RESEARCH METHODOLOGY

Topic:-
Analysis of bandwagon effect on youth

CHAPTER 1
1.0 Introduction
1.1 Statement Objective:
To analyze the factors which create a bandwagon effect on youth and study their effects.
1.2 Why this topic?
In 1999 a huge craze being described as Potter mania came into existence following the humungous hype created by the harry potter fans. This led to a huge demand for harry potter books, movies and goodies. Millions of fans waited in lines outside the book stores to get their first copies of the books. These people known as the ‘Potter heads’ created a huge fandom which included both children and adult alike, despite J.K Rolling original marketing the book for children aged 9-12.
Thus, here in this research paper we are analyzing the various aspects and factors causing this bandwagon effect esp. among youth.
• Why individuals make irrational choices based on the information they receive from others?
• Why people decide to ignore their personal information signals and follow the behaviour of others?
• What are the major drivers to propel this behaviour?
• What common factors are found among such people? What differentiates them from other sections of population.
• What are the pronounced effects to be seen? Are they good or not? Etc.
In layman’s term the bandwagon effect refers to people doing certain things because other people are doing them, regardless of their own beliefs, which they may ignore or override. The perceived "popularity" of an object or person may have an effect on how it is viewed on a whole. For instance, once a product becomes popular, more people tend to "get on the bandwagon" and buy it, too.
The bandwagon effect has wide implications, but is commonly seen in politics, consumer and social behaviour. This effect is noticed and followed very much by today's youth, where for instance if people see many of their friends buying a particular phone, they could become more interested in buying that product.
1.3 Why is it important?
• The bandwagon effect has been applied to situations involving majority opinion, such as political outcomes, where people alter their opinions to the majority view. Such a shift in opinion can occur because individuals draw inferences from the decisions of others.

• In micro-economics, bandwagon effect describes interactions of demand and preference. The bandwagon effect arises when people's preference for a commodity increases as the number of people buying it increases. This interaction potentially disturbs the normal results of the theory of supply & demand, which assumes that consumers make buying decisions solely based on price and their own personal preference.

• Businesses adopt various strategies to sell their products. They need to price the products right and make them available at the right place and to the right audience, as well as promote them adequately. Businesses often use a marketing strategy called the ‘bandwagon effect’ to make their products more appealing to customers.

• One example of the bandwagon effect is the growth of the green movement. In the late 1980s, a series of events led to growing popularity for the green movement. Natural disasters such as flooding and famine brought focus to bear on Earth-friendly practices. The Green Party won a substantial number of votes in the 1989 United Kingdom elections. All this led some marketers to get on the green bandwagon. They declared their products to be green in order to appeal to consumers.

• Another example of the bandwagon effect is in the information technology sector. Corporate IT departments, instead of putting in systems that best meet their needs, tend to go for "best of class" vendors. This way, in case of a cyber-attack or other negative experience, administrators can deflect any assertion that they failed to put in place adequate IT safeguards. To take advantage of this bandwagon effect, IT vendors may choose to position themselves as "best of class".

Thus, Bandwagon effect finds varied applications and is a powerful indicator of fad-following behaviour.

CHAPTER 2
2.0 Factors affecting consumer buying behavior
2.1 Positive Network Externality: Bandwagon Effect
A research has already been done showing the effect of price on the demand. Two cases have been considered. One in the absence of Bandwagon effect and the other in the presence of Bandwagon effect. Graphs were drawn taking Quantity demanded per month on the X-axis and Price per unit on the Y-axis.
1. The graph below shows when consumers believe more people have purchased the product, the demand curve shifts further to the right.

2. The graph below shows that the market demand curve is elastic, which is obtained by joining the points on the individual demand curves.

3. The below graph shows what happens to demand when the price falls when there is no bandwagon effect. There is a increase in demand. 4. The below graph shows what happens to demand when the price falls when there is bandwagon effect. There is a further increase in demand.

CHAPTER 3
3.0 Literature Review
The paper that examines the impact of a number of psychological factors on consumer’s propensity to engage in the “bandwagon” type of luxury consumption. (Kastanakis, Minas N and Balabanis, George)1 developed and empirically confirmed a conceptual model of bandwagon consumption of luxury products. In general, results show that a consumer's interdependent self-concept underlies bandwagon luxury consumption. This relationship is mediated by the level of a consumer's status-seeking predispositions, susceptibility to normative influence and need for uniqueness. The study concludes that these psychological constructs explain well a large part of bandwagon luxury consumption and can be used as inputs in the development of marketing strategies.
In an another study, it was found that although binge drinking among college students in the United states remains a considerable concern to government and public health officials, the issue has received much less attention in the economic literature. Ibrahim L.C.O. Niankara2 in his paper therefore uses tools introduced by statistical mechanics to develop a theoretical framework for, and empirically illustrate the study of the interaction processes in students’ demand for binge drinking in college. With the focus on bandwagon and snob effects, this paper shows that statistical mechanics methods can provide a simple but yet unifying framework for understanding the importance of collective interdependence among economic actors in the emergence of complex aggregate behavior such as college binge drinking. The paper introduces an innovative method of analysis of secondary data, relying on sample restriction to capture unique effects from factors within the campus environment that trigger the binge drinking behavior. The results also suggests that the bandwagon effect and the snob effect can be used through targeted policy planning to effectively reduce the economic and health burden of college binge drinking in the US.

Bandwagon effect is defined as ‘The extent to which the demand for a commodity is increased due to the fact that others are also consuming the same commodity’.3 A key aspect of his formulation is that scarcity precludes runaway bandwagon effects. ‘A diminishing marginal external consumption effect: The income constraint is sufficient to establish that there must be a point at which increases in a consumer’s demand must fail to respond to increases in demand by others. Since every consumer is subject to the income constraint, it must follow that the principle of diminishing marginal external consumption effect holds for all consumers’.4 Invoking this principle, Leibenstein hypothesizes demand curves for bandwagon goods are everywhere negatively sloped. Gary Becker’s model ignores Leibenstein’s scarcity constraint in favor of bandwagons that impart positive slopes—despite the fact that there is no empirical evidence that bandwagon effects have ever imparted a positive slope to market demand. Back in 1971, Becker wrote: ‘Perhaps the most fundamental finding in economics is the law of the negatively sloped demand curve’5 and yet his 1991 article contradicts that most fundamental finding without ceremony. We show that straightforward parameterizations of the upward sloping demand he models are inconsistent with the requirement that quantities demanded be non-negative. We also show that, even if the problem of negative consumption could be finessed via more subtle parameterizations and/or specifications, the comparative static results implied by the upward-sloping segments of his hypothesized demand curve fail Milton Friedman’s6 maxim that a theory’s assumptions ought not to cause it to produce unworldly implications.

CHAPTER 4
4.0 Methodology
4.1 Aim

To analyze the factors which create a bandwagon effect on youth and study their effects?
4.2 Data Collection
The data would be collected from students of XIME batch 18 the population size would be 180 and the sample size would be 30 and the factors that are considered are their behavior, their buying behavior and their buying indicator.
4.3 Sampling

On the basis of the Questionnaire we would do systematic random sampling where the population size N is 180 and the sample size n is 30 and while using systematic sampling, the population must be listed in a random order and the interval size k is equal to N/n = 180/30 = 6 now a random integer from 1 to 6 is generated through the random number generator in excel then, to select the sample, start with the mth unit (random number generated ) in the list and take every k-th unit (every 6th, because k=6). We would be sampling units , m, m+6.. and so on to 180.

4.3 Questionnaire Design

It is irrelevant how well investigations have gathered data or how methods have been applied (Curwin and Slater)7. If the questions that are used in the survey are bias, the results in the questionnaire will lose significant value. Within the questionnaire, the majority of the data that will be gathered are quantitative in a form of closed questions with support of data that are qualitative consisting of closed and open questions. The reason why a few qualitative questions are attached is the qualitative questions involve more attention and thinking for participants. Additionally, interpretation of results from numerous qualitative data is more complex and consumes more time than quantitative data. Since there is limited number of time in conducting this research, lots of the qualitative data might not be valuable. The questionnaire design is composed of three parts (as shown in appendix 1).
Part one consisting of quantitative questions contains personal details of respondents including: age, gender, and Work Experience. Part two also consists of quantitative and few qualitative questions that are comprised of questions, which requires rating from 1 to 5 (1= Strongly Disagree/Highly insignificant, 2=Disagree/Insignificant, 3= neutral, 4= Agree/Significant, and 5= Strongly agree/Strongly Significant) on their answers. These types of questions are also related to ordinal data; for example, questions are categorised and ranked on scales, whereby respondents are required to rate their decisions (Walters)8. This part requires responses from individuals in what influences them into purchasing products. In part three, there is one open qualitative question which require answer where respondents are allowed to elaborate using words and expressions of how they feel.

4.3.1 Pilot Study

Before the distribution of the final questionnaires, pilot testing questionnaires were conducted in order to observe an understanding of respondents towards statements included in the questionnaire. Pilot testing questionnaires were done by selecting few students randomly so as to collect their opinions regarding the applicability of answering the questions. A basis on selection of the respondents is simply concerned with students who have consumed some product. It is also important for the respondents to be similar to those who will answer the questionnaire once it has finally been structured (Fink)9. Each respondent was allowed a limited time of ten minute in answering questionnaire. There are two reason of time pressuring. Firstly, to check whether the statements in the questionnaires contain any unambiguity or whether it is too complex to understand. Secondly, is to figure out if the questionnaire was completed with ease. Additionally, respondents will be asked whether they understand the directions of completing the questionnaire, and if it is clear to follow. Later, a discussion between researcher and respondent will carry on along with taking notes for further development of questionnaire. The overall result indicated that the questionnaire was valid, reliability, and took appropriate time to complete. However, some respondents found it difficult to understand meaning of the term of brands product in the questionnaire. Therefore, a definition as well as some examples was comprised to eliminate this difficulty. After all students have completed the pilot testing, suggestions will be revised and then applied to improve final questionnaire, which will then be distributed among samples. These samples won’t include those students who were chosen for pilot study.

Questionnaire

Part I – Personal Details Q1. Age: 20-23 □ 24-27 □ 27-30 □
Q2. Gender: Male □ Female □
Q3. Work Ex: 0-1yr □ 1-2 yrs □ 3+ yrs □

Part II - Please rate these questions to your opinion
1 = Highly Insignificant
2 = Insignificant
3 = Neutral
4 = Significant
5 = Highly Significant

Q4. How much you base your buying decision on:
I Brand 1 2 3 4 5
II Product Features 1 2 3 4 5
III Price 1 2 3 4 5
IV Quality 1 2 3 4 5
V Design 1 2 3 4 5

Please rate these questions to your opinion
1 = Strongly disagree
2 = Disagree
3 = Neutral
4 = Agree
5 = Strongly agree

Question No. Questions Circle your choice

5. I use credit card to purchase luxury goods. 1 2 3 4 5
6. I buy luxury brand products because they offer better quality. – Mobile 1 2 3 4 5
7. I still purchase luxury brands products even if the prices increase. 1 2 3 4 5
8. I use student loans to purchase luxury brand products. 1 2 3 4 5
9. Representation of celebrities associated with luxury brand products influence me into purchasing them. 1 2 3 4 5
10. I have less desire towards luxury brand products when mass quantities of people consume the same products as me. 1 2 3 4 5
11. I purchase luxury brand products even though I do not use them. 1 2 3 4 5
12. I purchase luxury brand products because I simply like the style of them. 1 2 3 4 5
13. I purchase luxury brand products to fit in with my friends. 1 2 3 4 5
14. I purchase luxury brand products regardless of what other people think. 1 2 3 4 5
15. I envy others with luxury brand products e.g. I want the same products that they have. 1 2 3 4 5
16. How much does the popularity of a product affect your purchase? 1 2 3 4 5
17. How much do you consider friends/ family opinion while purchasing a product? 1 2 3 4 5

Q18. Have you made any purchase (ex. Electronic gadget etc.) imitating the popular view, which was not of much use to you?
Yes □ No □ Q19.When with friends during a purchase, do you:
i) Take part in decision making process □ ii) Like to accept the majority consent □
(Tick on whichever appropriate)

Q20. Have you ever changed your buying choice to be a part of an affinity group?
Yes □ No □
Q21(a). Have you ever purchased a product based on others opinion
Yes □ No □ Q21(b). If Yes, then has it been beneficial to you.
Strongly Disagree 1 2 3 4 5 Strong Agree

Part III – Please feel free to answer these questions according to your understanding. (There is no right or wrong answers)
Q22. Why do you think people are purchasing Popular goods?

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References

1 Kastanakis, Minas N and Balabanis, George. ‘Between the mass and the class: Antecedents of the “bandwagon” luxury consumption behavior’, Journal of Business Research, Oct2012, Vol. 65 Issue 10, p1399-1407, 9p.

2 Ibrahim L.C.O. Niankara. ‘The Role of Bandwagon and Snob Effects in Students Demand for Binge Drinking in College?’, Journal of Global Business and Trade 5, (2), p65-78.

3 Leibenstein, Harvey. ‘Some Anomalies Arising from Bandwagons that Impart Upward Sloping Segments to Market Demand’, Econ Journal Watch, Jan2009, Vol. 6 Issue 1, p189, 14p.

4 Leibenstein, Harvey. ‘Some Anomalies Arising from Bandwagons that Impart Upward Sloping Segments to Market Demand’, Econ Journal Watch, Jan2009, Vol. 6 Issue 1, p193, 14p.

5 Becker, Gary S. 1971. Economic Theory. New York: Alfred A. Knopf.
6 Friedman, Milton. 1970. The Methodology of Positive Economics. Essays in Positive
Economics, ed. Milton Friedman. Chicago: The University of Chicago Press.
7 Curwin and Slater, Quantitative methods for business decision, 5th ed. London: Thomson Learning, 2002.
8 Walters, Quantitative methods for business, USA: Addison-Wesley, 1994.
9 Fink, The survey handbook, 2nd ed. California: SAGE, 2003.