Customer Irritation turned Brand Irritation

Monday, April 02, 2012

By Pushyamitra Joshi poor services irritating you? Is less and wrong information given about the products or services by the marketing people made you angry? If your answer is yes for both the questions and it affects your next purchase decision not to buy that particular brand and its sub-brand then the company is suffering from brand irritation. Brand irritation means a negative image created about a particular brand or company in the mind of a customer due to his/her bad experience with products or services or sales personnel behaviour and it reflects his/her decision in not buying other product/services of the same company or brand under the umbrella. The term brand irritation defines the degree of consumer dissatisfaction turned irritation towards a particular brand and other brands in the portfolio and how it negatively affects the brand as a whole. It also discusses the various factors responsible for customer dissatisfaction turned into brand irritation. It involves the study of brand recognition, consumer behaviour and other factors like marketing and promotional factors to understand the concept. Brand irritation occurs due to two major factors and affects the brand performance negatively. These factors are: 1. Wrong strategic moves (From top management perspective): Wrong strategic move means when top management loses its focus by neglecting mission statement (Purpose of existence) and customers need. It creates a communication gap in between company and customers. This gap widens and ultimately customer irritation turned into brand irritation. 2. Intentional mistakes done by workforce (Lower management perspective): When workforce especially sales force at lower management is over ambitious to complete the sales target by misguiding customers or workforce is less committed to solve the problem of customers, create a negative image of the company or brand. These two factors are the major factors which again divided into various sub factors. Factors or causes behind brand irritation:

Outsourced customer care Avoiding customer needs Unfair strategic moves

1. Outsourced/ No customer care: Outsourced customer care or no customer care is one of the leading factor behind the customer irritation. Outsourced customer care is unable to provide the expected information and solution to the immediate problem faced by the customer caused irritation. Sometimes customer feels that it is just a formality from the part of the company to engage customer not to solve the problem.

2. Avoiding customer needs: It is one of the biggest mistakes sometimes done by top management by creating marketing myopia. Top management unable to understand the needs of customers and trying to apply their feelings and biased opinion in business. It again creates a gap in between

company and customer. Offering poor product mix, overpriced products, poor after sales service etc. are some examples behind customer irritation.

3. Unfair strategic moves: Sometimes top management of the company apply some unfair means to increase revenue by misleading customers through ambiguous messages. It is one of the most concerned areas where customers get irritated easily. Very stringent operation processes, unethical advertisements, hidden cost and charges are some of the examples.

1. Mis-selling/Hiding information: Mis guide to customers about product and services provided by the company or hiding important information is one of the important factors behind the brand irritation faced by the customers. 2. Lack of commitment of sales personnel: Lack of sincere efforts from the sales personnel to provide proper services to its customers. It shows the lack of commitment of the sales personnel towards its job and becomes another factor behind brand irritation.

3. Poor after sales service: Poor after sales service is another factor behind brand irritation where companys employee is unable to provide proper after sales service or replacement of the product to its customers. Definition: Brand irritation means a negative image created about a particular brand in the mind of a consumer due to their bad experience with the product or service or sales personnel behaviour and it reflects their decision in not buying other product/service of the same brand company or other brands under the umbrella.

Short term business (Case Example to understand the problem) One fine day Mr Pushpendra a newly recruited Unit sales manager of reputed general insurance company ACCI, was discussing with his boss Mr Anshul Kumar about new business development. Mr Anshul (State head) was giving instructions to Pushpendra for channel development strategies that he should first start contacting two wheeler distributors because car dealers and commercial vehicle dealers were already contacted by another Unit sales manager Mr Vignesh. A huge potential was there with two wheelers dealers in terms of number of policies and add on products.

Keeping in mind that channel business required proper attention, relationship management and constant follow-ups Pushpendra started mapping the potential distributors to start new business. After identifying and mapping he came to know that only one two wheeler dealer named Zala motors, a very reputed dealer of Nagda town is not doing business with the company. He immediately approached the office of Zala motors to meet the owner to start business with his company. After reaching to the showroom he just gave his visiting card to the receptionist to let Mr Zala know that he wanted to meet him. After seeing the card of Pushpendra, receptionist told him that Mr Zala is not interested in meeting with him. Pushpendra got shocked and thinking that what the hell is this? Is his

name does not soothing to the receptionist or is there something wrong written in the visiting card? After controlling his emotions he just asked gently Maam Is there anything wrong with my name or visiting card? Receptionist replied Yes, Mr Pushpendra our boss instructed us not to entertain any person from ACCI Bank. Pushpendra: But maam I am from ACCI general insurance company not from the bank. Receptionist: Whatever sir, our boss instructed not to entertain ACCI Company.

With this shock Pushpendra left the premises of Zala motors and started searching the clue that what happened? Why Mr Zala had irritation with the name ACCI? Pushpendra started enquiring about the reasons behind the irritation of Mr Zala. He came to know that before his joining one sales officer Rajesh was handling the channel business of Zala motors for ACCI general insurance. Rajesh had to coordinate with the account department of Zala motors for the collection of premium amount and provide insurance cover note to the customers; who have purchased vehicles from Zala motors. Company has provided manual cover notebook to the Rajesh, so that he immediately issued insurance cover note to the customers. Rajesh collected premium amount in cash from the accountant and then make its DD to send it to the branch office, Indore. After sometime Rajesh came up with the official letterhead of company on which it was written that company has opened its bank account in Nagda, so for fast processing of cover note and policy deposit cash into the bank account or handover it to the concerned sales person. Accountant chooses second option because of good relation with Rajesh and to avoid burden. After fifteen days of this incident Rajesh absconded with 1.5 lakh rupees of the Zala motors. Mr Zala enquired about it and came to know that the letter provided by Rajesh was fake and ran away with that money. Conditions for Mr Zala were very critical that cover note issued by Rajesh were not valid due to non-payment of insurance premium to the company. Mr Zala requested to the branch office in Indore to look into the matter and compensate his loss due to mistake of the employee of the company. Branch manager at Indore replied that whatever happened; just forget it because we cannot help you in the matter as we already terminated Rajesh from his services. It was in between you and Rajesh, now if you are interested in fresh start with us we can go ahead. Instead of solving his problem; Branch manager is not even considered it a problem. Also Mr. Zala got so much irritated with the irresponsible behaviour and rude response from Branch manager. After this incident whomsoever sales personnel came to meet Mr Zala with business proposal, Mr Zala asked them all to first solve his problem with their company; none of them ever came back to him. After this incident Mr Zala decided not to entertain a single ACCI group company for business at any cost. Mr. Pushpendra also felt the same situation what his previous colleagues already experienced. He came on to the conclusion that it is the negative impact of brand irritation on his companys business. Process/Degree of brand irritation First degree (Customer dislike/annoyance): In first stage or degree of brand irritation; customer gets annoyed due to bad quality or other negative factors, but do not react. Second degree (Customer dissatisfaction): In second stage or degree of brand irritation customer get dissatisfied because of his second time bad experience and reacts when someone asks them about the product of the brand. Customer is dissatisfied with the product of a brand only not brand as whole.

Third degree (Brand Irritation): In the third stage or degree of brand irritation, customers react by themselves and say others not to purchase the products of that brand. Customer loses confidence on whole brand. Person become opposite to the concept of brand advocate

Conclusion: In todays scenario customers have many options available in the market to satisfy their needs, so it is very crucial for the companies to provide not only better products and services but also take care of

the various factors associated with pre-purchase and post purchase communication. When expectations of customer does not match with the actual attributes due to difference in between communicated and actual attributes; customer get dissatisfied. This situation occurs due to over aggressiveness of sales force to complete the sales target by providing false information about the product to the customer. In this situation customer get suffer. When issues do not get resolved, by the company customer decide not to buy the same brand next time or any brand under the umbrella is a case of brand irritation. Brand irritation is nothing but shows the high degree of customer irritation towards the brand name by a customer due to his/her bad experience associated with that particular brand. Person become opposite to brand advocate.

References: http://pushyamitrajoshi.blogspot.in/2010_05_30_archive.html www.12manage.com Vishnoei M., Joshi P. (2011), Brand Irritation: A Roadblock to business performance in Marketing perspective, Review of business & Technology Research, Vol-4, MTMI, USA http://www.asiamarketresearch.com/glossary/brand-recognition.htm www.Brand management\What is Brand Recognition.htm Joshi P., Vishnoei M., Dr. Sultan K. (2012), Brand Irritation: A Case of Negative consumer Behavior, SRM University Marketing Conference Proceedings, Chennai

Commercial Banks Commercial banks in India comprise the State Bank of India and its subsidiaries, nationalized banks, foreign banks and other scheduled commercial banks, regional rural banks and nonscheduled commercial banks. The total number of branches of commercial banks are more than 45,000 and the regional rural banks approximately 8000 covering 280 districts in the country. While a major portion of the commercial banks providing assistance to the industrial sector is for meeting the working capital requirements, these banks also meet a part of the term Finance requirement of industrial units. According to the data compiled by Reserve Bank of India (RBI) of all the advance given to small scale industries/sector by the commercial banks the share of the term Loan is nearly 30%. As stated earlier, the lead in this regard was taken by the State Bank of India (SBI) in March, 1956 when a pilot scheme for guaranteed credit to small enterprises was started. Initially the scheme was confined to the branches of the State Bank of India at nine centres only; gradually it was extended to all other branches of the State bank in the country. Subsequently some of the other commercial banks also introduced special schemes to assist small enterprises. Later on, the other commercial banks also adopted this scheme. Under this scheme, the banks provide to the small scale enterprises the medium term and installment credit for acquiring fixed assets for the purposes of establishment and extension of their units and term credit for meeting their working capital needs. Installment credit granted by the bank for purchase of machinery/equipment either new or old against the hypothecation of equipment proposed to be purchased out of the profits of these loans. The borrower is required to make a down payment of 20 to 33.1/3% of the cost of equipment to be purchased from ones own resource while the rest is financed out of the loan. The rate of interest charged on these loans varies from time to time as per the directives of the RBI. The period for which this loan is granted varies from seven to ten years. These loans are repayable in half-yearly or yearly installments. A notable step taken in the financing of the small scale industries by RBI is introduction of the Lead Bank Scheme under which each district, in the country has been allotted to one of the major Indian Scheduled Banks for intensive development of banking facilities.

In view of the fact that the small scale enterprises have a week capital base and they often find it difficult to offer acceptable securities, Commercial banks and other financial institutions granting loans to them as also because of their unfavourable debt-equity ratio, these units are considered bad credit risks by the lending institution. With a view to removing this impediment the Government of India has introduced a Credit Guarantee Scheme in 1960. Under this scheme, the guarantee organisation stands surety on behalf of the small enterprises and guarantees loans granted to them upto a certain limit against the default or bad debt. The idea behind the introduction of this scheme is that the banks and other lending institutions should have assurance of security while dealing with the small scale industrial sector. Initially the scheme was applicable to 22 districts but, later on, it was extended to the entire country and as at present a very large number of financial institutions are taking advantage of the same and are being offered guarantee cover. The scheme is reviewed from time to time and all efforts are made by the RBI to make the scheme to the best advantage of the small scale industrial units. The guarantee fee charged by the guaranteed organisation is very nominal (1.5%). In spite of the declared policy of the Government as also of the RBI the commercial banks are still operating with the concept of security. Consequently, branches which are located in the far flung areas in the country need much to improve in their performance. Notwithstanding this lacuna it will be appropriate to mention here that the banks have got laudable scheme to assist in the promotion and development of small scale industries. Most of the banks have got specialised units in their administrative structure to take care of the financial needs of the small scale industrial units. The fixed capital needs or the long and medium term needs of the small scale units are presently being taken care of by the banks under their integrated scheme of credit for the small entrepreneurs. New units apart from the existing units are also eligible to avail of the advances financed to meet their medium and long-term credit needs for replacement of machinery, addition of the machinery, modernisation, etc. the rate of interest charged normally from the small scale industrial units is between 12 to 15% as against 18% from the large scale units. Arrangements also exist in certain branches to help small entrepreneurs in filling up necessary forms and completing the other documents which are necessary for the banks to consider the loan applications from the small scale units. Unfortunately, in smaller town where the entrepreneur is yet diffident, it is considered to be in an insurmountable difficulty with the result that many of them remain contended with the meagre resources which they can draw upon from among their family members, friends and relatives. Besides the above mentioned institutions a few years back the government established the Tourism Finance Corporation of India for funding tourism specific enterprises. Located in Delhi, this organisation gives loans for large as well as small enterprises Loans and Advances Loans and advances granted by commercial banks are highly beneficial to individuals, firms, companies and industrial concerns. The growth and diversification of business activities are effected to a large extent through bank financing. Loans and advances granted by banks help in meeting short-term and long term financial needs of business enterprises. We can discuss the role played by banks in the business world by way of loans and advances as follows :(a)Loans and advances can be arranged from banks in keeping with the flexibility in business operations. Traders, may borrow money for day to day financial needs availing of the facility of cash credit, bank overdraft and discounting of bills. The amount raised as loan may be repaid within a short period to suit the convenience of the borrower. Thus business may be run efficiently with borrowed funds from banks for financing its working capital requirements. (b) Loans and advances are utilized for making payment of current liabilities, wage and salaries of

employees, and also the tax liability of business. (c)Loans and advances from banks are found to be economical for traders and businessmen, because banks charge a reasonable rate of interest on such loans/advances. For loans from money lenders, the rate of interest charged is very high. The interest charged by commercial banks is regulated by the Reserve Bank of India. (d) Banks generally do not interfere with the use, management and control of the borrowed money. But it takes care to ensure that the money lent is used only for business purposes. (e) Bank loans and advances are found to be convenient as far as its repayment is concerned. This facilitates planning for future and timely repayment of loans. Otherwise business activities would have come to a halt. (f)Loans and advances by banks generally carry element of secrecy with it. Banks are duty-bound to maintain secrecy of their transactions with the customers. This enhances peoples faith in the banking system. While lending money by way of loan, credit is given for a definite purpose and for a pre-determined period. Depending upon the purpose and period of loan, each bank has its own procedure for granting loan. However the bank is at liberty to grant the loan requested or refuse it depending upon its own cash position and lending policy. There are two types of loan available from banks : (a) Demand loan, and (b) Term loan (a)A Demand Loan is a loan which is repayable on demand by the bank. In other words, it is repayable at short-notice. The entire amount of demand loan is disbursed at one time and the borrower has to pay interest on it. The borrower can repay the loan either in lumpsum (one time) or as agreed with the bank. For example, if it is so agreed the amount of loan may be repaid in suitable instalments. Such loans are normally granted by banks against security. The security may include materials or goods in stock, shares of companies or any other asset. Demand loans are raised normally for working capital purposes, like purchase of raw materials, making payment of short-term liabilities. (b)Term Loans : Medium and long term loans are called term loans. Term loans are granted for more than a year and repayment of such loans is spread over a longer period. The repayment is generally made in suitable instalments of a fixed amount. Term loan is required for the purpose of starting a new business activity, renovation, modernization, expansion/ extension of existing units, purchase of plant and machinery, purchase of land for setting up of a factory, construction of factory building or purchase of other immovable assets. These loans are generally secured against the mortgage of land, plant and machinery, building and the like. (II) Cash credit Cash credit is a flexible system of lending under which the

borrower has the option to withdraw the funds as and when required and to the extent of his needs. Under this arrangement the banker specifies a limit of loan for the customer (known as cash credit limit) up to which the customer is allowed to draw. The cash credit limit is based on the borrowers need and as agreed with the bank. Against the limit of cash credit, the borrower is permitted to withdraw as and when he needs money subject to the limit sanctioned. It is normally sanctioned for a period of one year and secured by the security of some tangible assets or personal guarantee. If the account is running satisfactorily, the limit of cash credit may be renewed by the bank at the end of year. The interest is calculated and charged to the customers account. Cash credit, is one of the types of bank lending against security by way of pledge or /hypothetication of goods. Pledge means bailment of goods as security for payment of debt. Its primary purpose is to put the goods pledged in the possession of the lender. It ensures recovery of loan in case of failure of the borrower to repay the borrowed amount. In Hypothetication, goods remain in the possession of the borrower, who binds himself under the agreement to give possession of goods to the banker whenever the banker requires him to do so. So hypothetication is a device to create a charge over the asset under circumstances in which transfer of possession is either inconvenient or impracticable. (III) Overdraft Overdraft facility is more or less similar to cash credit facility. Overdraft facility is the result of an agreement with the bank by which a current account holder is allowed to draw over and above the credit balance in his/her account. It is a short-period facility. This facility is made available to current account holders who operate their account through cheques. The customer is permitted to withdraw the amount of overdraft allowed as and when he/she needs it and to repay it through deposits in the account as and when it is convenient to him/her. Overdraft facility is generally granted by a bank on the basis of a written request by the customer. Sometimes the bank also insists on either a promissory note from the borrower or personal security of the borrower to ensure safety of amount withdrawn by the customer. The interest rate on overdraft is higher than is charged on loan. The following are some of the benefits of cash credits and overdraft :(i)Cash credit and overdraft allow flexibility of borrowing, which depends upon the need of the borrower. (ii) There is no necessity of providing security and documentation again and again for borrowing funds. (iii) This mode of borrowing is simple and elastic and meets the short term financial needs of the business. (IV) Discounting of Bills Apart from sanctioning loans and advances, discounting of bills of exchange by bank is another way of making funds available to the customers. Bills of exchange are negotiable instruments

which enable debtors to discharge their obligations to the creditors. Such Bills of exchange arise out of commercial transactions both in inland trade and foreign trade. When the seller of goods has to realise his dues from the buyer at a distant place immediately or after the lapse of the agreed period of time, the bill of exchange facilitates this task with the help of the banking institution. Banks invest a good percentage of their funds in discounting bills of exchange. These bills may be payable on demand or after a stated period. In discounting a bill, the bank pays the amount to the customer in advance, i.e. before the due date. For this purpose, the bank charges discount on the bill at a specified rate. The bill so discounted , is retained by the bank till its due date and is presented to the drawee on the date of maturity. In case the bill is dishonoured on due date the amount due on bill together with interest and other charges is debited by the bank to the customers account.