Test 2

Question 1

What is an independent variable, levels, and dependent variable? Be able to identify each element in an example.

Answer 1

Independent variable: the variable you manipulate between groups (free shipping offer)

Levels: value/variations of the independent variable that you will test (offer; absence vs. presence)

Dependent variable: outcome variable you measure (monthly orders)

Question 2

Why is random assignment in an experiment important?

Answer 2

Each condition has nearly identical distributions of all possible confounding variables. The only difference between the conditions is the independent (treatment) variable.

Question 3

What is internal validity? Which type of studies have high/low internal validity?

Answer 3

A measure of how well a study can establish cause-and-effect relationship between variables

High internal validity: Easy to control variables; random assignment to treatment

Low internal validity: Difficult to control variables outside of manipulation; quasi-random assignment to treatment

Question 4

What is ecological validity? Which type of studies have high/low ecological validity?

Answer 4

The degree to which a study’s findings can be applied to real-world situations

High ecological validity: natural, realistic settings

Low ecological validity: artificial setting

Question 5

What are the 5 stages of the consumer decision process?

Answer 5

Need recognition
Information search
Evaluation alternatives
Choice
Post-Choice evaluation

Question 6

What factors influence consumer involvement level in a purchase?

Answer 6

Price (how expensive?), personal consequences (how important is the item to oneself), social consequences (affect social image?)

Question 7

What is the difference between habitual decision-making, limited decision-making and extended decision-making?

Answer 7

Habitual decision-making: consumers normally do not look for information about a product and pick a product based on habit

Limited decision-making: Consumer search very little for information and often reach a decision based on prior beliefs based on products and their attributes

Extended decision-making: Consumers search very heavily for the best information that will help them reach a decision

Question 8

What is the difference between brand inertia and brand loyalty?

Answer 8

Brand inertia: Consumer simply buys a product repeatedly without any real attachment

Brand loyalty: Deeply held commitment to rebuy a product or service regardl

Question 9

What is the difference between internal and external search?

Answer 9

Internal search: Retrieval of knowledge stored in memory about products, services, and experiences

External search: Gathering of information from sources external to the customers

Question 10

What is the consumer’s consideration set?

Answer 10

The set of alternatives that are considered acceptable for further consideration in decision making

Question 11

What are the consumer drawbacks of having large assortments of products to choose from?

Answer 11

Lower choice accuracy (more likely the ‘ideal’ product is on the shelf, but it is harder to find), lower satisfaction (expectations are raised), greater regret (thinking about the foregone options), choice deferral

Question 12

What is choice deferral?

Answer 12

Choose none of the available options

Question 13

What outcome was found in the ‘jam study’?

Answer 13

More people bought a jam when it was a smaller option but less people looked at the 6 options and more people stopped to look at the options but less people bought the jam when there was 24 options

Question 14

What are key points in the reading “To Keep Your Customers, Keep it Simple”?

Answer 14

Simplicity is key

Overwhelming marketing can overwhelm customers not engage them

Three Tactics for Simplification:
1. Minimize Information Sources: Reduce the number of sources consumers need to consult.

2. Trustworthy Information: Provide reliable product information and recommendations.
3. Decision making: offer tools to help consumer identify the most relevant product features

Question 15

What is the difference between a compensatory and non-compensatory decision model?

Answer 15

Compensatory decision models: good attributes compensate for bad/low attitudes

Non-compensatory decision model: Low standing on one attribute cannot compensate by being better on another attribute

Question 16

What is the decision process behind the following models: multi-attribute utility model, conjunctive model, lexicographic model, elimination-by-aspects model

Answer 16

Multi-attribute: Compensatory decision model; a strong performance in one attribute can compensate for a weaker performance in another

Conjunctive: Non-compensatory model; poor performance on one attribute can disqualify an alternative

Lexicographic: Non-compensatory model; the most important factor wins

Elimination-by-aspects: A sequential eliminator process and a non-compensatory model; step-by-step elimination of options

Question 17

What are key points in the reading “Taking the Confusion Out of Choosing”?

Answer 17

The abundance of choices can lead to decision fatigue, making it harder to make decision

Too many choices can overwhelm our brains

Design choices that are more helpful and less overwhelming for consumers and employees

Question 18

What are attitudes?

Answer 18

Relatively enduring overall evaluation of an object

Question 19

What factors into an individual’s attitude according to the ABC model of attitudes?

Answer 19

Affect: Feeling about an object

Behavior: Overt behavior consumer exhibits or intention to behave

Cognition: Belief about an object

Question 20

How are attitude scores determined based on the multi-attribute attitude model?

Answer 20

by taking the sum of each attribute’s “belief score” multiplied by its corresponding “importance weight,”

Question 21

What are the 3 ways that marketers can change attitudes based on the multi-attribute model? Be able to identify if a marketing action is changing an evaluation of an attribute, changing a belief that the company offers an attribute, or creating a new salient attribute.

Answer 21

Changing the basic beliefs about the attributes of the product

changing the perceived importance of attributes

adding new attributes to the product

Question 22

What is the difference between the central and peripheral route of processing in the Elaboration Likelihood Model (ELM)?

Answer 22

Central Route: High Elaboration; Attitude formation/change determined by cognitive responses to the message

Peripheral Route: Low Elaboration; Attitude formation/change determined by surface features of a message or source

Question 23

Understand which type of advertising features tend to be used and are more persuasive under the peripheral route and the central route.

Answer 23

Peripheral route: Low-effort processing and convinced by surface features of ad; celeb endorsers, attractive models and spokespeople, music, humor, aesthetics of ad

Central route: High-effort processing and convinced by strong arguments in ad; endorsers that re experts on product, strong and convincing arguments, comparative ads that show dominance on benefit(s)

Question 24

What is the main claim the author makes in the article “Why Sex and Violence Don’t Sell”?

Answer 24

Advertisements featuring sex and violence are generally ineffective

Such content distracts viewers from the actual product being advertised

Leading to poor brand recall and reduced purchasing intentions

Question 25

What is persuasion?

Answer 25

The application of rational and/or emotional arguments to convince others to change their attitudes

Question 26

If given a scenario, be able to identify which of the 6 principles of persuasion is being utilized

Answer 26

Liking: People like those who like them; people are more persuaded by individuals they like (people are more likely to buy insurance from salespeople similar in age, religion, politics, etc.)

Reciprocity: People repay in kind; people feel inclined to return a favor or gift (when charities give free gifts it increases future donation rates)

Social Proof: People follow the lead of similar others; people rely on those around them for cues on how to think, feel, and act. (signing up for an event because others have done so)

Consistency: People align with their clear commitments; once people take on an issue or go on record in favor of a position, they prefer to stick with it (People sign a petition favoring a place for handicapped people, 2 weeks later all residents were asked to donate. Most people who signed the petition donated)

Authority: People defer to experts (Expert-opinion news story shifted public opinion up nationwide)

Scarcity: People want more of what they can have less of; scarcity triggers people to act (Limited-time)

Question 27

What are the possible consumer outcomes based on the expectancy-disconfirmation theory and when do these occur?

Answer 27

Satisfaction or dissatisfaction is determined by the difference in EXPECTATION and ACTUAL EXPERIENCE

The ACTUAL product leads to positive disconfirmation

And the “actual product” but is a lot different than expected leads to negative disconfirmation

Question 28

What factors into the expectations that consumers set for products and services?

Answer 28

Company’s claims and advertisements

Consumer’s prior experiences

Word-of-mouth

Consumers personal factors (what should happen or what they want to happen)

Question 29

What does equity theory state?

Answer 29

Consumers want fair exchanges, they compare their own level of inputs and outcomes to those of another party in an exchange

Question 30

What is cognitive dissonance?

Answer 30

An uncomfortable feeling that occurs when a consumer has lingering doubts about a decision they made

Can happen when there are many other appealing alternatives, decision is difficult to reverse, or the decision is important

Question 31

What are common marketing actions used to reduce cognitive dissonance?

Answer 31

Offering positive information that affirms decision

Offer returns, exchanges, and price matches

Offer additional incentives (discounts, free trials, complementary products)

Encourages positive word-of-mouth for social validation

Question 32

*What is the net-promoter score? How is it calculated and what question is asked?

Answer 32

How likely is it that you would recommend X to a friend or colleague

Subtract the percentage of detractors from the percentage of promoters