Test 2

Question 1

Which important aspects of buying behaviour does the NBD-Dirichlet model describe?

Answer 1

How often people buy and which brands people choose

Question 2

Where some brands share more (or less) customers with one another than what is expected (i.e. they deviate from the Duplication of Purchase Law), this is referred to as:

Answer 2

Partitioning

Question 3

Which of the following is an incorrect assumption in relation to brand choice

Answer 3

All consumers have the same purchase propensities to buy particular brands

Question 4

Bigger brands…

Answer 4

Have many more customers who are slightly more loyal

Question 5

Which of the following is correct in relation to short-term memory

Answer 5

• Storage capacity is normally 5 to 9 items
• Can be enhanced by ‘chunking’
• Also referred to as the working memory

Question 6

6. Describe Category Entry Points (CEPs). List four examples of CEPs for the ice-cream category.

Answer 6

Category entry points are elements in out mental availability that can be distribution outlets and pathways to a brand in a buyers mind.

Examples:

• Need- If a person is hot, they will buy ice-cream to cool them down
• Who else is present- Children, Ice cream is a cheap reward
• The environment- Beach, one often associates an ice cream to be a good snack after a day at the beach
• Core benefit- It cools one down and gives a sugar rush

Question 7

What is the “Natural Monopoly Effect”? Explain which brand performance metric shows the effect.

Answer 7

• A bigger brand will attach lighter category users in a high more often
• The loyalty metric shows the effect of the NME as it shows systematic variation in a category purchase rate

Question 8

What is Mental Availability? Briefly describe how it relates to buying situations.

Answer 8

• Mental availability (Brand salience) is how much a brand is thought of when a consumer is making a purchase
• This relates as the mental availability reflects as to how many CEP’s a bran havs

Question 9

The memory process involves 3 phases. Explain each phase.

Answer 9

1. Encoding: information into storage
2. Storage: where information is kept
3. Retrieval: when provided with a cue we can retrieve linked information

Question 10

10. Explain the empirical generalisation Double Jeopardy?

Answer 10

• It is a pattern that has been observed
• Shows competing brands do not show much difference in regards to the frequencies of purchases in comparison to the substantial difference in the size of their customer base\