Consumer Behaviour and Sales: Perception

Elements of Perception

•       Sensation

•       Absolute threshold

•       Differential threshold

•       Subliminal perception

Sensation

•       The immediate and direct response of the sensory organs to stimuli

•       A stimulus is any unit of input to any of the senses.

•       The absolute threshold is the lowest level at which an individual can experience a sensation.

Differential Threshold

•       Minimal difference that can be detected between two similar stimuli

•       Also known as the just noticeable difference (the j.n.d.)

Weber’s Law

•       The j.n.d. between two stimuli is not an absolute amount but an amount relative to the intensity of the first stimulus

•       Weber’s law states that the stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different.

•       For example, if you are buying a new computer that costs $1,000 and you want to add more memory that increases the and the price $200 (a 20% increase), you might consider this too much additional money to spend. However, if you were buying a $300,000 house a $200 feature may seem like nothing. It might take an additional $10,000 to make you stop and think if it's too much to spend. In this example, the amount stays the same ($200), but the proportion changes and that's what makes the perceptual difference.

https://www.youtube.com/watch?v=wVhiezByMSU

Sales Applications of the J.N.D

•       Marketers need to determine the relevant j.n.d. for their products

–      so that negative changes are not readily discernible to the public

•       Reduction in chocolate size?

–      so that product improvements are very apparent to consumers

•       NEW FORMULA!

Discussion Question

•       Is j.n.d. ethical? Think about its use for…

–      Product decisions

–      Packaging decisions

–      Advertising decisions

–      Sales promotion decisions.

Subliminal Perception

•       Stimuli that are too weak or too brief to be consciously received by sight, sound or other sensory processes.

•       Subliminal perception was thought to be useful in the form of subliminal advertising (Packard, 1957)

•       Early reports suggested that subliminal advertising during movie showings had led to 17% and 58% increase in sales of coca-cola and popcorn respectively.

•       Is subliminal advertising ethical?

Is Subliminal Persuasion Effective?

•       Extensive research has shown no evidence that subliminal advertising can cause behavior changes (Bathol & Goldstein, 1959; Moore, 1982; Pratkanis, 1991).

•       Unable to replicate movie study

•       Some evidence that subliminal stimuli may influence affective reactions, but the effects are weak (Moore, 1982)

•       Subliminal advertising is illegal in many countries (Harrell, 1986)

Aspects of Perception: Selection, Organisation, Interpretation

Perceptual Selection

•       Consumers subconsciously are selective as to what they perceive.

•       Stimuli selected depends on two major factors

–      Consumers’ previous experience

–      Consumers’ motives

•       Selection depends on the

–      Nature of the stimulus

–      Expectations

–      Motives

•       Perceptual Selection Concepts - Selective Exposure

–      Selective Attention

–      Perceptual Defense

–      Perceptual Blocking

•       Selective Exposure: Consumers seek out messages which:

•       Are pleasant

•       They can sympathise with

•       Reassure them of good purchases

•       Fit with their world view

•       Match their personalities

–      Selective Attention: Heightened awareness when stimuli meet their needs

•       Consumers prefer different messages and medium

–      Perceptual Defense: Screening out of stimuli which are threatening or opposed to your view of the world

Hastorf & Cantril, 1954

•       Princeton vs. Dartmouth – Controversial and rough american football match

•       Independent reports suggested that both sides were overly rough but that Dartmouth had been slightly more so than Princeton

•       Students from both universities were asked to estimate how many fouls each team committed

•       Dartmouth students: 4.4 vs. 4.3

•       Princeton students: 4.2 vs. 9.8

•       Clearly  there was some selective attention going on here…

•       Perceptual Blocking: Consumers avoid being bombarded by:

•       Tuning out

•       TiVo

Aspects of Perception: Organization

•       Principles: Figure and ground

•       Grouping

•       Closure

•       Figure and ground: People tend to organize perceptions into figure-and-ground relationships.

•       The ground is usually hazy.

•       Marketers usually design so the figure is the noticed stimuli.

•       Grouping: People group stimuli to form a unified impression or concept.

•       AKA Schemas

•       Grouping helps memory and recall.

•       Closure: People have a need for closure and organize perceptions to form a complete picture.

•       Will often fill in missing pieces

•       Incomplete messages remembered more than complete

Aspects of Perception: Interpretation

•       Perceptual Distortion: Physical Appearances

•       Stereotypes

•       First Impressions

•       Jumping to Conclusions

•       Halo Effect

•       Physical Appearances:

•       Positive attributes of people they know to those who resemble them

•       Important for model selection

•       Attractive models are more persuasive for some products

•       Stereotypes

•       People hold meanings related to stimuli

•       Stereotypes influence how stimuli are perceived

•       First Impressions

•       First impressions are lasting

•       The perceiver is trying to determine which stimuli are relevant, important, or predictive

•       Jumping to Conclusions

•       People tend not to listen to all the information before making conclusion

•       Important to put persuasive arguments first in advertising

•       Halo Effect

•       Consumers perceive and evaluate multiple objects based on just one dimension

•       Used in licensing of names

•       Important with spokesperson choice

Issues in Consumer Imagery

•       Product Positioning and Repositioning

•       Positioning of Services

•       Perceived Price

•       Perceived Quality

•       Retail Store Image

•       Manufacturer Image

•       Perceived Risk

Positioning

•       Establishing a specific image for a brand in the consumer’s mind

•       Product is positioned in relation to competing brands

•       Conveys the concept, or meaning, of the product in terms of how it fulfills a consumer need

•       Result of successful positioning is a distinctive, positive brand image

Positioning Techniques

•       Umbrella Positioning

•       Positioning against Competition

•       Positioning Based on a Specific Benefit

•       Finding an “Unowned” Position

•       Filling Several Positions

•       Repositioning

Issues in Perceived Price

•       Reference prices – used as a basis for comparison in judging another price

–      Internal

–      External

•       Acquisition and transaction utility

•       One study offers three types of pricing strategies based on perception of value.

Acquisition and transaction utility

•       You are on a deserted beach on a hot day. You’ve been there a while and you are thirsty. A friend of yours has spotted a single place selling beer a few hundred yards in the distance. He explains that he’s just off to fetch a bottle of beer for himself, and wonders if you would like one too. “Let me know how much you are willing to pay for a chilled bottle of, say, Heineken from that [beach-shack/luxury resort hotel] over there.” he explains. If the price is below your maximum, I’ll buy it. If it’s higher, I won’t.

•       Even though the two products - and their value to the drinker - are in theory identical, in experiments it was found that almost all people - even trained economists - were willing to pay considerably more for the bottle when the vendor was a fancy hotel than when it was a beach shack (in 1980s dollars, the average answers were $2.65 and $1.50 respectively)

•       it may suggest that our conception of value seems to include some concept of fairness and proportionality - and does not reside exclusively in the personal utility we enjoy from the purchase. So we unconsciously understand that a boutique hotel has higher overheads than a shack, and make allowances for that in our appraisal of a just price: if the price seems unfair, we won’t pay, even for something we really want.

Acquisition-Transaction Utility

•       Acquisition utility

–      The consumer’s perceived economic gain or loss associated with the purchase

–      Function of product utility and purchase price

•       Transaction utility

–      The perceived pleasure or displeasure associated with the financial aspect of the purchase

–      Determined by the difference between the internal reference price and the purchase price

Issues in Perceived Price

•       Reference prices – used as a basis for comparison in judging another price

–      Internal

–      External

•       Acquisition and transaction utility

•       One study offers three types of pricing strategies based on perception of value.

Perceived Quality

•       Perceived Quality of Products

–      Intrinsic vs. Extrinsic Cues

•       Perceived Quality of Services

•       Price/Quality Relationship

Perceived Quality of Services

•       SERVQUAL scale used to measure gap between customers’ expectation of service and perceptions of actual service

A Scale Measuring Customer’s Perception of Call Center Employees

ATTENTIVENESS

1. The agent did not make an attentive impression.
2. The agent used short, affirmative words and sounds to indicate that (s)he

      was really listening.

PERCEPTIVENESS

1. The agent asked for more details and extra information during the conversation.
2. The agent continually attempted to understand what I was saying.
3. The agent paraphrased what had been said adequately.

RESPONSIVENESS

1. The agent offered relevant information to the questions I asked.
2. The agent used full sentences in his or her answers instead of just saying yes or no.
3. The agent did not recognize what information I needed.

TRUST

1. I believe that this company takes customer calls seriously.
2. I feel that this company does not respond to customer problems with understanding.
3. This company is ready and willing to offer support to customers.
4. I can count on this company to be sincere.

SATISFACTION

5. I am satisfied with the level of service the agent provided
6. I am satisfied with the way I was spoken to by the agent.
7. I am satisfied with the information I got from the agent.
8. The telephone call with this agent was a satisfying experience.

CALL INTENTION

9. I will very likely contact this company again.
10. Next time I have any questions I will not hesitate to call again.
11. I would not be willing to discuss problems I have with this company over the phone.

Price/Quality Relationship

•       The perception of price as an indicator of product quality (e.g., the higher the price, the higher the perceived quality of the product.)

Perceived Risk

•       The degree of uncertainty perceived by the consumer as to the consequences (outcome) of a specific purchase decision

•       Types

–      Functional Risk

–      Physical Risk

–      Financial Risk

–      Psychological Risk

–      Time Risk

How Consumers Handle Risk

•       Seek Information

•       Stay Brand Loyal

•       Select by Brand Image

•       Rely on Store Image

•       Buy the Most Expensive Model

•       Seek Reassurance