What Is Price Perception?

Price perception is one of the leading variables when it comes to consumers buying process. Economists, market researchers have already undergone researches and predict that in buying decision price are the driving forces. Several studies explain and determine and explain the same fact thereby concluding the fact with decision making. The determinants of price perception can be both rational and psychological factors. The other factors may become psychological factors and prestige. The key variable to explore and explain consumers’ price perception is the degree of understanding the psychological process of consumers’ price perception.

When a firm has seasonal demand, the discrepancies are observed between the supply and demand. Generally the firm has excess supply at the time of low demand and scarcity when there is high demand. If the firm commercializes goods and faces seasonal demands, it can minimize the effect through good management of production and storage. The problem becomes more difficult in several sectors such as tourist services. The prices being fixed by these companies and firms drives the price perception in different aspects which can differ according to the individual characteristics. The pricing fixed by the firm by undifferentiated strategies, under price discounts may lead the consumers/individuals to perceive as low quality products being offered. So the price discount strategy becomes ineffective in this case.

Role of Price Perception in Consumer Buying Process

The price perception has been one of the most important research issues on the consumer behavior for last many years. The concept of reference point is very important in this regard and efforts have been made in order to define it.… Read the rest

Concept of Attitude in Consumer Behavior

An attitude describes a person’s relatively consistent evaluations, feelings, and tendencies toward an object or an idea. Attitudes put people into a frame of mind for liking or disliking things and moving toward or away from them. For example, many people who have developed the attitude that eating healthy food is important perceive vegetables as a healthy alternative to meat and chicken. As a result, the per capita consumption of vegetables has increased during recent years, leading the meat and chicken producers to try to change consumer attitudes that chicken and meat are unhealthy. Companies can benefit by researching attitudes toward their products. Understanding attitudes and beliefs is the first step toward changing or reinforcing them. Attitudes are very difficult to change. A person’s attitudes fit into a pattern, and changing one attitude may require making many difficult adjustments. It is easier for a company to create products that are compatible with existing attitudes than to change the attitudes toward their products. There are exceptions, of course, where the high cost of trying to change attitudes may pay off.

There is a saying among restaurateurs that a restaurant is only as good as the last meal served. Attitudes explain in part why this is true. A customer who has returned to a restaurant several times and on one visit receives a bad meal may begin to believe that it is impossible to count on having a good meal at that restaurant. The customer’s attitudes toward the restaurant begin to change. If this customer again receives a bad meal, negative attitudes may be permanently fixed and prevent a future return. … Read the rest

Hierarchy of Effects Model

Another widely used model in marketing that attempts to explain consumer decision making process is called the Hierarchy of Effects Model. Originally conceived to explain how advertising affects consumer’s purchase decisions, the Hierarchy of Effects Model focuses on consumer learning that takes place as he/she processes information from the external world. Although different researchers developed slightly different models, the basic idea is the same: people experience a sequence of psychological stages before purchasing a product.

The origins of the Hierarchy of effects can be traced all the way back to 1898 and the hierarchy’s creator, a salesman named Elias St Elmo Lewis. Lewis believed that rather than simply closing a sale, an effective salesperson actually guided a buyer through a series of stages. He claimed that a proper salesman must ensure Attention, maintain Interest, create Desire and finally spur the customer to Action (purchase). In 1910, the Hierarchy of Effects showed up for the first time in print mentioning the hierarchy’s use for advertising gain. It showed up as an editorial in Printer’s Ink. The model was then expressed as Attention, Interest, Conviction, and Action. The article declared that any complete advertisement campaign must follow this model of persuasion. In 1961 Robert Lavidge and Gary Steiner published their seminal paper on the Hierarchy of Effects in the Journal of Marketing. In addition to supporting the AIDA model, they noted that consumers appeared to progress through cognitive (thinking), then affective
(feeling) and finally conative (intention/doing) stages.

Hierarchy of effects Model can be explained with the help of a pyramid.… Read the rest

Factors Influencing the Consumer Decision Making Process

Each buying decision you make involves an elaborate mental thought process, a degree of active reasoning, though on the surface it may not always seem to be so. This may be because over a period of time you have taken certain buying decisions so many times that they now seem to be made almost automatically but that is not true at all. Even your daily decision of buying a loaf of bread involves the element of active reasoning as buying a new sofa set for your drawing room. However, in the former case, the extent and intensity of active reasoning may be much less as compared to the latter case. In the case of bread, the only decision variables may be which brand, quantity and retail outlet. But in the case of buying a sofa set the decision variables are far more in number. These may be:

  • Ready-made or made to order
  • From a furniture shop or to be built at home
  • Type of material for frame: wood, steel, aluminum
  • Type of material for cushion: cloth, rexine, leather
  • Design: with or without armrests, height, depth of seat, seating capacity, loose or fixed cushion.

Thus, depending on the type of decision being made, the degree and strength of active reasoning will vary. There are three factors, which influence the degree of active reasoning that is undertaken by the consumer in his process of decision-making. These are:

1. Involvement

The degree of personal involvement is a key factor in shaping the type of decision process that consumers will be followed.… Read the rest

Types of Consumer Buying Behavior

Consumers are becoming smarter day by day; it is not to fool them with any gimmick. Nowadays, consumer does his/her homework very well before making any purchase in the market. Even before buying a face wash a consumer go through a rigorous process of choosing the best among the many present in the market. Buying a face wash and buying a luxurious car is very different, therefore the perception involved and the information gathered by the consumer in purchasing a car is much more than buying a face wash.

Henry Assael distinguished four types of consumer buying behavior based on the degree of buyer involvement and the degree of differences among brands.

  1. Routinized Response Behavior (RRB)/ Habitual Buying Behavior: This is the simplest type of consumer behavior. This occurs when the consumer already has some experience of buying and using the product. Usually, this kind of behavior is adopted for the purchase of low cost, frequently used items. In such cases the buyers do not give much thought, or search and also do not take a lot of time to make the purchase. Most of the time the buyer is familiar with the various brands available and the attributes of each and has a well-established criteria for selecting their own brand. The buyers are well aware of the product class, know the brands and also have a clear preference among the brands. The degree of involvement in buying such products is low. In such a case, the marketer has to ensure two tasks: (a) The marketer must continue to provide satisfaction to the existing customers by maintaining quality, service and value.
Read the rest

Consumer Decision Making Process

The five stages of the consumer decision making process include; Problem recognition, information search, information evaluation, purchase decision, and evaluation after purchase. This is just a general model of the consumer decision making process and it emphasizes that the buying decision making process starts before the actual purchase and continues even after the purchase. It also encourages the marketer to focus on the complete buying process and not just on the purchase decision.

1. Problem Recognition

Consumers recognize a problem as a need or want. Of course, the most frequent problem occurs when consumers realize they are out of the product. For example, when the gas tank gets near empty, or you run out of lunch meat for your sandwiches, or when your car is due for maintenance. Problem recognition also occurs when a consumer receives new information about a good, service, or business. New fashions, for example, can make people recognize that their current clothing is not in style or up to date. Different circumstances can change and force a consumer to recognize a major buying problem. A stay at home mom who returns to the work force may need a new wardrobe. A first year college student may need a personal computer.  A recently retired couple may now have the time and money to take a European vacation.

2. Information Search

Consumers search for information that is helpful in making a purchasing decision. They may get this information in one or in many ways. Marketers are interested in the major information sources that consumers use and the influence each has on the final purchase decision.… Read the rest