Consumer Behavior & Purchase Process

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Questions and Answers

Explain the relationship between supply, demand, and the scarcity principle. How does manipulating scarcity impact consumer behavior, and give a real world example where a company did this well?

The scarcity principle suggests that as supply decreases relative to demand, the perceived value and urgency to acquire the item increases. Companies can manipulate this by limiting supply or creating artificial deadlines, which amplifies demand. For example, Supreme is known for creating artificial scarcity with their weekly product drops.

Differentiate between 'Wisdom of the Crowd' and 'Wisdom of your Friends' as source cues. In what scenarios might one be more reliable than the other when making a purchase decision?

Wisdom of the Crowd refers to relying on a large group's collective opinion, like online reviews, while Wisdom of your Friends involves seeking advice from people you know personally. Wisdom of your Friends might be more reliable for personal or high-risk purchases, whereas Wisdom of the Crowd can give broader product insights.

Describe the contrast principle. Provide an application of the contrast principle outside of the tip jar example.

The contrast principle is a cognitive bias where our perception of something is influenced by what we've just experienced. An application outside the tip jar example is when car dealerships show customers the expensive features before revealing the base model price, making the base model seem more affordable in comparison.

Explain how Reactance Theory can be used to increase the desirability of a product. Give a real-world example.

Reactance theory suggests that when people feel their freedom of choice is threatened, they react by wanting the restricted option even more. A real-world example is a music album being removed from major streaming services to increase the albums perceived value (and encourage consumers to purchase the music outright). Signup and view all the answers

Outline the components of the APA framework (Main Idea, Evidence, Analysis, and Link/Transition). How does the 'Analysis' component contribute to constructing a strong argument or evaluating a situation?

The APA framework includes Main Idea, Evidence, Analysis, and Link/Transition. The 'Analysis' component is important because it involves comparison, contrast, cause-and-effect reasoning, and evaluation of strengths, weaknesses, advantages, disadvantages, and effectiveness in order to form a cohesive and well-supported argument. Signup and view all the answers

Explain how understanding consumer behavior can benefit businesses in creating and marketing their products or services.

Understanding consumer behavior allows businesses to tailor their products/services to meet specific needs and preferences, leading to more effective marketing strategies and increased sales. Signup and view all the answers

Describe the steps in the consumer purchasing process, providing a brief example for each step.

1.Problem Recognition (e.g., needing a new phone). 2. Information Search (e.g., researching different phone models online). 3. Alternative Evaluation (e.g., comparing features and prices of different phones). 4. Purchase Decision (e.g., buying a specific phone). 5. Post-Purchase Behavior (e.g., being satisfied/dissatisfied with the phone's performance). Signup and view all the answers

How can businesses use the concept of market segmentation to improve their marketing efforts?

Market segmentation allows businesses to divide potential customers into smaller groups with similar characteristics, enabling them to create more targeted and effective marketing campaigns that resonate with each segment's specific needs and preferences. Signup and view all the answers

Describe the purpose of a SWOT analysis, as well as what each letter stands for, and why it's a useful tool for marketing strategy development.

A SWOT analysis is used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or business venture. It is a useful tool for marketing strategy development because it helps businesses to understand their internal capabilities, potential external factors, target audience and competitive landscape. Signup and view all the answers

Explain how Maslow's Hierarchy of Needs can be applied by marketers to understand consumer motivations. Give an example.

Marketers can use Maslow's Hierarchy to understand what motivates consumers at different stages of their lives. For example, a company selling home security systems targets the 'Safety' need, while a luxury car brand targets the 'Esteem' need. Signup and view all the answers

A new coffee shop has opened in town, and it's packed with customers. Explain how social proof might influence a potential customer who is deciding whether to enter the shop.

Social proof suggests that people often follow the actions of others to reflect the correct behavior. If a coffee shop is packed, a potential customer might assume it's good and decide to enter, based on the actions of the crowd. Signup and view all the answers

You are tasked with marketing a new fitness tracker. How would you integrate TWO elements of the marketing mix (Place, Price, Product, Promotion, Physical Evidence, Packaging, People, Processes) into your marketing strategy to maximize its appeal to health-conscious consumers?

<ol> <li>Product: Emphasize core features such as accurate heart rate monitoring, sleep tracking, and personalized workout suggestions. 2. Promotion: Use digital marketing, targeting health and fitness influencers, to promote the tracker's capabilities and user testimonials.</li> </ol> Signup and view all the answers

Differentiate between 'marketing' and 'consumer behavior', explaining how they relate to each other in a business context.

Marketing involves creating awareness and knowledge about a product or service; consumer behavior is the study of how people make purchase decisions. Marketing strategies rely on understanding consumer behavior to effectively promote and sell products. Signup and view all the answers

Flashcards

Supply

The amount of a specific product or service that is available.

Demand

The quantity of goods or services that customers are willing to purchase.