Chapter 5 - Perception

Chapter 5 Perception and Information Processing

LEARNING OBJECTIVES
After reading this chapter, students should be able to: Understand the nature of perception and how it affects consumer behaviour Define the concepts of exposure, attention, interpretation and memory and discuss how they influence the interpretation of marketing information Describe the information process and how it relates to consumer behaviour Discuss the communication processes involved in perception Outline how the gestalt theory and semiotics impact on consumer behaviour Outline the role of risk and how marketers and consumers use risk reduction strategies Understand the nature of positioning and consumer behaviour Discuss the importance of brands in consumer behaviour.

CHAPTER TOPICS
1. 2. What is perception? The nature of perception The role of perception in the decision-making process Information processing - Exposure - Attention - Interpretation Memory Information processing and consumer behaviour Absolute threshold Webers concept of just noticeable difference (JND) Selective exposure Sensory distortion Selective retention Selective attention Stimulus generalisation Stimulus discrimination The influence of colour on perception The influence of semantics (words) on perception Perceptual categorisation Communication processes Gestalt theory Case point 5.1Big brands, after a landmark court win, have a new weapon against imitators the gestalt factor Figure and ground perception Grouping Semiotics Perceived value Case in point 5.2Hidden meanings of semiotic marketing Perceived risk Types of risk Case in point 5.3Wait theres more tactics examined Positioning Page 1

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Chapter 5 - Perception Positioning maps Positioning strategies Repositioning brands 9. Brands 10. Brand equity and branding Brand names Line and brand extensions 11. The means end chain theory Case in point 5.4Bringing healthcare brands to life

What is perception?
Perception is an automatic and natural phenomenon and involves the interpretation of stimuli from the environment. It involves organising and giving meaning to new information from the environment. A sensation is the immediate response generated by an incoming stimulus. Marketers want to know what consumers like and dislike, because not only does it affect our reactions to their products and services, but also how we attend to their marketing efforts like promotional messages, selling techniques, pricing levels, and various attributes of the product or service itself.

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The nature of perception

We all perceive things differently. No two people see things the same way. We interpret things in the environment differently. Our senses work involuntary, but we still make active choices as to what we divert our attention to. Marketers want their messages to be noticed and attended to. To do this, we need to understand how consumers process information. Information processing is the series of activities that happen in the brain as information is received, processed and given meaning. The role of perception in the decision-making process Have you ever heard the saying the customer is always right? Even if they are not, correcting them will probably end in a negative attitude towards your brand, and no sale because you are challenging their perception! Perception is a key part in the information processing chain. How consumers perceive your offering (once they have noticed it) will not be the same as your interpretation of your marketing offer and promotion. Their perception will be linked to their past experience, attitudes, culture, the situation and social influences. Information processing Figure 5.1 (text, p. 123) lists the steps in consumer information processing. Each step is affected by internal influences acting on the consumer, and governing their overall perception of stimuli. Exposure Consumers are exposed to stimuli whether they like it or not. Exposure occurs when our sensory receptors detect a stimulus. Think back to the exercise where students noticed different stimuli around themlike aromas of fresh bread etc. Marketers know they must be exposed to the consumer to be noticed at all. Different eye-catching or attention-grabbing techniques are used by marketers. Attention Attention occurs when information is transferred from the sensory receptors (senses) to the brain for further processing. For example, if someone hears a joke on television, and stops to work it out, they are giving attention to it. Salience is an important concept to consider when trying to attract attention. It refers to the importance of a stimulus over less-important stimuli. For example, if you include some negative aspect in your ad in order to show a positive result, you may only attract enough attention to have the negative aspects noticed, and then associated with your brand. Consumer Behaviour by Karen Webb Page 2

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Interpretation Interpretation is the stage of processing at which consumers give meaning to the incoming stimulus information. Information is subject to cognitive and affective interpretation. This is illustrated in Figure 5.2 (text, p. 125). Cognitive interpretation refers to the thought processes involved with interpreting the information. Affective interpretation refers to how consistent the information is with existing beliefs and feelings. To ensure honesty in research on feelings, different physiological measures are used. Some of these are outlined in Exhibit 5.2 (text, p. 125). There are several factors that influence the way consumers perceive (and interpret) information: Individual characteristicsprior experience and learning (such as those taught by family). Stimulus factorshow a message is communicated. Use examples of celebrities appropriate for different age groups to illustrate. Situational factorslike the weather, or a personal situation like in love, on holidays, bored, hungry, etc. Memory Memory will be dealt with in detail in Chapter 6. It is defined as the information storage facility in the brain. Marketers want consumers to retrieve information about their products when their needs are aroused.

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Information processing and consumer behaviour

There are a number of theories related to perception and information processing that can guide decisions to be made by marketers. Some of these are discussed below. Absolute threshold The absolute threshold is the lowest point at which we perceive stimuli. When we flick through the pages of a magazine, all the ads for similar products tend to blend into one another. Occasionally one will stand out because of the colours, style or size of ad. Implications for marketers Marketers need to ensure they can break through the clutter with different techniques to gain the attention of prospects. Webers concept of just noticeable difference (JND) The concept of just noticeable difference (JND) is the minimum level of change to a stimulus that is required in order for the change to be noticed. Change can be related to product names, (e.g. Lipton tea Black tea) product features (change of aromas, different functions), product sizes (from 250ml to 200ml), pricing points (from $1.50 to $1.95). If the change is a positive one, a marketer will tell the world. If more is included a packet, it will be promoted through advertising and labelled clearly on the packaging. If the changes are significant, such as a complete logo and brand name change (Grace Bros to Myer) it may be an effort to reposition the company to a different market segment or an attempt to rid the company of a poor image. Implications for marketers Marketers need to ensure that any changes to their product, if perceived as negative, will not be noticed. A step of changes is sometimes preferred over one major change. If the change is likely to be noticed, then it is important not to hide that change from consumers, but point it out quite clearly to minimise backlash. Selective exposure There are a number of concepts linked to how we process messages and pay attention to certain stimuli. Consumers are exposed to many promotional messages every day, and its impossible to pay attention to every single one. Selective exposure refers to the fact that consumers make a choice about what information they take notice of. Often its an intentional avoidance of certain media or messages. That is why the RTA has struggled to reduce the road toll with messages about speeding and alcohol limits, because young people dont want to be told. Other age groups are the same,

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with avoiding messages about breast cancer checks, financial management for retirement, and smoking in the presence of children. Its important not to only refer to the younger generation since they are most likely the instructors target audience! Sensory distortion Sensory distortion occurs when consumers add preconceived ideas or attitudes to interpret new information that enters a sensory store in their memory. For example, if you believe all home insurance policies are the same, you will only shop around to get the best rate, not product (even if the insurers claim their offerings are superior). Marketers therefore need to stand out with certain benefits that are important to consumers, so that positive word-of-mouth is another tool of the trade that can be used. People will listen to their friends over advertisers. Selective retention Selective retention means that we remember information we find meaningful and interesting. Consider when you have asked someone their name only to forget it 30 seconds later! One of the keys for marketers is to make themselves memorable and appeal to what interests the consumer, not the marketer. Selective attention Selective attention is the idea that individuals do not take in all the stimuli around them. So if a piece of information is important for consumers to take in and remember, repeat it. Dont include too much information for consumers to retain. Stimulus generalisation Stimulus generalisation occurs when a conditioned response occurs to stimuli that are similar to the conditioned stimulus. That is, consumers see no real difference between brands, so marketers sometimes make them as similar as possible. Cases that have reached the courts are outlined in your text. Generic brands like No Frills, Woolworths Home Brand, and Farmland often tend to rely on this strategy, assuming shoppers mainly use price as the key differentiator between brands. Stimulus discrimination Stimulus discrimination refers to the ability to see distinct differences between stimuli. These differences might only be perceived by the consumer, and may not be real differences. If a consumer is loyal to a brand, they w ill always be able to find their favourite brand on a shelf amongst a foray of competitor offerings. This is why marketers strive for brandloyal consumers. The influence of colour on perception Colours have a great influence on perception, and scientists have proven that colours actually influence behaviour. The reason is that the stimuli presented by colours have an influence on the central nervous system. But this influence has to be learnt. Different countries have different meanings for certain colours. In Australia white might refer to purity, but in Japan it means grieving. Marketers must conduct research and really know their consumers when designing product styles and colours, and promotional materials, including packaging. The influence of semantics on perception Words can be used interchangeably in a crossword, but dont necessarily mean exactly the same thing in different contexts. For example, cool might mean refreshing, but it can also mean aloof. Words can be used in ad copy, to form pictures in peoples minds. For example, a cream soap might offer the user a refreshing sensation while showering. Perceptual categorisation A personal construct is like a personal filing system where you have a whole set of files in your mind with related information in them. Consumers only use a few criteria when filing, so its important that the characteristics brought out in a marketing offer are salient to the consumer and more likely to be filed where the marketer wants. It is important that marketers do not use too much information in their advertisements (for example), so that the right information is stored in the right place. Consumer Behaviour by Karen Webb Page 4

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Marketers also use this concept in their branding. If there are positive associations with the brand, then marketers may decide to keep the family brand name when introducing a new range of products. For example, Cadbury has extended their brand name from chocolates to ice creams, biscuits and cake mixes.

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Communication processes

The communication process basically depicts how communication works, for any situation, communication or message. Figure 5.3 (text p. 133) outlines the key components of the communication process. The effectiveness of any communication is influenced by the way the whole process is perceived not just the message itself. Non-verbal cues provide as much information as the verbal components. In addition, noise factors such as physical noise (like aircraft and loudspeakers) or psychological noise (like past experience, existing beliefs or even factors like hunger and tiredness), can also affect communication. Marketers should keep the basic communication process in mind when communicating to prospects or other players in the marketing channel.

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Gestalt theory

Gestalt psychology is the name given to the school of psychology that first developed the basic principles of perceptual organisation. Consumers organise their perceptions into unified wholes according to the principles of gestalt psychology: 1 figure and ground, grouping, and closure. Organisation helps consumers to complete the picture to make it more meaningful. The text gives an example (p. 132) of how a man and woman with children in a park are assumed to be a family, but if the man and woman were sitting on a rug with a glass of wine, the setting is more romantic. A lot of thought needs to go into marketing communication messages, because although individual elements may not necessarily be noticed, all elements go into making the whole picture. Case point 5.1Big brands, after a landmark court win, have a new weapon against imitators the gestalt factor Case in point 5.1 discusses the application of gestalt principles to marketing. Several examples are given on how consumers tend to position a brand on a whole number of attributes well and truly beyond a brand name. Colours, logos, brand names and themes add up to form a total picture. The side issues (for companies) of gestalt principles being used by consumers are two-fold. Marketers can stand out and be counted when they have the total package right. However, a good package may have to stand against copycats who want to hop on the same bandwagon. Figure and ground perception Figure and ground perception is about how we distinguish between a figure and its background. For example, a celebrity that is popular may be the (main) figure or part of the background, depending on the perception of the viewer. Grouping Based on gestalt principles, we group items to make sense of them. Three main ways to group are: similarity, proximity and closure. Similarity We tend to group things together that are similar. Marketers will use the same brand name to link different types of products together. For example, Cadbury uses the same brand name across a range of different product lines, even though there are different competitors in each product grouping. Proximity Items that appear the same are grouped together. Therefore Cadbury can use the same brand name across different product lines, because all lines are drawn together by a common ingredient chocolate.

Schiffman, L., Bednall, D., Watson, J. & Kanuk, L. (1997) Consumer Behaviour, Prentice Hall: Sydney, p. 173.

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Closure Closure occurs when we take new information and link it to existing information that we already know. For example, some advertisers want us to complete the sentence (The Fresh Food People Woolworths) or to answer a question (Which bank? Commonwealth Bank). Soundtracks also create powerful imagery, by setting the scene for the listeners. For example, sounds of thunder evoke storms. Semiotics Semiotics refers to the use of signs or symbols to establish an image and convey a message. For example, Kleenex toilet tissues use a cute Labrador puppy to show softness and tenderness against your skin. Case in point 5.2Hidden meanings of semiotic marketing Brands are based on an evolving mass of hidden meanings and associations. Advertising and promotions goes part way to working with semiotics, as young celebrities are used to associate their brand and indeed the product categorywith youthfulness and appeal. Marketers must consider all aspects of their brand and the hidden meanings conjured up by their marketing efforts, from product features, brand name, pricing and promotional efforts to colour. Encourage examples from students on semiotics at work in the marketplace by using well-established brands like Vegemite, Weet-Bix and Colgate.

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Perceived value

What one person considers as value, another person may perceive as not valuable at all. There are three types of consumer value: 1. Extrinsic versus intrinsic value 2. Self-oriented versus others-oriented value 3. Active versus reactive value. Extrinsic versus intrinsic value Extrinsic value relates to the situation where consumption occurs to satisfy some further goal. In other words, you might buy a laptop so you can study at TAFE or university. Intrinsic value is measured by the ability of the consumption process to satisfy for its own sake. For example, eating at McDonalds will satisfy your hunger as an en d in itself. Self-oriented versus others-oriented value Self-oriented value refers to value obtained from the consumption process that is somewhat selfish in nature. Othersoriented value is obtained from consumption that we perceive will benefit others. The different reasons laundry detergent is purchased are given as an example in the text (p. 142). This particular value can often have hidden meanings as we externally state that the purchase is for someone else, yet there may be some internal motive behind our behaviour! Active versus reactive value Active value refers to value that comes from consumers doing something with a product or manipulating it in some way, such as driving a car or eating a meal. Reactive value comes from doing something or responding to something as part of the consumption process, such as the pleasure obtained from visiting a gallery.

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Perceived risk

Perceived risk is the fear that the purchase of products or services may result in disappointment or unpleasant consequences. Remember that the risk is perceived or imagined, but can influence whether the consumer will buy that particular product or brand at all. Consumers are influenced only by risk that they perceive. Marketers need to be aware of the types of risk, and how they can help consumers overcome this fear and reduce their cognitive dissonance (Chapter 3). Services often carry greater risk than products, because of the very nature of services, such as intangibility, variability of service and perishability (if the service is not used).

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Types of risk Financial risk is the risk that the consumer will experience some sort of monetary or economic loss (e.g. paying for a holiday six months in advance when you might get sick). Physical or utility risk is a risk that the consumer will be harmed in some way or the product will not perform as expected (e.g. juice extractor doesnt juice whole fruit as expected). Social risk is the risk that the consumer will suffer social embarrassment from their purchase (e.g. buying another brand of doll instead of Barbie). Ego risk is the risk that the decision may not be in line with a persons sense of self and their values (e.g. We dont shop at THAT store). Opportunity risk is the risk of purchasing a particular product or service and forgoing another (e.g. Do we buy a rear projection TV or a plasma screen?).

Sometimes marketers use these risks as part of their marketing campaign, so a risk may be alleviated as a result of the purchase of their brand. (e.g. Dont risk getting caught with your pants down!) Marketers can use a number of strategies to reduce the level of perceived risk: Trial use of product or service Warranty or money-back guarantee Building a strong and reliable brand name Use of respected spokespeople in a campaign with high frequency (lots of repetition) Rewards or reinforcement for purchase (congratulations, special owners club) Back-up customer service and technical advice. Case in point 5.3Wait theres more tactics examined This case addresses the issue of risk reversal, where the marketer takes on some of the risk for the consumer. Strategies like money-back guarantees, gifts and test drives can be used so the consumer thinks they have nothing to lose. However, the discussion suggests that it really depends on the nature of the product or service being marketed, and just how much risk the marketer should take, since they are in business not only to satisfy customers, but also to make a profit.

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Positioning

Positioning is how your product is perceived (against competitors) in the minds of consumers. It involves determining a set of attributes for your brand, and communicating these to your target market. Positioning is based on a complex set of factors that are important to the consumer. Positioning maps A positioning map (or perceptual map) is a graphical representation of market positioning according to consumer perceptions. The two most important attributes are plotted on a graph to more easily show how a product is perceived in relation to competitors. The graph can also show gaps that are not being filled by companies. Positioning strategies There are a number of strategies a marketer can use to develop their position. The list below is not exhaustive: Positioning in relation to competitorscompares your brands benefits against the competitors (Duracell battery lasts longest) Positioning on the basis of product attributes and benefits particular benefits may be unique to your particular brand (Fisher & Paykels washing machine provides the best wringing cycle) Positioning on the basis of usage occasionproducts add a certain touch when used on special occasions (Harley-Davidson for the pleasure rider). Repositioning brands Sometimes companies lose their way either through inadequate market research or environmental scanning. Kodak has lost ground and valuable market share in the photography market through the development of affordable digital technology. They are now employing new strategies and introducing new initiatives to reposition their image and regain market share. Consumer Behaviour by Karen Webb Page 7

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Brands

A brand is a mix of tangible and intangible elements that make up an identifying name, mark or symbol. Consumers evaluate brands based on clusters of values they perceive a brand to represent. It is rare for a brand to only be evaluated on one attribute; it is usually a combination of features that provide value to customers. As it becomes more difficult to differentiate one brand from another, brands are becoming an important asset to stand out from the competition. A marketers overall aim is to develop a relationship with customers, which will result in brand loyalty. This also helps to act as a buffer in light of competitor activity such as price reductions or special incentives. To be successful, brands must be customer-focused and offer value. This can be done through continual innovation, market monitoring and consistent communication across all levels of the marketing channel. A brand is a way that an organisation identifies and differentiates its products, but it is also a lot more. A brand can also be described as a link between an organisations marketing activities and consumers perceptions. Brands can assist consumers to reduce perceived risk by reassuring them of consistent quality and service. A relationship with a service brand (such as banks, lawyers, teaching) is most likely based on the consumers experience with the employees, rather than the brand itself. Marketers need to focus on the importance of their human resources when developing their brands.

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Brand equity and branding

Brand equity is a measure of a brands worth. It incorporates brand association and brand image. Consider the difference in value of brands by comparing: Coca-Cola and a suburban manufacturer (like Berts) Subway with the local sandwich shop Bakers Delight with a small bakery. Brand equity is influenced by all the factors in a companys marketing mixincluding product quality and features, service, pricing points, distribution outlets and availability and marketing communications. It is also important that a brand can deliver on its promises. Brand names Brand names can be based on functional features or intangible image aspects. Many well-known brand names become part of everyday language. Classic examples include Bandaid, Walkman, Panadol and Hoover. Line and brand extensions A line extension is the launch of a variation on an existing brand into the same product category. A brand extension is the launch of an existing brand into a new category.

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The means end chain theory

Means end chain analysis is a way of determining consumer behaviour based on the perception of brand attributes, benefits and consumer values. This tool can then help marketers understand how they can reposition their offerings, based on the most important aspects of their brand to consumers. Sometimes positioning a brand based on its concrete attributes may not be appropriate. In many markets where products are similar, it can be difficult to distinguish between brand offerings.

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Attributes gain their relevance because they allow the consumer to achieve certain benefits. For example, laser therapy may promise to remove sun damage and fine lines. A benefit increases in importance as the consumer has a higher need, such as self esteem or self actualisation (eternal youthfulness). A product can have different perceptual meanings depending on the motivations (and needs) of the consumer. Consider the different reasons behind the purchase of a home computer. The more closely a product or brand is linked to the various elements in consumers meansend structures, the more likely it has personal relevance, and will be preferred over competing alternatives. This means that market research should go beyond identifying important brand attributes and explore what different types of customers seek or value in their brands. Focus groups and other qualitative methods are more valuable research tools to explore this type of information. Consider the example of Vita Brits, and how they ran a campaign on Ill get it. Celebrities and other people with vitality for life were featured in the ad. This ad was subject to research that revealed that people want breakfast cereals that provide energy so life can be enjoyed. It didnt necessarily imply that people will win or e xcel all the time, although sports stars like Kieran Perkins were featured. Case in point 5.4Bringing healthcare brands to life Brand building is proving crucial in the healthcare industry. Brand building includes emphasising the benefits of using products, rather than actual attributes. The four elements of a brand that should be emphasised include: 1. AttributesWhat it is, what it does, how it looks 2. BenefitsActual (reduces acne) or abstract (makes you feel prettier) 3. Personalitycreation of a brands character through qualities that resonate at a deeper level. Can include imagery (Landcare Australias hand helping Australia), celebrity endorsement (LOreal) or a trade character (Crazy Johns) 4. Valuesthat help mirror a customers self-definition. Consider brands that use one or more of these elements in your discussions.

DISCUSSION EXERCISES
1. Visit the website for Kraft (www.kraft.com.au) and look up one of their products, such as Vegemite. Take the link to information on how the product has changed over the decades (most often in response to consumer feedback or rising costs). Also refer to past ads on the product. Discuss the changes that have been made in a stepped fashion (JND) to reduce awareness by the consumer of those changes. Consider at least three consecutive changes. Find examples of marketing promotions that specifically use stimulus factors to appeal to: a) Selective exposure b) Selective attention. A 35-year-old mother of two works part-time and lives with her husband in a three-bedroom house in the suburbs. To relax last Tuesday night she watched Better Homes and Gardens and then All Saints. The next day she participated in a market research interview, and could only remember an ad about preventing child abuse and some new cookies put out by one of the cake-mix brands. However, she can remember quite clearly the recipes and brands used in the cooking segment of Better Homes and Gardens and also what happened to Terry when the heart attack patient called her name. How can you explain this memory recall using perception concepts? Cut out three advertisements from magazines and determine which (if any) gestalt principles are being used. Why is the advertiser using this technique to gain attention? For the following products, identify the perceived risks that a consumer is likely to experience during the purchase decision process. Discuss how the marketers of these products can reduce these perceived risks. a) Winter holiday to New Zealand b) New beer on the market c) Fragrance for a partner

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Construct a positioning map for take-away food outlets using two relevant dimensions. Then, mark the position on the map of five different brands that you know in your local area. Describe the positioning of these five brands. Do any of these brands need to be repositioned based on how they perform on your two chosen attributes?

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