Mar3231 Ex2 Ch7

From the point of students at FSU, college athletes could possibly be classified as a(n) _____.

All answers are correct

Offering a money back guarantee is an example of how a firm can offset perceived _____ risk.

Financial

Offering a reduced salt option of a product is an example of how a firm can offset which of the perceived risks we discussed in class?

Physical Risk

A retailer has begun to pre-wrap gift items and to re-deploy checkout personnel to reduce waiting times. The retailer is responding to which demographic and lifestyle factor?

Poverty of Time

________________ explains the idea that customers will make decisions based on their goal of maximizing self interest.

Rational Choice Theory

rational choice theory definition:

states that individuals use rational calculations to make rational choices and achieve outcomes that are aligned with their own personal objectives

• consumers do whatever they can to maximize self-interest

decoy pricing/effect definition:

describes how, when we are choosing between two alternatives, the addition of a third, less attractive option (the decoy) can influence our perception of the original two choices

Decoys are “asymmetrically dominated”, which means:

they are completely inferior to one option (the target) but only partially inferior to the other (the competitor).

decoy pricing example:

When Williams-Sonoma introduced bread machines, sales were slow. When they added a “deluxe” version that was 50% more expensive, the original machine started flying off the shelves; the first bread machine now appeared to be a bargain.

The Power of “Free” example:

• When free shipping was introduced, Amazon saw sales increases everywhere except for France. 

• It turned out that the French division offered 1 franc ($0.20) pricing instead of free pricing. When this was changed to free, France saw the same sales increases as elsewhere

rational behavior example:

• In 1994, a study was released that said fetticine alfredo was worse than eating a stick of butter.  The study gained popularity after calling this dish a “heart attack on a plate.”

  • Sales increased by 40% nationally; the article had the opposite effect than intended; this is the opposite of rational.

Retail Shopping Behaviors definition:

the actions and decisions that consumers make when they shop in retail stores or online.

Retail shopping behavior can be influenced by a variety of factors:

Demographics, Lifestyles, Needs & Desires, Shopping Attitudes & Behaviors, and Retailer Actions

Needs & Desires definition:

• refers to the underlying motivations that drive purchases

  • Needs are essentials/physiological (food, hygiene, shelter)

  • Desires are non-essentials wants that often relate to identity, style, or aspiration

shopping attitudes definition:

• refers to how shoppers feel about the act of shopping and how they behave during the process

  • The Deal-Seeker: “I only buy when it’s on sale”

  • The Brand-Loyalist: “I stick to what I know”

  • The Impulse Buyer: “I didn’t plan to buy this, but I need it now”

retailer actions definition:

cover what retailers do– pricing strategies, store layout, advertising, promotions, customer service, branding, and the overall shopping experience.

demographics definition:

• consumer data that is objective, quantifiable, easily identifiable, and measurable.

  • EX: Age, ethnicity, income, education, geographical location, home ownership

demographics are very _, and are not _.

objective ; predictable

lifestyles definition:

• ways in which consumers and families live and spend time/money.

  • We develop these based on social factors and psychological factors

  • EX: Social status, daily activities, food habits, and buying preferences

Social (Lifestyle) Factors:

• reference groups

• culture

• social class

• family life cycle

Psychological (Lifestyle) Factors:

• attitudes

• personality

• perceived risks

Aspirational group:

a person does not belong but wishes to join

Membership group:

a person does belong

Dissociative group:

a person does not want to belong

Face-to-face group:

intimate family or peer groups (most influential)

culture definition:

• a person’s way of life that is passed on by multiple generations 

  • EX: ideas, beliefs, religion, music, cooking. Ikea matches the building layout for a set room to the culture of the store

conspicuous consumption definition:

buying things to be seen buying things

social class definition:

•  the hierarchical distinctions between individuals or groups based on their socio-economic status (i.e. factors such as income, education, occupation, and social status)

  • EX: conspicuous consumption

Reference Groups definition:

any group of people who influence our decisions

• aspirational, membership, dissociative, and face-to-face

family life cycle definition:

• the stages that families go through as they develop and change over time

  • EX: target and amazon baby/wedding registries

attitudes definition:

• a way of thinking or feeling about someone or something

  • Retailers can use customer attitudes to: identify areas for improvement, marketing, and predict customer behavior

attitudes example:

a person with a strong belief in environmentalism would be more likely to have a lifestyle associated with being outdoors and supporting brands that do more for the environment

Understanding a retail customer’s personality can be useful for the business because:

• it tailors marketing and sales efforts

• personalizes the customer experience

• improves customer satisfaction

personality definition:

unique characteristics and qualities that make a person different from others.

• Retail customer personality collected through customer surveys, focus groups, and analysis of customer behavior data

perceived risks definition:

• successful retailers carefully monitor how risks affect lifestyle decisions related to the products and services they offer.

  • functional, physical, financial, social, psychological, and time risks

functional risk:

• associated with the product’s features and concerns that the product will not function as it is supposed

  • reduce risk by: product usage testing by retailer; Simulate wear for new goods.

physical risk:

• concerns about the safety of using a product or service

  • reduce risk by: safety testing, reduce salt and fat in food products

financial risk:

• related to the financial investment of using a product

  • reduce risk by: money back guarantee and exchange privileges

social risk:

• related to the negative social impact of a product and how it affects a customer’s identity or image

  • reduce risk by: co-branding of private label products with major high-quality national brands (Kirkland by Starbucks)

time risk:

• concerns about the time commitment required for the purchase and/or consumption of a product

  • reduce risk by: double money back guarantee; car dealers picking and returning recalled cars

psychological risk:

reduce risk by: showing empathy for consumer

Segmentation practices are in place to help with general assumptions about lifestyle and the impact on consumer behavior:

• Gender roles

• Consumer sophistication and confidence

• Poverty of time

• Component lifestyles

Component lifestyles definition:

choosing products and services that meet diverse needs and interests rather than conforming to traditional stereotypes

How much do you need to earn to be in the top 1% globally?

$38,000

In the US, the median household income is $_, whereas the median individual income is $_.

68,000 ; 43,206