Consumer Behavior and Purchase Process

False

Satisfaction = perceived performance - expectations

<p>cognitive dissonance</p> Signup and view all the answers

<p>Importance of consumer need = Consumer's essential requirements drive higher involvement Importance of product performance = Higher performance expectations lead to greater involvement Personal effort at stake = Engagement rises when significant personal effort is invested Personal security at stake = Concerns over safety and security heighten involvement</p> Signup and view all the answers

<p>Need Recognition</p> Signup and view all the answers

<p>False</p> Signup and view all the answers

<p>Charging time, range, interior space (any one of these is acceptable)</p> Signup and view all the answers

<p>Gather Information</p> Signup and view all the answers

<p>Personal = Friends and family Commercial = Advertising and salespeople Public, neutral = Media and consumer-rating groups Experiential = Handling and examining the product</p> Signup and view all the answers

<p>Personal preferences and attributes</p> Signup and view all the answers

<p>False</p> Signup and view all the answers

<p>Purchase behavior</p> Signup and view all the answers

<p>Increases brand loyalty</p> Signup and view all the answers

<p>False</p> Signup and view all the answers

<p>Internal and external partnerships</p> Signup and view all the answers

<p>online store</p> Signup and view all the answers

<p>Local Marketing Strategy = Appeals to local tastes and culture Global Marketing Strategy = Power of a global brand Direct-to-Consumer = Direct interaction with customers Hybrid Partnership Strategy = Combines internal and external strengths</p> Signup and view all the answers

<p>Better understanding of local conditions</p> Signup and view all the answers

<p>False</p> Signup and view all the answers

<p>Emails and word-of-mouth</p> Signup and view all the answers

<p>True</p> Signup and view all the answers

<p>Reduced perceived risk</p> Signup and view all the answers

<p>To create an overall good feeling about the brand.</p> Signup and view all the answers

<p>market leader</p> Signup and view all the answers

<p>Unearned Media = Coverage in neutral media Earned Media = Organic search results or press coverage User-Generated Content = Created by noncommercial users Unearned UGC = Paid endorsements from influencers</p> Signup and view all the answers

<p>Base retention costs on customer value</p> Signup and view all the answers

<p>False</p> Signup and view all the answers

<p>They emphasize product attributes and benefits.</p> Signup and view all the answers

<p>MS[units] = S[units] / M[units]</p> Signup and view all the answers

<p>False</p> Signup and view all the answers

<p>The number of units a firm must sell to cover fixed costs.</p> Signup and view all the answers

<p>P[selling]</p> Signup and view all the answers

<p>Gross Margin Ratio = Proportion that compares gross margin to COGS Market Share = Firm's sales compared to total sales in the market Break-even Volume = Units needed to cover fixed costs Sales in Monetary Value = Q multiplied by P[selling]</p> Signup and view all the answers

<p>Using a well-known brand name</p> Signup and view all the answers

<p>True</p> Signup and view all the answers

<p>Differential response, differential accessibility, high segment potential</p> Signup and view all the answers

<p>segmentation strategy</p> Signup and view all the answers

<p>Demographic = Objective characteristics of consumers Psychographic = Lifestyle and personality characteristics Behavioral = Based on consumer behavior patterns Geographic = Location-based segmentation</p> Signup and view all the answers

<p>To create products for specific target segments</p> Signup and view all the answers

<p>False</p> Signup and view all the answers

<p>It is easy to do, cheap, fast, and can forecast many demographic changes.</p> Signup and view all the answers

<p>a person tends to tell other people, who they know but who are not close friends of theirs, about a product, either in person or electronically.</p> Signup and view all the answers

<p>occurs when consumers who answer a survey have different behavior, beliefs, or perceptions compared to those who do not answer the survey.</p> Signup and view all the answers

<p>bid against other firms to show a particular consumer an ad in a particular space on a web page, based on analysis of data regarding the consumer's individual characteristics.</p> Signup and view all the answers

<p>it is easier for competitors to copy cost-plus prices than to copy other prices.</p> Signup and view all the answers

<p>as the personal consequences for the consumer of the product performing properly increase.</p> Signup and view all the answers

<p>should implement and use a rigorous new product development process.</p> Signup and view all the answers

<p>Trendiness</p> Signup and view all the answers

<p>may not give a good indication of the cost to Nike to reach TV viewers in Nike's target segment.</p> Signup and view all the answers

<p>The six personal selling skills are:</p> <ol> <li> <p><em>Ask questions</em>. Rose can ask the potential customer, &quot;what are your fitness goals?&quot; to understand what they are looking for and help them determine the best membership, and possibly also help them realize potential benefits that they did not consider.</p> </li> <li> <p><em>Active listening</em>. Rose should listen to the potential customer to understand their needs, interests, and concerns, so she can tailor her pitch accordingly.</p> </li> <li> <p><em>Stress benefits, not features</em>. Rather than listing features, Rose should highlight the benefits of Equinox memberships, such as the convenience of multiple locations, diverse fitness classes, and personalized training options.</p> </li> <li> <p><em>Establish interpersonal influence</em>. Rose should build rapport with the potential customer by showing a genuine interest in them and their goals, to make them feel comfortable and valued.</p> </li> <li> <p><em>Negotiate skillfully</em>. Rose should be prepared to bargain with the potential customer on price and other terms of the membership to reach a mutually agreeable solution.</p> </li> <li> <p><em>Close the sale</em>. Rose needs to ask for the sale in a professional and confident manner, while addressing any remaining concerns that the potential customer may have.</p> </li> </ol> Signup and view all the answers

<p>commission based compensation is simple to understand.</p> Signup and view all the answers

<p>This commission structure may not be optimal for Equinox because it does not incentivize salespeople to sell both types of memberships, which Equinox needs to market effectively. The commission structure does not incentivize salespeople to sell the more expensive business memberships.</p> Signup and view all the answers

<p>An alternative commission structure could be to pay salespeople a base salary and a commission based on the <em>profit</em> generated from each sale. For example, if a salesperson sells a $1000 membership, and Equinox makes a 45% gross margin on the sale, the salesperson earns a commission of $450 (45% of $1000). This structure is better for Equinox because it incentivizes salespeople to sell both individual and business memberships by rewarding them for profitability rather than only revenue generated.</p> Signup and view all the answers

<p>Here are the calculations for the net present value (NPV) of a customer attracted using the free trial:</p> <ol> <li> <strong>Calculate the profit per year from a paying customer:</strong> </li> </ol> <ul> <li>Gym membership revenue = $1000</li> <li>Gym membership COGS (cost of goods sold)= $1000 * (1 - 45%) = $550</li> <li>Gym membership profit = $1000 - $550 = $450</li> <li>Personal training revenue = 4 hours/year * $40/hour = $160</li> <li>Personal training COGS = $160 * (1 - 35%) = $104</li> <li>Personal training profit = $160 - $104 = $56</li> <li>Total profit per year = $450 (gym membership) + $56 (training) = $506</li> </ul> <ol start="2"> <li> <strong>Calculate the present value of the annual profit for each year:</strong> </li> </ol> <ul> <li>Year 1: $506 / (1 + 0.08)^1 = $468.52</li> <li>Year 2: $506 / (1 + 0.08)^2 = $435.78</li> <li>Year 3: $506 / (1 + 0.08)^3 = $405.35</li> </ul> <ol start="3"> <li> <strong>Calculate the total present value of profits:</strong> </li> </ol> <ul> <li>Total present value of profits = $468.52 + $435.78 + $405.35 = $1309.65</li> </ul> <ol start="4"> <li> <strong>Calculate the net present value (NPV):</strong> </li> </ol> <ul> <li>NPV = Total present value of profits - Initial investment</li> <li>Initial investment = Cost of free trial (personal training)</li> <li>Cost of free trial = (2 hours/customer * $40) * (1 - 35%) = $52</li> <li>NPV = $1309.65 - $52 = $1257.65</li> </ul> <p>Therefore, the net present value (NPV) of a customer attracted using the free trial is $1257.65.</p> Signup and view all the answers

<p>The TV ad is incorrectly using the <em>fear appeal</em> message strategy. This ad tries to scare consumers by showing a horrifying accident caused by using Roadrunner tires, to encourage them to purchase Michelin tires instead. This strategy is being used incorrectly because it paints an unrealistic and sensational picture of using Roadrunner tires, which is not representative of the actual experience of using those tires. Michelin should focus on highlighting the benefits of its tires rather than trying to frighten customers with negative scenarios. It is better to use a more balanced approach by emphasizing the safety and reliability of its tires compared to the competitor's tires, focusing on the quality and performance of Michelin tires in various driving conditions, including adverse weather conditions.</p> Signup and view all the answers

<p>The TV ad is also using a <em>comparative advertising</em> message strategy. This ad directly compares Roadrunner tires to Michelin tires by highlighting the lower cost of Roadrunner tires and then showing the negative consequences of using them. This strategy is being used incorrectly here because the ad is focusing only on the negative aspects of the competitor's tires and does not provide a balanced comparison with Michelin tires. Michelin could improve the ad by highlighting what is good about their tires, for example, the longevity, fuel efficiency, and improved handling of Michelin tires. This would allow the viewer to make a more informed decision based on a comprehensive comparison of both brands' strengths and weaknesses.</p> Signup and view all the answers

<p>The four types of perceived risk are performance risk, social risk, psychological risk, and financial risk.</p> <ul> <li> <p><strong>Performance risk</strong> is the risk that the product does not perform as expected. A potential Sierra buyer may experience performance risk with Super Cruise because they may worry about its reliability in various driving conditions, like bad weather or heavy traffic. GM can address this risk by highlighting the extensive testing and safety features of Super Cruise and showcasing its performance in different driving conditions.</p> </li> <li> <p><strong>Social risk</strong> occurs when people do not approve of your purchase as highly as you'd hope, especially when you care about the approval of people in the group you belong to or aspire to belong to. A potential Sierra buyer who tends to be a part of a social group that may have reservations about self-driving vehicles may experience social risk in considering Super Cruise. To address this risk, GM could present Super Cruise as a feature that allows for a safe and comfortable driving experience for both the driver and passengers, appealing to the desire to maintain a positive social image and demonstrate a responsible driving approach.</p> </li> <li> <p><strong>Psychological risk</strong> is associated with the consumer's feeling that the product isn't &quot;right&quot; for them. A potential Sierra buyer may experience psychological risk if they are uncomfortable giving up control to a self-driving system, even though Super Cruise is only active in specific situations. GM could address this risk by demonstrating the simplicity and ease of use of Super Cruise, emphasizing that the system seamlessly transitions between autonomous and manual driving, allowing the driver to remain in control when needed.</p> </li> <li> <p><strong>Financial risk</strong> is the risk that the product can hurt your financial well-being. A potential Sierra buyer may experience financial risk with Super Cruise because it is a $2500 optional feature, which may be cost-prohibitive for some buyers. GM could address this risk by highlighting the long-term benefits and value proposition of Super Cruise, showcasing how it contributes to improved safety, fuel efficiency, and overall vehicle enjoyment, making it a worthwhile investment.</p> </li> </ul> Signup and view all the answers

<p>Price discrimination occurs when a firm charges different prices for the same product to different customer segments. tkts is a form of price discrimination because it charges different prices for play tickets to consumers based on their willingness to wait in line and/or their willingness to accept last-minute tickets.</p> Signup and view all the answers

<p>Using price discrimination with tkts allows theaters to increase their profits by selling tickets that would have otherwise gone unsold at full price. The lower prices attract consumers who are price-sensitive or who are willing to wait in line, thereby filling empty seats and generating revenue that would have been lost. Additionally, by selling tickets at a lower price, tkts may attract new customers to theater productions, potentially leading to increased future sales and brand recognition.</p> Signup and view all the answers

<p>The three conditions for successful price discrimination are:</p> <ol> <li> <p><strong>Different price sensitivities</strong>. Consumers must have different price sensitivities for the same product. This is necessary because a firm cannot charge different prices if all consumers are willing to pay the same amount. The tkts program satisfies this condition because some consumers are willing to wait in line or buy last-minute tickets at a lower price, while others prefer to buy tickets in advance at the full price.</p> </li> <li> <p><strong>Identify different groups</strong>. The firm must be able to identify different groups of consumers with different price sensitivities. tkts satisfies this condition by requiring consumers to stand in line or purchase last-minute tickets for lower-priced plays - this effectively segregates consumers based on their price sensitivity level.</p> </li> <li> <p><strong>Prevent resale</strong>. The firm must prevent those who buy the product at a lower price from reselling it to those who are willing to pay a higher price. tkts may have difficulty meeting this condition. For example, a consumer might be able to sell their discount ticket to someone else who is willing to pay a higher price, effectively negativing the price discrimination. However, tkts requires a physical ticket purchase rather than an online purchase or app purchase, which may discourage reselling.</p> </li> </ol> Signup and view all the answers

<ol> <li> <p><strong>Logitech's COGS:</strong> Logitech's gross margin on selling price is 45%, which means its cost of goods sold (COGS) is 55% of the selling price. Therefore, Logitech's COGS = $100 * 55% = $55.</p> </li> <li> <p><strong>Retailer's COGS:</strong> The retailer's gross margin on cost is 25%, which means its cost of goods sold (COGS) is 75% of its buying price. Since Logitech's selling price is the retailer's COGS, the retailer's COGS = $55 * 75% = $41.25.</p> </li> </ol> Signup and view all the answers

<p>To break even on the plan, Logitech needs to generate $1,800,000 in revenue from additional webcam sales. Since Logitech's gross margin on selling price is 45%, for every $100 in sales, Logitech makes a $45 profit. Therefore, to generate $1,800,000 in profit, Logitech needs to sell $1,800,000 / $45 = 40,000 additional webcams.</p> Signup and view all the answers

<p>Mobiquity initially focused on providing <em>data analysis</em> for clients, but over time transitioned to offering <em>market research consulting</em> services, which enabled them to provide a more comprehensive understanding of market trends. More recently, Mobiquity has focused on <em>marketing strategy</em> development, providing a holistic approach to help clients achieve their marketing goals.</p> Signup and view all the answers

<p>One common mistake is <em>not understanding the data's limitations</em>. Firms may misinterpret the data, leading to inaccurate conclusions and decisions due to a failure to acknowledge the inherent bias or limitations within the collected data. Another common mistake is <em>not using the appropriate data analysis techniques</em>. Firms may use methods that are not suitable for the data, such as relying on small sample sizes for generalizing conclusions or using linear regression when the data displays a non-linear relationship.</p> Signup and view all the answers

<p>Two essential skills for entrepreneurs are <em>business acumen</em> and <em>communication</em>. Business acumen involves the ability to understand and manage the financial, operational, and strategic aspects of a business, which helps in making informed decisions. Effective communication skills allow entrepreneurs to effectively convey their ideas, vision, and proposals to potential investors, partners, employees, and customers, which is crucial for building relationships and achieving success.</p> Signup and view all the answers