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?

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2.

Secondary stimuli 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 ?

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2.

Primary stimuli 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

Not objective Linked to the brands image in the consumers mind

Taste

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 doesnt 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

LGs policy of family branding is stimulus generalisation

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True False

Perceptual Process
Exposure

Selection
Attention

Organisation

Categorisation

Interpretation
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 Momentary focusing of a consumers cognitive capacity on a selective stimulus

Attention

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 read
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True False

Selective organisation occurs because people organise information to be consistent with their beliefs
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True False

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

Sherifs social judgment theory

Consumers process information to ensure consistency By contrast or assimilation When information conflicts with beliefs Balance achieved by changing opinion about the object, or the source of information or both Result: balance of beliefs When postpurchase conflicts arise Balance through seeking supporting information Or distorting contradictory information

Heiders balance theory

Cognitive dissonance theory

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

Microsofts tagline Where do you want to go today? is an application of perceptual defense

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True 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 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

Basic principle: integration

Principles of perceptual integration

Closure Grouping Context

Closure

Perceivers 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

1950s 1970s and 80s 1990s
Personal computers Computers

Mainframes

Microcomputers

Desktops

Portables

Laptops

Notebooks

Personal assistants

Cell phones

Process of categorisation

Schema

Recall of information in clusters of thoughts, ideas and symbols Hard disks, floppies, CDs, memory, portability, graphics, connectivity etc Developing a subcategory of a broader category Schema can help define a subcategory
New schema: fruit based soft drinks Campaign: Weve got the juice Entry of Coca Cola and P&G established the subcategory

Subtyping

Pepsi Slice

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)

Object (Crystal Pepsi) Symbol (clear liquid) Interpretant (weak, watery)

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

True False

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

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

True False

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

True False

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

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

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

True False

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

Consumer strategies to reduce risk

More extensive information processing

Better evaluate alternatives Ensure avoiding products that fail Consumers know what to expect from the product

Brand loyalty

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
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

Acceptable price range

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 Packaging Colour Size of container

Extrinsic cues

Perceived quality of services

More difficult to evaluate quality of services

Variable Perishable Simultaneously produced and consumed

Consumers rely on extrinsic cues