Chapter 6 Consumer Perception

Chapter Outline

• Elements of Perception• Aspects of Perception

– Selection– Organization– Interpretation

Perception

• The process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world

• How we see the world around us

Sketchers

Elements of Perception

• Sensation• Absolute threshold• Differential threshold• Subliminal perception

Sensation

• The immediate and direct response of the sensory organs to stimuli

• A stimulus is any unit of input to any of the senses. Eg: products, brand names, advertisements

• The absolute threshold is the lowest level at which an individual can experience a sensation.

• Sensory Adaptation: “getting used to” eg. Bright sun, cold shower

• Ex: Absolute threshold THE IMPACT OF UPWARD PRICE MOVEMENTS ON DAILY

HOUSEHOLD GOODS.

Differential Threshold

• Minimal difference that can be detected between two similar stimuli

• Also known as the just noticeable difference (the j.n.d.)

• How do marketers apply the concept of differential threshold or 'just noticeable difference' in their marketing strategy? Explain giving suitable examples.

The concept of differential threshold is applied to almost all aspects of marketing strategies.

1.PRODUCTLINE EXTENSION. This concept is applied to the advertising/ promotion of the productline, in order to exploit the strength of the original brand. ------------------------------------------------------------------------------- 2.DISTRIBUTION CHANNELS The marketers' apply the concept of differential threshold in the selection of the distribution channels, for the various products from the same family productgroup. -----------------------------------------------------------------------------------------

3.PRODUCT PRICING

The marketers' apply the concept of differential threshold in the PRICING of the two brands from the same company --like two toothpaste brands from one company. ------------------------------------------------------------------------ 4.PRODUCT PROMOTIONS The marketers' apply the concept of differential threshold in the DEVELOPMENT/ IMPLEMENTATION of the sales promotion programs in two channels to maintain similarity / cost down. -------------------------------------------------------------------------- 5. PRODUCT PACKAGING The marketers' apply the concept of differential threshold in the PACKAGING of the various models of the company products / to create uniform image. ------------------------------------------------------------------------- 6. PRODUCT PERCEPTION/ IMAGE The marketers' apply the concept of differential threshold in the PRODUCT POSITIONING in more than one market segments.

Weber’s Law

• The j.n.d. (just noticeable difference) between two stimuli is not an absolute amount but an amount relative to the intensity of the first stimulus

• Weber’s law states that the stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different.

• Weber's Lawstates that as the intensity of the stimulus increases, the ability of a person to detect a difference between the two levels of the stimulus decreases

• Eg weights of products

Marketing Applications of the J.N.D.

• Marketers need to determine the relevant j.n.d. for their products– so that negative changes are not readily

discernible to the public– so that positive changes are very apparent to

consumers

Subliminal Perception

• Stimuli that are too weak or too brief to be consciously seen or heard may be strong enough to be perceived by one or more receptor cells.

We perceive stimuli without being aware of them.

Eg Theatre

Is Subliminal Persuasion Effective?

• Extensive research has shown no evidence that subliminal advertising can cause behavior changes

• Some evidence that subliminal stimuli may influence affective reactions

Aspects of Perception

Selection

Organization

Interpretation

Aspects of Perception

Selection

Organization

Interpretation

Perceptual Selection

• Consumers subconsciously are selective as to what they perceive.

• Stimuli selected depends on three major factors– Nature of the stimulus-contrast– Expectations-conditioned to expect eg. – Motives-perceive things we need or want.

Stronger the need, greater the tendency to ignore unrelated stimuli in the environment. Eg. Someone who is hungry

Discussion Questions

• What marketing stimuli do you remember from your day so far?

• Why do you think you selected these stimuli to perceive and remember?

Perceptual Selection

• Selective Exposure• Selective Attention• Perceptual Defense• Perceptual Blocking

• Consumers seek out messages which:– Are pleasant– They can sympathize– Reassure them of good

purchases

Concepts

Perceptual Selection

• Selective Exposure• Selective Attention• Perceptual Defense• Perceptual Blocking

• Heightened awareness when stimuli meet their needs

• Consumers prefer different messages and medium

Concepts

Perceptual Selection

• Selective Exposure• Selective Attention• Perceptual Defense• Perceptual Blocking

• Screening out of stimuli which are threatening though exposure has taken place

• Eg warning labels on cigarette packs

Concepts

Perceptual Selection

• Selective Exposure• Selective Attention• Perceptual Defense• Perceptual Blocking

• Consumers avoid being bombarded by stimuli by

“Tuning out”– TiVo and Replay are

devices which allow consumers to skip TV commercials

Concepts

Aspects of Perception

Selection

Organization

Interpretation

Perceptual Organisation

• People do not experience numerous stimuli from the environment as separate sensations but they tend to organize them in groups and perceive them as unified wholes. This method simplifies life considerably for the individual. This is also called Gestalt psychology (Gestalt in german means pattern)3 principles:

Organization

• Figure and ground• Grouping• Closure

• People tend to organize perceptions into figure-and-ground relationships.

• The ground is usually hazy.• Marketers usually design

so the figure is the noticed stimuli.

Principles

Lacoste’s campaign uses a very Lacoste’s campaign uses a very plain ground so the symbol really plain ground so the symbol really

shows.shows.weblink

Organization

• Figure and ground• Grouping• Closure

• People group stimuli to form a unified impression or concept.

• Grouping helps memory and recall.

• Eg. Advertisement for tea

• 9 digit numbers in chunks of 3

Principles

Organization

• Figure and ground• Grouping• Closure

• People have a need for closure and organize perceptions to form a complete picture.

• Will often fill in missing pieces

• Incomplete messages remembered more than complete

Principles

• Eg: a circle with a section of its periphery missing is invariably perceived as a circle, not an arc.

• Eg: person who begins a task or hears the beginning of a message develops a need to complete it.

Aspects of Perception

Selection

Organization

Interpretation

Interpretation

• Physical Appearances

• Stereotypes• First Impressions• Jumping to

Conclusions• Halo Effect

• Positive attributes of people they know to those who resemble them

• Important for model selection

• Attractive models are more persuasive for some products

Perceptual Distortion

Interpretation

• Physical Appearances

• Stereotypes• First Impressions• Jumping to

Conclusions• Halo Effect

• People hold meanings related to stimuli

• Stereotypes influence how stimuli are perceived

• Eg United Colours of Benetton campaign

Perceptual Distortion

Interpretation

• Physical Appearances

• Stereotypes• First Impressions• Jumping to

Conclusions• Halo Effect

• First impressions are lasting

• The perceiver is trying to determine which stimuli are relevant, important, or predictive

• Eg products must be perfect before they are launched

Perceptual Distortion

Interpretation

• Physical Appearances

• Stereotypes• First Impressions• Jumping to

Conclusions• Halo Effect

• People tend not to listen to all the information before making conclusion

• Important to put persuasive arguments first in advertising

Perceptual Distortion

Jumping to Conclusions

• Eg consumer may just hear beginning of a commercial message and draw conclusions.

• Eg A study found out that consumers do not read food labels, just purchase packages they believe contain greater volume which maybe true or not. Elongated packaging more volume than round packaging.

Jumping to Conclusion

Interpretation

• Physical Appearances• Stereotypes• First Impressions• Jumping to

Conclusions• Halo Effect

• Consumers perceive and evaluate a person or an object on many dimensions based on just one dimension

• Used in licensing of names• Eg product line extension on

the basis of brand or spokesperson.

Perceptual Distortion

Eg of Halo Effect

• Tampering with the perceived halo effect of a product or brand can have disastrous effects. JW Marriott took over the Righa Royal Hotel in New York city and renamed it JW Marriott New York. But this move led to a dip in sales.

Issues in Consumer Imagery

• Consumer Imagery: Consumers have certain perceptions or images which are relevant to consumer behavior.

• Product Positioning and Repositioning• Positioning of Services• Perceived Price• Perceived Quality• Retail Store Image• Manufacturer Image• Perceived Risk

Positioning

• Establishing a specific image for a brand in the consumer’s mind

• Positioning is more important than the product’s characteristics although products that are poorly made will not succeed in the long run on the basis of image alone.

• Most new products fail because of “me too” offerings.

• Successful positioning is based on Benefits v/s Features

• Eg Nutrigrain and Balance –energy bars• Positioning is the essence of marketing mix. In the

same example through research, manufacturers can determine the characteristics of persons who will have healthy breakfast habits and develop a marketing plan.

• Positioning coveys the concept or meaning of the product in terms of how it fulfills a consumer need.

• A good positioning strategy should have a 2 pronged meaning one that is congruent with the consumer needs while at the same time featuring the brand against its competition. Eg 7 Up slogan as “The Un-Cola”-it shows as an alternative to the most popular soft drink and also places it in the same league with its giant competitor.

Positioning Techniques

• Umbrella Positioning• Positioning against

Competition• Positioning Based on a

Specific Benefit

• Finding an “Unowned” Position

• Filling Several Positions• Repositioning

UMBRELLA POSITIONING

• Ex: “Nobody can do it like McDonald’s”

Positioning against Competition

• Ex; Ads for coconut oil target a blue coloured bottle

Positioning based on a specific benefit

• Ex:Anti-dandruff shampoo

Finding an unowned Position• In highly competitive markets finding a niche unfilled

by other companies is challenging but not impossible.

• Eg Toothpaste market Topol was positioned as a smoker’s toothpaste that could fight tartar and gum disease became very successful.

• Eg Palmolive positions its dishwashing liquid as, “tough on grease, soft on hands”.

Filling Several Positions

• Because unfilled gaps or unowned perceptual positions present opportunities for competitors, marketers create several distinct offerings in the form of brands to fill several identified niches. Eg:P&G world’s largest producer of laundry detergents like Tide and Ariel

Product Repositioning

• Why must we reposition?• 1. competitor cutting into the brand’s market

share• 2. too many competitors stressing the same

attribute eg: the milk chocolate melts in your mouth

• 3. Changing consumer preferences• Ex:Kentucky Fried Chicken changed to KFC to

avoid “Fried” from its advertising.

Product Repositioning

• Ex: Johnson and Johnson with declining birth rates and consumer’s preferences for gentle and pure products have emerged, J&J repositioned its baby lotion, powder and soap for grown ups.

Positioning of Services

• As services are intangible differentiating a service from its competitor is a key factor. Thus the marketing objective is to create a distinct image about the brand in the mind of the consumer. Eg hotels will have packaged soaps and shampoos, eg:delivery vehicles painted in distinct colours

Differentiated Positioning Strategy

• Companies market several versions of their service to different market segments.

• Eg Hilton Hotel purchased Embassy Suites, Doubletree and Hampton Inn Chains, though shared ownership, brands are separate and distinct from one another as each targets a different segment.

Aspects of Service Positioning• Physical environment-eg banks and offices, consumers

associate services with their settings and accordingly judge the quality.

• Eg Bank-5 environmental variables• A. Privacy visual and personal during transaction• B. Efficiency/Convenience-easy to find• C.Good ambience: temperature, lighting, soft music• D. Physical appearance of bank employees• E. Aesthetics: Colour, style, use of materials and artwork.

Perceived Price

• How a consumer perceives price has strong influence on both purchase intention and purchase satisfaction.

• Consumers pay attention to prices paid by other consumers eg. Frequent flyers, senior citizens etc.

• Eg:Nobody is happy to know that he or she paid twice as much for an airline ticket.

Reference Prices

• Reference price is any price that a consumer uses as a basis for comparison in judging another price.

• Eg: products on “sale”• Reference prices are internal and external• External reference price uses a higher ext ref price,

“sold elsewhere at” by offering a lower sales price to persuade consumer that the buy is a good buy.

• Internal reference is price retrieved by the consumer from memory. Eg: was and now

• They play a major role in consumer’s evaluations and perceptions of value of advertised (external) price deal.

Tensile Price Claim

• 3 types of tensile price claims• Maximum, minimum and range. • Eg save 10-40%, save upto 60%, save 20% or

more

• Findings say maximum discount level are more effective than minimum discount and discount range

Bundle Price

• Marketing of two or more products or services in a single package for a special price.

• Study found that additional savings offered directly on the bundle have a greater impact on the consumer’s perceptions of transaction value as compared to savings on individual items in the bundle

Perceived Quality

• Perceived Quality of Products– Intrinsic vs. Extrinsic CuesIntrinsic cues concern physical characteristics of the

product itself. Eg flavor of ice-cream or cakeEg: It is interesting to note that color of powdered

fruit drink is more important than its label and the actual taste. Orange color is perceived as sweet, refreshing and flavorful

Extrinsic cues

• In the absence of actual experience with a product, consumers often evaluate products on the basis of cues that are external to the product itself such as price, brand image, manufacturer’s image, retail store image or even the country of origin.

Perceived Quality of products

• -Country-of-origin stereotypes• Eg: Japanese cars are more reliable• Eg: German engineering is excellent• Eg: Made in USA label means a superior

product

Perceived Quality of Services

• Services have distinctive characteristics• They are intangible• They are variable• They are perishable• They are simultaneously produced and

consumed

• Consumers cannot compare competing services side by side as they do with competing products, consumers rely on surrogate or extrinsic cues to evaluate service quality eg: In a doctor’s clinic consumers note quality of the clinic, room furnishings, number and source of framed degrees on the wall, pleasantness of receptionist, professionalism of the nurse to evaluate the quality of a doctor’s services.

Standardization of services

• Actual quality of services will vary from person to person, customer to customer and from service employee to another service employee.

• Therefore it is essential to standardize services. However the downfall is customized services which consumers value

• Eg: haircut, food

• Unlike products which are first produced, then sold and then consumed, services are first sold, then produced and consumed simultaneously eg haircut

• Whereas defective products can be detected before reaching consumer, an inferior service is consumed as it is being produced thus little opportunity to correct it. Eg haircut

• During peak hours quality of services decreases because both the service provider and customer are hurried and under stress.

• To counter this problem, service providers offer discounts

• Eg telephone calls are cheaper after 11 p.m. to ease traffic

• Eg early dinner before 7 pm. is inexpensive

Perceived Quality of Services

• SERVQUAL scale used to measure gap between customers’ expectation of service and perceptions of actual service delivered based on 5 dimensions: reliability, responsiveness, assurance, empathy and tangibility.

• Reliability-providing the service as promised, at the promised time and doing it right the first time

• Responsiveness-prompt service, willingness to help consumers, readiness to respond to customer requests

• Assurance-instilling confidence in customers and making them feel safe in their transactions

• Empathy-employees dealing with customers with care by understanding their needs

• Tangibility-modern equipment, convenient operating hours, employees with professional appearance, visually appealing facilities and materials related to the service

• These dimensions are divided into 2 groups• 1. outcome dimension-focuses on reliability of the

core services• 2. process dimension-focuses on how core service is

delivered that is employees’ responsiveness, assurance and empathy in handling customers

• Eg fedex

Price/Quality Relationship• The perception of price as an indicator of product

quality (e.g., the higher the price, the higher the perceived quality of the product.)

• In addition to price consumers use such cues as brand image and store image to evaluate its quality

• Generally consumers rely on price when they have little information or they have little confidence in their own ability

Retail Store Image• A study of retail store image on comparative pricing

strategies found that consumers tend to perceive stores that offer a small discount on a large number of items (i.e. frequency of price advantage) as having lower prices overall than competing stores that offer large discounts on a small number of products. (i.e. magnitude of price advantage) Thus frequent advertising that presents large number of price specials reinforces consumer beliefs about the competitiveness of a store’s prices.

Retail Store Image• Perceived quality is sometimes a function of both

price and store image.• For eg. When brand and retailer images become

associated, the less favorable image becomes enhanced at the expense of the more favorable image. Thus when a low-priced store carries a brand with a high priced image, the image of the store will improve, whereas the image of the brand will be adversely affected. For this reason marketers of prestigious brands will attempt to control the outlets.

Manufacturer’s Image

• Consumer imagery extends to manufacturer’s image as well. Pioneer Brands have a favorable perception than follower brands. Positive correlation between pioneer brand image and individual’s ideal self-image.

Perceived Risk

• Consumer purchase decisions are often associated with risk.

• Perceived risk is defined as the uncertainty that consumers face when they cannot foresee the consequences of their purchase decisions.

• Major types of risks include

Risk types

• Functional risk• Physical risk• Financial risk• Social risk• Psychological risk• Time risk

Perception of Risk Varies

• Consumer perception of risk varies depending on the person, product, situation and culture.

• Person: High risk perceivers and Low risk perceivers. High risk are described as narrow categorizers and low risk are described as broad categorizers.

• Product: Higher degree of risk (functional, financial and time) in the purchase of a plasma tv as compared to an automobile.

• In addition to products consumers perceive services to be riskier than products (social, psychological, physical)

• Situation: traditional retail store, online or door to door sales

• Culture: today a lot of shopping is done online as compared to some years ago. In online or mail order shopping the consumer cannot inspect the merchandise before ordering. However as they gain experience in online purchasing their levels of risk can be reduced.

How Consumers Handle Risk• 1.Consumers seek information-• 2.Consumers are brand loyal eg high risk perceivers• 3.Consumers select by brand image-No experience

consumers, seek well known brands• 4.Consumers rely on store image-when consumers have no

other info, they trust the judgement of buyers of a reputable store. Also store image wherein consumers will look for product testing, assurance of service, return priveleges and adjustment in case of dissatisfaction.

• 5. Consumers buy the most expensive model: when in doubt they buy the most expensive model which is probably the best in quality, i.e. they equate price with quality

• 6.Consumers seek reassurance: eg. By way of warranties, pre-purchase trial, free samples, money back guarantees, eg: people buy a car after taking a test drive.