CONSUMER BEHAVIOR (18MBAMM301)

Unit 3:
Individual Influences on Consumer Behavior and CRM
A) Motivation: Basics of Motivation, Needs, Goals, Positive & Negative
Motivation, Rational Vs Emotional motives, Motivation Process, Arousal of
motives, Selection of goals. Motivation Theories and Marketing Strategy
Maslow’s Hierarchy of Needs, McGuire’s Psychological Motives.
B) Personality: Basics of Personality, Theories of Personality and Marketing
Strategy (Freudian Theory, Neo-Freudian Theory, Trait Theory), Applications
of Personality concepts in Marketing, Personality and understanding consumer
diversity, Brand Personality, Self and Self-Image.
C) Perception: Basics of Perception & Marketing implications, Elements of
Perception, Dynamics of Perception, Influence of perception on CB, Consumer
Imagery, Perceived price, Perceived quality, price/quality relationship,
Perceived Risk, Types of risk, How to consumers’ handle risk.
3.1 MOTIVATION : BASICS OF MOTIVTION.
Motivation is defined as the process of stimulating people to action, to accomplish desired
goals. It involves arousing needs and desires in people to initiate and direct their behaviour in
a purposive manner. Motivation can be defined as the processes that account for an
individual's intensity, direction, and persistence of effort toward attaining a goal. While
general motivation is concerned with effort toward any goal.

According to Dalton E. McFarland, “Motivation refers to the way in which urges, drives,
desires, aspirations, and strivings or needs direct, control or explain the behaviour of human
beings”.

The three key elements in this definition are:

1) Intensity: It is concerned with how hard a person tries.

2) Direction: However, high intensity is unlikely to lead to favourable job-

performance outcomes unless the effort is channelled in a direction that benefits the
organisation. Therefore, one has to consider the quality of effort as well as its
intensity. Effort that is directed toward, and consistent with the organisation's goals is
the kind of effort.

3) Persistence: Motivation has a persistence dimension. This is a measure of how long

a person can maintain effort. Motivated individuals stay with a task long enough to
achieve their goal.

Motivation causes goal-directed behaviour. Feeling of a need by a person causes him to

behave in such a way that he tries to satisfy himself so that he does not feel the lack of that
particular thing.
3.2 NEEDS
Needs exist in the individual. They describe basic human requirements. They indicate a state
of felt deprivation. Marketing does not create needs. They exist in the individuals
automatically with the follow of time. Consumers are motivated by their desire to satisfy
complex needs, and these should be the starting point for all marketing activity. “Need' refers
to something that is deep-rooted in an individual's personality. How individuals go about
satisfying that need will be conditioned by the cultural values of the society which they
belong to. So in some cultures the need for self-fulfilment may be satisfied by a religious
penance, while other societies may seek it through a development of their creative talents.

3.2.1Characteristics of Needs
Each of the preceding needs has several characteristics:

1) Needs is Dynamic: Needs are never fully satisfied; satisfaction is only temporary. Clearly,
eating once will not satisfy our hunger forever. Also, as soon as one need is satisfied, new
needs emerge. After we have eaten a meal, we might next have the need to be with others (the
need for affiliation). Thus needs are dynamic because daily life is a constant process of need
fulfilment.

2) Needs Exist in a Hierarchy: Although several needs may be activated at any one time,
some assume more importance. You may experience a need to eat during an exam, but your
need for achievement may assume a higher priority - so you stay to finish the test. Despite
this hierarchy, many needs may be activated simultaneously and influence your acquisition,
usage, and disposition behaviours. Thus your decision to go out for dinner with friends may
be driven by a combination of needs for stimulation, food, and companionship.

3) Needs is Internally or Externally Aroused: Although many needs are internally

activated, Some needs can be externally cued. Smelling pizza cooking in the apartment next
door may, e.g., affect your perceived need for food.
4) Needs arise Conflict: A given behaviour or outcome can be seen as both desirable and
undesirable, if it satisfies some needs but fails to satisfy others. The result is called an
approach-avoidance conflict be you both want to engage in the behaviour and want to avoid
it. Teenagers may experience an approach avoidance conflict in deciding whether to smoke
cigarettes. Although they may believe that others will think they are cool for smoking
(consistent with need for belonging), they also know that smoking is bad for them
incompatible with need for safety.
3.2.2 Types of Needs
1) Social Needs: Social needs are externally directed and relate to other individuals.
Fulfilling these needs thus requires the presence or actions of other people. For example, the
need for status us in high regard; the need for support drives us to have others relieve us of
our burdens, the need for modelling reflects a wish to have others show us now to behave.

2) Non-Social Needs: Non-social needs are those for which achievement is not based on
other people. Our needs for sleep, novelty, control, uniqueness, and understanding, which
involve only ourselves, can affect the usage of certain products and services. We might
purchase the ame brand repeatedly lo maintain consistency in our world - or we might buy
something totally different to fulfill a need for variety.

3) Functional Needs: Functional needs may be social or non social. Functional needs
motivate the search for products that solve consumption-related problems. For example,
contemplating between a car with safety features (ABS Airbag) at an additional cost or a car
without safety features at lower cost is linked to the functions benefits of the car.
Alternatively for working women, putting the child in a day care centre or hiring a full time
nanny at home is a contemplation based on cost, convenience and safety aspects for the child.

4) Symbolic Needs: Symbolic needs affect how we perceive ourselves and how we are
perceived by others. Achievement, independence, and self-control are symbolic needs
because they are connected with our sense of self. Similarly, our need for uniqueness is
symbolic because it drives consumption decisions about how we express our identity. The
need to avoid rejection and the need for achievement, status, affiliation, and belonging are
symbolic because they reflect our social position or role. For example, some consumers
might wear Jimmy Choo shoes to express their social standing.

5) Hedonic Needs: Hedonic needs include needs for sensory stimulation, cognitive
stimulation, and novelty (non-social hedonic needs) and needs for reinforcement, sex, and
play (social hedonic needs). These hedonic needs reflect our inherent desires for sensory
pleasure. If the desire is intense enough, it can inspire fantasising about specific goods,
simultaneously pleasurable and discomforting.
3.3 GOALS
Goals denote what an organisation hopes to accomplish in future period of times. They
represent a future state or an outcome of the effort put in now. Broad categories of financial
and non-financial issues are addressed by the goals that a consumer sets for it.

3.3.1 Selection of Goals The goals

Selected by individuals depend on the various factors as discussed below:

1) Personal Experience: If the individual's past experience has been satisfactory when a
particular goal was used to satisfy a need, it is more likely that it (goal) be selected again.

2) Social and Cultural Norms and Values: social and cultural environment does affect
behaviour. Free consumption of hard drinks (liquor) openly is against our cultural norms.
Thus consumers are not seen consuming liquor openly as it is not the ‘done thing' in our
culture.

3) Personal Norms and Values: An individual's own personal norms and values possibly
religious or ethical can also affect the selection of the goal to achieve a particular need.

4) Physical and or Intellectual Capacity: At times some goals are unachievable due to
personal limitations. Suppose a person is very found of consuming tea but has got an acidity
problem then he or she will have to go for an alternative goal.

5) Accessibility of Goal: At times selection of a goal is made on the basis of accessibility.

6) Self Image: A person's own perception of himself or herself also affects the selection of
specific goals. Each person is likely to select or purchase products which closely reflect or are
congruent with the person's own self-image.
3.3.2 Interdependence of Needs and Goals
Needs and goals are interdependent; neither exists without the other. However, people are
often not as aware of their needs as they are of their goals. For example, a teenager may not
consciously be aware of his social needs but may join a photography club to meet new
friends. A local politician may not consciously be aware of a power need but may regularly
run for public office.

Individuals are usually somewhat more aware of their physiological needs than they are of
their psychological needs. Most people know when they are hungry or thirsty or cold, and
they take appropriate steps to satisfy these needs. The same people may not consciously be
aware of their needs for acceptance, for self-esteem, for status. They may, however,
subconsciously engage in behaviour that satisfies these psychological (acquired) needs.
3.4 POSITIVE AND NEGATIVE MOTIVATION
People are said to be motivated positively when they are shown a reward and the way to
achieve it. Such reward may be financial or non-financial. Monetary motivation may include
different incentives, wage plans, productive bonus schemes, etc. Non-monetary motivation
may include praise for the work, participation in management, social recognition, etc.
Monetary incentives provide the worker a better standard of life while non-monetary
incentives satisfy the ego of a man.

Positive motivation seeks to create an optimistic atmosphere in the enterprise. Positive

motivation involves. identifying employee potentialities and makes him realise the possible
result by achieving his potentialities. Positive motivation can be referred as “Anjaneya type
of motivation' in Ramayana.

One can get the desired work done by installing fear in the minds of people. In this method of
motivation, fear of consequences of doing something or not doing something keeps the
worker in the desired direction. This method has got several limitations. Fear creates
frustration, a hostile state of mind and an unfavourable attitude tɔwards the job which hinders
efficiency and productivity. So the use of it should be kept to its minimum.
3.5 RATIONAL versus EMOTIONAL MOTIVES
Traditionally the term Rationality is associated with persons who carefully weigh the pros &
cons of all the alternatives and then choose the one that gives them the greatest utility. In the
marketing context it can be said that consumers who are ‘rational will select the goals after
ascertaining various objective criteria such as size, weight, price, etc.

As against this Emotional motive are those goals, which are selected on the basis of
emotion's involvement. Usually such goals are selected purely on personal or subjective
criteria such as desire for recognition of status, fear, pride, esteem, love, etc.

Basis of
Rational Motives Emotional Motives
Difference

The purchaser has to consider many

The purchaser needs little time in
factors like price, quality, after sales
Time spent in making emotional purchases because
service and other related matters and
Purchasing he immediately decides for the
therefore, he takes time in taking
purchase.
decision for the rational purchases.

Emotional buying motives are

In rational buying motives, head and
Dominance dominated by the feelings of the
mind dominate
heart.

In Rational purchasing, the product is Emotional purchases are generally of

Nature of
mostly durable in nature and the goods, which are low-priced and
Product
comparatively of high price non-durable in nature
3.6 AROUSAL OF MOTIVES
Motive is an inner state that mobilises bodily energy and directs it in selective fashion toward
goals usually located in the external environment.

This definition implies that motives involve two major components:

1) A mechanism to arouse bodily energy.

2) A force that provides direction to that bodily energy.

According to William J. Stanton, "A motive may be defined as a drive or an urge for which
an individual seeks satisfaction”.

According to Berelson and Steiner, “A motive is the inner state that energises, activates or
moves and that directs or channels behaviour to work goals”.

The arousal concept concerns what actually energises consumers' behaviour.

Although arousal activates bodily energy, it provides little, if any, direction to behaviour.

A variety of mechanisms can trigger the arousal of motives and energise consumers. The
following may work alone or in combination to activate behaviour:

1) Physiological Conditions: One source of arousal acts to satisfy our biological needs for
food, water, and other life-sustaining necessities. Depriving such a bodily need generates an
uncomfortable state of tension. When this tension is sufficiently strong, arousal occurs to
provide energy necessary to satisfy the need. The consumer's previous experience and present
situation will strongly influence the directions any heightened activity will take.

2) Cognitive Activity: Humans engage in considerable cognitive activity (thinking and

reasoning) even when the objects of their thoughts are not physically present. This thinking,
considered by some to be daydreaming or fantasy, can also act as a motive trigger. One way
this occurs is when consumers deliberate about unsatisfied wants. For example, thinking
about one's lack of physical activity can arouse energy to remedy the situation.

3) Situational Conditions: Situational conditions can also work alone to generate motive
arousal. This appears to occur when circumstances draw consumers' attention to the disparity
between their present state and something viewed as a better condition. For example, a
consumer may see an advertisement stressing how compact disc players enhance the pleasure
of listening to music. Such a message might, by itself, be responsible for triggering the
aroused state.

4) Emotional Arousal: Affective, or emotional, arousal happens when one is emotionally

charged up and feels passionate about something. One may be angry, excited, scared, joyful
or feeling the stimulation of any other emotion. Some people fall easily into affective arousal
and may be considered to have a volatile temperament. Affective arousal is, in some ways,
most central to arousal in that cognitive and physical arousal are more likely to be
accompanied with some degree of emotional sensation. There is a less frequent direct
connection between cognitive and physical arousal.
 3.7 MOTIVATION PROCESS

The motivational process is the steps that consumer take to get motivated. It is a process, that
when followed produces incredible results. The process of motivation starts when the
consumer comes across an unfulfilled need - this need if not satisfied will create a state of
tension within the consumer. This state drives the consumer to adopt behaviour that will help
relieve the tension. The efforts and the behaviour of people to achieve a goal that reduces
such tension are influenced by their knowledge or learning and their way of thinking (i.e.,
cognitive processes) Consider the example where the athlete experiences the need to surpass
the world record; this need causes tension within him. Hence, the athlete identifies a goal to
be achieved to eliminate the tension and makes efforts to reach it. How he sets the goal and
directs his behaviour to achieve it will depend on his experience and attitude.

Learning Cognitive
Processes

Fulfilment of
Unfulfilled Goal or Need
Needs Tension Drive Behaviour (Achievemen
t of Goal)

Reduction
in
Tension
3.8 MASLOW’S HIERARCHY OF NEEDS.
There are two types of needs—Basic and Secondary or acquired. Basic needs are important
for survival whereas acquired needs are not so important. We know various needs are felt by
a man but do not know about their preferential order. A. H. Maslow solved this problem and
presented a theory on priority order of needs which are discussed below.

Hierarchy of Needs
1) Basic Physiological Needs: In the hierarchy-of-needs theory, physiological needs are the
first and most basic level of human needs. These needs, which are required to sustain
biological life, include food, water, air, shelter, clothing, sex - all the biogenic needs, in fact,
that were listed as primary needs earlier.

2) Safety and Security Needs: After the first level of need is satisfied, safety and security
needs become the driving force behind an individual's behaviour. Savings accounts, insurance
policies, education, and vocational training are all means by which individuals satisfy the
need for security.

3) Social Needs: The third level of Maslow's hierarchy includes such needs as love,
affection, belonging, and acceptance. Because of the importance of social motives in Indian
society, advertisers of many product 15 categories emphasise this appeal in their
advertisements.

4) Esteem or Ego Needs: When social needs are more or less satisfied, the fourth level of
Maslow's hierarchy becomes operative. This level is concerned with egoistic needs.

5) Need for Self-Actualisation: According to Maslow, most people do not satisfy their ego
needs sufficiently to ever move to the fifth level - the need for self-actualisation (self-
fulfilment). This need refers to an individual's desire to fulfil his or her potential - to become
everything he or she is capable of becoming. This need is expressed in different ways by
different people.

A young man may desire to be an Olympic star and work single-mindedly for years to
become the best in his sport. The self-actualisation need is not necessarily a creative urge but
that it is likely to take that form in people with some capacity for creativity.

Maslow has further classified the needs as lower order needs and higher order needs. First
two needs in the hierarchical order are lower needs and rests three are higher order needs.
 Self
Actualisation
(Self Fulfilment)

Esteem Needs or Ego Needs

(Prestige, Status, Self-Respect)

Social Needs
(Affection, Friendship, Belongingness)

Safety and Security Needs

(Protection, Order, Stability)

Basic Physiological Needs

(Food, Water, Air, Sex, Shelter)

There are two types of needs—Basic and Secondary or acquired. Basic needs are
important for survival whereas acquired needs are not so important. We know various needs
are felt by a man but do not know about their preferential order. A. H. Maslow solved this
problem and presented a theory on priority order of needs which are discussed below.

Hierarchy of Needs

1) Basic Physiological Needs: In the hierarchy-of-needs theory, physiological needs are the
first and most basic level of human needs. These needs, which are required to sustain
biological life, include food, water, air, shelter, clothing, sex - all the biogenic needs, in fact,
that were listed as primary needs earlier.

2) Safety and Security Needs: After the first level of need is satisfied, safety and security
needs become the driving force behind an individual's behaviour. Savings accounts, insurance
policies, education, and vocational training are all means by which individuals satisfy the
need for security.
3) Social Needs: The third level of Maslow's hierarchy includes such needs as love,
affection, belonging, and acceptance. Because of the importance of social motives in Indian
society, advertisers of many product 15 categories emphasise this appeal in their
advertisements.

4) Esteem or Ego Needs: When social needs are more or less satisfied, the fourth level of
Maslow's hierarchy becomes operative. This level is concerned with egoistic needs.

5) Need for Self-Actualisation: According to Maslow, most people do not satisfy their ego
needs sufficiently to ever move to the fifth level - the need for self-actualisation (self-
fulfilment). This need refers to an individual's desire to fulfil his or her potential - to become
everything he or she is capable of becoming. This need is expressed in different ways by
different people.

A young man may desire to be an Olympic star and work single-mindedly for years to
become the best in his sport. The self-actualisation need is not necessarily a creative urge but
that it is likely to take that form in people with some capacity for creativity.

Maslow has further classified the needs as lower order needs and higher order needs. First
two needs in the hierarchical order are lower needs and rests three are higher order needs.

Need Hierarchy and Marketing Strategy

Maslow's hierarchy-of-needs theory postulates a five-level hierarchy of pre-potent human
needs. Higher-order needs become the driving force behind human behaviour as lower-level
needs are satisfied. The theory says, in effect, that dissatisfaction, not satisfaction, motivates
behaviour.

The need hierarchy has received wide acceptance in many social disciplines because it
appears to reflect the assumed or inferred motivations of many people in the society. The five
levels of need are sufficiently generic to encompass most lists of individual needs. The major
problem with the theory is that it cannot be tested empirically; there is no way to measure
precisely how satisfied one level of need must be before the next higher need becomes
operative.
It has following applications in marketing strategy:

1) Segmentation Applications: Maslow's need hierarchy is readily adaptable to

market segmentation and the development of advertising appeals because there are
consumer goods designed to satisfy each of the need levels and because most needs
are shared by large segments of consumers. For example, individuals buy health
foods, medicines, and low-fat products to satisfy physiological needs. They buy
insurance, preventive medical services, and home security systems to satisfy safety
and security needs. Almost all personal care and grooming products (i.e., cosmetics,
mouthwash, shaving cream), as well as most clothes, are bought to satisfy social
needs. High-tech products such as elaborate sound systems and luxury products (i.e.,
furs, big cars, or expensive furniture) are often bought to fulfill ego and esteem needs.
Postgraduate college education, hobby-related products, exotic and physically
challenging adventure trips are sold as ways of achieving self-fulfillment. The need
hierarchy is often used as the basis for market segmentation, with specific advertising
appeals directed to one or more need-segment levels. An ad for a expensive sports car
may use a self-actualisation appeal such as "you deserve the very best".

2) Promotional Applications: Advertisers may use the need hierarchy for positioning
products – i.e.; deciding how the product should be perceived by prospective
consumers. For example, many ads for soft drinks stress social appeal by showing a
group of young people enjoying themselves and the advertised product; others stress
refreshment (a physiological need); still others may focus on low caloric content (thus
indirectly appealing to the ego need).
3.9 McGUIRE’S PHYSIOLOGICAL MOTIVES.
McGuire developed a classification system that organises these various theories into sixteen
categories. This system helps marketers to isolate motives likely to be involved in various
consumption situations.

Cognitive motives focus on the person’s need for being adaptively oriented toward the
environment and achieving a sense of meaning. Affective motives deal with the need to reach
satisfying feeling states and to obtain the person goals. Preservation oriented motives
emphasise the individual as striving to maintain equilibrium, while growth motives
emphasise development. McGuire divided motives into four main Categories.

McGuire’s Psychological Motives

Cognitive Preservation Motives Cognitive Growth Motives

Affective Preservation Motives Cognitive Growth Motives

Cognitive Preservation Motives

1) Need for Consistency (Active, Internal): A basic desire is to have all facets or
parts (attitudes, behaviours, opinions, self-images, views of others, and so forth) of
oneself consistent with each other. Understanding the need for consistency is also
important for structuring advertising messages and developing attitude change
strategies.

2) Need for Attribution (Activ., External): This set of motives deals with
customers' need to determine who or what causes the things that happen to them. The
fact that consumers need to attribute cause underlies an area of research known as atti
ution theory. This approach to understanding the reasons consumers assign particular
meanings to the behaviours of others has been used primarily for analysing consumer
reactions to promotional messages (in terms of credibility).

3) Need to Categorise (Passive, Internal): People have a need to categorise and

organise. the vast array of information and experiences they encounter in a
meaningful yet manageable way. So, they establish categories or mental partitions
that allow them to process large quantities of information. Prices are often categorised
such that different prices connote different categories of goods.

4) Need for Objectification (Passive, External): These motives reflect needs for
observable cues or symbols that enable people to infer what they feel and know.
Impressions, feelings, and attitudes are subtly established by viewing one's own
behaviour and that of others and drawing inferences as to what one feels and thinks.

Cognitive Growth Motives

1) Need for autonomy (Active, Internal): All individuals in all cultures have this
need at some level. Americans are taught that it is proper and even essential to express
and fulfil this need. In contrast, in countries such as Japan, fulfilment of this need is
discouraged, while fulfilment of he need for affiliation is more socially acceptable.

2) Need for Stimulation (Active, External): People often seek variety and difference
out of a need for stimulation. Such variety-seeking behaviour may be a prime reason
for brand switching and some so-called impulse purchasing

3)Teleological Need (Passive, Internal): Consumers are pattern matchers who have
images of desired Outcomes or end states to which they compare their current
 situation. This motive propels people to prefer mass media such is movies, television
programs, and books with outcomes that match their view of how the world should
work. This has obvious implications for adverı using messages.

4) Utilitarian Need (Passive, External): These theories view the consumer as a

problem-solver who approaches situations as opportunities to acquire useful
information or new skills. Thus, a consumer watching a situation comedy on
television not only is being entertained but is learning clothing styles, etiquette,
lifestyles options, and so forth.

Affective Preservation Motives

1) Need for Tension Reduction (Active, Internal): People encounter situations in
their daily lives that create uncomfortable levels of stress. In order to effectively
manage tension and stress, people are motivated to seek ways to reduce arousal.
Recreational products and activities are often promoted in terms of tension relief.

2) Need for Expression (Active, External): This motive deals with the need to
express one's identity to others. People feel the need to let others know who and what
they are by their actions, which include the purchase and use of goods. The purchase
of many products such as clothing and automobiles allow consumers to express an
identity to others, because these products have symbolic or expressive meanings.
Thus, the purchase of the latest in skiwear may reflect much more than a desire to
remain warm white skiing.

3) Need for Ego Defense (Passive, Internal): The need to defend one's identity or
ego is another important motive. When one's identity is threatened, the person is
motivated to protect his or her self-concept and utilise defensive behaviours and
attitudes.

4) Need for Reinforcement (Passive, External): People are often motivated to act in
certain ways because they were rewarded for behaving that way in similar situations
in the past. This is the basis for operant learning.
Affective Growth Motives
1) Need for Assertion (Active, Internal): Many people are competitive achievers
who seek success, admiration, and dominance. Important to them are power,
accomplishment, and esteem.

2) Need for Affiliation (Active, External): Affiliation is the need to develop

mutually helpful and satisfying relationships with others. Marketers frequently use
such affiliation-based themes, for example, “Your kids will love you for it
advertisements.

3) Need for Identification (Passive, Internal): The need for identification results in
the consumer playing various roles. Marketers encourage consumers to assume new
roles (become a skateboarder) and position products as critical for certain roles (“No
working mother should be without one”).

4) Need for Modelling (Passive, External): The need for modelling reflects a
tendency to base behaviour on that of others. Modelling is a major means by which
children learn to become consumers. Marketers utilise this motive by showing
desirable types of individuals using their brands.

McGuire's Psychological Motives and Marketing Strategy

1) Helps in Studying Consumer Behaviour: It is very important for the marketers to know
the motives influencing the consumer as they initiate and direct all human behaviour
(including consumer behaviour). William McGuire has tried to list human motives. The
motives listed by him are relevant to a marketer in studying consumer behaviour as well.

2) Helps in Isolation of Motives: The psychological motives help marketers to isolate

motives likely to be involved in various consumption situations. For example, the travel
industry uses the Need for novelty concept by changing up their ads and showing adventure
vacations where people are actively having fun and some ads showing relaxing vacations
where people are swinging in a hammock.

3) In Developing Marketing Mix: Marketers use the need for consistency concept in
developing a consistent marketing mix. The second area of marketing interest with
consistency is called “cognitive dissonance". This refers to a tendency of consumers to worry
about the wisdom of major purchases after they have been made which is necessary for
marketers to know to predict further sales.
4) In Understanding Consumer's Response: Marketers use the need to attribute causation
to deal with human tendency to determine who or what causes the things that happen to us.
Attributing cause is a part of the foundation for the use of rhetorical theory to understand
consumers' response to persuasive communication.

5) In Role Modelling: The marketers utilise role model need for showing the types of
consumers who use their brands. The tendency of modelling explains why conformity occurs
within reference groups.
3B.1 PERSONALITY : BASICS OF PERSONALITY.
The term personality has been derived from Latin word 'personare', which means to
speak through”. Personality is used in terms of influencing others through external
appearance. Sum total of ways in which an individual reacts and interacts with others.

Personality is an individual's characteristic response tendencies across similar

situations. Personality is an internalised system which includes all those aspects of a person
that are inherited as well as those that are learned. These two internal aspects are
interdependent and cannot be isolated

According to Gordon Allport, “Personality is the dynamic organisation within the

individual of those psychophysical systems that determine his unique adjustments to his
environment”.

According to Ruch, Personality should include:

1) External appearance and behaviour or social stimulus value;

2) Inner awareness of self as a permanent organising force; and

3) The particular pattern or organisation of measurable traits, both inner and outer.

According to Schiffman and Kanuk, “Personality can be defined as those inner

psychological characteristics that both determine and reflect how a person responds to his or
her environment".

3B.2 THEORIS OF PERSONALITY.

1 Freudian Theory.

2 Neo Freudian Theory.

3 Trait Theory.
3B.2.1 FREUDIAN THEORY/ PSYCHOANALYTICAL THEORY
Freud, the father of psychoanalytic theory, proposed that every individual's
personality is the product of a struggle among three interacting forces – the id, the ego, and
the superego.

1) ID: The id is the source of strong inborn drives and urges such as aggression and
sex. The id operates on what is called the pleasure principle, that is, it acts to avoid
tension and seeks immediate pleasure. However, it tends to operate at a very
subjective and unconscious level and is not fully capable of dealing with objective
reality. Also, many of its impulses are not acceptable to the values of organised
society.

For example, when an individual is hot and thirsty his id would urge him to grab
something cold to drink, There would be no concern about how the drink was
acquired or whether it belonged to someone else.

2) Ego: The ego comes into being because of the limitations of the id in dealing with
the real world. Through learning and experience, the ego develops the individual's
capabilities of realistic thinking and ability to deal appropriately with his
environment. It operates on what is called the reality principle, which is capable of
postponing the release of tension until that time when it will be effectively directed at
coping with the external environment. To illustrate, although the hungry individual's
id would encourage him to just take food away from his friend, the ego might reason
that asking for the food may take longer but may also resulting in a greater portion.
Because it serves in this way as the organised focal point for effective action in the
environment, the ego is said to be the executive of personality.

3) Super Ego: The super ego represents societal and personal norms and serves as an
ethical constraint on behaviour. It can best be described as the conscience. The super
ego provides norms to ego to determine what is wrong or right. However, a person is
not aware of the working of the super ego, and conscience is developed by absorption
of cultural values and norms of the society.
 ID EGO

SUPER EGO

Freud theorised that there are four universal stages of psycho-sexual development
which are decisive in the formation of personality. These stages are: oral, anal, phallic
and genital. The first three stages of development extend from birth to five years and
are called pre-genital stages since the genital zones of the body have not attained a
dominant role in personality development.

Freudian Theory and Marketing Strategy

Researchers who apply Freud's psychoanalytic theory to the study of consumer personality
believe that human drives are largely unconscious and that consumers are primarily unaware
of their true reasons for buying what they buy. These researchers tend to see consumer
purchases and/or consumption situations as a reflection and an extension of the consumer's
own personality. In other words, they consider the consumer's appearance and possessions -
grooming, clothing, jewellery, and so forth – as reflections of the individual's personality.
3B.2.2 NEO FREUDIAN THEORY / SOCIO PSYCHOLOGICAL THEORY
There were several Freud's colleagues who disagreed with his rigid adherence to
consider only the basic biological or instinctive as determinants. According to these Neo-
Freudian's, social relationships played a vital role in the formation and development of
personality.

Alfred Adler viewed human beings as seeking to attain various rational goals, which
he called style of life. He also placed much emphasis on the individual's efforts to overcome
feelings of inferiority (i.e., to strive for superiority).

Harry Stack Sullivan, another Neo-Freudian, stressed that people continuously

attempt to establish significant and rewarding relationships with others. He was particularly
concerned with the individual's efforts to reduce tensions, such as anxiety.

Like Sullivan, Karen Horney was also interested in anxiety. She focused on the
impact of child-parent relationships, especially the individual's desire to conquer feelings of
anxiety. Horney proposed that individuals be classified into three personality groups:
compliant, aggressive, and detached.

1)- Compliant individuals are those who move toward others (they desire to be loved, wanted,
and appreciated).

2) Aggressive individuals are those who move against others (they desire to excel and win
admiration).

3) Detached individuals are those who move away from others (they desire independence,
self-reliance, self sufficiency, and freedom from obligations).

Neo-Freudian Theory and Marketing Strategy.

Although the Neo Freudians did not have influence in the field of marketing, many of
the advertisements indicate that marketers have been using Neo Freudian theory intuitively.
Ads depicting products or services which provide an opportunity to belong, be appreciated by
others or social group setting are being portrayed as a compliant individuals.

For example, advertisements of Close-up confidence, Rexona deodorant, Lifebuoy

plus soap, Denim after shave, Old Spice deodorant, Godrej Hair Dye, etc. help in creating self
confidence or in reducing anxiety.
3B.2.3 TRAIT THEORY
A trait theory is defined as "Any distinguishing, relatively enduring way in which one
individual differs from another". Accordingly, trait theorists are concerned with the
construction of personality tests (or inventories) that pinpoint individual differences in terms
of specific traits.

Personality traits are enduring characteristics that describe and individual's behaviour.
The more consistent the characteristic and the more frequently it occurs in diverse situations,
the more important that trait is in describing the individual.

Several attempts have been made to isolate personality traits and in this process,
several thousands of traits have been pointed out. But it would better if the traits are confined
to a manageable number to understand their impact. Cattell listed 171 personality traits, but
concluded that they were superficial and lacking in descriptive power. What he sought was a
reduced set of traits that would identify underlying patterns. The result was the identification
of sixteen personality factors, which he called source or primary traits.

The sixteen source traits have been presented in the below table

Sixteen Primary Traits

SN TRAITS
1 Reserved v/s Outgoing
2 Less intelligent v/s More intelligent
3 Affected feelings v/s Emotionally more stable
4 Submissive v/s Dominant
5 Serious v/s Happy-go-lucky
6 Expedient v/s Conscientious
7 Timid v/s Venturesome
8 Tough-minded v/s Sensitive
9 Trusting v/s Suspicious
10 Practical v/s Imaginative
11 Forthright v/s Shrewd
12 Self-assured v/s Apprehensive
13 Conservative v/s Experimenting
14 Group dependent v/s Self-dependent
15 Uncontrolled v/s Controlled
16 Relaxed v/s Tense
 Big Five Traits Model:
The ‘Big Five' Personality Traits Model has attracted the attention of both researchers and
managers. The potential value of this framework lies in the fact that it includes an integrated
set of traits that appear to be valid predictors of certain behaviours at the workplace. It may
also be noted that different people have these traits in varying degrees from high to low.

The “Big Five” Personality Traits

Core Traits Descriptive Characteristics of High Scores

1) Extraversion Sociable, outgoing, talkative, assertive, gregarious.

2) Agreeableness Cooperative, warm, caring, good-natured, courteous, trusting.

3) Conscientiousness Dependable, hardworking, organised, self-disciplined, persistent, responsible.

4) Emotional stability Calm, secure, happy, unworried.

5) Openness Curious, intellectual, creative, cultured, artistically experience, sensitive,

flexible, imaginative.

1) Extraversion: Extroversion reflects a person's comfort level with relationships. Extroverts

are sociable, talkative, assertive, and open to establishing new relationships; Introverts are
less sociable, less talkative, less assertive and more reluctant to begin relationships

2) Agreeableness: Agreeableness refers to a person's ability to get along with others. Highly
agreeable people value harmony more than they value having their say or their way. They are
co-operative and trusting of others. People who score low on agreeableness focus more on
their own needs than the needs of others.

3) Conscientiousness: Conscientiousness refers to the number of goals that a person focuses

on. A highly conscientious person focuses on relatively few goals at one time. He or she is
likely to be organised, systematic, careful, thorough, responsible, self-disciplined, and
achievement-oriented. A person with a low conscientious nature tends to focus on a higher
number of goals at one time. Consequently, the individual is more disorganised, careless, and
irresponsible, as well as less thorough and self-disciplined.

4) Emotional Stability focuses on an individual's ability to cope with stress. The positive
emotional stability tends to be calm, enthusiastic, and secure. A person with low emotional
stability tends to be nervous, depressed, and insecure.
5) Openness: Openness addresses one's range of interests. Extremely open people are
fascinated by novelty and innovation. They are willing to listen to new ideas and to change
their own ideas, beliefs, and attitudes in response to new information. On the other hand,
people with low levels of openness tend to be less receptive to new ideas and less willing to
change their minds. They also tend to have fewer and interests and be less curious and
creative.

Trait Theory and Marketing Strategy

The orientation of trait theory is primarily quantitative or empirical; it focuses on the
measurement of personality in terms of specific psychological characteristics, called traits. A
trait is defined as “Any distinguishing, relatively enduring way in which one individual
differs from another”. Trait theorists are concerned with the construction of personality tests
(or inventories) that enable them to pinpoint individual differences in terms of specific traits.
3B.3 APPLICATIONS OF PERSONALITY CONCEPTS IN MARKETING
Personality research in general, and those studies related to consumer behaviour in particular,
have evolved through various stages and in several directions. The application of personality
measurements to study consumer behaviour has produced many contradictory findings and
often disappointing relationships. Ironically, of all the personality concepts available, the one
that has probably enjoyed the greatest popularity and use among business practitioners is
psychoanalytic theory, especially as used in one of the most highly subjective areas –
motivation research.

1) Consumer Research: Trait theory has been used in research on consumers more than has
any other concept. Its ability to predict or explain consumer behaviour has often met with
lacklustre success.

2) Psychographics: Personality concepts have made significant contributions to the area of

psychographics. Instead of being used alone, personality traits are combined with information
on activities, interests, opinions, demographics, and other measures to profile consumers' and
their behaviour. Therefore, psychographics has emerged in the last decade as an approach to
developing composite “pictures” of: consumer types and to "humanising” the data that are
collected from consumers.

3) Consumer Brand Choices: Each person has personality characteristics that influence his
or her buying behaviour. By personality, we mean a set of distinguishing human
psychological traits that lead to relatively consistent and enduring responses to environmental
stimuli. Personality is often described in terms of such traits as self-confidence, dominance,
autonomy, deference, sociability, defensiveness, and adaptability. Personality can be useful
variable in analysing consumer brand choices.

4) Segmentation, Purchase Prediction and Marketing Communications: Trait theories

suggest that personality is comprised of a set of traits that describe general response
predispositions. A consumer's personality is quantified by asking them to respond to a range
of questions about particular traits or personality factors from a large bank of personality
inventories. Once a group of personality traits are identified, combinations of these traits can
then be used for segmentation, purchase prediction and marketing communications.

5) Brand Personality: Since large numbers of consumers can be categorised according to

various traits, this approach potentially can be used to segment markets. Many marketers
endorse this idea as they try to create brand personalities that will appeal to different types of
consumers.

3B.4 PERSONALITY AND UNDERSTANDIG CONSUMER DIVERSITY.

Personality is a set of unique psychological characteristics that influence how a person
responds to his or her environment, including cognitive, affective, and behavioural
tendencies. Understanding a consumers personality can help predict his/her responses to
marketing activities - but it is a tricky business. People do not necessarily behave the same
way in all situations, and an individual's personality can change over ume. Consumers'
personalities mature along with their physical growth.

Much of the consumer-related personality research has followed the trait approach
and focused on identifying specific personality traits that explain differences in consumers'
purchase, use, and disposition behaviour. A number of studies have attempted to find a
relationship between personality and consumer behaviour, but reviews of this research
generally conclude that personality is not a good predictor of consumer behaviour.

Although personality has not been shown to be strongly related to consumer

behaviour, some researchers believe that more reliable measures of traits, developed in a
consumer context, would reveal a relationship. For example, researchers created a consumer
self-confidence scale to examine how this trait affects the choice of higher-price alternatives.
The association between personality and consumer behaviour may be stronger for some types
of consumer behaviour than for others.

Marketers may also find personality more useful for targeting some product and
service categories than others. In particular, our choice of offerings that involve subjective or
hedonic features such as looks, style, and aesthetics may be somewhat related to personality.
A good example is the selection of a greeting card, which represents a personal message and
therefore is an extension of the sender's personality. Finally, certain types of personality traits
may be more related to consumer behaviour than others.
3B.5 BRAND PERSONALITY.
Brand personality is the personification of brands appeals to one's imagination. The brand-as-
person metaphor also makes understanding these invisible, abstract mental constructions
easier and more fun. Countless human concepts have entered the world of brands through
personification - identity, personality, charisma, relationship, trust, integrity, birth, death,
soul, awareness, and even karma and re-incarnation. All these concepts come together to
create a brand personality. They also make brands and working with brands literally more
alive.

According to Southgate “Personality is the human characteristics of the brand in question,

whilst taking special care that it is the brand that is being described and not the target
customer.'

According to Azoulay and Kapferer, “Brand personality is the set of human personality
traits that are both applicable to and relevant for brands".

Human characteristics might be demographic traits such as gender, age, socio-economic class
besides subtle personality traits like warmth, concern and sentimentality. Brand personality
can thus have demographic characteristics, for instance, Feminine (Sunsilk) versus Masculine
(Aramusk) and old (Mysore Sandal) versus young (Liril). It could have psychographic
characteristics like upper class (Van Heusen) versus blue collar (Nirma Bath) and
sophisticated (Esteem) versus rugged (Tata Sumo).

Harley Davidson motorcycle is seen as a macho, freedom-seeking person. This is its

personality. Similarly, Coke's personality is “Real” (the real thing!); Pepsi's is "young,
spirited, and exciting.

Importance of Brand Personality

1) Enriches Understanding: Brand personality helps to gain an in-depth understanding of
consumer perceptions and attitudes towards the brand and can provide more insight than is
gained by asking about attribute perceptions. For example, Microsoft, IBM etc.

2) Contributes to Differentiating Identity: Brand personality can differentiate brands

especially where brands are similar in product attributes. In fact, it can define not only the
brand but the product class context and experience. For example, Mercedes vs. BMW, Clinic
Plus vs. Pantene, etc.
3) Guides Communication Effort: Brand personality communicates the brand identity with
richness and texture. If the brand is specified only in terms of attribute associations, very little
meaningful guidance is provided.

4) Creates Brand Equity: Brand personality builds long-term brand equity and differentiates
the brand and makes it distinct from other competitive offerings. It also serves as a powerful
relationship device.

5) Easy Interpretation: Another importance is that the consumer can interpret the brand's
image in such a way that it is personally more meaningful. Brand personality encourages
more active processing on the part of the consumer. Thus, the consumer puts more effort in
creating and using the brand personality.

6) Aid to Brand Revitalisation: A further importance of brand personality is that life is

given to a brand. By revitalising a brand, another perspective of brand personality can be
examined, namely the role of a brand as a relationship partner in a consumer-brand
relationship.

Types of Brand Personality

1) Ritualistic Brands: These are brands associated with particular occasions. For example,
Crackers are associated with Diwali and Greeting cards with Birthdays. Tractor paints' image
is built on the South Indian habit of getting the house painted for Pongal. Britannia’s Marie is
a tea time biscuit associated with ritual of the consumption. Titan is positioning itself as a
watch for celebration, i.e. wedding gift.

2) Symbol Brands: The logo or the name of the brand is more important than what it
contains. Chivas Regal is strongly identified with the eagle-shaped container. The devil has
given a lot of sensational publicity to Onida TV.

3) Heritage Brands: These are the brands that have pioneer advantage. They are capable of
setting the agenda for the category or the segment they are in. Mysore Sandal, for example, is
uniquely identified by its fragrance, distinct packaging and its traditional positioning. Philips
has a strong position in the audio system market because of its reputation.

4) Exclusive Brands: These are also termed "Aloof" or "Snobbish” brands. For example,
Dove toilet soap, BMW’s 650 cc. bike, Arrow Shirts are meant for an exclusive clientele in
India. Not everyone can buy them. The “Upper Crust" range of shirts from Coats Vyella has a
small crown stitched on the cuffs that sets it apart from others.

5) Belonging Brands: Human beings are constantly in need of being socially accepted.
Brands which make the consumer a part of a larger family are belonging brands. Levi-Strauss
jeans put a youth at par with youth in the rest of the world. A Ray-Ban signals a Youngman's
having arrived. Charms cigarette, in the initial stages, fired the imagination of youth and
acquired a cult following among them.

6) Legendary Brands: Brands which have a great deal of history behind them and have
achieved demi-god status are legendary brands. Coke and Marlboro fall in this category.
Charminar cigarette, Lux soap are examples from the Indian market.
3B.6 SELF AND SELF IMAGE.
A person s self image is the mental picture, generally of a kind that is quite resistant to
change, that depicts not only details that are potentially available to obiective investigation by
others (height, weight, hair colou, gender, I.Q. score, etc.), but also items that have been
learned by that person about himself or herself, either from personal experiences or by
internalising the judgments of others. A more technical term for self image that commonly
used by social and cognitive psychologists is self-schema. Self-schemas store information
and influence the we way we think and remember. For example, research indicates that
information which refers to the self is preferentially encoded and recalled in memory tests. a
phenomenon known as “Self-Referential Encoding".

Self-images, or “perceptions of self", are very closely associated with personality in

that in very closely associated with personality in that individuals tend to buy products and
services and patronise retailers with images or "personalities” that closely correspond to their
own self-images.

Such concepts as one or multiple selves, self-image, and the notion of the extended
self are explored by consumer behaviour researchers.

The self is an individual person as the object of his or her own reflective
consciousness. Self personality provides an individual with the opportunity to try on different
personalities or different identities, much like going to the mall and trying on different outfits
in a department or specialty store. If the identity fits, or the personally can be enhanced, the
individual may decide to keep the new personality in favour of his or her personally. From
consumer point of view, it is likely that such opportunities to try out a new personality or
alter the self may result in changes in selected forms of purchase behaviour.

An advantage of studying consumer behaviour using the theory of self-concept is that

consumers provide descriptions of themselves, as opposed to having descriptions made by
outside observers. That is, each consumer describes his or her own view of himself or herself,
which is in contrast to personality tests that fit consumer responses into predetermined
categories or traits. This distinction is important, because the way in which a consumer
perceives himself or herself might differ substantially from the way in which the researcher
sees or categorises that same consumer.
Self Image and Marketing Concept
The concept of self-image has strategic implications for marketers - They can market
their products on the basis relevant consumer self-images, position their products or services
as symbols of such self-images. Such a strategy is fully consistent with the marketing
concept. Marketer first assesses the needs of consumer segments (with respect to both a
product category and to an appropriate symbol of self-image) and then proceeds to develop
and market a product or service that meets both the criteria.

These theories of self-concept development take somewhat different views of how

people see themselves. In reality, probably all of the theories are working to some extent.
Self-concepts are very likely shaped to varying degrees according to how one perceive
himself relative to others, one's levels of aspirations and biased selection of information about
self, the labelling of self according to how consumers' perceive society categorises them, and
the reflected appraisals of significant other.

Types of Self-Image
According to various researchers, there are many kinds of self image an individual
may have:

1) Actual Self-Image: How they actually see themselves.

2) Ideal Self-Image: How they would like to see themselves.

3) Social Self-Image: How they feel the society sees them

4) Ideal Social Self-Image: How they would like the society to them.

5) Expected Self-Image: Their expectation of how they see themselves at some specified
future time.

In different contexts consumers might select different self-images to guide behaviour. The
concept of self-image has strategic implications for marketers. Marketers can segment their
markets on the basis of relevant consumer self-images and then position their products or
stores as symbols for such self-images.

All the above self-images will be useful for the marketers. The “ideal self-image' and
expected self-image conveys that consumers may look out for opportunity to change their
‘self. This can be used by marketers to produce products projecting the above opportunity for
consumers.
Consumers have a preference for those products and services, which match their personal
images. Thus, knowledge of the various types of self images of consumers will enable
marketers, work out marketing strategy programmes. For instance, the marketer can work on
market segmentation programmes on the basis of the relevant consumer self image and then
position their products or services to match the consumers social status and life style, in
various product categories.
3C.1 PERCEPTION : BASICS OF PERCEPTION.

According to S P Robbins, “Perception is defined as a process by which an individual’s

organize and interpret their sensory impressions in order to give meaning to their
environment”

3C.2 ELEMENTS OF PERCEPTION.

Elements of Perception

Sensation Absolute Threshold

Just-noticeable-difference Subliminal Perception

Sensation
When a person is exposed to any of the marketing stimuli or an ad, the first reflex that is
initiated in him is known as sensation. For example, when a person come across a beautiful
ad of a Mercedes Benz 'E-class' on the centre spread of a magazine, their first reaction will
probably be one of admiration. As person enter a bakery, may smell the mouth-watering
aroma of freshly baked cakes. We can feel the energy in the pulsating music played at a
disco.

How one responds to a stimulus received by any of the five senses is called sensation. And
perception is how person understand a sensation and co-relate it with his needs and
personality. Marketers try to advertise their products in such a way that they will appeal to
the consumer's senses. They not only try to leave a mark on the consumer's mind, they also
try to provide him with cues to perceive the product in a specific way. For example, the
thundering light in the Rin detergent ad may lead the consumer to expect that kind of
cleaning for his clothes.

Marketing Implications

Fast music, like that played at aerobics classes, tends to energise; in contrast, slow music can
be soothing. The type of music being played in a retail outlet can have an interesting effect on
shopping behaviour. Specifically, a fast tempo creates a more rapid traffic flow, whereas a
slow tempo can increase sales as much as 38 per cent because it encourages leisurely
shopping (although consumers tend to be completely unaware of this influence on their
behaviour). However, a fast tempo is more desirable in restaurants because consumers will
eat faster, thereby allowing greater turnover and higher sales. Music can also affect moods.
Likeable and familiar music can induce good moods, whereas discordant sounds and music in
a disliked style can induce bad moods

Absolute Threshold
The absolute threshold is the minimum level of stimulus intensity needed for a stimulus to be
perceived. In other words, the absolute threshold is the amount of intensity needed to detect a
difference between something and nothing. Suppose you are driving on the highway and a
billboard is in the distance. A billboard might have the most entertaining copy ever written,
but this genius is wasted if the print is too small for passing motorists to see it from the
highway. The absolute threshold is that point at which you can first see the billboard. Before
that point, the billboard is below the absolute threshold and not sufficiently intense to be
seen.

When one defines the lowest intensity of a stimulus that can be registered on a sensory
channel, one speaks of a threshold for that receptor. The absolute threshold refers to the
minimum amount of stimulation that can be detected on a sensory channel: The sound
emitted by a dog whiltel is too high to be detected by human ears, so this stimulus is beyond
our auditory absolute threshold. The absolute threshold is an important consideration in
designing marketing stimuli.

Schiffman et al. explains that the lowest level at which an individual can experience a
sensation is called his absolute threshold, often referred to as the lower threshold. This means
that the point where a difference can be detected between “something” and “nothing" is
person's absolute threshold for that stimulus. The point at which a consumer can detect a
difference between something and nothing is that person's absolute threshold for that
stimulus. As exposure to the stimulus increases, one notice it less.

Marketing Implications

The obvious implication is that consumers will only consciously perceive a marketing
stimulus when it is sufficiently high in intensity to be above the absolute threshold. Thus if
images or words in a commercial are too small or the sound level is too low, consumers'
sensory receptors will not be activated and the stimulus will not be consciously perceived.

Differential Threshold/Just- Noticeable-Difference

The minimal difference that can be detected between two similar stimuli is called the
differential threshold, or the Just Noticeable Difference (the 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 has come to be known, states that the stronger the initial stimulus, the greater the
additional intensity needed for the second stimulus to be perceived as different.

According to Weber's 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.

Examples of Just-Noticeable-Difference

1) JND for a car model may exist at a level of 10,000. So only when the price is changed by
10,000 or more, t the consumers will notice the price change.

2) Hindustan Unilever increases the price of a 1.5kg package of Surf Excel Blue detergent
from 110 to 120 or, say, the price of a 100gram pack of Lux toilet soap is raised to 21 from
18. Consumers here may perceive these as a significant change in the prices of these two
brands. Marketers use the concept of JND for product pricing, packaging, and promotion
decisions.

Application of Just- Noticeable-Difference to Consumer Behaviour

Manufacturers and marketers endeavour to determine the relevant JND for their products for
two very different reasons:

1) So that negative changes (e.g., reductions in product size or quality, or increases in product
price) are not readily discernible to the public (i.e., remain below the JND); and

2) So that product improvements (e.g., improved or updated packaging, larger size, or lower
price) are very apparent to consumers without being wastefully extravagant (i.e., they are at
or just above the JND).

For example, some years ago, in an apparent misunderstanding of the JND, a silver polish
manufacturer introduced an extension of its silver polish brand that prolonged the shine of the
silver by months but raised its product price by merely pennies. By doing so, the company
decreased its sales revenue. A better strategy would have been to introduce several successive
versions of the polish; each version with a shine that lasts longer than the previous version
(and at or slightly above the JND) and offered at a higher price (but a price, i.e., lower than
the JND).

When it comes to product improvements, marketers very much want to meet or exceed the
consumer's differential threshold; i.e., they want consumers to readily perceive any
improvements made in the original product. Less than the JND is wasted effort because the
improvement will not be perceived; more than the JND is wasteful because it reduces the
level of repeat sales. On the other hand, when it comes to price increases, less than the JND is
desirable because consumers are unlikely to notice it.

Marketers decrease the product quantity included in the packages, while leaving the prices
unchanged - thus, in effect, increasing the per unit price. The manufacturer of Huggies
reduced the number of diapers in a package from 240 to 228 (and continued pricing it at
$31.99); PepsiCo reduced the weight of one snack food bag from 14.5 ounces to 13.5 ounces
(and maintained the price at $3.29), the reductions in quantity were below most consumers'
JND for these products.

Marketers often want to update their existing package designs without losing the ready
recognition of consumers. They usually make a number of small changes, each carefully
designed to fall below the JND, SO that consumers will perceive minimal difference between
succeeding versions. For example, Betty Crocker, the General Mills symbol, has been
updated seven times from 1936 to 1996.

Subliminal Perception
The concept of the perceptual threshold is important for another phenomenon - subliminal
perception. Suppose a person sitting at a movie and is exposed to messages like "Eat
popcorn" and "Drink Coke". However, each message is shown on the screen for only a
fraction of a second, so short a time that you are not consciously aware of them. Stimuli like
these, presented below the threshold level of awareness, are called subliminal messages, and
our perception of them is called subliminal perception.

Subliminal perception is different from pre-attentive processing. With pre-attentive

processing attention is directed at something other than the stimulus, e.g., at a magazine
article instead of an ad in person's peripheral vision. With subliminal perception attention is
directed squarely at the stimulus. Also, with pre-attentive processing the stimulus is fully
present - if a person shift attention and look directly at the ad or billboard, the person can
easily see it. In contrast, subliminal stimuli are presented so quickly or are so degraded that
the very act of perceiving them is difficult.

Marketing Implications

The question of whether stimuli presented subliminally affect consumers' responses has
generated considerable controversy in the marketing field. A widely known but fraudulent
study in the advertising industry claimed that consumers at a movie theatre were subliminally
exposed to messages on the movie screen that read “Eat popcorn” and “Drink Coke".
Reportedly, subliminal exposure to these messages influenced viewers' purchase of Coke and
popcorn. Although advertising agencies deny using such stimuli, and the original popcorn-
Coke study has been discredited, some people claim that marketers are brainwashing
consumers and attempting to manipulate them. These people also believe that ads containing
these stimuli are effective. This perception is perhaps fostered by the availability of self-help
tapes with subliminal messages that claim to help consumers stop smoking, lose weight, and
feel more relaxed.
3C.3 DYNAMICS OF PERCEPTION.
Perception is a process consists of several sub-processes. One can take an input-throughput-
output approach to understand the dynamics of the perceptual process. This approach
emphasises that there is input, which is processed and gives output. The stimuli in the
environment – subjects, events, or people - can be considered as the perceptual inputs. The
actual transformation of these inputs through the perceptual mechanisms of selection,
organisation, and interpretation can be treated as the throughputs, and the resultant opinions,
feelings, attitudes, etc., which ultimately influence our behaviour, can be viewed as the
perceptual outputs. The whole perceptual process can be presented as follows:

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 pre-dispositions (expectations,
motives, and learning) based on previous experience. The combination of these two very
different kinds of inputs produces for each human being a very private, very personal picture
of the world. Because each person is a unique individual, with unique experiences, needs,
wants, desires, and expectations, it follows that each individual's perceptions are also unique.
This explains why no two people see the world in precisely the same way.

Perceptual Selection
The first component of perception, selection, requires consumers to be exposed to marketing
stimuli and to attend to these stimuli. Consumers will pick and choose marketing stimuli
based on their needs and attitudes. The car buyer will be more attentive to car ads; the
fashion-conscious consumer will be more attentive to ads for clothing; the consumer who is
loyal to Budweiser beer will be more attentive to Budweiser advertising. In each case, the
consumer is processing stimuli selectively by picking and choosing them based on his or her
psychological set.

This process of perceptual selection is increasingly difficult because of the greater clutter of
advertising messages.

Processes Defining Perceptual Selection

For such perceptual selection to occur, the consumer must first see or hear the stimulus and
then respond to it. Therefore, three processes define selection which is:

1) Exposure: It occurs when consumers' senses (sight, hearing, touch, smell) are activated by
a stimulus.
Exposure to a stimulus either occurs or it does not. Consumers' interest in and involvement
with the stimulus is reflected in the level of attention they devote to it. Consumers will pick
and choose the stimuli they are exposed to.

A consumer in the market for a new car is more likely to look for car ads. The consumer
shopping for a laptop computer is more likely to ask friends and business associates about
their experiences with various brands.

2) Attention: It is the momentary focusing of a consumer's cognitive capacity on a specific

stimulus. When consumers notice a T.V. ad, a new product on a shelf, or a car in a
showroom, attention has taken place.

Advertisers can use many of the structural factors described previously to get consumers'
attention - e.g., size through larger ads, position by placing an ad in the upper half of a page,
and novelty by using eye catching photos or illustrations. These factors apply to in-store
stimuli as well.

An important principle of attention is that the greater the consumers' adaptation level, the less
likely it is that attention will take place. Many consumers have become so adapted to
repetitive T.V. commercials that they “tune-out”; i.e., they are exposed to the commercial but
do not notice it.

The opposite of adaptation is contrast, a change from the constant conditions consumers are
used to. Advertisers try to achieve contrast by varying their campaigns, by using attention-
getting stimuli, or by introducing new stimuli. This reduces advertising wear out.

3) Selective Perception: Consumers perceive marketing stimuli selectively because each

individual is unique in the combination of his or her needs, attitudes, experiences, and
personal characteristics. Selective perception means that two consumers may perceive the
identical advertisement, package, or product very differently. One consumer may believe a
claim that Clorox gets clothes whiter than other bleaches; another may regard such a claim as
untrue and may believe that all bleaches are the same.

Selective perception ensures that consumers will receive information most relevant to their
needs. This process is called perceptual vigilance. In a marketing study demonstrating the
operation of perceptual vigilance, Spence and Engel found that consumers recognise names
for preferred brands more quickly than they do names for other brands. Individuals were
more likely to perceive preferred stimuli.
Perceptual Organisation
Perceptual Organisation emphasises on the subsequent activities that take place in the
perceptual process after a stimulus is received. A person rarely perceives the extent of colour,
light or sound associated with objects. Instead he perceives organised patterns, stimuli and
identifiable whole objects.

Factors Affecting Perceptual Organisation

1) Figure and Ground: Figure-Ground principle is generally considered to be the most basic
form of perceptual organisation. This principle simply implies that the perceived object or
person or event stands out distinct from its background and occupies the cognitive space of
the individual. For example, as you read this page, you see white as the background and black
as the letters or words to be read. You do not try to understand what the white spaces in the
middle of black letters could mean.

2) Perceptual Grouping: Grouping is the tendency to curb individual stimuli into meaningful
patterns. For example, if we perceive objects or people with similar characteristics, we tend
to group them logous and this organising mechanism helps us to deal with information in an
efficient way rather than getting bogged down and confused with so many details.

3) Perceptual Constancy: Constancy is one of the more sophisticated forms of perceptual

organisation. This concept gives a person a sense of stability in this changing world. This
principle perinits the individuals to have some constancy or stability in a tremendously
variable and highly complex world. If constancy were not at work, the world would be very
chaotic and disorganised for the individual. Without perceptual constancy the size, shape and
colour of objects would change as the worker moved about and it would make the job almost
impossible. 4) Perceptual Context: The highest and most sophisticated form of organisation is
perceptual context. It gives meaning and value to simple stimuli, objects, events, situations
and other persons in the environment. The organisational structure and culture provide the
primary context in which workers and manages o meir perceiving. For example, a verbal
order, a new policy, a pat on the back, a raised eye brow or a suggestion takes on special
meaning when placed in the context of the work organisation.

5) Perceptual Defence: Closely related to perceptual context is the perceptual defence. A

person may build a defence against stimuli or situational events in a particular context that
are personally or culturally unacceptable or threatening. Accordingly, perceptual defence may
play a very important role in understanding union-management and supervisor-subordinate
relationship. Most studies verify the existence of a perceptual defence mechanism.

Perceptual Interpretation
People exercise selectivity as to which stimuli they perceive and they organise these stimuli
on the basis of certain psychological principles. The interpretation of stimuli is also uniquely
individual, because it is based on what individuals expect to see in light of their previous
experiences on the number of plausible explanations they can envision, and on their motives
and interests at the time of perception.

Stimuli are often highly ambiguous. Some stimuli are weak because of such factors as poor
visibility, brief exposure, high noise level, or constant fluctuation. Even stimuli that are
strong tend to fluctuate dramatically because of such factors as different angles of viewing,
varying distances, and changing levels of illumination. Consumers usually attribute the
sensory input they receive to factors they consider most likely to have caused the specific
pattern of stimuli. Past experiences and social interactions help to form certain expectations
that provide categories (or alternative explanations that individuals use in interpreting 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.

Perceptual Distortion

Individuals are subject to a number of influences that tend to distort their perceptions, such
as:

1) Physical Appearances: People tend to attribute the qualities they associate with certain
people to others who may resemble them, whether or not they consciously recognise the
similarity. For this reason, the selection of models for print advertisements and for television
commercials can be a key element in their ultimate persuasiveness. Studies have found that
attractive models are more persuasive and have a more positive influence on consumer
attitudes and behaviour than average-looking models; attractive men are perceived as more
successful businessmen than average-looking men. Some research suggests that models
influence consumers' perceptions of physical attractiveness and through comparisons, their
own self perceptions. Recent research indicates that using a highly attractive model may not
necessarily increase message effectiveness. One study revealed that highly attractive models
are perceived as having more expertise regarding enhancement products (e.g., jewellery,
lipstick, perfume) but not problem-solving products (e.g., products that correct beauty flaws
such as acne or dandruff).

2) Stereotypes: Individuals tend to carry pictures in their minds of the meanings of various
kinds of stimuli. These stereotypes serve as expectations of what specific situations, people,
or events will be like, and they are important determinants of how such stimuli are
subsequently perceived. Several years ago, an ad for Benetton featuring two men - one black
and one white – handcuffed together, which was part of the "united colours of Benetton”
campaign promoting racial harmony, produced a public outcry because people perceived it as
depicting a white man arresting a black man. Clearly, this perception was the result of
stereotypes, since there was nothing in the ad to indicate that the white person was arresting
the black person rather than the other way around.

3) First Impressions: First impressions tend to be lasting; yet, in forming such impressions,
the perceiver does not yet know which stimuli are relevant, important, or predictive of later
behaviour. A shampoo commercial effectively used the line, “You will never have a second
chance to make a first impression." Since first impressions are often lasting, introducing a
new product before it has been perfected may prove fatal to its ultimate success; subsequent
information about its advantages, even if true, will often be negated by the memory of its
early performance.

4) Jumping to Conclusions: Many people tend to jump to conclusions before examining all
the relevant evidence. For example, the consumer may hear just the beginning of a
commercial message and draw conclusions regarding the product or service being advertised.
For this reason, many copywriters are careful to give their most persuasive arguments first.

5) Halo Effect: Historically, the halo effect has been used to describe situations in which
evaluation of a single object or person on a multitude of dimensions is based on the
evaluation of just one or a few dimensions (e.g., a man is trustworthy, fine, and noble because
he looks you in the eye when he speaks). Consumer behaviourists broaden the notion of the
halo effect to include the evaluation of multiple objects (e.g., a product line) on the basis of
the evaluation of just one dimension (a brand name or a spokesperson).
3C.4 INFLUENCE OF PERCEPTION ON CONSUMER BUYING
BEHAVIOUR
Consumer buying behaviour is influenced by the perception also, which is
psychological influence. Marketer's strategies make use perceptual processes to gain and
retain customer. Partly determine people's general behaviour, and thus, influence their
behaviour as consumers. Even though these perception processes operate internally, they are
very much affected by social forces outside the individual.

Different people perceive the same thing at the same time in different ways. An individual at
different times may perceive the same item in a number of ways. Perception is the process of
selecting, organising, and interpreting information inputs to produce meaning. Information
inputs are sensations received through sight, taste, hearing, smell, and touch. When a person
hear an advertisement, see a friend, smell polluted air or water, or touch a product, receives
information inputs.

An individual's current set of needs affects selective exposure. Information inputs that relate
to one's strongest needs at a given time are more likely to be selected to reach awareness. It is
not by random chance that many fast-food commercials are aired near mealtimes. Customers
are more likely to turn in to these advertisements at these times.

The selective nature of perception, the first step may result not only in selective exposure but
also in two other conditions:

1) Selective Distortion: It is changing or twisting currently received information; it occurs

when a person receives information inconsistent with personal feelings or beliefs. For
example, on seeing an advertisement promoting a disliked brand, a viewer may distort the
information to make it more consistent with prior views. This distortion substantially lessens
the effect of the advertisement on the individual.

2) Selective Retention: In selective retention, a person remembers information inputs that

support personal feelings and beliefs and forgets inputs that do not. After hearing a sales
presentation and leaving a store, a customer may forget many selling points if they contradict
personal beliefs.

The second step in the process of perception is perceptual organisation. Information inputs
that reach awareness are not received in an organised form. To produce meaning, an
individual must mentally organise and integrate new information with what is already stored
in memory. People use several methods to organise. One method, called closure, occurs when
a person mentally fills in missing elements in a pattern or statement. In an attempt to draw
attention to its brand, an advertiser will capitalise on closure by using incomplete images,
sounds or statements in its advertisements.

Interpretation, the third step in the perceptual process, is the assignment of meaning to what
has been organised. A person bases interpretation on what he or she expects or what is
familiar. For this reason, a manufacturer that changes a product or its package faces a major
problem. When people are looking for the old, familiar product or package, they may not
recognise the new one. For example, when Smucker's re-designed its packaging, marketers
told designers that although they wanted a more contemporary package design, they also
wanted a classic look so that customers would perceive their products to be the familiar ones
they had been buying for years. Unless a product or package change is accompanied by a
promotional program that makes people aware of the change, an organisation may suffer a
sales decline.

Although marketers cannot control buyers' perceptions, they often try to influence them
through information. Several problems may arise from such attempts, however. First, a
consumer's perceptual process may operate such that a seller's information never reaches that
person. For example, a buyer may block-out a salesperson's presentation. Second, a buyer
may receive a seller's information but perceive it differently than was intended. For example,
when a toothpaste producer advertises that “35 per cent of the people who use this toothpaste
have fewer cavities”, a customer might infer that 65 per cent of users have more cavities.

Third, a buyer who perceives information inputs to be inconsistent with prior beliefs is likely
to forget the information quickly. Thus, it can be said that perceptual process influences
buying behaviour of consumer which should be intelligently used by marketers.
3C.5 PERCEPTION AND MARKETING IMPLICATIONS
A study of perception is useful in the following areas:

1) Retail Strategy: Most retail environments contain a vast array of information. It is a known
fact that consumers cannot process all the information. Hence, retailers need to be concerned
about information overload. Retailers must ensure that consumers do not become frustrated
and minimise their in-store information processing. Retailers, therefore, use exposure very
effectively. Store interiors (of Ebony, Shopper's Stop, etc.) are designed with frequently
sought-out items being separated so that the average consumers will travel through more of
the store. This increases total exposure. Shelf position and amount of shelf space influence on
which items and brands are given more attention. Point-of-purchase displays also attract
attention to sale and newly launched items. Stores are designed with highly visible shelves
and overhead signs to make locating items as easy as possible. The total mix of in-store
information cues (brands available, layout, point-of-purchase displays, etc.), external building
characteristics, and advertising combine to form the meaning of store image assigned. The

consumer forms a perception about the store, as a result.

2) Brand Name and Logo Development: Brand names are important for both consumer and
industrial products. A brand name which is difficult to pronounce and does not convey much
of a visual image is not likely to find appeal amongst the target consumers. There are
companies which use linguistics and computers to create names that convey the appropriate
meaning for products. For example, the brand name “Compaq” for a computer was created in
such a fashion. It was originally to be called – “Gateway”. But the focus on choosing this
brand name was on the total meaning conveyed by the interaction of the meaning of the
name's parts. For Compaq, 'com' means computer and communications, while “paq' means
small. The unique spelling attracts attention and also gives a scientific” impression. From
this, it is obvious that name selection influences how consumers interpret product features.
Besides how a product and service is presented (its logo) is also equally important. This is the
reason why companies devote so much of time, money and effort in developing a right kind
of logo for all their company products.

3) Media Strategy: The fact that the exposure process is selective rather than random is the
underlying basis for effective media strategies. Marketers determine the media to which
consumers in the target market are most frequently exposed and then place their advertising
messages in those media. For some products and target markets (fashion items and
accessories and heavy users of these items), consumers are highly involved with the product
and will go to considerable lengths to secure product relevant information. Consumers of
these kinds of product will search for media where relevant information is available. For
other products and target markets, consumers have limited involvement with the product
category.

4) Advertisement and Package Design: Advertisements and packages must perform two
critical tasks:

i) Capture attention, and

ii) Convey meaning.

A marketer should make an effort to attract attention to a package or advertisements. To a

large extent, what he does depends on the target market, the product, and the situation. If the
target market is interested in the product category, and in that particular brand, attention does
not pose much of a problem. Once consumers are exposed to the message, they will most
likely attend to it sometimes it is the other way round, Consumers are not always actively
interested in a product. Interest in a product tends to arise only when the need for the product
arises. Since, it is difficult to reach consumers at exactly this point; marketers have the
difficult task of trying to communicate with them at times when their interest level is low and
non-existent.

Suppose that marketer is responsible for developing a campaign designed to increase the
number of users for a liquid 'toilet cleaner'. This is essentially a low involvement product.
Interest in this product arises only when the need for the same surfaces. Under such
circumstances, two strategies appear reasonable:

i) To utilise stimulus characteristics such as full-page ads bright colours, animated cartoons to
attract attention to the advertisement, and

ii) To tie the message to a topic, the market is interested in. The topic may range from using
celebrities endorsing the virtues of the product or using health and cleanliness as a major
plank. While using stimulus characteristics, care should be taken to ensure that the target
audience interprets the message in the advertisement correctly.
5) Advertising Evaluation: A successful advertisement (or any other form of marketing
message) must accomplish four tasks:

i) Exposure: It must physically reach the consumer.

ii) Attention: It must be attended to by the consumer.

iii) Interpretation: It must be properly interpreted.

iv) Memory: It must be stored in memory in a manner that will allow retrieval under the
proper circumstances.
3C.6 CONSUMER IMAGERY
Consumers are found to choose many brands which reflect their self-image. In fact,
consumers seem to perceive those brands as their best choice which matches with their
personal images. Using projective techniques, marketers can identify how customers view
themselves, thereby getting valuable insights into products and promotion options that are not
readily apparent.

For example, when examining consumers a marketer may initially build marketing strategy
around more obvious clues to consumption behaviour, such as consumer's demographic
indicators (e.g., age, occupation, and income). However, an in-depth research may yield
information that shows consumers are purchasing products to fulfill certain self-concept
objectives which have little to do with the demographic category they fall into (e.g.,
consumers make purchase decisions that make them feel younger). By applying consumer's
self-image, it is possible to expand the market to which the product may be targeted.

Elements Of Consumer Imagery

Elements of Consumer Imagery

Product Positioning Product Re-Positioning

Positioning of Services
Perceived Price

Perceived Quality Price/Quality Relationship

Perceived Risk
Product Positioning
The way a product is perceived or positioned by a consumer is probably more important than
what it actually is. Product positioning is the essence of the marketing mix. It converges what
the meaning of the product is and how it can fulfill the consumer needs. It compliments the
company's segmentation strategy and selection of target markets. Successful positioning is
based on consumer's reality and familiarity.

Positioning involves establishing a specific image for a sport product in relation to competing
products. A sport marketer will utilise perceptual mapping to determine the best position to
enter the marketplace. This research method provides sport marketers the opportunity to
graphically analyse perceptions concerning the attribute of specific sport products.
Depending on the evaluation, a number of methods of positioning could be implemented to
enter a sport product into the marketplace. For direct positioning, the sport marketer may
position the sport product directly against the competition or position the sport product based
on a specific benefit. More broad positioning efforts include positioning the product for
several markets, and umbrella positioning - covering all aspects of the marketplace. There are
even times where a sport marketer may position a product in an unknown position, taking a
risk and hoping for the reward.

Product Repositioning
From time to time, in response to changes in the market environment, marketers re-position
products. Repositioning is difficult to achieve effectively, however, and is impossible to
achieve overnight. Once the image of a product is established in the consumer's mind,
consumer's resists change. Re-positioning involves re-educating the consumer about changes
in important product, price, distribution, and/or promotional or personal selling benefits. The
growth of the fast-food chain McDonald's can be viewed from the perspective of re-
positioning. McDonald's restaurants, when first opened, were part of a chain similar to the
Hot 'N' Now Hamburgers, Checkers or Rally's of today. Consumer parked the car and went to
the window to order and pick-up very-low-priced burgers, fries, and shakes. All of the outlet
designs were the same. Now McDonald's offers sit-down family restaurants with an emphasis
on value at lower prices, often with a fun place for the kids to play. The menu is extensive
and the interior and exterior decor varies from restaurant to restaurant

The images consumers have of brands change over time. The evolution of images and
product positions over time is natural and to an extent inevitable. Product re-positioning, on
the other hand, refers to a deliberate decision to significantly alter the way the market views a
product. This could involve its level of performance, the feelings it evokes, the situations in
which it should be used, or even who uses it.

Positioning of Services
Compared with manufacturing firms, service marketers face several unique problems in
positioning and promoting their offerings. 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. These include delivery vehicles painted in distinct
colours, restaurant matchbooks, packaged hotel soaps and shampoos, and a variety of other
specialty items. Many service companies feature real service employees in their ads (as
tangible cues) and some use people focused themes to differentiate themselves.

Image becomes a key factor in differentiating services from competition. Hence, marketers
need to position their service in such a manner that the consumer is able to relate it to the
brand name and feel important.

Perceived Price
Price image is defined as a consumer's subjective impression of the overall price level of a
retailer or product line. Price images represent an evaluation of a set of prices relative to
some standard. The relative nature of price image judgments distinguishes them from
judgments regarding the absolute magnitude of the prices. The relative nature of price image
judgments also suggests that they are sensitive to what information is included in the
consideration set.

Consumers' perception of price has a strong influence on both purchase intentions and
satisfaction. A reference price is the price that the customer may use for comparison for
judging another price. The types of pricing strategies based on customers' perception of the
value provided by the purchase are:

1) Satisfaction-Based Pricing: This provides value by recognising and reducing customers'

perception of uncertainty. Such pricing strategy is implemented by service guarantees, flat
pricing rate, and ensuring specific benefits.
2) Relationship Pricing: It gives value by encouraging long-term relationship with the
consumers which they perceive as beneficial. It is implemented through long-term contracts
and price bundling.

3) Efficiency Pricing: It provides value by reducing the service cost by sharing with
customers the cost savings the company has achieved.

Perceived Quality
Perceived quality has three aspects - objective quality based on the performance of the brand
in the intended direction, manufacturing quality in terms of how defect-free the brand is, and
product-based quality, which is associated with features, parts/ingredients, and services
offered by the brand. Perceived quality is psychological because it involves consumers'
perception of how the brand addresses their needs. The expectations of the target segment are
crucial in assessing perceived quality. There may be two kinds of televisions – one an upscale
plasma version and the other an entry-level model. Both of these versions are targeted
towards different segments. The higher-end consumer would expect specific quality and
state-of-the-art features that would add a | symbolic appeal to the television (which is
normally kept in the visitors' hall in a typical Indian household) and

effective after-sale service when there is a need for it. The expectations of the lower-end
customer would be limited to the utilitarian and functional aspects of the television, and
hence perceived quality would be different for these two segments.

Consumers' perceive quality of products based on intrinsic and extrinsic features of the
product or service. The intrinsic features may include size, colour, flavour and aroma.
Extrinsic cues may include the product packaging, advertising, pricing, and even peer
pressure. Consumers like to base their evaluation of product quality on intrinsic cues because
these enable them to justify their product choice or decision. More often than not, however,
they try to use extrinsic characteristics to judge quality.

Price/Quality Relationship
The price-quality relationship refers to the consumer perception that a relatively high price is
a sign of good quality. The belief in this relationship is stronger for products that are unique
or products such as experiential products which the customer cannot test until they are used.
The greater the uncertainty surrounding a product, the greater is the dependence of the
consumers on the price/quality hypothesis, and more the premium they are prepared to pay.
A difference in pricing also leads to differentiation in the products offered by the seller. This
reduces the cannibalisation amongst various brands within a portfolio of products of the
seller.

Perceived Risk
Dowling and Stalin defined risk as a consumer's perceptions of the uncertainty and adverse
consequences of engaging in an activity. Consumer behaviour is motivated to reduce risk.
When consumers menu product or a service, they often hesitate to make the final decision
because they cannot be sure that all of their buying goals will be accomplished with the
purchase.

Another factor of consumers' motivation to process information about a product or brand is

perceived risk, the extent to which the consumer is uncertain about the personal consequences
of buying, using or deposing of an offering.

If negative outcomes are likely or positive outcomes are unlikely, perceived risk is high.
Consumers are more likely to pay attention to and carefully process marketing
communications when perceived risk is high. As perceived risk increases, consumers tend to
collect more information and evaluate it carefully.

Perceived risk can be associated with any product or service, but it tends to be higher:

1) When little information is available about the offering,

2) When the offering is new,

3) When the offering has a high price, and

4) When the offering is low priced.

Types of Perceived Risk

Researchers have identified six types of risk, which are as follows:

1) Performance Risk: It reflects uncertainty about whether the product or service will perform
as expected. If a car buyer is uncertain whether a new or used vehicle will be reliable,
perceived performance risk is high. The Maruti Service Master's “True Value” program is a
novel exercise by the company to bring in credibility and trust in the selling and purchasing
of the second-hand cars directly with Maruti.

2) Financial Risk: It is higher if an offering is expensive. For example, a home is an

expensive purchase and the level of risk associated with this kind of monetary investment is
high. When consumers perceive high product-category risk due to high price levels, research
suggests that buying decisions can be improved by researching specific offerings using
recommendation agent websites such as MySimon and [Link].

3) Physical (or Safety) Risk: It refers to the potential harm a product or service might pose to
one's safety. Many consumer decisions are driven by a motivation to avoid physical risk. For
example, some U.S. and Canadian consumers concerned about crime or terrorism are hiring
private security guards to patrol their neighbourhoods.

4) Social Risk: It is the potential harm to one's social standing that may arise from buying,
using, or disposing of an offering. According to research, anti-smoking ad messages that
conveyed the severe social disapproval risk of smoking cigarettes were more effective in
influencing teens' intensions not to smoke than ad messages stressing health consequences
such as disease.

5) Psychological Risk: It reflects consumers' concern about the extent to which a product or
service fits with the way they perceive themselves. For example, if you see yourself as an
environmentalist, buying disposable diapers may be psychologically risky.

6) Time Risk: It reflects uncertainties over the length of time that must be invested in buying,
using or disposing of the product or service. Time risk may be high if the offering involves
considerable time commitment, if learning to use it is a lengthy process, or if it entails a long
commitment period (such as a health club that requires a three-year contract).
3C.7 HOW CONSUMERS’ HANDLE RISKS
Consumers are found to handle perceived risk in different ways as noticed through several
empirical research studies:

1) Consumers Seek Information: Through word-of-mouth communication, from salespeople,

from the general media.

2) Consumers Stay Brand Loyal: Consumers become loyal to a brand to avoid risk of
purchasing new or untried brands.

3) Consumers Select Products by Brand Image: When they have no experience with a
product, but tend to 'trust a favoured/well-known brand name.

4) Consumers Rely on Store Image: If consumers have no prior information about a product,
they often trust the judgment of the merchandise buyers of a reputed store.

5) Some Consumers Buy the Most Expensive Model: Consumers here equate price with
quality.

6) Consumers Seek Reassurance: Customers do this via money-back guarantees, government

trademark private laboratory test results, ISO certification, warranties, and pre-purchase
trials.