slides that could be relevant 7

Question 1

expected value approach

Answer 1

the value of an option equals the sum of outcomes weighted by their probabilities

Question 2

expected value approach

Answer 2

the value of an option equals the sum of outcomes weighted by their probabilities

Expected value = sum (outcome * probability of outcome)

Question 3

prospect theory

Answer 3

perception of probability is biased

overvalue small probabilities and undervalue large probabilities

perception of probability, value and reference point are biased

losses loom larger than equivalent gains (loss aversion)

risk seeking for losses, risk averse for gains

value depends on reference point

Question 4

silver linings principle

Answer 4

how do people integrate a mixed bag of outcomes? gains and losses

I lost 50 euros at the race track today but found 10 euros in the parking lot while walking back to my car

I lost 10 euros at the race track today but found 50 euros in the parking lot while walking back to my car

Question 5

coding gains and losses: Hedonic editing

segregation vs integration

Answer 5

Integrated: outcomes are valued jointly
v(x+y)

Segregated: outcomes are valued separately

v(x) + v(y)

I lost 50 euros but found 10 euros (segregation)

I earned 40 euros today (integration)

separation of costs or integration depending

Question 6

satisfaction “formula”

Answer 6

perceived quality - expectation

satisfaction depends on expectations

Question 7

two types of customer satisfaction

Answer 7

Transaction specific

Cumulative

Question 8

Cumulative customer satisfaction

Answer 8

Overall evaluation based on the total purchase and consumption experience with a good or service over time

Question 9

Transaction-specific customer satisfaction

Answer 9

Post-choice evaluative judgement of a specific purchase occasion

Question 10

Key benefits of high customer satisfaction

Answer 10

Customer loyalty

Customer margin (reduced price elasticities; less complaints and legal actions

Customer acquisition
(increased positive word of mouth and decreased negative word of mouth)

(more effective advertising through customer satisfaction claims)

Question 11

high competitive zone

Answer 11

commoditization or low differentiation

Consumer indifference

many substitutes

Low cost of switching

Question 12

responses to dissatisfaction

Answer 12

Take no action

Voice response

Private response

Public response

Third-party response

Question 13

the service recovery paradox

Answer 13

Customers are more likely to remain loyal if a service initially fails and is then recovered, than if the customer has received the service without failure

Question 14

Hedonic editing principle: (watch video)

Answer 14

segregate gains (e.g. specify benefits included in a bundle)

Integrate losses (present 1 vs many prices, present)

Question 15

mental accounting

Answer 15

Is the process of categorizing money, spending and financial events

Describes why people intuitively do these tings, and how it impacts financial decision-making

Using mental accounting often leads to odd and suboptimal decisions

Question 16

purchase decisions: Gains
perceived quality
soft and hard factors

Answer 16

Soft factors: reliability, empathy and responsiveness

Hard factors: durability, safety, useability

Question 17

Perceived costs: pains
soft factors
Hard factors

Answer 17

Soft factors: time, effort

hard factors: money, opportunity

Question 18

flaws of average

Answer 18

average can be everyone 3 starts of half 5 and other half 1

Question 19

when value of customers is high and value to customers is low

Answer 19

vulnerable customers

Question 20

when value of customers is high and value to customer is high

Answer 20

star customers

Question 21

when value of customers is low and value to customers is high

Answer 21

free riders