MAR4480 EXAM 2 QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS GRADED A++ LATEST UPDATE
Firms can attempt to reach:
-all buyers in a market
-smaller groups or segments of the market
-specific buyers on an individual level
Firm understand the current/potential customers decision making:
• Wants
• Needs
• Motivations
• Behaviors
What is Rational Economics?
based on the assumption that people are predictable and will maximize the utility of their
choices relative to their needs and wants (Expected Value)
What is Behavioral Decision Theory?
an approach to understanding adolescent risk taking, in which behaviors are seen as
the outcome of systematic decision-making processes (Biases and Heuristics)
What is Power of Defaults?
can also be used to help businesses profit from consumers, sometimes by prompting
people to choose things that are not in their best interests.
Power of Defaults Examples
,Walt Disney World changed the default choices in its kids' meals
• swapping out soda for juice and french fries for fruits and vegetables
• leading to the consumption of 21% fewer calories, 44% less fat, and 43% less sodium.
Vanguard reported that automatically enrolling new employees in a retirement plan
more than doubled participation rates.
• default set to "opt in"
• clients had to go out of their way to decline
• This cost people a lot of money:
• 75% of total checking account fees
• averaged over $250 per year
Compromise Effect
when a brand gains share because it is an intermediate rather than an extreme option
Choice Sets - Compromise Effect
How about a marketing examples of leveraging compromise effect?
Let's say that you are an owner of an ice cream shop. How can you increase sales
using compromise effect?
Add a larger size at $2.50
Add a smaller size at $1.00
,Rational?
"Heart attack on a plate" = higher sales
Licensing Effect
giving yourself a pass to do something bad because you did something good
example: 1997 Mars Rover Launch
Situational Influence
the influence arising from factors that are particular to a specific time and place and are
independent of individual customers' characteristics
Visual arrays can influence variety and uniqueness seeking behaviors
Perception
the process of organizing and interpreting sensory information, enabling us to recognize
meaningful objects and events
• Assigning meaning to stimuli
• Perception is subjective.
Country of Origin Effect (COO)
• Consumers may associate certain countries with a reputation for producing high-
quality or low-quality products in specific categories.
• For example, Swiss watches are often associated with quality and precision, while
Chinese-made products may be perceived as more affordable but potentially lower in
quality.
, • These perceptions can influence consumers' willingness to pay for a product.
The Consumer Decision Journey
Stages and issues in consumer decision making:
• Need recognition trigger
• Initial consideration set
• Active evaluation
• Moment of purchase
• Post-purchase experience
On the journey well before initiating a search:
• Loyalty loop...purchase newer version of a previous product
• Not only which product...but, where to buy: price and availability
• Merchant might influence more than product
• Loyalty to a dealer/retailer (cars, home improvement...)
• Store credit cards or loyalty programs
Needs Recognition (Consumer Decision Process)
• Starts the purchase process
• The recognition that one's current state is not their desired state
• Needs and wants are not the same
• To segment markets, understand wants
The Initial Consideration/Evoked Set (Consumer Decision Process)
COMPLETE SOLUTIONS GRADED A++ LATEST UPDATE
Firms can attempt to reach:
-all buyers in a market
-smaller groups or segments of the market
-specific buyers on an individual level
Firm understand the current/potential customers decision making:
• Wants
• Needs
• Motivations
• Behaviors
What is Rational Economics?
based on the assumption that people are predictable and will maximize the utility of their
choices relative to their needs and wants (Expected Value)
What is Behavioral Decision Theory?
an approach to understanding adolescent risk taking, in which behaviors are seen as
the outcome of systematic decision-making processes (Biases and Heuristics)
What is Power of Defaults?
can also be used to help businesses profit from consumers, sometimes by prompting
people to choose things that are not in their best interests.
Power of Defaults Examples
,Walt Disney World changed the default choices in its kids' meals
• swapping out soda for juice and french fries for fruits and vegetables
• leading to the consumption of 21% fewer calories, 44% less fat, and 43% less sodium.
Vanguard reported that automatically enrolling new employees in a retirement plan
more than doubled participation rates.
• default set to "opt in"
• clients had to go out of their way to decline
• This cost people a lot of money:
• 75% of total checking account fees
• averaged over $250 per year
Compromise Effect
when a brand gains share because it is an intermediate rather than an extreme option
Choice Sets - Compromise Effect
How about a marketing examples of leveraging compromise effect?
Let's say that you are an owner of an ice cream shop. How can you increase sales
using compromise effect?
Add a larger size at $2.50
Add a smaller size at $1.00
,Rational?
"Heart attack on a plate" = higher sales
Licensing Effect
giving yourself a pass to do something bad because you did something good
example: 1997 Mars Rover Launch
Situational Influence
the influence arising from factors that are particular to a specific time and place and are
independent of individual customers' characteristics
Visual arrays can influence variety and uniqueness seeking behaviors
Perception
the process of organizing and interpreting sensory information, enabling us to recognize
meaningful objects and events
• Assigning meaning to stimuli
• Perception is subjective.
Country of Origin Effect (COO)
• Consumers may associate certain countries with a reputation for producing high-
quality or low-quality products in specific categories.
• For example, Swiss watches are often associated with quality and precision, while
Chinese-made products may be perceived as more affordable but potentially lower in
quality.
, • These perceptions can influence consumers' willingness to pay for a product.
The Consumer Decision Journey
Stages and issues in consumer decision making:
• Need recognition trigger
• Initial consideration set
• Active evaluation
• Moment of purchase
• Post-purchase experience
On the journey well before initiating a search:
• Loyalty loop...purchase newer version of a previous product
• Not only which product...but, where to buy: price and availability
• Merchant might influence more than product
• Loyalty to a dealer/retailer (cars, home improvement...)
• Store credit cards or loyalty programs
Needs Recognition (Consumer Decision Process)
• Starts the purchase process
• The recognition that one's current state is not their desired state
• Needs and wants are not the same
• To segment markets, understand wants
The Initial Consideration/Evoked Set (Consumer Decision Process)
