Consumer Behaviour Notes.ppt

Notes of Consumer behaviour

1. BY
PROF. PRASHANT
MISHRA
VIMR, SATNA.

2. Introduction
Consumerbehaviouristhestudyofhowindividual
customers,groupsororganizationsselect,buy,use,
anddisposeideas,goods,andservicestosatisfytheir
needsandwants.
Itreferstotheactionsoftheconsumersinthe
marketplaceandtheunderlyingmotivesforthose
actions.

3. Why CB
Marketersexpectthatbyunderstandingwhatcauses
theconsumerstobuyparticulargoodsandservices,
theywillbeabletodetermine:
A.Whichproductsareneededinthemarketplace
B.Whichareobsolete
C.Howbesttopresentthegoodstotheconsumers

4. Definition
AccordingtoSchiffman&Kanuk:“Thebehaviourthatconsumers
displayinsearchingfor,purchasing,using,evaluating,and
disposingofproductsandservicesthattheyexpectwillsatisfytheir
needs”.
AccordingtoEngel,Blackwell,andMansard,‘consumerbehaviour
istheactionsanddecisionprocessesofpeoplewhopurchasegoods
andservicesforpersonalconsumption’.
AccordingtoLoudenandBitta,‘consumerbehaviouristhedecision
processandphysicalactivity,whichindividualsengageinwhen
evaluating,acquiring,usingordisposingofgoodsandservices’.

5. We Need to Understand…
What they buy?
Why they buy?
When they buy?
Where they buy it?
How often they buy it?
How they evaluate it? (Post Purchase evaluation)
Impact of such evaluations on future purchases
How they dispose it?

6. Field of study
It is an inter-disciplinary social science that blends
elements from
Psychology
Sociology
Social anthropology
Marketing
Economics(especiallybehavioral economics)

7. Factors affecting CB
Marketingfactorssuchasproductdesign,price,promotion,packaging,
positioninganddistribution.
Personalfactorssuchasage,gender,educationandincomelevel.
Psychologicalfactorssuchasbuyingmotives,perceptionofthe
productandattitudestowardstheproduct.
Situationalfactorssuchasphysicalsurroundingsatthetimeof
purchase,socialsurroundingsandtimefactor.
Socialfactorssuchassocialstatus,referencegroupsandfamily.
Culturalfactorssuchasreligion,socialclass—casteandsub-castes.

8. Internal & External Factors

9. Nature of CB
Undergoes a constant change
Varies from consumer to consumer
Information on consumer behaviour is important to
the marketers
Leads to purchase decision
Varies from product to product

10. The study of CB Leads to…
Product design/model
Pricing of the product
Promotion of the product
Packaging
Positioning
Place of distribution

11. Implementing the marketing Concept
Market Segmentation
Market Targeting
Positioning

12. Market Before Segmentation

13. Market Segmentation

14. Market Targeting

15. Market Positioning

17. Customer Value
Customervalueispresentwhenthebenefitsofferedbyaproductaremore
thanthecostsusedtoacquirethatproduct.
Customervaluecanbedeterminedbysubtractingtotalcustomercosts
fromtotalcustomerbenefits.
Thebenefitstocustomerscancompriseofproductquality,warranty,
after-salesservices,maintenanceandrepaircosts,freeofcostdelivery,
relationshipofstaffwithcustomers,etc.
Thetotalcostincludenotjustthecostofproduction,butalsothetimeand
effortsused,risksinvolved,emotionalstressetc.
Customervalueisessentiallydeterminedbysomekeyfactorslikeproduct
standards,price,brand,productalternatives,customerexperiencesetc.

18. Customer Satisfaction
Customersatisfactionreferstotheevaluationbycustomersofhow
wellthevaluewasdeliveredbytheproduct,i.e.didtheproduct
deliverthevaluethattheyexpectedtoreceivefromit?Hence,it
takesplaceafterthecustomerhaspurchasedtheproduct.
Customersatisfactionisthedegreetowhichthecustomer
expectationsoftheproductwereconsistentwiththewaythe
productactuallyperformed.
Apersonfeelssatisfiedanddoesthinknotsatisfied.Hence,
customersatisfactionishighlysubjectiveandverydifficultto
measure.
Theexpectationofacustomermaybeaffectedbyprevious
experience,suggestionsfromfriends,thepromisemadebythe
sellerandinformationaboutcompetitors.

19. Types of Customers
1.Loyalists:Acompletelysatisfiedcustomer
whokeepspurchasing.
2.Apostles:Theyarethedelightedcustomers.
3.Defectors:Customerswhofeelneutraland
maystoppurchasing.
4.Terrorists:Thecustomerwhohavenegative
experienceandspreadsnegativepublicity.
5.Hostages:Theunhappycustomerswhostay
withthecompanyduetomonopoly.
6.Mercenaries:Averysatisfiedgroupof
customerswhohavenorealloyaltyandmay

20. Customer Retention
Thecustomerretentiondefinitioninmarketingisthe
processofengagingexistingcustomerstocontinue
buyingproductsorservicesfromyourbusiness.
Customerretentionreferstotheabilityofacompany
orproducttoretainitscustomersoversomespecified
period.
You’llspendfivetimeslessmoneyoncustomer
retention.
Theprobabilityofsellingtoanexistingcustomerisat
least40percentmorelikelythanconvertingsomeone
new.

21. Research Facts

22. Customer Retention Rate Calculation
Youhave50,000customersatthestartofacalculationperiod
oftwomonths.Duringthosetwomonths,youacquire1,000
customers,andattheendoftheperiod,youhave40,000
customers.
We’llsubtract1,000from50,000togetridofcustomers
acquiredduringthetestingperiod.That’sleavesuswith
49,000.Now,we’lldivide40,000by49,000toget.81.Ifwe
multiplythatnumberby100,wegetacustomerretentionrate
of81percent.

23. Customer Retention Strategies
Set customer expectations
Become the customers’ trusted advisor
Use relationships to build trust
Take a proactive approach to customer service
Use social media to build relationships
Go the extra mile
Make it personal

24. Benefits of Customer Retention
1.It's Cheaper than Acquisition.
2.LoyalCustomersare More Profitable.
3.Your Brand Will Stand Out from the Crowd.
4.You'll Earn More Word of Mouth Referrals.
5.EngagedCustomersProvide More Feedback.
6.CustomersWill Explore Your Brand.
7.LoyalCustomersare More Forgiving.
8.CustomersWill Welcome Your Marketing.

26. Firms Marketing Efforts
1. Product
2. Price
3. Place
4. Promotion
Socio Cultural Environment
1. Family
2. Informal Source
3. Non Commercial Sources
4. Social Class
5. Culture & Subculture
Need Recognition
Pre Purchase Search
Evaluation of alternatives
Psychological Fields
1. Motivation
2. Perception
3. Learning
4. Personality
5. Attitude
Purchase
1. Trial
2. Repeat Purchase
Post Purchase Evaluation
Experience
External influence
Consumer Decision Making
INPUT
PROCESS
OUTPUT
Post Purchase Behaviour

27. Information Search Process
Thetermsearchreferstomentalaswellasphysical
informationseekingandprocessingactivitieswhichone
engagesintofacilitatedecisionmaking.
Consequentlysearchmaybeundertakeninordertofindout
aboutproducts,prices,stores,andsoon,relatedtothe
product.
Searchmaybecategorizedaspre-purchaseorongoing(based
onthepurposeofsearch)andasinternalorexternal(based
onitssource).

28. Contd…
Onemodelofconsumerdecisionmakinginvolvesseveralsteps.
Thefirstoneisproblemrecognition—yourealizethatsomething
isnotasitshouldbe.Perhaps,forexample,yourcarisgetting
moredifficulttostartandisnotacceleratingwell.
Thesecondstepisinformationsearch—whataresome
alternativewaysofsolvingtheproblem?Youmightbuyanew
car,buyausedcar,takeyourcarinforrepair,ridethebus,ride
ataxi,orrideaskateboardtowork.
Thethirdstepinvolvesevaluationofalternatives.Askateboard
isinexpensive,butmaybeill-suitedforlongdistancesandfor
rainydays.
Finally,wehavethepurchasestage,andsometimesapost-
purchasestage(e.g.,youreturnaproducttothestorebecause
youdidnotfinditsatisfactory).

29. Internal & External Search
Internalsearchinvolvestheconsumeridentifyingalternativesfrom
hisorhermemory.Forcertainlowinvolvementproducts,itisvery
importantthatmarketingprogramsachieve“topofmind”
awareness.Forexample,togetrelieffromheadachetheconsumer
recallsapreviouslyusedbrandDisprin.Thus,theconsumermust
beabletoretrievefrommemorybeforeitwillbeconsidered.
Forhighinvolvementproducts,consumersaremorelikelytouse
anexternalsearch.Beforebuyingacar,forexample,theconsumer
mayaskfriends’opinions,readreviewsinConsumerReports,
consultseveralwebsites,andvisitseveraldealerships..,through
brochures,websites,ornewscoverage.

31. Awareness Set
EvokedSet:Itcomprisesofthosebrandsthattheconsumerwillevaluate
forthesolutionsofaparticularproblem.
IneptSet:Itismadeupofthebrandsthathavebeenrejectedfrom
purchaseconsiderationsbecauseofunpleasantexperienceofnegative
feedback.
InertSet:Itconsistsofthosebrandsaboutwhichaconsumerisawarebut
wouldnotconsiderbuyingandthesebrandsaretreatedwithadifference.

32. Evaluative
Criteria
Existing
Solutions
Performance
level of each
solution on
each criteria
Is the information
enough to make a
balanced decision
Yes
No
Information
Search
Terminates
Information
Search
Continues

35. The 4 Basic Views
1.Economical View
2.Cognitive View
3.Passive View
4.Emotional View

36. Economical View
Thismodelassumesthataconsumerisarationalpersonandhe
takesrationaldecisions.Hecomparesvariousproducts,evaluates
itsadvantagesanddisadvantagesandthenmakeapurchase
decisiononthebasisofinformationcollected.Heisawareofallthe
productalternativesandiscapableofrankingthem.
Economicviewbelievesinaworldofperfectcompetitionbutin
truesensethismodelisinappropriateastherecanneverbea
situationofperfectcompetition.
Besidesitisalsonotpossiblefortheconsumertomakerational
decisionsallthetimebecauseformakingrationaldecisionsa
consumerwillhavetobeawareofalltheproductsinthemarket,all
possiblealternativesandtheirfeatures.

37. Example
Theeconomicviewofabuyerdependsontheirpersonalityof
seekingforthepotentialandvalueoftheproduct.Buyerssatisfy
theiractualizationneedsbycomparingpriceandqualityofthe
productwiththeavailablealternatives.
Variousmarketershavebeenusingthelowpricingandthe
economicviewtoattracttheirtargetmarketandthusincreasetheir
sales.
1DollarStorewouldbeanidealexampleofacompanythattriesto
makebestoftheeconomicviewmodel.
Thecompanysellsitsmerchandizeatprices,whicharelowestinthe
market.
Thequalityoftheproductsthough,isnotasgoodasotherinthe
samemarket.

38. Cognitive View
AccordingtoCognitiveview,decision-makingisanemotional
orreasoningprocess,whichcanberationalorirrationaland
canbebasedonexplicitassumptionsortacitassumptions.
Themostimportantcharacteristicofthisviewisthat,a
consumerisinpursuitofinformationuntilasatisfactory
solutionisfound.
Oncethesatisfactorysolutionisfound,theprocessof
collectinginformationisterminated.

39. Example
Forexample,ifapersonislookingtobuyacarhewillfirst
decidewhatfeaturesdoeshewantinhisvehicle.Whetherhis
firstpreferenceissafetyorperformance.Basedonthis
evaluationhewillevaluatevariouscarmodelsavailableinthe
market.
Anotherexampleofthiscanbeseenasthe“Free”or“Sale”
adverts.Theseadvertsconveythatsomethingisfreeorthere
isasaleon.This“Free”or“Sale”stickeronthewindow
displayofstoreisenoughtoattracttheconsumersinsidethe
store.

40. Passive View
Thismodelassumesthattheconsumerstakedecisions
accordingtothepromotionaleffortsofthemarketersand
responddirectlytothesalesandadvertisementappeals
offeredbythemarketers.
Itisoppositetotheeconomicmodelasitassumespeoplewill
evaluateaproductdependinguponhowitispromotedand
positionedinthemarket.

41. Example
Thisismainlyevidentincaseoftourismindustry.Local
sellersandmarketersinmanyplacesoftenmanipulate
tourists.Sincethetouristshaveverylittlemarketandproduct
knowledge,salespeoplecanmanipulatethem.

42. Emotional View
Emotionalviewbelievesintargetingemotionsandimpulseof
theconsumers.
Thisviewbelievesthattherearecertainfeelingsoremotions
likejoy,lovefearfantasyetcattachedtoeverypurchaseofthe
consumers
Aconsumerislesslikelytodopre-purchaseevaluationand
searchbeforeemotionalpurchase.

43. Example
Overtheyearsfootballclubshavesoldtheirmerchandizeon
thebasisoftheemotionalview.
Thevariousholidaypackagesuseemotionstoattractthe
customers.
Manyreal-estatesellerpromotetheirhomesandother
propertieswithatagline“YourHome”etcjusttoattractthe
emotionalaspecttotheirproduct.
TheBodyShophasbeenusingtheemotionalmodelattractits
consumers.

45. Introduction
Theconsumerusescertaindecisionrules.Thedecision
ruleshelpaconsumersimplifythedecisionprocess.
Thevariousevaluativecriteriaarestructuredand
integratedsoastosimplifytheevaluationprocess.
TherecanbetwokindsofDecisionRules,viz.,
CompensatoryrulesandNon-compensatoryrules.
Theconsumerdecisionrulesareoftenreferredas
heuristics,decisionstrategiesandinformation
processingstrategies.

46. Compensatory Decision Rule
Compensatoryrules:Undercompensatoryrules,thevarious
evaluativecriteriaarelistedasattributes.
Theseattributesarescoredandratedforthevariousalternative
brands.
Alowerratingonanattributemaybeoffsetbyahigherratingon
another;i.e.ahigherratingononeattributewouldcompensatefor
alowerratingonanother.
Basedonthefinalscores,thebrandsareranked,theonewiththe
highestscore,beingregardedasthebest.
Theconsumerwouldthenselectthebrandthatscoresthehighest
amongthevariousalternativesthathavebeenevaluated.

47. Mazda = 4(5)+3(3)+2(5)+5(3)+1(1) = 55
Honda =
Toyota =
Nissan =
Hyundai =
Accordingtothecompensatoryrule,Toyotaisthebestchoice.
Compensatoryrulesallowforthepositiveevaluationofonebrand
attributetobalanceoutthenegativeattributes.

48. Non –Compensatory Decision Rules
Non-Compensatoryrules:Here,anegativeevaluationofanyone
attributeeliminatesthebrandfromconsideration.
Alowerratingonanattributecannotbeoffsetbyahigherratingon
another;i.e.ahigherratingononeattributewouldnotcompensate
foralowerratingonanother.
Theconsumerwouldthenselectthebrandthatscoresthehighest
amongthevariousalternativesthathavebeenevaluated.
Non-compensatoryrulescouldassumethreeforms:
Conjunctive
Disjunctive
Lexicographic.
EliminationByAspect.

49. Disjunctive Rule
Indisjunctiverule,aminimallyrequired
performancelevelisassignedforeachimportant
attribute.Allbrandsthatmeetorexceedatleastone
criteriaareacceptable.

50. Under this rule, Mazda, Toyota, and Hyundai meet the minimum for at
least one important attribute and are acceptable.

51. Conjunctive Rule
Theconjunctiveruleisthemirrorimageofthe
disjunctiverule.Inaconjunctiverule,abrandmust
haveallofitsfeaturesabovetheminimum
acceptabilitylevelstobeacceptable

52. Mazda,Toyota,Nissan,andHyundaiarealleliminatedbecausetheydo
notmeettheminimumstandards.Therefore,accordingtotheconjunctive
rule,onlyHondaisacceptable.

53. Elimination-By-Aspects
Eliminationbyaspectsisamodelofadecisionmaking
techniquedevelopedbyAmosTverskyinthe1970s.
Whenfacedwithmultipleoptionsthismethodfirst
identifiesasingleattributeorfeaturethatismost
importanttothedecisionmaker.
Whenanoptiondoesn'tmeetthecriteriaor'cutoff'for
anattributethenitiseliminatedfrombeinga
possibility.
Differentattributesandfeaturesareapplieduntila
single 'best' option is left.

54. Step 1: Price eliminates Hyundai
Step 2: Fuel economy eliminates Mazda
Step 3: Ride and Handling eliminates Nissan
Step 4: Safety eliminates Honda
This leaves Toyota.

55. Lexicographic Rule
Thelexicographicdecisionrule,consumersfirst
ranktheattributesintermsofperceivedimportance.
Then,theconsumerselectsthebrandthatperforms
bestonthefirstattribute.Iftwoormorebrandstie,
theyareevaluatedonthenextmostimportant
attributeuntilonebrandoutperformsalltheothers

56. Using the same ranking as the previous rule, Mazda is the best brand
option based on best price, the consumer’s most important attribute.

57. Sr.No Decision Rule Example
1 Compensatory rule The consumer chooses that laptop which
he judges as the best when he balances
the good and bad ratings with each other.
Non Compensatory rules
2 Conjunctive rule The consumer chooses that laptop that
has no bad features.
3 Disjunctive rule The consumer chooses that laptop that
has at least one good feature.
4 Lexicographic rule The consumer chooses that laptop that is
the best on the most important of all
features.

58. Cognitive Dissonance
CognitiveDissonance:Thisisafeelingoftensionandanxietythata
consumerexperiencesafterthepurchaseofaproduct.The
consumerbeginstohaveafeelingofuncertaintywithrespectthe
performanceoftheproductandbeginstodoubthispurchase
decision“whetherthedecisionwastherightone?”.
Hebeginstoaskhimselfthefollowingquestions:
a)HaveImadetherightchoice?
b)HaveIpurchasedtherightbrand?
c)HaveIgotvalueformoney?
TheFoxandtheSourGrapesisaperfectexampleofCognitive
Dissonance.

59. Reducing Consumer Dissonance
Consumerstrytoreducethisdissonanceby:
Gainingmoreproductinformation
Discussingwithothersatisfiedcustomerswhohavebought
thesameproduct/brand
Goingbacktothedealerandaskingforreassurances.

62. Introduction
Needsarethecoreofthemarketingconcept.Thestudyof
Motivationreferstoalltheprocessesthatdrivesinapersonto
perceiveaneedandpursueadefinitecourseofactiontofulfill
thatneed.
Consumermotivationisaninternalstatethatdrivespeopleto
identifyandbuyproductsorservicesthatfulfillconsciousand
unconsciousneedsordesires.
Thefulfilmentofthoseneedscanthenmotivatethemtomake
arepeatpurchaseortofinddifferentgoodsandservicesto
betterfulfillthoseneeds.
Motivationisthedrivingforcewithinindividualsthatimpels
themtoaction.

63. WhatareNeeds−Everyindividualhasneedsthatarerequiredto
befulfilled.Primaryneedsarefood,clothing,shelterandsecondary
needsaresociety,cultureetc.
WhatareWants−Needsarethenecessities,butwantsare
somethingmoreinadditiontotheneeds.Forexample,foodisa
needandtypeoffoodisourwant.
WhatareGoals−Goalsaretheobjectivesthathavetobe
fulfilled.Goalsaregenericandproductspecificinnature.Generic
goalsaregeneralinnature,whereasproductspecificgoalsarethe
desiresofaspecificnature.
Needsandtheirfulfilmentarethebasisofmotivation.Changetakes
placeduetobothinternalaswellasexternalfactors.Sometimes
needsaresatisfiedandsometimestheyarenotduetoindividual’s
personal,social,culturalorfinancialneeds.

64. Types of Needs
•Physiological (or biogenic)
needs that are considered
primary needs or motives
Innate
Needs
•Learned in response to our
culture or environment. Are
generally psychological and
considered secondary needs
Acquired
Needs

65. Goals
Goalsarethesought-afterresultsofmotivated
behavior.
1.Genericgoalsaregeneralcategoriesofgoalsthat
consumersseeasawaytofulfilltheirneeds
2.Product-specificgoalsarespecificallybranded
productsorservicesthatconsumersselectastheir
goals

66. Goal Selection
1.Personalexperiences
2.Physicalcapacity
3.Prevailing cultural norms &values
4.Goals accessibility in the physical and socialenvironment
5.Individualscharacteristics

67. Motives
RATIONALMOTIVE:
Rationalityimpliesthatconsumersselectgoalsbasedontotally
objectivecriteria,suchassize,weight,price,etc.
EMOTIONAL MOTIVE:
Emotionalmotivesimplytheselectionofgoalsaccordingtopersonal
orsubjectivecriteria

68. Arousal of Motives
Physiological arousal (they get hungry)
Emotional arousal (frustrated)
Cognitive arousal (they read an ad that made them recall their needs)
Environmental arousal (the weather becomes cold)

69. Model of MotivationalProcess

71. Introduction
Motivationisahighlydynamicconstructthatis
constantlychanginginreactiontolifeexperiences.
Needsandgoalschangeandgrowinresponsetoan
individual’sphysicalcondition,environments,
interactionswithothersandexperiences.
Asindividualsattaintheirgoalstheydevelopnewones.
Iftheydon’tattaintheystriveforoldgoalsorbuild
substitutegoals.

72. Contd…
NEEDSARENEVERFULLYSATISFIED:
Mosthumanneedsareneverfullyorpermanentlysatisfied.
Eg:Drinkingwateragainandagain,youfellthirstyyoudrinkwateragain
andagain.
NEWNEEDSEMERGE ASOLDNEEDSARESATISFIED:
Somemotivationaltheoristsbelievethatahierarchyofneedsexistsand
thatnewhigher-orderneedsemergeaslower-orderneedsarefull-filled.
Eg:Maslowhierarchyofneedsthatisamanwhohassatisfiedhis
physiologicalneedsmayturntosocialandesteemneeds.
SUCCESS&FAILUREINFLUENCE GOALS:
Individualswhosuccessfullyachievetheirgoalsusuallysetnewandhigher
goalsthataretheyraisetheirlevelofaspiration.
Eg:IfyourtargetgradeisB,ifyouachieveitthanatnextyoutarget
highergrades.

73. 73

74. INTRODUCTION
In1967,Gablingerbeerwasintroducedasalow
caloriebeer.Itwaspromotedasadietbeerwiththe
projectedUSPthatheavybeerdrinkerswouldgainless
weightdrinkingtheproduct.
“THE PRODUCT FAILED… ”
‘‘FIVE YEARS LATER… ’’
74

75. CONTD…
MillerLitewasintroducedaslessfillingbeer,underthe
slogan…
“EVERYTHING YOU WANT IN A BEER … AND LESS ”
“This product was a great success”.
1.ThereasonforthesuccessofMillerLitewasthe
company’spromotionwhichsuggestedthatthe–beer
drinkerscoulddrinkmorebeerthantheyalreadydid
withoutfeelingfull.
2.Gablingersbeerfailedbecauseittoldthebeerdrinkers
that–theywouldgainlessweight(theheavybeer
drinkersarenotconcernedabouttheweight)
75

76. ANALYSIS OF THE CASES
Althoughboththeproductswereprettyidenticalin
physicalattributes,itshowtheofferingswereperceivedby
thetargetgroup–howtheywerepositioned–thatmade
thedifference.
Gablingersofferedthemaproduct…
Millerofferedthemabenefit…
Individualsactandreactonthebasisofperceptionnoton
thebasisofobjectivereality.
Foreachindividual,realityisatotallypersonal
phenomenonbasedonthepersonsneeds,wantsvalues
andpersonalexperience.
Hence,consumersperceptionismoreimportantforthe
marketersthantheknowledgeofobjectivereality.
76

77. 77

78. DESCRIPTION…
Itisbecauseindividualsmakedecisionsandtake
actionsbasedonwhattheyperceivetobereality.
Asstatedintheexample,beforetheintroduction
oflow–caloriebeer,consumerhasnopre
conceivedviewoftheproduct.
Since,Millerunderstoodthebehaviourofthebeer
drinkers,itprovidedthecompanywithaviewto
interpretthenewofferingsinamannercompatible
withtheirneeds,whichGablingersfailedtodo.
78

79. 79

80. CONCEPTUAL FRAMEWORK
Perceptionistheprocessofselecting,organizingandinterpreting
sensationsasameaningfulwhole.Inthepast,themethodsofstudying
stimuliandmeasuringitsresponseswererestrictedtofivesenses–
See,Hear,Touch,Smell&Taste.
Although,thesensesplayamajorroleinourprocessofperceptionits
inadequatetodependonlyonthebasisoffivesenses.
Theperceptionishighlysubjectiveandthereforecanbeeasily
distorted.
Acc.ToSchiffmam&Kanuk–“Perceptionistheprocessby
whichanindividualselects,organizesandinterpretsstimuli
intoameaningfulandco-herentpictureoftheworld.”
Itcanbedescribedashowweseetheworldaroundus.Twoindividuals
maybeexposedtothesamestimuliundertheidenticalconditionsbut
howeachindividualrecognizes,select,organizeandinterpretsthese
stimuliisahighlyindividualprocessbasedoneachpersonsneeds,
valuesandexpectations.
80

81. ELEMENTS OF PERCEPTION
Individualsactandreactonthebasisoftheirperceptions,notonthe
basisofobjectivereality.
Realityisatotallypersonalphenomenon,basedonthatpersonsneed,
wants,values,andpersonalexperiences.Butforthemarketer’s,
consumerperceptionismoreimportantthantheknowledgeofreality.
Theintegralelementsofperceptioncanbesummedasfollows:
1.Exposure
2.Sensation
3.Absolutethreshold
4.DifferentialThreshold
5.SubliminalPerception
6.Attention
7.PerceptualSelection
81

82. DESCRIPTION OF ELEMENTS.
EXPOSURE:
Itoccurswhenindividualcomesintocontactwith
environmentalstimulieitheraccidentlyor
deliberatelybytheirgoaldirectedbehaviour.Not
allstimulitowhichtheygetexposedarenoticed.
82

83. 2.SENSATION
1.Sensationistheimmediateanddirectresponseofthesensoryorgans
tostimuli.
2.Astimulusmaybeanyunitofinputtoanyofthesesenses.Examples
ofstimuliincludeproducts,packages,brandnames,advertisements
andcommercials.
3.Sensoryreceptorsarethehumanorgansthatreceivesensoryinputs.
4.Theirsensoryfunctionsaretosee,hear,smell,tasteandfeel.
5.Allofthesefunctionsarecalledintoplay,eithersinglyorin
combinations,intheevaluationanduseofmostconsumerproducts.
HumanSensitivityreferstotheexperienceofsensation.Sensitivity
tostimulivarieswiththequalityofanindividual’ssensoryreceptors
andtheamountofthestimulitowhichheorsheisexposedi.e.the
intensityofthestimuli.
83

84. 3. ABSOLUTE THRESHOLD
Thelowestlevelatwhichanindividualcanexperiencea
sensationiscalledtheabsolutethreshold.Thepointatwhicha
personcandetectadifferencebetween“something”and
“nothing”isthatperson’sabsolutethresholdforthatstimulus.
Forinstance,oneindividualcansensethesoundpitchat20
decibelandtheotheronemaysensethesoundpitchat30
decibel.
Absolutethresholdforsoundincaseofthesetwoindividuals
wouldbedifferent.
Thesesensesarelikelytobecomeincreasinglydullunder
conditionsofconstantstimulationandtheabsolutethreshold
increases.
Forexample;thevalueofabsolutethresholdwouldgenerallybe
highwhoisresidingneartoabusyrailwaystation.
84

85. CONTD…
SensoryadaptationisaproblemformanyTVadvertisersbecauseofadvertising
clutters.Itisbecauseofthisreasontheadvertisersareinclinedtochangetheir
ADcampaignfrequentlyfearingthattargetaudienceswillgetsoadaptedtothe
currentadsandwillnolongertriggerthesensorystimulation.
Inanefforttocutthroughtheadvertisingclutterandensuresthatconsumers
notetheirads,somemarketerstrytoincreasesensoryinputs.
Example:
1.Applecomputersonceboughtallthespaceinthenewsweekmagazineto
ensurethatthereadersonlyseetheirads.
2.Fromtimetotime,variousadvertisershavetakenallofthebuscardsonmost
busybusroutestoadvertisetheirproducts.
Inanefforttocutthroughtheadvertisingclutterandensuresthatconsumers
notetheirads,somemarketerstrytodecreasesensoryinputs.
1.Someprintadsincludealotofemptyspacesinordertoaccentuatethebrand
nameorproductillustrations.
2.SomeTVadsusesilence,theabsenceofaudiosoundtogenerateattention.
85

86. EXAMPLE
Absolute threshold is the
weakest level of stimuli
that can be detected 50%
of the time.
A candle flame can be seen
at 5 km distance on a dark
and clear night.
Tick of a watch under quiet
condition at 20ft distance.
Taste of 1 table spoon of
sugar in 500 Ltrs of water
86

87. 4. Differential threshold
Theminimaldifferencethatcanbedetectedbetweentwosimilarstimuliis
calledthedifferentialthresholdorthejustnoticeabledifference
(JND).
AnineteenthcenturyGermanscientistnamedErnstWeberdiscoveredthatthe
JNDbetweentwostimuliwasnotanabsoluteamount,butanamountrelative
totheintensityofthefirststimulus.
Weber’sLawasitisbeenstated–thestrongertheinitialstimulus,thegreater
theadditionalintensityneededforthesecondstimulustobeperceivedas
different.
ForExample–ifthepriceof1litreofbrandedorangejuiceisRs.80/-most
consumerswillprobablynotnoticeanincreaseofRs.5/-(i.e.theincrement
wouldfallbelowtheJND)anditmaytakeanincreaseofRs.10/-,Rs.15/-or
maybeRs.20/-fortheconsumertonoticetheincreaseinprice(i.e.increment
hikesabovetheJND).
AccordingtoWeberslaw,anadditionallevelofstimulusequivalenttotheJND
mustbeaddedforthemajorityofpeopletoperceiveadifferencebetweenthe
resultingstimulusandtheinitialstimulus.
87

88. CONTD…
Theabilityofconsumertodetectthevariousinsensoryelementsisdetermined
bytheirthresholdlevel.Someconsumersaremoresensitivetothesestimuli
thanothers.
Thiswillbequiteclearfromthefactteaandcoffeecompaniesemploypersons
calledteaorcoffee‘tasters’.JustNoticeabledifferenceisbasedonthe
differentialthresholdofaconsumer.
Aconsumerwillnotbeabletodetectanychangeinstimulusbelowhis
threshold.
IfpriceofaMercedesBenzSclassisreducedby25000/-,itwillnothaveany
impactonsalesbecausethebasicpriceisinseveralLakhsthatadifferenceof
Rs25000/-maynotbenoticeableforconsumers.Ontheotherhandaprice
reductionofevenRs5000/-foraMaruti800isseentopushsalessubstantially
becauseofitsloworiginalprice.
Anotherexample,ifthepriceofacarisincreasedbyRs.1000/-/-itwould
probablynotbenoticedi.e.,theincrementwouldfallbelowtheJ.N.D.itmay
takeanincreaseofRs.5000/-/-ormorebeforeadifferentialinpricewouldbe
noticed.
88

89. WEBERS LAW
Weber'sLaw,moresimplystated,
saysthatthesizeofthejust
noticeabledifference(i.e.,deltaI)is
aconstantproportionoftheoriginal
stimulusvalue. Forexample:
Supposethatyoupresentedtwo
spotsoflighteachwithanintensity
of100unitstoanobserver.Then
youaskedtheobservertoincrease
theintensityofoneofthespotsuntil
itwasjustnoticeablybrighterthan
theother.Ifthebrightnessneededto
yieldthejustnoticeabledifference
was110thentheobserver's
differencethresholdwouldbe10
units(i.e.,deltaI=110-100=10).
89

90. EXAMPLE
90

91. 5. SUBLIMINAL PERCEPTION
AbsoluteThresholdisstimulusbelowwhichconsumerscannotdetectthe
stimulusatall.
Itisalsoreferredtoassubliminalperception.i.e.perceptionofstimulusbelow
theconsciouslevel.Oneofthemajorcontroversiesregardingconsumer
perceptionsiswhetherconsumerscanactuallyperceivemarketingstimuli
belowtheirabsolutelevel.
Thelevelatwhichconsumer’snolongernoticeafrequentlyrepeatedstimulus.
Anindividualwalkingintoanair-conditionedroom,kitchenfulloffragrance,or
anoisypartywillnoticethestimuliafteraperiodoftime.
Peoplearemotivatedbelowtheirlevelofconsciousawareness.Peoplearealso
stimulatedbelowtheirlevelofconsciousawareness;thatis,theycanperceive
stimuliwithoutbeingconsciouslyawarethattheyaredoingso.
Stimulithataretooweakortoobrieftobeconsciouslyseenorheardmay
neverthelessbestrongenoughtobeperceivedbyoneormorereceptorcells.
Thisprocessiscalledsubliminalperceptionbecausethestimulusisbeneaththe
threshold,or“limen”ofconsciousawareness,thoughobviouslynotbeneaththe
absolutethresholdofthereceptorsinvolved.
91

92. EXAMPLE
Thisissubliminalmessagingat
it’score—subtle,butstill
clever.
Pepsireleasedtheimageonthe
leftandCoca-Colaresponded
withtheimageontheright.
Pepsi’soriginaladissubliminal
inthatitmakestheviewerthink
andchuckleabit:it’sfunnyto
suggestthatgettingaCoke
whenyouwantedaPepsiis
scary.
Coca-Cola’sresponseisperfect,
aswell,andbecomesagreat
learningtool:sometimes,the
taglinereallydoesmakethe
image.
92

93. CONTD…
Anoldie,butagoodie,
many don’tseethe
subliminalmessagein
Amazon’slogo.
Thecurrentlogohasbeen
inusesincearound
2000,anditdoesn’tseem
tobegoinganywhere.And
whyshouldit?
ThecuteAtoZ
arrowandgrinningface
worksowell.
93

94. CONTD…
Another oldie-but-
goodie subliminal
messagecanbefoundin
theFedExlogo.
Whitespaceinthelogo
clearlyshowsanarrow
—anindicationofthe
company’sspeedand
abilitytogetyour
deliveryfromPointAto
PointB
94

95. EXAMPLES
95

96. 6. ATTENTION
Itoccurswhenoneormorestimuliactivatesoneormoresensory
receptornervesandtheresultingsensationreachthebrainfor
furtherprocessing.
Humanbeingsareconstantlyexposedtonumerousstimulievery
minuteoftheday.
Thisheavyintensityofstimulationtowhichweareexposed
shouldservetoconfuseustotallybut,Itdoesnot.
Thereasonbeingthattheperceptionisnotafunctionofsensory
inputalone.Perceptionistheresultofinteractionofphysical
stimulifromexternalenvironmentandanindividuals
expectations,motivesandlearning’sbasedonearlier
experiences.
Interactionofthesetwoverydifferenttypesofstimulicreates,for
anindividual,averyprivateandpersonalpictureoftheworld.
96

97. 7. Perceptual selection
Humanbeings,arequietselectiveintheirperception.Wereally
perceiveaverysmallfractionofstimulitowhichweareexposed.
Inamarketplace,aconsumerisexposedtonumerousmarketing
relatedstimulieventhenonaregularbasis,consumervisitsthemarket
andmakedesiredpurchaseswithoutanydisorientationorloosing
sanity.
Thereasonisthatweallsubconsciouslyexerciseselectivityin
perception.
Theselectionorselectivityinperceptionofthestimulidependson
consumerspreviouslearning’sandexperiencesandhismotives,needs,
wantsanddesires
Oneormorefactorsrelatedtoexperienceandmotivesaffectthe
consumers“selectiveexposure”and“selectiveattention”atagiven
timeandcanincreaseordecreasetheprobabilitythatacertainstimuli
willbeperceived.
97

98. SENSORY RECEPTORS AND STIMULI PERCEPTION
Environmentalstimuliorsensoryinputsarereceivedthrougharefive
senses.
Visualizeforamoment…ayoungwomanshoppinginafruitmarket…
1.Sheseesthesplendidvarietiesofcolourfulfruits…
2.Shesmellsthearomaofsweetmangoesandstrawberries…
3.Shetastesasampleofripepineapple…
4.Shehearthecallsfromthevendorspromotingtheirfruits…
5.Shefeelstheweightandconsistencyofthefruits(saywatermelon)
beforethepurchase…
Theinputpickedupbyhersensesasshewalksinthefruitmarketisthe
rawdata–ingredientsintheinitialstepofinformationprocessing.
98

99. CONTD…
Justasthebrightcolourofthefreshfruit,their
sweetscent,theirarrangementatvariousstands
arousetheshoppersdesiretobuysodoesthe
sensoryqualitiesofnearlyallproducts.
Thesesensoryqualitiesplayanimportantrolein
enablingmanufacturestodifferentiatetheir
productsfromthatthoseoftheircompetitor's.
Forexample–AfewyearsagoKimberly–Clark
achievedanamazinghikeintheirsalesfigureby
introducingcolouredandscentedpapernapkins.
99

100. EYE EAR NOSE MOUTH SKIN
SEE HEAR SMELL TASTE TOUCH
EXPOSURE TO
RAW DATA
PROCESSING OF
INPUTS
INTERPRETATION
OF INPUTS
S
E
N
S
O
R
Y
S
T
I
M
U
L
I
SENSORY ORGANS
100

101. 101

102. DESCRIPTION
Humanbeingsareconstantlybombardedwithstimuliduringevery
minuteandeveryhourofeveryday.Thesensoryworldismadeupofan
almostinfinitenumberofdiscretesensationsthatareconstantlyand
subtlychanging.
Accordingtotheprinciplesofsensation,intensivestimulation“bounces
off”mostindividuals,whosubconsciouslyblockaheavybombardment
ofstimuli.
Onetypeofinputisphysicalstimulifromtheoutsideenvironment;the
othertypeofinputisprovidedbyindividualsthemselvesintheformof
certainpredispositionsbasedonpreviousexperience.
Thecombinationofthesetwoverydifferentkindsofinputsproduces
foreachofusaveryprivate,verypersonalpictureoftheworld.Because
eachpersonisauniqueindividual,withuniqueexperiences,needs,
wantsanddesires,andexpectations,itfollowsthateachindividual’s
perceptionsarealsounique.
102

103. CONTD…
Perceptual Selection
Consumerssubconsciouslyexerciseagreatdealofselectivityastowhichaspectsof
theenvironmenttheyperceive.Anindividualmaylookatsomethings,ignore
others,andturnawayfromstillothers.Inactually,peoplereceiveonlyasmall
fractionofthestimulitowhichtheywereexposed.
Whichstimuligetselecteddependsontwomajorfactorsinadditiontothenature
ofthestimulusitself.
(1)Consumerspreviousexperienceasitaffectstheirexpectations.
(2)Theirmotivesatthetime.
Easeofthesefactorscanservetoincreaseordecreasetheprobability
thatastimuluswillbeperceived.
Nature of the stimulus
Marketingstimuliincludeanenormousnumberofvariablesthataffectthe
consumersperception,suchasnatureoftheproduct,itsphysicalattributes,the
packagedesign,thebrandname,theadvertisementsandcommercials.Ingeneral,
Contrastisoneofthemostattentioncompellingattributeofastimulus.
103

104. PERCEPTUAL ORGANIZATION
Alltheselectedstimulifromenvironmentarenot
experiencedasseparatesensations.Individualstends
toorganizethesesensationsintogroupsandperceive
themasaunifiedwhole.
Thespecificprincipleunderlyingperceptual
organizationarereferredasGestaltPsychology.
GestaltinGermanmeans–Patternor
Configuration.
Thethreemostbasicprinciplesofperceptual
organizationare:
1.Figure&Ground
2.Grouping
3.Closure
104

105. 1. FIGURE & GROUND
Thestimulithatcontrastwiththeenvironmentismorelikelytobe
noticed.E.g.Aloudsoundorapalecolour.
Thesimplestvisualillustrationconsistsofafigureonaground;
(Background).
Thefigureisperceivedmoreclearlyincontrasttoitsgroundbecauseit
appearstobewelldefined,solidandintheforefront.
Thecommonlinethatseparatesthefigureandthegroundisgenerally
attributedtothefigureratherthantheground.
ForEx.–incaseofmusicstimuli–Peoplecaneitherbatheinmusicor
listentothemusic.
In1
st
casemusicissimplybackgroundtootheractivities;marriage,
disco’s,party’setc.
In2
nd
casemusicisthefigure;enjoyingmusicsittingaloneinacalm
environmentorlisteningGazal’sinaliveconcert.
Figureismoreclearlyperceivedbecauseitappearstobedominant;in
contrast,groundappearstobesecondaryandthereforelessimportant.
105

106. MARKETING IMPLICATIONS
Advertisershavetoplantheiradvertisementcarefullytomakesure
thatthestimulustheywantnotedisperceivedasfigureandnotas
ground.
Themusicbackgroundmustnotoverwhelmthejingles;the
backgroundoftheadvertisementmustnotdetractfromtheproduct
Marketerssometimesrunadvertisementthatconfusetheconsumer
becausethereisnoclearindicationaboutwhichisthefigureandwhich
istheground.
Insomecasesblurringoffigureandgroundisdeliberate;Thewell
knownAbsolutVodkacampaignrunsprintadswithwhichthefigure
(shapeoftheAbsolutVodkabottle)ispoorlydelineatedagainstthe
ground;challengingthereaderstosearchforthebottleandthus
resultinginincreasedreadersparticipation.
106

107. GROUPING
Individualshaveinherenttendencytogroupingavarietyof
informationclosetoeachotherintimeorspaceandformaunified
picture.
Thetendencytogroupstimulimayresultasaconsequenceofclose
proximityandsimilarity.
Whenanobjectisassociatedwithanotherbecauseofitsclosenessto
thatobjectitisduetoproximity.
Marketersusethistendencyinindividualswithadvantagetoimply
certaindesiredmeaningrelatedtotheirproductsorservices.
Forex;Softdrinksareusuallyshownbeingenjoyedinanactive,fun
loving,partyingandinterpretsthefeelingoftogetherness.
Anadforcoffeemayshowayoungmanorwomansippingthecoffeein
abeautifullyfurnishedanddecoratedlivingroom.Theoverall
impressionandmoodimpliedbygroupingofstimulihelpsthe
consumertoassociatethedrinkingofbeveragewithelegantand
comfortablelifestyle.
107

108. CLOSURE
Individualshaveaneedforclosureandtheyfulfillitby
organizingtheirperceptionsinamannerthatleadstoforminga
completepicture.
Inthiseventtheyareexposedtoapatternofstimuliwhichin
theirviewisincomplete,theytendtoperceiveitascompleteby
fillinginthemissingpieces.
Thisprocessmaybetheresultofconsciousorsubconscious
effort.Becauseofthisneedforclosure,individualexperience
tensionwhenanytaskisincompleteandafeelingofsatisfaction
withitscompletion.
Acc.ToJamesT.HeimbackandJacobJacoby–People
rememberincompletetasksbetterthanthecompletetask,
becauseapersonwhobeginsataskdevelopstheneedto
completeit.
Forex:Afterhearingthebeginningofasongorjingleorajokeor
storyhedevelopsaneedtocompleteit.
108

109. CONTD…
Expectations
Peopleusuallyseewhattheyexpecttosee,andwhat
theyexpecttoseeisusuallybasedonfamiliarity,.
Previousexperience,orpreconditionedset.Ina
marketingcontext,peopletendtoperceiveproducts
andproductattributesaccordingtotheirown
expectations.
Motives
Peopletendtoperceivethethingstheyneedorwant;
thestrongertheneedthegreaterthetendencyto
ignoreunrelatedstimuliintheenvironment.In
general,thereisheightenedawarenessofstimulithat
arerelevanttoonesneedsandinterestsanda
decreasedawarenessofstimulithatareirrelevantto
109

110. CONTD…
Selective perception
Theconsumers“selection”ofstimulifromtheenvironment
isbasedontheinteractionsofexpectationsandmotives
withthestimulusitself.Thesefactorsgiverisetofour
importantconceptsconcerningperception.
Selective Exposure
Consumersactivelyseekoutmessagesthattheyfind
pleasantorwithwhichtheyaresympathetic.Andthey
activelyavoidpainfulorthreateningones.Theyalso
selectivelyexposethemselvestoadvertisementsthat
reassurethemofthewisdomoftheirpurchasedecisions.
Selective attention
Consumersexerciseagreatdealofselectivityintermsof
theattentiontheygivetocommercialstimuli.Theyhavea
heightenedawarenessofstimulithatmeettheirneedsor
interestsandminimalawarenessofstimuliirrelevantto
theirneeds.Thus,consumersarelikelytonoteadsfor
productsthatwouldsatisfytheirneedsanddisregardthose
inwhichtheyhavenointerest.
110

111. CONTD…
Perceptual Defense
Consumerssubconsciouslyscreenoutstimulithattheyfind
psychologicallythreatening,eventhoughexposurehas
alreadytakenplace.
Thus,threateningorotherwisedamagingstimuliareless
likelytobeconsciouslyperceivedthanareneutralstimuliat
thesamelevelofexposure.
Perceptual Blocking
Consumersprotectthemselvesfrombeingbombardedwith
stimulibysimply“tuningout”–blockingsuchstimulifrom
consciousawareness.
Theydosooutofself–protectingbecauseofthevisually
overwhelmingnatureoftheworldinwhichwelive.
ThepopularityofsuchdevicesasReplayTV,whichenable
viewerstoskipoverTVcommercialswithgreatease,isin
part,aresultofperceptualblocking.
111

112. PERCEPTUAL INTERPRETATION OF STIMULI
Itreferstoassigningameaningtothesensations.
Individuals,intheirownuniquemannerinterpretthestimuli.Asan
oldsayinggoes–“Apersonseewhathewantstosee”.
Interpretationofstimulibytheindividualsisbasedontheirearlier
experience,theirexplanations,theirmotives,beliefsandinterestsat
thetimeofperception.
Foranumberofreasonastimulicanoftenbeweakorstrongandmay
provetobequietambiguoustoindividuals.Forexample;brief
exposure,poorvisibility,changinglevelofilluminations,lowpitch,
highnoiseleveletc.cancreatedifficultiesininterpretingthestimuli.
Earlierlearningandexperiencebecomesinstrumentalinforming
certainexpectationsanddifferentexplanationsthattheindividualsuse
ininterpretingthestimuli.
Anumberoffactorsinfluenceindividualsthatmaydistorttheir
perceptions:
112

113. Contd…
1.PHYSICAL APPEARANCE :Peoplemayormaynotconsciouslyrecognize
thattheytendtoattributethequalities,whichintheiropinionareassociated
withcertainindividualstootherswhomayresemblethosepersons.
AccordingtoastudyconductedbyKathleenDebevec&JeromeBKernan,
indicatesthatattractivelookingmenareperceivedasmoresuccessful
businessmenthantheaveragelookingmen.Attractivemodelsinadsand
commercialsprovemorepersuasiveandhavemorepositiveimpacton
consumerattitudethantheaveragelookingmodels.
2.STEREOTYPING STIMULI:Peopletendtoformpicturesintheirmindsof
themeaningofdifferenttypesofstimuli.Thisstereotypingthestimulihelps
themdevelopexpectationsabouthowspecificevents,peopleorsituationsturn
outtobe.Forexamplethepictureofapolicemanorapoliticianbehaviourin
ourmind.
3.IRRELEVANT STIMULI:Incertainsituations,consumerarefacedwith
differentperceptualjudgments.Insuchcircumstancestheyoftenrespondto
somewhatirrelevantstimuli.Forex;aconsumermayconsiderthecolourof
washingmachineinitsfinalpurchase.
113

114. CONTD…
4.FIRSTIMPRESSIONS :Firstimpressionsareoftenlong
lastingevenwhentheperceiverisnotexposedtosufficient
relevantinformation.Forex;thewordimportedisenoughfora
largenumberofconsumersforproductslikewatches,shoes,
cameras,videogamesetc.
5.JUMPING TOCONCLUSIONS :Somepeoplehaveastrong
tendencytodrawconclusionsbasedoninsufficient
information’s;“Judgingthebookbyitscover”.Theyseemtobe
impatientaboutexaminingalltherelevantevidence,whichmay
benecessarytodrawabalancedconclusion.
6.HALOEFFECT:Thisreferstothetendencytoevaluateone
attributeofthestimulitodistortreactionstoitsother
properties.Thisisfrequentlyseenincaseofbrandextension
wherethemarketerstakeadvantageofbrandreputation.Ex;
DettolorLuxSoap.
114

115. IMPORTANCE OF IMAGES TO CONSUMERS
Animageisatotalperceptionofsomethingthatindividual’s
formbyprocessingalltheinformationtheyareexposedtoover
thetimeandagain.
Researchesindicatesthat,consumersdeveloppermanent
perceptionsaboutbrands,prices,storesandcompanies.These
inferencesareconsumersbeliefsaboutproductsandservices.
Acc.ToRusselWBelk:Theconsumersattempttoenhance
theirselfimagesbypurchasingproductsthattheyagreewith
theirselfimageandavoidbuyingproductsthatdonotfirtheir
selfimage.
115

116. PRICE PERCEPTION
Aconsumerperceivesthepriceofaproductorserviceashigh,lowor
fairhassignificantinfluenceonbuyingintentionandpostpurchase
satisfaction.
ForEx:Afterseeingtheexplosivegrowthofcheapballpointpensinthe
globalmarket,Parkerpenspositioneditsnewlaunchedproductline
basedonpriceduring1980’sandofferedlowpricepens.
“THE RESULTS WERE DISASTROUS…”
oThereasonbeingtheParkersImagewasinconsistentwithitsoffered
price.
oThecompanyin1989revertedbacktoitsstrengthsofhighpricedpens
andbecomeprofitableagain.
1.Consumershavecertainexpectationsofwhatthepriceisorwhatthe
priceshouldbeoftheproduct.
2.Theirexpectationsmayormaynotreflecttheactualpriceofthe
productorservices.
3.Consumersoftenassociatethepriceofaproductwithquality.
116

117. CONTD…
REFERENCE PRICE:Itisanypricethataconsumerusesasabasis
forcomparinganotherprice.Forex:aconsumermayexpecttopayRs.
20,000/-foraSony2000wattmusicsystem.Thisisconsumers
referencepricethathe/sheexpectstopayanduseasbasistocompare
topricewithalternativebrands.
Theconsumersarewillingtoacceptarangeofpricescalledacceptable
pricerangeforaproductorservice.
TENSILEPRICECLAIMS:Itcommunicatesarangeofpricesavings
suchas–“SaveUpto50%”.
OBJECTIVE PRICECLAIMS:Itoffersasinglediscountlevelsuch
as–“Save20%”.
117

118. CONSUMERS REACTIONS TO PRICE VARIABLES
Acc.ToKentBMonroeandSusanBPetroshius:
1.Consumerusespriceasanindicatorsofproduct
quality.
2.Consumerappeartodevelopreferencepricesasa
standardsforevaluatingpricestheyseeinthe
marketplace.
3.Consumersreferencepricingarenotconstantand
getmodifiedwithshoppingexperiences.
4.Consumerstendtodeveloparangeofacceptable
pricesaroundthereferenceprice.
5.Factorssuchasbrandimagecansoftenthestrength
ofperceivedprice–qualityrelationship.
118

119. CONSUMERS RISK PERCEPTIONS
Consumersmayfaceseveraltypesofrisksinmaking
purchasedecision.Themajoronesare:
FunctionalRisk:Istheriskthatproductwillnot
performasexpected.
PhysicalRisk:Istherisktoselfandothersthatthe
productmayexplodeorblast.
FinancialRisk:Istheriskthattheproductwillnot
beworthitscost.
SocialRisk:Istheriskthataproductchoicewill
bruisetheconsumer’sego.
TimeRisk:Istheriskthatthetimespentoninthe
productsuchmaybewastediftheproductdoesnot
performasexpected.
119

120. OVERCOMING THE RISK
PERCEPTION
Consumersdevelopaselfdefensiveweaponinordertosatisfythe
unsatisfiedneeds.
Consumersseeksinformation:
Consumersseekinformationthroughhisfriendfamilyandother
people.Theyspendmoretimethinkingandgettinginformationabout
theproductwhentheyassociateahighdegreeofriskwiththe
purchase.
Consumersarebrandloyal:
Consumersremainbrandloyalinordertoavoidtheriskbasedon
theirpastpositiveexperienceofpostpurchaseevaluation.
Consumersselectbybrandimage:
Whenconsumershavenoexperiencewiththeproducttheytrustthe
brandname.Theconsumersoftenthinkaboutthewellknownbrand,
worthbuyingandgofortheproduct.
120

121. CONTD…
Consumersreplyonstoreimage:
Iftheconsumersdonothaveanyinformationabouttheproductthey
trustthemerchandisebuyersofreputablestoresanddependonthem.
Consumersbuythemostexpensivemodel:
When in doubt the consumers feel that the most expensive model is
probably the best in terms of quality and price.
Consumers seeking reassurance:
Consumers who are uncertain about the product choice seek for
reassurance through money back guarantees and warranty’s or trial
use etc.
121