Unit-2

Consumers as individuals and in the social context

Consumer Perception
Consumer perception, is how customers feel about a brand, product,
or service. It's a marketing concept that includes customers' opinions,
beliefs, and feelings about a company, and how they interact with it.
Consumer perception is important because it can: Influence buying
decisions, Impact customer loyalty, determine product value, and
Help position a brand as a leader in its segment.
Here are some factors that can influence consumer perception:
 Direct experiences, such as using a product or talking with
customer support
 Indirect experiences, such as what customers see in ads, hear
from friends, or read in online reviews
 Price and quality of the product
 Comparisons with other products
Understanding consumer perception can help businesses improve
their marketing, service delivery, and grow their business. For
example, brands can collect data to learn more about their
customers, what motivates them, and how they feel about the brand.
This information can help brands build empathy and deliver impactful
messaging.
What is customer perception?
When it comes to products, services, brands, and everything else, we
all have prebuilt beliefs and expectations that influence how we
perceive experiences and ultimately our response to them.
In most instances, before we even engage with a brand or business,
we’ve already formed some idea of what the experience will be like
and what we would want it to be like. Our perceptions precede the
experience and ultimately shape our response.
Take a box of chocolates at a chocolatier, for example — before
experiencing the contents, we all have expectations of what might be
delivered. These expectations are influenced by different drivers,
such as the quality of the chocolates and the overall costs, and our
own beliefs (which may or may not have been affected by what
we’ve seen or heard already).
We may have seen reviews online that rave about the chocolates,
reinforcing our expectations that they are indeed good and worth
buying. All of this contributes to our perception of the experience
and future brand loyalty.
The fact is that consumer beliefs, expectations, and sentiment
towards a product, service, or offering are directly linked to how they
perceive their experience with you. If you ignore the actual
experience as well as how it’s perceived, you risk doing harm to the
long-term image and health of your business and brand.
But despite the clear pitfalls, this is precisely why so many brands and
businesses often miss the mark: they have an idea of what they feel
their consumers are interested in, while the reality is far different.
Why is customer perception important?
As consumer beliefs, expectations, and feelings towards brands,
products, or services are linked to how they perceive their
experience, ensuring you meet those expectations correlates with
your overall success.
This means that every time a consumer or customer has contact with
your brand, the experience has to meet their expectations – doing so
ensures their perception of you is a positive one.
Positive customer perceptions can influence whether your customers
believe your values are similar to theirs and whether they can trust
your brand to meet their needs. This can influence whether
customers return to purchase more, or whether they choose a
competitor. Three loyalty metrics – customer satisfaction, likelihood
to recommend, and likelihood to purchase more – can be affected by
the perception a customer has of you. This makes the customer
experience so important.
Consumer Learning & Knowledge
According to Kotler’s Definition, learning involves changes in an
individual’s behavior arising out of the experience. Most of the
human behavior is learned over time, out of the experience.
Following are the features of consumer learning
• Consumer learning is a process. A process which continually
changes and acquires new knowledge.
• This knowledge can be obtained from reading, discussing,
observing, thinking, etc.
• Newly acquired knowledge or personal experience, both serve
as feedback.
Elements of Consumer Learning
1. Motivation: is the driving force of all important things to be learnt.
Motives allow individuals to increase their readiness to respond to
learning. It also helps in activating the energy to do so. Thus the
degree of
involvement usually determines the motivation to search information
about a product.
• For example, showing advertisements for summer products just
before
summer season or for winter clothes before winters.
2. Cues: Motives encourage learning and cues stimulate the direction
to these motives. Cues are not strong as motives, but their influence
in which the consumer responds to these motives.
• For example, in a market, the styling, packaging, the store display,
prices all serve as cues to help consumers to decide on a particular
product, but this can happen only if the consumer has the motive to
buy. Thus, marketers need to be careful while providing cues,
especially to consumers who have expectations driven by motives.
3. Response signifies: how a consumer reacts to the motives or
even cues. The response can be shown or hidden, but in either of
the cases learning takes place. Often marketers may not succeed
in stimulating a purchase but the learning takes place over a
period of time and then they may succeed in forming a particular
image of the brand or product in the consumer’s mind.
4. Reinforcement: The reward -- the pleasure, enjoyment and
benefits -- that the consumer receives after buying and using a
product or service is called reinforcement. Reinforcement is
critical to the learning process and can significantly impact future
responses, even though this element typically happens after
purchase. It is very important as it increases the probability of a
particular response in the future driven by motives and cues.

Consumer Attitude Formation & Change

• Consumer attitude may be defined as a feeling of favorableness
or unfavorableness that an individual has towards an object. As
we, all know that an individual with a positive attitude is more
likely to buy a product and this results in the possibility of liking
or disliking a product.
• Consumer attitudes are a composite of a consumer’s (1) beliefs
about, (2) feelings about, (3) and behavioral intentions toward
some object-within the context of marketing, usually a brand or
retail store. These components are viewed together since they
are highly interdependent and together represent forces that
influence how the consumer will react to the object.

• Belief plays a vital role for consumers because, it can be either

positive or negative towards an object. For example, some may say
tea is good and relieves tension, others may say too much of tea is
not good for health. Human beliefs are not accurate and can change
according to situations.
• Consumers have certain specific feelings towards some products or
brands. Sometimes these feelings are based on certain beliefs and
sometimes they are not. For example, an individual feels uneasy
when he thinks about cheese burst pizza, because of the tremendous
amount of cheese or fat it has.
• Behavioral intentions show the plans of consumers with respect to
the products. This is sometimes a logical result of beliefs or feelings,
but not always. For example, an individual personally might not like a
restaurant, but may visit it because it is the hangout place for his
friends.

Model of Attitude
Tri-component Model − According to tri-component model, attitude
consists of the following three components.
• Cognitive Component − The first component is cognitive
component. It consists of an individual’s knowledge or perception
towards few products or services through personal experience or
related information from various sources. This knowledge, usually
results in beliefs, which a consumer has, and specific behavior.
• Affective Component − The second part is the affective
component. This consists of a person’s feelings, sentiments, and
emotions for a particular brand or product. They treat them as the
primary criteria for the purpose of evaluation. The state of mind also
plays a major role, like the sadness, happiness, anger, or stress, which
also affects the attitude of a consumer.
• Conative Component − The last component is conative component,
which consists of a person’s intention or likelihood towards a
particular product. It usually means the actual behavior of the person
or his intention.

Reference Groups
Reference groups are groups (social groups, work groups, family, or
close friends) a consumer identifies with and may want to join.
They influence consumers' attitudes and behavior. A reference group
helps shape a person's attitudes and behaviours. Opinion leaders are
people who influence others.
In the world of consumer behavior, reference groups play a crucial
role in influencing individuals’ purchasing decisions. A reference
group refers to a social group that an individual identifies with or
aspires to be a part of. These groups can have a significant impact on
consumers’ attitudes, opinions, and buying choices.

Understanding the concept of reference groups and their influence

on consumer behavior is essential for marketers and businesses
aiming to effectively target their desired audience.
In this article, we will delve deep into the topic of reference groups,
exploring their definition, types, and their impact on consumer
behavior.
What is a Reference Group in Consumer Behaviour?
A reference group, in the context of consumer behavior, is a group of
individuals or social entities that influence an individual’s beliefs,
attitudes, and behavior. These groups serve as a benchmark for
individuals when forming their opinions, evaluating their self-worth,
and making purchase decisions.

People often seek validation and acceptance from their reference

groups, leading them to conform to group norms and adopt similar
behaviors and consumption patterns.

Types of Reference Groups

There are various types of reference groups that individuals may
belong to or aspire to be a part of. Let’s explore some common types
of reference groups:

1. Direct Reference Groups: These are close-knit groups that an

individual has regular face-to-face interactions with. Examples
include family members, friends, colleagues, and classmates. Direct
reference groups have a strong influence on an individual’s opinions
and behavior due to the close relationships and shared experiences.

2. Indirect Reference Groups: Indirect reference groups consist of

individuals or entities that an individual does not have direct
interactions with but still considers as a point of reference.
Celebrities, social media influencers, and public figures often serve as
indirect reference groups. People might admire and emulate their
behaviors, lifestyles, and consumption choices.

3. Aspirational Reference Groups: Aspirational reference groups are

those that individuals aspire to be a part of but currently do not
belong to. These groups often represent a desired social status,
achievements, or a particular lifestyle. Aspirational reference groups
can vary from cultural or professional circles to exclusive clubs or
organizations.

4. Membership Reference Groups: Membership reference groups are

formal organizations or associations that individuals are part of.
These groups often have a specific purpose, shared values, and
standards. Examples include professional associations, hobby clubs,
and religious organizations. Membership reference groups influence
individuals through the sense of belonging and shared identity.

Major factors influencing consumer behavior

The six primary factors that significantly impact consumer behavior

include psychological, social, cultural, personal, economic, and
technological influences.
As consumer expectations continue to evolve in response to various
influences, you must remain agile and responsive to these changes.
1. The psychological factors
Human psychology is a complex and multifaceted realm that
significantly influences consumer behaviors. From the moment we
become aware of a product or service to the final decision to
purchase, our internal psychological processes play a crucial role in
guiding our actions.

i) Motivation: The driving force behind purchases

At the heart of consumer behavior lies motivation, the internal drive
that compels us to seek satisfaction. According to Maslow's Hierarchy
of Needs, individuals are motivated by a range of needs, from basic
physiological requirements like food and shelter to higher-level
desires for esteem and self-actualization. When a particular need
becomes pressing, it triggers a motivational state that directs our
behavior toward fulfilling that need.
For instance, a skincare brand might appeal to consumers' desire for
youthful skin by emphasizing its anti-aging benefits. By tapping into
these underlying motivations, brands can create a strong emotional
connection with their customers and drive purchasing decisions.
ii) Perception: How consumers interpret product information
Perception is the process by which individuals select, organize, and
interpret sensory inputs to form a meaningful picture of the world
around them. In the context of consumer behavior, perception plays
a crucial role in how individuals evaluate products and services.
Consumers are bombarded with a vast array of information from
various sources, including advertisements, reviews, and social media.
The way they interpret and make sense of this information ultimately
shapes their perception of a product.
Factors such as selective attention, where consumers focus on certain
stimuli while ignoring others, and interpretation, where they assign
meaning to the information they receive, can significantly influence
perception. For example, a consumer might selectively attend to the
positive reviews of a product while overlooking negative ones,
leading to a more favorable perception of the product.
iii) Learning: How experience shapes consumer preferences
Learning is the process by which individuals acquire new knowledge
and modify their behavior based on experience. In consumer
behavior, learning can occur through classical conditioning, where
consumers associate a product with a particular stimulus, or operant
conditioning, where they learn from the consequences of their
actions.
For instance, a consumer might learn to associate a particular brand
of chocolate with a positive emotional experience, such as receiving
it as a gift from a loved one. This association, formed through
classical conditioning, can lead to a preference for that brand in the
future. Similarly, if a consumer has a positive experience with a
product, they are more likely to purchase it again, demonstrating
operant conditioning.
iv) Attitudes and beliefs: The foundations of consumer decision-
making
Attitudes and beliefs are the fundamental building blocks of
consumer decision-making. Attitudes are enduring evaluations of
products, services, or brands, while beliefs are the information
individuals have about these entities. These attitudes and beliefs are
formed through a combination of direct experience, information
from external sources, and inference.
Preexisting attitudes and beliefs can significantly influence consumer
behavior. If a consumer holds a negative attitude toward the brand
image, they are less likely to purchase its products, regardless of the
brand's actual merits. Conversely, positive attitudes can lead to brand
loyalty and repeat purchases.
You can influence consumer attitudes and beliefs through targeted
marketing campaigns that highlight the benefits of their products and
address any negative perceptions. By consistently reinforcing positive
associations, brands can shape consumer attitudes and drive
purchasing decisions.
2. The social factors
As social beings, humans are profoundly influenced by the people
around them. From the moment we are born, our family, friends, and
social circles shape our preferences, attitudes, and, ultimately, our
buying behavior. Social factors play a crucial role in determining what
we purchase, how we purchase it, and why we make those choices.

i) Family: The foundation of consumer behavior

From a young age, we observe our parents and other family
members making purchasing decisions, and these experiences shape
our own preferences and habits. As we grow older, the family
continues to play a significant role in our buying behavior, with
different family members exerting varying degrees of influence.
For instance, in a traditional household, the mother may have a
stronger influence on grocery purchases, while the father may have
more say in decisions related to major appliances or automobiles.
Children can also sway family purchasing decisions, particularly when
it comes to toys, snacks, or entertainment products. As family
dynamics evolve over time, so too do the factors that influence
consumer behavior within the household.
ii) Reference groups and social networks: The power of peer
influence
Reference groups are the people with whom an individual associates
and identifies, such as friends, colleagues, or social clubs. These
groups have a profound impact on consumer behavior, as individuals
often seek to conform to the norms and preferences of their peers.
Social networks, both online and offline, amplify this effect as people
share information, recommendations, and opinions about products
and brands.
The influence of reference groups and social networks can be seen in
various aspects of consumer behavior. For example, teenagers may
purchase certain brands of clothing or accessories to fit in with their
peer group, while adults may join a gym or take up a new hobby to
align with the interests of their social circle. Social proof, in the form
of positive reviews or endorsements from influential figures, can also
sway consumer decisions, as people tend to trust the opinions of
those they perceive as similar to themselves.
iii) Roles and status: How social position shapes buying behavior
As people move through different stages of life, such as entering the
workforce, getting married, or starting a family, their purchasing
habits often change to reflect their new roles and responsibilities. For
instance, a young professional may prioritize buying business attire
and investing in career development, while a new parent may focus
on purchasing items for their child's needs.
Social status, which is often tied to factors such as income,
occupation, and education, can also influence consumer behavior.
Individuals with higher social status may be more likely to purchase
luxury goods or services to maintain their position and signal their
success. Conversely, those with lower social status may prioritize
more practical or cost-effective purchases to meet their basic needs
and fit in with their social circles.

3. The cultural factors

Cultural factors encompass the shared values, beliefs, customs, and
practices of a particular group or society. When consumers engage
with brands, their choices are often guided by the cultural context in
which they exist.
As globalization continues to blur cultural boundaries, recognizing
the importance of cultural sensitivity in marketing will be essential
for businesses seeking to thrive in diverse markets. By understanding
the broader cultural context that encompasses culture itself,
subcultures, and social class, you can develop profitable strategies.
i) Culture: The pervasive impact on consumer choices
Culture refers to the collective programming of the mind that
distinguishes one group of people from another. It encompasses the
values, norms, and practices that guide behavior within a society.
Cultural factors have a profound influence on consumer behavior as
they dictate what is considered desirable or acceptable within a
community. For example, cultures that prioritize collectivism may
encourage consumers to make purchasing decisions that benefit their
family or social group, while individualistic cultures may promote
personal preferences and self-expression in buying choices.
Cultural values also shape product preferences and consumption
patterns. In societies where frugality is valued, consumers may
gravitate towards cost-effective products, whereas cultures that
emphasize luxury and status may lead individuals to seek out
premium brands. Additionally, cultural rituals and celebrations often
dictate specific buying behaviors during holidays or special occasions,
such as purchasing gifts or traditional foods.
ii) Subculture: The influence of shared beliefs and values
Within broader cultural groups exist various subcultures and smaller
communities that share distinct beliefs, values, and practices.
Subcultures can be defined by factors such as ethnicity, religion,
geographic location, or shared interests.
These subgroups often form unique consumer segments with specific
preferences that differ from the dominant culture. For instance,
ethnic subcultures may have unique dietary restrictions or
preferences that influence their food choices.
iii) Social class: The impact of status on buying behavior
Social class is determined by various factors, including income level,
occupation, education, and family background. Social class affects
not only purchasing power but also brand preferences and
consumption patterns.
Consumers from different social strata may interpret marketing
messages differently based on their experiences and values
associated with their social class.
4. The personal factors
Personal factors vary from individual to individual, leading to diverse
perceptions and behaviors in the marketplace. The key personal
factors include age and life cycle stage, occupation, income level,
lifestyle choices, personality traits, self-concept, and gender.

i) Age and life cycle stage

Age is a crucial determinant of consumer behavior as it affects
purchasing habits throughout different life stages. For instance,
teenagers often gravitate towards trendy clothing, beauty products,
and technology that reflect their social identity and peer influences.
In contrast, middle-aged consumers may focus on family-oriented
purchases such as homes, vehicles, and educational products for
their children.
As individuals transition into retirement, their buying behavior shifts
once again; retirees may prioritize health-related products and
services or leisure activities that enhance their quality of life. You
must recognize these differences in age-related preferences to
effectively target your offerings. For example, brands targeting
younger consumers might emphasize style and social status, while
those appealing to older adults might highlight reliability and
comfort.
ii) Occupation: Shaping consumer choices
Different professions often dictate specific preferences when it
comes to products and services. For instance, a healthcare
professional may prioritize purchasing high-quality scrubs or medical
equipment, while a corporate executive might invest in tailored suits
or luxury accessories that reflect their status.
Additionally, occupation can influence the types of brands consumers
are drawn to. For example, individuals in creative fields may favor
brands that promote innovation and artistic expression, whereas
those in more traditional industries might lean towards established
brands known for reliability.
iii) Income: The economic influence on purchasing power
A consumer's financial situation directly impacts their purchasing
power and spending habits. Higher-income individuals generally have
greater disposable income, allowing them to indulge in luxury goods
and premium services. Conversely, lower-income consumers are
often more price-sensitive and prioritize essential purchases such as
groceries, clothing, and household items.
You can leverage this understanding by segmenting their target
audience based on income levels. For example, luxury brands may
focus on affluent consumers by emphasizing exclusivity and superior
quality in their marketing campaigns. In contrast, budget-friendly
brands can attract cost-conscious shoppers by highlighting value for
money and practicality.
iv) Lifestyle: Reflecting attitudes and values
Lifestyle encompasses an individual's way of living, including their
interests, activities, values, and attitudes. It significantly influences
consumer behavior by dictating the types of products individuals
choose to purchase.
For instance, health-conscious consumers may seek out organic foods
or fitness-related products that align with their commitment to
wellness. Further, a brand promoting eco-friendly products can
appeal to environmentally conscious consumers by emphasizing
sustainability in its messaging.
v) Additional personal factors: Personality, self-concept, and gender
Personality influences how individuals perceive brands; for instance,
consumers who identify with adventurous traits may gravitate
toward brands associated with excitement and exploration.
Self-concept refers to how individuals view themselves; this
perception can drive brand loyalty as consumers seek products that
reflect their identity. For example, someone who sees themselves as
sophisticated may prefer luxury brands that align with this self-image.
Gender is another important factor influencing purchasing behavior.
Research indicates that men and women often approach shopping
with different motivations; men may prioritize functionality, while
women may focus on emotional connections with products.
5. The economic factors
When a nation experiences economic prosperity, a strong economy
leads to greater money supply in the market and higher purchasing
power for consumers. In contrast, a weak economy can result in a
struggling market, impacting employment levels and consumer
confidence.

i) Personal income: The cornerstone of purchasing power

When an individual has a higher disposable income, the money
remaining after fulfilling basic needs and necessary payments, their
purchasing power increases. This surplus allows consumers to spend
more on a variety of items, from luxuries to discretionary purchases.
Conversely, a reduction in disposable income leads to decreased
spending across multiple categories.
ii) Family income: The collective impact on buying decisions
When a family has multiple income sources, it results in higher
overall earnings available for spending on both essential items and
luxuries. This surplus income can encourage family members to
indulge in purchases they might not have considered otherwise, such
as vacations, entertainment, or high-end consumer goods.
iii) Consumer credit: The influence of easy access
Easy access to credit, facilitated by credit cards, bank loans, hire
purchase agreements, and installment plans, can spur higher
spending on comfort and luxury items. When consumers have the
option to defer immediate payment or spread it out over time, they
may be more inclined to make purchases that they might have
otherwise forgone due to budgetary constraints.
iv) Liquid assets: The confidence to spend
Consumers with a higher proportion of liquid assets, such as cash,
bank savings, and securities, tend to exhibit a greater willingness to
spend on comfort and luxury goods. These readily available financial
resources provide a sense of confidence and security, allowing
consumers to indulge in discretionary purchases without the same
level of hesitation as those with fewer liquid assets.
v) Savings: The impact of deferred gratification
If a consumer prioritizes saving, their expenditure on purchases may
decrease accordingly. Conversely, a consumer with a lower savings
rate will likely allocate a larger portion of their income towards
buying products and services. The balance between saving and
spending is a delicate one, often shaped by individual financial goals,
risk tolerance, and economic conditions.
vi) Economic conditions: The barometer of consumer confidence
The broader economic climate, characterized by factors such as
inflation, interest rates, and overall stability, can have a profound
impact on consumer confidence and spending patterns. During
periods of economic uncertainty or recession, consumers may adopt
a more cautious approach, prioritizing essential purchases and
deferring discretionary spending. Conversely, in times of economic
growth and stability, consumers tend to exhibit higher confidence
and a greater willingness to engage in spending across various
categories.

6) The technological factors

The rapid advancement of technology has transformed how
consumers interact with brands, conduct research, and make
purchasing decisions.
From digital influence through social media and e-commerce to the
power of data analytics in understanding preferences, technology is
at the forefront of modern marketing and CX strategies.

i) Digital influence: The power of technology on consumer behavior

Social media, e-commerce, and mobile technology have become
integral to how consumers discover, evaluate, and purchase
products. For instance, social media platforms like Instagram and
Facebook allow brands to connect with consumers directly, fostering
engagement through targeted advertisements and influencer
partnerships. These platforms enable consumers to share their
experiences and opinions about products, which can significantly
influence the purchasing decisions of their peers.
E-commerce has revolutionized shopping habits by providing
consumers with the convenience of purchasing products from
anywhere at any time. The ability to compare prices, read reviews,
and access a wealth of information online empowers consumers to
make informed choices. As a result, traditional brick-and-mortar
stores face increasing competition from online retailers that offer
seamless shopping experiences and extensive product selections.
Mobile technology further enhances this convenience, allowing
consumers to shop on-the-go and access information instantly
through their smartphones.
ii) Data and analytics: Harnessing insights to understand consumer
behavior
As businesses collect vast amounts of data from various customer
touchpoints, they can gain valuable customer insights that can help in
reducing churn and increasing profits. This data-driven approach
enables companies to tailor their marketing strategies to meet the
specific desires of their target audience.
For example, companies can utilize predictive analytics to anticipate
future buying behaviors based on historical data. By analyzing
patterns in consumer behavior, businesses can identify trends and
adjust their offerings accordingly.
Here’s a notable case study where a major bank reduced user churn
by understanding customer behavior using an AI-powered engine .
iii) Real-world applications: The impact of technology on consumer
choices
The influence of technology on consumer buying behavior is evident
in various industries. For instance, in the fashion sector, brands
leverage social media influencers to showcase their products in
authentic settings. This strategy not only increases brand visibility but
also builds trust among potential customers who value peer
recommendations over traditional advertising.
In the automotive industry, manufacturers utilize virtual reality (VR)
technology to enhance the car-buying experience. Consumers can
explore vehicles in immersive environments without stepping foot in
a dealership. This innovative approach allows potential buyers to
visualize their options better and make more informed decisions.
Additionally, advancements in artificial intelligence (AI) have enabled
businesses to improve customer service through chatbots and virtual
assistants. These technologies provide instant support for consumer
inquiries, enhancing satisfaction by offering timely assistance. As
consumers increasingly expect quick responses to their questions,
businesses that adopt AI-driven solutions are better positioned to
meet these demands.