CONSUMER PERCEPTION

Nature & Dynamics of Perception and Information processing

Elements Of Perception
Two people might be exposed to the same stimuli under the same conditions ------ but they will draw different meanings out of the same. Perception is about “ how we see the world around us”. Its influenced by a person’s needs, values and expectations. Perception is defined as the process by which an individual selects, organizes and interprets stimuli into meaningful and coherent picture of the world.

Information Processing For Consumer Decision Making
Exposure
Random ----------------------------------- Deliberate

Attention
Perception
Low involvement ---------------------------- High involvement

Interpretation
Low involvement ---------------------------- High involvement Short term ---------------- Memory --------------- Long term Active problem solving Stored experiences, values, decisions, rules feelings

Purchase & consumption decisions

Information processing
 Information processing is a series of activities –stimuli are perceived, transformed into information and stored.  First activity is Perception.

Exposure occurs when a stimulus (Ad) comes within range of a persons sensory receptors. Attention occurs when a stimulus is received (say the Ad is seen). Interpretation is the assignment of meaning to the received sensation. Memory has short term version just for present decision or longer term retention of the meaning.

Elements Of Perception
Sensation: immediate & direct response to
stimuli by the sensory receptors. Stimuli include products, packages, brand names, Ads and other commercials. Sensation will depend on the energy level changes in the environment ( resident of Mumbai vs. rural Indian). Sensory adaptation is about “getting used to certain sensations”, that it loses its impact. Brings in the reason for changing campaigns.

Absolute Threshold: the lowest level at

which an individual can experience a sensation. Differential Threshold: is the minimal difference that can be detected between two similar stimuli is called differential threshold. Just Noticeable Difference ( j. n. d.) When it comes to product improvements marketers should meet or exceed consumers differential threshold.

Dynamics Of Perception
Sensory world comprises of an infinite number of discrete sensations. As we are bombarded with tens/hundreds of stimuli every minute ----- Physical stimuli from the outside environment and Internal stimuli (individuals desires, motives) based on previous experiences, We sub-consciously get into which stimuli to recognize and interpret – or in other words---Selection, Organization and interpretation of stimuli.

Dynamics Of Perception
Nature of the stimulus: nature of the product, its physical attributes, packaging, design, factors related to advertising – copy, contrast, models, positioning claims etc. Expectations: people usually see what they expect to see and what they expect to see is usually based on familiarity, previous experience or preconditioned set. Motives: people tend to perceive the things they need or want. The stronger the need the greater is the tendency to ignore unrelated stimuli.

Stimulus Factors
Size and intensity of the stimuli Colours and Movement of the object  Position of the object in the person’s vision field (shelf space, screen/page location etc) Contrast from expected / isolation from other stimuli. Interest generated by the stimuli

Perceptual selection: Consumers subconsciously exercise a great deal of selectivity as to which aspects of the environment they should perceive. Two major factors other than the nature of the stimuli itself – 1) consumer’s previous experience as it affects their expectations and 2) their motives at that time (needs, desires, interests etc.)

Selective Perception Selective Exposure: Consumers seek out messages that they find pleasant / which they are sympathetic with and avoid ones which are unpleasant. Selective Attention: People have heightened awareness of stimuli that meet their needs – likely to note ads of products that will satisfy their needs.

Selective Perception Perceptual Defense: we subconsciously screen out stimuli that are psychologically threatening, even after getting exposed. (Smokers avoiding the statutory warnings) Perceptual Blocking: protect themselves from being bombarded with stimuli by simply blocking such stimuli Perceptual Distortion: Individuals are subject to a number of influences that tend to distort their perceptions –
 Gauging people based on Physical appearance, Sterotyping, perceptions based on First impressions, Jumping to conclusions, Halo effect etc.

Perception - Marketing applications
Positioning: image that a consumer has in his mind about a product. Positioning is actually more important to the ultimate success of a product than are its actual characteristics. Product repositioning: forced change either due to competitors activities or due to change in consumer preferences. Perceptual Mapping: shows were the product stand vis-à-vis competitors brands.

Perception - Marketing applications
Perceived Price: how consumer perceives the price – as high, medium or low. Reference prices are prices which consumer as a basis for comparing/judging another price. Internal reference prices are prices / price ranges retrieved from memory. Tensile price claims (save up-to 50%, save 10 – 40%, save more than 25%) Objective price claims: save 25% Price Bundling Consumers are less sensitive to price when they use credit cards.

Perception - Marketing applications
Acquisition utility represents the consumers perceived economic gain or loss associated with a purchase and is a function of product utility and purchase price. Transaction Utility – concerns the perceived pleasure or displeasure associated with the financial aspect of the purchase  and is determined by the difference between the internal reference price and the purchase price.

Perception - Marketing applications
Perceived Quality: Consumers often judge the quality of a product on the basis of a variety of informational cues. Intrinsic cues (physical characteristics of the product – size, color, flavor, aroma, etc). Extrinsic cues are packaging, pricing, advertising, types of shops were its sold etc. Service Quality -SERVQUAL

Perception - Marketing applications
Perceived Risk – the uncertainty that consumers face when they cannot foresee the consequences of their purchase decision. Functional risk Physical Risk Financial Risk Social Risk Psychological risk Time Risk

Perception - Marketing applications
How consumers handle risk Consumers seek information Consumers are brand loyal (avoid risk by being loyal to
the brand which they are satisfied with).

Consumers select by brand image Consumers rely on store image Consumers buy the expensive models (when in doubt
consumers buy the expensive models).

Consumers seek reassurance (when uncertain about
qualities they look for reassurances such as guarantees / warranties, certifications etc.)

Perception
External Stimuli

Learning
Attitude / behavioral changes
Immediate consumer action (Leading to operant learning) Change in knowledge structures (classical conditioning)

out

Selective Exposure (Filter 1)

Exposure

Short term

Long Term Memorizing

out

Selective Attention (Filter 2)

Perceptual Blocking (Filter 3)

reject

Attention

Socio-cultural And third party Influences (filter 4)

Interpretation

Consumer Learning

Elements of Learning, Types of Learned Behavior and Learning Theories.

Nature Of Learning
Information processing consists of exposure, attention, interpretation leading to perception. Learning is the term used to describe the processes by which memory and behavior are changed as a result of conscious and nonconscious information processing. Learning is any change in the content or organization of long term memory or behavior.

Learning & Consumer Behavior
Culture Sub-culture Social Class Family Friend’s Institutions Experiences Mass Media Advertising Learning Values Attitudes Tastes Preferences Skills Feelings Meanings Behaviors Purchase & Use Behavior

High Involvement & Low Involvement
High Involvement learning situation is one in which the consumer is motivated to process or learn the material. Individual reading the buyer’s guide of a lap top before the actual purchase. Low involvement learning is one in which the consumer has little or no motivation to process or learn the material. Much of learning occurs in low involvement contexts.

Low Involvement Learning
Incidental Exposure
Typical situation where the reader of an article gets exposed to the Ads placed next to it. An individual who is not interested in clothing May notice an Ad featuring a model whom the respondent greatly admire. Similarly he/she may notice clothes ads if they face a need to buy new clothes soon.

Behavioral Learning Theories
Conditioning (stimulus-Response Theories) refers to learning based on association of a stimulus (information) and response (behavior or feelings). Classical Conditioning Instrumental or Operant Conditioning

Classical Conditioning
Unconditional Stimulus (Cricket Match) Unconditioned Response (Excitement) Conditioned Stimulus (Drinking Pepsi)

Conditioned Stimulus (Drinking Pepsi)

Conditioned Response (Excitement)

Strategic Applications Of Classical Conditioning
Repetition Increases the strength of the association between a conditioned stimulus and an unconditioned stimulus and slows the process of forgetting. Although some over-learning aids retention, at some point the individual can become satiated. Advertising wear out -both attention and retention will decline. Can be overcome by varying the messages. Lux Ads, Marlboro ads

Strategic Applications Of Classical Conditioning Stimulus generalization
Learning depends not only on repetition but also on the ability of the individuals to generalize. That is making the same response to slightly different stimuli. Explains why me-too products exist/succeed in the market. Applied by marketers to product line, product form and category extensions.

Strategic Applications Of Classical Conditioning Stimulus Discrimination
Opposite of stimulus generalization – consumer selects specific stimuli from among similar stimuli. Positioning concept – unlike the clone who thinks the
consumer will generalize their perceptions, the market leaders want the consumer to discriminate their stimuli.

Product Differentiation: strategies aimed at creating
differentiation based on an attribute. This attribute can be even a trivial one such as colour.

Its difficult to unseat once the stimulus discrimination is established.

Instrumental Conditioning
Classical learning is most common in low involvement situations. Instrumental or Operant conditioning (B.F. Skinner) differ from classical primarily in the role and timing of reinforcement. It also require a link between stimulus & response. Since no automatic stimulus response relationship is involved, the subject must be first induced to engage in the desired behavior.

Operant Conditioning
Operant learning differs from classical conditioning primarily in the role and timing of reinforcement.
 Suppose Parle brings out a new mango drink which according to the company has a more natural taste than Mazza etc.  How do we prove this to our target audience.  One approach would be to distribute large quantities of free samples at supermarkets/ other public places where our target market is present and thus gain a favorable disposition.

Operant Conditioning
Stimulus (Mango drink) Desired response (consumption) Reinforcement (natural flavor)

Increases probability Of response to stimulus

 Reinforcement plays a much larger role in operant than it does in classical conditioning.  Operant conditioning often involve in the actual use of the product. Thus a great deal of marketing strategy should be focused on initial trial.

Operant Conditioning
Try Brand A Unrewarded (Legs too loose)

Stimulus Situation (Need good Fitting trousers)

Try Brand B

Unrewarded (tight in seat)

Try Brand C

Unrewarded (Too baggy)

Try Brand D

Rewarded (Perfect fit) Repeat behavior

Operant Conditioning
Process of shaping in purchase Behavior
Consume a free sample that was given to you

Purchase a second pack using the discount coupon that was given with the free sample

Repurchase the product at full price.

 This process of encouraging partial responses to leading to the final desired response is known as shaping.  Widely used by marketers, especially when you have consistent quality product which are superior to products currently available.  Rebates, trading of stamps, freebies like toys etc. to shop in a store or to buy a brand, providing good ambience, retail entertainment are all examples.

Cognitive Learning Theory
Learning Based on mental activity is called cognitive learning.
Unlike behavioral learning theory, cognitive theory holds that learning involves, complex mental processing of information.

Vicarious learning/modeling Iconic Rote Learning Reasoning / analogy

Modeling or Observational learning
Considerable amount of learning takes place in the absence of direct reinforcement (either positive or negative) Through a process called modeling or observational learning (or vicarious learning). Consumers observe how others behave in response to certain situations (stimuli) and the ensuing results (reinforcement) that occur, and they imitate (model) the positively reinforced behavior when faced with similar situations.

 Modeling is the process through which individuals learn behavior by observing the behavior of others and the consequences of such behavior.  Advertisers sees the importance in observational learning , especially in selection of celebrities or other models.  A teenager sees an ad that depicts social success as the outcome of using a certain brand of shampoo – she will want to buy it.  A child sees the ad of Sachin Tendulkar drinking Boost – the secret of his energy and he will also look forward to have boost.  Vicarious learning is the basis for much of today’s advertising.

Cognitive Learning Theory
Iconic Rote Learning: Learning the association between two or more concepts in the absence of conditioning. One may see an Ad that claims that Tiger Balm is a joint pain reliever and the recipient will add

Tiger along with MOOV and Iodex in his memory under the pain reliever concept. A substantial amount of low-involvement learning involves iconic rote learning.

Iconic rote learning – by numerous a repetition of a simple message that occur as the consumer scans the environment may result in the message being learned. Through iconic Rote Learning consumer form beliefs about the attributes of the product without being aware of the source of information. When the need arises purchase may be formed based on these beliefs formed.

Cognitive Learning Theory
Reasoning / Analogy Most complex form of cognitive learning is reasoning including analogical reasoning. Here, individuals engage in creative thinking to restructure and recombine existing information as well as new information to form new associations and concepts. It starts with information from a credible source that questions our existing beliefs. New information is considered with the existing knowledge as the base.

Attitude

Attitude
An attitude is an enduring organization of motivational, emotional, perceptual and cognitive processes with respect to some aspect of our environment. It is a learned predisposition to respond consistently in a favorable or unfavorable manner with respect to a given object.

Attitude Components
Attitudes serve four key functions for individuals. Knowledge function Value Expressive functions Utilitarian Function Ego defensive function

Perception
External Stimuli

Learning
Attitude / behavioral changes

out

Selective Exposure (Filter 1)

Immediate consumer action (Leading to operant learning)

Change in knowledge structures (classical conditioning)

Exposure

Short term

Long Term Memorizing

out

Selective Attention (Filter 2)

Perceptual Blocking (Filter 3)

reject

Attention

Socio-cultural And third party Influences (filter 4)

Interpretation

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