MGT 3121 Chapter 1
a firm that is pareto dominated by its competitors is
inefficient
Pareto Dominated
means that a firm's product or service is inferior to one or multiple competitors on all dimensions of the customer utility function.
price
meant to include the total cost of owning the product or receiving the service.
consumption utility measures
measure how much you like a product or service ignoring the effects of price and inconvenience.
Consumption Utility
measures how much you like a product or service ignoring the effects of price and the inconvenience of obtaining the product or service.
Timing
makes the difference between convenience and inconvenience
Determining customers wants and preferences is the primary function of ______.
marketing
operations
matching supply with demand is the goal
Fit attributes
are those where customer tastes may vary.
Supply
products or services
It is common for an organization to be able to improve on all three dimensions of customer utility.
False Reason: The three dimensions are typically trade-offs: improving one makes it harder to achieve another.
McDonald's and Subway have the same capabilities.
False Subway charges more to provide custom sandwiches, whereas McDonald's sells essentially premade food for less.
How far you have to drive to the store to buy an item impacts the consumption utility you associate with it.
False because consumption utility is irrespective of convenience.
If John's Pizza can deliver better-tasting, less-expensive pizza in less time than Maria's Pizza then John's Pizza _________________ dominates Maria's Pizza.
Pareto
Utility
measures your desire for a product or service. - composed of three components consumption utility, price and inconvenience.
inefficiency
can be visualized as the gap between a firm's current position and the efficient frontier.
Demand is driven by the ___________ utility of the product or service, its price, and the associated inconvenience for customers.
consumption
Inconvenience
contribute to transaction costs. Makes up two subcomponents which are location and timing.
Firm's capabilities are defined as the dimensions of the ____________ utility function it is able to satisfy.
customer
When organizations make a trade-off they focus on meeting one dimension of ______________ utility in favor of another.
customer
Capabilities
defined as the dimensions of the customer's utility function it is able to satisfy. allow companies to do well on some but not all of the subcomponents making up the customer utility function.
How far you have to drive to the store to buy an item impacts the consumption utility you associate with it.
false
The price of an item impacts the consumption utility you associate with it.
false
Performance
features of the product or service that most people agree are more desirable.
Consumption utility
measures how much you like a product or service.
Organizations can improve their business by reducing _______________ so that they do not have to sacrifice one performance dimension versus another.
inefficiency
Consumption Utility
is irrespective of convenience.
Location
makes the difference between convenience and inconvenience
Demand
is simply the set of products and services our customers want. Driven by the consumption utility of our product or service its price, and the associated inconvenience for our customers.
The more you have to wait the ______ the inconvenience component.
more
the further the location the _________ the inconvenience component.
more
There is ___________ one market in the auto industry.
more than
Organizations can improve their business by making trade-offs among the dimensions of
performance
organizations can improve their business by making trade-offs among the dimensions of
performance.
When choosing a shipping option when ordering online, customers trade off speed and ______
price
Matching supply with demand means
providing customers with what they want while also making a profit. - also the goal of operations management
customers buy products that maximize their
utility
Trade-offs between responsiveness and costs is referred to as a ____________ trade-off.
strategic
heterogeneous preferences
the fact that not all consumers have the same utility function
Economists often refer to the inconvenience component as
transaction
A pizza delivery chain offering a 30-minutes or less guarantee on their pizza orders impacts the inconvenience component of utility.
true
If price and convenience of two products are equal, the product customers associate with the highest consumption utility is likely to have the highest demand.
true
Marketing
understanding how customers derive utility from products and services
Economic theory suggests that a consumer's choice of a good or service is based on where he or she expects to achieve the highest
utility
according to economic theory, a consumer buys an SUB-instead of a passenger car because she or he expects to achieve the highest ________ from buying.
utility
demand is driven by the consumption utility for a product, its __________________, and the inconvenience for customers.
utility
one of the components of utility is consumption
utility
Strategic trade off
when selecting inputs and resources, the firm must choose between a set that excels in one direction of customer utility or another, but no single set of inputs and resources can excel in all dimensions
