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Terms in this set (5)

Note that the process shown in Figure 8.1 does not have to be completed with all five stages. The consumer could stop at any stage and go no further. For example, the consumer even after going through the first three stages, may choose not to purchase the product. Also, the process is usually not as "linear" as shown i.e., consumers could go back and forth between stages without going forward. For instance, the consumer could process information in stage two and go back to stage one to understand their needs better.
Conditions for HDC (High Involvement Decision Making) also known as complex decision making .... you create a lot of beliefs in a high involvement decision making
• Product category must be high involvement! This means that the product category must be of high personal relevance to the consumer because in some way there is PERCEIVED RISK in the product category. There can be perceived risk in any of the five types of perceived risk below.
There is perceived performance risk because the product is a complex unit such as a car.
There is perceived social risk since the product is used selectively by certain groups.
There is perceived financial risk because the product is costly to buy and also to use.
There is perceived psychological risk because the product is capable of changing the consumer's self-concept.
There is perceived physical risk because the product is capable of physically hurting the consumer and/or others.
• The consumer must have enough time to engage in the lengthy process
• The consumer must be knowledgeable enough to understand the information derived from the information processing stage.
• There should be enough information available to the consumer.

Figure 8.1 describes a high involvement model of consumer behavior. What would a model of consumer behavior for low involvement products look like? What happens when the need is aroused for canned soup, assuming it is a low involvement category? Is it possible that the consumer goes straight to purchase from need arousal without much information processing and brand evaluation? Is it possible that after purchase, there may be very little post purchase deliberation or perhaps none! The consumer registers the same satisfaction as always and the tendency to rebuy is reinforced. All in all, low involvement consumers are likely to:
• Buy first, then think about the purchase.
• Not conduct a lot of information search.
• Buy on the basis of price alone.
• Not have strong brand attitudes.
• Not use complex (high involvement decision making) decision making.

NEED AROUSAL
Philip Kotler defined needs in marketing as "felt deprivations". Need Arousal, the first stage in HDC, concerns how consumers go about developing an understanding of their needs prior to purchasing a high involvement product. Thus, consumers feel deprived from the fulfillment of their needs (hunger, etc. as below) and this causes some "tension" that motivates them to go through the expense and trouble of conducting the entire HDC process for a certain product category. Note, once again, that needs are felt deprivations and "wants" are the product categories that fulfill such needs.
Maslow's Hierarchy of Needs in the figure below shows five needs that are common to all human beings. These needs are a "hierarchy" since the lower order needs from physical to safety needs must be satisfied first before the higher order needs of love, esteem and self-actualization can be satisfied. In other words, you cannot fall in love on an empty stomach!


Figure 8.3 below shows the process of Need Arousal. Keep in mind that there is a separate process for each of the five stage of HDC.
Internal and External Variables in Need Arousal
Two sets of variables may influence the need recognition stage of Need Arousal. Internal variables (see also figure 1.1 in Chapter One) are those influences arising from the consumer's demographics and psychographics including age, gender, income, lifestyle, personality and past experiences. For instance, a person's income may cause them to recognize either the need for a compact car of for a luxury car.
External variables are the variables outside of the consumer which may influence the consumer's recognition of their needs. These environmental variables include the marketing activities of companies, the consumer's culture, subculture, friends and family. For instance, a car commercial could awaken the recognition of the need for a sports car. Internal and external variables usually work together to create need recognition, as also shown in Figure 1 in Chapter One. Thus, a consumer's past experiences, demographics, psychographics AND their family and friends could combine to form the consumer's recognition of their need for a new house.
Consumers' Psychological Set (what's in their mind)
This comprises of consumers' existing brand attitudes and the benefit criteria the consumer seeks in the product category. At the moment in time that the consumer recognizes the need for a purchase in a product category, say a wedding dress, there are certain existing brand attitudes (or perhaps none!) towards different brands of wedding dresses and also certain existing benefit criteria that she already uses to evaluate different brands for the choice of a wedding dress. Note the difference between brand attitudes and benefit criteria. Brand attitudes refer to the overall attitudes towards particular brands. Brand criteria are factors that the consumer seeks in all brands in a product category, regardless of any particular brand.
Attitude is a learned predisposition
THUS, BENEFIT CRITERIA REFERS TO THE ENTIRE PRODUCT CATEGORY (SAY, ALL BRANDS IN THE BEER PRODUCT CATEGORY), WHILE BRAND ATTITUDES IS ABOUT THE INDIVIDUAL BRANDS (MILLER, COORS, ETC.) IN THE SAME PRODUCT CATEGORY (BEER). You should think of other examples of product categories and brands in those categories. Define product categories somewhat broadly, but not too narrowly. Thus, fast food is less useful to us as marketers than burger chains. You must know the product category you compete in very clearly so that you know who your competitors are. Notice the difference when you position your movie theatre in the product category "all entertainment in the local area" versus "all movie theatres in the local area". What are the consequences of each positioning strategy?
Brand Attitudes
BRAND ATTITUDES are defined as consumer's learned predispositions towards certain brands. As Figure 8.4 shows, there are three components of BRAND ATTITUDES - brand beliefs, the overall attitude to the brand and the intention to buy (or not!) the brand/ behave in a certain way towards the brand (say, vote or not to vote for a politician). Purchase is not a component
Brand beliefs are the cognitive component of BRAND ATTITUDES. A brand belief is a subjective association between any two discriminable concepts such as "Brand X is low in calories," or "Brand X is pasteurized". Note that all brand beliefs may not be favorable and that a brand may have both positive and negative beliefs. Brand beliefs are the same as the "product attributes" made in a factory notion that we saw earlier. Performance is a benefit
The sum total of all these beliefs (some positive and some negative) result in a favorable or unfavorable Overall Brand attitude. This component is defined as a person's overall disposition towards another person or object ("Brand X is good/bad," or "Brand X is the best/worst brand" or "I love/hate Brand X") based on brand beliefs.
The third component of a BRAND ATTITUDE is intention to buy (or not to buy) the brand. Note that this is not purchase of the brand. In fact, it may not even lead to purchase of the brand. However, intention to buy or behave towards the brand in some positive way, is the best indicator that we have to predict brand purchase. Even if positive brand intentions lead to brand purchase thirty percent of the time customers only have the intent to buy 30% of the time, this is a huge prediction of consumer behavior from our point of view. In fact, in the absence of actual behavior, intention to buy is used by managers to gauge the effectiveness of changes in their marketing mix variables. For instance, did a change in the price of the brand produce a change in intention to buy ratings by consumers who knew about the price change?

Brand Criteria
Consumers use brand criteria as factors in a product category to help in deciding on one brand over another. For example, for the purchase of a car, consumers may have in mind the criteria of comfort, handling, economy in mind when they start their information search. These brand criteria will expand during their information search. Perhaps, acceleration and accessories will added to augment their brand criteria list in their psychological mind set for the product category.
INFORMATION SEARCH
Brand consideration set and more brand critera
Sell the brand category than the brand
In the second stage of HDM, consumers search (and re-search!) information on (a) more brands in the product category to expand their consideration set of brands - the set of brands from which they will make their final selection of a brand (b) more brand criteria to help them to compare brands in their consideration set. Note that they do not do the final comparison until the third stage of HDM, brand evaluation. They merely obtain and add to the brand criteria list they already possess from the need arousal stage. They use this final list in stage three.
In order to find these pieces of information, consumers perceive stimuli. Perception is defined as the selection, organization and interpretation of stimuli. What are customers looking forFigure 8.5 shows this process within the stage of information search.

We will discuss the process of perception more in a later chapter. For now, we should know that it is a process, i.e. first, consumers must select the information using their selective perception abilities; next, they must organize the information into chunks of meaningful information on brands; last, they must interpret the usefulness of the information for their own needs. Thus, they may see an ad for Coke, but they must also select it, i.e. they must attend to the ad to some degree at least. Then they have to organize the ad by putting it in a "folder" in their minds for Coke. Finally, they must take all the information in that folder and understand what all the information means for their choice in the cola category.
Types of Search. There are three types of information search, ongoing search, purchase directed search and passive acquisition of information.
• Ongoing search occurs on an also known as enduring basis. The consumer is highly involved in the product category in some way (see the various aspects of involvement in Ch.9) and always searches for information in this product category regardless of whether they are about to buy the product. As an example, a consumer may always look for information on the latest fashions regardless of whether they intend to buy fashionable clothes in the near future. These consumers are always looking for new information in the product category. You don't have to buy, just be interested. (like I am with makeup)..... this is high involvement
• Purchase directed search occurs when and only when the consumer needs to make a purchase in the near future. The consumer may or may not be highly involved in the product category. If the consumer is not involved in the category, they will have less knowledge about the product category and their search will be different from that of consumers who are highly involved and have more knowledge in the product category. What difference do you think this will make to their search navigation on the web and/or elsewhere?
• Passive acquisition of information occurs when the consumer is not involved in the product category and is not about to buy the product category. Imagine a consumer almost mindlessly flitting from website to website with no clear goal in mind. They pick up information, if any, in a random way. This is low involvement
Extent of Search. How much information will consumers search for? Will it depend on the following factors?
• The level of risk. We can say that higher the risk in any one of the five types of risk (see earlier in this chapter), higher the information search. So, more specifically, higher the price or financial risk, higher the search.

The last sentence above describes a hypotheses. A hypotheses is a statistical prediction about the relationship of two or more variables (like price and search above). The hypotheses above states that there will a POSITIVE CORRELATION between price and search, so that as price goes up, search also goes up to some degree AND that as price goes down, search also goes down to some degree. What would a negative correlation between price and search state?
DO ME A FAVOR AND NEVER USE THE TERM "CORRELATION" EXCEPT IN A STATISTICAL SENSE AS ABOVE. IF YOU MEAN A CONNECTION, THEN SAY A "CONNECTION AND NOT A CORRELATION, PLEASE. 'THERE IS A CONNECTION BETWEEN BUSINESSES AND POLITICS', FOR INSTANCE AND NOT A CORRELATION.

• The amount of time pressure. If there is a great deal of time pressure (i.e. not much time available), then information search will go down. Thus, higher the time pressure, lower the amount of information search. Note that this is a negative correlation between time pressure and information search.
• Higher the perception of significant differences between brands in the product category, higher the information search. This is a positive correlation. Consumers sometimes perceive that a product category is fraught with uncertainty because they could really go wrong if they purchased the wrong brand, say of furniture or headache remedy. In which case, they will spend more time searching for the right brand. In other brands, if we advertise that "all brands are not the same" in our product category, consumers are more likely to read lengthier copy in our advertisement or brochure or email. In a way, this raises the level of risk or involvement in the product category and, thus, raises the level of information search.
• The Cost of Search. There are two types of cost in information search, monetary and non-monetary. Monetary costs are the costs of money in order to search. Obviously, if consumers have to travel to search for information, they will incur a monetary cost of search by way of gas expenses. Not so obviously, consumers also incur non-monetary costs of search in terms of time costs (time spent looking at ads, shopping at retail outlets, etc.) and psychological costs of shopping (having to deal with sales people at a car dealer). Higher the monetary and/or non-monetary costs of search, lower the information search. Why? What type of correlation is this?
• Level of prior experience. Higher the consumer's level of prior experience, lower the level of search. Consumer's prior experience with the product category provides them with more prior knowledge of the product category and allows them to search more efficiently. Graph this negative correlation using two axis for the two variables, level of prior experience and level of search. Contrast it to a graph that shows a positive correlation.
Sources of search. There are two sources of search - personal/non-personal, trusted and non-trusted. Trusted sources are those that do not have a vested interest in the sale of a brand. Thus, all marketing sources (sales people, ads, etc.) would be NON-trusted sources. On the other hand, sources such as Consumer Reports which does not even take ads from corporations would be a trusted source. Other trusted sources may be organizations like the American Medical Association, Good Housekeeping, etc. who work in the interest of consumers. Look back to Chapter Two where we saw the role of certain consumer organizations and activists in society. Trusted sources are also called "neutral" sources.
Personal sources involve an actual person interacting one-on-one with the consumer. Thus, a commercial using a celebrity (Bruno Mars) would be a NON- personal source but "Uncle Jim" would be personal source as would a salesperson. A personal source could also be a trusted or non-trusted source and there we have the difference between Uncle Jim and the salesperson made clear! Uncle Jim is trusted and personal.
BRAND EVALUATION
Having collected information on more brands and more brand criteria during information search, the consumer now has to sit down and make sense of all this data. One model of high involvement decision making that is used by consumers is the expectancy value model. This model allows consumers to come to a decision on which brand of, for example, automobile is the best choice for them or which brand is expected to provide the most value. There are four components to this model as shown in Figure 8.6 below. Brand criteria, brand score on criteria, important weight, real brand score, total expected value
(a) THE BENEFIT SCORE FOR EACH BRAND. This is the score given by the consumer to a brand on one of the brand criteria.
(b) THE IMPORTANCE WEIGHT FOR EACH BENEFIT CRITERIA. This is the score given by the consumer to a benefit criteria to indicate the importance of this criteria.
The benefit score for each brand multiplied by the importance score for that benefit criteria is the "real" benefit score for the brand. The figure below only provides the importance weight for each benefit criteria and the benefit score for each brand. The real benefit score must be computed as explained above and all the real scores for each brand added up represent the total expected value for each brand. The brand with the highest such score is expected to provide the greatest value to the consumer.

Benefit criteria can be different from importance weight
Price can also be a part of this cart
Question. In the figure above, some ratings have been provided to you for a certain consumer group. Which brand do you think will offer this consumer group the most expected value? (a) Without using the importance weights (b) Using the importance weights (you have the compute the "real" benefit scores!)
The limitations of EVL
There are some points to note about the expectancy value model. First, it is a quantitative model of decision making. Consumers may not be so quantitative in their brand evaluation. Or, they may not actually give numbers to the scores but some other less quantitative language of their own, say crosses and checks. In other words, they may make more wholistic, intuitive, overall judgements during evaluation. Second, a brand with the highest expectancy value does not necessarily get purchased. As we shall see, there are other things as well that lead to purchase.
Lastly, the outcome also depends on whether consumers use a compensatory or non-compensatory method of decision making. If consumers add up all the real scores for each brand and then decide on a brand, that is a compensatory method of high involvement decision making i.e., consumers are allowing a brand to make up for weaknesses on one criteria with strengths on another criteria. But, what if they use a non-compensatory method in which any brands that do not do well in the first (most important) benefit criteria are rejected forthright without allowing them to "strut their stuff" on other criteria. Thus, in the figure above, the brand Acura would have been dropped during THE VERY FIRST analysis by the consumer for the first criteria of SAFETY. In the second "round" for the benefit criteria COMFORT, the brand Infinity would have been eliminated and the winner would have been the Lexus, based on just two rounds of consideration! Thus, we have to dig deeper and find out which mode of decision making is used by consumers for each product category that we examine. Consumer behavior is rarely simple.
Compensatory: If you do bad in one category you can make up for it in another (power league) (in the chart, Acura doesn't do well in safety but goes well in everything else)
Non-compensatory: you can't make up for weakness, the moment you don't perform well, you're out (last day of volleyball tourney)
Question. Let us explore the marketing implications of Brand evaluation.
a) Can we affect consumers' evaluation of our brand? Can we change their benefit criteria by introducing new criteria and/or eliminating existing criteria? How?
b) Can we change their benefit scores for our brand? How?
c) Can we change their importance weights for the criteria on which we are the strongest? How?
d) Can we change their Total Expected Value scores? HOW? This strategy invites you to think of other ways in which consumers make evaluations about brands without using the expectancy value model.
Question. The expectancy value model is not only for consumer brand evaluation. It can be used for a wide variety of decision making because it is very much like the "weighted average" method of business decision making. Use this method to figure out the price for the seven cities in Java as per the information given in the APPENDIX at the end of this text. This is question 6 from the Appendix.

PURCHASE (OR NO PURCHASE?)
What instrumental actions need to be made for a car purchase?
Choose the dealer where you wish to buy. You have to find a model you like, how do you want to finance the car, do you want an extended warranty
This would appear to be the easiest stage in HDM to understand. Yet, it is a critical phase of HDM and a company could also easily mess up at this stage. First, we must understand that consumers do not have to buy at this stage. They could put off the purchase or just decide that the product category was not for them at all. There are a variety of reasons why consumers may go through brand evaluation, intend to buy the brand in the product category and not end up buying the brand or perhaps even buying a different brand from the one they thought earlier had the most expected value. A loss of income, a change in family situation, fluctuations in the economic and/or political environment, a loss of faith in the brand or company, new developments in competitive brands could all change the consumer's choice. There are also instrumental actions to perform, as below.
INSTRUMENTAL ACTIONS. Instrumental actions are those actions that the consumer must complete before they can actually possess a brand. They occur before purchase and after brand evaluation. These actions may require an entire process of decision making as well. First, consumers must choose the store, or website they will buy the brand from. This is called dealer choice and as you can tell, this is a crucial action which may at times also change the very brand that is chosen. Next, they have to decide on the exact version or item or SKU of the brand that they want. Consumers also have to find financing for expensive product categories. Further, in some cases, they must also have to qualify to use the product by providing evidence for their ability to use the product. Examples are consumers obtaining a license to drive a car, finding insurance, choosing the color of the car, obtaining registration.
Question. How will you, as a car dealer, make sure that a consumer who walks in today and says they are ready to buy, actually drives out TODAY with the car of their choice?
POST PURCHASE
Why is post purchase important? Word-of-mouth marketing Maintain their customers
Whose satisfaction is most important? Purchaser, decision maker, consumer
On the way back from the dealership, Jim finds his new car is producing a "ping" noise. Jim will feel what in social psychology (the work of Festinger and others) is called dissonance - a state of mental conflict involving two different beliefs. Consumers always feel some dissonance after a high involvement decisions, like buying a car or marriage On the one hand Jim believes that this is a good car that he has purchased. On the other hand, Jim sees that there is evidence contrary to that belief. These two contradictory beliefs cause him some dissonance. We have referred to this earlier in chapter one as a "crossfire" between emotion and reason and that can also be another example of dissonance. When the right and left brain hemispheres work together, the consumer feels satisfaction and when they do not work together, there is dissonance. These are the two most important notions to understand in the last stage of HDM - post purchase.
First, let's see why understanding the consumer's mental state during post purchase is important at all. Why should we care what consumers think about after they have already bought the brand. The first and obvious answer is that we want them to buy the brand again and they will only do so if they are satisfied with their first purchase. Further, we want the consumer to buy and rebuy auxiliary services as well. If they are not satisfied, we have to do what it takes to make them satisfied. This is why consumer complaints are so important. It has been found that consumers who complained about their purchase and who were then given service that rectified their problem, became more loyal to the brand than those who never complained at all! Treat every problem as an opportunity to make the consumer loyal in the long run! Next, we want the consumer to talk about their purchase and they will only do this if there is satisfaction and no dissonance.
Satisfaction is a positive feeling of fulfillment. Dissatisfaction is the negative feeling of fulfillment .... Satisfaction=perceived. Performance=expectations a consumer can still be satisfied even if it is below their expectations.... The first thing you need to know is what the consumers expectations are from you. It occurs when consumers' expectations are met by the perceived performance of the product. Thus it is a function of two things and we can actually do something about both. It may be possible to raise or lower consumers' expectations. The advertised price, for instance, can raise or lower expectations. The verbal and visual content of an ad can also do the job we want to do. Of course, we can also raise or lower their perceptions of the performance of the brand buy actually improving our brand or store's performance. Remember, as always, that it is the perception of the performance that matters. We can think we make a great product but that is not necessarily the perception in the eyes of the consumer. Note that if expectations are not met, the result is dissatisfaction. Dissatisfaction is only after performance is perceived. It is not the same as dissonance because dissonance can be at any time, even before the purchase of the product. The difference between dissatisfaction and dissonance Thus, it may be that the more or less satisfied consumer also has some dissonance. Treat your satisfied consumers with this in mind.
Another point about satisfaction is that it is the satisfaction of the final user of the product that is most important. In a "group" purchase, everyone's (purchaser, decision maker, etc.) satisfaction is important but that of the final consumer is paramount.
As a result of satisfaction or dissatisfaction, two other important effects take place in the consumer's mind. The first is called the assimilation effect. This occurs when the consumer is more of less satisfied. In this state the consumer wants to assimilate as much good news about their purchase as possible. An ad stating that the brand has just picked up an award is going to be pounced upon by this consumer. They will also lap up any good word of mouth from friends and relatives about the new purchase and the brand. Ever wonder why a salesperson compliments you on your purchase?
The second effect is called the contrast effect and it occurs when the consumer is clearly dissatisfied with the purchase. In this state the consumer will interpret negative info about brand more negatively than it really is. They are somewhat traumatized by the mistake they have made and any additional bad news will send them over the edge. Thus, do not deliver further bad news to a consumer who is clearly upset with their purchase. First bring the customer to satisfaction (easier said than done, of course!) then, if absolutely necessary, spring the small piece of bad news (perhaps they owe a few dollars more, etc.) to them. Otherwise, it could be the straw that breaks the camel's neck!
So, in closing, with satisfaction in mind, know your consumers' expectations at various stages of their purchase and definitely after purchase. Then, manage these expectations and also the perceived performance of the brand. Second, with dissonance reduction in mind, give reassurance after purchase to reduce dissonance. By the way, ALL consumers will feel some amount of dissonance after the purchase of a high involvement product. However, as managers, we can try to keep this to a minimum. Once again, give reassurance after performance.
randing strategies are discussed in this chapter in terms of identifying and differentiating the brand for consumers. Branding is defined as a process from the aspects of identification of a brand to the aspects of differentiation of a brand. Four types of consumers are discussed with regard to their unique needs in identifying and/or differentiating between brands. Two of these types, brand loyal and inert consumers, are discussed in detail and the other two types, "thoughtful" decision makers (TDM) and "variety seekers" (VS), are discussed with reference to previous chapters (Chs. 8 and 9).
Next, four theories of learning (classical conditioning, systematic learning, heuristic learning and vicarious learning) are discussed as marketing based strategies for implementing the branding process. With both these frameworks in mind a set of branding strategies over time are discussed during the normal life cycle of an innovative product category. The radical innovation of the driverless car is used as a running example of the successful (or not!) branding of a new product.
Branding is about identifying our brands as part of a product category (or categories) and differentiating our brand from other brands. Consumers like to identify brands as (a) belonging to a certain product category (CATEGORY IDENTIFICATION) and (b) in high involvement product categories, consumers also like to identify brands as trustworthy and reliable (TRUST IDENTIFICATION).
Note that in low involvement product categories, consumers may not care enough about the product category to bother with this last aspect. For such consumers, all brands are the same in the product category and, hence, any brand will do. In other words, for some consumers in some product categories, all brands are the same and they only need to recognize that a brand (say, Garnier) belongs in a product category (shampoo) in order to buy it. They will buy any brand that is available to them in that product category. On the other hand, some high involvement consumers who, for example have dandruff, need to be able to identify a particular brand (say, Head and Shoulders in shampoo) as being trustworthy and reliable. We shall refer to the two types of identification as CATEGORY IDENTIFICATION and TRUST IDENTIFICATION.
Such high involvement consumers (low involvement variety seeking consumers too as in Table 10.1) also need to be able to differentiate between brands in terms of (a) product attributes and benefits that are different from other brands (RATIONAL DIFFERENTIATION) in particular situational contexts (b) attractiveness elements such as being "fun", "cool", "dynamic" and other brand creating images that are different from other brands (EMOTIONAL DIFFERENTIATION).

Four Types of Consumers understand brand loyal and inertia consumers
As Table 10.1 shows, there are four types of consumers (see also Assael 2004, p. 100) and they require different types (and degrees) of identification and differentiation strategies on our part. This typology of consumers is based on two dimensions. On the horizontal dimension we have consumers who vary from high to low on consumer involvement with certain product categories. Note, that we have seen before that the amount of perceived risk in the product category is a crucial factor in producing such variations in product involvement.
On the vertical dimension we have consumers who also vary from high to low but this time on the amount of decision making (see Chs. 8 and 9) required to purchase a certain product category. Thus, even among high involvement consumers, there are two groups - those who take a lot of time and effort before buying a brand and those who buy a brand habitually without time and effort being expended. What do you think is the main perception that varies among these high involvement consumers which causes this subdivision within them? How about, once again, the amount of perceived risk in the product category?
Hence, PERCEIVED RISK (note that it is a perception and not necessarily reality) is the KEY to this entire matrix of consumer decision processes. All four quadrants of the matrix can be differentiated on the basis of perceived risk.
(A) The consumers in Quadrant 1 are the THOUGHTFUL consumers who have high involvement with a product category and spend a high amount of decision making effort and time in buying the category. This is the group with the highest level of perceived risk because there is risk due to the product category and also risk due to the amount of time that has to be spent in buying the product category.

The thoughtful consumer is highly involved and spends a lot of time buying products like homes, autos, insurance, etc. These consumers have to be provided with all four branding strategies discussed earlier - CATEGORY IDENTIFICATION, TRUST IDENTIFICATION, RATIONAL DIFFERENTIATION and EMOTIONAL DIFFERENTIATION.

(B) Quadrant 2 represents the VARIETY SEEKING consumer with a moderate amount of perceived risk because although there is little risk due to the product category there is some risk due to the amount of time that has to be spent in buying the product category.

The variety seeking consumer is low involvement but spends some time buying products like luggage, carpets, cheese, wine, etc. as with all four types of consumers, they must be provided with CATEGORY IDENTIFICATION.

Since these consumers look for variety in their purchase of brands in the product category, they must be provided with RATIONAL DIFFERENTIATION and EMOTIONAL DIFFERENTIATION. They will make their brand choices based on the differences they perceive between brands. In products like luggage which are mainly utilitarian, functional products, they will look for rational differentiation. In more hedonic goods, they will look for emotional differentiation. Note, from Table 10.1, that trust is less important here since the risk is low.

(C) Quadrant 3 is the BRAND LOYAL consumer who sees little perceived risk because although there is some risk due to the product category there is no risk due to the amount of time that has to be spent in buying the product category. The level of risk associated with involvement in the product category is neutralized, or at least greatly reduced, by the habitual kind of decision making by these consumers.

These consumers frequently and HABITUALLY buy a familiar brand that they prefer AND with which they have favorable attitudes.

These brand loyal consumers also have the following characteristics.
• Their brand loyalty is product specific. This person may be brand loyal to toothpaste but not brand loyal to soap. They are not universally loyal to a product This means that there is no universally loyal consumer, i.e. these users are loyal to a brand in a certain product category but they are not necessarily loyal to a brand in another product category. If they were "universally loyal", they would have a brand to which they are loyal, in every product category. In some product categories, they show brand loyalty but in other categories they do not. This means that as brand managers we have to EARN THE LOYALTY of consumers to our brand. We cannot just assume that there are some consumers who will naturally be inclined to be loyal in our product category! LOYALTY MUST BE EARNED ONE CONSUMER AT A TIME!)
• Brand loyal consumers are more self-confident in their choice of a brand? They shop for the brand quickly and efficiently. They do not hesitate before buying the brand. So what, by the way? Well, one implication, for us as brand managers, is that we need to consistently offer emotional differentiation but not rational differentiation as we would have to do for thoughtful consumers. These consumers need to be emotionally satisfied with their brand choice and not be "disturbed" with rational differentiation which may cause them to re-consider their usual, loyal choice!
• Brand loyal consumers are more store loyal! There appears to be a positive correlation between store loyalty and brand loyalty.
• Brand loyal consumers perceive little risk in buying the brand but may see risk in the product category. Thus, they need (see Table 10.1) both CATEGORY and TRUST IDENTIFICATION.
• Brand loyals are more likely to be from minority groups.

(D) Quadrant 4 is the INERT consumer who has no perceived risk because there is no risk due to either the product category or due to the amount of time that has to be spent in buying the product category. Buying out of habit (repeated purchase)
Brand loyal and inert consumers both have in common is that they buy though habit. The difference between them: brand loyal has a strong positive attitude, they buy more than the inert

Although, like brand loyal consumers, they also HABITUALLY buy a familiar brand in a product category, they are different from brand loyal consumers because they have no or very few attitudes towards the brand they always buy. Hence we call them inert consumers, as if they are like a large and heavy motionless boulder, which refuses to be put in motion. In order to move these consumers to change their brand will require a very big "shove". If they are our consumers, we reinforce their association of our brand as being synonymous with the product category with CATEGORY IDENTIFICATION. Let sleeping dogs lie!

So, once again, what is the difference between brand loyals and inerts?
• Brand loyals and inerts both need repurchasing of the brand. But this by itself may only be Inertia! This is only HABIT.
• BUT brand loyals have a strong and positive attitude to the brand that they buy. This results in loyalty and not inertia.
• Brand loyalty needs BOTH repeat purchasing AND strong, positive attitudes towards the brand.

Brand loyalty is sometimes measured as repeat purchase ("How often have you bought this brand in the last six months"). But, how good is repeat purchase as a measure of brand loyalty? Not very good, because this measure may only show HABIT OR INERTIA. It maybe that they are buying the brand repeatedly because they are loyal to the low price of the brand (PRICE LOYALTY) and not because of favorable attitudes towards the brand.
Or, it may show loyalty to a store (STORE LOYALTY). They are buying the brand habitually because it is the only brand in the product category that is stocked by the store at which they always shop. They have no strong, positive attitudes to the brand and so, although they are repeat buyers of the brand, they are not brand loyal to the brand.

To sum up, brand loyal users and inert users both buy out of habit. However, brand loyal users have strong and good attitudes towards the brand ("This brand is different from other brands", "This brand is unique", "I love this brand").

So what? What profitable outcomes can a brand loyal user give a brand over that of an inert user? We shall see this later in the chapter!

So, now that we understand the four different branding strategies based on brand identification and brand differentiation, how do we go about using these in actual practice? How should we go about identifying and differentiating our brands? Should we use promotions (type of media, for instance) or price or distribution or the product and its packaging?
Obviously, from what we have seen so far, the answer lies in, first, understanding our target consumers based on our understanding of the level of involvement that our target consumers has with the product category and the amount of time they are likely to spend in buying the product category (Chs. 8 and 9).
Second, we need to understand how consumers go about learning about brands in terms of both identification and differentiation. Hence, we will now proceed to discuss four theories of learning and then progress on to the subject of habitual purchases such as brand loyalty and inertia which are derived from these four theories. Learning theories are particularly important in understanding, for example advertising effects, since consumers learn about brands and products through advertising and other promotional strategies used in marketing. How this learning actually takes place and which media is best suited for each learning outcome is the subject of the rest of this chapter.

Four Theories of Learning
Classical Conditioning low involvement
Pavlov and others in their classic experiments demonstrated that if two dissimilar objects are repetitively associated together in close contiguity to each other, the emotional response originally elicited by the unconditioned stimulus can, over time, be elicited by the conditioned stimulus alone. Salivate (UCR), Food (UCStimulus), Bell (CS).... Repetition and contiguity Mitchell and Olsen also found that the same conditioning effect appears to determine perceptions when nonverbal information is presented in advertisements. They exposed subjects to facial tissue ads that contained either a verbal claim or nonverbal information. Individuals were seen to develop perceptions of brands based solely on nonverbal information. Mitchell and Olsen interpreted this as the classical conditioning effect of pairing an unknown brand with a nonverbal stimulus.
Thus, advertisements which associate a brand with a nonverbal emotional cue, over time transfer the emotion to the brand itself. This involves non-verbalemotional communication which transfers the emotion associated with the nonverbal stimulus in the advertisement to the brand's image. It is different from verbal communication in that it is not a linguistic process and there are no formal rules involved. Moreover, electronic media may be especially adept at classical conditioning strategies that produce emotion, since electronic media abound in nonverbal emotional cues. Indeed, Haley, Richardson and Baldwin identified 510 nonverbal variables in television commercials in the areas of vocalics, proxemics, facial cues, music, etc. and related these successfully to persuasion variables such as brand salience.

In sum, classical conditioning strategies in advertising commonly use nonverbal cues, such as music and sound effects, which are available only in the electronic media. Accordingly, I suggest this as a second reason why, relative to print media, electronic media emphasize emotion.
Question: What was the first reason?
Systematic Learning Theory, high involvement... when a reason is given (rational) uses words
Systematic learning theories view the consumer as an active processor of information. Process of problem solving The recipient of a persuasive message goes through the process of perception as discussed before. Namely,
1. Attention to the message
2. then, comprehension of the message
3. then, rehearsal of the message (which produces a conclusion)
4. Finally, retention of the message in memory.
Thus, it is the verbal content of the message, or verbal communication as described earlier, which is the primary determinant of beliefs and evaluations about brands under conditions of systematic learning. This process of the creation of beliefs and evaluations about brands on the basis of verbal advertising communication is also the process of developing knowledge by description, which is based upon reason.
Thus, the generation of reason is linked to the systematic learning of product and brand information from ads.
Such systematic learning is also likely to generate greater rational responses when it is used in the print media, since print allows greater opportunity to process verbal information about brands. Wright (1974) showed that print media mediate rational responses to advertising, such as source derogation and counter arguing. He suggested that this is so, because print allows more opportunity to process information, while electronic media are fleeting and not in the control of the viewer. Further, according to Batra (1986), consumers are more active and willing to process information in print than in electronic media, which are considered to be more "intrusive". In keeping with this, Jacoby and Hoyer (1990) found better comprehension for print ads than for television ads.
Heuristic Learning Theory choose an easy way, low involvement
According to Chaiken, persons process information in both systematic and heuristic ways. While systematic processing involves thoughtful, "mindful" analysis of the content of the ad, heuristic processing involves the use of simple heuristic cues in order to arrive at a conclusion (brand preferences, etc.). Thus, consumers may sometimes use simple decision rules (or "rules of thumb") in their behavior such as:
1. buying a brand name
2. buying the brand advertised by an expert or an attractive or trustworthy spokesperson (celebrities, typical consumers as we have seen before)
3. buying the brand that most people use
4. Buying the brand that is advertised the most
5. Buying the cheapest brand
6. Buying the name they have bought before
Pechmann and Stewart (1989) argue that heuristic processing is the antithesis of analytic processing, since this process is used when consumers wish to avoid detailed consideration of the merits of a brand. The implication may then be made that heuristic consumers wish to expend less effort in decision making. Relatedly, Krugman (1965) has argued that television functions as a low involvement medium which uses heuristic cues (repetition of the brand name, etc.) for its effectiveness. Chaiken and Eagly (1983) also associate heuristic processing with electronic media and systematic processing with print media, since print media is better used for presenting difficult messages, while electronic media, since it is fleeting, is better for simpler heuristic messages.
Thus, affective cues, say a celerity spokesperson, may generate emotion and elicit heuristic processing. Accordingly, heuristic processing may be associated with greater emotional responses. In other words, people may use the affective response to an ad as a heuristic to decide which brand to buy ("I like the advertising for this brand, therefore, I will chose this brand"). Ray and Batra (1983) state that emotion-laden stimuli in ads may create better message acceptance, since in a positive affective state, people tend to make speedier, less complex judgements. Further, such communication is also more apt to take place in television, due to its capacity for greater vividness of the images presented, as described by Chaiken and Eagly (1983).
Vicarious Learning I learn from watching others... observation of others leads to imitation of their behavior
Pechmann and Stewart (1989) describe the process of vicarious learning through advertising. Ads that portray social reward or punishment for an actor due to use or non-use of a particular brand arouse identification and emotion. The point is that humans construct beliefs and rules about which brands to use based on emotional communication. The rewards/punishments meted out to the model in the ad are exemplified in the model's expressive behavior, such as facial expressions, etc. The process of observing such emotional expression results in arousal and a vicarious sharing of the same subjective experience as undergone by the model in the ad. The consumer comes to associate the brand with the emotion generated (happiness, say) and sees the brand as the social instrument that obtains rewards and stays punishments.
Buck (1989) argues that non-verbal emotional communication via electronic media is responsible in part for the "emotional education" of persons in that it provides an understanding of the internal environment of feelings and desires. Buck suggests that humans are biologically constructed to receive certain emotional displays and to understand their meanings directly and without the need for rational processing (Buck, 1989).
Thus, non-verbal cues such as the facial expressions of advertising models support vicarious learning strategies that result in emotion concerning the emotional benefits of advertised brands. Moreover, such observational learning is apt to be greater in television, due to its lifelike representation of human interaction. Marshall McLuhan (1964) also considered television to be a "re-action" (p. 320) medium in the sense that viewers tend to pay greater attention to the facial expressions of the actors than to the action in progress. Accordingly, I suggest that vicarious learning strategies are best achieved through electronic media which present the facial expressions and other displays of advertising models in more vivid, lifelike and dynamic images than print and, thereby, produce greater emotion.
Steps in the BRANDING process over the PRODUCT Life Cycle for a RADICAL Innovation - THE DRIVERLESS CAR (ALREADY DEVELOPED BY GOOGLE AND THE BIG AUTO COMPANIES - OUR "CLIENTS")!
1. Write three or more product concepts statements (with accompanying visuals) for the radically new product category. Test these with the target market (likely innovators and early adopters of the new category). Choose one based on the product concept tests and ensure that the concept clearly states how the innovation (the driverless car) is the same as its closest product category competitors (driven cars, buses, railways, airlines, etc.) as well as how it is different from these product categories. Make a product concept map so everyone on the team can also visually examine the chosen product concept for the innovation. The chosen concept and all close category competitors should be on this map. The map should have one dimension on which the chosen concept is the same as the competition and one dimension on which it is very different.
2. Crucial to the success of the innovation is to understand the Main Consumer Behavior Problem (MCBP) at this stage. We have a concept and we have a target market and at first glance everything seems to be working just fine. However, we have to step back and ask ourselves "what could go wrong?" There is always a MCBP. If we believe this then we have to go back to our analysis of the target market and delve deeper into what could be a possible disconnect between the target market and the chosen product concept, even though it all seems dandy on the surface. Why on earth would someone not want a driverless car at the same price as the cheapest automobile now available? Well, the MCBP could be ......??? FIND IT FOR YOURSELF! STATE IT CLEARLY IN THREE SENTENCES.
a) OUR TARGET MARKET FEELS THE NEED FOR EASY AND AFFORDABLE ROAD TRANSPORTATION.
b) OUR PRODUCT CONCEPT IS THAT THE DRIVERLESS CAR IS AS AFFORDABLE AS THE CHEAPEST CAR IN THE MARKET YET IT IS MUCH EASIER TO "DRIVE".
c) OUR MCBP IS THAT CONSUMERS MAY NOT PERCEIVE THAT ..................??????
d) OUR SOLUTION IS ......???? (PERHAPS A SYMBOL? SEE BELOW WITH "THE PENGUIN" SOLUTION)
3. The chosen product concept, the MCBP and the SOLUTION TO THE MCBP now become the foundation for all of the strategy for the innovation throughout its product life cycle from introduction to decline. Thus, we have to decide
a) Which of the many features in the innovation to include in our marketing strategy. How do we decide this? You got it! THE PRODUCT CONCEPT AND THE MCBP are our touchstones! Any of the "features" that gel with these criteria must be clearly translated into its "benefits" and delivered to the target market during the growth stage of the product life cycle of the innovation. Also, any packaging, service features, warranties, etc. which can be designed to conform to the product concept and the MCBP and the SOLUTION to the MCBP.
b) The brand name for the new brand in the innovative product category that we will be marketing. It should reflect THE PRODUCT CONCEPT AND THE SOLUTION TO THE MCBP clearly. As an example, let's say that the name "THE PENGUIN" solves the MCBP. Perhaps, the MCBP is that "Although the lower income target market wants an easy and affordable car, they may perceive that such a brand identifies them as having lower status." Hence, our solution to the MCBP is "THE PENGUIN"! We think such an emotional symbol is "cool", relatable, fun, and carries no stigma of social class, in fact it may elevate it. It also promotes the driverless car as being solid, trustworthy and having a sure purpose and skill in navigating through traffic - just like a penguin travels through dangerous waters with sure-footed agility and confidence.
c) The price strategy for the new brand. Keep in mind that the price of the brand is often synonymous with the perception of the image of the brand. It denotes the "perceived value" of the brand. It should also reflect THE PRODUCT CONCEPT AND THE MCBP. Any promotions, discounts etc. should be planned in accordance with the MCBP.
d) The distribution strategy for the brand. It should also reflect THE PRODUCT CONCEPT AND THE MCBP.
4. In the first stage of INTRODUCTION, the goal is to achieve CATEGORY IDENTIFICATION (see Figure 10.2). To do this, the strategic emphasis in promoting the brand and the innovation should be to make the target market (innovators and early adopters) aware that the new brand (say, THE PENGUIN automobile) belongs in the category of driverless automobiles. To do this, it is suggested, as in Figure 10.2, that classical conditioning strategies be adopted. Hence,
a) Repetitive linkages between the symbol, PENGUIN (unconditioned stimulus) and product category, DRIVERLESS CAR (conditioned stimulus) must be made
b) in electronic media such as television (network and streaming services), radio, etc.
c) using non-verbal cues such as visual images, sound effects, music, etc.
d) Over time, the EMOTIONAL response ("cool, fun, etc.") usually elicited by the symbol, a penguin, will come to be associated with the driverless car.
e) And, the brand, THE PENGUIN, will also always be favorably associated with the first driverless car (CATEGORY IDENTIFICATION).
Note that social media which is very useful for promoting word of mouth is not suggested for use at this stage since very few, if any, consumers are actually using the product. While this is expected to be true for most radical innovations, it may not be so for continuous innovations (for example, the instant pot!) where consumers are already using brands in the product category (say, kitchen appliances). Social media would be very relevant in this case to spread word of mouth!
5. In the second stage of GROWTH in the product life cycle of the innovation, driverless cars, the strategic goal (see Figure 10.2) is to achieve RATIONAL DIFFERENTIATION. To do this, it is recommended that the promotion of the product now emphasizes RATIONAL positioning of the brand on its attributes and benefits while continuing to promote CATEGORY IDENTIFICATION. The segment in the market is now the "thoughtful" consumer, the early adopters who will be crucial in spreading the innovation. According, we have to show them how and why the innovation (driverless car) is better than what they are using now (cars, buses, trains, etc.). All the principles relating to systematic learning are relevant here.
a) We have to lead the thoughtful consumer through the process of clearly perceiving our brand by paying attention to the message elements in our promotions.
b) Additionally, we have to take the consumer through comprehension, rehearsal and retention of our message.
c) The thoughtful consumer is willing to actively process information but note that it is never easy to achieve systematic learning without clarity of communication and much repetition of the message.
d) The verbal content of the advertising message, will be the primary determinant of beliefs and evaluations about brands (see Chapter 8).
e) Such systematic learning is also likely to generate greater rational responses when it is used in the print media, since print allows greater opportunity to process verbal information about brands.
6. In the third stage of MATURITY in the product life cycle of the innovation, the strategic goal (see Figure 10.2) is to achieve both TRUST IDENTIFICATION and EMOTIONAL DIFFERENTIATION depending on the consumer segment we are appealing to. Thus, it is recommended that the promotion of the product now, once again, emphasizes EMOTIONAL positioning of the brand but in a different way than the classical conditioning strategies discussed during the introduction stage of the product life cycle. In sum, there should be two different emotional strategies at this stage directed towards two different segments. The segments in the market that we should now appeal to are the "loyal" consumers and also the "variety seekers". The most important consideration, at this stage of the product life cycle, is the state of competition. During maturity, there are many brands and the sales of the product category are not growing, leading to intense competition between the many brands to snatch market share away from each other. Most brands now offer the same benefits and perceived differences between brands are few and far between. Hence rational differentiation is not much good here. Instead,
a) We must use heuristic learning strategies to derive emotional affiliation between our brand and our brand loyal consumers. The use of simple heuristic cues to create trust will appeal to our brand loyal consumers to continue to use the brand and, perhaps even pay a higher price for it. The "heuristic" to use here is to remind these consumers that "we were the first to introduce the innovation". It is called "the first mover" advantage and we should avail of it in our promotions. Trust can also be created by the other heuristics discussed before in this chapter (use of spokespersons etc.). This is the notion of TRUST IDENTIFICATION and it is crucial to keeping brand loyal consumers close to our brand. It identifies the brand as being trustworthy and therefore capable of being purchased without too much thought or analysis. In the case of a durable innovation, repeat purchase here would also refer to the repeat purchase of service plans, etc.
b) In this heuristic learning context, I propose the use of "relational" media. This type of media is not mass media (print and broadcast) since messages in this media are addressed directly to a single user. The use of emails and other direct-to-consumer media are examples of this type of relational media. It is the best choice for relationship building (trust, loyalty) between a brand and its loyal consumers because it names the consumer individually in a message.
c) We must use vicarious learning strategies to derive emotional appeal and emotional interest among variety seekers. These are consumers who are not loyal to any particular brand but who are willing to switch to gain variety in their consumption of a product category. Note, this is not so relevant for a durable innovation but it may be a very good strategy for non-durables which are more frequently purchased and which are used in a social setting. Thus, socially visible products like clothing may be able to advertise social rewards/punishment from "others" towards a consumer for using the "wrong" brand of clothing.
d) Obviously, social media where "others" are all around the consumer would be the medium of choice here. Creating word of mouth using social media like Instagram would raise engagement and involvement among the low involvement consumers who we have identified as "variety seekers" earlier in this chapter. This is the notion of EMOTIONAL DIFFERENTIATION which I have suggested earlier (see Figure 10.2) and it is crucial to keeping brand loyal consumers close to our brand. The way to do it is through the strategy of vicarious learning as also discussed earlier.
7. In the final stage of DECLINE in the product life cycle of the innovation, the strategic goal (see Figure 10.2) is to achieve TRUST IDENTIFICATION among the remaining brand loyal users of the innovation. These are the die-hard users of the brand and they will use the brand despite adverse situations like shortages of the brand, distributional obstacles and a higher price. We need to maintain trust using heuristic learning strategies, as discussed, in relational media.
In ending this chapter, it is worthwhile to remind the reader how much of branding is due to the creation of trust. TRUST IS AN EMOTIONAL PROCESS (IT TAKES TIME) BUT ONCE CREATED, TRUST FUNCTIONS FOR THE CONSUMER TO (A) REDUCE RISK AND UNCERTAINTY AND (B) SAVE THE CONSUMER FROM EXPENDING TIME AND EFFORT IN BUYING A BRAND.

BRAND TRUST RESULTS IN STRONG AND FAVORABLE ATTITUDES (Key to brand loyalty!) TOWARDS THE BRAND WHICH, IN TURN, LEADS TO BRAND LOYALTY AND THE FOLLOWING PROFITABLE OUTCOMES FOR THE FIRM.

1. Brand loyal consumers buy more of the same brand. Hence, brand loyalty leads to greater sales of a brand through greater repeat sales of the brand to brand loyal consumers. This leads to greater profit for the firm by way of greater revenue [Profit = Revenue (sales x price) - Costs].

2. Brand loyal consumers talk more about the brand. Hence, brand loyalty leads to greater sales of a brand through greater favorable word of mouth about the brand. As above, once again, this leads to greater profit for the firm by way ofgreater revenue [Profit = Revenue (sales x price) - Costs].
3. Brand loyal consumer are cheaper to maintain. For instance, brand loyalty leads to lower advertising and distribution costs. Brand loyal consumers do not need a lot of adverting, although they will need some advertising consistently over a period of time. Brand loyal consumers will also search for the brand and not use another brand, thus lowering distribution costs. This leads to greater profit for the firm by way of lower costs [Profit = Revenue (sales x price) - Costs].
4. Brand loyal consumers pay more for the brand because of favorable attitudes ("this brand is unique"). Hence, brand loyalty leads to greater prices of a brand. Once again, this leads to greater profit for the firm by way of greater revenue [Profit = Revenue (sales x price) - Costs].

This is why Brand loyalty is the Holy Grail of marketers. It leads to greater PROFITS through many means!

PRODUCT QUALITY IS THE CORNERSTONE OF BRAND LOYALTY!!!

ABOVE ALL, DO NOT MESS WITH THIS! AFTER ALL, WHAT ARE CONSUMERS LOYAL TO IN A BRAND? THE BRAND'S QUALITY.
THEY WILL FORGIVE YOU ONCE, MAYBE TWICE, FOR POOR QUALITY BUT THREE STRIKES AND YOU ARE OUT!

MORE ON PRODUCT QUALITY IN THE NEXT CHAPTER ON PERCEPTIONS!
• A change in fonts, color, packaging can change the consumer's thoughts on the product's quality
• Perception comes before emotion
• Perception is created from the senses
• The difference between a perception and an attitude is attitude/emotion is valence meaning they are always positive or negative


perceptions are defined as a mental process that uses previous knowledge to select, organize and interpret the stimuli that are registered by our senses. Perceptions are selective

Perceptions are different from other psychological and physiological phenomena. For instance, recall from chapter 1 that perception is different from arousal. Perception precedes arousal which then, perhaps, leads to emotion and reason. For instance, perception occurs when any of our senses (sight, sound, feel, taste and smell) are exposed to a stimulus - say, the color red which causes our pupils to enlarge (a sign, or symptom of arousal). Note that perception is not a feeling like arousal and emotion. Arousal, however, is a feeling which arises from a physical reaction to a perceived stimulus.

Question. Think of consumers' selection of a pair of shoes. Which of the five senses above is paramount in this selection process - sight, sound, feel, taste or smell? How would this affect your sale of a pair of $200 dollar women's' shoes using a website for millennials? What steps would you take to create confidence in the purchase?

The other thing to remember from our definition about perceptions is that they are based on past experience. Hence, our "selection, organization and interpretation of stimuli" is based on what we are familiar with. Our present perception of a stimulus is based on our past experience with that stimulus or other similar stimuli.
For example, I may be at the doctor's office and perceive the channel on the television as "real news" because I am familiar with it. You may not perceive the same channel in the same way if you are not familiar with it. You may select to attend to it because you have no other choice. After exposing yourself to it for a while, you may organize the channel in your mind as a local channel and interpret it as a channel which mostly gives information on the weather.

Question. How are perceptions different from attitudes (from chapter 8)? Which comes before the other and why do you think so? Which has "valence"?

The Importance of Consumer Perceptions

Consumer perceptions are important in marketing because

• Perceptions affect all four Ps - product, price, distribution and promotion.
• Consumers' overall perceptions of all the aspects of a brand result in a brand image for the brand.
• Perceptions lead to emotions and thoughts which in turn, lead to behavior.

Overall, perceptions are important because we construct our world of reality based on our perceptions. In other words, there may be no other "absolute" reality than the one we create with our perceptions about reality. In this way, my reality may be different from yours because my perceptions about what is "real" are different from yours. Think about people from different parts of the globe and contrast their perceptions of a red, white and blue flag to our perceptions of "old glory". Their reality is very different from ours. However, if we are to persuade people, then we must be able to see things from their "perspective" which is based on their perceptions about what they consider to be reality.

Question. Think of other ways in which perceptions, and thus reality, is different for different people. Examples? What would be "fake news" to you and "real news" to others? Do you think that there is such a thing as "objective" reality or is all reality "subjective" by definition?


THE PROCESS OF PERCEPTION

The process of perception consists of selection (includes attention and exposure (you saw the ad... physical activation of the senses)), organization and interpretation of a stimulus. Perception may involve only one or all of these aspects.
Obviously, as marketers we would want our stimulus (say, a package design) to result in all four aspects of perception but that does not always happen. Often, consumers choose to only select a stimuli to attend and expose themselves to and nothing else, in the way of perception, takes place. Even for low involvement products, attention and exposure alone may not be enough to cause behavior in terms of sales and other profitable outcomes.
Especially for high involvement products, this may be insufficient in terms of creating attitudes, emotions and thoughts which, in turn, lead to behavior (sales, willingness to pay a higher price, word of mouth, etc.).

It is also important to understand that selectivity is present in the entire process of perception from attention to exposure to organization to interpretation.
Exposure > attention >organization> integration> attitude
1. Selective Perception
Expose yourself to it and attend to it (attention)
Expose (physical activation of the senses... eyes dilate or you get shivers after watching the ad and then attention (cognitive resources (a thought), you think about the ad even for just a moment... you did more than see the ad)
When two consumers perceive an identical advertisement, a package, or a product very differently, selective perception has occurred.
Perceptions begin with the selection of a stimulus by consumers in order to expose themselves to the stimulus and, then, to be able to attend to the stimulus.

What stimuli do people select to attend to? Know these
• They select stimuli that are available to them. Make sure that your stimuli (ads, packages) are made available to them! If you do not advertise, for example, consumers cannot possibly select your message in any way.
• They select stimuli that are familiar to them. Give them stimuli they recognize easily. Provide a familiar setting, people, music, etc.
• They select stimuli that are compatible with their most urgent needs. Thus, if you are studying for an exam, you will select stimuli that say, "DO YOU HAVE AN EXAM TOMORROW?" over those that say, "NEXT TIME YOU ARE ON A DATE".
• They select stimuli that are different from what they expect to find. Similarly, you will "select" stimuli that are larger or smaller (different), etc. than what you are used to. Something different is unexpected and that grabs attention

Why are Consumers Selective in their Perceptions? Know these

• To reduce information overload. We are bombarded with thousands of stimuli every day and we cannot possibly attend to all of these stimuli. Hence, we are "selective" about what stimuli we attend to and what stimuli we expose ourselves to.
Exposure occurs when a stimulus produces some kind of sense activation (say, pupil dilation for the sense of sight).
Subsequently, attention involves the momentary allocation of cognitive resources (the consumer thinks about the stimulus at least for a moment).

Once again, consumers use their power of selective perception to expose and attend only to relevant stimuli i.e. stimuli that are available, familiar, compatible with their needs and different from other stimuli (see above).

• To reduce cognitive dissonance. Recall from chapter 1 and chapter 8, that cognitive dissonance occurs when a consumer has two conflicting beliefs ("I love this brand but the brand is doing something bad to the environment which I also care about").
BALANCE THEORY holds that a person who is in such a state of "imbalance" and experiencing cognitive dissonance will seek and ultimately achieve a state of balance using selective perception. For example, if a consumer loves a brand but the brand pollutes the environment (which the consumer also loves), there is a state of imbalance resulting in uncomfortable cognitive dissonance. This state of imbalance will not hold since the consumer is upset ("dissonant") and no one wants to feel upset for very long. Accordingly, the consumer will begin to see the brand selectively till she/he now dislikes the brand and this restores the balance between the three actors in our system under discussion - consumer, brand and environment as below.
If the customer is imbalanced state they are in dissonance
Selective perception can change the balance
An even number of negative signs is still a balanced state

NOTE: ALL POSITIVE SIGNS OR AN EVEN NUMBER OF NEGATIVE SIGNS IS A BALANCED STATE.

Question. If you are the brand manager in the example above, what would you have to do to keep the consumer loyal to your brand? Can you think of another example in marketing where balance theory would apply?

Thus, selectivity in perceptions is the first step in the process of perception. It results in, first, selective exposure and, next, in selective attention. However, selectivity is also used in the next two steps of the process of perception - organization and interpretation.

2. Selective Organization
How do I get people to organize it? Make it into a whole. An ad is many stimuli. Ways to organize it: continuity, similarity, proximity, closure, and context
Once consumers have (hopefully!) attended to our message and exposed themselves (thought about it), even momentarily, to the message, our job now is to help them to organize all the various elements (verbal and non-verbal) of our message into a coherent "whole". There are a lot of stimuli in a print ad for instance - a headline, a visual, body copy, brand logo, etc. Thus, we have to make sure that consumers can make sense of all these disparate items and that the many elements of the ad are integrated into one "whole". We can help consumers to do this in a variety of ways: know these
• We can ensure continuity between the elements of a print ad, for example. This involves the flow of the design elements of the ad - what consumers see first (usually the visual in a print ad), what they see next (the headline), and next (the body copy), and last of all (the logo and slogan). Our attempt here is to manage the eye gaze of the consumer so that the ad (and the brand) is perceived as an integrated whole. Consumers tend to organize their thoughts better if the structure of the message is clearly laid out for them.
• We can ensure that the packaging of our brand, for example, has some similarity with other brands in the product category. For instance, think of the similarity in the colors of different brands of cola (notice that there are striking differences as well which we will discuss later in this chapter). Consumers tend to group things by similarity and we can help them to do this in the way we brand and design our communications to them.
• Our package and brand can also gain from proximity to other brands in the distribution of our brand, for instance. Consumers also group things by proximity. So, if we "seat" our new brand next to Diet Coke, they will perceive our brand to be in the same group as Diet Coke.
• Another way to get consumers to organize our message clearly is to ask them to bring closure to something that is incomplete. Consumers like to do this because they like to complete things. For instance, we could ask them to answer a question that we pose in the headline of the ad. ("Can you name the company that sells the most cars?" "Do you know the car that has won the most awards for safety?"). New brands sometimes create curiosity for the launch of the brand with "teaser" ads which do not reveal the identity of the brand for a period of time. Tantalizing consumers to wait for the dis-"closure" of the new brand forces them to complete the picture of the brand in their minds.
• Providing a context or situation that is attached to the brand. A video with an affluent setting tells the consumer to organize the brand in their minds as a luxury brand, for instance. A university setting tells consumers that it is a brand for students. The context is usually in the "background" of the ad and the product is usually in the "foreground". As we have discussed in chapter 7, the consumption situation, if depicted properly, is capable of creating strong emotional associations for the brand and its meaning for consumers. Emotional responses allow consumers to form "wholistic" meanings for brands.

3. Selective Interpretation
Two parts: categorization and inference
The last step in the process of perception is selective interpretation which leads to more of a rational response although emotional elements will also continue to accrue at this final step. Selective interpretation occurs when consumers are able to perceive the relevance of the brand for them and for their lives. It involves both categorization of the brand within a product category and inference of the meaning of a brand (the image of the brand).

As we will see later in the chapter (under product concept and perceptual mapping), categorization has two aspects. First we must be able to establish our brand as being the same as other brands in a product category. Second, we must be able to establish that our brand is in some way, different from other brands. According to Mandler, consumers have a schema for each product category in their minds. For instance for diet sodas, the schema may be that there are brands that are "low calorie" and brands that are "good tasting".

Our first job, then, is to establish that our brand is both healthy and good tasting - in other words, it is the same as other brands in the product category and fits the existing schema in consumers' minds ("schema congruity" according to Mandler).

Our second job is to, next, establish that our brand is, however, different from other brands because it is also "energetic". This deviation from the existing schema in consumers' minds (schema incongruity) causes arousal and interest in the new brand. If the deviation (or difference) is also a "good" and desired benefit, it will now create a favorable emotional response towards the brand (I apologize to Mandler for simplifying his theory but this is enough for our purposes!).

Along with a favorable categorization of the new brand consumers must also be able to draw positive inferences about the meaning and relevance of the brand to their lives.

o One way to do this is to use the science of symbols which is known as semiotics. Semiotics involves the brand, a symbol conveying the benefits of the brand and the target consumer who interprets the symbol. In the last example in chapter 10, for instance, for low income consumers, we used the symbol of a penguin to symbolize agility and sure-footedness in a dangerous environment. The penguin also evoked the benefits of fun, cuteness and perhaps even status (if using "emperor" penguins!). Over time, as we saw with classical conditioning theory, the favorable associations of the symbol get transferred to the brand as well. Needless to say, this takes time and money!

Question. How could consumers interpret the Penguin differently from our intentions? How would you prevent this from happening?

A second way to get consumer to draw a favorable inference for our brand is to reduce the perceived risk in the new brand in an old category or a new brand in a new product category (say, the first brand in the category driverless cars). Previously, we have dealt with (1) perceived risk which involves the potential for loss in a brand or product category. (2) We have seen that such loss could be attributed to loss that is financial, performance, physical, social, psychological (loss of ego) which are all various types of risk.

For our present purposes, we must also identify two components of risk. In other words, the notion of perceived risk is made up of two things.
The first is the probability of the occurrence of the risk factor ("how likely is it that you will be in an automobile accident?"). The second is the severity of the consequences of the threat factor ("If you were in an automobile accident, how bad is the outcome likely to be?").

Our strategy with the driverless car as an example should be to reduce the probability of the occurrence of the risk since that is probably what consumers will be most concerned about in this scenario.
We could also enumerate the ways in which our brand may reduce the severity of the consequences of a crash although this may be more difficult to do. Saab, the auto maker, once advertised "This Saab will give up its life to save yours" and showed a smashed up Saab! Interpretation - you can reduce the severity of the consequences of a crash by buying a Saab.

A critical and fundamental way to get consumers to draw a favorable perceptual inference for a brand is to create and maintain a clear and favorable brand image. Brand image refers to the total and overall perceptions of a brand in the mind of a target consumer over time. Such a brand image could be emotional or rational or both. Hark back to chapter 1. An emotional brand image would link "others" to the brand and, perhaps, induce the consumer to think of situations in which the linkage of the consumer with significant others is fostered. A rational brand image would urge the consumer to use the brand in their own self-interest.

Certain types of products lend themselves to different brand images more easily. For instance, brands in hedonic (pleasurable) product categories would be easier to provide with an emotional image while brands in utilitarian (functional) product categories would be easier to depict using a rational brand image.

Whatever image we decide to create for our brand, consistency is the key to maintaining and sustaining that image. For instance, if we decide to position our brand as a luxury brand, then frequent price reductions will harm that image and in the long term will destroy the brand. Sony, for example, used to command a premium price for its products in the U.S. based on its quality image. Frequent price reductions by retailers (who usually only care about their short time profits) have destroyed this price premium so that Sony now sells at prices below those of their competitors! Thus, you know now what your job responsibility as a brand manager will be - to decide on a long term, profitable brand image for your consumers and then to maintain that image with marketing strategies that are consistent with that brand image. "Chipping and chopping" your strategies in the short term will kill your brand in the long term.

Consumer and Marketer Strategies to Reduce Risk

Consumers on their own will act to reduce their perceived risk in a product category. Some consumer strategies are: know these
• Consumers reduce their risk by seeking more information. This is a fundamental axiom - information reduces uncertainty. As we have seen, consumers seek information depending on their level of involvement with the product category. Hence, some consumer search for more information and others search less. For a product in which the level of involvement is high, we should realize that most consumers want information on brands before they purchase and we should provide this information easily and adequately. Unfortunately, information cuts both ways and some consumers may actually increase their risk by finding new information. All the same, we have to provide both the positive and negative consequences of a "high involvement" product, in an ethical manner - keeping in mind that information reduces uncertainty but may increase or decrease risk.
• Consumers reduce risk by acting on information that they already have in a product category. Being brand loyal For instance, if they have learned to be brand loyal in a product category, they will continue to use that information in a product category which has a great deal of inherent risk in the product category, say headache remedies. In a previous chapter as well, we have seen that brand loyalty reduces risk in high involvement decision making.
• Consumers use other heuristics (rules of thumb, easy decision tools) than brand loyalty as well. For instance, they may buy the cheapest brand or the brand with the smallest size (note how a small size is an essential part of a brand's item assortment! Consumers want to try out a new brand with the smallest risk possible). Another heuristic is to buy the brand with the best warranty or guarantee, thus reducing risk.
• Consumers reduce their expectations of the brand and thus reduce their disappointment with a brand.

As a corollary to the above, here are the marketer based strategies to reduce consumers' perceptions of risk: know these
• Reduce financial risk by providing a "value" based price. Remember that value can be a high price as well as a low price.
• Reduce psychological risk by keeping consumers' expectations about the brand at a realistic level. Setting consumers' expectations at too high a level just sets up your brand for failure. Setting consumers' expectations at too low a level produces a brand that no one wants! So where else should you set consumers' expectations but at a realistic level? Telling the truth is the best strategy in the long run.
• Reduce performance risk by ensuring the correct "value" based quality and providing warranties to mitigate against problems in the future. Having a painless returns policy also helps in this respect. As discussed, a small size also helps to mitigate against risk for a new brand as do free samples and trials (test drives, etc.). Remember that free samples are the most expensive sales promotions in your repertoire but that they do create trust for a new brand by reducing risk.
• Reduce social risk by using communication strategies that show the approval of friends and family and significant "others".
• Reduce physical risk by producing the safest product possible for consumers. Take responsibility when the worst happens.
• Create confidence and trust in the brand by reaching out to consumers with advertising, public relations, sales people. Information CAN reduce risk if it is properly presented and the reduction of risk, in turn, produces trust which in turn, creates a loyal consumer. Provide more information by providing expert endorsements, online services, free trials etc.
Most importantly, establish personal relationships to increase confidence and trust. Nothing creates trust (or distrust!) more than another human being. Although this is difficult to do with every consumer in a frequently used product, consumer to consumer and expert to consumer communications simulate face to face communication and generate trust.

In sum, the process of the perception of a brand is a complicated maneuver which at the same time, is pivotal in producing brand outcomes. It starts with consumers' selection of the stimuli released by the brand with regard to achieving both selective attention and exposure to the brand. Next, consumers must be able to organize the various stimuli in the communications of the brand into a coherent whole in every single message from the brand. Then, consumers must be able to interpret and understand clearly which product category our brand falls into. Finally, they have to be able to make another clear interpretation involving a positive inference of the relevance of the brand to their lives. We will soon elaborate further on how these last two stages combine to create a successful brand image using the notions of generalization and discrimination.

PERCEPTIONS IN MARKETING

Someone once said that marketing is all about creating perceptions.
Question. Do you agree with this statement? Or is "reality" also important? Why? Why not? Give examples of "reality" in marketing as different from "perceptions".

Perceptions are important in marketing because they affect all four Ps - product, price, distribution and promotion. Consumers' overall perceptions of all the aspects of a brand result in a brand image for the brand.

Perceptions and the Product

The "first order of business" in creating a successful brand is to have a clear, unique and desirable product concept for the brand. This is the foundational platform for the brand to which all marketing strategies must conform. Ideally, nothing should ever take place in our marketing strategies that does not reinforce the declared product concept for the brand. Ideally also, consumers' perceptions of our brand should be clear, unique and desirable but, as we have seen, such perceptions are difficult to create, especially in a crowded marketplace of many buyers and sellers. Our efforts to establish these perceptions must continue in spite of, and in full knowledge, of the missteps that can take place in the process of perception. For example, since we know that selectivity is an issue in every step of the way, we must double and re-double our efforts to ensure that our communications are perceived as intended.
The product concept is a written statement of the brand which describes the total bundle of values provided by the brand as should be perceived by a specific target market in both the long term (say, five years) and the short term (say, one year). Typically, consumers will never see this written statement (although they will see the execution of it) since it is meant for the marketing team (marketing manager, brand manager, sales manager, distribution manager, promotion manager, advertising agency, etc.) to co-ordinate their different activities.
For instance, once the marketing manager (with input from the team) has established the product concept, the brand manager creates the various ingredients, benefits, packaging, brand name, warranties, recommended prices (consumer, wholesaler, retailer) of the product in accordance with this same concept. This conformity with the product concept is the best defense of all other strategies of the brand. "Why did you come up with this price/ad/sales goals, etc.?" Answer: Because it is in accordance with the product concept in the following way......." You cannot go wrong with that answer provided you can back it up!
Question. Is the package part of the product or the promotions of the product? Make a case for each as if you are the brand manager looking after the product part of the marketing mix and, then, as if you are the advertising and promotion manager looking after all the communications of the brand. Next, make a case for why it should be given to the sales and distribution manager instead!

Let's go back to the "bundle of values" aspect of the product concept. What is this bundle of values? In this regard, the first "value" is to establish PERCEPTIONS about why and how the brand is the SAME as any other brand in the product. This is the first sentence of the product statement/concept. The second value to establish is how the brand is different from other brands. The first is called GENERALIZATION. The second is called DISCRIMINATION. This is the second sentence of the product statement/concept. The consumer will probably not see. It's for internal use. The product statement/concept will be expressed to consumers though employees
Notice how this is contrary to what most (even experienced) managers will say. I always hear, "how do we make the brand different?" when the first question in branding should always be, "how can we make consumers perceive that the brand is the SAME as all the other brands in the product category?"
Before we go further into these two strategies in developing a product concept, we have to ask, "WHY is generalization so important?"
Question. Can you come up with the answer? What does generalization create assuming that there are other existing brands in the product category?

Generalization.
How can we generalize a brand to its competitors? First, we must understand the crucial benefits (needs) that consumers look for in the product category. Then, through everything else we do, we have to make sure that consumers perceive that our brand abundantly provides this first aspect of our 'positioning'. In other words, we have to be, first, as good as everyone else in providing the basic benefits that consumers look for in the product category. We referred to this in the earlier chapter as in-category identification. Thus, in a soap, we have to provide what anyone using soap wants - cleaning power that is not abrasive. We cannot assume that consumers will take this for granted in our brand.
Thus, in the last example, we are "generalizing" all the "good things" that consumers want in the product category to our brand. Of course, we must REALLY provide this, it cannot just be a perception. A very wise man once said, "You can fool some of the people all the time and all the people some of the time, but you cannot fool all the people all the time." And, as the good book says, "The mills of God grind slow but they grind exceedingly small." The truth always comes out in the end and it falls hard on deceit.
Brands also do generalization when they generalize all the good things from one of their old and trusted brands to one of their new and unknown brands. This is called brand leveraging and one example of this kind of generalization is the strategy of using a brand extension. This involves "piggybacking" off the old brand to create from the outset, a good image for the new brand. Thus, a famous soda brand was the first to come out with a now equally famous diet soda brand. They could have given it a completely new name which had nothing to do with Coke. Instead they chose to call it Diet Coke.
Question. Explain what the generalization strategy for Diet Coke was. What was being generalized and from which brand to which?

This kind of brand extension can also occur in two different product categories.
For instance, if Coke comes out with a new brand of tea bags, they could call their new tea brand, Coke Tea.
Question. Do you think the brand extension (Coke Tea) above would work? Why? Why not? What does it depend on? How would you research the issue?
Question. How could a strategy of generalization (say, a brand extension) dilute the equity of the "mother" brand?

Discrimination.
Can consumers discriminate differences between brands? This is important for one thing, because the more different a brand is perceived to be from other brands in a product category, the more the brand influences the customer's more personal, "playful" side of decision-making. The more novel a brand's offerings are, the more they tie into personal thoughts, feelings, and possibly experiences (Ligas 2000). Thus, the consumer may shop at a specific retail establishment because some aspect of the experience is unique, whether it is the novel offerings, the stimulating atmosphere, or a combination of these and other unique traits. This fulfills a hedonic function in the consumer's life since this aspect is the pleasurable side of the shopping experience. It also provides a profitable chance for companies since consumers will buy more, talk more and pay more for such a very different brand (Apple, Nike, etc.).
The ability to discriminate depends on the individual consumer's ability to perceive just noticeable differences (JND) between brands. Since we must make aggregate decisions for all consumers in our strategies, we seek as managers to determine the "aggregate" JND for the product category for price, package size, ad size etc. Accordingly, we would like to know what the "percentage JND" for a price change is in a product category. In other words, what is the percentage change required in the price of a six pack of twelve ounce diet soda before diet soda buyers will say, "That's a price change". The price is the worst differentiator because the competition can be the easiest to copy. Product is the most important P
Again, if we want to give a price discount for our six pack we need to know how much of a change is needed before consumers will perceive that they are, indeed, getting a price break. Obviously, we don't want to give away more money than we have to. Hence, we need to be fairly sure that our discount is actually perceived by consumers as a discount, thereby actually increasing our sales as a result of the price change. Similarly, and as importantly, perhaps we do not want our price change to be noticed. Why?
Question. As an example the iconic character, the Morton's Girl, has changed over the years but she has changed "unnoticeably". The package design has changed just a little over a few years and then, again, a little over the next few years and so on. Why has the brand made these very small and subtle changes over a great many years, instead of making a big change in any one year? What has been the concern? The changes in Morton's Girl is hardly perceptible, but if you show the very first girl to the most recent girl it's very clear. Year to year you can't see the difference
Question. Can you think of one research idea to find out whether a 5% change in price will be noticed? Hint: Try to find out what a "dollar metric" question is.

Weber's law states that the change (in absolute terms, not percentage terms) required for a larger size of a brand will be higher than the change required for a smaller size of the brand. Thus, as per Weber's law, a brand item priced at $100 will require more of a change in absolute terms than a brand item priced at $10 before the change is perceived. In other words, higher the original price (or package size, ad size, etc.), the higher the change required in order to be noticed. How much of a change is needed, depends on the size of the initial stimulus

Although we do not know, at the outset, what the JND (or, the percentage change in price) for a six pack of 12 oz. diet sodas is, we do know, from Weber's Law, that the JND in absolute terms (dollars/cents) will be different depending on the size of the brand item, say a twenty four pack of 12 oz. diet sodas.


Question. Why is price the "worst differentiator"? Sometimes brands follow a "me-too" strategy, i.e. my brand gives you everything the other brands give you except that we are cheaper. Why is this not a good strategy in the long run?

In summary, our written product concept must incorporate at least two separate sentences. One sentence (or more) must state how the brand is the SAME as all the other brands in the product category. The next sentence (or more) must state how the brand is different in a clear, unique and desirable way from its competitors. The brand's benefits, packaging, name and all other aspects of the marketing mix (4Ps) must reinforce and highlight this product concept or "positioning" of the brand.

Perceptions and the Price
Price is the only p that is quantitative amount that produces revenue
Price is the value placed by consumers and brands on what is exchanged. It is also the only revenue producing P since all the other Ps are spending Ps. Do you now perceive its high importance in branding and profits? Yet, it is so often disregarded because it is the hardest strategy to nail down at headquarters and then to implement in the market place. We cannot legally impose a manufacturer's price and, hence, we try to implement a MSRP (Manufacturers Suggested Retail Price). It behooves us as managers to strive to establish a well-accepted price for our brand that is in keeping with our marketing plans in the long term. Left without some amount of control from managers, the price in the market will not necessarily conform to the product concept and brand image that we have in mind.

The point is that Price is actually a perception. If I ask each of you the price of a can of Red Bull, it can be sure that I will get a lot of very different answers. Thus, it is a subjective perception and the only "real" consumer price of the brand is the one that is published as the MSRP (Manufacturers Suggested Retail Price) for the brand.

Reference Price and the Notion of Quality.
The reference price for a brand item is the price that consumers expect to pay for the item. Thus consumer expectations of price are important for marketers to track. For instance, a salesperson needs to know the reference price in the mind of the consumer since a quoted price which is much lower or much higher than the reference price will change the perception of quality in the consumer's mind
NOTE: Quality is too often very vaguely defined. Never use it without defining it first. There are many ways of thinking about quality so we need a clear definition that establishes the boundaries of the concept.
Quality is here defined as the reliability of a brand or the ability of the brand to perform its stated function consistently for a certain period of time. In other words, the quality of the brand refers to the brand always being the same, every time it is used. Thus, "good" quality, according to our definition of quality, does not mean that it is high quality (as in a luxury car). It means that the quality is always the same. Campbell's soup for instance is not the best soup you will ever eat but it is always the same and, thus, very reliable and very good quality!

The brand's "stated function", in the definition of quality above, should, of course, be stated in the product concept and the positioning of the brand. However, since the product concept is formally written for the eyes of the marketing team and not the consumer per se, it must also be stated somewhere else for the consumer - perhaps in the label of the brand or in its advertising. We make a promise to the consumer and we keep that promise with our product quality ("the cornerstone of brand loyalty" as you will recall). Further, our marketing strategies must work to fulfill that promise of quality in the consumer's mind.

Note also that just like price, perceived quality is also a perception. It is both the perceptions of price and quality in the marketplace that accounts for a brand's success. Our own perception, as managers, of the quality of the brand is not important. It is what the consumer sees the brand to be that finally matters and accounts for success or failure.

The Relationship of Price and Quality

Coming back to the salesman who needs to cite a price to the consumer in the example above, research by Monroe and others has consistently shown that, under two conditions, there is a positive relationship (positive correlation) between perceived price and perceived quality. Thus, a low price suggests low quality to the consumer and a high price suggests high quality. However, this only works under two conditions.

1. When the consumer has no other information except the price of the brand. Consumers are smart - given no other information, they will use the only information that is given to them (i.e. the price of the product) to determine the quality of the brand. Example: a consumer is looking at two unknown brands of microwave ovens. He knows very little of the workings of a microwave. He will, under these conditions, consider the higher priced brand to be of higher quality than the lower priced brand.

Question. What is the managerial implication for (a) the lower priced brand? (b) The higher priced brand? Provide more information for the lower priced brand to convince the consumer it is high quality. For high priced products you need to created perceived value

2. When the consumer trusts the source of the price information. In an unknown and untrusted store, the consumer will not think of high price as necessarily signifying high quality. The consumer may think of this as a "rip-off". In other words, the consumer may think that both brands are actually much the same but the unknown and untrusted store is trying to make a much bigger profit on the higher priced brand.

However, the same situation in a known and trusted store (say Wal-Mart) will denote higher quality for the higher priced brand. After all, in the consumer's mind, Wal-Mart would never pull such a stunt as to show a higher price for one brand over another when both brands are, actually, the same quality.


Perceptions and the Promotion of the Brand

Recall that, in a previous chapter, we have said that value is what a certain consumer wants to have happen (the consequences) in a certain situation from a certain object. Thus, perceived value is conceived as some combination of the brand and the situation in which the consumer finds herself/himself. The function of the promotions of the brand are also, thus, to establish the perceived value of the brand based on showing what positive consequences for the consumer can arise from using the brand in a certain situation. Such positive consequences can be shown to generated emotional responses by using "others" who matter to the consumer.
We can, therefore, generate perceived value in our promotions for a brand by showing:

A. The happiness/surprise/joy/pride/etc. that the brand can generate in certain situations involving others who are important to the consumer. This would entail emotional strategies to create perceived value.
B. How the consumer can gain in their own self-interest by buying the brand in a certain situation (like a "sale", etc.) which does not involve "others". This would entail rational strategies to create perceived value.