1. Chapter 4
Copyright © 2015 Pearson Education

2. Chapter 4 Learning Objectives
4.1 To understand the elements of perception and their role in consumer behavior.
4.2 To understand why consumers process only a small amount of the information they receive.
4.3 To understand how consumers organize consumption-related information.
4.4 To understand why and how consumers
“add” biases to stimuli and the implications of this tendency for marketing.
Consumers act on the basis of their perceptions, not objective reality. So, it is important that marketers understand the notion of perception and its
related concepts to determine more readily what factors influence consumers to buy.

3. Chapter 4 Learning Objectives
4.5 To understand the elements of consumers’ imagery.
4.6 To understand how consumers determine the quality of products and services.
4.7 To understand consumers’ perceived risks and how they handle and reduce those risks.

4. Perception
The process by which individuals select, organize, and interpret stimuli into a meaningful and coherent picture of the world. It can be described as “how we see the world around us.”

5. Learning Objective 4.1
4.1 To understand the elements of perception and their role in consumer behavior.
Perception is all about consumers’ subjective understandings and not objective realities. Raw sensory input is processed selectively based on other stimuli from the external environment and internal factors like expectations and motives.

8. Sensation
The immediate and direct response of the sensory organs to stimuli (units of input to the senses, as captured by the sensory receptors).
Examples of stimuli (i.e., sensory inputs) include products, packages, brand names, advertisements, and commercials. Sensory receptors are the human organs (the eyes, ears, nose, mouth, and skin) that receive sensory inputs. As sensory input decreases, however, our ability to detect changes in input or intensity increases, to the point that we attain maximum sensitivity under conditions of minimal stimulation.

9. Audio Sensory Input
Many companies have invested large amounts of resources in designing products and packages that emit just the right audio sensory input, after studying how consumers perceive the volumes and pitches of sounds

10. Discussion Questions
What is the difference between the absolute threshold and the differential threshold (JND)? Why do marketers care about sensory adaptation?
The lowest level at which an individual can experience a sensation is called the absolute threshold. The point at which a person can detect a difference between “something” and “nothing” is that person’s absolute threshold for that stimulus.
The minimal difference that can be detected between two similar stimuli is called the differential threshold or the just noticeable difference (JND). Weber’s Law suggests the minimum amount of change that can be detected depends on the size of the initial stimulus.
The image shows how Betty Crocker changed over the years.
Sensory adaptation is becoming accommodated to a certain level of stimulation and becoming less able to notice a particular stimulus. Marketers care because consumers stop paying attention to their communications when they adapt to them.

11. Experiential Marketing
Ambush Marketing
Placing ads in places where consumers do not expect to see them and cannot readily avoid them.
Experiential Marketing
Allows customers to engage and interact with offerings in sensory ways in order to create emotional bonds between consumers and marketing offerings

13. Discussion Question
How might a cereal manufacturer such as Kellogg’s use the j.n.d. for Frosted Flakes in terms of:
Product decisions
Packaging decisions
Advertising decisions
Sales promotion decisions
Kellogg’s might want to change their ingredients, either to make the product healthier or because they have secured lower-priced raw materials. They might want to reduce package size to avoid a price increase and they would not want this to be noticed. Perhaps Tony the Tiger could look a little different. At one point, Pillsbury made a decision to make the Pillsbury Dough Boy a bit thinner. They wanted to make sure he still was cute but looked a bit more fit and lean.

14. Subliminal Perception
What is subliminal perception?
Is it effective?
Stimuli that are too weak or too brief to be consciously seen or heard. They may be strong enough to be perceived by one or more receptor cells. People have been fascinated by subliminal perception for over 50 years. The question is whether stimuli that are not consciously sensed can still be perceived and are therefore capable of altering behavior. At this point, there is no research that shows that it directly changes attitudes or purchase behavior. Extensive research has shown no evidence that subliminal advertising can cause behavior changes. There is some evidence that subliminal stimuli may influence affective reactions. No doubt, there will continue to be research on this subject as many feel that there is indeed an effect from subliminal perception.

15. Learning Objective 4.2
4.2 To understand why consumers process only a small amount of the information they receive.
Subconsciously, consumers are very selective when exposed to stimuli. An individual may look at some things, ignore others, and turn away from still others. In actuality, people receive (i.e., perceive) only a small fraction of the stimuli to which they are exposed. Which stimuli get selected depends on two major factors, in addition to the nature of the stimulus itself: (1) consumers’ previous experience as it affects their expectations (what they are prepared, or “set,” to see), and (2) their motives at the time (their needs, desires, interests, and so on).

16. The Stimulus Contrast Shocking or unrealistic images
Physical stimuli that affect consumers’ perceptions of products and evoke attention include the product itself, its attributes, package design, brand name, advertisements, and commercials (including copy claims, choice and sex of model, positioning of model, size of ad, and typography), and placement
of promotional messages within the advertising space. Ads that contrast with their environments are very likely to be noticed. Contrast is one of the most attention-compelling attributes of a stimulus. Shocking and unrealistic images provoke attention. The ads are from a campaign
created by the Children’s Defense Fund, an advocacy group. It depicts the potential tragic, long-term costs of cutting government-financed initiatives for children. The images combining infant faces with adult bodies are shocking and make the ads highly noticeable.

17. Discussion Questions
What marketing stimuli do you remember from your day so far?
Why do you think you selected these stimuli to perceive and remember?
If you think about it, you might be surprised at what you have seen today. Did you go online to Google? If so, you probably had many contextual search ads appearing on your screen. Also consider outdoor advertisements you may have seen, including billboards, taxi tops, and rail advertising.

18. Perceptions are affected by…
Expectations
Motives
Selective Perception
Selective Exposure
Selective Attention
Perceptual Defense
Perceptual Blocking
Expectations: People usually see what they expect to see, and what they expect to see is usually based on familiarity, previous experience, or a preconditioned set of expectations. In a marketing context, a person tends to perceive products and product attributes according to his or her own expectations.
Motives: People tend to perceive the things they need or want: The stronger the need, the greater the tendency to ignore unrelated stimuli in the environment.
The consumer’s selection of stimuli from the environment is based on the interaction of expectations and motives with the stimulus itself. Selective exposure occurs when consumers tune out messages that they find pleasant or with which they are sympathetic, and they actively avoid painful or threatening ones. They also selectively expose themselves to advertisements that reassure them of the wisdom of their purchase decisions. Selective attention is consumers’ heightened awareness of stimuli that meet their needs or interests and minimal awareness of stimuli irrelevant to their needs. Thus, consumers are likely to note ads for products that would satisfy their needs and disregard those in which they have no interest. People also vary in terms of the kinds of information in which they are interested and the form of message and type of medium they prefer. Perceptual defense takes place when consumers subconsciously screen out stimuli that they find psychologically threatening, even though exposure has already taken place. Furthermore, individuals sometimes unconsciously distort information that is not consistent with their needs, values, and beliefs. Consumers often protect themselves from being bombarded with stimuli by simply “tuning out”—blocking such stimuli from conscious awareness. They do so out of self-protection, because of the visually overwhelming nature of the world in which we live.

19. Learning Objective 4.3
4.3 To understand how consumers organize consumption-related information.
People do not experience the numerous stimuli they select from the environment as separate and discrete sensations; rather, they tend to organize them into groups and perceive them as unified wholes. Thus, the perceived characteristics of even the simplest stimulus are viewed as a function of the
whole to which the stimulus appears to belong.

20. Perceptual Organization
Gestalt psychology
Figure and ground
Grouping
Closure
Gestalt psychology suggests the whole is greater than the sum of its parts, and it looks for patterns and configurations that affect the interpretation of information. Three principles that affect how patterns are perceived are figure and ground, grouping, and closure.
Figure and ground refers to the interrelationship between the stimulus itself (i.e., figure) and the environment or context within which it appears (i.e., ground). Contrast is an application of figure and ground. Product placement tries to obscure the difference between figure and ground.
Grouping refers to people’s instinctive tendency to group stimuli together so that they become a unified picture or impression. The perception of stimuli as groups or chunks of information, rather than as discrete bits of information, facilitates memory and recall.
Closure is people’s instinct to organize pieces of sensory input into a complete image or feeling. Individuals need closure, which means that if they perceive a stimulus as incomplete, they are compelled to figure out its complete meaning. If a message they receive is incomplete, they consciously or subconsciously fill in the missing pieces (like answering the questions in the ad shown in Figure 4.10).

21. Perceptual Organization Application
What Element of Perceptual Organization Is Featured in This Ad?
Closure

22. Learning Objective 4.4 4.4 To understand why and how consumers
“add” biases to stimuli and the implications of this tendency for marketing.
The interpretation of stimuli is uniquely individual because it is shaped by the individual’s experiences, motives, expectations, and external stimuli. When stimuli are highly ambiguous, an individual will usually interpret them in such a way that they serve to fulfill personal needs, wishes, interests, and so on.

23. Perceptual Interpretation
Stereotyping
Triggers
Physical appearance
Descriptive terms
First impressions
Halo Effect
Individuals carry biased pictures in their minds of the meanings of various stimuli, which are termed stereotypes. Sometimes, when presented with sensory stimuli, people “add” these biases to what they see or hear and thus form distorted impressions. Generally, people stereotype because it makes the processing of sensory input quicker and easier. The triggers of stereotyping are physical appearance, descriptive terms, first impressions, and the halo effect. We often make decisions based on how people or products appear. A beautiful spokesperson might be perceived as possessing expertise for beauty products. A certain color to a food might make us think it is healthier. Stereotypes are often reflected in verbal messages/descriptive terms. First impressions are lasting so a marketer should be careful how they advertise new products. The perceiver is trying to determine which stimuli are relevant, important, or predictive. The Halo effect refers to the overall evaluation of an object that is based on the evaluation of just one or a few dimensions. In marketing, the term refers to a prestigious image of a product “rubbing off on” other products marketed under the same brand name.

24. How Does This Ad Depict Perceptual Interpretation?
In this ad, the marketer uses descriptive terms; s/he has stereotyped the person who eats a cheeseburger vs. tofu and applied them in a descriptive sense to their product.

25. Learning Objective 4.5
4.5 To understand the elements of consumers’ imagery.
Consumer imagery refers to consumers’ perceptions of all the components of products, services, and brands, and to how consumers evaluate the quality of marketers’ offerings. Products and brands have images and symbolic values for consumers based on the unique benefits that these products claim they provide.

26. Brand Image Positioning Brand image updates Package image
Service image
The desired outcome of effective positioning is a distinct “position” (or image) that a brand occupies in consumers’ minds. This mental “position” must be unique and represent the core benefit the brand provides. Table 4.2 shows the positioning of different detergent brands.
Occasionally, a brand’s image must be updated. Consumers often view products that have been around for a long time as boring, especially when newer alternatives are introduced. Examples in Table 4.3 include Dell, StarKist, Quaker Oats, and Google.
In addition to the product’s name, appearance, and features, packaging also conveys the brand’s image. For example, to buyers of perfumes, the only tangible evidence of the product’s nature and quality is the packaging, the cost of which often accounts for up to 50% of the total cost of the perfume.
Because services are intangible, image becomes a key factor in differentiating a service from its competition. Thus, the marketing objective is to enable the consumer to link a specific image with a specific brand name. Many service marketers have developed strategies to provide customers with visual images and tangible reminders of their service offerings (e.g. distinctive service environments, delivery vehicles painted in distinct colors, restaurant matchbooks, packaged hotel soaps and shampoos, featuring real service employees in their ads (as tangible cues) and using people-focused themes to differentiate themselves).

27. Perceived Price
Perceived price is the customer’s view of the value that he or she receives from the purchase. How a consumer perceives a price—as high, low, or fair—strongly influences both purchase intentions and post-purchase satisfaction.
A reference price is any price that a consumer uses as a basis for comparison in judging another price. Reference prices can be external or internal. Internal reference prices are those prices (or price ranges) retrieved by the consumer from memory.

28. Learning Objective 4.6
4.6 To understand how consumers determine the quality of products and services.

29. Quality Product quality Service quality Price/quality relationship
Intrinsic cues
Extrinsic cues
Service quality
Price/quality relationship
Store image
Manufacturer image
Intrinsic cues are physical characteristics of the product itself, such as size, color, flavor, or aroma. In some cases, consumers use physical characteristics (e.g., the flavor of ice cream or cake) to judge product quality. Consumers like to believe that they base their evaluations of product
quality on intrinsic cues, because that enables them to justify their product decisions (either positive or negative) as being “rational” or “objective” choices. More often than not, however, consumers use extrinsic cues—that is, characteristics that are not inherent in the product (e.g. color, packagin, brand image, price, manufacturer’s image)—to judge quality.
Services are intangible, they are variable, they are perishable, and they are simultaneously produced and consumed. Consumers often rely on surrogate cues (i.e., extrinsic cues) to evaluate service quality. The most widely accepted framework for researching service quality stems from the premise that a consumer’s evaluation of service quality is a function of the magnitude and direction of the gap between the customer’s expectations of service and the customer’s assessment (perception) of the service actually delivered. The SERVQUAL scale measures the “gaps” between customers’ expectations of the services that they had purchased and their perceptions of the services that they had actually received on two factors: outcomes and processes.
A price/quality relationship forms when consumers rely on price as an indicator of product quality; in short, they believe more expensive products are better (you get what you pay for). Some consumers who decide according to a price/quality relationship are actually relying on a well-known (and, hence, more expensive) brand name as an indicator of quality without actually relying directly on price.
Store image stems from the merchandise it carries, the brands sold and their prices, the level of service, the store’s physical environment and ambiance, and its typical clientele (this can often be determined from the cars parked in the store’s parking lot). The width and type of product assortment affect retail store image. Customers often use brand, store image, and price together as a product quality indicators.
Manufacturers who enjoy a favorable image generally find that their new products are accepted more readily than those of manufacturers
who have a less favorable or even a “neutral” image. Consumers also associate certain attributes with manufacturers. Institutional advertising is promotion that is designed to promote a company’s overall image without overtly referring to specific products.

30. Discussion Question
Provide an example where a viral message impacted consumer perceptions of a company’s image. In your opinion, how did the viral message affect consumer perceptions of the quality of the product or service provided by the company?

31. Learning Objective 4.7
4.7 To understand consumers’ perceived risks and how they handle and reduce those risks.

32. Perceived Risk
The degree of uncertainty perceived by the consumer as to the consequences (outcome) of a specific purchase decision
Consumer purchase decisions are determined by the degree of risk that consumers perceive, and their tolerance for risk. The major types of risk are listed in this slide. The first, functional risk, deals with the risk that the product will not perform as expected. Physical risk is the risk to self and others. Financial risk is that the product will not be worth its cost and social risk is that the choice of the product might lead to social embarrassment. Psychological risk is that a poor product choice will hurt the consumer's ego and time risk is that the time has been wasted in purchasing this product.

33. How Consumers Handle Risk
How consumers handle risk will differ by their own individual strategy. That being said, there are a handful of strategies that people tend to use when dealing with risk. The first of these is to seek information so that they have more knowledge when they purchase. Consumers can also stay brand loyal, thereby avoiding risk by sticking with a known product. Consumers can select by brand image to reduce their risk because they may already know and trust the brand, perhaps from buying a different product by the same brand or company. Some consumers will rely on store image to help them reduce risk. Some customers buy the most expensive model assuming that the price/quality relationship will safely deliver them the best product. Finally, consumers seek reassurance through money-back guarantees, warranties, seals of approval and free trials.

34. Discussion Question
Think of a recent purchase that you considered risky. What type(s) of risk was (were) involved? How did you handle the risk? Explain.

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Copyright © 2015 Pearson Education, Inc.