustainability – Green Building Technology
Issues concerning construction and the environmental sustainability have been of great concern. Many technological changes have taken place in construction industries to attain a sustainable life. Technological improvement has emerged because of the impact of the construction with the environment. A major technological improvement that has taken place in the construction industry is green building technology.
Green building is a new technology that has been introduced in building and construction companies It is also referred to as sustainable building. The green building technology aims at increasing the efficiency in buildings with their site uses by using processes and structures which are environmentally friendly and resource efficient. The green building technology aims at changing the nature of operation, construction, maintenance, design, demolition, and renovation of buildings.
Green building technology aims at finding a sustainable balance between home and industrial building and the sustainable environment. For this to be achieved, it requires keen intervention in different construction sectors including the design team, the engineers, and the architects together with the project clients in each phase of the construction project. The green building technology is aimed at expanding and complementing of the classical system of building design which is concerned with the economical sustainability, their utility, comfort, as well as durability.
The green building technology is designed in order to curb the impact from the built environment to that of human health and natural environment in different ways. These ways include;
1. Sustainable water usage, energy and resources available.
2. Promoting the health of the occupants and improving the productivity of employees
3. Reducing resulting wastes, environmental pollution, and degradation.
Buildings have got a great impact on the environment if they are not checked. The impact caused by the construction of building also extends to the health of people within the building. The technological change in construction looks at the resultant improvement over a long period, which is the entire life-cycle in construction including its subsequent operations, disposal costs and the maintenance of the building.
Green Building Technology – Was it introduced as a cost-saving measure or for other reasons such as meeting building regulations or improving thermal performance, etc.?
As mentioned above, green building technology was introduced in order to achieve a sustainable environment. This including saving on the cost of construction, reducing the impact of construction to the environment, Sustainable water usage, energy and resources available, as well as minimization on the waste disposal which causes environmental pollution and degradation.
Building has an adverse effect to the health of individuals. The public health is affected by the construction, the building design and operation practices. The effects of buildings to health can be grouped in three main categories.
1. Effect on those occupying the building: various aspects on the building affect the health of the occupants, the staff, and visitors of a certain building. This includes indoor air circulation. The indoor air circulation of a building depends on the physical design of the building, which includes the ventilation, waste disposal locations, airflow, and pressure. Daylight access in the building also affects the occupant.
2. Effect on the health of the community surrounding the building: Health of the surrounding community is affected by the building. This can also result from waste material from the building. It also has an impact on the water management and air circulation to the neighboring community.
3. The effect of the entire global community: The health effect of the building extends beyond the immediate community. The production material of a building can constantly release toxic components to the environment. The components can cause severe effect to the larger community such as the effect of CFCs.
The goals achieved by introduction green building technology included energy efficiency, water efficiency, and material efficiency and improved indoor environment. On energy efficiency, the green building technology aims at reducing the total capacity of energy used in its construction and operation.
Green Building Technology Dissertations
For this reason, buildings are constructed in a way that they will save on energy and avoid energy wastage through several ways such as siting a building in place where there is enough daylight to be used instead of electricity during the day. The houses are also fitted with solar water heaters to cut on energy use and cost in heating.
Sustainable building also aims at reducing the overall consumption of water. For this reason, water harvesting techniques have been incorporated in the construction of buildings to harvest rain water. Installation of water recycling and purifying machines is also put in place to ensure water efficiency and conservation. The technological changes in the construction industries have helped to achieve a sustainable environment which is necessary to reduce the impact caused by building to the people within them and the surrounding community.
References
PARAYIL, G. (2002). Conceptualizing technological change: Theoretical and empirical explorations. Lanham, MD, Rowman & Littlefield.
SMITH, M. R. (1994). Does technology drive history? the dilemma of technological determinism. Cambridge, Mass., MIT Press
TROY, P. N. (1995). Technological change and the city. Annandale, NSW, Federation Press.
VLANDIS, P. (1999). The impact of technological change on construction management. Thesis (B. Build. Construction Management) University of New South Wales, 1999.
The Effect of Classical Conditioning on Consumer Behaviour
Classical conditioning is a source of learning that influences an individual’s behaviour psychologically, habitually and perceptually. The concept of classical conditioning is discovered by Ivan Pavlon and is defined as a learning process that is created by crafting a connection between a neutral stimulus and an environmental or physical stimulus. However, it emphasises on placing neutral stimuli before the naturally occurring reflex.
The very well-known example of classical conditioning is of a dog, where the dog was exposed to a sound as neutral stimuli which triggered salivation as the reflex in anticipation of food (Cherry, 2017). Nevertheless, a study by Pornpitakpan (2012) states that there is no significant evidence that classical conditioning have any effect on consumer behaviour and its use in the advertisement is a waste. Therefore, this report will analyse the impact of Classical Conditioning on Consumer behaviour through Coca Cola’s advertisement in United Kingdom.
Classical Conditioning at Coca Cola
Coca Cola is among the top selling and manufacturing soft drink Companies in the world, it was established by John Pemberton in the 19th century. Perhaps it is run by Asa Griggs Candler, an extraordinary marketer who has got Coca Cola to this dominating position. Coca Cola is a Global brand but this report talks about its Coca-Cola Great Britain (CCGB) division, which manages 20 different brands and 80 or so drinks. Its brands in the United Kingdom include a variety of still and sparkling drinks, four colas, herbal teas, sports drinks, waters, juices and also no calories, caffeine and sugar drinks in the range of flavours (Coca-cola, 2017). Nonetheless, the advertisement of Coca Cola is a great choice to demonstrate the impact classical conditioning on consumer buying behaviour.
Coca Cola’s Advertisement History
Coca Cola has a unique way of marketing its drinks ever since it’s first on-screen advertisement in 1950, where it associated its brand to festive occasions from red trucks in Christmas holidays to hilltop singers by creating an association. Similarly, in another advertisement in the 1950s featuring Julie Reaby and Alf Davies (the winners of British Ballroom Dancing Open Championship of 1956) with the slogan “Coca‑Cola puts you at your sparkling best!”. Coca Cola has been seen to create its brand image as the source of happiness.
Like most of the well-known brands in the 1960s, Coca Cola featured celebrities in its advertisement to air in the UK because it tends to influence consumer’s buying behaviour. Then there were also some ads where it introduced cartoons to show how characters call truce using a bottle of Coca Cola. Furthermore, it uses appealing jingles like “Only Coke will do when you’re thirstiest”, “Coca‑Cola refreshes you best!”. Likewise, Coca Cola has evolved tremendously by associating coke with appealing notions and trends like it introduced can opener named Churchkey in the mid-1970s with the demonstration of how to open cans. The Coca Cola ads at times introduce its campaigns, to help a cause or demonstrate a new idea but with the aim to attract more and more consumers (Coca Cola, 2017).
Use of Classical Conditioning in Coca Cola’s Advertisement
Understanding the consumer behaviour is a crucial aspect of today’s market, especially for effective marketing and branding of the products. In fact, when a new product is launched the consumer behaviour changes and its psychological understanding becomes important because it requires new association. Under classical conditioning, many brand use liked or disliked music in their advertisement to affect consumer’s product preference (Gorn, 1982). However, Coca Cola uses classical conditioning in its advertisements very effectively for creating an association of its products with a likeable factor.
As thirst is an unconditioned response of the consumers in a hot season and it is triggered by many physical and environmental factors like sports, heat, dehydration, workout etc. which are used by Coca Cola as unconditioned stimuli in its marketing and branding functions very strategically. Moreover, the keywords of these unconditioned stimuli are used in slogans to appeal consumers and influence their purchase decision such as “Thirst Knows No Season”, The Pause That Refreshes”, Open Happiness etc. (Ryan, 2017).
Nonetheless, Coca Cola products are used as conditioned stimulus by placing along with the unconditioned stimuli in every advertisement. As a result, Coca Cola drinks become a signal of unconditioned stimulus like heat and dehydration for the consumers and they feel thirsty by seeing the ad without actually experiencing the environmental factors. This impact of classical conditioning compels consumers to buy Coca Cola by making them feel thirsty when they actually may or may not be thirsty. In addition to that, Coca Cola also uses festivals to create its pairing with the festive period and influence people to buy coke (Oakley, 2013).
Impact of Advertisement Characteristics on Consumer Behaviour and Pepsi (Rival Brand)
There are numerous characteristics of Advertisement including the use of media, tools, communications means etc. which basically make the brand image. As the brand image is the core driver of the brand equity and it influences consumer perception and choice regarding a product by driving the consumer behaviour. Regardless of the marketing strategies of the companies, the main objective of every organisation is to effect consumer’s perception and buying behaviour towards the brand. Coca Cola establishes its brand image of happiness and refresher in consumer’s mind and stimulates their purchasing decision of the brand (Zhang, 2015).
The first ever print advertisement published by Coca Cola in 1886 had slogan “Delicious and Refreshing” and was marketed on every merchandise including trays, clocks etc. until 1920 to create its brand image as a very refreshing beverage. Which positively influenced consumer behaviour and increased its market share, as a result many similar slogans were used in ads like “Coca Cola is a Delicious Beverage, Delightfully in Harmony with the Spirit of All Outings”, “Coca Cola Revives and Sustains” and “The Great National Temperance Drink” using classical conditioning to create a distinct brand image in consumer mind (Ryan, 2017).
For example, a very well-known and highly anticipated Christmas ad by Coca cola that was aired in 2013 used the traditional factors or view of advertisement to compel consumers to buy that product. In the human mind, events like Christmas are the unconditioned stimulus that tends to bring a positive vibe or sense of happiness, excitement and togetherness as an unconditioned response.
Before the implementation of the classical conditioning, the neutral stimulus or Coca Cola drinks do not trigger any emotion in consumers because of no brand association. Nevertheless, when the same neutral stimulus (Coca cola) is advertised with the unconditioned stimulus (Christmas) in an advertisement, it generates positive feelings among consumers, the emotions of excitement and family re-emergence when they see Coca Cola. These emotions then become the conditioned response of consumers due to the association of Coca Cola with Christmas. Perhaps, the effectiveness of the advertisement cannot be directly measured but the recorded sales of Coca Cola during the Christmas season exceeded to £185m, which shows its very positive impact on consumer buying behaviour (Oakley, 2013).
Furthermore, Oakley (2013) shows the impact of Coca Cola’s same advertisement on Pepsi by highlighting the AIDA (Awareness, Interest, Desire, Action) tool used by Coca Cola in the ad. The tool is discovered by Elmo Lewis and proposes a view of effective advertisement which affects Pepsi’s sales. The tool first grasps consumer attention by awareness, then interests or appeals them to learn about it and consequently convinces them to desire the product. Eventually, it influences their purchasing decision making or consumer buying behaviour and they take action to buy Coca cola. Which perhaps decrease Pepsi’s sales than Coca Cola.
The rivalry between Coca Cola and Pepsi is quite interesting as both have somewhat similar in chemical composition but their advertisement creates preference among their consumers. However, Coca Cola is known as the most popular beverage with 18.6% global market share, whereas Pepsi has 11.9%.
The advertisements of Coca Cola like its 2013 Halloween ad maybe a cheap advertisement tactic (shown in the figure below) as a competition but it is an example of classical conditioning that created the brand association. The advertisement may have worked in favour of Coca Cola but badly affected Pepsi (Oakley, 2013). Not just that the other advertisement characteristics of Coca Cola like media and communication tools also badly affect Pepsi as they both have the same target audience.
After the above thorough analysis of Classical Conditioning and its effect on consumer behaviour in advertisement using Coca Cola’s Great Britain advertisement, it is proved to be quite evident. There are many brands like Coca Cola who use the unconditioned stimulus along with neutral stimulus to create conditioned response by associating the brand or product with an emotion.
The effect is proven significant using various Coca Cola’s advertisement examples, from its first ever print ad to on-screen advertisements that create its association with freshness, happiness, togetherness etc. and Influence its consumer’s buying behaviour and increases its sales. The example of its Christmas ad is used to show the effect of classical conditioning on Coke’s consumers and their purchase decision which show an immense increase in sales during Christmas period.
Furthermore, the effect of advertisement characteristics on its rival brands is also significant. Which is proved using its 2013 Halloween advertisement that created the brand association (using classical conditioning) and through AIDA communication tool, which anticipates and influenced most of the cola consumer market at the time.
The effect of classical conditioning on consumer behaviour is noticed because of the association that this theory help creates, condition human brain to respond similarly to the unconditioned response (heat, dehydration or thirst) at the sight of a neutral stimulus (Coca Cola). A study by Till, Stanley and Priluck (2008) states that the celebrity enforcement used to condition consumer behaviour is very effective. For example, when a celebrity endorses a brand, his followers are likely to buy that brand to create a sense of belongingness.
Classical Conditioning Recommendations
According to the above analysis Coca Cola uses Classical Conditioning to influence its consumer behaviour, perhaps there are numerous other ways of influencing consumer behaviour. Few of them are as follows:
As nowadays consumers are flooded with the information than the last decade which gave them the power to switch brand due to excessive sugar or any other property of the product. Moreover, there are the variety of substitute brands using same classical conditioning factors.
In fact, Conlon (2021) states that four out of five customers don’t come back if they do not like a single thing about the product. Therefore, it is recommended to onboard technologies and personally engage with the consumers to influence their buying behaviour and offering the personalised experience. There are latest technologies like social intelligence and customer analytics that would assist in delivering the premium experience.
As technology has empowered the brands, it has also empowered consumers to disengage and unsubscribe, which means that Coca Cola cannot merely rely on its festive and refreshing drinks advertisement. Some consumers demand ‘boosting drinks’ or the healthy drinks that do not increase their sugar intake and obesity level. Thus, it is recommended to create smaller consumer segments to cater all consumer preferences and influence them by targeting their insecurities like weight, health consciousness, energy etc.
Furthermore, Redsicker (2014) say that today’s consumers are super connected, thus understanding individual groups that tend to influence each other’s buying behaviour must be studied to anticipate their purchasing decision. By learning about their cultural aspects or latest trends or celebrity hype, is likely to alter consumer behaviour.
Another recommendation is to use the ‘on rader’ issues or social causes instead of festivals because these factors resonate more than anything. The issues like recycling, animal welfare, personal energy source etc. tend to attract young people to use those brands that support human welfare. It is also likely to create loyal customers by accessing more and more consumer insight to influence them and anticipate their demand or decision making (Lee, 2011).
References
Cherry, K. (2017). How Classical Conditioning Works: An Overview With Examples. [online] Verywell.
Coca Cola. (2021). Coca‑Cola adverts from our archives.
Coca Cola. (2021). Coca-Cola GB.
Conlon, G. (2021). What Change in Customer Behavior Will Impact Marketing Most in 2020?
Gorn, G.J., 1982. The effects of music in advertising on choice behavior: A classical conditioning approach. The Journal of Marketing, pp.94-101.
Lee, S. (2011). Influencing Consumer Behaviour Sustainability.
Oakley, T. (2013). Why do Coca-Cola advertise?
Pornpitakpan, C., 2012. A critical review of classical conditioning effects on consumer behaviour. Australasian Marketing Journal (AMJ), 20(4), pp.282-296.
Redsicker, P. (2014). 5 Ways You Can Influence Consumer Purchasing Decisions: New Research : Social Media Examiner.
Ryan, T. (2017). Coca-Cola Slogans History.
Till, B.D., Stanley, S.M. and Priluck, R., 2008. Classical conditioning and celebrity endorsers: An examination of belongingness and resistance to extinction. Psychology & Marketing, 25(2), pp.179-196.
Zhang, Y., 2015. The Impact of Brand Image on Consumer Behaviour: A Literature Review. Open journal of business and management, 3(01), p.58.
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This dissertation examines long-run purchasing power parity (PPP) between the United States and other competing countries and regions using monthly data from 1960 to 2019. Mainstream methods of PPP test and most influential researches are reviewed.
Three methods of PPP testing – Unit Root Test, Cointegration Test, Panel Unit Root Test have been applied in this paper. We identify that PPP holds between the US and a certain number of countries by analysing the test results. Also, the results of PPP test between the US and its top 10 trading partners have been specifically investigated and elaborated.
This dissertation highlights that both the Multivariable co-integration tests and the bivariable Cointegration tests are applied in order to find out the effect of prior restrictions on the results. Then, this chapter examines whether the PPP holds between the US and its top 10 trading partners countries minus China with the panel unit root test. Finally, in the sixth chapter, this paper concludes that PPP holds in 41 countries out of 176 countries, and among the US top 10 trading partners, only China, Canada and India do not have solid evidence supporting PPP.
The purchasing power parity (PPP) theory, as one of the most influential economic theories, has been widely used in macroeconomic analysis. It states that the price of the same commodity or a basket of products in two countries should be proportional to the exchange rate between the two countries. The exchange rate is crucial to the economic development of a country, not only because it affects the volume of imports and exports between countries, but also because it is highly correlated with other economic indicators, such as GDP and interest rate. Therefore, it is necessary to study the PPP theory to determine the equilibrium exchange rate as well as assist governments in adjusting exchange rates based on empirical evidence.
This dissertation will be structured in the following way. In chapter 1, this paper introduces the definition of purchasing power parity and then explains the significance of PPP studying. A brief history of the stages of the PPP study is also covered in this chapter. The second chapter is the literature review. It reviews the origin and evolution of PPP theory and common test methods. Sample testing results using different methods are also discussed in this dissertation and they also give us a broad view of PPP tests conducted for various countries using data from different time spans.
Purchasing Power Parity Dissertation
In the meantime, critiques and strengths of each test method are covered to provide a comprehensive view of each PPP test method. Besides, previous studies on the US are reviewed as well. In the third chapter, this paper presents a series of econometric methods and models to be used in this thesis, including unit root test, cointegration test and panel unit root test. In the fourth chapter, it explains the data source in detail. For EU countries that miss data due to the adoption of EUR, this paper also describes how the equivalent data is generated to fill the holes. The fifth chapter is the empirical analysis. This chapter first plots the real exchange rate for the US and its top 10 trading partners, and by presenting the graphs, the trend will be analysed.
In general, the purchasing power parity (PPP) theory works miserably when applied to real-world data. In other words, it is rare for the PPP relationship to hold true between any two countries at any particular point in time. In most scientific disciplines, the failure of a theory to be supported by the data means the theory is refuted and should be thrown out or tossed away.
However, economists have been reluctant to do that with the PPP theory. In part this is because the logic of the theory seems particularly sound. In part it’s because there are so many “frictions” in the real world, such as tariffs, nontariff barriers, transportation costs, measurement problems, and so on that it would actually be surprising for the theory to work when applied directly to the data.
Purchasing Power Parity Dissertation Contents
Chapter 1 – Introduction
Chapter 2 – Literature Review Two Versions of the PPP Theory Evolution of PPP Test Simple Static PPP Test Unit Root Test Cointegration Test Panel Unit Root Test Non-linear Test US & Related Tests
Chapter 3 – Empirical Framework Tests for a Unit Root in the Real Exchange Rate Cointegration Test Panel Unit Root Test
Chapter 4 – Data Description
Chapter 5 – Empirical Analysis Real Exchange Rate Observation Unit Root Test Cointegration Test Multivariate Cointegration Test Bivariate Cointegration Test Panel Unit Root Test Analysis of the US Top 10 trading countries’ Test Result
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