CB Quiz 5

AN EXAMPLE OF STAYING BELOW THE JND: PORTRAYAL OF BETTY CROCKER -1936-1996

An interesting application of the Just Noticeable Difference is the small changes in the portrayal of General Mills' fictitious spokesperson, Betty Crocker, an iconic figure used by the company since 1936. The company wanted to keep her up to date but did not want the changes to be noticed. For the most part, the changes from one period to the next are fairly subtle.

SUCCESSFUL & UNSUCCESFUL EXAMPLES OF CONCEPT CONSISTENCY

Arm & Hammer baking soda successfully leveraged into room deodorizers based on the strength of its association as a deodorant in refrigerators. On the other side of the coin, one might have expected that Harley Davidson cigarettes would have been successful due to the much higher incidence of smoking among hard core bikers. Why did it fail? Similarly, Pond's Original Fresh Towelettes for removing dirt and impurities aligned well with its cold creams that have been around since 1864. But Kimberly-Clark's product in the same category, Kleenex facial cleansing tissues, did not align well with the concept of an established tissue brand associated with wiping one's nose rather than one's face..

brand leveraging pt 2

As noted, a characteristic that varies across consumers is the ability to generalize perceptions from one stimulus to another. Some consumers see a relationship across brands that may escape other consumers, for example, the life style connotation of Ralph Lauren products allowing paint and furniture to be sold under the Lauren label. This form of brand leveraging is the primary strategic application of perceptual generalization, that is, the ability of a consumer to generalize from one product category to another. The slide above cites three conditions for successful brand leveraging: - A strong brand image is required since the brand must have a strong and positive association if it is to be used on another product category. - Successful leveraging requires some core concept associated with the brand. Bic could successfully leverage from pens to razors because the core concept was disposability. Nike could leverage its name from athletic shoes to sports apparel because its name was associated with sports rather than shoes. Does Apple have a core concept facilitating leveraging? - Given the need for a core concept, leveraging requires the brand to be transferred to a category that is consistent with the core concept. On the surface, Arm & Hammer baking soda might not be associated with room deodorizers and deodorants, but baking soda was most frequently used as a food deodorizer in refrigerators, so these new products were consistent with the company's core concept. - Company loyalty also facilitates brand leveraging by providing an umbrella under which the company's brands will be recognized, for example Apple's "i," McDonald's "Mc" or Nike's Swoosh. Amazon has introduced a variety of products beyond its original core competency as a web retailer - a streaming device, a voice activated speaker a subscription service for streaming video and music. We will ask whether Amazon can engender company loyalty on this basis?

mere exposure effect

Familiarity is a result of frequent exposure. Numerous studies in psychology have found that being exposed to stimuli over time leads us to regard them as fluent and to favor them underlies the concept of cognitive fluency

AN EXAMPLE OF SUBLIMINAL EFFECTS:EFFECT OF MUSIC ON WINE PURCHASES

In another study, background music had a direct effect on wine sales. When German music was played, German wines outsold French wines by almost 2:1. When French music was played in the same store, French wines outsold German wines by 5:1. when asked about it, 90% said "no, music doesnt change it" -> they weren't aware of the stimulus!

selective perception (governing perspective)

It means that we seek stimuli to conform to our beliefs and past associations so as to achieve a comfort level with the world around us as represented by a state of perceptual equilibrium. As a result, we tend to seek stimuli that fit into our pre-existing cognitive framework.

SUBLIMINAL EFFECTS IN MARKETING

JND are subliminal Consumers are not conscious of the effects of such stimuli, but they may have an effect on behavior. Consider the three studies cited in the slide above. Consumers were not conscious of the effects of font style on menus, color décor in stores, or music in a store on their behavior. ¡The font style on two identical menus will affect diners' quality perceptions of the same restaurant ¡Customers in a store with blue décor were significantly more likely to make purchases than when the same store had a red décor. ¡Daily sales in a department where slow music was played was 38% higher than in the same store when the tempo was faster.

reading 22 - aquafina in a can

Reading #22 describes Pepsi's prospective introduction of bottled water in cans so as to contribute to environmental control by eliminating the use of plastic bottles, given that most plastic bottles are not recyclable and cans are. Based on the article, consumers are clearly predisposed to assuming water will be in bottles so as to view their contents. But are consumers, particularly Millennials and Gen Zs, sufficiently motivated to overcome these predispositions to further recycling objectives? That is certainly one key question facing Pepsi. Several others: -Would you buy Aquafina water in a can? -Would a metal container in the shape of a bottle be more acceptable?

perceptual equilibrium vs disequilibrium

The process of selective perception does not mean we reject all information that is unfamiliar. Numerous studies have found that new or unfamiliar information is more acceptable if it has some component that is familiar. Selective perception reveals our biases for what is acceptable within our cognitive framework.

reading 24

cites Intel's strategy to redefine its brand image from the long-standing "Intel Inside" campaign to the more experientially oriented "Amazing Experience Outside" campaign. The attempt is to expand perceptions of Intel applications beyond the computer to applications focusing on real life experiences. We will view a video of the more recent campaign. The shift in emphasis is another example of technology companies moving from the functional to the experiential. A question for discussion is whether consumers will accept the premise of the "Intel Outside" concept, or are perceptions of Intel too ingrained based on its former strategy?

reading 25

cites another negative effect of stimulus generalization, namely when consumers use the brand name to represent the product category and thus generalize from the brand to the product. An example is calling facial tissue Kleenex, bandages Band-Aids, or using the term "Google it" for search. This can result in a loss of brand identity if competitors bring suit against the company to claim that the brand name is now generic for the category. For example, at one time Bayer had exclusive use of the name aspirin, but lost it in the U.S. when competitors claimed it was generic for headache remedies. Incidentally, Bayer can still use aspirin exclusively in 80 countries. Product names that at one time were brand names and lost their identity are Formica, Thermos, YoYo, and Escalator. - What brands other than those cited above are in danger of losing their brand identity?

cognitive fluency study 2 - pronounceable stock names

easier to pronounce stock names are more valuable Once again, familiarity led to favorability. **this is actually true with real stock names lol

sharpeners

greater ability to accept disfluent info Experts are more likely to be sharpeners because they have a greater capacity to process unfamiliar or contradictory information given their knowledge of the product category. - Risk takers are more likely to be sharpeners because they will seek out alternatives that may not be in the mainstream. - Younger consumers are more likely to be sharpeners because they are not set in their ways. Their beliefs and past associations are not as firmly established. As a result, they are more likely to be open-minded and accepting of information that contradicts their beliefs.

levelers

level out information to conform to past beliefs & associations. Seek out fluent information.

cognitive fluency

the facility with which we associate with and accept stimuli. **reduces cognitive load, makes things easier on consumers moves consumers to system 1 processing We tend to accept and favor information that is familiar to us and gives us a greater comfort level. The drive for perceptual equilibrium occurs by our seeking stimuli that are cognitively fluent, that is, information that tends to be more easily recognized and is therefore easier to organize and interpret.

perceptions

the way we see the world

STRATEGIC IMPLICATIONS OF COGNITIVE FLUENCY

Communicate recognizable & familiar (i.e. fluent) information to increase favorability toward brands. If introducing new products, tie the new to the familiar. Brand names §Ambien & Lunesta outsell Rozerem (sleeping pills) §WelChol outsells Praluent (cholesterol reducing drugs) Advertising Executions: § Tie new ad executions to the familiar - e.g. Geico always using same tag line - "15 seconds can save you 15% or more..." Brand leveraging §Nike leveraging to sports clothes is fluent §Bic leveraging to perfumes is disfluent New product adoption: Link to familiar §Typewriters à Computers §Laptops à Tablets §Black & White TV à Color TV

PERCEPTUAL ORGANIZATION: CATEGORIZATION

Consumers classify stimuli into categories to make sense out of them. The category in which we put a brand directly affects how we perceive it. Luxury vs. medium-size vs. economy car categories affect our perceptions of quality and price. The distinction between minivans and SUVs affect our image of the car based on life style factors such as family orientation and performance factors such as four-wheel drive and acceleration. The more involved the consumer is with a category, the more likely the consumer will expend more effort in categorizing it. The music buff, the frequent videogamer, the avid skier are all more likely to establish multiple categories for the products of interest. This is evident across cultures. Chinese consumers have more categories for bicycles, American consumers for cars. It is also interesting to see that as American consumers became more conscious of nutrition and fitness, more categories developed for bottled drinks - vitamin water, energy drinks, sports drinks, low carb drinks. The distinction between fast food and fast casual establishments developed for the same reason. Implications: - Changing needs are likely to produce new categories. For example, the need to go from the gym to the office produced athleisure wear - Category associations change over time, producing changes in quality perceptions. We will discuss the impact on quality perceptions of Starbucks moving from the coffee house to the fast food category. - Categorization also has implications for brand leveraging. A brand using its name in a new category must insure that consumers see a similarity with the previous category. In this respect, when Kimberly Clark attempted to leverage Kleenex from tissues to facial wipes it failed. Why? - The rationale for horizontal integration is expanding the company's base through acquisitions and mergers. : In this respect, was the rationale behind Google's acquisition of You Tube consistent with the company's core concept? : What about Facebook's acquisition of Instagram? : Does Microsoft's proposed acquisition of Tik Tok make sense in the context of the way consumers categorize the two companies? - The manner in which retailers group products in stores should mirror the way consumers categorize products.It is interesting that drugstores categorize products by usage - e.g. headache remedies, pain relievers - whereas supermarkets do so by product category - e.g. dairy products, vegetables, meat.The probable reason is that we usually go into a drug store to solve a problem, and products are grouped together to address that problem.We go into supermarkets to satisfy specific needs addressed by particular product categories.

social media

Social media have a direct role in facilitating cognitive fluency. We tend to communicate with others who have similar opinions, attitudes and preferences. In so doing, we seek out stimuli that reinforce our past beliefs and predispositions. As a result, social media may be a vehicle to further the mere exposure effect and may also ameliorate information overload by restricting the range of information we are exposed to. But social media may have negative consequences in this regard. We will discuss whether in your experience, communicating about brands on social media has limited your range of information and choices. The desire for the familiar in seeking cognitive fluency may be reinforced during the pandemic. Our routines have been disrupted, and in the desire to cope with an unfamiliar environment we formerly took for granted, we may seek out the familiar through friends and family on social media.

perceptual discrimination

The ability to discriminate changes in stimuli - e.g. noticing a small increase in price or decrease in package size.

Model of consumer perceptions

We then organize these stimuli into categories to make sense of them; for example, organizing stimuli into information on tablets vs. laptops, or on iPhones vs. Galaxies. Finally, we interpret these stimuli so as to make a purchase decision. A key element in interpretation is how we see a brand, that is, our image of the brand. Stimuli that affect our perceptions are communicated either from marketers or from friends, family and colleagues through word-of-mouth. We will first consider selection with a focus on selectivity governing perceptions, and then consider organization and interpretation of stimuli.

reading 23 - MAYA

most advanced yet acceptable Reading #23 describes the preference for the familiar as a result of the mere exposure effect, but also the conflicting desire for the new and exciting. This conflict led the famed designer Raymond Loewy to form the MAYA principle - More Advanced Yet Acceptable. In introducing new products, Loewy advised there should be an element of the familiar. Spotify at first introduced its streaming music service with the intention of providing new music, but an error in programming led it to introduce familiar hits as well. When it corrected the error, it found subscriptions dropped substantially, so it went back to introducing the familiar with the new.

cognitive fluency study 1 - Dollar bills

people didnt really know it was fake but still subconsciously estimated it to have a lower value/buying power!

cognitive disfluency

rejecting the unfamiliar and favoring familiar

cognitive load

the effort involved in decision making.

THE ADAPTATION LEVEL:ADVERTISING WEAROUT

¡ After repeated exposure, additional advertising does not increase recall ¡Consumers tire of ad themes ▪Aflac Duck? ¡How avoid advertising wear-out? §Vary ad executions - e.g. Geico campaigns More: The adaptation level is the second widely used measure of stimulus discrimination. As noted, the most relevant application to marketing is the likelihood of advertising wearout with repeated exposures to the same campaign. The best way to avoid advertising wearout is to vary ad executions. Geico is a good example of this strategy. It has not only relied on the Gecko in its ads but has portrayed a variety of quirky characters. It has run as many as six executions at a given time. The quote by Geico's ad manager above addresses the problem of advertising wearout - offsetting viewer fatigue.

Brand leveraging

¡Ability to generalize perceptions from one stimulus to another is primary strategic application - generalize from one product to another. Requires: ▪Strong brand image ▪A core concept ▪Bic - Disposability ▪Nike - Sports & Performance ▪Does Apple have a core concept? ▪Concept consistency ▪Arm & Hammer deodorizers ▪But Harley-Davidson cigarettes? ¡Company loyalty facilitates leveraging ▪The Apple "i" ▪McDonald's "Mc" ▪Nike's Swoosh What about Amazon?

PERCEPTUAL DISCRIMINATION

¡Ability to notice changes in marketing stimuli There are two measures of perceptual discrimination - the just noticeable difference (JND) and the adaptation level.

SUBLIMINAL ADVERTISING

¡Advertising below the JND meant to induce behavior without consumer recognition §Never proven ¡Examples of subliminal advertising effects: §Tostitos logo - intended? §Gilbey's gin advertises sex - unintended? More: The use of subliminal stimuli in advertising is highly questionable. In the 1950's, a PR executive purportedly ran some experiments in several movie theaters in New Jersey where the words Coca Cola and "eat popcorn" were flashed on the screen at subliminal exposures. The researcher claimed that sales of Coca Cola and popcorn surged when there was an intermission. Other researchers failed to replicate these results, and the research proved to be fabricated. But the idea that advertising could make consumers do something they ordinarily would not do lingered and was reinforced by books such as The Hidden Persuaders that supported the notion that advertising can manipulate consumers. There is no question that there are intended subliminal effects. For example, the symbolism of coming together in McDonald's double arches could be construed as subliminal in that it has a positive effect, but many consumers are not conscious as to why. Also, most consumers are not conscious of the fact that the two "t"s in the Tostitos logo in the next slide may represent two individuals over a bowl of salsa. But some advertising critics have gone far afield in claiming subliminal effects. Consider the so-called subliminal effects cited by some marketing analysts in the Gilbey's ad in the second slide below. The notion that advertising has subliminal effects that can manipulate consumers has been largely discredited..

brand's schema

¡Marketers seek to establish integrated images based on a variety of positive associations with a brand that we have referred to as a brand's schema §Lululemon has developed a schema based on the trend for athleisure. (See next slide)

APPLICATION OF THE JND TO CHANGES IN PRICE AND PACKAGE SIZE

¡PRICE §Increase price below the JND so it will not be noticed §Decrease price above the JND so it will be noticed ¡PACKAGE SIZE §Decrease package size below the JND so it will not be noticed ¡Marketers prefer to decrease package size rather than increase price Consumers prefer the reverse More: The most important applications of the JND are to price and package size. Marketers would like price increases to be below the JND so as not to be noticed and price decreases above the JND so as to be noticed. Similarly, marketers would like decreases in package size to be below the JND so as not to be noticed. Marketers prefer to reduce the size of the package as a disguised price increase in the hope that consumers will not notice the change. This may be preferable to increasing the price directly. Consumers tend to react adversely to decreases in package size without a parallel decrease in price. They view this as deceptive. If they had a choice, most would prefer a price increase as being more above board.

NEGATIVE PERCEPTUAL GENERALIZATION

¡Product dilution - too much generalization §Pierre Cardin §But why not Ralph Lauren ¡Generalize from the brand to the product category §Results in loss of brand identity §Examples that were brands at one time: ▪Formica ▪Thermos ▪YoYo ¡Question: Will Google lose its brand identity? Although stimulus generalization can lead to successful brand leveraging strategies, it can also have a negative impact. One is brand dilution from too many attempts to use the brand name. Pierre Cardin is an example, a designer brand that extended its brand from frying pans to calculators and diluted its brand equity as a result. A question for discussion is why the same effect has not occurred for Ralph Lauren, given the use of its name from clothing to furniture to paint.

ACCEPTING DISFLUENT INFO

¡There are differences in the consumer's predisposition to accept disfluent information We referred to consumers' bias towards favoring familiar stimuli that conform to their past beliefs and associations. But some consumers, known as sharpeners, are more inclined to accept disfluent stimuli. The majority of consumers are levelers, that is, those who conform to the concept of cognitive fluency by seeking out information that conforms to their past beliefs and associations.

brand's image

¡the sum total of our inferences of a brand based on perceived stimuli and past experiences §The brand's image defines its brand equity, that is, its worth in the eyes of the consumer ¡Marketers often seek to redefine their brand image to make it more current: §Example: Intel's attempt to change its brand image from "Intel Inside" to "Amazing Experiences Outside"

Just noticeable difference (JND)

§Below this point, consumers do not notice a difference in stimuli ▪Limen = threshold point Subliminal stimuli are below JND A consumer may not be aware of soft music playing while shopping, but the music may subconsciously affect shopping behavior in the store. The limen is the point below which stimuli are not noticed. In our example, the music has a subliminal effect on the shopper, that is, awareness was subconscious or below the limen. It would take an increase in volume for the music to reach the consumer's point of cognition or limen.

THE LIMITS OF FAMILIARITY (Cognitive wearout)

§Cognitive wearout §Variety-seeking §Desire for the new and unexpected We tire of repetitive stimuli (cognitive wearout) and often seek refuge in looking for variety as an escape from familiar stimuli. There is also the desire for the new and unfamiliar. One way for marketers to avoid cognitive wearout is to vary their strategies to avoid boredom, but in so doing to use a common theme. One example cited previously is Geico. It varies its advertising executions in using a variety of quirky and humorous themes, but in doing so maintains its consistent theme - "15 seconds can save you....".

reading 21 - examples of reduced cognitive load

§Google Page Rank - Ranks pages based on frequency: Mere exposure effect ▪"I'm Feeling Lucky" Button: System 2 processing - rarely used. §Netflix & Amazon: Minimize cognitive load through recommendation systems ▪Amazon - based on prior purchases ▪Netflix - based on what previously watched Covid-19 has probably increased cognitive load for most consumers by moving many purchases from System 1 to System 2, that is, from habit to decision making

Perceptual generalization

§The tendency of consumers to generalize from one stimulus to another - e.g. seeing a connection between Bic pens and razors based on their disposability

Adaption level

§point at which repeated exposures reduce ability to perceive stimuli ▪Advertising Wear-out is the point at which repeated exposure results in the stimulus losing effectiveness. If we walk into a perfume store the scent is immediately apparent, but after 15 or 20 minutes it is much less noticeable. Our sensory organs have adapted to the smell. The most important application of the adaptation level to marketing is the concept of advertising wearout where multiple exposures to the same advertising message wear thin after a while and lose their punch. Various studies have suggested that this tends to occur after four exposures to the same message. One interesting question is whether the adaptation level contradicts the concept of the mere exposure effect.The latter posits that repeated exposures lead to familiarity and favorability.Yet the adaptation level posits that we become accustom to repetitive stimuli and they begin to lose their effectiveness.

REJECTING DISFLUENT INFORMATION

•Consumers tend to reject inconsistent or conflicting (disfluent) information -Anti-smoking commercials are viewed as threatening by many smokers for depicting the consequences of smoking. (We will view an anti-smoking commercial depicting the consequences of smoking as opposed to one that illustrates the benefits of not smoking. The latter, from Thailand, was called the most effective anti-smoking commercial of all time. We will ask why? -A luxury car entry by Volkswagen, the Phaeton, which was rejected by prospective car buyers but toyota and honda succeeded. -Pepsico is introducing Acquafina water in cans this year. Will it be rejected as disfluent? -On the other side of the coin, Ralph Lauren has introduced paints in Home Depot that have been accepted. Why weren't they rejected in a relatively downscale store based on Lauren's luxury image?