customer perception

Definition

A marketing concept that encompasses a customer's impression, awareness and/or consciousness

about a company or its offerings. Customer perception is typically affected
by advertising, reviews, public relations, social media, personal experiences and other channels.
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Merchants aim to increase their sales by determining what drives their customers' purchase decisions.
Consumer perception theory attempts to explain consumer behavior by analyzing motivations for buying -or not buying -- particular items. Three areas of consumer perception theory relate to consumer perception
theory: self perception, price perception and perception of a benefit to quality of life.

Consumer perception applies the concept of sensory perception to marketing and advertising. Just as
sensory perception relates to how humans perceive and process sensory stimuli through their five senses,
consumer perception pertains to how individuals form opinions about companies and the merchandise they
offer through the purchases they make. Merchants apply consumer perception theory to determine how their
customers perceive them. They also use consumer perception theory to develop marketing and advertising
strategies intended to retain current customers -- and attract new ones.
Self perception theory attempts to explain how individuals develop an understanding of the motivations
behind their own behavior. Self perception by customers relates to values and motivations that drive buying
behavior -- which is also an important aspect of consumer perception theory. For instance, a study by
researchers at the University of Massachusetts at Amherst addressed how self perception shaped consumers'
buying behavior. The study considered the question of whether consumers believed their buying decisions
had a real effect on issues such as environmental impact. The researchers concluded that consumers' self
perception was a driving factor in whether or not they placed a priority on socially conscious purchase and
consumption practices. Consumers who viewed themselves as socially conscious tended to place more
weight on issues such as environmental impact when making buying decisions than consumers who did not
hold similar views of themselves.

The products and services that an industrial company has to offer are
generally organized around its customers needs in addition to the level of
expertise and production capabilities of the firm. Creating a strategy for
product development is an important and often multifaceted segment of
running a successful enterprise, and it brings together a range of different
principles, such as research and development, marketing, engineering, design,
materials, and manufacturing. In most cases, an industrial product
development strategy will depend on two main goals: keeping the new product

or product line within the companys overall objectives and marketing

philosophy, and developing a system for assessing the performance of an
existing product. For evaluating the success of an existing product, factors
such as sales, customer response, profits, competition, and market acceptance
are usually involved.
Product development is usually based upon these criteria, and putting
together a strategy helps to determine which products need to be modified,
continued, or discontinued. In addition, development analysis can set
guidelines for new products to be introduced. When working on product
development, it can be helpful to remember that an industrial product is often
more than just a tangible good, but also a set of technical, economic, legal, and
personal relations between the consumer and the seller. Elements such as
price, product specifications, purchasing contracts, and a customers personal
interpretation of a companys brand and reputation are all significant
influences on a products overall performance.
Customer Perception
Consumers can evaluate a product along several levels. Its basic characteristics
are inherent to the generic version of the product and are defined as the
fundamental advantages it can offer to a customer. Generic products can be
made distinct by adding value through extra features, such as quality or
performance enhancements. The final level of consumer perception involves
augmented properties, which offer less tangible benefits, such as customer
assistance, maintenance services, training, or appealing payment options. In
terms of competition with other products and companies, consumers greatly
value these added benefits when making a purchasing decision, making it
important for manufacturers to understand the notion of a total package
when marketing to their customers. For example, when manufacturing
automotive parts, a high-performing product will provide the customer base
with basic benefits, while adding spare parts, technical assistance, and skill
training will offer enhanced properties to create a total package with increased
appeal to consumers.
Changing Product Strategies
In industrial product development, a marketing strategy that is flexible and
adaptive to changing market circumstances stands a greater chance of being
effective in the long-term. Products and consumer perceptions are variable, so
changes in strategy may be required to better address customer needs,
technological developments, new laws and regulations, and the overall

product life-cycle. By monitoring external conditions and shifting product

development accordingly, a company can better target its consumers and learn
to react to their needs. The major factors that can necessitate a change in
product strategy include:
Customer Preferences: Fluctuations in the cost of materials, new
application requirements, and changing brand awareness are just a few of
things that can cause consumer needs to change. Keeping close track of
customer response to a product and taking their demands into consideration
are important for maintaining market share.
Technological Advances: A new technological development can engender
a change in a product line, causing products to need modification in order to
remain competitive or rendering some products obsolete. For example, fiber
optic cables have replaced older cables in certain applications and many
businesses have switched from main frame computers to personal computers.
Being aware of these advances can help a business stay ahead of the curve.
Laws and Regulations: The implementation of new governmental
regulations can cause certain products or manufacturing methods to be
restricted, limiting their consumer appeal. Conversely, new laws can also lend
an advantage to certain business and deregulation can sometimes benefit
production standards. Product development strategies must shift according to
the legal landscape.
Product Life-Cycles: To preserve the rate of growth in profit and sales,
many industrial companies decide to alter, discontinue, or replace older
products with newer models or more recent upgrades. These changes are
usually made periodically, allowing existing products that reach maturity or
decline to be phased out or modified, thus retaining their appeal.

Understanding and Managing Customer Perception

By Dagmar Recklies

This article first appeared in Effective Executive, ICFAI University Press, July 2006
It has never been more difficult to win and keep business through product and

price distinction.[1]

In todays globalising economy competition is getting more and more fierce. That means it becomes more d
differentiate themselves from other offerings than ever before. Not only is the number of competitive offerin
production, sourcing, logistics and access to information. Many products and services face new competition
new offerings or bundles from industry outsiders. Since product differences are closed at an increasing spee
battle for customers by price reductions, products and services tend to become COMMODITIES
.

On the other hand, customer behaviour becomes more hybrid. On one hand, customers are increasingly pri
marketplaces like ebay or buying their groceries at discount MARKETS . On the other hand they enjoy bran
same person may plan a weekend trip with a no-frills airline and a stay at a five-star-hotel.

In the result, customers have a wider choice of often less distinguishable products and they are much bette
balance of power shifts towards the customer. Customers are widely aware of their greater power, which rai
companies should care for them.

Bringing it all together, it becomes ever more difficult to differentiate a product or service by traditional cate
etc.

In this situation the development of a strong relationship between customers and a company could likely pr
competitive advantage. This relationship is not longer based on features like price and quality alone. Today
customer makes in his various interactions with a company (e.g. how fast, easy, efficient and reliable the pr
relationship. Problems during a single transaction can damage a so far favourable customer attitude.

The consequence for companies is that they have to adapt their ways of competing for customers. Tradition
efforts of customer relationship management on issues like customer satisfaction and targeted MARKETING
direct marketing or advertising. Although doubtless necessary and beneficial, these activities are not longer
between company and customer down to a particular set of contacts in which the company invests its effort
than a satisfied customer who is well aware of the companies offerings and has a positive attitude towards
not necessarily a loyal one.[2]

If a customer is satisfied that means that a product of service has met his expectations and that he was no
is doubtlessly very important. It is the precondition for repeat purchases and it prevents the customer from
experiences. A loyal customer, however, is more than a customer who frequently purchases from a compan

The difference is the emotional bond which links the customer so closely to the company that he develops a
brands and is even willing to recommend them to others. Loyal customers truly prefer a product, brand or c
Thus loyalty goes beyond a rational decision for known quality or superior price-performance-ratio. It is abo
perceptions about the brand or product.

When the customer makes his buying decision, he evaluates the benefits he perceives from a particular pro
The value a customer perceives when buying and using a product or service go beyond usability. There is a
social status, exclusivity, friendliness and responsiveness or the degree to which personal expectations and
perceived by the customer, normally comprise more than the actual price. They also include costs of usage,
offering, potential switching costs etc. Hence, the customer establishes an equation between perceived ben

and compares this to similar equations of other products.

Based on this, customer loyalty can be understood as to how customers feel about a product, service or bra
total INVESTMENTS with a it live up to their expectations.

The important point here is the involvement of feelings, emotions and perceptions. In todays competitive m
becoming much more important for gaining sustainable competitive advantage.

Customer perceptions are influenced by a variety of factors. Besides the actual outcome i.e. did the produ
function and did it fulfil the customers need the whole process of consumption and all interactions involve
globalised information driven economy this can also comprise issues like

How other customers or influencing groups perceive the product or brand

The degree to which the customer feels the actual marketing campaign addresses the most important i

Responsiveness and service quality of any affiliates, e.g. distribution partners

Customer perceptions are dynamic. First of all, with the developing relationship between customer and com
and its products or services will change.

The more experience the customer accumulates, the more his perceptions will shift from fact-based judgem
whole relationship gains for him. Over time, he puts a stronger focus on the consequence of the product or

Moreover, if the customers circumstances change, their needs and preferences often change too. In the ex
competitors, with which a customer compares a product or service will change, thus altering his perception
is that the public opinion towards certain issues can change. This effect can reach from fashion trends to th
citizenship. Shells intention to dump its Brent Spar platform into the ocean significantly altered many custo
worth buying fuel from.

Research has been don on the impact of MARKET SHARE on the perceived quality of a product.[3]Depend
customers preferences, increasing MARKET share can have positive or negative effects on how the custom

Positive effects of increasing MARKET

share on customer perception

Increasing MARKET share can send out positive signals by acting as an indicator of
superior quality that is recognised by more and more other customers. This effect is
particularly strong for premium priced products. Customers normally assume that a
product must be of exceptional quality if it can gain such an unexpected market success
despite its high price.

Many brands offer positive emotional benefits of using a product that is popular in
the MARKETS .

The value of a product or service can rise through increasing number of users of the
same product, e.g. number of members of an online community, better availability of
software
for
popular
computer
systems.

MARKET research and surveys. There are several aspects of measuring customer
perceptions.
First of all the company has to find out how itself and its offerings are perceived by the
customers. It is essential to identify what the customer is actually buying and which
features are most important to him. Only this way it is possible to align the internal focus
and resources to the customers expectation. This information is of greater value if it can be
compared to the customers perception of competitive offerings. Not only will this reveal
relative strengths and weaknesses, it is also a valuable source of ideas for improvement.

Besides that, surveys should also identify the relative importance of several influencing
variables in the eyes of the customer. To know what matters most to the customer helps to
set priorities for projects.

Of course, as with any MARKET research activities, it should be based on a careful

customer segmentation. Customer groups that differ by frequency of use, social status,
geographical region or other criteria, are likely to have different expectations and
preferences. Hence, they will probably perceive an offering in different ways.

Zeithaml et al[5] suggest to incorporate several behavioural-intentions questions to

identify signals that are potentially favourable or unfavourable for the company. Questions
for behaviour intentions are potentially of higher validity and richer diagnostic value than
the overall service quality or customer satisfaction variables. Since these questions are
directed at potential future actions they can not only indicate of changes in demand
and MARKET trends. They also provide early warning signs and help to take to take timely
corrective action.

Only if a company knows which features of its products and services or which other points
of contact with the customer are considered most important by the customers, it can
develop appropriate strategies. Such a strategy will not only help the company to
strengthen the emotional bond with the customer through targeted improvements and
activities. It may also have the positive side effect that the customers whole experience
leads him to the conclusion that this company really understands his distinctive needs and
really takes him seriously. Hence, the customers perception of the whole company may
improve beyond a positive attitude towards a particular product.

Based on thorough research, companies can develop strategies and initiate targeted
activities to manage and improve customer perceptions. This article finishes with some
examples of how this can be done. It has to be taken into consideration, however, that there
is no one right strategy. Since these measures shall provide a distinctive competitive
advantage, they should be based on the particular competencies and resources of a
company and they should aim at setting the company apart from the other MARKET
participants.
The service experience is closely linked to his perception of the total company and its
offerings be it products or service. A common idea of many authors is that it is not always
necessary to deliver the absolutely perfect customer experience. Instead it is important to
solve the customers need or problem in a matter that is perceived appropriate. For many
retail products, for example, it will be sufficient in most cases to offer an appropriate group
of substitute products, but not all particular products. In service situations, customers will depending on the actual nature of the service - not expect an immediate service delivery.
They will however expect a delivery within a time frame that is either MARKET standard or
meets the service promise of the actual service provider. As long as the company keeps this
promise, the customer will perceive this as satisfying. Byrnes even suggests that you earn
more customer loyalty when you do a good job fixing a service problem, than if there had
been no problem at all.[6] The point is to meet or excel the customers expectations, not to
achieve some ideal level of product or service delivery.

Companies should try to make sure that their customers are fully aware of all the ways
their offering can provide value to them. They have to explain the customer how this
particular product can deliver more value than those from competitors.[7] This approach
means to widen the customer perception and to extend their awareness and appreciation to
more features or aspects of the offering. However, this point has to be considered very
carefully in order not to produce an diametrical effect.

Customer perception refers to how customers view a certain product based on their own
conclusions. These conclusions are derived from a number of factors, such as price and overall
experience.
When it comes to influencing consumers to purchase a product, their perception of the brand must
be taken into account. This perception may vary based on the customer or a certain demographic of
customer. Customer perception can be developed from a variety of factors, such as their own
personal experience or how they have heard other people experienced the product.
The Internet has transformed how people experience brands and build their perceptions. Social
media and review websites provide access to reviews and details that help customers form their own
perceptions about brands and their products.