Unit-2

consumer behavior
and
customer
relationship
management

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UNIT – II:

Perception

Nature

Perception and Marketing Strategy,

Motivation

Motivation Theories and Marketing Strategy

Personality.

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Perception

Definition
A process by which individuals organize and interpret their sensory
impressions in order to give meaning to their environment

-Stephen P. Robbins

Perception is an important meditative cognitive process through which

persons make interpretations of the stimuli’s or situation they are faced with

- Fred Luthans

Meaning of Perception:
“Perception is the process through which the information from
outside environment is selected, received, organised and
interpreted to make it meaningful to you. This input of meaningful
information results in decisions and actions.”

Nature of Perception:
“Perception refers to the interpretation of sensory data. In other
words, sensation involves detecting the presence of a stimulus
whereas perception involves understanding what the stimulus
means. For example, when we see something, the visual stimulus is
the light energy reflected from the external world and the eye
becomes the sensor. This visual image of the external thing becomes
perception when it is interpreted in the visual cortex of the brain.
Thus, visual perception refers to interpreting the image of the

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external world projected on the retina of the eye and constructing a
model of the three dimensional world.”

From the above explanation it becomes clear that perception is

something more than sensation. It correlates, integrates and
comprehends diverse sensations and information from many
organs of the body by means of which a person identifies things and
objects, the sensations refer to.

Perception is determined by both physiological and psychological

characteristics of the human being whereas sensation is conceived
with only the physiological features. Thus, perception is not just
what one sees with the eyes it is a much more complex process by
which an individual selectively absorbs or assimilates the stimuli in
the environment, cognitively organizes the perceived information in
a specific fashion and then interprets the information to make an
assessment about what is going on in one’s environment.

Perception is a subjective process, therefore, different people may

perceive the same environment differently based on what particular
aspects of the situation they choose to selectively absorb, how they
organize this information and the manner in which they interpret it
to obtain a grasp of the situation.

Importance of Perception:

(i) Perception is very important in understanding the human

behaviour, because every person perceives the world and
approaches the life problems differently- Whatever we see or feel is
not necessarily the same as it really is. It is because what we hear is
not what is really said, but what we perceive as being said. When we

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buy something, it is not because it is the best, but because we take it
to be the best. Thus, it is because of perception, we can find out why
one individual finds a job satisfying while another one may not be
satisfied with it.

(ii) If people behave on the basis of their perception, we can predict

their behaviour in the changed circumstances by understanding
their present perception of the environment. One person may be
viewing the facts in one way which may be different from the facts
as seen by another viewer.

(iii) With the help of perception, the needs of various people can be
determined, because people’s perception is influenced by their
needs. Like the mirrors at an amusement park, they distort the
world in relation to their tensions.

(iv) Perception is very important for the manager who wants to

avoid making errors when dealing with people and events in the
work setting. This problem is made more complicated by the fact
that different people perceive the same situation differently. In
order to deal with the subordinates effectively, the managers must
understand their perceptions properly.

Thus, for understanding the human behaviour, it is very important

to understand their perception, that is, how they perceive the
different situations. People’s behaviour is based on their
perceptions of what reality is, not on reality itself. The world as it is
perceived is the world that is important for understanding the
human behaviour.

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Perceptual Process.

Perception is a process of receiving, selecting, organising, interpreting,

checking and reacting to stimuli. This is like an input-through put-
output process in which the stimuli can be considered as 'inputs'
transformation of 'input' through selection, organization and
interpretation as 'through puts' and the ultimate behaviour/action as
'output'. The whole perceptional process can be presented as follows :

These are explained one by one

1. Receiving Stimuli : The first process in the perception is the

presence of stimuli. The stimuli are received from the various sources.
Through the five organs. It is a physiological aspect of perception
process. Stimuli may be external to us (such as sound waves) and inside
us (such as energy generation by muscles).

2. Selection of Stimuli : After receiving the stimuli or data, some are

selected. Others are screened out. Two types of factors affect selection of
stimuli for processing : external and internal factors. External factors
relate to stimuli such as intensity of stimuli, its size, movement,
repetition, etc. Internal factors, relate to the perceiver such as his/her
age, learning, interest, etc. Normally, he will select the objects which
interest him and will avoid that for which he is indifferent. This is also
called 'selective perception'.

3. Organization of Stimuli : Organising the bits of information into a

meaningful whole is called "organization". There are three ways by which
the selected data, i.e., inputs are organised. These are :

(i) Grouping, (ii) Closure and (iii) Simplification.

(i) Grouping : In grouping, the perceiver groups the various stimuli on

the basis of their similarity or proximity. For example, all the workers

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coming from the same place may be perceived as similar on the basis of
proximity.

(ii) Closure : When faced with incomplete information, people fill up

the gaps themselves to make the information meaningful. This may be
done on the basis of past experience, past data, or hunches. For example,
in many advertisement, alphabets are written by putting electric bulbs
indicating the shape of the concerned alphabets but broken lines. In such
cases, people tend to fill up the gap among different bulbs to get meaning
out of these.

(iii) Simplification : People identify main stimulus features and

assesses how they are organized. He interprets a stimulus situation, the
perceiver simples the information.

Factors Influencing Perceptual Set External

Factors:
1. Size : Bigger size attracts the attention of the perceiver

2. Intensity : A loud sound, strong odor or bright light is noticed more

as compared to a soft sound, weak odour or dimlight.

3. Repetition : A repeated external stimulus is more attention getting

than a single one. Advertisers use this principle.

4. Novelty and Familiarity : A novel or a familiar external situation

can serve as attention getter.

5. Contrast : It is a kind of uniqueness which can be used for attention

getting. Letters of bold types, persons dressed differently than others,
etc., get more attention.

6. Motion : A moving object draws more attention as compared to a

stationary object. Advertisers use this principle.

Internal Factors

Self-concept : The way a person views the world depends a great deal
on the concept or image he has about himself. The concept plays an
internal role in perceptual selectivity.

Beliefs : A person's beliefs have profound influence on his perception.

Thus, a fact is conceived not on what it is but what a person believes it to
be.

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Expectations : These affect what a person perceives. A technical
manager may expect ignorance about the technical features of a product
from non-technical people.

Inner Needs : The need is a feeling of tension or discomfort, when one

thinks he is missing something. People with different needs experience
different stimuli. According to Freud, wishful thinking is the means by
which the Id attempts to achieve tension reduction.

Response Disposition : It refers to a person's tendency to perceive

familiar stimuli rather than unfamiliar ones.

Response Salience : It is the set of disposition which are determined

not by the familiarity of the stimulus situations, but by the person's own
cognitive predispositions. Thus, a particular problem may be viewed as a
marketing problem by marketing personnel, a control problem by
accounting people and human relations problem by personnel people.

Perceptual Defence : It refers to the screening of those elements

which create conflict and threatening situation in people.

1. Denying the existence or importance of conflicting information.

2. Distorting the new information to match the old one.

3. Acknowledging the new information but treating it as a non-

representation exception. The factors that influence perception may be
broadly divided into three categories :

1. Factors that reside in the 'Perceiver' (i.e., attitude, motives, interests,

past experiences and personality, expectations)

2. Factors of the 'situation' and-factors connected with the 'Target'.

3. Factors that determine the preferred location of a brand on each of the

relevant dimension in perceptive mapping.

Errors in Perception
As seen above perception is the process of analyzing and understanding a
stimulus as it is.

But it may not be always possible to perceive the stimuli as they are.

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 Knowingly or unknowingly, we mistake the stimulus and perceive it
wrongly.

Many times the prejudices in the individual, time of perception, unfavorable

background, lack of clarity of stimulus, confusion, conflict in mind and such
other factors are responsible for errors in perception.

There are some errors in perception;

 Illusion.

 Hallucination.

 Halo Effect.

 Stereotyping.

 Similarity.

 Horn Effect.

 Contrast.

Illusion

The illusion is a false perception. Here the person will mistake a stimulus
and perceive it wrongly.

For example, in the dark, a rope is mistaken as a snake or vice versa. The
voice of an unknown person is mistaken as a friend’s voice. A person
standing at a distance who is not known may be perceived as a known
person.

Hallucination

Sometimes we come across instances where the individual perceives some

stimulus, even when it is not present.

This phenomenon is known as a hallucination. The person may see an

object, person, etc. or he may listen to some voice though there are no
objects and sounds in reality.

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Selective Perception

Selective perception means the situation when people selectively interpret

what they see on the basis of their interests, background, experience, and
attitudes.

It means any characteristics that make a person, object, or event stand out
will increase the probability that it will be perceived.

Because it is impossible for us to assimilate everything we see, only certain

stimuli can be taken in.

Halo Effect

The individual is evaluated on the basis of perceived positive quality,

feature or trait. When we draw a general impression about an individual on
the basis of a single characteristic, such as intelligence, sociability, or
appearance, a halo effect is operating.

In other words, this is the tendency to rate a man uniformly high or low in
other traits if he is extraordinarily high or low in one particular trait: If a
worker has few absences, his supervisor might give him a high rating in all
other areas of work.

Stereotyping

People usually can fall into at least one general category based on physical
or behavioral traits then they will be evaluated. When we judge someone
on the basis of our perception of the group to which he or she belongs, we
are using the shortcut called stereotyping.

or example, a boss might assume that a worker from a Middle East country
is lazy and cannot meet performance objectives, even if the worker tried his
best.

Similarity

Often, people tend to seek out and rate more positively those who are
similar to themselves. This tendency to approve of similarity may cause

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evaluators to give better ratings to employees who exhibit the same
interests, work methods, points of view or standards.

Horn Effect

When the individual is completely evaluated on the basis of a negative

quality or feature perceived. This results in an overall lower rating than an
acceptable rate.

He is not formally dressed up in the office, that’s why he may be casual at

work too.

Contrast

The tendency to rate people relative to other people rather than to the
individual performance he or she is doing. Rather will evaluate an employee
by comparing that employee’s performance with other employees.

In the early 20th Century, Wilhelm Wundt identified contrast as a

fundamental principle of perception, and since then the effect has been
confirmed in many different areas.

These effects shape not only visual qualities like color and brightness but
other kinds of perception, including how heavy an object feels. One
experiment found that thinking of the name “Hitler” led to subjects rating a
person as more hostile.

Basically, we use the above shortcuts when we judge others. Perceiving and
interpreting what others do is burdensome. As a result, individuals develop
techniques for making the task more manageable.

These techniques are frequently valuable-they allow us to make accurate

perceptions rapidly and provide valid data for making projections. But
sometimes it also creates problems.

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Marketing Strategy:
A Marketing Strategy is the long term planning of business objectives
that the company wants to achieve. For these to be achieved it is
important to choose well the specific actions to consolidate the
reputation of products and services or increase sales in the market.
Utilizing opportunities is vital to find the target market and to be able to
make customers loyal to the organization so that the positioning of the
company gets stronger.
A marketing strategy refers to a business's overall game
plan for reaching prospective consumers and turning them
into customers of the products or services the business
provides.

Importance of Marketing Strategy

 Marketing strategy provides an organization an edge over it’s
competitors.
 Strategy helps in developing goods and services with best profit
making potential.
 Marketing strategy helps in discovering the areas affected by
organizational growth and thereby helps in creating an
organizational plan to cater to the customer needs.
 It helps in fixing the right price for organization’s goods and
services based on information collected by market research.
 Strategy ensures effective departmental co-ordination.
 It helps an organization to make optimum utilization of its
resources so as to provide a sales message to it’s target market.
 A marketing strategy helps to fix the advertising budget in
advance, and it also develops a method which determines the scope
of the plan, i.e., it determines the revenue generated by the
advertising plan.

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APPLICATIONS OF A STUDY OF CONSUMER’S
PERCEPTION:
• Retail Strategy
• Brand name and logo
• Media strategy
• Advertisement
• Package design

RETAIL STRATEGY
 Store layout and interiors
 Shelf position and amount of shelf space allocated to various
products and brands
 Cross promotion
 Creating retail environment – ambient scent

BRANDNAME & LOGO DEVELOPMENT

 Linguistic considerations
 Typography
 Attractive colours (e.g.Yellow of Maggi, Idea, Red of ICICI Bank)

MEDIA STRATEGY
 Media vehicle selection
 Media schedule

ADVERTISEMENT
 Creative designing
Colours
Contrast
Use of humour, jingles, animation, sex appeal or celebrities to grab
attention

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PACKAGE DESIGN & LABELING
 Packages must attract attention and convey information
E.g. Kellogg’s Chocos

Motivation:

• People are motivated by many things, some positive others

not. Some motivating factors can move people only a short time,
like hunger which will last only until you are fed. Others can drive
a person onward for years.
 Motivation is the driving force within individuals that impels them
to action. Motivation is the activation or energisation of goal-
oriented behavior.
 Motivation may be intrinsic or extrinsic.
 The term is generally used for humans but, theoretically, it can also
be used to describe the causes for animal behavior as well.
According to various theories, motivation may be rooted in the
basic need to minimize physical pain and maximize pleasure, or it
may include specific needs such as eating and resting, or a desired
object, hobby, goal, state of being, ideal, or it may be attributed to
less-apparent reasons such as altruism, morality, or avoiding
mortality.
 The study of Motivation refers to all the processes that drives in a
person to perceive a need and pursue a definite course of action to
fulfill that need.
 Needs are the core of the marketing concept
 What are Needs − Every individual has needs that are required
to be fulfilled. Primary needs are food, clothing, shelter and
secondary needs are society, culture etc.
 What are Wants − Needs are the necessities, but wants are
something more in addition to the needs. For example, food is a
need and type of food is our want.
 What are Goals − Goals are the objectives that have to be
fulfilled. Goals are generic and product specific in nature. Generic

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 goals are general in nature, whereas product specific goals are the
desires of a specific nature.
Needs and fulfillment are the basis of motivation. Change
takes place due to both internal as well as external factors.
Sometimes needs are satisfied and sometimes they are not due
to individual’s personal, social, cultural or financial needs.

Theories of Motivation:
Maslow’s Theory of Need Hierarchy
• Based on the notion of a universal hierarchy of human needs Dr .
Abraham Maslow, a clinical psychologist formulated a widely
accepted theory of human motivation. This identifies five basic
levels of human need which rank in order of importance from
lower level needs to higher level needs.
• This theory signifies the importance of satisfying the lower level
needs before higher level needs arise. According to this theory,
dissatisfaction motivates the consumer.

Following are the levels of human needs −

Maslow’s Need Hierarchy Theory
• Physiological Needs − Food, clothing, air, and shelter are the
first level needs. They are known as the basic necessities or
primary needs.
• Safety or Security Needs − Once the first level needs are
satisfied, consumers move to the next level. Physical safety,
security, stability and protection are the security needs.
• Social Needs − After the safety needs are satisfied, consumers
expect friendship, belonging, attachment. They need to maintain
themselves in a society and try to be accepted.
• Esteem Needs − Then comes esteem needs such as self-esteem,
status, prestige. Individuals here in this stage want to rise above
the general level as compared to others to achieve mental
satisfaction.
• Self-Actualization − This is the highest stage of the hierarchy.
People here, try to excel in their field and improve their level of
achievement. They are known as self-actualizers.

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 Motivational Theory and
Marketing Strategies:
• Marketers have to understand the motives of their potential
customers to enjoy good sales. A buyer has several motives and
each change with various elements. In such cases the marketers
can readily help their customers by changing their marketing
strategy so that the conflict is resolved. Following are the major
conflicts that may arise −
• Approach Conflict − This conflict arises when a consumer has
two different choices of similar products or services. He gives equal
importance to them, but is unable to choose one over the other.
• Approach Avoidance Conflict − This type of conflict happens
when the consumer decides in favor of a product, but is unhappy
with a particular feature of the product and wants to avoid it.
Under such circumstances, the marketer may come up with few
modifications in the existing product and make it suitable for the
consumer.
Personality:
• To understand a buyer needs and convert them into customers is
the main purpose of the consumer behavior study. To understand
the buyer habits and his priorities, it is required to understand and
know the personality of the buyer.
• Personality signifies the inner psychological characteristics that
reflect how a person reacts to his environment. Personality shows
the individual choices for various products and brands. It helps the
marketers in deciding when and how to promote the product.
Personality can be categorized on the basis of individual traits,
likes, dislikes etc.
• Though personality is static, it can change due to major events
such as death, birth or marriage and can also change gradually
with time. By connecting with the personality characteristics of an
individual, a marketer can conveniently formulate marketing
strategies.
various theories of personality:
 Trait Theory.
 The Psychoanalytic Theory of Freud.
 Neo-Freudian Theory.

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 Trait Theory:
 Traits are the features of an individual or tendency of an individual
in a particular manner.
 Traits help in defining the behavior of consumers. According to the
Trait theorists, an individual’s personality make-up stems out of
the traits that he possesses, and the identification of traits is
important.
Following are the few of the most common traits −
• Outgoing
• Sad
• Stable
• Serious
• Happy go lucky
• Relaxed
• Self assured
• Practical
• Imaginative
 Trait theory is representative of multi-personality theories. Trait
theory is based on certain assumptions, such as traits which are
certainly stable in nature and a limited number of traits are
common to most of the people.
According to the Trait theorists, an individual’s personality make-
up stems out of the traits that he possesses, and the identification
of traits is important. The trait theories can be of two broad
categories, viz., Simple trait theories and general trait theories.

The Psychoanalytic Theory of Freud:

• Sigmund Freud, the father of psychology, became famous with his
psychoanalytic theory of personality. In fact, the theory is regarded
as the cornerstone of modern psychology. Sigmund based his
theory on certain assumptions which is as follows −
• Unconscious needs or drives lie at the heart of human motivation
and personality.
• The socialization process that takes place within people in a social
set up has a huge impact on individual behavior. Freud explained
much of how the psyche or the mind operates, and proposed that,
human psyche is composed of parts within our awareness and
beyond our awareness.
He said that all behavior within an individual cannot be explained,
much lies in the subconscious.:

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• Id − According to Freud’s psychoanalytic theory of personality, the
id operates based on the pleasure principle, which stresses on
immediate fulfillment of needs. The id is the personality
component made up of unconscious psychic energy which satisfies
basic urges, needs, and desires.
• Ego − Ego is that state of awareness which thinks of you as
separate from the other. It always thinks of the glories of the past
and hopes of the future and focuses on guiltiness. It always thinks
of what was and what could be.
• Super Ego − The superego provides guidelines for making
judgments. It is the aspect of personality that holds all our moral
standards and ideals that we acquire from both parents and
society.

Neo-Freudian Theory:
• There were a group of psychologists who believed that social
interaction and resultant relationships formed the basis for the
growth and development of personality. Here, they disagreed with
their contemporary, Freud, who believed that personality was −
• Biological and rooted in genetics, and
Was groomed as a result of early childhood experiences. This
group of researchers who laid emphasis on the process of
socialization came to be known as the Neo. To form a personality,
social relationships are very important.
Based on this, consumers are classified into three personality
types−:
• Complaint Personalities − They prefer love and affection and
so they move towards them and so they prefer known brands.
• Aggressive Personalities − They tend to move against others
and they show off their need for power, success etc which is quite
manipulative.
• Detached Personalities − They are not much aware of brands
and are more self reliant and independent.
• Marketers also tend to use Neo-Freudian theories while
segmenting markets and positioning their products.

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