Notes of Consumer behaviour

1. BY
PROF. PRASHANT
MISHRA
VIMR, SATNA.

2. Introduction
 Consumer behaviour is the study of how individual
customers, groups or organizations select, buy, use,
and dispose ideas, goods, and services to satisfy their
needs and wants.
 It refers to the actions of the consumers in the
marketplace and the underlying motives for those
actions.

3. Why CB
 Marketers expect that by understanding what causes
the consumers to buy particular goods and services,
they will be able to determine:
A. Which products are needed in the marketplace
B. Which are obsolete
C. How best to present the goods to the consumers

4. Definition
 According to Schiffman & Kanuk:“The behaviour that consumers
display in searching for, purchasing, using, evaluating, and
disposing of products and services that they expect will satisfy their
needs”.
 According to Engel, Blackwell, and Mansard, ‘consumer behaviour
is the actions and decision processes of people who purchase goods
and services for personal consumption’.
 According to Louden and Bitta, ‘consumer behaviour is the decision
process and physical activity, which individuals engage in when
evaluating, acquiring, using or disposing of goods and services’.

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 (especially behavioral economics)

7. Factors affecting CB
 Marketing factors such as product design, price, promotion, packaging,
positioning and distribution.
 Personal factors such as age, gender, education and income level.
 Psychological factors such as buying motives, perception of the
product and attitudes towards the product.
 Situational factors such as physical surroundings at the time of
purchase, social surroundings and time factor.
 Social factors such as social status, reference groups and family.
 Cultural factors such as religion, social class—caste and sub-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
 Customer value is present when the benefits offered by a product are more
than the costs used to acquire that product.
 Customer value can be determined by subtracting total customer costs
from total customer benefits.
 The benefits to customers can comprise of product quality, warranty,
after-sales services, maintenance and repair costs, free of cost delivery,
relationship of staff with customers, etc.
 The total cost include not just the cost of production, but also the time and
efforts used, risks involved, emotional stress etc.
 Customer value is essentially determined by some key factors like product
standards, price, brand, product alternatives, customer experiences etc.

18. Customer Satisfaction
 Customer satisfaction refers to the evaluation by customers of how
well the value was delivered by the product, i.e. did the product
deliver the value that they expected to receive from it? Hence, it
takes place after the customer has purchased the product.
 Customer satisfaction is the degree to which the customer
expectations of the product were consistent with the way the
product actually performed.
 A person feels satisfied and does think not satisfied. Hence,
customer satisfaction is highly subjective and very difficult to
measure.
 The expectation of a customer may be affected by previous
experience, suggestions from friends, the promise made by the
seller and information about competitors.

19. Types of Customers
1. Loyalists: A completely satisfied customer
who keeps purchasing.
2. Apostles: They are the delighted customers.
3. Defectors: Customers who feel neutral and
may stop purchasing.
4. Terrorists: The customer who have negative
experience and spreads negative publicity.
5. Hostages: The unhappy customers who stay
with the company due to monopoly.
6. Mercenaries: A very satisfied group of

20. Customer Retention
 The customer retention definition in marketing is the
process of engaging existing customers to continue
buying products or services from your business.
 Customer retention refers to the ability of a company
or product to retain its customers over some specified
period.
 You’ll spend five times less money on customer
retention.
 The probability of selling to an existing customer is at
least 40 percent more likely than converting someone
new.

21. Research Facts

22. Customer Retention Rate Calculation
 You have 50,000 customers at the start of a calculation period
of two months. During those two months, you acquire 1,000
customers, and at the end of the period, you have 40,000
customers.
 We’ll subtract 1,000 from 50,000 to get rid of customers
acquired during the testing period. That’s leaves us with
49,000. Now, we’ll divide 40,000 by 49,000 to get .81. If we
multiply that number by 100, we get a customer retention rate
of 81 percent.

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. Loyal Customers are More Profitable.
3. Your Brand Will Stand Out from the Crowd.
4. You'll Earn More Word of Mouth Referrals.
5. Engaged Customers Provide More Feedback.
6. Customers Will Explore Your Brand.
7. Loyal Customers are More Forgiving.
8. Customers Will 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
 The term search refers to mental as well as physical
information seeking and processing activities which one
engages in to facilitate decision making.
 Consequently search may be undertaken in order to find out
about products, prices, stores, and so on, related to the
product.
 Search may be categorized as pre-purchase or ongoing (based
on the purpose of search) and as internal or external (based
on its source).

28. Contd…
 One model of consumer decision making involves several steps.
 The first one is problem recognition—you realize that something
is not as it should be. Perhaps, for example, your car is getting
more difficult to start and is not accelerating well.
 The second step is information search—what are some
alternative ways of solving the problem? You might buy a new
car, buy a used car, take your car in for repair, ride the bus, ride
a taxi, or ride a skateboard to work.
 The third step involves evaluation of alternatives. A skateboard
is inexpensive, but may be ill-suited for long distances and for
rainy days.
 Finally, we have the purchase stage, and sometimes a post-
purchase stage (e.g., you return a product to the store because
you did not find it satisfactory).

29. Internal & External Search
 Internal search involves the consumer identifying alternatives from
his or her memory. For certain low involvement products, it is very
important that marketing programs achieve “top of mind”
awareness. For example, to get relief from headache the consumer
recalls a previously used brand Disprin. Thus, the consumer must
be able to retrieve from memory before it will be considered.
 For high involvement products, consumers are more likely to use
an external search. Before buying a car, for example, the consumer
may ask friends’ opinions, read reviews in Consumer Reports,
consult several web sites, and visit several dealerships. ., through
brochures, web sites, or news coverage.

31. Awareness Set
 Evoked Set: It comprises of those brands that the consumer will evaluate
for the solutions of a particular problem.
 Inept Set: It is made up of the brands that have been rejected from
purchase considerations because of unpleasant experience of negative
feedback.
 Inert Set: It consists of those brands about which a consumer is aware but
would not consider buying and these brands are treated with a difference.

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
 This model assumes that a consumer is a rational person and he
takes rational decisions. He compares various products, evaluates
its advantages and disadvantages and then make a purchase
decision on the basis of information collected. He is aware of all the
product alternatives and is capable of ranking them.
 Economic view believes in a world of perfect competition but in
true sense this model is inappropriate as there can never be a
situation of perfect competition.
 Besides it is also not possible for the consumer to make rational
decisions all the time because for making rational decisions a
consumer will have to be aware of all the products in the market, all
possible alternatives and their features.

37. Example
 The economic view of a buyer depends on their personality of
seeking for the potential and value of the product. Buyers satisfy
their actualization needs by comparing price and quality of the
product with the available alternatives.
 Various marketers have been using the low pricing and the
economic view to attract their target market and thus increase their
sales.
 1 Dollar Store would be an ideal example of a company that tries to
make best of the economic view model.
 The company sells its merchandize at prices, which are lowest in the
market.
 The quality of the products though, is not as good as other in the
same market.

38. Cognitive View
 According to Cognitive view, decision-making is an emotional
or reasoning process, which can be rational or irrational and
can be based on explicit assumptions or tacit assumptions.
 The most important characteristic of this view is that, a
consumer is in pursuit of information until a satisfactory
solution is found.
 Once the satisfactory solution is found, the process of
collecting information is terminated.

39. Example
 For example, if a person is looking to buy a car he will first
decide what features does he want in his vehicle. Whether his
first preference is safety or performance. Based on this
evaluation he will evaluate various car models available in the
market.
 Another example of this can be seen as the “Free” or “Sale”
adverts. These adverts convey that something is free or there
is a sale on. This “Free” or “Sale” sticker on the window
display of store is enough to attract the consumers inside the
store.

40. Passive View
 This model assumes that the consumers take decisions
according to the promotional efforts of the marketers and
respond directly to the sales and advertisement appeals
offered by the marketers.
 It is opposite to the economic model as it assumes people will
evaluate a product depending upon how it is promoted and
positioned in the market.

41. Example
 This is mainly evident in case of tourism industry. Local
sellers and marketers in many places often manipulate
tourists. Since the tourists have very little market and product
knowledge, sales people can manipulate them.

42. Emotional View
 Emotional view believes in targeting emotions and impulse of
the consumers.
 This view believes that there are certain feelings or emotions
like joy, love fear fantasy etc attached to every purchase of the
consumers
 A consumer is less likely to do pre-purchase evaluation and
search before emotional purchase.

43. Example
 Over the years football clubs have sold their merchandize on
the basis of the emotional view.
 The various holiday packages use emotions to attract the
customers.
 Many real-estate seller promote their homes and other
properties with a tag line “Your Home” etc just to attract the
emotional aspect to their product.
 The Body Shop has been using the emotional model attract its
consumers.

45. Introduction
 The consumer uses certain decision rules. The decision
rules help a consumer simplify the decision process.
 The various evaluative criteria are structured and
integrated so as to simplify the evaluation process.
 There can be two kinds of Decision Rules, viz.,
Compensatory rules and Non-compensatory rules.
 The consumer decision rules are often referred as
heuristics, decision strategies and information
processing strategies.

46. Compensatory Decision Rule
 Compensatory rules: Under compensatory rules, the various
evaluative criteria are listed as attributes.
 These attributes are scored and rated for the various alternative
brands.
 A lower rating on an attribute may be offset by a higher rating on
another; i.e. a higher rating on one attribute would compensate for
a lower rating on another.
 Based on the final scores, the brands are ranked, the one with the
highest score, being regarded as the best.
 The consumer would then select the brand that scores the highest
among the various alternatives that have been evaluated.

47. Mazda = 4(5)+3(3)+2(5)+5(3)+1(1) = 55
Honda =
Toyota =
Nissan =
Hyundai =
According to the compensatory rule, Toyota is the best choice.
Compensatory rules allow for the positive evaluation of one brand
attribute to balance out the negative attributes.

48. Non – Compensatory Decision Rules
 Non-Compensatory rules: Here, a negative evaluation of any one
attribute eliminates the brand from consideration.
 A lower rating on an attribute cannot be offset by a higher rating on
another; i.e. a higher rating on one attribute would not compensate
for a lower rating on another.
 The consumer would then select the brand that scores the highest
among the various alternatives that have been evaluated.
 Non-compensatory rules could assume three forms:
 Conjunctive
 Disjunctive
 Lexicographic.
 Elimination By Aspect.

49. Disjunctive Rule
 In disjunctive rule, a minimally required
performance level is assigned for each important
attribute. All brands that meet or exceed at least one
criteria are acceptable.

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

51. Conjunctive Rule
 The conjunctive rule is the mirror image of the
disjunctive rule. In a conjunctive rule, a brand must
have all of its features above the minimum
acceptability levels to be acceptable

52. Mazda, Toyota, Nissan, and Hyundai are all eliminated because they do
not meet the minimum standards. Therefore, according to the conjunctive
rule, only Honda is acceptable.

53. Elimination-By-Aspects
 Elimination by aspects is a model of a decision making
technique developed by Amos Tversky in the 1970s.
 When faced with multiple options this method first
identifies a single attribute or feature that is most
important to the decision maker.
 When an option doesn't meet the criteria or 'cut off' for
an attribute then it is eliminated from being a
possibility.
 Different attributes and features are applied until a
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
 The lexicographic decision rule, consumers first
rank the attributes in terms of perceived importance.
Then, the consumer selects the brand that performs
best on the first attribute. If two or more brands tie,
they are evaluated on the next most important
attribute until one brand outperforms all the others

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
 Cognitive Dissonance: This is a feeling of tension and anxiety that a
consumer experiences after the purchase of a product. The
consumer begins to have a feeling of uncertainty with respect the
performance of the product and begins to doubt his purchase
decision “whether the decision was the right one?”.
 He begins to ask himself the following questions:
 a) Have I made the right choice?
 b) Have I purchased the right brand?
 c) Have I got value for money?
The Fox and the Sour Grapes is a perfect example of Cognitive
Dissonance.

59. Reducing Consumer Dissonance
Consumers try to reduce this dissonance by:
 Gaining more product information
 Discussing with other satisfied customers who have bought
the same product/brand
 Going back to the dealer and asking for reassurances.

62. Introduction
 Needs are the core of the marketing concept. The study of
Motivation refers to all the processes that drives in a person to
perceive a need and pursue a definite course of action to fulfill
that need.
 Consumer motivation is an internal state that drives people to
identify and buy products or services that fulfill conscious and
unconscious needs or desires.
 The fulfilment of those needs can then motivate them to make
a repeat purchase or to find different goods and services to
better fulfill those needs.
 Motivation is the driving force within individuals that impels
them toaction.

63.  What are Needs − Every individual has needs that are required to
be fulfilled. Primary needs are food, clothing, shelter and secondary
needs are society, culture etc.
 What are Wants − Needs are the necessities, but wants are
something more in addition to the needs. For example, food is a
need and type of food is our want.
 What are Goals − Goals are the objectives that have to be
fulfilled. Goals are generic and product specific in nature. Generic
goals are general in nature, whereas product specific goals are the
desires of a specific nature.
 Needs and their fulfilment are the basis of motivation. Change takes
place due to both internal as well as external factors. Sometimes
needs are satisfied and sometimes they are not due to individual’s
personal, social, cultural or financial needs.

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
Goals are the sought-after results of motivated
behavior.
1. Generic goals are general categories of goals that
consumers see as a way to fulfill their needs
2. Product-specific goals are specifically branded
products or services that consumers select as their
goals

66. Goal Selection
1. Personal experiences
2. Physical capacity
3. Prevailing cultural norms & values
4. Goals accessibility in the physical and social environment
5. Individuals characteristics

67. Motives
RATIONAL MOTIVE:
 Rationality implies that consumers select goals based on totally
objective criteria, such as size, weight, price, etc.
EMOTIONAL MOTIVE:
 Emotional motives imply the selection of goals according to personal
or subjective criteria

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 Motivational Process

71. Introduction
 Motivation is a highly dynamic construct that is
constantly changing in reaction to life experiences.
 Needs and goals change and grow in response to an
individual’s physical condition, environments,
interactions with others and experiences.
 As individuals attain their goals they develop new ones.
If they don’t attain they strive for old goals or build
substitute goals.

72. Contd…
NEEDS ARE NEVER FULLY SATISFIED:
 Most human needs are never fully or permanently satisfied.
Eg: Drinking water again and again, you fell thirsty you drink water again
and again.
NEW NEEDS EMERGE AS OLD NEEDS ARE SATISFIED:
 Some motivational theorists believe that a hierarchy of needs exists and
that new higher-order needs emerge as lower-order needs are full-filled.
Eg: Maslow hierarchy of needs that is a man who has satisfied his
physiological needs may turn to social and esteem needs.
SUCCESS & FAILURE INFLUENCE GOALS:
 Individuals who successfully achieve their goals usually set new and higher
goals that are they raise their level of aspiration.
 Eg: If your target grade is B, if you achieve it than at next you target
higher grades.

73. 73

74. INTRODUCTION
 In 1967, Gablinger beer was introduced as a low
calorie beer. It was promoted as a diet beer with the
projected USP that heavy beer drinkers would gain less
weight drinking the product.
“THE PRODUCT FAILED…”
‘‘FIVE YEARS LATER…’’
74

75. CONTD…
Miller Lite was introduced as less filling beer, under the
slogan…
“EVERYTHING YOU WANT IN A BEER … AND LESS”
“This product was a great success”.
1. The reason for the success of Miller Lite was the
company’s promotion which suggested that the – beer
drinkers could drink more beer than they already did
without feeling full.
2. Gablingers beer failed because it told the beer drinkers
that – they would gain less weight (the heavy beer
drinkers are not concerned about the weight)
75

76. ANALYSIS OF THE CASES
Although both the products were pretty identical in
physical attributes, its how the offerings were perceived by
the target group – how they were positioned – that made
the difference.
Gablingers offered them a product…
Miller offered them a benefit…
Individuals act and react on the basis of perception not on
the basis of objective reality.
For each individual, reality is a totally personal
phenomenon based on the persons needs, wants values
and personal experience.
Hence, consumers perception is more important for the
marketers than the knowledge of objective reality.
76

77. 77

78. DESCRIPTION…
 It is because individuals make decisions and take
actions based on what they perceive to be reality.
 As stated in the example , before the introduction
of low – calorie beer, consumer has no pre
conceived view of the product.
 Since, Miller understood the behaviour of the beer
drinkers, it provided the company with a view to
interpret the new offerings in a manner compatible
with their needs, which Gablingers failed to do.
78

79. 79

80. CONCEPTUAL FRAMEWORK
 Perception is the process of selecting, organizing and interpreting
sensations as a meaningful whole. In the past, the methods of studying
stimuli and measuring its responses were restricted to five senses –
See, Hear, Touch, Smell & Taste.
 Although, the senses play a major role in our process of perception its
inadequate to depend only on the basis of five senses.
 The perception is highly subjective and therefore can be easily
distorted.
 Acc. To Schiffmam & Kanuk – “Perception is the process by
which an individual selects, organizes and interprets stimuli
into a meaningful and co-herent picture of the world.”
 It can be described as how we see the world around us. Two individuals
may be exposed to the same stimuli under the identical conditions but
how each individual recognizes, select, organize and interprets these
stimuli is a highly individual process based on each persons needs,
values and expectations.
80

81. ELEMENTS OF PERCEPTION
 Individuals act and react on the basis of their perceptions, not on the
basis of objective reality.
 Reality is a totally personal phenomenon, based on that persons need,
wants, values, and personal experiences. But for the marketer’s,
consumer perception is more important than the knowledge of reality.
 The integral elements of perception can be summed as follows:
1. Exposure
2. Sensation
3. Absolute threshold
4. Differential Threshold
5. Subliminal Perception
6. Attention
7. Perceptual Selection
81

82. DESCRIPTION OF ELEMENTS.
EXPOSURE:
It occurs when individual comes into contact with
environmental stimuli either accidently or
deliberately by their goal directed behaviour. Not
all stimuli to which they get exposed are noticed.
82

83. 2.SENSATION
1. Sensation is the immediate and direct response of the sensory organs
to stimuli.
2. A stimulus may be any unit of input to any of these senses. Examples
of stimuli include products, packages, brand names, advertisements
and commercials.
3. Sensory receptors are the human organs that receive sensory inputs.
4. Their sensory functions are to see, hear, smell, taste and feel.
5. All of these functions are called into play, either singly or in
combinations, in the evaluation and use of most consumer products.
 Human Sensitivity refers to the experience of sensation. Sensitivity
to stimuli varies with the quality of an individual’s sensory receptors
and the amount of the stimuli to which he or she is exposed i.e. the
intensity of the stimuli.
83

84. 3. ABSOLUTE THRESHOLD
 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.
 For instance, one individual can sense the sound pitch at 20
decibel and the other one may sense the sound pitch at 30
decibel.
 Absolute threshold for sound in case of these two individuals
would be different.
 These senses are likely to become increasingly dull under
conditions of constant stimulation and the absolute threshold
increases.
 For example; the value of absolute threshold would generally be
high who is residing near to a busy railway station.
84

85. CONTD…
 Sensory adaptation is a problem for many TV advertisers because of advertising
clutters. It is because of this reason the advertisers are inclined to change their
AD campaign frequently fearing that target audiences will get so adapted to the
current ads and will no longer trigger the sensory stimulation.
 In an effort to cut through the advertising clutter and ensures that consumers
note their ads, some marketers try to increase sensory inputs.
Example:
1. Apple computers once bought all the space in the news week magazine to
ensure that the readers only see their ads.
2. From time to time, various advertisers have taken all of the bus cards on most
busy bus routes to advertise their products.
 In an effort to cut through the advertising clutter and ensures that consumers
note their ads, some marketers try to decrease sensory inputs.
1. Some print ads include a lot of empty spaces in order to accentuate the brand
name or product illustrations.
2. Some TV ads use silence, the absence of audio sound to generate attention.
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
 The minimal difference that can be detected between two similar stimuli is
called the differential threshold or the just noticeable difference
(JND).
 A nineteenth century German scientist named Ernst Weber discovered that the
JND between two stimuli was not an absolute amount, but an amount relative
to the intensity of the first stimulus.
 Weber’s Law as it is been stated – the stronger the initial stimulus, the greater
the additional intensity needed for the second stimulus to be perceived as
different.
 For Example – if the price of 1 litre of branded orange juice is Rs. 80/- most
consumers will probably not notice an increase of Rs. 5/- (i.e. the increment
would fall below the JND) and it may take an increase of Rs. 10/- , Rs. 15/- or
may be Rs. 20/- for the consumer to notice the increase in price (i.e. increment
hikes above the JND).
 According to Webers law, an additional level of stimulus equivalent to the JND
must be added for the majority of people to perceive a difference between the
resulting stimulus and the initial stimulus.
87

88. CONTD…
 The ability of consumer to detect the various in sensory elements is determined
by their threshold level. Some consumers are more sensitive to these stimuli
than others.
 This will be quite clear from the fact tea and coffee companies employ persons
called tea or coffee ‘tasters’. Just Noticeable difference is based on the
differential threshold of a consumer.
 A consumer will not be able to detect any change in stimulus below his
threshold.
 If price of a Mercedes Benz S class is reduced by 25000/-, it will not have any
impact on sales because the basic price is in several Lakhs that a difference of
Rs25000/- may not be noticeable for consumers. On the other hand a price
reduction of even Rs5000/- for a Maruti 800 is seen to push sales substantially
because of its low original price.
 Another example, if the price of a car is increased by Rs.1000/-/- it would
probably not be noticed i.e., the increment would fall below the J.N.D. it may
take an increase of Rs.5000/-/- or more before a differential in price would be
noticed.
88

89. WEBERS LAW
 Weber's Law, more simply stated,
says that the size of the just
noticeable difference (i.e., delta I) is
a constant proportion of the original
stimulus value. For example:
Suppose that you presented two
spots of light each with an intensity
of 100 units to an observer. Then
you asked the observer to increase
the intensity of one of the spots until
it was just noticeably brighter than
the other. If the brightness needed to
yield the just noticeable difference
was 110 then the observer's
difference threshold would be 10
units (i.e., delta I =110 - 100 = 10).
89

90. EXAMPLE
90

91. 5. SUBLIMINAL PERCEPTION
 Absolute Threshold is stimulus below which consumers cannot detect the
stimulus at all.
 It is also referred to as subliminal perception .i.e. perception of stimulus below
the conscious level. One of the major controversies regarding consumer
perceptions is whether consumers can actually perceive marketing stimuli
below their absolute level.
 The level at which consumer’s no longer notice a frequently repeated stimulus.
An individual walking into an air-conditioned room, kitchen full of fragrance, or
a noisy party will notice the stimuli after a period of time.
 People are motivated below their level of conscious awareness. People are also
stimulated below their level of conscious awareness; that is, they can perceive
stimuli without being consciously aware that they are doing so.
 Stimuli that are too weak or too brief to be consciously seen or heard may
nevertheless be strong enough to be perceived by one or more receptor cells.
 This process is called subliminal perception because the stimulus is beneath the
threshold, or “limen” of conscious awareness, though obviously not beneath the
absolute threshold of the receptors involved.
91

92. EXAMPLE
 This is subliminal messaging at
it’s core — subtle, but still
clever.
 Pepsi released the image on the
left and Coca-Cola responded
with the image on the right.
Pepsi’s original ad is subliminal
in that it makes the viewer think
and chuckle a bit: it’s funny to
suggest that getting a Coke
when you wanted a Pepsi is
scary.
 Coca-Cola’s response is perfect,
as well, and becomes a great
learning tool: sometimes, the
tagline really does make the
image.
92

93. CONTD…
 An oldie, but a goodie,
many don’t see the
subliminal message in
Amazon’s logo.
 The current logo has been
in use since around
2000, and it doesn’t seem
to be going anywhere. And
why should it?
 The cute A to Z
arrow and grinning face
work so well.
93

94. CONTD…
 Another oldie-but-
goodie subliminal
message can be found in
the FedEx logo.
 Whitespace in the logo
clearly shows an arrow
— an indication of the
company’s speed and
ability to get your
delivery from Point A to
Point B
94

95. EXAMPLES
95

96. 6. ATTENTION
 It occurs when one or more stimuli activates one or more sensory
receptor nerves and the resulting sensation reach the brain for
further processing.
 Human beings are constantly exposed to numerous stimuli every
minute of the day.
 This heavy intensity of stimulation to which we are exposed
should serve to confuse us totally but, It does not.
 The reason being that the perception is not a function of sensory
input alone. Perception is the result of interaction of physical
stimuli from external environment and an individuals
expectations, motives and learning’s based on earlier
experiences.
 Interaction of these two very different types of stimuli creates, for
an individual, a very private and personal picture of the world.
96

97. 7. Perceptual selection
 Human beings , are quiet selective in their perception. We really
perceive a very small fraction of stimuli to which we are exposed.
 In a marketplace, a consumer is exposed to numerous marketing
related stimuli even then on a regular basis, consumer visits the market
and make desired purchases without any disorientation or loosing
sanity.
 The reason is that we all subconsciously exercise selectivity in
perception.
 The selection or selectivity in perception of the stimuli depends on
consumers previous learning’s and experiences and his motives, needs,
wants and desires
 One or more factors related to experience and motives affect the
consumers “selective exposure” and “selective attention” at a given
time and can increase or decrease the probability that a certain stimuli
will be perceived.
97

98. SENSORY RECEPTORS AND STIMULI PERCEPTION
 Environmental stimuli or sensory inputs are received through are five
senses.
 Visualize for a moment… a young woman shopping in a fruit market…
1. She sees the splendid varieties of colourful fruits…
2. She smells the aroma of sweet mangoes and strawberries…
3. She tastes a sample of ripe pineapple…
4. She hear the calls from the vendors promoting their fruits…
5. She feels the weight and consistency of the fruits (say water melon)
before the purchase…
 The input picked up by her senses as she walks in the fruit market is the
raw data – ingredients in the initial step of information processing.
98

99. CONTD…
 Just as the bright colour of the fresh fruit, their
sweet scent, their arrangement at various stands
arouse the shoppers desire to buy so does the
sensory qualities of nearly all products.
 These sensory qualities play an important role in
enabling manufactures to differentiate their
products from that those of their competitor's.
 For example – A few years ago Kimberly – Clark
achieved an amazing hike in their sales figure by
introducing coloured and scented paper napkins.
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
 Human beings are constantly bombarded with stimuli during every
minute and every hour of every day. The sensory world is made up of an
almost infinite number of discrete sensations that are constantly and
subtly changing.
 According to the principles of sensation, intensive stimulation “bounces
off” most individuals, who sub consciously block a heavy bombardment
of stimuli.
 One type of input is physical stimuli from the outside environment; the
other type of input is provided by individuals themselves in the form of
certain predispositions based on previous experience.
 The combination of these two very different kinds of inputs produces
for each of us a very private, very personal picture of the world. Because
each person is a unique individual, with unique experiences, needs,
wants and desires, and expectations, it follows that each individual’s
perceptions are also unique.
102

103. CONTD…
Perceptual Selection
 Consumers subconsciously exercise a great deal of selectivity as to which aspects of
the environment they perceive. An individual may look at some things, ignore
others, and turn away from still others. In actually, people receive only a small
fraction of the stimuli to which they were 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.
 (2) Their motives at the time.
Ease of these factors can serve to increase or decrease the probability
that a stimulus will be perceived.
Nature of the stimulus
 Marketing stimuli include an enormous number of variables that affect the
consumers perception, such as nature of the product, its physical attributes, the
package design, the brand name, the advertisements and commercials. In general,
Contrast is one of the most attention compelling attribute of a stimulus.
103

104. PERCEPTUAL ORGANIZATION
 All the selected stimuli from environment are not
experienced as separate sensations. Individuals tends
to organize these sensations into groups and perceive
them as a unified whole.
 The specific principle underlying perceptual
organization are referred as Gestalt Psychology.
 Gestalt in German means – Pattern or
Configuration.
 The three most basic principles of perceptual
organization are:
1. Figure & Ground
2. Grouping
3. Closure
104

105. 1. FIGURE & GROUND
 The stimuli that contrast with the environment is more likely to be
noticed. E.g. A loud sound or a pale colour.
 The simplest visual illustration consists of a figure on a ground;
(Background).
 The figure is perceived more clearly in contrast to its ground because it
appears to be well defined, solid and in the forefront.
 The common line that separates the figure and the ground is generally
attributed to the figure rather than the ground.
 For Ex. – in case of music stimuli – People can either bathe in music or
listen to the music.
 In 1st case music is simply background to other activities; marriage,
disco’s, party’s etc.
 In 2nd case music is the figure; enjoying music sitting alone in a calm
environment or listening Gazal’s in a live concert.
 Figure is more clearly perceived because it appears to be dominant; in
contrast, ground appears to be secondary and therefore less important.
105

106. MARKETING IMPLICATIONS
 Advertisers have to plan their advertisement carefully to make sure
that the stimulus they want noted is perceived as figure and not as
ground.
 The music background must not overwhelm the jingles; the
background of the advertisement must not detract from the product
 Marketers sometimes run advertisement that confuse the consumer
because there is no clear indication about which is the figure and which
is the ground.
 In some cases blurring of figure and ground is deliberate; The well
known Absolut Vodka campaign runs print ads with which the figure
(shape of the Absolut Vodka bottle) is poorly delineated against the
ground; challenging the readers to search for the bottle and thus
resulting in increased readers participation.
106

107. GROUPING
 Individuals have inherent tendency to grouping a variety of
information close to each other in time or space and form a unified
picture.
 The tendency to group stimuli may result as a consequence of close
proximity and similarity.
 When an object is associated with another because of its closeness to
that object it is due to proximity.
 Marketers use this tendency in individuals with advantage to imply
certain desired meaning related to their products or services.
 For ex ; Soft drinks are usually shown being enjoyed in an active, fun
loving, partying and interprets the feeling of togetherness.
 An ad for coffee may show a young man or woman sipping the coffee in
a beautifully furnished and decorated living room. The overall
impression and mood implied by grouping of stimuli helps the
consumer to associate the drinking of beverage with elegant and
comfortable lifestyle.
107

108. CLOSURE
 Individuals have a need for closure and they fulfill it by
organizing their perceptions in a manner that leads to forming a
complete picture.
 In this event 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 process may be the result of conscious or subconscious
effort. Because of this need for closure, individual experience
tension when any task is incomplete and a feeling of satisfaction
with its completion.
 Acc. To James T. Heimback and Jacob Jacoby – People
remember incomplete tasks better than the complete task,
because a person who begins a task develops the need to
complete it.
 For ex: After hearing the beginning of a song or jingle or a joke or
story he develops a need to complete it.
108

109. CONTD…
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. In a
marketing context, people tend to perceive products
and product attributes according to their 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. In
general, there is heightened awareness of stimuli that
are relevant to ones needs and interests and a
109

110. CONTD…
Selective perception
The consumers “selection” of stimuli from the environment
is based on the interactions of expectations and motives
with the stimulus itself. These factors give rise to four
important concepts concerning perception.
Selective Exposure
Consumers actively seek 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
Consumers exercise a great deal of selectivity in terms of
the attention they give to commercial stimuli. They have a
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
110

111. CONTD…
Perceptual Defense
Consumers subconsciously screen out stimuli that they find
psychologically threatening, even though exposure has
already taken place.
Thus, threatening or otherwise damaging stimuli are less
likely to be consciously perceived than are neutral stimuli at
the same level of exposure.
Perceptual Blocking
Consumers protect themselves from being bombarded with
stimuli by simply “tuning out” – blocking such stimuli from
conscious awareness.
They do so out of self – protecting because of the visually
overwhelming nature of the world in which we live.
The popularity of such devices as Replay TV, which enable
viewers to skip over TV commercials with great ease, is in
111

112. PERCEPTUAL INTERPRETATION OF STIMULI
 It refers to assigning a meaning to the sensations.
 Individuals, in their own unique manner interpret the stimuli. As an
old saying goes – “A person see what he wants to see”.
 Interpretation of stimuli by the individuals is based on their earlier
experience, their explanations, their motives, beliefs and interests at
the time of perception.
 For a number of reason a stimuli can often be weak or strong and may
prove to be quiet ambiguous to individuals. For example; brief
exposure, poor visibility, changing level of illuminations, low pitch,
high noise level etc. can create difficulties in interpreting the stimuli.
 Earlier learning and experience becomes instrumental in forming
certain expectations and different explanations that the individuals use
in interpreting the stimuli.
 A number of factors influence individuals that may distort their
perceptions:
112

113. Contd…
1. PHYSICAL APPEARANCE: People may or may not consciously recognize
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 a study conducted by Kathleen Debevec & Jerome B Kernan,
indicates that attractive looking men are perceived as more successful
businessmen than the average looking men. Attractive models in ads and
commercials prove more persuasive and have more positive impact on
consumer attitude than the average looking models.
2. STEREOTYPING STIMULI: People tend to form pictures in their minds of
the meaning of different types of stimuli. This stereotyping the stimuli helps
them develop expectations about how specific events, people or situations turn
out to be. For example the picture of a policeman or a politician behaviour in
our mind.
3. IRRELEVANT STIMULI: In certain situations, consumer are faced with
different perceptual judgments. In such circumstances they often respond to
somewhat irrelevant stimuli. For ex; a consumer may consider the colour of
washing machine in its final purchase.
113

114. CONTD…
4. FIRST IMPRESSIONS: First impressions are often long
lasting even when the perceiver is not exposed to sufficient
relevant information. For ex; the word imported is enough for a
large number of consumers for products like watches, shoes,
cameras, video games etc.
5. JUMPING TO CONCLUSIONS: Some people have a strong
tendency to draw conclusions based on insufficient
information’s ; “Judging the book by its cover”. They seem to be
impatient about examining all the relevant evidence, which may
be necessary to draw a balanced conclusion.
6. HALO EFFECT: This refers to the tendency to evaluate one
attribute of the stimuli to distort reactions to its other
properties. This is frequently seen in case of brand extension
where the marketers take advantage of brand reputation. Ex;
Dettol or Lux Soap.
114

115. IMPORTANCE OF IMAGES TO CONSUMERS
 An image is a total perception of something that individual’s
form by processing all the information they are exposed to over
the time and again.
 Researches indicates that, consumers develop permanent
perceptions about brands, prices, stores and companies. These
inferences are consumers beliefs about products and services.
 Acc. To Russel W Belk : The consumers attempt to enhance
their self images by purchasing products that they agree with
their self image and avoid buying products that do not fir their
self image.
115

116. PRICE PERCEPTION
 A consumer perceives the price of a product or service as high, low or
fair has significant influence on buying intention and post purchase
satisfaction.
 For Ex: After seeing the explosive growth of cheap ball point pens in the
global market, Parker pens positioned its new launched product line
based on price during 1980’s and offered low price pens.
“THE RESULTS WERE DISASTROUS…”
o The reason being the Parkers Image was inconsistent with its offered
price.
o The company in 1989 reverted back to its strengths of high priced pens
and become profitable again.
1. Consumers have certain expectations of what the price is or what the
price should be of the product.
2. Their expectations may or may not reflect the actual price of the
product or services.
3. Consumers often associate the price of a product with quality.
116

117. CONTD…
 REFERENCE PRICE: It is any price that a consumer uses as a basis
for comparing another price. For ex: a consumer may expect to pay Rs.
20,000/- for a Sony 2000 watt music system. This is consumers
reference price that he / she expects to pay and use as basis to compare
to price with alternative brands.
 The consumers are willing to accept a range of prices called acceptable
price range for a product or service.
 TENSILE PRICE CLAIMS: It communicates a range of price savings
such as – “Save Up to 50%”.
 OBJECTIVE PRICE CLAIMS: It offers a single discount level such
as – “Save 20%”.
117

118. CONSUMERS REACTIONS TO PRICE VARIABLES
 Acc. To Kent B Monroe and Susan B Petroshius:
1. Consumer uses price as an indicators of product
quality.
2. Consumer appear to develop reference prices as a
standards for evaluating prices they see in the
market place.
3. Consumers reference pricing are not constant and
get modified with shopping experiences.
4. Consumers tend to develop a range of acceptable
prices around the reference price.
5. Factors such as brand image can soften the strength
of perceived price – quality relationship.
118

119. CONSUMERS RISK PERCEPTIONS
Consumers may face several types of risks in making
purchase decision. The major ones are:
 Functional Risk: Is the risk that product will not
perform as expected.
 Physical Risk: Is the risk to self and others that the
product may explode or blast.
 Financial Risk: Is the risk that the product will not
be worth its cost.
 Social Risk: Is the risk that a product choice will
bruise the consumer’s ego.
 Time Risk: Is the risk that the time spent on in the
product such may be wasted if the product does not
perform as expected.
119

120. OVERCOMING THE RISK
PERCEPTION
Consumers develop a self defensive weapon in order to satisfy the
unsatisfied needs.
 Consumers seeks information:
 Consumers seek information through his friend family and other
people. They spend more time thinking and getting information about
the product when they associate a high degree of risk with the
purchase.
 Consumers are brand loyal:
 Consumers remain brand loyal in order to avoid the risk based on
their past positive experience of post purchase evaluation.
 Consumers select by brand image:
 When consumers have no experience with the product they trust the
brand name. The consumers often think about the well known brand,
worth buying and go for the product.
120

121. CONTD…
 Consumers reply on store image:
 If the consumers do not have any information about the product they
trust the merchandise buyers of reputable stores and depend on them.
 Consumers buy the most expensive model:
 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