1/4 of course Flashcards
what is consumer behaviour?
study of decisions, products, services, ideas, satisfaction, branding
explain ending prices ($9.99)
anchoring: consumers use reference point to judge value
explain reference prices (reg $48, $39 sale)
anticipated regret: consumers infer that it’s a limited time offer
what is the best advertisement?
experience
explain introductory offers
- Experience is the best advertisement (first-hand experience better than second hand advertisement)
- People find it difficult to give up things (loss aversion)
how can we maximize customer satisfaction?
- exceed expectations
- satisfaction with process of buying
- minimize dissatisfaction
how can we measure customer satisfaction?
survey and sales data
why is brand equity important?
- Price premium over unbranded/store brand alternatives
- Ability to extend brand name to other categories
what is problem recognition?
- 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
how do you increase gap between actual and ideal state
- 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
what are sources of authenticity?
- 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
what is internal memory search?
memory search, easily recalled
- Advantages: familiar brands considered for purchase; familiar brands liked more (familiarity = comfort)
what is external memory search?
google/amazon search
- Brand names and attributes, paid ads, organic search
what is search advertising?
- 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
what is SEO?
- 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
what is compensatory decision making? (high effort)
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
what is non-compensatory decision making? (high effort)
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
what are numerical cut-offs?
firms should price products below maximum price cut-off (maximum willingness to pay)
why do luxury products not have price info?
- So consumers cannot use price cut-off easily
- Forced to ask staff for info –> consistency
- No attributes/visual –> emotional decision making
what is low effort decision making?
Single (or two) attribute (usually price is #1 for this)
- People are busier and inflation has made things more expensive
how do you collect data on consumer choices?
loyalty cards, in-store surveys
how do you reinforce buying behaviour?
- Give discounts that are regular (fixed schedule initially)
- Use variable schedule later
what are strengths of the TORA?
- 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
what are weaknesses of the TORA?
- 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
