DMKT302 Consumer Behaviour PDF Manipal University

DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) MASTER OF BUSINESS ADMINISTRATION SEMESTER 3 DMKT302 CONSUMER BEHAVIOUR Unit 5: Consumer Perception...

DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) MASTER OF BUSINESS ADMINISTRATION SEMESTER 3 DMKT302 CONSUMER BEHAVIOUR Unit 5: Consumer Perception 1 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Unit 5 Consumer Perception Table of Contents SL Fig No / Table / SAQ / Topic Page No No Graph Activity 1 Introduction - - 4 1.1 Objectives - - 2 Sensation (Exposure to Stimuli) - 1 2.1 Absolute threshold - - 2.2 Differential threshold - - 5 -7 2.3 Subliminal perception - - 2.4 Attention - - 3 Perceptual Selection 1 2 3.1 Stimulus factors - - 3.2 Expectations - - 3.3 Motives - - Selective perception concepts 8 -11 Selective exposure Selective attention/Selective 3.4 perception - - Adaptation Perceptual vigilance and defence Perceptual blocking 4 Perceptual Organisation 2, 3, 4, 5, 6 3 4.1 Figure and ground - - 12 - 16 4.2 Grouping - - 4.3 Closure - - 5 Perceptual Interpretation - 4 5.1 Factors that distort individual - - 17 - 20 perception 5.2 Caselet: The Power of Packaging and - - Consumer Perception 6 Price Perceptions - 5 21 - 22 7 Perceived Quality 7 6 23 - 25 Unit 5: Consumer Perception 2 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 7.1 Product quality - - 7.2 Service quality - - 8 Consumer Risk Perceptions - 7 26 - 27 8.1 How Consumer deal with risk - - 9 Summary - - 28 10 Glossary - - 29 - 30 11 Terminal Questions - - 31 12 Answers - - 31 - 32 13 Case Study - - 33 Unit 5: Consumer Perception 3 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 1. INTRODUCTION After learning about consumer personality in the previous chapter, this unit sheds light on a very important aspect that influences consumer’s behaviour– individual perceptions. Reality to an individual is that individual’s perception is a completely personal phenomenon, on the basis of which the individual acts or reacts. Individual do not react only on the basis of objective reality. For this reason, marketers are particularly interested in consumers’ perceptions than their knowledge of objective reality. Simply put, perception is “how we see the world around us.” Perception can be understood as the process by which an individual selects, organises and interprets stimuli into a meaningful and coherent picture of the world. A stimulus is any unit of input to a sensory receptor. Sensory receptors are the human organs of eyes, ears, nose, mouth and skin which help to see, hear, smell, taste and feel. These are used either singly or together to evaluate products. In the marketing context, the stimuli include brand names, advertisements, colours, sounds and packages, etc. 1.1 Objectives: After studying this unit, you should be able to: ❖ Analyse the concepts of sensation, perceptual selection and perceptual organisation ❖ Identify the factors that distort consumer perception ❖ Explain consumer price perceptions ❖ State the factors influencing consumer’s product and service quality ❖ List the risks associated with purchase and ways to deal with them Unit 5: Consumer Perception 4 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 2. SENSATION (EXPOSURE TO STIMULI) Sensation is the immediate and direct response of sense organs to simple stimuli such as an advertisement, a brand name or a package, etc. Exposure only requires the presence of a stimulus within an individual’s relevant environment. For example, a person would be exposed to a commercial (stimulus) if she/he were in the room when the commercial was shown, even when the person paid no attention to it or noticed it. Sensory receptors are human sense organs (eyes, ears, nose, mouth and skin) involved in receiving sensory inputs. Though there are numerous stimuli present in our environment, we are exposed to only an extremely small fraction of them. We are exposed to a large number of stimuli on a more or less random basis every day, but most of us deliberately seek exposure to selected stimuli in a “self-selected” manner and ignore or avoid others (zapping and muting of TV commercials, or zipping of pre-recorded videotapes are good examples of stimuli avoidance). Obviously, we look for information that we consider will help us in some way to accomplish our desired goals. Sensitivity to stimuli varies among individuals and depends on the quality of sensory receptors. For example, some people have more acute hearing or sharper eyesight than others. 2.1 Absolute threshold Absolute threshold refers to the lowest level at which an individual can experience sensations. At this point, an individual can detect a difference between “something” and “nothing”, and this point would be the absolute threshold for that stimulus. For instance, an individual may sense the sound pitch at 20 cycles per second and another individual may sense the sound pitch at 30 cycles per second. Absolute threshold for sound in the case of these two individuals would be different. Many individuals’ ability to discriminate sensory characteristics such as taste, smell, hearing or feel is small. The senses are likely to become increasingly dull under conditions of constant stimulation and the absolute threshold increases. For example, if a person drives for half an hour through a corridor of billboards, it is doubtful that any particular billboard will register an impression. This is known as ‘adaptation’ and refers to ‘getting used to’ certain sensations. Unit 5: Consumer Perception 5 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Sensory adaptation is a problem faced by advertisers given the clutter created by excessive advertising. To cut through the clutter, advertisers try to increase sensory input such as colour (or no colour meaning black and white) or scent. 2.2 Differential threshold Differential threshold is the smallest detectable difference between two values of the same stimulus. This is also referred to as Just Noticeable Difference (JND). A German scientist of the 19th century, Ernst Weber, discovered that the just noticeable difference between two stimuli was not an absolute amount, but an amount relative to the intensity of the initial stimulus. Weber’s law, as it has come to be known, states that the stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different. For example, if a producer raises the price of its car by Rs.400, probably it would not be noticed because the increase would fall below the JND. The difference in price may become noticeable if the increase were to be Rs.1,000 or more. To be noticed, an additional level of stimulus equivalent to JND must be added to make the difference perceptible. Likewise, if the reduction in price of the same car is Rs.400, it again is unlikely to be noticed falling below the level of JND. According to Weber’s law, an extra level of stimulus equivalent to the JND must be added to the majority of people to perceive a difference between the resulting stimulus and the initial stimulus. Manufacturers and marketers attempt to ascertain the relevant JND for the products for two reasons: Negative changes such as reduction in product size, price rises, diminished quality, etc., are not easily noticeable by consumers. Product enhancements such as improved packaging, increased product size, price reduction etc., are easily noticeable by consumers. 2.3 Subliminal Perception People can also perceive stimuli that are below their level of conscious awareness. In this situation, stimuli that are otherwise too weak or brief to be consciously seen or heard prove strong enough to be perceived. When the stimulus is below the threshold of awareness and Unit 5: Consumer Perception 6 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) is perceived, the process is called subliminal perception. This shows that the threshold of conscious awareness is higher than the absolute threshold for effective perception. An example of subliminal perception in marketing is product/brand placement in movies. Coca-Cola has been found to play an increasingly prominent role in scripts. In the Hindi movie Taal, the lead couple romance over a bottle of Coke and in the Hindi movie Mohabbatein there were many verbal mentions of Coca-Cola. Based on subliminal audio perception, a new industry seems to be emerging. For instance, self-help audios, guided meditations, music for relaxation and healing constitute a growing industry built on the premise of subliminal persuasion. 2.4 Attention Attention occurs when one or more stimuli activate one or more sensory receptor nerves and the resulting sensations reach the brain for further processing. Human beings are constantly exposed to numerous stimuli every day. This heavy intensity of stimulation to which we are exposed should serve to confuse us totally, but it does not. The reason is that perception is not a function of sensory input alone. An important principle of perception is that raw sensory input alone does not elicit or explain the coherent picture of the world that most adults possess. Rather the coherent picture is reached after sensory input gains consumer attention and the individual selects, organises and interprets this stimulus. Self-Assessment Questions - 1 1. A premium wristwatch company reduced the price of a Rs.2 lakh watch by Rs.200. It relates to____________ threshold. 2. Brand name and logo of the company can also act as___________. Unit 5: Consumer Perception 7 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 3. PERCEPTUAL SELECTION Human beings, subconsciously, are quite selective in their perception. Everyday people look at so many things, ignore others and do not even notice many others. People really perceive only a very small fraction of stimuli to which they are exposed. In a marketplace, a consumer is exposed to numerous marketing-related stimuli besides numerous other stimuli not related to marketing. Even then, on a regular basis, consumers visit the market and make desired purchases without any disorientation or losing sanity. The reason is that they unconsciously exercise selectivity in perception. The selectivity of stimuli depends on the consumer’s previous experience and motives, besides the nature of stimulus itself. One or more factors related to experience and motives affect consumers’ ‘selective exposure’ and ‘selective attention’ at a given time and can increase or decrease the probability that a certain stimulus will be perceived. 3.1 Stimulus Factors There are numerous marketing-related stimuli that affect consumers’ perception such as type of product, physical characteristics, packaging, colour, brand name, advertisement, claims, endorser, size of ad, position of ad or time of commercial, etc. The product and its components such as package, contents and physical properties are primary or intrinsic stimuli. Marketing communications developed to influence consumer behaviour and peer group influence (suggestions or ownerships by ‘significant others’) are secondary or extrinsic stimuli. In general, stimuli that stand out against their background capture immediate attention. Novel stimuli achieve this through unique images, shapes, sounds and colours. Messages that seem at odds with commonly held beliefs also attract attention. Contrast becomes very distinctive and attracts attention. For example, in print ads, there are lots of white space and just a few words, or the opening scene of a commercial is without a sound. These are attempts at differentiation and often merit the attention of consumers. 3.2 Expectations People generally see what they expect to see and this expectation is based on familiarity and previous experience. Consumers often perceive products and product attributes according to their expectations. If a consumer has been expecting a new soft drink to have a bitter aftertaste because friends said so, then probably it would taste bitter. It is also true that in Unit 5: Consumer Perception 8 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) many instances, stimuli that are in sharp contrast to expectations attract more attention than those that meet our expectations. The figure 5.1 shows the zoo zoo ad by Vodafone and it grabbed the attention of the customers. They had designed the brand mascot in a different way i.e beyond the expectations Figure 5.1: Unusual and unexpected attracts attention. Source: (n.d.). Retrieved August 28, 2012, from http://worldfamos.blogspot.in/2009/05/amazing- vodafones-zoozoo-ads.html 3.3 Motives People are inclined to perceive things that they need or want; the stronger the need, the greater the inclination to ignore unrelated stimuli. A person’s perceptual process aligns itself closely to those environmental factors that are important to him/her. Hence, a person who is hungry may more keenly perceive signs of eating places. 3.4 Perceptual Selection Concepts Selection of stimuli from the environment by consumers results from the interaction of expectations and motives with the stimulus itself. From these factors surface the following important concepts regarding perception: Selective exposure – Exposure occurs when consumers’ senses are activated by stimulus. Consumers are attentive to stimuli that are relevant, pleasant or towards which they may be sympathetic and ignore unpleasant and painful ones. For instance, a consumer who is contemplating the purchase of a scanner is more likely to look for scanner ads. On the other hand, tobacco users avoid messages that link smoking with Unit 5: Consumer Perception 9 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) cancer and take note of those few that deny any relationship. Similarly, consumers readily expose themselves to ads of products they prefer or admire or ads that reinforce their purchase decisions. For example, a consumer who has bought an expensive Mac computer is more likely to see or read its advertisements to reassure her/his purchase decision. Selective attention/selective perception – Attention is the momentary focusing of a consumer’s cognitive capacity on a particular stimulus. Consumers have increased awareness of stimuli that are relevant to their felt needs or interests and decreased awareness of irrelevant stimuli. They would readily notice ads of products that they need or want. Some consumers are price-sensitive, for some quality is more important and accordingly they pay attention to such ad messages. Consumers use considerable selectivity in terms of attention they pay to different stimuli. Adaptation – Adaptation refers to gradual adjustment to stimuli to which consumers are exposed for prolonged periods. Because of adaptation, consumers do not notice the stimuli to which they have become adjusted. For instance, an air-conditioned picture theatre feels quite cool in the beginning but a short time later we adapt to temperature and become less aware of it. Consumers become adapted to advertising messages over time due to boredom or familiarity. Perceptual vigilance and defence – Even when consumers are exposed to stimuli they do not want to see or hear, they unconsciously ignore such undesirable stimuli. Perceptual defence is more likely in anxiety-producing situations; hence, unpleasant, damaging or threatening stimuli have less chance to be perceived compared to neutral stimuli at the same level of exposure. Consumers are also likely to modify or distort any information that is not consistent with their needs, wants, values or beliefs and previously held information (that may be the basis of cognitive dissonance). The concept of perceptual defence has relevance in advertising. It means individuals are not passive recipients of marketing-related messages and would largely determine the messages they will be exposed to and notice and the meaning that they assign to them. When intense fear appeals are used to sell any product, they may become threatening to a point that consumers use perceptual defence for the entire message. Unit 5: Consumer Perception 10 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Perceptual blocking Consumers are exposed to innumerable stimuli in a typical day. They protect themselves from being overwhelmed and overburdened by blocking such numerous stimuli from their conscious awareness. For instance, consumers screen out enormous amounts of TV advertising by ‘tuning out’. Activity 1 Interview three men and three women about their current material needs and wants and make a note of the brand names that they can recall related to their needs and wants. Hint: If they need shoes, they might recall Nike, Adidas, Reebok, etc. Self-Assessment Questions - 2 3. Geeta wants to buy a new LCD; therefore, she looks for LCD advertisements on TV. This is an example of selective__________. 4. Satish doesn’t like a particular actor so he changes the channel when an ad featuring that celebrity is aired. This is called perceptual __________. 5. The selection of stimulus depends on an individual’s past experiences and his___________. Unit 5: Consumer Perception 11 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 4. PERCEPTUAL ORGANISATION All the selected stimuli from the environment are not experienced as separate and discrete sensations. Individuals tend to organise these sensations into a coherent pattern and perceive them as unified wholes. The specific principles underlying perceptual organisation are sometimes referred as Gestalt psychology. Gestalt is a German word and means “pattern” or “configuration.” Three basic principles of perceptual organisation focus on ‘figure and ground’ relationships, ‘grouping’ and ‘closure’. 4.1 Figure and ground This is one of the most basic and automatic organisational processes that perceivers use. People have a tendency to organise their perceptions into figure and ground relationship. In order to be noticed, stimuli must contrast with their environment. We notice black against white and do not notice white in white. Similarly, a sound must be louder or softer to be noticed. The figure usually appears well-defined, solid and perceived more clearly than the ground (background) that is usually perceived as hazy, indefinite and continuous. The common line separating the figure and the ground is perceived as belonging to the figure and not to the ground. This perception gives greater definition to Figure 5.1. Our learning influences which stimuli will be perceived as figure and which as ground. Perceptual organisation is affected by motives and expectations based on previous experience. Earlier pleasant or painful associations with one or the other element of figure- ground alone can also influence the perception. The following sketches show how the figure and ground process operates. Most individuals perceive Figure 5.2 (a) as a goblet on a black ground rather than as two faces separated by black space and Figure 5.2 (b) depicts a reversible picture and one may perceive it to be either a young or an old woman. Unit 5: Consumer Perception 12 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Figure 5.2: Figure-ground Reversal. (a) Can be viewed as a vase or two faces, (b) Can be seen as an old lady or a young girl The application of these findings is important in advertising. The ads must be planned carefully to ensure that the figure and ground are perceived the way the advertiser intended. For example, in many print ads, the background is kept white so that the intended product features can be clearly perceived. Often, white letters are used on a black background to achieve contrast. In case of commercials, the background music must not detract from the product message or jingle. Advertisers, in some cases,deliberately blur the figure and ground so that consumers search for the advertised product, which is usually cleverly hidden in the ad. 4.2 Grouping Individuals have an inherent tendency-wards grouping or chunking a variety of information or items close to each other in time or space and form a unified picture. The tendency to group stimuli may result as a consequence of proximity, similarity or continuity. When an object is associated with another because of its closeness to that object, such as in Figure 5.3 (a), it is due to proximity. Because of their vertical proximity, the 15 dots are seen as three rows of five dots and not as five columns of three dots. Advertising often uses this principle by associating a product with positive symbols and imagery close to the product. In the second case (b), consumers group 8 rectangles and 4 circles as three sets because they look similar. Unit 5: Consumer Perception 13 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Consumers also group stimuli to attain continuity by grouping stimuli into uninterrupted forms rather than discontinuous pattern (c). The dots in Figure 5.3 are more likely to be seen as an arrow projecting downward than as two columns of dots. Individuals’ tendency of grouping makes it easier for their memory and recall. Proximit Similarit Continuit y y y (a (b (c) Figure 5.3: Examples of Grouping ) ) Source: (n.d.). Retrieved August 28, 2012, from http://bhartiads.co.in/country-vacations-your- first-holiday-tour-with-flight-tickets-very-limited-offer-5000.html Figure 5.4: Grouping of Stimuli: A Family Enjoying a Picnic Lunch Unit 5: Consumer Perception 14 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Marketers use this tendency in individuals with advantage to imply certain desired meaning related to their products or services. Soft drinks are usually shown being enjoyed in active and fun-loving settings. An ad for tea, coffee or some other beverage may show a young woman and man sipping the beverage in a beautifully furnished and decorated living room. The overall impression and mood implied by the grouping of stimuli helps the consumer to associate the drinking of beverage with comfortable living and romance. To sell houses, builders often release ads showing a family with grandparents enjoying picnic-lunch in their own private lawn, implying comfortable and fine living. 4.3 Closure Individuals have a need for closure and fulfil it by organising their perceptions in a manner that leads to forming a complete picture. If they are exposed to a pattern of stimuli, which in their view is incomplete, they tend to perceive it as complete by filling in the missing pieces. This phenomenon may be the result of conscious or subconscious efforts. For example, if a portion of a circle is left incomplete, it is mostly perceived as a complete circle and not an arc or the triangle formed by cutting out pies from circles as depicted in Figure 5.5. Because of this need for closure, individuals experience tension when some task is incomplete and a feeling of satisfaction and relief develops with its completion. Figure 5.5: Examples of Closure Principle Figure 5.6: Advertisement by Nike represents Closure principle Unit 5: Consumer Perception 15 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) According to James T. Heimbach and Jacob Jacoby, people remember incomplete tasks better than completed tasks because a person who begins a task develops the need to complete it and this gets manifested in improved memory. For instance, hearing the beginning of a jingle or message develops a need to hear the remaining part of it. If the TV commercials of Nirma or Lifebuoy leave the jingle incomplete, familiar listeners complete it in their memory because of the conditioning effect and need for closure. Activity 2 Create 2 different ads for the same brand using the ‘closure’ principle. Hint: You may make use of various the brand associations such as its logo, colours specific to that brand, punch lines and so on to create the ads. Self-Assessment Questions - 3 6. Gestalt means pattern or____________. 7. People perceive even an incomplete but known symbol as complete. This relates to the____________principle. Unit 5: Consumer Perception 16 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 5. PERCEPTUAL INTERPRETATION Similar to perceptual selection and organisation, perceptual interpretation is a uniquely individual process as it results from what individuals expect to see based on their prior experience, on the various conceivable explanations they can imagine, and on their motives and interests at the time of perception. When stimuli are vague, individuals decipher them in such a manner that they match their needs, wishes, interests, etc. 5.1 Factors That Distort Individual Perception A number of factors influence individuals that may distort their perceptions, such as physical appearances, stereotypes, irrelevant stimuli, first impressions, jumping to conclusions and halo effect, etc. Physical appearances – People may or may not consciously recognise that they tend to attribute the qualities, which in their opinion are associated with certain individuals, to others who may resemble those persons. According to Kathleen Debevec and Jerome B Kernan,research indicates that attractive men are perceived as more successful in business than average-looking men. Attractive models in ads and commercials prove more persuasive and have a more positive impact on consumer attitudes and behaviour than average-looking models. Stereotypes – People tend to form “pictures” in their minds of the meanings of different types of stimuli. These stereotypes act as expectations about how specific events, people or situations will turn out to be. For example, many people carry the “picture” of politicians or police mostly being corrupt. Irrelevant stimuli – In certain situations, consumers are faced with difficult perceptual judgements. In such circumstances, they often respond to somewhat irrelevant stimuli. For instance, they may consider the refrigerator colour before making the final purchase decision instead of technical considerations. First impressions – First impressions are often lasting even when the perceiver is not exposed to sufficient relevant or predictive information. For instance, just a few years ago, the word “imported” was enough for a large number of consumers to form favourable impressions about many products such as wristwatches, shoes, clothes and many other different products. Unit 5: Consumer Perception 17 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Jumping to conclusions – Some people seem to have a strong tendency to draw conclusions even without sufficient information being examined. They seem to be impatient about examining all the relevant evidence, which may be necessary to draw a balanced conclusion. This is often the reason that strong arguments about a product or service are presented first in ads. Halo effect – This refers to a tendency to evaluate one attribute or aspect of stimulus and extend these evaluations and reactions to its other attributes or properties. This is frequently seen in case of a brand or line extensions where the marketer takes advantage of a brand’s reputation. For example, Dettol soap, Lux shampoo, etc. Self-Assessment Questions – 4 8. Aditya bought a branded DVD player and was not satisfied with its performance. Hence, he decided not to buy any product of that particular brand. This is called halo effect. (True/False) 9. Many people believe that Shah Rukh Khan can only do romantic roles. This is called first impression. (True/False) 5.2 Caselet: The Power of Packaging and Consumer Perception Packaging plays an important role in reinforcing consumer perception and experience about a product. Of the several functions packaging serves at the point of purchase, one key function is providing physical stimulus to purchase the product. Sensation transference – the product tastes so good because it appears so good Consumers don’t distinguish between a product and the package. Sensation transference refers to consumers’ perception about the package being transferred to how they feel about the product itself. To consumers, product is a part of the package. Research substantiates that consumers build quality, experience and taste perceptions from the package itself. Consumers’ perceptions of a product or service are directly linked to the aesthetic elements of the product design. In essence, for consumers, the product encompasses both the packaging and the product. Unit 5: Consumer Perception 18 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Visual, rational and emotional stimuli of package design Packaging influences consumer perceptions for a brand, and consumers’ emotional responses to packaging play a key role in forming those perceptions. Studies show that elements such as colours, shapes, symbols and words used in package design can evoke varied feelings. For instance, the perceptions of 7Up’s green-coloured bottle, Kinley’s oddly shaped mineral water bottle and Cadbury’s familiar logo have resulted in high recall value and brand awareness. Companies need to ensure that their packaging elicits the correct emotional responses so as to generate the desired perception and position for their brand success. Private label packaging Superior packaging can also alter consumer perception about a product. Smaller manufacturing companies including private labels are resorting to creative packaging to reach their target consumers. Dadima's Magic Mango pickle, ITS fruit tomato ketchup, Mehek Dehradoon Basmati, 24 Letter Mantra and Bread & More are some brands with good package formats that provide a good stimuli to purchase. Coca-Cola packaging and consumer perception The Coca-Cola contour bottle is one of the important icons of the brand and represents the brand’s authenticity. This design was intended to produce a distinct perception and identity for the brand in consumers’ minds. The company wanted to develop a shape that consumers should recognise as a Coca-Cola bottle even if felt in the dark. Elements of the Coca-Cola trademark that have strongly been perceived by consumers are: The Coca-Cola red and white graphics. The Coca-Cola brand name written in the well-known Spencarian script. The prominent contour shape of the Coca-Cola bottle. Studies reveal that close to 90 percent of the earth’s population is acquainted with Coca-Cola and it is the second most commonly understood phrase after OK. This reflects its strong brand awareness. Coca-Cola’s packaging conveys the uniqueness, originality, superior refreshment and enduring values of the brand. Research examining consumers’ perception of the contour shape shows the association of a variety of positive meanings with it, such as: Unit 5: Consumer Perception 19 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Being symbolic of the ultimate enjoyment, refreshment and good times. Having a sensual look. Commonly known and accepted. Bonding consumers around the world, and Being aesthetically beautiful. In the 1990s, Coca-Cola was introduced in polyethylene terephthalate (PET) contour bottles. This was the perfect opportunity for Coca-Cola to impart all the symbols and connotations associated with the original glass contour bottle into a modern package format. The communication to consumers was that they could now relish the original Coca-Cola taste in a modern packaging. This packaging format was instantaneously perceived by consumers as a much more convenient way to consume Coca-Cola. The screw-top cap rendered the product a lot more portable and lent the flexibility to be consumed in any situation – while playing sport, driving, walking around or just hanging out with friends. This generated an entire new range of occasions in which Coca-Cola could be consumed and consequently, a new user base emerged. Coca-Cola, nevertheless, continues to make its glass bottle packaging as it is known to evoke powerful feelings of nostalgia and a perception that the product tastes better in the glass packaging. Inevitably, consumer feelings and perceptions are continuously changing, so packaging format needs to be accordingly in sync to meet consumer expectations. (Source: Adapted from article on www.business2000.ie, excerpts from research article by the customer equity company and other minor online readings.) Unit 5: Consumer Perception 20 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 6. PRICE PERCEPTIONS Whether a consumer perceives the price of a product or service as high, low, or fair has significant influence on buying intentions and post-purchase satisfaction. There is considerable evidence to suggest that the meaning of price variable for consumers is quite complex. For example, seeing the explosive growth of cheap ballpoint pens, Parker Pen repositioned its pens based on price during the 1980s and offered low-priced pens. The results were nothing but disastrous because the Parker’s image was inconsistent with its price. In 1989, the company reverted to its strength of high-priced pens and became profitable again. This proves that: Consumers have certain expectations of what the price is or should be of a product or service. Their expectations may or may not reflect the actual price of the product or service. Consumers often associate the price of a product or service with quality. Consumers consider differential pricing used by some marketers to benefit certain classes of consumers such as club members, senior citizens, women etc., for which they are not eligible, as unfair. A reference price (also called standard price) is any price that a consumer uses as a basis for comparing another price. For example, a consumer may expect to pay Rs.20,000 for a Sony 2000 PMPO music system. This is the consumer’s reference price that she/he expects to pay and uses as basis to compare prices for alternative brands. Consumers are willing to accept a range of prices, called the ‘acceptable price range’, for a product or service. The acceptable price range in case of a music system might be from Rs.12,000 on the lower end to Rs.22,000 on the higher end. The higher end acceptable price is called ‘reservation price’. Below the lower end of the acceptable price, the consumer might be suspicious about product quality. Above the reservation price, the product would be considered too expensive. The range of acceptable price often varies significantly among consumers and depends on individual consumer characteristics and attitude towards a particular brand. Researchers have investigated the effects of three types of consumer price perceptions communicated through advertising. Unit 5: Consumer Perception 21 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Plausible low prices are considered well within the range of acceptable market prices. Plausible high prices are close to outer limits of the range but still not beyond the limits of believability, and Implausible high prices are definitely beyond the limits of acceptable range of prices. So long as the communicated reference price is within a given range of consumer’s acceptable price, the external reference price is taken as believable and accepted. Urbany, Bearden and Weilbaker found that a difference between reference and actual prices resulted in a move by reference prices quite close to actual prices, if these prices were within the acceptable price range. In case the communicated reference price is outside the range of acceptable prices, then it will not be perceived as valid reference price. An implausibly high reference price can adversely affect consumer evaluations of the marketer. If the reference price is set at the highest point offered recently by similar products, the marketer can advantageously influence consumer perceptions of product value and minimise negative effects. Tensile price claims communicate a range of price savings such as “save up to 50 percent”, “save 20 to 40 percent”, or “save 30 percent or more.” Objective price claims on the other hand offer a single discount level such as “save 20 percent.” Since tensile and objective price claims cover a broader range of products, they produce a more powerful impact on consumer purchases and store traffic than ads offering a discount on a single product. Self-Assessment Questions – 5 10. Reference prices serve as the basis for comparison of different brands’ prices. (True/False) 11. Maximum acceptable price is referred to as plausible low price. (True/False) Unit 5: Consumer Perception 22 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 7. PERCEIVED QUALITY Consumers often tend to assess the quality of a product or service on the basis of different types of information cues they relate with the product or service. Some of these are intrinsic while others are extrinsic. 7.1 Product Quality Intrinsic cues (cues are stimuli that direct motives) that relate to the physical attributes of the product such as the size, colour or smell etc., are sometimes used to judge the quality of a product. For example, the quality of perfumes is often judged on the basis of fragrance, physical appearance of the container, packaging and its colour. Many detergent powders and cakes are traditionally coloured blue to influence the perceived quality because consumers associate “bluing” with brightening and whitening their laundry. Consumers like to be thought of as objective or rational in their assessment of products and believe that their product choices are based on intrinsic cues. Consumers lacking actual experience with the product tend to judge the quality on the basis of extrinsic cues such as brand image, price, or even the country of origin, etc. Lack of previous purchase experiences may lead to an awareness that high-quality products tend to cost more and high price may become an indicator of higher quality. Hence, consumers may suspect the quality of low-priced products. In India, a little over a decade ago, “foreign” meant superior quality. This tendency is still prevalent among a large number of middle and lower middle class consumers. According to Durairaj Maheswaran, many consumers use country-of-origin stereotypes to judge the product quality. For example, ‘Japanese cars are reliable’ or ‘German engineering is excellent’. It is really interesting to recall that prior to Second World War, anything “made in Japan” was stereotyped as “junk.” 7.2 Service Quality Unlike tangible products, it is really very difficult to judge the quality of services. This difficulty arises because of certain unique characteristics of services. Services are intangible, variable, perishable, and are produced and consumed simultaneously. According to Valarie A. Zeithaml, A. Parasuraman and Leonard L. Berry, consumers evaluate service quality on the basis of magnitude and direction of the gap between the expectations of service and consumers’ perceived value of the service actually delivered. For example, an airlines passenger has certain expectations about the quality of cabin services and behaviour Unit 5: Consumer Perception 23 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) of the stewardesses during the 10-hour flight time. The passenger’s assessment of airlines services is based on expectations of her/his background and experiences. If the airlines services fall below her/his expectations, then the passenger will consider the airlines as a provider of poor service. In case the expectations of the passenger are exceeded, then she/he will view the airlines as high-quality service provider. Some researchers believe that there are five dimensions of service quality: 1. The appearance of physical facilities, equipment, personnel and communication materials. 2. Ability to perform the promised service dependably and accurately. 3. Willingness to help customers and provide prompt service. 4. Knowledge and courtesy of employees and their ability to convey trust and confidence. 5. Caring, individualised attention that the firm provides to the customers. Consumers also develop company and retail store images. They organise a variety of information based on advertising, product lines carried by the store, opinions of friends and relatives, exhibits, sponsorships and their own experiences with company’s products to form corporate images. Store image often influences brand image. A positive store image is directly related with sales results. It is not unusual to notice that consumers perceive identical products quite differently even when the price too is identical, depending on store image. For example, identical furniture sold by Gautier and any common furniture shop is quite likely to be viewed differently. Table 5.1 depicts the customers’ view of service quality. Table 5.1: Customers’ View of Service Quality The customers’ opinion of service quality if formed on the basis of the following dimensions: Tangibles Appearance of physical premises, equipment, personnel & communication material Reliability Ability to perform the assured service dependably and accurately Responsiveness Willingness to assist customers and provide prompt service Assurance Knowledge and courtesy of staff and their ability tocommunicate trust and confidence Empathy Individualised attention provided by the company to its customers (Source: Adapted from “Delivering Quality Service: Balancing Customer Perceptions and Expectations” by Valerie A. Zeithami, A. Parasuramam and Leonard L. Berry) Unit 5: Consumer Perception 24 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Self-Assessment Questions – 6 12. Intangibility of services makes it difficult to evaluate its quality. (True/False) 13. The ambience of the store and its posh location can also lead to formation of perception of product or service quality. (True/False) Unit 5: Consumer Perception 25 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 8. CONSUMER RISK PERCEPTIONS Consumers may face several different types of risks in making purchase decisions. The major ones are: Financial or monetary risk is the risk that the product will not be worth its cost. Expensive products and services are most subject to this risk. Performance risk which is associated with the possibility that the product will not perform as anticipated or may fail. The consumer wastes time in getting it repaired or replaced. The risk is greatest when the product is technically complex, for example, an expensive computer or notebook. Physical risk refers to bodily harm to self and others due to product usage. For example, food and beverages, electrical or mechanical appliances, or medical services etc. can sometimes prove risky. When cooking gas (LPG) was first introduced in India, consumers’ physical risk perception about it was high. Similarly, some consumers consider the use of pressure cooker as risky. Social risk which means that a poor product purchase may not meet the standards of an important reference group and may result in social embarrassment. For example, clothes, jewellery, carpet or car, etc. Psychological risk relates to loss of self-esteem or self-image as a result of poor choice and making her/him feel stupid. For example, high- involvement category products or services. 8.1 How consumers deal with risk Consumers use various strategies to deal with perceived risk. This helps them to act with confidence in making purchase decisions. The strategies are designed either to increase certainty associated with product purchase or to minimise negative purchase consequences. Some of the strategies that consumers adopt to deal with risk are: Acquire additional information to better assess the risk. Remain brand loyal. They stay loyal to a brand that has delivered satisfaction instead of buying an untried brand. Buy the most popular brand because they usually believe that popular brands can be trusted. Unit 5: Consumer Perception 26 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Buy the most expensive model or brand as they associate price with quality. Rely on store image. They trust reputable retail outlets and depend on them regarding their choice of merchandise for resale. Seek money-back guarantees, warranties and pre-purchase trial. For example, a marketer offers free trial and “no questions asked” refund of money or there are guarantees/warranties. Buy the smallest pack size or lowest-priced item in an attempt to reduce the consequences of failure. Reduce level of expectations to reduce psychological consequences before making the purchase. Activity 3 Give examples of some promotional schemes that try to minimise consumer’s risk perceptions. Give at least two examples for each type of risk. Hint: Refer to section 5.9.1 for examples Self-Assessment Questions – 7 14. Sarika doesn’t buy a particular perfume just because she feels that her friends might not like the fragrance. This is related to psychological risk. (True/False) 15. Brand loyal customers are less likely to face risks. (True/False) Unit 5: Consumer Perception 27 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 9. SUMMARY Recapitulation of important concepts discussed in this unit: Perception consists of those activities by which an individual acquires and assigns meaning to stimuli. Different individuals may be exposed to the same stimuli under the same conditions but how each individual recognises the stimuli, selects them, organises them and interprets them is unique in case of each person and depends on each individual’s needs, wants, values, beliefs, personal experiences, moods and expectations. Sensation is the immediate and direct response of sense organs. Absolute threshold refers to the lowest level at which an individual can experience a sensation. Differential threshold is the smallest detectable difference between two values of the same stimulus and is referred to as Just Noticeable Difference (JND). Stimulus factors are physical characteristics of the stimulus itself, such as contrast, size, intensity, colour, movement and position, etc. Individual factors refer to individual’s characteristics, such as expectations, motives and learning, etc. Based on their individual factors, consumers form perceptions as a result of stimulus factors they are exposed to. Individuals can also perceive stimuli, which are below their level of conscious awareness. Such stimuli are too weak or brief to be consciously seen or heard but prove strong enough to be perceived. This is referred to as subliminal perception. Individuals interpret stimuli in their own unique way. This is based on personal experiences, plausible explanations they can assign, their motives, beliefs and interests at the time of perception. Marketers are particularly interested in how consumers differentiate between brands, how they interpret images, what type of risks they perceive and how they deal with risk. Unit 5: Consumer Perception 28 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 10. GLOSSARY Absolute threshold – The lowest level at which a person can experience a stimulation. Adaptation – The process by which a person gets acclimatised to a certain level of stimulation. Attention – Awareness of one or more stimuli activating one or more sensory receptor nerves. Cues – Stimuli that channel or show a particular way to satisfy a prominent motive of consumers. Closure – A principle of Gestalt psychology that emphasises a person’s need for completion, mirrored in the person’s subconscious reorganisation and perception of incomplete stimuli as complete images. Differential threshold – The least difference that can be sensed between two stimuli. Also referred to as JND. Extrinsic stimuli – Stimuli external to the product (price, brand image, store image etc.) that affect the consumer’s perception of product quality. Figure and ground – A principle of Gestalt psychology that focuses on contrast, where figure is perceived clearly in contrast to (back) ground. Gestalt – A German phrase meaning “pattern” or “configuration” that denotes various concepts of perceptual organisation. Grouping – A principle of Gestalt psychology, which suggests that individuals group stimuli automatically so that they form a cohesive picture or impression. Halo Effect – A circumstance in which the perception of a person on multitudinous dimensions is based on the assessment of just one (or a few) dimensions. Intrinsic stimuli – Stimuli that are inherent in the product such as size, colour, flavour, or aroma. Just Noticeable Difference – See differential threshold. Perceived risk – The degree of uncertainty perceived by the consumer with respect to the outcome of a particular buying decision. Unit 5: Consumer Perception 29 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Perception – The process by which an individual selects, organises and interprets stimuli into a meaningful and coherent picture of the world. Perceptual blocking – The subconscious exclusion of stimuli that are threatening or conflicting with one’s needs, values, beliefs or attitudes. Perceptual defence – The process of subconsciously altering stimuli to make them less threatening or more uniform with one’s needs, values, beliefs or attitudes. Perceptual interpretation – Consumers interpretation of stimuli based on expectation that come from prior experiences, on the various conceivable explanations they can imagine, and on their motives and interests at the time of perception. Perceptual organisation – The subconscious arrange sorting and perception of stimuli into groups or configurations according to Gestalt psychology principles. Perceptual selection – The subconscious exercising of selectivity by individuals with respect to stimuli they perceive. Response – An individual’s reaction to a given stimulus or cue. Selective attention/selective perception – An amplified awareness of stimuli relevant to one’s needs or interests Selective exposure – Conscious or subconscious exposure that the consumer has to media or messages, and subconscious or active avoidance of others. Sensation – Immediate and direct response of sensory organs to stimuli. Sensory receptors – The human organs of eyes, ears, nose, mouth and skin that receive sensory inputs. Stereotypes – People tend to form “pictures” in their minds of the meanings of different types of stimuli that serve as anticipations of what certain situations or people will like. Subliminal perception – Perception of very weak or rapid stimuli sensed below the level of conscious awareness. Unit 5: Consumer Perception 30 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 11. TERMINAL QUESTIONS 1. What is the difference between absolute threshold and differential threshold? Discuss the implications of Weber’s Law. 2. Discuss the concept of perceptual selection. 3. Mention any three marketing situations where the principle of grouping can be used with advantage. 4. Which important factors influence consumer perceptions? 5. What are price and quality perceptions? Discuss its marketing implications. 6. Select a restaurant which you have visited recently. Analyse the atmosphere and physical environment of this service set up. What image according to you does the restaurant’s environment convey? What changes would you suggest to make the environment more appealing to customers? 7. What risks do consumers face? How can they overcome those risks? 12. ANSWERS Self-Assessment Questions 1. Differential 2. Stimuli 3. Exposure 4. Blocking 5. Motives 6. Configuration 7. Closure 8. True 9. False 10. True 11. True 12. False 13. True 14. False 15. True Unit 5: Consumer Perception 31 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) Terminal Questions 1. Absolute threshold refers to the lowest level at which an individual can experience sensations. Differential threshold is the smallest detectable difference between two values of the same stimulus. For more details, refer section 5.2. 2. Human beings, subconsciously, are quite selective in their perception. People really perceive only a very small fraction of stimuli to which they are exposed. For more details, refer section 5.3. 3. Marketers use the principle to give desired meaning to their products or services. The tendency to group stimuli may result as a consequence of proximity, similarity or continuity. For more details, refer section 5.4. 4. Physical appearance (including packaging), first impression, stereotyping, halo effect etc. play an important role in reinforcing consumer perception and experience about a product. For more details, refer section 5.5. 5. Consumers form perceptions about price level and quality of a brand. Whether a consumer perceives the price of a product or service as high, low, or fair has significant influence buying intentions and post-purchase satisfaction.. For more details, refer sections 5.7 and 5.8. 6. Write with respect to how store image influences brand image and in this context the image you hold about the restaurant. For more details, refer section 5.8. 7. Consumers use various strategies to deal with perceived risk either to increase certainty associated with product purchase or to minimise negative purchase consequences. For more details, refer section 5.9. Unit 5: Consumer Perception 32 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) 13. CASE STUDY Ceat - ‘Raising the Bar’ On 15 April 2008, CEAT Ltd. (Ceat), part of RPG Group and a major tyre manufacturer, unveiled a new logo, doing away with its 25-year-old mascot, the rhino and the tagline, 'Born tough'. The rebranding exercise was carried out as part of a brand repositioning effort. The Ceat logo and the tagline were in use since 1983. While this tagline seemed to work quite well when strength and durability were the only aspects that customers looked for in tyres, it seemed to have lost its relevance with the needs of both the primary customers (automobile companies), and the end-consumers changing. Recognising this, the company repositioned Ceat from a brand that conveyed toughness to one that was associated more with performance, style and comfort. Therefore, Ceat decided to drop the 'Born Tough' logo as well as the rhino. There was another reason for dropping the age-old rhino logo, even though it had high recall. This was the general perception associated with the rhinoceros – that of an endangered species – and the company did not want this perception to be extended to the brand as well. It wanted a more modern and contemporary logo, which would go with its new positioning in the market. The letter "E" appeared distinct, without the upright stroke connecting the three horizontal ones. Its red letter signified motion and movement. The "E" also represented the idea of "raising the bar", as the brand tried to raise its performance standard and credibility in the market. It also signified broadening of the company's capabilities, in terms of reach across segments and geographies. The red lines of the "E" gave the logo a very young and modern appeal, while the remaining letters were in blue, showing maturity and stability. “Ceat's new logo symbolises not just our foundations, but reveals an accent on the future." The company planned to invest Rs.400 million on the entire campaign, with Rs.100 million allocated for the first year. Discussion Question: What was your perception of the brand before it changed its logo and mascot? Hint: It came across as a rugged brand. (Source: icmrindia.org) Unit 5: Consumer Perception 33 DMKT302: Consumer Behaviour Manipal University Jaipur (MUJ) References: Consumer Behavior by Leon G Schiffman and Leslie Lazar Kanuk, Prentice Hall India Online sources: www.business2000.ie, www.icmrindia.org Unit 5: Consumer Perception 34