Consumer Behaviour

Consumer perceptions

Definitions Sensation: immediate and direct response of

sensory organs to stimuli Stimulus: any unit of input to any of the

senses Products Packages Brand names Advertisements & commercials

Absolute threshold: the lowest level at which an individual can experience a sensation

Marketing stimuli

Any communications or physical stimuli designed to influence consumers

Primary (intrinsic) stimuli Secondary (extrinsic) stimuli

Product and its components (package, contents, physical properties) are?1. Secondary stimuli

2. Primary stimuli

Secondary stimuli

Represent the product through Words, pictures, symbolism Other stimuli associated with the product (price,

store, salesperson)

To survive competition, consumers must be constantly exposed to ?1. Primary stimuli

2. Secondary stimuli

The product concept

Bundle of product benefits that can be directed to the needs of a defined group of consumers

Using messages, symbolism, imagery Organisation of the secondary stimuli into a

product position Key factors determining which stimuli

consumers perceive and how they interpret them

Characteristics of the stimulus Consumers’ ability to perceive the stimulus

Stimulus characteristics Sensory elements Structural elements

Sensory elements

Sight: colour perceptions Link between colour preferences and brand choices

Taste Not objective Linked to the brand’s image in the consumer’s mind

Smell Sound

Voiceovers Music

Feel

Structural elements

Physical characteristics of the marketing message Print ads: size or position in a magazine TV

Length of the ad Time of day Use of jingles

Consumer characteristics

Stimulus discrimination Stimulus generalisation

Stimulus discrimination

Threshold level Adaptation level

Threshold level

Ability of consumers to detect variations in stimuli is determined by their threshold level

Just noticeable difference Differential threshold exists in comparing two

stimuli Consumer doesn’t detect differences below

differential threshold Minimum difference between two stimuli that

consumers can detect DT represents the JND

Applications

Negative changes in stimuli that will not be noticed Price increase through reduced quantity

Improvements should be noticed Differentiate brand from competition so it is

noticed

Webers Law

The stronger the initial stimulus, the greater the change required for the subsequent stimulus to be seen as different

Increase in the difference required to reach the differential threshold (JND) is constant

Most direct application in pricing The higher the original price, the greater the

markdown required to increase sales

Adaptation level The level at which consumers no longer notice a

frequently repeated stimulus Advertising wearout is the consumers’

adaptation to a campaign over a period of time Consumers differ in levels of adaptation

Stimulus generalisation When two stimuli are seen as similar (contiguous) The effects of one can be substituted for the effects of

the other Allows consumers to simplify the process of evaluation

No separate judgment required for each stimulus Brand loyalty is a form of stimulus generalisation

Assume past experience (positive) will be repeated No separate judgment required for each purchase

New products: consumers generalise from past experience to categorise them Horseless carriage

LG’s policy of family branding is stimulus generalisation

1. True

2. False

Perceptual Process

Selection

Organisation

Interpretation

Exposure

Attention

Categorisation

Inference

Perceptual selection Exposure

Consumers’ senses activated by a stimulus Pick and choose stimuli they are exposed to Likely to avoid exposure to stimuli that are

unimportant and uninteresting Attention

Momentary focusing of a consumer’s cognitive capacity on a selective stimulus

Selective Perception Two consumers may perceive the identical

advertisement, package or product very differently

Occurs at every stage in the perceptual process Depends on

Nature of stimulus: eg contrast Expectations: people usually see what they expect to

see. What they expect to see is usually based on familiarity, previous experience or preconditioned set of expectations

Motives: people tend to perceive things they need

Selective exposure and attention occur because consumers’ beliefs influence what they choose to listen to or read1. True

2. False

Selective organisation occurs because people organise information to be consistent with their beliefs1. True

2. False

Selective interpretation occurs so that perceptions conform with prior beliefs and attitudes1. True

2. False

Functions of Selective Perception Perceptual vigilance: consumers receive information

most relevant to their needs High involvement: guides consumers to information instrumental

in attaining desired benefits Low involvement: screens out information because consumers

want to minimise information processing Perception that information conforms to beliefs and

attitudes: perceptual defence Protects from threatening or contradictory stimuli When consumers are involved Messages in agreement with beliefs accepted (assimilation

effect) Messages not in agreement, rejected or distorted to contrast with

the consumers’ opinions (contrast effect)

Perceptual equilibrium Consistency between the information

received about a brand and consumers’ prior beliefs about the brand

Ensures that the consumers’ psychological set is in equilibrium

Cognitive theories based on PE Sherif’s social judgment theory

Consumers process information to ensure consistency By contrast or assimilation

Heider’s balance theory When information conflicts with beliefs Balance achieved by changing opinion about the object, or the

source of information or both Result: balance of beliefs

Cognitive dissonance theory When postpurchase conflicts arise Balance through seeking supporting information Or distorting contradictory information

Perceptual disequilibrium Consistency between the information

received about a brand and consumers’ prior beliefs about the brand

Ensures that the consumers’ psychological set is in equilibrium

Microsoft’s tagline “Where do you want to go today?” is an application of perceptual defense

1. True

2. False

Why? Ambiguity Benefits are not clear cut Product is important to consumer Enables consumers to project almost any

motive for using MS products Perceive the message selectively in line

with their needs Use of Perceptual Defence

Perceptual organisation

Consumers group information from various sources to understand it better Act on it

Basic principle: integration Perceive various stimuli as an organised whole Simplifies information processing Provides an integrated meaning for the stimuli Based on Gestalt psychology: people organise

perceptions to form a complete picture of an object

Principles of perceptual integration Closure Grouping Context

Closure

Perceiver’s tendency to fill in missing elements when a stimulus is incomplete

Consumers desire to form a complete picture – satisfaction in completing the picture on their own

Principle operates when consumers develop their own conclusions from moderately ambiguous advertisements

Closure

Grouping

More likely to perceive a variety of information as chunks than as separate units

Chunking or grouping information permits consumers to evaluate one brand over another by using a variety of attributes

Principles of grouping Promixity Similarity continuity

Promixity One object is associated with another because of

its closeness to that object Advertising employs principle of proximity by

associating the product with positive symbols and imagery close to the product

Proximity

Similarity

Similarity

Continuity

Grouping stimuli into uninterrupted forms rather than discontinuous contours

In a retail store, no sharp breaks should occur from one sales station to the next by type of merchandise: reasonably continuous transition

Continuity

Context

Consumers tend to perceive an object by the context in which it is shown

Setting of an advertisement influences the perception of a product

Same advertisement may be perceived differently in two different media

Most important principle: figure and ground Distinguish stimuli that are prominent (figure in foreground) From stimuli that are less prominent (in the background)

Product should be the figure and setting the ground

Context

Perceptual interpretation

Once consumers select and organise stimuli they interpret them

Categorisation Inference

Categorisation

Tendency to place information into logical categories

Helps process known information quickly and efficiently

Also helps consumers classify new information Marketers need to ensure

Recognise a brand as part of a product class Not a direct duplicate of other brands Product positioning

Category levels

When consumers first learn about a product they classify it at the most basic level

As they process more information, develop a capacity to use refined classifications

Category levels for computers

1990s

1970s and 80s

1950s Computers

Personal computers

Desktops Portables Laptops

Notebooks Personal assistants Cell phones

Mainframes Microcomputers

Process of categorisation

Schema Recall of information in clusters of thoughts, ideas and symbols Hard disks, floppies, CDs, memory, portability, graphics,

connectivity etc Subtyping

Developing a subcategory of a broader category Schema can help define a subcategory

Pepsi Slice New schema: fruit based soft drinks Campaign: “We’ve got the juice” Entry of Coca Cola and P&G established the subcategory

Perceptual inference

Consumers develop inferences about brands, prices, stores and companies Beliefs formed about objects from past associations

Semiotics: study of the role signs and symbols have in assigning meanings to objects

Semiotics attempts to determine the meaning consumers assign to symbols through The object The symbol associated with the object The interpretant or meaning of the symbol

Crystal Pepsi

Object

(Crystal Pepsi)

Symbol

(clear liquid)

Interpretant

(weak, watery)

Object

(Crystal Pepsi)

Symbol

(clear liquid)

Interpretant

(light, natural)

Symbolic Product Associations desired by Pepsi

Symbolic Product Associations held by many consumers

Perceived risk

Types of risk Financial: cost relative to disposable income Social risk: may not meet standards of important reference group Psychological risk: loss of self esteem when error recognised Performance risk: product may not work as anticipated Physical risk: bodily harm due to product performance Internet risks

Security of financial information Privacy Shipping and handling costs Late delivery or delivery of damaged or incomplete products

Risk is likely to be perceived as greater when there is high involvement

1. True

2. False

Risk is likely to be perceived as greater when there is little information about the product category1. True

2. False

Risk is likely to be perceived as greater when the product is new

1. True

2. False

Risk is likely to be perceived as greater when the product is technologically simple

1. True

2. False

Risk is likely to be perceived as greater when consumers have high self confidence in evaluating brands1. True

2. False

Risk is likely to be perceived as lesser when there are variations in quality among brands

1. True

2. False

Risk is likely to be perceived as greater when the price is high

1. True

2. False

Risk is likely to be perceived as greater when the purchase is not very important to consumers

1. True

2. False

Consumer strategies to reduce risk More extensive information processing

Better evaluate alternatives Ensure avoiding products that fail

Brand loyalty Consumers know what to expect from the product

Buy the lowest priced item or smallest size Obtain a warranty or guarantee Reduce psychological risk

Reduce level of expectation

Marketer strategies to reduce risk Warranties Money back guarantees Liberal return policies for defective products Offer products at lower prices or smaller sizes Free samples

Price perceptions

Price expectations Price –quality relationship

Price expectations

Reference price or standard price What the consumer expects to pay Consumers use this as a reference for comparison

Acceptable price range Range of prices consumers are willing to accept higher end is the reservation price: above which the product

would be judged too expensive Lower end is the limit below which the quality would be suspect

Price quality relationship

Association is likely to be perceived when insufficient information about product quality Price used as an indication of quality

Price is also used to reflect quality when there is confidence in the source of the price information Quality association of a brand name warrants a higher

price

Brand positioning

Image in the mind of the consumer More important to success than actual attributes Unique position that the brand occupies in the mind of the consumer Differentiation through emphasis on benefits

Must reflect attributes that are important to and fit with the perceptions of the target segment

Result: a distinctive brand image on which consumers rely in making choices

Positive brand image leads to positive beliefs about the brand value and a willingness to search for the brand. Also reinforces brand loyalty

Positioning strategy forms consumer beliefs about brand attributes and determines the price consumers are willing to pay

Perceptual mapping

Enables marketers determine how they want their products or services to appear to consumers in relation to competitive brands on one or more relative characteristics

Allows them to see gaps in the positioning of all brands and identify areas in which new offerings can be developed

Perceived price Should generally reflect the value the customer

receives from the purchase Should be consistent with the value

A burger A BMW

How a consumer perceives the price has a strong influence on purchase intention and satisfaction High Low Fair

Reference prices

Any price that a consumer uses as a basis for comparison in judging other prices

Can be external or internal Internal reference prices are retrieved by the

consumer from memory Internal reference prices change

Perceived quality

Based on informational cues that they associate with the product

Intrinsic to the product or service Extrinsic to the product or service

Perceived quality of products Intrinsic cues

Physical characteristics of the product Size Colour Flavour Aroma

can be used to justify being rational/objective Extrinsic cues

Packaging Colour Size of container

Perceived quality of services

More difficult to evaluate quality of services Variable Perishable Simultaneously produced and consumed

Consumers rely on extrinsic cues