CHAPTER FIVE

CONSUMER PERCEPTION
5.1. Definition and Meaning of Consumer Perception
The term “perception” can be defined as the ability to derive meaning. Derived from the word
“perceive”, it refers to the ability of giving meaning to whatever is sensed by our sense organs. It is
the process through which an individual interprets ones’ sensory impressions to give meaning to
them. Schiffman defines it as “the process by which an individual selects, organizes, and interprets
stimuli into a meaningful and coherent picture of the world.”
Sensation is the ability of our five sense organs to sense a stimulus. It is an auto reflex mechanism
(direct and immediate) of our sense organs, i.e. eyes, ears, nose, tongue, and skin towards a stimulus
in the environment. This stimulus could be anything; a person, object, situation or thing. In terms of
marketing, it could be a product, a brand name, an advertisement or even a store. Thus sensation is
the reaction or response of a sense organ or a sensory receptor towards stimuli. Perception is much
broader in scope. It is complex process by which a person organizes facts around the stimuli and
gives meaning to it. The perceptual process depicts a complex and dynamic interplay of three
processes, viz., selection, organization and interpretation.
The person selects the stimuli and organizes and interprets the input received from the sense organs,
so as to give a meaning to the stimuli. Thus, for example, as a person is caught by a new packaging of
a familiar brand, he picks up other stimuli on the package through his senses, as well as organizes
other facts from internal (memory) and external sources (dealer, packaging) etc., so as to conclude
that the package is new but the brand is old and familiar. This is perception. While the sense organs
report a change in the form of flashy colors on the packaging, the human mind works cognitively and
organizes other information around it to give a meaning and arrive at a conclusion. This is referred to
as perception. Thus while sensation is physiological, perception is broader and includes not only the
physiological component but also the sociological and psychological component.
While perception starts with sensation, it ends up when meaning is given to the stimuli, through
cognitive processes. While sensation picks up bits and pieces as stimuli, the cognitive processes
involved in perception can add to/delete/modify the diverse sensations and information. Also, while
each one of us would be similar in sensing a stimulus, the way we interpret it would be different. In
other words, sensation is similar but perception is not. This is because as far as our sense organs are
concerned, we are similar, but when it comes to the human mind and the cognitive processes, we are
all different. We have varying cognitive capabilities; our backgrounds are diverse and psychological
processes (needs, motivation, learning, attitudes, values, etc.) and sociological factors (culture, sub-
culture, social class, etc.) different. So while sensation is an objective process, perception is highly
subjective.

5.2. Nature of Perception

Perception can be better explained by understanding the nature and characteristics of perception.
[1] Perception is a complex process; after a stimulus is detected by the sense organs, the perception
process comes into play and involves the interplay of three processes, viz., selection,
organization and interpretation. It is a dynamic process.
[2] It is also an intellectual process; it involves a lot of cognitive effort. Once sensation takes place,
the perception process involves the selection, organization and interpretation of data.
 [3] Perception is broad in nature; it includes a physiological component (through sensation), as well
as sociological and psychological components.
[4] Perception is a subjective process as two people may perceive the same stimuli differently.
While two persons may be exposed to the same stimuli, the manner in which they select them,
organize and interpret them is different. This is because the two are impacted by their
background, learning and experiences, motivation, personality, cultures, values and lifestyles,
social class effects etc. which may be different from each other.
5.3. The Perceptual Process and the Mechanism
The perceptual process starts when a person is exposed to a stimulus and the sensory receptors report
the same to the human body. While the senses may be exposed to various stimuli, the human senses
select only some of these at a point of time. This is because the sense organs have a limited capacity
at a particular point of time. After the sense organs report a few stimuli, the perceptual process takes
over. Of the stimuli that have been detected, few are selected, organized and interpreted for meaning.
During this process of selection, organization and interpretation, the human being is assisted by the
memory bank or the information that is stored in his long term memory. This is known as the schema.
The schema acts as a filtering mechanism and helps select some of the stimuli, and then interpret and
organize them. The selection, organization and interpretation by the human mind is done on the basis
of i) characteristics of the perceiver, and ii) characteristics of the situation. The characteristics of the
perceiver include learning and experiences, knowledge and beliefs, motivation, need and
involvement, attitude, personality, social class, culture etc. All these constructs act as the bases of the
schema, and put together affect the perceptual process. The characteristics of the situation include the
time and location.
People perceive things differently because of their characteristics and backgrounds, and because of
the different perceptual mechanisms that take place. Although we may differ in such processes,
universally speaking, the perceptual process comprises four components, viz., input, perceptual
mechanism, output and behavior. Let us have a discussion on these.
i. Input: The input to the perceptual process refers to the various stimuli that surround an
individual and exist in his environment. It could assume various forms, for example, it could
be another person, object, thing, or situation. The perceptual process begins when the sensory
receptors detect a stimulus in the environment, which acts as an input to the perceptual
mechanism.
ii. Perceptual mechanism: The perceptual mechanism consists of three sub-processes, viz.,
selection, organization and interpretation. Once the sense organs detect a stimulus in the
environment, a person selects, organizes and interprets it through perceptual selectivity,
perceptual organization and perceptual interpretation. Put together, these are known as
perceptual mechanisms.
iii. Output: Once the input has been interpreted, it results in an output. This output towards the
stimuli assumes various forms, for example, in the formation of emotions and moods, feelings
and opinions, as well as attitudes and beliefs.
iv. Behavior: The resultant behavior is an outcome of the output. Based on his emotions and
moods, feelings and opinions, as well as attitudes and beliefs, a person would enact out a
behavior. This behavior is a function of and will be reflective of such emotions and moods,
feelings and opinions, as well as attitudes and belief.

The Perceptual Mechanism

The perceptual mechanism is impacted by two kinds of factors; i) external factors, related to the
stimuli and to the environment; and, ii) internal factors, related to the perceiver, in the form of
demographic, socio-cultural and psychographic factors. People perceive things differently because of
the perceptual mechanism that differs between people. Every person is unique in himself with unique
backgrounds, experiences, expectations, etc., and so the resultant perceptions are also unique. The
perceptual mechanism requires greater discussion owing to the great deal of complexity and
dynamism that goes into play. The three sub-processes viz., perceptual selection, organization and
interpretation are discussed as follows:

A. Perceptual Selection
Human beings are simultaneously exposed to various stimuli in his/her environment. Due to the fact,
that the various stimuli cannot be treated or processed at the same time, people become selective in
their approach. They would choose some stimuli for further processing. The choice of the stimuli
would depend on what they feel is relevant for them and or appropriate for them. This is referred to as
perceptual selectivity.
Which of the stimuli gets selected, is based on two broad factors, viz., factors, external and related to
the stimuli, and factors internal and related to the perceiver
a) External and related to the stimuli: those factors that exist in the environment and are in the form
of characteristic features of the stimuli. These could take the form of size, intensity, contrast, motion,
repetition, familiarity, novelty etc. In the field of marketing, stimuli could include the product, the
brand name, the features and attributes, the packaging, the advertisement, etc.
b) Internal and related to the perceiver: those factors that are related to an individual and would
differ from person to person, viz., factors like motivation, learning, personality and self-image, etc.
Perceptual selectivity of a person would depend upon what he considers relevant and appropriate as
per these psychological variables.
 Needs and Motivation: Selection of a stimulus depends upon our needs, wants and motivation.
We would be receptive to a stimulus which we feel is relevant for us, as based on our needs. For
example, if a person wants to buy a flat (safety and security need), and he is high on the esteem
need too, he would prefer looking at advertisements for availability of flats in the posh areas of
the city. He would be receptive to such stimuli that support this need. Similarly for people strong
on need for achievement, they would be receptive to inputs or stimuli that support their need.
Thus, people with different needs select different stimuli (i.e. items) to respond to. The stronger
the need is, the greater would be the tendency to select related stimuli and ignore unrelated
stimuli in the environment.
 Learning: As individuals, we learn from our experiences, and store such learning in our memory
bank. We tend to form attitudes and beliefs about product and service offerings, and would be
receptive to stimuli that confirm to such attitudes and beliefs and would reject a stimulus that
does not support such attitudes and beliefs.
 Personality and self-image: Personality and self-image also affect perceptual selectivity. A
person would be attracted to stimuli that closely relates to their personality and self-image.
Apart from these three, other factors that could affect selectivity of the stimulus are:
 Response disposition: it is the tendency to select a familiar stimuli rather than one
which is unfamiliar.
  Expectations: the tendency to have preconceived notions about an input, and the
resultant tendency to select anything that supports the expectation and vice versa.
 Past experiences
For marketers, the input that they can arrive out of this discussion on perceptual selectivity is that
they should offer different products for different segments and position them accordingly. While
these are factors that affect perceptual selectivity, let us also have a discussion on sensory thresholds
and more elaborately on absolute threshold and differential threshold.

5.4. Sensory Thresholds

Any and every stimuli that we are exposed to may not catch our attention. This is because the stimuli
lacks in strength and intensity. The amount of strength and intensity that a stimulus must possess so
as to get noticed by the sensory receptors for ultimate perception is referred to as sensory threshold.
For example, a faint sound may not be heard, or a light smell may get unnoticed, etc. Each one of us
has our sense organs, and we all differ with respect to how quick and competent they are to sense
such stimuli. Sensory threshold is further elaborated upon by the two sub-concepts of absolute
threshold, and differential threshold.

a) Absolute threshold
The minimum amount of strength or intensity that a stimulus should possess to get noticed is referred
to as an absolute threshold. It is the lowest intensity at which a stimulus can be detected i.e. in other
words, it is the lowest level at which an individual can experience a sensation.

Our senses also have an absolute threshold that determines the minimum possible amount of
stimulation that is required for getting noticed. Thus, the absolute threshold varies from person to
person. Some people are good at hearing and can hear the faintest of sounds; on the other hand there
are others for whom a faint sound would get unnoticed. Similarly, some people have good eyesight
and can small prints while others cannot. Thus, absolute thresholds differ from person to person, and
any stimuli that falls below one’s threshold, would get unnoticed. Thus, in order to get noticed, the
marketer should understand that the absolute threshold for a stimulus should be kept high; for
example, when making decisions on packaging of potato wafers, the font size should be big, the
colors flashy and attractive etc.

b) Differential threshold
The minimum amount of change that is required to be brought about in a stimulus so that the change
gets noticed is referred to as the differential threshold. It is the minimum level of change that is
necessary for a person to detect that there has been a change in the stimuli. That is why it is also
known as j.n.d. (or just noticeable difference).

The concept can also be defined from the perceiver’s perspective. Human beings also have the ability
to perceive changes in a stimulus. Differential threshold refers to a person’s ability to detect and
perceive a change in the stimulus.

The marketer should understand that while making changes in his 4Ps, he should keep the differential
threshold in mind. He needs to determine the relevant j.n.d. for their offerings. For certain changes
like decrease in price or discounts, he could keep the j.n.d. high so that it is noticeable, and consumers
are attracted towards the discounted price; and in case of price increase, he should keep the j.n.d. low
and increase the price gradually, so that it does not get noticed by the consumer. For changes like
increased quantity at the same price, he should keep the j.n.d. high again, so as to be noticed. A new
variant or a modified form, should exhibit the “NEW” so that it is noticeable.

In a nutshell, the j.n.d. should be used in a manner that while positive changes (e.g. reduced price,
discounts, extra quantity, product improvement etc.) should be noticeable to the consumers, negative
changes (e.g. increased price, reduced quantity etc.) should not be apparent.

B. Perceptual Organization
After the input has been received from the selection stage and given attention to, the input/cue or the
information is organized into a coherent form, so as to be able to extract meaning out of it in the next
stage. Thus, perceptual organization deals with what happens in the perceptual mechanism once the
information from the environment is received. It is a cognitive process, which is responsible for
organizing the stimuli and the surrounding cues, to develop a “whole picture”, according to one’s
physiological, socio-cultural and psychographic principles.

While exposed to the various stimuli, human beings do not select them as separate and unrelated
identities, but they group them and perceive them as “a unified whole.” The various stimuli are put
together as a unified integrated structure. This organization of the stimuli is based on certain
principles, which were first proposed by the Gestalt school of psychology, and hence the name
“Gestalt principles”. The term “Gestalt”, is a German word meaning “pattern” or “configuration” or a
“unified whole”. As the various stimuli are patterned together and configured as a single whole, it is
given the term Gestalt principles. The manner in which these stimuli are unified, and the basis of the
configuration/pattern of relationships amongst the stimuli, influences an individual's overall
perception of each stimulus in the configuration. The marketer should aim at making the principles of
the Gestalt philosophy work in the product's favor.
There are certain factors that affect the Gestalt perception or the manner in which the configuration of
the stimuli takes place. These factors are stimulus factors and individual factors.
a) Stimulus factors
These refer to the external and observable characteristics of the stimulus, i.e. of the person, object,
thing or situation; in marketing terms it refers to the characteristics of the product, brand, packaging,
advertisement etc. Such factors would include size, intensity, motion, repetition, familiarity and
novelty, color and contrast, position, and isolation. Most of these factors have been detailed above.
Those that haven’t been discussed are as follows:
 Color and contrast: Color always catches greater attention than black and white. But it has
been observed that it can lose impact when put with other colored advertisements. Herein the
contrast effect assumes importance. A colored advertisement in a full context black and white
or vice versa is a perfect example of contrast effect.
 Position: Research has indicated that position also has a role to play in sensory perception. For
a language like English, which runs left to right on a page, the upper half of a page gets more
attention than the lower half, and the left-hand side more than the right. This would vary
across languages like for Urdu, Persian etc. This accounts for price differences in newspapers
and magazines, where the price of an advertisement differs according to the position where it
is placed.
  Isolation: Instead of being closer, when a stimulus stands apart from the other stimuli, the
chances of it getting perceived a greater than when it clustered together with other stimuli.
 Unity: Unity as a principle has an important role to play while organizing the various stimuli
into a unified group. Unity can be achieved by applying the Gestalt principles of proximity,
similarity, and density.
 Proximity: Those stimuli that are placed close to others form groups.
 Similarity: Those stimuli which are similar to each other form groups.
 Density: Those stimuli that have common density units form groups.
b) Individual factors

These refer to factors internal to and related to the perceiver; in marketing terms it refers to the
characteristics of the consumer. For example, motivation, learning, personality and self-image etc.
Such characteristics are unique to the individual and play an important role in selection, organization
and interpretation. They differ from person to person and as such, they are less measurable and
quantifiable than stimulus factors.

Motivation, learning, personality and self-image have been detailed above. Those psychological
characteristics that haven’t been discussed, but affect perception are as follows:

 Interest: The interest level varies from person to person. Some generalizations with respect to
interest may be made on the basis of age, gender, social class and lifestyle etc. People would
differ across gender, age etc. with the level of interest.

 Involvement: this refers to the degree with which a person approaches a person, object, thing,
or stimuli. It is indicative of how important and relevant something is to a person. When the
level of involvement for a product/service category is high, the consumer would be more
attentive to any kind of information that is provided; in such a case information gathering,
retention and recall would be high. The consumer would perceive the offering differently as
compared to one who is not that involved.

 Values: People are receptive to such product/service offerings that are compatible with their
culture and sub-culture, and the respective value system. They would exhibit perceptual
defense when exposed to stimuli that do not match their values or go against their values.

5.5. Consumer Perception and Implications for Marketers

Consumer perception has implications for a marketer. Marketer should understand that people
perceive things differently because of the perceptual mechanism that differs between people. Every
person is unique in himself with unique backgrounds, experiences, expectations, etc., and so the
resultant perceptions are also unique.
I. Perceptual selectivity

 The marketer should manage the sensory and perceptual factors to influence consumers.

 Human beings are simultaneously exposed to various stimuli in his/her environment. The
choice of the stimuli that they select would depend on what they feel is relevant for them and
or appropriate for them. In the field of marketing, stimuli could include the product, the brand
name, the features and attributes, the packaging, the advertisement, etc.
  The marketer should give attention to factors external and related to the stimuli, as well as to
factors, internal and related to the perceiver. External stimuli could take the form of size,
intensity, contrast, motion, repetition, familiarity, novelty etc. The stimuli should possess one
or more of such characteristics to get selected. Internal stimuli refer to factors that are related
to an individual viz., factors like motivation, learning, personality and self-image, etc.
Perceptual selectivity of a person would depend upon what he considers relevant and
appropriate as per these psychological variables.

 Keeping perceptual selectivity in mind, marketers, should offer different products for different
segments and position them accordingly.

 In order to get noticed, the marketer should understand that the absolute threshold for a
stimulus should be kept high; for example, when making decisions on packaging of potato
wafers, the font size should be big, the colors flashy and attractive etc.

 The marketer should understand that while making changes in his 4Ps, he should keep the
differential threshold in mind. For certain changes like decrease in price or discounts, he could
keep the j.n.d. high so that it is noticeable, and consumers are attracted towards the discounted
price; and in case of price increase, he should keep the j.n.d. low and increase the price
gradually, so that it does not get noticed by the consumer. In a nutshell, the j.n.d. should be
used in a manner that while positive changes (e.g. reduced price, discounts, “extra” quantity,
product improvement etc.) should be noticeable to the consumers, negative changes (e.g.
increased price, reduced quantity etc.) should not be apparent.

 Marketers should understand that consumers are selective in their exposure to the various
stimuli that they are exposed to, and often block themselves from unpleasant and undesirable
stimuli (Selective exposure). The marketer must try and present a pleasant stimuli.

 Of the many stimuli that people are exposed to, people are attracted to those stimuli that they
consider to be relevant in terms of a match with their needs (Selective attention).

 Sometimes people may select stimuli which they later find as psychologically threatening and
uncomfortable. In such cases, they have a tendency to filter out that stimulus, although initial
exposure has taken place (Perceptual defense). The marketer must try and present a pleasant
stimuli.

 When exposed to a large number of stimuli simultaneously, people may often block the
various stimuli, as they get stressed out (Perceptual blocking). So a marketer must not clutter
the media with too much of stimuli.

II. Perceptual Organization

Similar to perceptual selectivity, during perceptual organization, the marketer should give attention to
factors external and related to the stimuli, as well as to factors, internal and related to the perceiver.
The external factors refer to the external and observable characteristics of the stimulus, i.e. of the
person, object, thing or situation; in marketing terms it refers to the characteristics of the product,
brand, packaging, advertisement etc. Such factors would include size, intensity, motion, repetition,
familiarity and novelty, color and contrast, position, and isolation. The individual factors refer to
factors internal to and related to the perceiver; in marketing terms it refers to the characteristics of the
consumer. For example, motivation, learning, personality and self-image etc. The marketer should
aim at making the principles of the Gestalt philosophy work in the product's favor.
III. Perceptual Interpretation

Similar to selection and organization, perceptual interpretation is also influenced by the forces
external and related to the stimuli, as well as forces internal and related to the perceiver. It is also
affected by the situation under which perception takes place.

 People have a tendency to perceive things which they feel are relevant for them (Selective
perception). Marketers should relate the product and service offerings through a need-benefit
association, and could also go for need-benefit segmentation. They must work within the
consumer's needs to categorize products.

 People often judge others (or the stimuli) on the basis of physical appearance and looks
(Physical appearance). Marketers should design their product and service offerings
aesthetically. They must take advantage of physical appearance as an influencing factor to
their advantage. They should also use attractive models as their spokesperson, who are more
persuasive than average looking models.

 People judge another person (or the stimuli) on the basis of the characteristics of the group to
which he belongs (Stereotypes). Thus, marketers launch a product/service under the blanket
family name, so that the image that a time tested successful enjoys can be transferred to the
new offering as well. The marketer should be careful that in this case, the offering is not
disappointing for the customer, lest the image of the family brand could be tarnished.

 People make interpretations on the basis of irrelevant and unmeaningful stimuli; so products
should be positioned accordingly. Aesthetics and looks have a big role to play.

 People often make judgments on the basis of the first impression. A new product should never
be introduced in the market before it has been market tested. In case it is not tested and
launched, and subsequently fails, it could be disastrous for the company. All subsequent
attempts to satisfy the customer would fail as first impression is long lasting.

IV. Product and service offering and Imagery:

While making purchase decisions, consumers are faced with numerous alternatives, and purchase
decisions is often made on the basis of the image that the product/service offering or the brand holds.

V. Perceived price and Imagery:

 The manner in which a marketer prices a product and creates an image also has an impact on
consumer decision making. Marketers must identify appropriate reference prices (from a
consumer’s perspective), and estimate those levels (higher/lower) that are regarded as
uncomfortable and unacceptable by consumers. They must price their offerings accordingly.

 Consumers consciously or sub-consciously, give a lot of importance to fairness of price.

 Various kinds of slogans in various formats can be used by a marketer to his/her advantage;
Slogans tend to communicate “value” to the customer, through perceptions of increased
savings and low price. The wording and the semantics used to denote price or any information
related to prices can also affect a consumer’s perception about price.
  Tensile price claims are spread over across a range have a greater impact on consumer psyche
than objective price claims that are indicative of a single discount. Tensile price claims help
build store traffic, and subsequently larger sales and revenue.

 Bundle pricing has a positive effect on the consumers’ perception. The consumer feels happy
with regard to the increased savings that he would be able to get out of buying the products
together, rather than buying them individually at a higher price.

VI. Perceived quality and Imagery:

Marketers must communicate product or service features in a manner that develops perceptions of
product or service quality. Consumers judge the quality of the product offering on the basis of
internal and external cues; internal cues refer to the physical characteristics internal to the product or
service, like size, color, etc. while extrinsic cues refer to cues that are external to the product or
service, like price of the product, brand image, retail store image, or the country of origin.
VII. Price/Quality Relationship and Imagery:
Consumers relate price with quality and price is seen as an indicator of quality. Consumers also relate
the increased price to the product/service attributes, features and the overall benefits that the offering
provides. However, when a consumer has prior experience with the brand or is familiar with the
brand name and the brand image, price would become a less important factor in the assessment of
quality.

VIII. Retail Store and Image:

Just as product and service offerings are positioned and clearly indicate the segment(s) for which they
are aimed, similarly retail stores are also positioned. Not only are they indicative of the
products/service offerings that they sell, but the layout, design, ambience and the price of the
offerings clearly demonstrate the segment(s), for whom they exist. Consumers tend to shop in stores
that have images consistent with their own self-images. Thus retail stores create images for their self,
which illustrate the kind of and the quality of products they stock and carry. They layout, design and
ambience of a retail store reflects the kind of product lines it carries. Consumers relate the well-
known retail name with the assortment that it carries. They perceive high quality and value in goods
that bears a well-known retail name. The effects of the store image translate to the products as well
and vice versa.

The retail store and its image is greatly impacted by the price of the offerings and the discounts that it
offers. Stores that offer a small discount on a large number of items are perceived to be having lower
prices overall than stores that offer large discounts on a smaller number of products.

IX. Manufacturer name and Image:

Consumers are more receptive to product and service offerings that emanate from a respectable,
credible and reputed manufacturer, rather than one who is less favorable, or neutral, or totally
unknown.

X. Brand Image:

Consumers tend to form images of a brand; brand image is defined as the manner in which a
consumer forms perception about a brand. Marketers should aim at creating and maintaining a
positive image about their brands. Such an image gets created by product features, attributes, quality
as well as the satisfaction.

XI. Perceived risk:

The purchase process results in a state of anxiety and tension with respect to the negative
consequences that could result from product usage. This state known as “perceived risk”; it refers to a
feeling of uncertainty that arises within an individual when he fails to predict the consequences of
product choice, usage and resultant experience.

Perceive risk can be lessened or even ignored, thereby ending the state of tension and anxiety.
Marketers must identify consumer's perception of risk and help reduce the perception of risk through
risk reduction strategies. Some risk-reduction measures that can be taken by the marketer are as
follows: i) providing information; ii) building and maintaining brand loyalty and/or Store loyalty; iii)
creating a favorable brand image and/or Store image.