1/4 of course

Question 1

what is consumer behaviour?

Answer 1

study of decisions, products, services, ideas, satisfaction, branding

Question 2

explain ending prices ($9.99)

Answer 2

anchoring: consumers use reference point to judge value

Question 3

explain reference prices (reg $48, $39 sale)

Answer 3

anticipated regret: consumers infer that it’s a limited time offer

Question 4

what is the best advertisement?

Answer 4

experience

Question 5

explain introductory offers

Answer 5

• Experience is the best advertisement (first-hand experience better than second hand advertisement)
• People find it difficult to give up things (loss aversion)

Question 6

how can we maximize customer satisfaction?

Answer 6

• exceed expectations
• satisfaction with process of buying
• minimize dissatisfaction

Question 7

how can we measure customer satisfaction?

Answer 7

survey and sales data

Question 8

why is brand equity important?

Answer 8

• Price premium over unbranded/store brand alternatives
• Ability to extend brand name to other categories

Question 9

what is problem recognition?

Answer 9

• Gap between actual state and ideal state
• Moves consumers from passive (non-decision) state to active (decision) state
• Increase gap to increase motivation to act

Question 10

how do you increase gap between actual and ideal state

Answer 10

• Point out low actual state (a problem to be fixed)
• Provide high ideal state (ex: attractive models in ads and toys)
• Contrast low actual vs. high ideal states

Question 11

what are sources of authenticity?

Answer 11

• Realistic ideal points in retailing/advertising
• Transparent and fair manufacturing process
• Original designs/handmade products
• Firm’s origin story with founders
• Firm’s behaviour consistent with its values/mission statement

Question 12

what is internal memory search?

Answer 12

memory search, easily recalled
- Advantages: familiar brands considered for purchase; familiar brands liked more (familiarity = comfort)

Question 13

what is external memory search?

Answer 13

google/amazon search
- Brand names and attributes, paid ads, organic search

Question 14

what is search advertising?

Answer 14

• Make a list of keywords relevant to your offering
• Specify where your ad will appear (google search or affiliate websites)
• Bid on your keywords
• Google will accept or offer a higher price for your keywords
• Set a total advertising budget for a time period

Question 15

what is SEO?

Answer 15

• Google creates an index of the internet based on website information collected by “spiders” that travel from page to page using weblinks on pages
• When a search term is entered, Google creates a ranked list of “relevant” pages using a proprietary algorithm based on:
• Page quality of website
• Repeated use of terms on website
• Quality and quantity of links pointing to the website

Question 16

what is compensatory decision making? (high effort)

Answer 16

Assumes that bad performance on one attribute can be compensated by a good performance on another attribute
- Ex: bad styling can be compensated by low price

Question 17

what is non-compensatory decision making? (high effort)

Answer 17

Consumer use cut-offs (ex: more than minimum screen size/less than maximum price willing to pay)
- When there are many brands and attributes (using cut-offs simplifies choice in these situations)
- When an attribute is really important to consumers

Question 18

what are numerical cut-offs?

Answer 18

firms should price products below maximum price cut-off (maximum willingness to pay)

Question 19

why do luxury products not have price info?

Answer 19

• So consumers cannot use price cut-off easily
• Forced to ask staff for info –> consistency
• No attributes/visual –> emotional decision making

Question 20

what is low effort decision making?

Answer 20

Single (or two) attribute (usually price is #1 for this)
- People are busier and inflation has made things more expensive

Question 21

how do you collect data on consumer choices?

Answer 21

loyalty cards, in-store surveys

Question 22

how do you reinforce buying behaviour?

Answer 22

• Give discounts that are regular (fixed schedule initially)
• Use variable schedule later

Question 23

what are strengths of the TORA?

Answer 23

• Ensures we don’t miss important attributes relevant to decision-making
• Ensures rational/long-term analysis of info (important for high-effort decisions)
• Allows objective (ex: numerical) comparisons between brands

Question 24

what are weaknesses of the TORA?

Answer 24

• Incomplete set of attributes can bias results
• Does not permit cut-offs on attributes (ex: families want safest car and will not compromise on safety for price)
• Does not measure feelings towards the brand

Question 25

what senses do marketers have more/less control over?

Answer 25

• Visual, audio, smell –> marketer has more control
• Taste, touch –> marketer has less control