Chapter 6 Consumer Perception

The process by which an individual: SELECTS, ORGANIZES, Perception and INTERPRETS STIMULI into a meaningful and coherent picture of the world.

Elements of Perception
Some basic concepts relating to PERCEPTUAL PROCESS (within the frame-work of Consumer Behavior)
Sensation The absolute threshold The differential threshold Subliminal perception

Elements of Perception

Sensation The absolute threshold The differential threshold Subliminal perception

The immediate & direct response of sensory organs to stimuli (e.g. advertisements / packaging / brand name) Stimulus = any unit of input to any of the senses

Sensation

Sensory receptors = eyes, ears, nose, mouth, & skin An unchanging environment provides little or no sensation at all E.g. effect of honking in 5 Bangalore

Elements of Perception

Sensation The absolute threshold The differential threshold Subliminal perception

The lowest level at which an individual can experience a sensation Absolute Threshold
In other words, it is the point at which a person can detect a difference between something and nothing- this is that persons absolute threshold for that stimulus
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Getting used to certain sensations; becoming accommodated to a certain level of stimulation For advertisers sensory adaptation concept is very important- i.e. consumer gets used to an advt. and hence, the advt. will no longer provide sufficient sensory input to be noted. That explains the need to change the advts. Frequently
Analogy : getting used to a hot bath / cold bath / bright sun after the initial response the individual 10 gets conditioned to the stimulus and hence, no further response is elicited

Sensory Adaptation

Sensory Adaptation

Marketers have two options to overcome advertisement clutter, either by : Increasing the sensory input by flooding consumers with a plethora of ads (e.g Advertisement of Colgate Toothpaste on Mumbais local trains) the exposure is so high that a person has to be blind if she/he has to miss the ad Decreasing the sensory input using unexpected features (e.g. using silence for TV ads the absence of music or audio effects) to gain attention Marketers seek unusual media to attain the Absolute Threshold E.g. Mailing perfume samples, balloon advertsements, using elephants to promote HERO (cigarette brand) in rural areas, etc. 11

Increasing the Sensory Input (example)

The ad depicts the use of a plethora of ads for increased sensory input

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Decreasing the Sensory Input (example)

ONIDA HAS WASHED THE NATION CLEAN

AIRTEL

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Elements of Perception

Sensation The absolute threshold The differential threshold Subliminal perception

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Differential Threshold

The minimal difference that can be detected between two similar stimuli. Also known as the j.n.d. (just noticeable difference).

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Webers Law

A theory concerning the perceived differentiation between similar stimuli of varying intensities (i.e., the stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different).
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Webers Law (Example)

If the price of a Skoda Octavia is increased by Rs. 1000/-, it may not have much of an impact (i.e. the increment would fall below the j.n.d.)

But, if the price of petrol is increased by Rs. 10/- it will have a tremendous impact ( because it is a significant % of the base cost of petrol)
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Webers Law (A Paradox)

Company X has a hair dye thats positioned as Lasts longer Competing brands offer lasting duration of 15 days If Company X offers 40 days, then repeat purchase rate will reduce If company X offers 12 days, then lasts longer perception wont last long But, if Company X offers 18 days, then consumers may notice the difference with 18 competing brands

Marketing Applications of the JND

Need to determine the relevant j.n.d. for their products
so that Negative Changes (reduction in product size, increase in product price etc.) are not readily discernible to the public (i.e. keeping such negative changes below the j.n.d.) e.g. web transaction fee So that Positive Changes (product improvements like lower price, increased quantity etc.) become apparent to the consumers without being extravagant (i.e. keeping the Positive changes at the j.n.d. level)

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Marketing Applications of the JND

Anything below the j.n.d. is wasted effort

Anything above the j.n.d. is extravagant & wasteful

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Application of j.n.d. Marketers often want to update their symbols without losing the ready recognition of consumers who have been exposed to years of cumulative advertising impact In such cases, they usually make a number of small changes, each carefully designed to fall below the j.n.d., so that consumers will perceive minimal difference between succeeding versions
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Application of j.n.d. (example 1)

Betty Crocker, the General Mills symbol, has been updated seven times from 1936 to 1996 22

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Application of j.n.d. (example 2)

LEXMARK bought the office supplies & eqpt. line from IBM in March91 & agreed to relinquish IBM name by 96 Accomplished in a 4-stage process
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Application of j.n.d. (example 2)

Transition Complete : LEXMARK stands alone

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Application of j.n.d. (example 3)

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Application of j.n.d. (example 3)

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Elements of Perception

Sensation The absolute threshold The differential threshold Subliminal perception

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People can perceive stimuli without being consciously aware that they are doing so

Subliminal Perception

Perception of very weak or rapid stimuli received below the level of conscious awareness
Stimuli that are too weak or too brief to be consciously seen or heard may nevertheless be strong enough to be perceived by one or more receptor cells29

Case of the 1950s Widely reported that consumers were being exposed to subliminal ad messages they were not aware of receiving These messages were meant to persuade products indirectly In 1957, an experiment was conducted in New Jersey, USA in a movie theater Messages like Eat Popcorn & Drink Cola were flashed on-screen : these messages had very short exposure time and viewers were unaware of having seen an ad In a span of 6 weeks popcorn sales went up by 58% and Coke sales went up by 18% - thereby confirming the potency of subliminal perception as an advertising 30 concept!

 However, there is a debate on using subliminal perception as an advertising tool because they make the consumers make unconscious acts of purchase The debate on whether to ban subliminal perception as an advertising tool still rages on in the USA..

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Dynamics of Perception

Perception study is a study of what we subconsciously add to OR subtract from raw sensory inputs to produce our own private picture of the world Perception is not a function of sensory inputs alone, BUT Perception = f(2 different types of inputs that interact to form the personal picture that each individual experiences) Type 1 : physical stimuli from outside environment Type 2 : in the form of certain predispositions (expectations, motives & learning) based on previous experience Hence, perceptions are unique: E.g. Only 2% people in Africa wear shoes was perceived as a weakness by many but for Mr. Bata 32 perceived this as an opportunity !

Aspects of Perception
Selection Organization

Interpretation

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Selection

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Perceptual Selection Consumers subconsciously exercise a great deal of selectivity as to which aspects of the environment (i.e. which stimulus) they perceive
Example : A woman in a supermarket is exposed to thousands of stimuli: different number of products of different colors, sizes etc. different number of people (looking, walking, searching, talking etc.) different smells (fruits, perfumes, disinfectants, etc.) different sounds (A/C, talking, etc.) Yet, she manages to select the items she needs, pay for them and leave the place, all within a short period of time HOW? Because of her SELECTIVITY IN PERCEPTION!
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Which stimuli gets selected?

Depends on two major factors

Consumers previous experience (affects their expectations) Consumers motives at that time (their needs, desires etc.)

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Some Marketing Variables Influencing Consumer Perception

Nature of Product Physical Attributes of Product Package Design Brand Name Advertisements & Commercials Position of Ad Editorial Environment
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Nature of the Stimulus Marketing Stimuli include several variables that affect consumers perception (package, brand name, ads etc.) Marketers often use CONTRAST as a differentiator in the clutter of ads E.g. Hutch ads just the word Hi printed at the top of the page
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Application of Contrast

An illustration of the attentiongetting nature of a dramatic product in an ad

Dramatic Images & Contrast Attract Attention

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Application of Contrast

Attentiongetting nature of white space in advertisements

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Expectations
People usually see what they expect to see What they expect to see = f( familiarity, previous experience, expectations) E.g. : If a persons friend tells him that Yellow Fields food is bad, he may also feel the same after eating - not because the food is bad but maybe he perceives that it will be bad
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Application of Expectation

Stimuli that conflict sharply with expectations receive more attention

The Unexpected Attracts Attention

Unexpected
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Application of Unexpected

The Unexpected Attracts Attention

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Concepts Concerning Selective Perception

Selective Exposure Selective Attention Perceptual Defense Perceptual Blocking

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Selective Exposure

Consumers seek out messages that they find pleasant and purposefully avoid painful or threatening messages (e.g. greying hair, decaying teeth etc.)

They also selectively expose themselves to ads that reassure them of the wisdom of their purchase behavior 45

Selective Attention

Consumers display a great deal of selectivity in terms of attention they give to commercial stimuli

E.g. some give more attention to pricing, some give more attention to appearance, etc.

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Consumers subconsciously screen out stimuli that they find psychologically threatening

Perceptual Defense
E.g. a smoker will block out stimuli that carries the message that smoking causes cancer 47

Consumers block out stimuli from conscious awareness

Perceptual Blocking
E.g. Zapping of TV commercials with remote control

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Organization

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Principles of Perceptual Organization

People dont experience the numerous stimuli as separate and discrete sensations
They tend to organize them into groups and perceive them as unified wholes

The specific principles underlying perceptual organizations are called GESTALT PSYCHOLOGY 3 most basic principles of perceptual organization:
Figure and ground Grouping Closure Zeigernik effect
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Concentrates on the background & foreground of ad messages

Figure & Ground

E.g Advertisers need to be careful and ensure that music (background) never becomes more than the voice (foreground)
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Application of Figure & Ground

Print advertisers often silhouette their products against a white background to make sure that the features they want are noted clearly perceived
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Grouping

Individuals tend to group stimuli so that they form a unified picture / impression Marketers use this concept extensively: An ad for a tea brand, showing a man & woman sipping tea in front of a fireplace in a tastefully decorated room The overall mood implied by the Grouping of stimuli leads the consumer to associate drinking of tea with romance, 53 fine living and warmth

Individuals have a need for closure i.e., if the pattern of stimuli to which they are exposed is incomplete, they tend to perceive it, nevertheless, as complete! Thus, the figure, with a section of the periphery missing is invariably perceived as a complete circle Incomplete tasks are better remembered than complete tasks (ZEIGERNIK EFFECT)
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Closure

Classic Example of Closure

A video on TV showing bacon frying in an iron pot and a voice-over in cowboy accent with a soft cowboy song as a backdrop

Closure

After 24 hours, telephone surveys indicated that people remembered much more from the video horses standing in the background and the flames reflecting on the faces of the 55 cowboys !!!

Zeigernik Effect

A person beginning a task needs to complete it. When he or she is prevented from doing so, a state of tension is created that manifests itself in improved memory for the incomplete task.

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Marketing Implication for Closure

Implications of Closure
(failed love story!!)

Incomplete ad messages BEG for completion by consumers this involves them more deeply into the message, thereby leading to greater degree of recall

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Application of Closure

Using the need for CLOSURE to increase attention

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Interpretation

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Interpretation is uniquely individual Since stimuli is often highly ambiguous (brief burst of noise, etc.), it leads to individual interpretation This is what forms the basis for projective techniques ( like incomplete sentences, caption contests etc.) for Consumer Research
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Interpretation

Distorting Influences
Physical Appearances Stereotypes Irrelevant Cues First Impressions Jumping to Conclusions Halo Effect
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Distorting Influences
Physical Appearances
Selection of models become important for persuasiveness
E.g. Sachin for Boost & Aishwarya for Lux

Stereotypes
Individuals tend to carry pictures in their minds of the meanings of various kinds of stimuli (i.e. expectations of what specific situations, people and events will be like)
E.g. T-Series cassettes are always perceived as pirated stuff

Irrelevant Cues
Consumers often respond to irrelevant cues
E.g. A person may buy a Skoda based on the luxury options 63 rather than on the technical superiority

Distorting Influences
First Impression
You never get a second chance for a first impression - i.e. first impressions are longlasting!

Jumping to Conclusions
Many people jump to conclusions without seeing the whole thing (form opinions beforehand) Hence, for such persons advertisers give their most persuasive arguments first
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Distorting Influences
Halo Effect
Evaluation of an object on a multitude of dimensions is based on the evaluation of just one or a few dimensions
E.g. A man is considered trustworthy because he looks in the eye and speaks

Marketing Implication: Marketers take advantage of the Halo Effect when they extend a brand name associated with one product line to another E.g. Reliance Infocomm from the Reliance stable !!!
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CONSUMER IMAGERY

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Consumer Imagery

Products and brands have symbolic value for individuals, who evaluate them on the basis of their consistency with their personal pictures of themselves

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Consumer Imagery

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Using Imagery to convey a product benefit

The ad uses the symbolism of a widely recognized landmark, as a negative goal, to promote the benefits of a calcium supplement
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Issues In Consumer Imagery

Product Positioning and Repositioning Positioning of Services Perceived Price Perceived Quality Retail Store Image Manufacturers Image Perceived Risk
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Positioning

Establishing a specific image for a brand in relation to competing brands.

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Repositioning

Changing the way a product is perceived by consumers in relation to other brands or product uses.

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Repositioning

In the renewed emphasis on home & hearth that followed the tragedy of 9/11, Berkshire repositioned its blankets as a cozy nesting place

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Perceptual Mapping

A research technique that enables marketers to plot graphically consumers perceptions concerning product attributes of specific brands Helps marketers to identify positioning gaps and possible repositioning aspects
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Fashion Coverage
High
Fashion Splash

Perceptual Mapping

Price
Low
Crash Bash Splash

High

Low

Publisher discovers that Splash is perceived similar to Crash

The Publisher can reposition Splash as Fashion Splash 75

Perceived Price

How a consumer perceives a price (high / low / fair) has a strong influence on both purchase intention & purchase satisfaction Consider the perception of price fairness : Differential pricing strategies are often perceived as unfair by consumers who are not eligible for the special price Perceptions of Price Unfairness AFFECTS Perceptions of product value AFFECTS Willingness to patronize a 76 product / dealer

Issues in Perceived Price

Reference prices Tensile and objective price claims

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Reference Price

Any price that a consumer uses as a basis for comparison in judging another price

Two kinds of reference prices exist External & Internal

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Reference Prices
External Reference Price
e.g. - a dealer claims : elsewhere this same product is sold for Rs.100 whereas I am selling for Rs. 75

Internal Reference Price

e.g. - Consumer says I saw the other dealer selling this same product for Rs. 75
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Tensile and Objective Price Claims

Tensile Price Claims : Such claims are used to promote a range of price discounts for a product line / an entire department / entire store. Examples of tensile price claims: Save between 10 40% Save upto 60% Save 20% or more

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Tensile and Objective Price Claims (contd.)

Objective Price Claims : Such claims are used to promote a single discount Important : Research shows that Tensile & Objective Price claims have greater effect on consumer shopping than a reference price advertisement

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Perceived Quality
Perceived Quality of Products
Intrinsic vs. Extrinsic Cues

Perceived Quality of Services Price/Quality Relationship

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Intrinsic Cues

Physical characteristics of the product (such as size, color, flavor, or aroma) that serve to influence the consumers perceptions of product quality.

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Extrinsic Cues

Cues external to the product (such as price, store image, or brand image) that serve to influence the consumers perception of a products quality.

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Characteristics of Services
Intangible Variable Perishable Simultaneously Produced and Consumed

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Perceived Quality of Services

More difficult for consumers to evaluate the quality of services than the quality of products. This is because services are intangible / variable / perishable / simultaneously produced and consumed Some researchers believe that consumers evaluation of service quality = f (magnitude and gap between customers expectations of service and his perception of the service actually delivered)

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Quality of Service

An ad centered around customer expectations

Brussels Airlines

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Conceptual Model of the Behavioral & Financial Consequences of Service Quality

Service Quality Superior Behavioral Intentions Favorable Remain

+Rs. Ongoing Revenue Increased Spending Price Premium Referred Customers Financial Consequences -Rs. Decreased Spending Lost Customers Costs to Attract New Customers
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Inferior

Unfavorable

Defect

Price/Quality Relationship

The perception of price as an indicator of product quality (e.g., the higher the price, the higher the perceived quality of the product).

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The degree of uncertainty perceived by the consumer as to the consequences (outcome) of a specific purchase decision There are two dimensions to perceived risk : UNCERTAINTY & CONSEQUENCES Important : It is immaterial whether or not the risk exists what is important is that there is a risk perception! 90

Perceived Risk

Types of Perceived Risk

Functional Risk Physical Risk Financial Risk Social Risk Psychological Risk Time Risk

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Types of Perceived Risk

Functional Risk : The product may not perform as expected or claimed (e.g. Will I really get 100 Km/Litre if I buy a TVS Centra?) Physical Risk : The risk to self and others that the product may pose (e.g. Is using a mobile phone really safe?) Financial Risk : The risk that the product will not be worth its price (e.g. If I purchase a PC for Rs. 40,000 today, will it become obsolete in the next one year?)
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Types of Perceived Risk (contd.)

Social Risk : The risk that the product choice may result in social embarrassment (e.g. If I buy a Reva will my neighbors laugh at me?) Psychological Risk : The risk that a poor product choice may hurt the consumers ego (e.g. Will I be embarrassed to invite my rich friends to my new tiny flat ?) Time Risk : The risk that the time spent in product search may be wasted if the product doesnt perform as expected (e.g. Will I have to go through the shopping effort all over again?)
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How Consumers Handle Risk

Consumers characteristically develop their own strategies for reducing perceived risk Some of the risk-reducing strategies adopted by the consumers are as follows:
Seek Information Stay Brand Loyal Select by Brand Image Rely on Store Image Buy the Most Expensive Model Seek Reassurance
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How Consumers Handle Risk (contd.)

Consumers seek information
This is the most straightforward, logical and common method adopted by consumers. They search for information from whatever source they can lay their hands on

Consumers become brand loyal

Consumers avoid risk by remaining loyal to a brand which they have used before and have been satisfied with the performance
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How Consumers Handle Risk (contd.)

Consumers select by brand image

When consumers have no previous experience with a product, they tend to trust a well-known brand name

Consumers rely on store image

If consumers have no information on a product they may rely on the image of the store

Consumers buy the most expensive model

When in doubt, consumers may feel that the most experience model is probably the best in terms of quality (i.e. they equate price with quality)
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How Consumers Handle Risk (contd.)

Consumers seek reassurance

Consumers who are uncertain about the wisdom of their product choice may seek assurance through money-back guarantees, warranties, pre-purchase trials etc.

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