Lecture2 1 5

INSTITUTE –University School of Business
DEPARTMENT -Management
M.B.A
CONSUMER PSYCHOLOGY-22BAT623
Dr. Amandeep Kaur
Assistant Professor
Chandigarh University
Consumer psychology-Motivation theories

DISCOVER . LEARN .
EMPOWER
a. Course Outcomes
CO1 To understand consumer psychology in an informed and systematic way.
CO2 To apply behavioural theories to conceive strategic insight to create values for
customer.
CO3 To analyze ever changing consumer behaviour trends and patterns to develop
insight in order to improve products and services.
CO4 To evaluate the relative effectiveness of marketing strategies aimed at influencing

the behaviours of customers.
CO5 To develop marketing mix based on consumer insight and consumer preferences.
Consumer Imagery
An image is a total perception of something that individuals form by processing all the information they are exposed to over time. Research indicate that consumers
develop enduring perceptions or images about brands, prices, stores and companies. These inferences are consumers’ beliefs about products or services.
Table of Contents [Hide]
 1 Consumer Imagery
o 1.1 Price perceptions
o 1.2 Perceived product and service quality
o 1.3 Perceived risk
Consumers may associate Patanjali with ayurvedic quality because of their advertising or wordof- mouth communications from friends/family. Individuals develop a
self-image of themselves and certain brands carry a symbolic value for them. Some products seem to match this self-image of an individual while others do not.
According to Russell W Belk, consumers attempt to enhance or preserve their self-images by purchasing products that they believe correspond to or agree with their
self-images and avoid buying products that do not fit their self-images.
Price perceptions
Whether a consumer perceives the price of a product or service as high, low, or fair has
significant influence on buying intentions and post-purchase satisfaction. Researchers have
investigated the effects of three types of consumer price perceptions communicated through
advertising.
Plausible low prices are considered well within the range of acceptable market prices;
plausible high prices are close to outer limits of the range but still not beyond the limits of
believability and implausible high prices are definitely beyond the limits of acceptable
range of prices.
So as long as the communicated reference price is within a range of the consumer’s

acceptable price, the external reference price is taken as believable and accepted.
Perceived product and service quality
Consumers often tend to assess the quality of a product or service on the basis of different types of information they
relate with the product or service. Intrinsic cues (cues are stimuli that direct motives) relate to the physical attributes
of the product such as the size, colour, or smell etc, which are sometimes used to judge the quality of a product.
Consumers like to be thought of as objective or rational in their assessment of products and believe that their product
choices are based on intrinsic cues.
Consumers lacking actual experience with the product tend to judge the quality on the basis of extrinsic cues such as
brand image, price, or even the country of origin. Lacking previous purchase experiences may lead to an awareness
that higher-quality products tend to cost more and high-price may become an indicator of higher-quality and suspect
the quality of low-priced products.
Kent B Monroe and Susan B Petroshius have summarized research findings to show how consumers react to price
variable:
Consumers seemingly use price as an indicator of product quality as well as an indicator of the purchase cost.
Consumers appear to develop reference prices as standards for evaluating prices they see in the marketplace.
Consumers’ reference prices are not constant and get modified by shopping experiences. Their exposure to price higher
or lower than reference price is likely to result in upward or downward movement of the reference price.
Consumers tend to develop a range of acceptable prices around the reference or standard price. Prices above or below
the reference price are likely to be judged as unsuitable and may lead to decreased willingness to purchase the
product.
Factors such as a brand image or store image can soften the strength of the perceived price-quality relationship.
If the prices for different alternatives are perceived as similar, then price is unlikely to influence the choice between
these alternatives.
Perceived risk
Whenever consumers make decisions to purchase any new brands, there is an element of uncertainty about the consequences and
perception of risk is involved in most such purchases. Risk perception can be defined as ‘the consumers’ perceptions of
uncertainty that they face when they are unable to foresee various consequences of their purchase decisions.
The relevant risk dimensions are uncertainty and the consequences. It is worth noting that the influence of risk depends on
individual’s perception. This means that the risk actually may or may not exist and even if a real risk exists but is not perceived, it
will not influence consumer behavior.
Consumers may face several different types of risks in making purchase decisions. The major ones are:
Financial or monetary risk which is the risk that the product will not be worth its cost. Expensive products and services are
most subject to this risk.
Performance risk which is associated with the possibility that the product will not perform as anticipated or may even fail. The
consumer wastes time in getting it repaired, or replaced. The risk is greatest when the product is technically complex.
Example: An expensive computer.
Physical risk which refers to bodily harm to self and others due to product usage. For example food and beverages, electrical or
mechanical appliances, or medical services etc. can sometimes prove risky. When cooking gas (LPG) was first introduced in
India, consumers’ physical risk perception about it was high. Similarly, some consumers consider the use of pressure cooker
as risky.
Social risk which means that a poor product purchase may not meet the standards of
an important reference group and may result in social embarrassment.
Example: Clothes, jewellery, carpet, or car etc.
Psychological risk which relates to loss of self-esteem or self-image as a result of poor

choice and making her/him feel stupid. Example: Highinvolvement category
products or services.
The degree of risk perception among consumers varies and depends upon the person,
product, situation and the culture. Some consumers who are high-risk perceivers or
risk avoiders, limit their product choices to a limited number of safe alternatives to
avoid risking a poor selection.
More often than not, consumer stay brand loyal to avoid risk. Some of the strategies that consumers adopt to deal with
risk are:
 Consumers acquire additional information. This allows them to better assess the risk.
 Consumers remain brand loyal. They stay loyal to a brand that has delivered satisfaction instead of buying an untried
brand.
 Consumers buy a most popular brand because they usually believe that well-known and popular brands can be
trusted.
 Consumers buy the most expensive model or brand as they often associate price with quality.
 Consumers rely on store image. They trust reputable retail outlets and depend on them regarding their choice of
merchandise for resale.
 Consumers seek money-back guarantees, warranties and pre-purchase trial. For example, a marketer offers a free trial
and “no questions asked” refund of money, or there are guarantees/warranties.
 Buy the smallest pack size or lowest-priced item. In an attempt to reduce the consequences, consumers buy the
smallest size or the lowest-priced item.
 Reduce level of expectations to reduce psychological consequences before making the purchase.
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INSTITUTE –University School of Business

Consumer psychology-Motivation theories

CO1 To understand consumer psychology in an informed and systematic way.

CO4 To evaluate the relative effectiveness of marketing strategies aimed at influencing

So as long as the communicated reference price is within a range of the consumer’s

Example: Clothes, jewellery, carpet, or car etc.

Psychological risk which relates to loss of self-esteem or self-image as a result of poor

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