MKTG FINAL

Three types of consumer choice processes:

Affective Choice Attitude-Based Choice Attribute-Based Choice

product use

Retailers can frequently take advantage of the fact that the use of one product may require or suggest the use of other products, e.g., dresses and shoes.

Price Elasticity of Demand

This is the key formula you should use: E = (∆Q/ Q) / (∆P/ P) where: E = Price elasticity of demand ∆Q = Change in quantity (New quantity - Old quantity) Q = Old quantity ∆P = Change in price (New price - Old price) P = Old price

Which of the following tends to be more holistic in nature, and the brand is not decomposed into distinct components that are evaluated separately from the whole?

affective choice

Net Promoter Score (NPS)

an indirect word-of-mouth (WOM) measure of true attitudinal loyalty Promoters minus Detractors

Joseph is considering the purchase of a computer, and he is comparing brands on the basis of price, memory, speed, and reliability. He mentally ranks each alternative on these attributes and makes a selection based on these rankings. Joseph is using which type of choice process?

attribute-based choice

In standard economics, more choice is always better because I can simply ignore the less desirable choices

true

Variety is desirable because of diminishing marginal utility

true

Which of the following statements is true:

Theta demand is elastic

Behavioural Insights Team (BIT)

-- also known unofficially as the "Nudge Unit", --organization that was set up by the UK government in 2010 to apply nudge theory (behavioural economics and psychology) to try to improve government policy

Lexicographic Decision Rule

--Consumer ranks the criteria in order of importance. --Then selects brand that performs best on the most important attribute. --If two or more brands tie, they are evaluated on the second most important attribute. This continues through the attributes until one brand outperforms the others.

Elimination-by-Aspects Rule

--First, evaluative criteria ranked in terms of importance --Second, cutoff point for each criterion is established. --Finally (in order of attribute importance) brands are eliminated if they fail to meet or exceed the cutoff.

The endowment effect

--People value a thing more once it becomes theirs --Ownership increases utility --Term originated by Richard Thaler (U. of Chicago) --Loss aversion

The Jam Experiment

--Shoppers were more attracted to greater variety 40%,60% --More purchased when variety less

Compensatory Decision Rule

--states that the brand that rates highest on the sum of the consumer's judgments of the relevant evaluative criteria will be chosen.

Affective Choice

--tend to be more holistic. Brand not decomposed into distinct components for separate evaluation --Evaluations generally focus on how they will make the user feel as they are used. --Choices are often based primarily on the immediate emotional response to the product or service.

Attribute-based choice requires

--the knowledge of specific attributes at the time the choice is made --it involves attribute-by-attribute comparisons across brands.

Disjunctive Rule:

-Establishes a minimum required performance for each important attribute (often a high level) --All brands that meet or exceed the performance level for any key attribute are acceptable --price, weight, processor, battery life, after sale support, display quality:5,5,not critical, not critical, not critical, 5

Conjunctive Rule:

-Establishes minimum required performance for each evaluative criterion. --Selects the first (or all) brand(s) that meet or exceed these minimum standards. --price, weight, processor, battery life, after sale support, display quality: 3,4,3,1,2,3

Decision Rules for Attribute-Based Choices

Conjunctive Rule Disjunctive Rule Elimination-by-Aspects Rule Lexicographic Rule Compensatory Rule

Vulcans

Emotionless, Deliberative Thinkers

Dissatisfaction Responses

Firms need to satisfy consumer expectations by: --Creating reasonable expectations through promotional efforts, and --Maintaining consistent quality so the reasonable expectations are fulfilled.

Which of the following statements is true, re. Theta:

Gamma is a substitute and Alpha is a complement

Given attribute cutoffs of Price = 5, Quality = 5, and Weight = 4, which of the following would be chosen using the disjunctive decision rule?

Given attribute cutoffs of Price = 5, Quality = 5, and Weight = 4, which of the following would be chosen using the disjunctive decision rule? NEC Dell Compaq Price 5 4 4 Quality 3 3 5 Ease of Use 3 3 1 Compaq and NEC because they have attributes that meet at least one of the standards, thus they are acceptable choices.

Price cues (9-endings)

Impact higher for: --new products --when label of "sale price" not shown

Which of the following is NOT an action a consumer may utilize to reduce dissonance?

Increase the importance of alternatives that were not considered in the purchase initially.

Attitude-Based Choice

Involves the use of general attitudes, summary impressions, intuitions, or heuristics; no attribute-by-attribute comparisons are made at the time of choice.

There are three categories of consumers:

Promoters Passively satisfied Detractors

"Nudge"

Reasonably cheap Mostly related to "context" or "choice architecture"

Attribute-Based Choice

Requires the knowledge of specific attributes at the time the choice is made, and it involves attribute-by-attribute comparisons across brands.

onsider the study involving coffee mugs. In one case, students were given a coffee mug as theirs to keep, and later asked for what price they would sell the coffee mug. In another case, students were asked what price they would pay for this same coffee mug. One group gave their average price as $2.25, and one group gave an average price as $4.50. Which group gave the lower average price ($2.25)?

The group that was not given a coffee mug, but was asked if they wanted one

Even if a dissatisfied consumer takes no external action, which of the following is likely?

Will have a less favorable attitude toward the store or brand.

Acer

chosen because it performs best on Price, our consumer's most important attribute.

Which decision rule establishes minimum required performance standards for each evaluative criterion and selects the first or all brands that meet or exceed these minimum standards?

conjunctive

Which of the following is a noncompensatory decision rule?

conjunctive disjunctive lexicographic elimination by aspects

Rebecca is a single woman in her 40s. She sold her Honda Civic and bought an Acura CSX, which is considerably more expensive, but she really liked it. She was going to her brother's house with her mother, and she asked that her mother drive. She didn't want her brother to see that she had purchased an expensive car for herself. Rebecca was experiencing _____.

consumption guilt

Repeat purchasers

continue to buy the same brand though they do not have an emotional attachment to it.

external influences

culture, subculture, demographics, social status, reference groups, family, marketing activities

Consumer decision process

external influences, internal influences, and decision process

Brand loyalty

involves commitment to the brand - it is a biased behavioral response expressed over time.

Retailers can promote such items

jointly display them together, or train sales personnel to make relevant complementary sales

Postpurchase Dissonance

occurs when a consumer has doubts or anxiety regarding the wisdom of a purchase made and is a function of the following: --The degree of commitment or irrevocability of the decision --The importance of the decision to the consumer --The difficulty of choosing among the alternatives --The individual's tendency to experience anxiety

internal influences

perception, learning, memory, motives, personality, emotions, attitudes

Connie just purchased her first new car, and she's actually feeling a little bad about it. She's concerned about how much money she spent and how long she will be making car payments. She's not sure she made the right choice, either. She liked another car a little better, but ended up purchasing another model. Connie is experiencing _____.

post purchase dissonance

Which of the following occurs when a consumer actively acquires a product that is not used or used only sparingly relative to its potential use?

product nonuse

Which of the following is NEVER a type of consumer choice process?

rational choice

decision process

situations: problem recognition, info search, alternative evaluation and selection, outlet selection and purchase, post purchase processes

post purchase dissonance: after purchase is made

the consumer may utilize one or more of the following to reduce dissonance: --Increase the desirability of the brand purchased --Decrease the desirability of rejected alternatives --Decrease the importance of the purchase decision --Reverse the purchase decision (return before use)

Switching costs

the costs of finding, evaluating, and adopting another solution.