CB 6, 6th Edition Barry J. Babin Solutions manual and test bank
Chapter 2: Value and the Consumer Behavior Value Framework
TRUE/FALSE
1. The Consumer Behavior Framework (CBF) represents consumer behavior theory illustrating factors that shape consumption-related behaviors and ultimately determine the value associated with consumption.
ANS: F
The Consumer Value Framework (CVF) represents consumer behavior theory illustrating factors that shape consumption-related behaviors and ultimately determine the value associated with consumption.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
2. Situational influences are unique to a time or place that can affect consumer decision making and the value received from consumption.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
3. Learning, perception, memory, and attitudes are examples of elements comprising the personality of a consumer.
ANS: F
Learning, perception, memory, and attitudes are examples of elements comprising consumer psychology. Personality consists of motivation, personal value, traits, lifestyles, and emotional expressiveness.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
4. A basic customer relationship management premise is that customers form relationships with companies as opposed to companies conducting individual transactions with customers.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
5. A customer relationship management system allows a firm to be more customer-focused.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Comprehension
6. Relationship quality reflects the connectedness between a consumer and a retailer, brand, or service provider.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
7. A strong, or high-quality, relationship is typified by a consumer who buys the same brand each time a need for that product arises.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Comprehension
8. Internal influences on the consumption process include factors, such as social class.
ANS: F
External influences on the consumption process include factors, such as social class.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-1
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Comprehension
9. Cognition refers to the mental processes that go on as we process and store things that can become knowledge.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
10. Individual differences, which include personality and lifestyle, help determine consumer behavior.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
11. Individual differences have little effect on the value experienced by consumers and the reaction consumers have to consumption.
ANS: F
Individual differences shape the value experienced by consumers and the reaction consumers have to consumption.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-1
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Comprehension
12. Internal influences include the social and cultural aspects of life as a consumer.
ANS: F
External influences include the social and cultural aspects of life as a consumer.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-1
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Comprehension
13. People and groups who help shape a consumer’s everyday experiences are a part of the social environment.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Comprehension
14. The presence of music in an environment is a social influence that may shape consumer behavior.
ANS: F
The presence of music in an environment is a situational influence. External social influences include culture, reference groups, social class, and family influences.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-1
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Comprehension
15. The core concept of consumer behavior is value.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Comprehension
16. The concept of “value” captures how much gratification a consumer receives from consumption.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Comprehension
17. Worth to a consumer is a function of price.
ANS: F
Worth to a consumer is a function of much more than price. Value can be modeled by playing the “what you get” from dealing with a company against the “what you have to give” to get the product.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-2
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Comprehension
18. Value equals the difference between what you get and what you have to give to get the product.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Comprehension
19. Two types of values are primary value and secondary value.
ANS: F
The two types of values are utilitarian and hedonic.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-2
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Knowledge
20. Utilitarian value is derived from a product that helps the consumer solve problems and accomplish tasks that are a part of being a consumer.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Knowledge
21. Hedonic value is the immediate gratification that comes from experiencing some activity.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Knowledge
22. One conceptual difference between utilitarian value and hedonic value is that utilitarian value is an end in and of itself rather than a means to an end.
ANS: F
Hedonic value, not utilitarian value, is an end in and of itself rather than a means to an end.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-2
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Comprehension
23. Rather than being viewed as opposites, utilitarian and hedonic values are not mutually exclusive.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Comprehension
24. Any act of consumption cannot provide both utilitarian and hedonic value.
ANS: F
Utilitarian and hedonic values are not mutually exclusive. For example, dining in a fine restaurant provides both utilitarian value (nourishment) and hedonic value (pleasure).
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-2
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Comprehension
25. A strategy is a planned way of doing something to accomplish some goal.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Knowledge
26. A corporate strategy is the way a company goes about creating value for customers.
ANS: F
A marketing strategy is the way a company goes about creating value for customers.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-3
NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Knowledge
27. Marketing myopia is defined as a condition in which a company views itself competing in a value or benefits producing business rather than in a product business.
ANS: F
Marketing myopia is defined as a condition in which a company views itself competing in a product business rather than in a value, or benefits producing, business.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3
NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Comprehension
28. Strategies exist at more than one level in an organization.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Comprehension
29. A marketing strategy provides an operating orientation for the company.
ANS: F
A corporate strategy is usually associated with a specific corporate culture, which provides an operating orientation for the company. Marketing strategy then follows.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3
NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Comprehension
30. To deliver superior customer value, different business units within the firm must have the same marketing strategy.
ANS: F
Different business units within the firm may have different marketing strategies.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3
NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Comprehension
31. Marketing tactics are ways marketing management is implemented.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Knowledge
32. Marketing tactics include price, promotion, product, and distribution decisions.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Knowledge
33. The term augmented product means the original product plus the extra things needed to increase the value from consumption.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Knowledge
34. Products are multifaceted and can provide value in many ways.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Product
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Comprehension
35. Every product’s value is made up of the basic benefits, plus the augmented product, plus the “feel” benefits.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Product
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Comprehension
36. Companies embracing the total value concept demonstrate an understanding that products provide value in multiple ways.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Product
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Comprehension
37. A product’s value can only be created by what the marketer is offering.
ANS: F
Value is not created by the marketer’s offering but rather, consumption involves value co-creation.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Comprehension
38. The marketing mix is the combination of product, pricing, promotion, and distribution strategies used to position some product offering or brand in the marketplace.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-4 NAT: BUSPROG: Analytic STA: DISC: Marketing Plan
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Knowledge
39. The segment or segments of a market that a company serves to is called the focal market.
ANS: F
Marketers often use the term target market to signify which market segment a company will serve with a specific marketing mix.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4
NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Knowledge
40. The marketing mix represents the way a marketing strategy is implemented within a given market or exchange environment.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-4 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Comprehension
41. Target marketing is the separation of a market into groups based on the different demand curves associated with each group.
ANS: F
Market segmentation is the separation of a market into groups based on the different demand curves associated with each group.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Knowledge
42. In economics, the term “buoyancy” represents the degree to which a consumer is sensitive to changes in some product characteristic.
ANS: F
In economics, elasticity is a term used to represent market sensitivity to changes in price or other characteristics.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Knowledge
43. The market for any product is the sum of the demand existing in individual groups or segments of consumers.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-4 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Comprehension
44. The most basic truth of economics is that as price increases, the quantity demanded will always decrease.
ANS: F
Although a positive relationship between price and quantity may seem unusual, backward sloping demand, a term used in economics to refer to this situation, is hardly rare.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Comprehension
45. Consumer segments exist because different consumers do not value different alternatives the same way.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-4 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Comprehension
46. Product differentiation is a marketplace condition in which consumers do not view all competing products as identical to one another.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-4 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Knowledge
47. Product differentiation becomes the basis for product positioning.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-5 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Analyzing Markets with Perceptual Maps KEY: Bloom's: Comprehension
48. Positioning refers to the way a product is perceived by a consumer.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-5 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Analyzing Markets with Perceptual Maps KEY: Bloom's: Knowledge
49. A perceptual map is used to depict graphically the positioning of competing products.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-5 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Analyzing Markets with Perceptual Maps KEY: Bloom's: Knowledge
50. A blue ocean strategy seeks to position a firm so far away from competitors that, when successful, the firm creates an industry of its own and at least for a time, isolates itself from competitors.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-5 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Analyzing Markets with Perceptual Maps KEY: Bloom's: Knowledge
51. Ideal points on a perceptual map represent each marketer’s product offering.
ANS: F
Ideal points on a perceptual map represent the combination of product characteristics that provide the most value to an individual consumer or market segment.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Analyzing Markets with Perceptual Maps KEY: Bloom's: Knowledge
52. Both consumers and marketers enter exchange-seeking value.
ANS: T PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-6 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value Today and Tomorrow—Customer Lifetime Value
KEY: Bloom's: Comprehension
53. All the customers are equally valuable to a firm.
ANS: F
Not every customer is equally valuable to a firm, that is why the concept of customer lifetime value (CLV) is important.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-6
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value Today and Tomorrow—Customer Lifetime Value
KEY: Bloom's: Comprehension
54. Customer lifetime value represents the approximate worth of a customer to a company in economic terms.
ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-6 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value Today and Tomorrow—Customer Lifetime Value
KEY: Bloom's: Knowledge
55. Customer lifetime value is equal to sales attributed to a particular customer minus the costs associated with satisfying that customer over the lifetime of that customer.
ANS: F
Customer lifetime value is equal to the net present value of the stream of profits over a customer’s lifetime plus the worth attributed to the equity a good customer can bring in the form of positive referrals and word of mouth.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-6
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value Today and Tomorrow—Customer Lifetime Value
KEY: Bloom's: Knowledge
MULTIPLE CHOICE
1. The _____ represents consumer behavior theory illustrating factors that shape consumption-related behaviors that ultimately determine the value associated with consumption.
| a. | Consumer Behavior Framework (CBF) |
| b. | Consumer Value Framework (CVF) |
| c. | Consumption Process Framework (CPF) |
| d. | Customer Relationship Framework (CRF) |
| e. | Marketing-Consumer Framework (MCF) |
ANS: B PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
2. Which of the following is at the heart of the consumer value framework and the focus of marketing efforts?
| a. | Utilitarian and hedonic values |
| b. | Personal values |
| c. | Consumer perception |
| d. | Environment |
| e. | Cultural values |
ANS: A PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Comprehension
3. Which of the following is an element of consumer psychology?
| a. | Environment |
| b. | Media |
| c. | Implicit memory |
| d. | Culture |
| e. | Emotional intelligence |
ANS: C PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
4. Which of the following is an internal influence on consumer value?
| a. | Costs |
| b. | Learning |
| c. | Social class |
| d. | Time |
| e. | Family |
ANS: B PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
5. Which of the following is an external influence on consumer value?
| a. | Personal values |
| b. | Attitude |
| c. | Needs |
| d. | Perception |
| e. | Reference groups |
ANS: E PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
6. An automobile marketer is interested in studying the internal influences that affect the psychology of the potential buyers of luxury automobiles. Which of the following would this marketer be interested in studying?
| a. | Lifestyles of luxury car buyers |
| b. | Political choices of potential buyers |
| c. | Social status of potential buyers |
| d. | Buyers’ attitudes toward different brands |
| e. | The accessories that car owners prefer |
ANS: D PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Comprehension
7. Which of the following is considered a part of the consumer’s personality?
| a. | Memory |
| b. | Attitude |
| c. | Intuition |
| d. | Categorization |
| e. | Personal values |
ANS: E PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
8. A basic _____ premise is that customers form relationships with companies as opposed to companies conducting individual transactions with customers.
| a. | Consumer Behavior Framework |
| b. | Customer Relationship Management |
| c. | Marketing Consumer Framework |
| d. | Relationship Quality Management |
| e. | Consumption Process Framework |
ANS: B PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
9. According to the Customer Relationship Management (CRM) orientation:
| a. | each customer represents just a single sale rather than a potential stream of resources. |
| b. | customers who switch providers each time they make a purchase tend to be more profitable than loyal customers due to their wide range of purchases. |
| c. | the most profitable customers are those who search for information about a product online and then buy it in a brick-and-mortar store. |
| d. | customers form relationships with companies as opposed to companies conducting individual transactions with customers. |
| e. | a strong, or high-quality, relationship is typified by a consumer who buys different brands of a product each time a need for that product arises. |
ANS: D PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Comprehension
10. As the manager of a leading banking institution, Bijou tracks detailed information about the bank’s clients. This way more client-oriented decisions can be made, leading to longer-lasting affiliations with clients. Bijou is involved in _____.
| a. | customer relationship management |
| b. | marketing management |
| c. | consumer value management |
| d. | quality management |
| e. | internal marketing management |
ANS: A PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-1 NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Application
11. According to which of the following orientations, each customer represents a potential stream of resources rather than just a single sale?
| a. | Product orientation |
| b. | CVF orientation |
| c. | Hedonic orientation |
| d. | CRM orientation |
| e. | Utilitarian orientation |
ANS: D PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
12. _____ reflects the connectedness between a consumer and a retailer, a brand, or service provider.
| a. | Hedonic value |
| b. | Interconnectivity |
| c. | Synergy |
| d. | Consumption |
| e. | Relationship quality |
ANS: E PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
13. When a consumer realizes high value from an exchange with a company, _____ improves.
| a. | relationship quality |
| b. | internalization |
| c. | emotional contagion |
| d. | augmented quality |
| e. | elasticity |
ANS: A PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
14. _____ are things that can be thought of as part of the consumer.
| a. | External influences |
| b. | Innate influences |
| c. | Internal influences |
| d. | Social influences |
| e. | Personal influences |
ANS: C PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
15. Which of the following terms refers to the thinking or mental processes that go on as we process and store things that can become knowledge?
| a. | Cognition |
| b. | Schema |
| c. | Affect |
| d. | Synergy |
| e. | Internalization |
ANS: A PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
16. Since childhood, Meg’s parents always told her that milk is good for health. As a result, Meg developed a liking for milk and started drinking it regularly. In this case, Meg’s thinking or mental process is referred to as _____.
| a. | sensitization |
| b. | affect |
| c. | emotional contagion |
| d. | emotional intelligence |
| e. | cognition |
ANS: E PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-1 NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Application
17. _____ refers to the feelings that are experienced during consumption activities or associated with specific objects.
| a. | Cognition |
| b. | Internalization |
| c. | Affect |
| d. | Habituation |
| e. | Utilitarian value |
ANS: C PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
18. Hannah is an avid reader and looks forward to going to the library at the end of each week to issue more books. Which of the following terms refers to the sense of satisfaction she feels from this activity?
| a. | Affect |
| b. | Delusion |
| c. | Schema |
| d. | Synergy |
| e. | Externalities |
ANS: A PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-1 NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Application
19. Characteristics and traits, including personality and lifestyles, that help define a consumer are referred to as _____.
| a. | value enhancers |
| b. | individual identifiers |
| c. | discriminators |
| d. | individual differences |
| e. | exemplars |
ANS: D PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
20. Which of the following environments includes the people and groups who help shape a consumer’s everyday experiences?
| a. | Emotional environment |
| b. | Internal environment |
| c. | Social environment |
| d. | Macro environment |
| e. | Micro environment |
ANS: C PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
21. Amy is a member of the readers’ club in her school. Before she buys any new book, she checks what is popular with the others in her club. Amy’s readers’ club is part of her _____ that influences Amy’s everyday experiences.
| a. | internal environment |
| b. | value network |
| c. | relationship network |
| d. | emotional environment |
| e. | social environment |
ANS: E PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-1 NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Application
22. _____ are unique to a time or place that can affect consumer decision making and the value received from consumption.
| a. | Situational influences |
| b. | Temporal factors |
| c. | Social influences |
| d. | Internal factors |
| e. | Socio-environmental factors |
ANS: A PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
23. The presence of music in an environment may shape consumer behavior and even change buying patterns. In this case, music is an example of a _____.
| a. | social influence |
| b. | situational influence |
| c. | socio-economic factor |
| d. | hedonic factor |
| e. | perceptional influence |
ANS: B PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Knowledge
24. Which of the following terms refers to a personal assessment of the net worth a consumer obtains from an activity?
| a. | Quality |
| b. | Experience |
| c. | Prestige |
| d. | Value |
| e. | Effort |
ANS: D PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Knowledge
25. _____ captures how much gratification a consumer receives from consumption.
| a. | Opportunity cost |
| b. | Internal rate of return |
| c. | Value |
| d. | Emotional contagion |
| e. | Sunk cost |
ANS: C PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Knowledge
26. Which of the following is a negative consequence of consumption?
| a. | Quality |
| b. | Opportunity costs |
| c. | Prestige |
| d. | Convenience |
| e. | Experience |
ANS: B PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Knowledge
27. Two main types of values are _____.
| a. | internal and external |
| b. | utilitarian and hedonic |
| c. | personal and social |
| d. | primary and secondary |
| e. | temporal and stable |
ANS: B PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Knowledge
28. _____ value is derived from a product that helps a consumer solve problems and accomplish tasks that are a part of being a consumer.
| a. | Utilitarian |
| b. | Functional |
| c. | Terminal |
| d. | Purchase |
| e. | End-state |
ANS: A PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Knowledge
29. Sam needed a new pair of bicycle pedals. After visiting several stores to find the right ones, he purchased a pair from a local store called All Things Sports and was satisfied that his needs were met. Which of the following best describes the type of value Sam received?
| a. | End-state value |
| b. | Premium value |
| c. | Terminal value |
| d. | Utilitarian value |
| e. | Purchase value |
ANS: D PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-2 NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Application
30. _____ value is the immediate gratification that comes from experiencing some activity.
| a. | Hedonic |
| b. | Utilitarian |
| c. | End-state |
| d. | Process |
| e. | Terminal |
ANS: A PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Knowledge
31. Natalie and her friends enjoy visiting upscale stores together even if they do not purchase anything. For them, the experience of shopping is an end in itself, not just a means to an end. While shopping, which of the following types of values do Natalie and her friends experience?
| a. | Utilitarian value |
| b. | Pleasure-seeking value |
| c. | Hedonic value |
| d. | Experiential value |
| e. | Augmented value |
ANS: C PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-2 NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Application
32. Which of the following is true about the two basic types of values?
| a. | Utilitarian value is an end in and of itself rather than a means to an end. |
| b. | Hedonic value is very emotional and subjective in nature. |
| c. | Utilitarian value is the immediate gratification that comes from experiencing some activity. |
| d. | Utilitarian value is immediate whereas hedonic value is delayed. |
| e. | Hedonic value is provided by an activity because the activity allows something good to happen or be accomplished. |
ANS: B PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Comprehension
33. A planned way of doing something is known as _____.
| a. | marketing myopia |
| b. | a mission |
| c. | a strategy |
| d. | utilization |
| e. | a terminal value |
ANS: C PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Knowledge
34. FordTech is a software company whose clients are based in France. The company has formed a team to decide the direction the organization should take over the next five years. The focus of this team is to increase their clientele in Europe. The company is keen on taking advantage of the opportunities and avoiding threats in the changing environment. This team is involved in developing the _____ for the organization.
| a. | architecture |
| b. | layout |
| c. | schema |
| d. | blueprint |
| e. | strategy |
ANS: E PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-3 NAT: BUSPROG: Reflective Thinking STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Application
35. Which of the following terms refers to the way a company goes about creating value for its customers?
| a. | Schema |
| b. | Marketing strategy |
| c. | Social inclusion |
| d. | Blueprint |
| e. | Focus |
ANS: B PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Knowledge
36. When firms fail to realize how their products provide value, they run the risk of developing _____.
| a. | marketing myopia |
| b. | cognitive dissonance |
| c. | negative affect |
| d. | marketing dissonance |
| e. | marketing disconnect |
ANS: A PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Knowledge
37. Cullen and MacNeil’s is a well-known store that sells writing material. The company faces strong competition from the electronic media. If the company thinks of itself merely as a paper company instead of a company that delivers the benefits users want, it could be taking a short-sighted view of its business. That is, Cullen and MacNeil’s could suffer from _____.
| a. | brain drain |
| b. | cognitive dissonance |
| c. | marketing disconnect |
| d. | marketing myopia |
| e. | product devaluation |
ANS: D PTS: 1 DIF: Difficulty: Challenging
OBJ: LO: 2-3 NAT: BUSPROG: Reflective Thinking STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Application
38. _____ strategy deals with how the firm will be defined and sets general goals.
| a. | Corporate |
| b. | Marketing |
| c. | Tactical |
| d. | Top-level |
| e. | Meta |
ANS: A PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Knowledge
39. Which of the following is an example of a marketing tactic?
| a. | Implementing a new technology in order to reduce costs over the next few years |
| b. | Analyzing the budget for the next two years |
| c. | Focusing on the five-year plan |
| d. | Distributing a product only through discount stores |
| e. | Setting the company’s sales goal |
ANS: D PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Comprehension
40. A departmental store realizes that it needs to increase revenue in the face of severe budget cuts due to the weak economy. The store has decided to run a sale every month and upgrade their stock more regularly, so that customers don’t see the same products every month. They are going to begin offering a wider selection of brands for men and women. They plan to advertise on billboards, on radio, on television, and in newspapers throughout the state. The store will also send direct mail letters to regular customers. The sale, the wide selection of brands, and the promotion are examples of _____.
| a. | blue ocean strategy |
| b. | product differentiation |
| c. | marketing tactics |
| d. | marketing augmentation |
| e. | task implementation |
ANS: C PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-3 NAT: BUSPROG: Reflective Thinking STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Application
41. A(n) _____product includes the original product plus the extra things needed to increase the value from consumption.
| a. | augmented |
| b. | secondary |
| c. | complete |
| d. | enhanced |
| e. | terminal |
ANS: A PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Product
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Knowledge
42. Andrea purchased an Apple iPad and an extended warranty. She also purchased a gaming application specially developed for Apple iPad. The application purchased by Andrea, is an example of a(n) _____ product.
| a. | terminal |
| b. | segmented |
| c. | extended |
| d. | augmented |
| e. | complete |
ANS: D PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-3 NAT: BUSPROG: Reflective Thinking STA: DISC: Product
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Application
43. The business practice wherein companies operate with the understanding that products provide value in multiple ways is called the _____ concept.
| a. | net worth |
| b. | total value |
| c. | value marketing |
| d. | product value |
| e. | multifaceted product |
ANS: B PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Product
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Knowledge
44. While buying a car, a potential buyer takes into consideration several aspects of the car, such as its design, quality, ease of servicing, speed, and mileage. An automobile company, that takes into consideration all these aspects while manufacturing and selling its cars, is said to be practicing the _____ concept.
| a. | value marketing |
| b. | multifaceted product |
| c. | total value |
| d. | product value |
| e. | net worth |
ANS: C PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-3 NAT: BUSPROG: Reflective Thinking STA: DISC: Product
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Application
45. The realization that a consumer is necessary and must play a part in order to produce value is the major premise underlying the concept of _____.
| a. | synergy |
| b. | value integration |
| c. | value internalization |
| d. | value co-creation |
| e. | dyadic valuation |
ANS: D PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Comprehension
46. Which of the following is an element of the marketing mix?
| a. | Quality |
| b. | Pricing |
| c. | Design |
| d. | Use |
| e. | Span |
ANS: B PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-4 NAT: BUSPROG: Analytic STA: DISC: Marketing Plan
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Knowledge
47. The market segment a company will serve with a specific marketing mix is referred to as the _____ market.
| a. | target |
| b. | primary |
| c. | elementary |
| d. | capital |
| e. | dominant |
ANS: A PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-4 NAT: BUSPROG: Analytic STA: DISC: Marketing Plan
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Knowledge
48. Prime’s is a company that manufactures and markets suits for professional kayakers. These consumers are predominantly males in the age group of 25-45 years. This market segment that Prime’s serves with a specific marketing mix is called its _____.
| a. | preferred market |
| b. | optimum market |
| c. | target market |
| d. | dominant market |
| e. | elementary market |
ANS: C PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-4 NAT: BUSPROG: Reflective Thinking STA: DISC: Marketing Plan
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Application
49. _____ is the separation of a market into groups based on the different demand curves associated with each group.
| a. | Market zoning |
| b. | Market augmentation |
| c. | Market positioning |
| d. | Market segmentation |
| e. | Market selection |
ANS: D PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-4 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Knowledge
50. Community Trust Bank is analyzing its customer data to determine if groups other than the business customers can be identified. The bank is looking at the frequency of branch visits, use of ATMs, online banking activity, loan activity, and account balances for each customer. The bank has identified three groups of customers based on these factors and is considering offering different products to better meet the needs of each group. Which of the following marketing concepts is represented by this exercise?
| a. | Total value concept |
| b. | Market segmentation |
| c. | Value reengineering |
| d. | Marketing audit |
| e. | Environmental scanning |
ANS: B PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-4 NAT: BUSPROG: Reflective Thinking STA: DISC: Marketing Plan
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Application
51. Which of the following terms is used to represent market sensitivity to changes in price or other characteristics?
| a. | Elasticity |
| b. | Differentiation |
| c. | Congruity |
| d. | Segmentation |
| e. | Positioning |
ANS: A PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-4 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Knowledge
52. A product with backward sloping demand displays _____.
| a. | a negative price-quantity relationship |
| b. | a higher consumer sensitivity toward price than toward other product factors |
| c. | a neutral price-quantity relationship |
| d. | a positive price-quantity relationship |
| e. | a higher consumer sensitivity toward product quality than toward price |
ANS: D PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-4 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Comprehension
53. _____ refers to a marketplace condition in which consumers do not view all competing products as identical to one another.
| a. | Product positioning |
| b. | Product differentiation |
| c. | Marketing positioning |
| d. | Competitive advantage |
| e. | Market differentiation |
ANS: B PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-4 NAT: BUSPROG: Analytic STA: DISC: Product
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Knowledge
54. Consumers do not view all types of coffee as identical to one another. Some prefer iced coffee, while others will only drink non-fat latte. Still others will only drink chai latte or a cappuccino. This marketplace condition in which consumers do not view all competing products as identical to one another is called _____.
| a. | product differentiation |
| b. | product variation |
| c. | market segmentation |
| d. | perceptual differentiation |
| e. | selective perception |
ANS: A PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-4 NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Application
55. Product _____ refers to the way a product is perceived by a consumer.
| a. | differentiation |
| b. | augmentation |
| c. | positioning |
| d. | segmentation |
| e. | perception |
ANS: C PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-5 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Analyzing Markets with Perceptual Maps KEY: Bloom's: Knowledge
56. Which of the following is used to depict graphically the positioning of competing products?
| a. | Product blueprint |
| b. | Schema |
| c. | Perceptual map |
| d. | Product map |
| e. | Demand curve |
ANS: C PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-5 NAT: BUSPROG: Analytic STA: DISC: Research
TOP: A-head: Analyzing Markets with Perceptual Maps KEY: Bloom's: Knowledge
57. A cosmetic manufacturer that targets young women was looking at a graphical display of how women perceived different brands of cosmetics. They found that their brand was clustered with brands that are targeted toward older women. This graphical depiction of the positioning of competing brands used by the marketer is an example of a _____.
| a. | perceptual map |
| b. | BCG matrix |
| c. | competitive matrix |
| d. | competitive array |
| e. | positioning plot |
ANS: A PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-5 NAT: BUSPROG: Reflective Thinking STA: DISC: Research
TOP: A-head: Analyzing Markets with Perceptual Maps KEY: Bloom's: Application
58. Which of the following, on a perceptual map, represents the combination of product characteristics that provide the most value to an individual consumer or market segment?
| a. | Touch point |
| b. | Maximum point |
| c. | Optimum point |
| d. | Ideal point |
| e. | Slope intercept |
ANS: D PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-5 NAT: BUSPROG: Analytic STA: DISC: Research
TOP: A-head: Analyzing Markets with Perceptual Maps KEY: Bloom's: Comprehension
59. What do the x- and y-axes on a perceptual map represent?
| a. | How competitors perform on the two most important attributes to consumers-price and quality |
| b. | The ideal combination of attributes and the actual combination of attributes of all competitors in the market |
| c. | Dimensions used to separate competitors on a specific characteristic |
| d. | Growth rate of the market and market shares of each competitor |
| e. | Factors used to identify market segments |
ANS: C PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-5 NAT: BUSPROG: Analytic STA: DISC: Research
TOP: A-head: Analyzing Markets with Perceptual Maps KEY: Bloom's: Comprehension
60. The approximate worth of a customer to a company in economic terms is known as the _____.
| a. | net present value (NPV) |
| b. | customer lifetime value (CLV) |
| c. | customer present value (CPV) |
| d. | customer future value (CFV) |
| e. | total customer value (TCV) |
ANS: B PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-6 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value Today and Tomorrow—Customer Lifetime Value
KEY: Bloom's: Knowledge
61. Customer lifetime value includes the net present value of the stream of profits over a customer’s lifetime and _____.
| a. | the costs associated with satisfying that customer |
| b. | the costs associated with keeping that customer for more than 10 years |
| c. | the retention rate for all customers |
| d. | opportunity cost saved from having loyal customers |
| e. | the worth attributed to the equity a good customer can bring |
ANS: E PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-6 NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value Today and Tomorrow—Customer Lifetime Value
KEY: Bloom's: Comprehension
SUPERFOCUS SCENARIO
Superfocus is a revolutionary concept in eyeglasses--it even received a 2010 The Wall Street Journal innovation award. It is a type of eyeglass that allows the wearer to change correction without changing glasses, or having to look through a certain part of the lens like bifocal and progressive lens wearers must do. The round lenses are actually two lenses with a clear fluid in-between. The outer lens is hard, while the inner lens is flexible. There’s a little slider on the bridge that, when moved, pushes the fluid and changes the shape of the inner, flexible lens. That, in turn, changes the correction, so a user can see near, far, and everything in-between just by changing the position of the slider. The only catch is that the lenses have to be perfectly round and the frames need to be made out of stainless steel or titanium aluminum. This limits the frame style and color choices for consumers.
Superfocus can be purchased through eye care professionals or directly from the manufacturer online. The company has recently started using direct-response television advertising to drive traffic to the website so consumers can learn more about this product and sign up for a free trial offer. With prices starting at $700 a pair, the free trial might help overcome some resistance due to the relatively high price.
62. Refer to Superfocus Scenario. Superfocus glasses were developed for people who have multiple prescriptions but do not like bifocals or who have to continually change glasses for different tasks like reading, computer work, or driving. By solving this problem for consumers, which type of value is being delivered by Superfocus?
| a. | Hedonic |
| b. | Rational |
| c. | Complete |
| d. | Utilitarian |
| e. | Relative |
ANS: D PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-2 NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Application
63. Refer to Superfocus Scenario. The advertising, distribution through the website and eye care providers, the price, and the free trial offer are examples of Superfocus’s _____.
| a. | marketing tactics |
| b. | corporate strategy |
| c. | company mission |
| d. | value proposition |
| e. | product differentiation |
ANS: A PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-3 NAT: BUSPROG: Reflective Thinking STA: DISC: Marketing Plan
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Application
64. Refer to Superfocus Scenario. Superfocus is trying to separate its market into different groups based on age so that it can create customized products for each group. This indicates that Superfocus is conducting the process of _____.
| a. | value reengineering |
| b. | mass marketing |
| c. | total quality management |
| d. | social marketing |
| e. | market segmentation |
ANS: E PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-4 NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Application
65. Refer to Superfocus Scenario. People who need multifocal lenses are the company’s _____ market.
| a. | capital |
| b. | target |
| c. | dominant |
| d. | focal |
| e. | augmented |
ANS: B PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 2-4 NAT: BUSPROG: Reflective Thinking STA: DISC: Marketing Plan
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Application
66. Refer to Superfocus Scenario. While consumers need and want this type of eyeglass, they also want something that looks fashionable. Most consumers would not consider the round, silver stainless steel or titanium aluminum charcoal gray frame fashionable. Thus, on a perceptual map, Superfocus would _____.
| a. | not be positioned as a very useful product |
| b. | be positioned close to competitors |
| c. | be in a quadrant all by itself |
| d. | not even appear |
| e. | not be very close to the ideal point |
ANS: E PTS: 1 DIF: Difficulty: Challenging
OBJ: LO: 2-5 NAT: BUSPROG: Reflective Thinking STA: DISC: Research
TOP: A-head: Analyzing Markets with Perceptual Maps KEY: Bloom's: Application
FAST FOOD SCENARIO
Daniel, an entrepreneur, is planning to open a fast-food restaurant. He wants to cash in on the huge population of busy professionals who usually don’t have the time for a sit-down meal. They prefer instead to grab a bite on the go. Daniel has done his fair share of research, and he found that though fast-food restaurants cater to the need for a quick bite, consumers feel guilty of indulging in what they thought was “unhealthy.” Daniel conceptualized a place that will offer a quick bite as a healthy alternative, so consumers would not have to suffer from guilt. Daniel is looking at establishing a long-term relationship based on trust with his customers.
67. Refer to Fast Food Scenario. Busy professionals, who usually don’t have the time for a sit-down meal, prefer to grab a bite on the go; even when it means indulging in unhealthy food habits. This is an example of _____ influence on consumer behavior.
| a. | tangential |
| b. | internal |
| c. | situational |
| d. | intellectual |
| e. | personal |
ANS: C PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-1 NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Application
68. Refer to Fast Food Scenario. Daniel found that though fast-food restaurants cater to the need for a quick bite, consumers feel guilty of indulging in “unhealthy” food habits. This experience of guilt can be best described as _____ associated with the consumption of fast food.
| a. | intuition |
| b. | affect |
| c. | memory |
| d. | cognition |
| e. | motivation |
ANS: B PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-1 NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Application
69. Refer to Fast Food Scenario. Daniel is looking at establishing a long-term relationship based on trust with his customers. In doing so, Daniel is adopting a(n) _____ orientation.
| a. | Association Behavior Management |
| b. | Customer Relationship Management |
| c. | Investor Margin Management |
| d. | Relationship Quality Management |
| e. | Marketing Profitability Management |
ANS: B PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-1 NAT: BUSPROG: Reflective Thinking STA: DISC: Marketing Plan
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Application
70. Refer to Fast Food Scenario. Daniel conceptualized a place that will offer a quick bite as a healthy alternative, so consumers would not have to suffer from guilt. In doing so, Daniel is offering _____ value to his customers.
| a. | augmented |
| b. | utilitarian |
| c. | hedonic |
| d. | temporal |
| e. | tangential |
ANS: B PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-2 NAT: BUSPROG: Reflective Thinking STA: DISC: Strategy
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Application
71. Refer to Fast Food Scenario. Daniel wants to cash in on the huge population of busy professionals who usually don’t have the time for a sit-down meal. They prefer instead to grab a bite on the go. They are Daniel’s _____ for his new restaurant.
| a. | capital |
| b. | target |
| c. | dominant |
| d. | focal |
| e. | augmented |
ANS: B PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 2-4 NAT: BUSPROG: Reflective Thinking STA: DISC: Marketing Plan
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Application
ESSAY
1. Describe the Consumer Value Framework (CVF), including its basic components.
ANS:
The Consumer Value Framework (CVF) represents consumer behavior theory illustrating factors that shape consumption-related behaviors and ultimately determine the value associated with consumption. Value is at the heart of experiencing and understanding consumer behavior. Value then influences relationship quality, which reflects the connectedness between a consumer and a retailer, brand, or service provider. The consumption process can involve a great deal of decision-making and thus represents a consumer decision making process. Many internal and external factors influence this process. Internal influences include consumer psychology (i.e., learning, perception, implicit memory, information processing, memory, categorization, and attitude) and the personality of the consumer (i.e., motivation, personal values, personality, lifestyles, emotional expressiveness). External influences include elements in the social environment (i.e., acculturation/enculturation, culture and cultural values, reference groups, social class, and family influence) and situational influences (i.e., atmospherics, time/timing, and conditions).
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-1
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: The Consumer Value Framework and Its Components
KEY: Bloom's: Comprehension
2. Define consumer value, and compare and contrast utilitarian value and hedonic value. Describe two situations - one in which you received utilitarian value and the other in which you experienced hedonic value. Which made you more satisfied? Explain why.
ANS:
Value is a personal assessment of the net worth obtained from an activity. Value is what consumers ultimately pursue because valuable actions address motivations that manifest themselves in needs and desires. In this sense, value captures how much gratification a consumer receives from consumption.
Two key types of value are utilitarian value and hedonic value. Utilitarian value is derived from a product that helps the consumer solve problems and accomplish tasks that are a part of being a consumer. A rational explanation can usually be given when somebody explains why something was purchased when utilitarian value is involved. Hedonic value is the immediate gratification that comes from experiencing some activity. Conceptually, hedonic value differs from utilitarian value in several ways: (1) hedonic value is an end in and of itself, rather than a means to an end, (2) hedonic value is very emotional and subjective in nature, and (3) when a consumer does something to obtain hedonic value, the action can sometimes be very difficult to explain objectively.
Students’ examples will vary.
PTS: 1 DIF: Difficulty: Challenging OBJ: LO: 2-2
NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: Value and Two Basic Types of Value KEY: Bloom's: Application
3. Explain why marketing plays an important strategic role in an organization and describe where marketing strategy fits in the bigger organization.
ANS:
One way that a company can enhance the chance of long-term survival is to have an effective marketing strategy. That is because, in a business environment, a marketing strategy is the way a company goes about creating value for customers. Strategies exist at several different levels. Corporate strategy deals with how the firm will be defined and sets general goals. Marketing strategy then follows. Different business units within the firm may have different marketing strategies. In describing how value is created, the strategies tell why customers will choose to buy things from the company.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3
NAT: BUSPROG: Analytic STA: DISC: Strategy
TOP: A-head: Marketing Strategy and Consumer Value KEY: Bloom's: Comprehension
4. Define market segmentation and explain how it is a marketplace condition. Describe different market segments of McDonald’s customers.
ANS:
Market segmentation is the separation of a market into groups based on the different demand curves associated with each group. Market segmentation is a marketplace condition; numerous segments exist in some markets, but very few segments may exist in others. Ultimately, consumer segments exist because different consumers do not value different alternatives the same way.
Different market segments of McDonald’s customers include families with young children, teenagers and young adults, and senior citizens. Students might also discuss segments based on time of day, such as breakfast eaters, lunch, or dinner. The market could also be segmented by usage—heavy users vs. light users. Finally, consumers could be segmented geographically, especially internationally. McDonald’s in other countries or region of this country might carry different product offerings based on local tastes.
PTS: 1 DIF: Difficulty: Challenging OBJ: LO: 2-4
NAT: BUSPROG: Reflective Thinking STA: DISC: Customer
TOP: A-head: Market Characteristics: Market Segments and Product Differentiation
KEY: Bloom's: Application
5. Explain how perceptual maps are useful in understanding consumers and delivering superior value.
ANS:
A perceptual map is used to depict graphically the positioning of competing products. Positioning refers to the way a product is perceived by a consumer and can be represented by the number and types of characteristics that consumers perceive. When marketing analysts examine perceptual maps, they can (1) identify competitors, (2) identify opportunities for doing more business, and (3) diagnose potential problems in the marketing mix. Ideal points represent the combination of product characteristics that provide the most value to an individual consumer or market segment.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-5
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Analyzing Markets with Perceptual Maps KEY: Bloom's: Comprehension
6. Explain the concept of Customer Lifetime Value (CLV). Think of a product you have purchased (e.g., toothpaste, soft drink, computer) and estimate your lifetime value to the manufacturer of a specific brand. What can the marketer of that brand do to ensure you remain loyal to that brand?
ANS:
Customer Lifetime Value (CLV) represents the approximate worth of a customer to a company in economic terms. In equation form, CLV = npv(sales - costs) + npv(equity). Students’ examples will vary, but they should estimate how long they could possibly purchase the product and specific brand, how much the product costs, and some discussion regarding what it costs the company to keep them loyal. They should also factor in the value they provide the company if they influence others to become loyal customers as well. Finally, while not specifically covered in the chapter, students should discuss ways the marketer can keep them loyal, such as offering rewards for continued purchase, providing opportunities to purchase other products, offering incentives to recommend the product to others, or offering special privileges for loyal behavior.
PTS: 1 DIF: Difficulty: Challenging OBJ: LO: 2-6
NAT: BUSPROG: Analytic STA: DISC: Customer
TOP: A-head: Value Today and Tomorrow—Customer Lifetime Value
KEY: Bloom's: Analysis
Chapter 2
Value and the Consumer Behavior VALUE Framework
WHAT DO YOU THINK Polling Question
I get a lot out of shopping even when I don’t buy anything.
Strongly disagree 1 2 3 4 5 6 7 Strongly agree
Have students access www.cengagebrain.com to answer the polling questions for each chapter of CB. Ask them to take the online poll to see how their answers compare with other students taking a consumer behavior course across the country. Then turn to the last page of the chapter to find the What Others Have Thought box feature. This graph is a snapshot of how other consumer behavior students have answered this polling question thus far.
Learning Outcomes
After studying this chapter, the student should be able to:
2-1 Describe the consumer value framework, including its basic components.
2-2 Define consumer value and compare and contrast two key types of value.
2-3 Apply the concepts of marketing strategy and marketing tactics to describe the way firms go about creating value for consumers.
2-4 Explain the way market characteristics like market segmentation and product differentiation affect marketing strategy.
2-5 Analyze consumer markets using elementary perceptual maps.
2-6 Justify consumers’ lifetime value as an effective focus for long-term business success.
Suggested Lecture Opener
Walmart, considered the world’s largest retailer, is facing stiff competition from Amazon these days. Shoppers who are primarily focused on value are now turning to the world’s largest online retailer Amazon for most of their value shopping. Walmart’s target consumers were those who were primarily interested in low prices and not the overall shopping experience. This is where it lost to its competitor Amazon who scored by providing more value to the shopper with their competitive prices and free shipping for many of their products.
Source: Brad Tuttle, “Today’s Value Shopper Heads to Amazon, Not Walmart,” Time Moneyland, April 10, 2012,
http://moneyland.time.com/2012/04/10/todays-value-shopper-heads-to-amazon-not-walmart/
Lecture Outline with PowerPoint® Slides
Research in consumer behavior is not limited to identifying brands and products that customers most desire. Instead, researchers want to know why different consumers favor different brands. Exhibit 2.1 categorizes the favorite brands of young U.S. consumers by age group. Consumers’ favorites are related to identifiable characteristics. These preferences are subject to change across time and situations. This change may be caused by different factors—demographic, psychological, cultural, and environmental. This chapter introduces the Consumer Value Framework (CVF) and some of the core concepts that tie all of CB together and make it actionable in marketing.
LO: 2-1. Describe the consumer value framework, including its basic components.
[Instructor PPT Slide 4]
Q: Ask students to identify some of the factors that can change a consumer’s favorite brands or products over time.
A: Answers will vary. Some of the factors that can change a consumer’s favorites include declining quality, the perception that value gained is less than the perceived value, price increases, the influence from their reference groups or peer groups, situational factors, etc.
[Instructor PPT Slides 5, 6]
The Consumer Value Framework
The Consumer Value Framework (CVF) illustrates the factors shaping consumption-related behaviors and ultimately determines the value associated with consumption. Exhibit 2.2 displays the CVF in detail. All components in the model are interrelated and consist of the following elements:
· Internal influences
· External influences
· Consumption process
· Value
· Relationship quality
[Instructor PPT Slide 7]
Value and the CVF Components
The concept of value is at the heart of consumer behavior and it is discussed throughout the book.
[Instructor PPT Slide 8]
Relationship Quality
Customer Relationship Management (CRM) has gained popularity over the years not just in marketing but in all of business. It is based on the assertion that customers form relationships with companies rather than companies conducting a transactional exchange of selling and buying. A CRM system facilitates customer-oriented decisions and lays the foundation for enduring relationships. Relationship quality reflects the connectedness between a consumer and a retailer, brand, or service provider.
[Instructor PPT Slide 9]
Consumption Process
The consumption process is influenced by many factors, which can be divided into internal, external, and situational influences.
[Instructor PPT Slides 10, 11, 12]
Internal Influences: The Psychology and Personality of the Consumer
Internal influences constitute the psychology of the consumer. For example, how will customers react to a price increase from $80 to $100? Does it matter whether an item is priced at $69.99 or $70? The psychology of the consumer involves both cognition and affect.
Individual differences are traits like personality and lifestyle differences that help determine consumer behavior. These traits define an individual’s personality. A consumer with an outdoorsy personality might have a strong preference for a convertible than someone who is happy spending time indoors.
The psychology of the consumer is determined by two factors:
· Cognition: This refers to the thinking or mental processes that go on as we process and store things that can become knowledge.
· Affect: This refers to the feelings that are experienced during consumption activities or associated with specific objects.
While cognition involves understanding and comprehension resulting in knowledge, affect deals with the emotional experience inherent in the consumption process.
The personality of the consumer accounts for individual differences. A consumer who is a fitness enthusiast may attribute high value to a 24-hour fitness center that gives him access to workout facilities at any given time of the day. However, a consumer who is indifferent to workout regimens may perceive the center as being no different from other fitness centers.
[Instructor PPT Slides 13, 14]
External Influences
Why do consumers around the globe have such varied tastes in food? This may be explained by differences in external influences, social environments, and situational influences. External influences include the social and cultural aspects of life as a consumer. The social environment includes the people and groups who help shape a consumer’s everyday experiences. For example, what we like to eat is primarily shaped by our families and what we eat at home. Situational influences include the effect that the physical environment has on consumer behavior.
Society and culture emphasizes conformity to rules that decide life’s choices and consequently consumer choices. Situational influences which are mostly contextual to specific situations affect consumer behavior. Reference groups like family and friends have an impact on consumer behavior.
Q: Ask students to recall a recent solitary shopping experience. How is the experience different from shopping in a group? Does shopping with peers influence their buying decisions?
A: Answers will vary. While shopping alone, people have a lot of time at their disposal to go through all the products, weigh their pros and cons, and then make a decision, whereas shopping with peers will influence the buying decision to some extent as shoppers may have less time, or be influenced by the opinions of their peers.
LO: 2-2. Define consumer value and compare and contrast two key types of value.
[Instructor PPT Slide 15, 16]
Value is a personal assessment of the net worth obtained from an activity. Value is what drives consumer behavior. It is what fuels repeat purchases. Value is not synonymous with quality or customer satisfaction associated with a product or service. As the example in the book illustrates, a person who chooses to eat in a fast-food restaurant may relinquish quality of food for lower prices and faster service.
[Instructor PPT Slide 17]
The Value Equation
Exhibit 2.3 demonstrates the value equation—“what you get” for “what you have to give.”
What you get = benefits such as quality, convenience, and nostalgia
What you give = time, money, and effort
Consumers ultimately pursue value because valuable actions address motivations that manifest themselves in needs and desires. It is a good idea to look at the types of value in order to better understand the concept.
While value can be of many specific types, the CVF in the book uses a value typology consisting of only two types—hedonic and utilitarian values.
[Instructor PPT Slides 18 - 21]
Utilitarian Value
Utilitarian value is linked to products that solve consumers’ problems and facilitate task achievement. An example of utilitarian value would be buying a shampoo to clean one’s hair. The actual process of cleaning may be far from gratifying for the customer but the accomplishment of getting something cleaned is what gives the customer gratification.
Hedonic Value
Hedonic value is the immediate gratification that comes from experiencing some activity. As it is emotional and subjective in nature, hedonic value is not a means to an end, but an end in itself. An example of hedonic value would be riding a roller coaster.
It should be noted that consumers can derive both utilitarian and hedonic values from the same experience. The book uses the example of parents taking their children to the movies. It assures the children’s happiness as well as the parents’ enjoyment. Exhibit 2.4 further explains this concept.
A person who chooses a quick takeaway for a bite on the run is not actually thinking of settling down in a fancy restaurant that provides quality food with impeccable service.
Restaurants that provide one of the values will survive as against places that are low on both values. A consumer is most likely to repeat an experience of a place that serves high-quality food in a great atmosphere with efficient staffs.
Q: Ask students to give examples (other than the ones provided in the text) of products that deliver both hedonic and utilitarian values.
A: Answers will vary. For example, when a person buys a chocolate bar, he or she intends either to consume it or to give it to someone. This is the utilitarian value of the chocolate bar. The hedonic value of the chocolate bar comes into play when that person consumes it and enjoys the taste, or gifts it and sees the pleasure on the receiver’s face.
LO: 2-3. Apply the concepts of marketing strategy and marketing tactics to describe the way firms go about creating value for consumers.
[Instructor PPT Slides 22 - 25]
Marketing Strategy
Exhibit 2.5 indicates how business strategy exists at different levels.
· Corporate strategy - This strategy deals with how the firm will be defined and sets general goals.
· Marketing strategy – Refers to approaches a company uses to create value for customers. Marketing myopia develops when an organization ignores value in product business. It is a condition in which a company views itself competing in a product business rather than in a value, or benefits producing, business.
· Marketing tactics - Refer to the ways in which marketing management is implemented. They involve price, promotion, product, and distribution decisions.
[Instructor PPT Slides 26, 27]
Total Value Concept
Exhibit 2.6 shows the relative market share for top athletic shoe companies in the U.S. Despite the relative similarity of products as well as the prices they sale for, the market share for the competing brands varies widely. Even as Nike dominates almost half the total market, its advertising budget is almost double of its nearest competitor. It is worth noting that among serious runners (people who run more than 10 mile a week) Nike and New Balance have an almost equal market share. Different brands create value for their products in different ways. An apple iPad will have no value without WiFi or a service plan. Apple offers more than 200,000 apps for its iPad. These apps increase the value of the product. The term augmented product means the original product plus the extra things needed to increase the value from consumption. Total value concept is practiced when companies operate with the understanding that products provide value in multiple ways.
The Total Value Concept Illustrated
How does the Ferrari provide value? If you understand this, you understand the total value concept. Here are some likely value factors:
· Transportation
· The Ferrari service plan
· The feelings associated with driving the car
· The positive feelings that go along with ownership
· The feelings of status and pride that come with ownership
· The negative feelings that go along with ownership
[Instructor PPT Slide 28]
Value is Co-Created
Value is not created by the marketer alone; the consumer adds his or her own resources to the consumption process so that value is co-created. The benefits offered by a 24-hour fitness center can turn into value only when the customer applies his diligence, skill and effort to a workout regime.
Q: Ask students to explain the total value concept for different types of products and services, such as fast food, coffee, jeans, a massage, etc.
A: Answers will vary. Encourage students to use the book as a guide for comprehending the concept of total value. For example, when a person buys a new air-conditioner, he or she pays for the product, its installation, breakdowns, and maintenances. At the same time, he or she enjoys the experience of owning an air-conditioner and also enjoys the cool air generated by the air-conditioner. And, at some point in time, he or she will have to dispose of it as well.
LO: 2-4. Explain the way market characteristics like market segmentation and product differentiation affect marketing strategy.
[Instructor PPT Slide 29]
Marketing management involves managing the marketing mix and deciding to whom the effort will be directed. The marketing mix is the combination of product, pricing, promotion, and distribution strategies used to position the brand in the marketplace. Target market is a term used to signify the particular market segment that a company will serve with a specific marketing mix.
Q: Give students a product, such as a car and list its characteristics and attributes. Based on these characteristics, students must identify possible target markets for the car and justify their answers.
A: Answers will vary. For example, if the car is a sports car, it will appeal more to a younger age group. If the car is built for durability and utility and can seat five or more people, it will appeal more to people who want a family car.
[Instructor PPT Slide 30]
Market Segmentation
Market segmentation is the separation of a market into groups based on the different demand curves associated with each group. There may be many or few market segments (groups of people with similar characteristics) in any given market. Exhibit 2.6 depicts the market segmentation process.
Elasticity is a term that is used to demonstrate the degree to which a consumer is sensitive to changes in some product characteristic. The example in the book suggested that there was more elasticity in the price variable versus the warranty variable when consumers purchase tablet computers. In many cases, segmentation is a consequence of consumers’ unique preferences.
Exhibit 2.7 depicts the market segmentation process. Backward sloping demand refers to the situation where a positive relationship exists between price and quantity. Product category demand explains the market segment for many products that features a positive price-quantity demand relationship. The book uses the example of two perfumes—Trés Cher sold by the gallon and Chanel No.5 sold by the ounce. Athletic shoe consumers may defy the normative and negative price-quantity relationship as they perceive name brand products as more valuable than bargain brands. This added value maybe attributed not just to the tangible characteristics of the shoes but also from the feelings that come along with knowledge of the brand. Consumers perceive the values of different alternatives differently resulting in segmentation.
[Instructor PPT Slides 31, 32, 33]
Product Differentiation
Product differentiation is a marketplace condition in which consumers do not view all competing products as identical to one another. An example of product differentiation is how many people see Internet retailers differently. Market segments can be identified based on the way different consumers view Internet shopping and their differing sensitivities to the characteristics of Internet transactions.
Q: Ask students to pick a product category and analyze the ways in which different brands differentiate their product offerings. How do brands differentiate their offerings for consumers within the same market segment (teenagers, Hispanics, professional women, etc.) and across different market segments?
A: Answers will vary. Encourage students to use the book as a guide for comprehending the concept of market segmentation and product differentiation. For example, a shampoo may be differentiated across different market segments as shampoo for children, women, or men. The shampoo can be further differentiated within the same market. For example, within the shampoo for women category, there may be shampoo for damaged hair, to fight hair fall, to prevent dandruff, etc.
LO: 2-5. Analyze consumer markets using elementary perceptual maps.
[Instructor PPT Slides 34, 35]
Analyzing Markets with Perceptual Maps
Product differentiation becomes the basis for product positioning. Product positioning refers to the way a product is perceived by a consumer and can be represented by the number and types of characteristics that consumers perceive.
Perceptual Maps
Perceptual maps are used to depict the positioning of competing products graphically. A blue ocean strategy seeks to position a firm so far away from competitors that, when successful, the firm creates an industry of its own and at least for a time, isolates itself from competitors.
[Instructor PPT Slides 36]
Illustrating a Perceptual Map
Exhibit 2.8 illustrates a perceptual map depicting consumer beliefs about tourist attractions in New Orleans, Louisiana.
The perceptual map allows several key observations. Some of which are:
· The competition among attractions viewed as highly authentic and relaxing is intense.
· Two segments, Culture Explorers and Knowledge Seekers, possess ideal points near the five segments.
After analyzing the perceptual map, the analyst can draw several conclusions:
· The highest demand positioning is in quadrant IV (highly authentic – relaxing).
· An opportunity may exist in quadrant I. Here, major competition for the adventure seeking market appears absent. The advantage of positioning a new business away from the competitors is that it takes fewer resources to get started because the major competitors are not likely to see the new offering as a threat.
Q: Have students choose an example of a product (i.e., car, makeup, household product) using Exhibit 2.8. Students can come up to the board or draw a perceptual map in their notebooks for a classroom discussion.
A: Answers will vary. For example, the perceptual map for a car may include dimensions like classic, distinctive, conservative, sporty, practical, or affordable. A consumer will then plot the cars he is considering along these dimensions and finally buy what he thinks is the best for him.
Using Consumer Behavior Theory in Marketing Strategy
Businesses are constantly using consumer behavior to make better strategic and operational marketing decisions. Exhibit 2.9 in the book displays a consumer behavior analysis checklist that is used by simply applying each question to the given situation.
LO: 2-6. Justify consumers’ lifetime value as an effective focus for long-term business success.
[Instructor PPT Slide 37, 38]
Value Today and Tomorrow—Customer Lifetime Value
Not all customers are equally valuable to a firm. Firms increasingly want to know the lifetime value associated with a customer or customer segment. Ultimately, companies need to delineate their most profitable segment and devise a way to communicate with them to increase profit.
Customer Lifetime Value (CLV) represents the approximate worth of a customer to a company in economic terms or the overall profitability of an individual consumer. Although there is no generally accepted formula for CLV, the basic premise is simple and can be represented as follows:
CLV = npv (sales – costs) + npv (equity)
where npv = net present value. Consider a customer who shops twice a week at IKEA. On average, this customer spends $200 per week, or $10,400 per year, at IKEA. If we assume a 5% operating margin, this customer yields a net $520 per year to IKEA.
| |
Q: The value the company receives from exchange may be slightly easier to explain than the value that a consumer receives. Explain.
A: The value the company receives from exchange may be slightly easier to explain than the value that a consumer receives. This is because a company has access to numerical data like sales figures and costs figures, which help in calculating a customer’s worth, whereas the only numerical data available to a customer is that of the money he or she spends on a product or service. It is not possible for the customer to assign a numerical value to the satisfaction or dissatisfaction he or she has gained from using the product or service.
There is no single blueprint for successful and effective positioning. Many times firms are tempted to adopt another firm’s successful marketing strategies. When Blackberry moved away from its positioning as the premier utilitarian value phone toward a hedonic value positioning as adopted by the Apple iPhone, its sales suffered.
[Instructor PPT Slide 39]
Video material for this chapter is starting on page 18 of the IM
END OF CHAPTER MATERIAL
REVIEW Questions
(*) Indicates material on prep cards.
1. Why do a consumer’s “favorite things” differ from one consumer to the next?
Answer: A host of factors influence our likes and dislikes for activities and goods. Why do preferences change? This is a complicated question and one that becomes only more complicated when other factors are considered besides obvious characteristics like demographics. What about psychological factors, cultural factors, and environmental characteristics? All of these can change a consumer’s favorites.
BUSPROG: Reflective Thinking
DISC: Customer
LO: 2-1
Topic: A-head: The Consumer Value Framework and Its Components
Bloom’s: Knowledge
Difficulty: Easy
2. How is the Customer Value Framework useful?
Answer: The CVF represents consumer behavior theory, which illustrates factors shaping consumption-related behaviors and ultimately determines the value associated with consumption. Thus, the CVF provides potential explanations for behavior.
BUSPROG: Reflective Thinking
DISC: Customer
LO: 2-1
Topic: A-head: The Consumer Value Framework and Its Components
Bloom’s: Knowledge
Difficulty: Easy
3. *What is the difference between an internal influence and an external influence?
Answer: Internal influences are things specific to an individual consumer. They include individual difference variables like demographics and lifestyle – but also the psychology of the consumer. External influences involve things outside the consumer like society and situational influences.
BUSPROG: Reflective Thinking
DISC: Customer
LO: 2-1
Topic: A-head: The Consumer Value Framework and Its Components
Bloom’s: Knowledge
Difficulty: Easy
4. List three examples of products you have consumed that provide high utilitarian value. List three examples of items that provide high hedonic value. Think of at least one product or brand that you would associate with both high utilitarian and hedonic value.
Answer: Typical items possessing utilitarian value include fast food, mass transit (subway, bus ride), and cleaning products. Typical items possessing hedonic value include attending a sports event or an amusement park or going shopping in an exciting venue.
BUSPROG: Analytic
DISC: Product
LO: 2-2
Topic: A-head: Value and Two Basic Types of Value
Bloom’s: Application
Difficulty: Moderate
5. *In what ways can using Twitter to tweet to others provide value? What type of value does tweeting provide?
Answer: Just look for students to use the concepts of utilitarian and hedonic value correctly in their examples. Such as, informing others where to meet – utilitarian value and participating in a humorous tweet - hedonic value.
BUSPROG: Analytic
DISC: Product
LO: 2-2
Topic: A-head: Value and Two Basic Types of Value
Bloom’s: Application
Difficulty: Moderate
6. What is the core concept of consumer behavior? Define it and use an example from your own life to illustrate its meaning.
Answer: Value is the core concept of consumer behavior. Value is a personal (subjective) assessment of the overall net worth obtained from an activity.
BUSPROG: Analytic
DISC: Customer
LO: 2-2
Topic: A-head: Value and Two Basic Types of Value
Bloom’s: Knowledge
Difficulty: Moderate
7. Define and distinguish marketing strategy, corporate strategy, and marketing tactics, and provide examples. You may consult the Internet for names of well-known marketing firms.
Answer: Corporate strategy deals with how the firm will be defined and sets general goals for the company. Marketing strategy deals more specifically with
the way in which a company goes about creating value. Marketing tactics are ways in which the strategy is actually implemented in the marketplace. Walmart has
a corporate strategy that emphasizes efficiency and low-cost operations. The marketing strategy is to provide consumers with a wide selection of goods that are placed on the market at low prices driven by low costs. Marketing management includes strategies such as low price guarantees and promotions that emphasize prices.
BUSPROG: Analytic
DISC: Strategy
LO: 2-3
Topic: A-head: Marketing Strategy and Consumer Value
Bloom’s: Evaluation
Difficulty: Moderate
8. What is the total value concept? Can you use the total value concept to explain why Callaway golf or Starbucks are such successful companies?
Answer: The total value concept is practiced when companies operate with the understanding that products provide value in multiple ways. Callaway Golf realizes that they aren’t really selling golf clubs so much as selling the advantage of a better golf experience. Therefore, experiences such as customer club fitting are integral in helping the consumer enjoy more value from their exchange with Callaway. Starbucks sells the coffee experience and not just the coffee. Thus, the atmosphere of the establishment, along with things such as Wi-Fi access, enhance the product and are important to deliver to customers even if it is a cost to Starbucks.
BUSPROG: Analytic
DISC: Product
LO: 2-3
Topic: A-head: Marketing Strategy and Consumer Value
Bloom’s: Application
Difficulty: Moderate
9. What is marketing myopia? How does it relate to the total value concept? Does it apply equally today as thirty years ago?
Answer: Marketing myopia results when firms define themselves based on the product they produce rather than the value they provide. Firms avoid myopia when they practice the total value concept. The question about it applying equally should generate interesting debate. An argument can be made in either direction – but the case is easier to make that it applies equally in the past, today and in the future.
BUSPROG: Analytic
DISC: Strategy
LO: 2-3
Topic: A-head: Marketing Strategy
Bloom’s: Analysis
Difficulty: Moderate
10. In what way are market segmentation and product differentiation similar? How are the two concepts different?
Answer: Both are marketplace conditions. Market segmentation is a marketplace characteristic determined by consumer preferences, whereas product differentiation is determined by perceptions of product alternatives.
BUSPROG: Reflective Thinking
DISC: Customer
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Analysis
Difficulty: Moderate
11. What is a perceptual map? What are the dimensions of a perceptual map?
Answer: A perceptual map is used to depict the positioning of competing products graphically. The dimensions of a perceptual map are simply the characteristics that help distinguish different brands or products from each other. For example, price is a commonly used dimension. Brands can be distinguished into low-priced, moderately priced, and high-priced alternatives.
BUSPROG: Reflective Thinking
DISC: Product
LO: 2-5
Topic: A-head: Analyzing Markets with Perceptual Maps
Bloom’s: Knowledge
Difficulty: Easy
12. What is meant by product positioning?
Answer: Positioning refers to the way in which a product is perceived by a consumer. Positioning can be represented by the amount and types of characteristics perceived by consumers and can be depicted on a perceptual map.
BUSPROG: Reflective Thinking
DISC: Product
LO: 2-5
Topic: A-head: Analyzing Markets with Perceptual Maps
Bloom’s: Knowledge
Difficulty: Easy
13. List at least three ways in which a firm can use a perceptual map to analyze a given consumer market.
Answer: When marketing analysts examine perceptual maps, they can identify competitors by seeing which brands are located in the same area on the perceptual map, identify opportunities for doing more business, and diagnose potential problems in the marketing mix. For instance, the analyst may realize that by changing the amount of some product characteristic, they can “move” closer to the ideal point of some segments and thus increase the competitiveness of their product. Alternatively, a new business may choose to position a product in a way that leaves it facing little direct competition. This can be done by “locating” the product as far away from other brands as possible.
BUSPROG: Analytic
DISC: Customer
LO: 2-5
Topic: A-head: Analyzing Markets with Perceptual Maps
Bloom’s: Analysis
Difficulty: Challenging
14. *How do marketing firms assess the value of a given customer?
Answer: Customer lifetime value (CLV) represents the approximate worth of a customer to a company in economic terms. Put another way, CLV is the overall, long-term profitability of an individual consumer.
BUSPROG: Reflective Thinking
DISC: Customer
LO: 2-6
Topic: A-head: Value Today and Tomorrow—Customer Lifetime Value
Bloom’s: Knowledge
Difficulty: Easy
15. How do you feel about companies who give special perks like discounts or preferred seating to their “best” customers? Is this treatment fair?
Answer: Even though this is mostly an opinion question, students should be using CLV concepts in their opinions. Do they believe it’s fair that loyal airline customers get upgrades to first class or gain access to exclusive airport lounges where they enjoy free drinks a comfortable and relaxing waiting environment?
BUSPROG: Ethics
DISC: Customer
LO: 2-6
Topic: A-head: Value Today and Tomorrow—Customer lifetime value
Bloom’s: Evaluation
Difficulty: Challenging
Interactive/Application Exercises
16. Interview three consumers from your town. Ask them how they believe the following companies provide value to consumers:
· Home Depot
· Apple
· Barnes and Noble
· John Deere
Answer: The main focus here is to foster a better understanding of how benefits lead to utilitarian and hedonic value.
BUSPROG: Analytic
DISC: Customer
LO: 2-2
Topic: A-head: Value and Two Basic Types of Value
Bloom’s: Application
Difficulty: Challenging
17. From the list of companies in Question 16, use Internet resources (such as the Wilson Business Resource Database, Hoovers, or Corporate sites) to learn about the corporate and marketing strategies of these companies. From your experience, does it seem that they truly understand the value that consumers desire from companies in their respective industries?
Answer: The main focus here is to help students develop a working knowledge of the total value concept.
BUSPROG: Analytic
DISC: Customer
LO: 2-3
Topic: A-head: Marketing Strategy and Consumer Value
Bloom’s: Application
Difficulty: Challenging
18. *List 10 fast food restaurants. Consider what a typical lunch would be like at each place. Use their websites if you need to review the menu. Rank them from least to most expensive. Then, using the same 10 restaurants, rank them from the least to the most healthy. Form “dimensions” with these rankings and then create a perceptual map illustrating the fast-food market formed by these 10 restaurants.
Answer: This exercise should result in a two-dimensional perceptual map with price as one dimension and healthiness as the other. Ask students to look for business opportunities within the perceptual map.
BUSPROG: Analytic
DISC: Strategy
LO: 2-5
Topic: A-head: Analyzing Markets with Perceptual Maps
Bloom’s: Application
Difficulty: Challenging
19. Interview several consumers, and ask them about their concerns when choosing a fast-food restaurant. Using these results, estimate the location of the ideal points for different fast-food markets on the perceptual map that you developed in Question 17. Then, prepare an executive summary (bulleted list) indicating potential opportunities that exist within this market. Also state which restaurants appear to have the best and the worst positioning, respectively.
Answer: Adding the consumer ideal points should allow students to develop a better understanding of where different fast-food businesses should “move” on the perceptual map. For example, if consumers desire lower prices, perhaps a restaurant would lower their prices to “move” closer to this segment.
BUSPROG: Analytic
DISC: Strategy
LO: 2-5
Topic: A-head: Analyzing Markets with Perceptual Maps
Bloom’s: Application
Difficulty: Challenging
20. Assume that someone wishing to start a band in your town has come to you for advice on positioning the band to be a commercial success. Using the Customer Value Framework and your knowledge of positioning, what factors do you think would ultimately explain how or if the band will be successful? Some general advice on successful bands can be found at www.epinions.com.
Answer: The main focus here is designing a product for an existing market segment. By changing certain characteristics (type of music played, media through which music is delivered, price), the band can move closer or further from market segments.
BUSPROG: Analytic
DISC: Strategy
LO: 2-1, 2 4, 2-5
Topic: A-head: Value and the CVF Components, Analyzing Markets with Perceptual Maps
Bloom’s: Synthesis
Difficulty: Challenging
21. Review the Customer Value Framework. At first glance, what aspects of the Customer Value Framework do you believe are most relevant in helping you understand that consumer behavior is useful to study so as to make you a better consumer?
Answer: Any discussion about this topic is acceptable as long as students use terminology from the CVF.
BUSPROG: Analytic
DISC: Customer
LO: 2-1
Topic: A-head: The Consumer Value Framework and Its Components
Bloom’s: Knowledge
Difficulty: Easy
GROUP ACTIVITY
* Assign each team member to closely examine a different component of the CVF (internal influences, external influences, etc.). Develop and act out a short skit in which each person explains to a store clerk why they are selecting to purchase a specific type of smartphone in terms only of the concepts that go along with the particular component of the CVF. In other words, is there a certain type of device that would be more likely to be selected based on external influences rather than internal? In the skit, each person must use the following words: value, hedonic value, utilitarian value, motivation, benefits, cost and time. Have some fun with this activity!
Answer: No specific answers exist. Rather, this is an opportunity for the students to elaborate on core concepts of the CVF.
CHAPTER VIDEO SYNOPSIS
To view the video case E-business at Evo, go to the CB companion website login.cengage.com to select this video.
When ski enthusiast Bryce Phillips launched Evo from his garage in 2001, the sports-equipment company consisted of an Internet connection, used ski gear, and a single employee. Bryce wanted to build a brand that was exciting, unique, that would last for a long time and that would cater to the demands of a particular niche. He opened a store in 2005. Today the Seattle-based ski-and-snowboard retailer is the premier online destination for closeout-model equipment and apparel. Consumers of ski and water sport products choose Evo for its online shopping experience, discounted brand name merchandise, and no-haggle customer service.
Evo gained online recognition through the brand’s efforts to connect with consumers. Bryce and Nathan Decker, who is in charge of e-commerce, differentiated their brand through content and the personalities of the employees who worked for Evo. Marketing strategies such as marketing plans for the holidays, free and expedited shipping, good value in terms of price and selection gave Evo online recognition and competitive advantage over other sites. Evo’s success can be credited to its strong focus on customer relationship management. Since customers place importance on the value they receive from the consumption process, Evo makes sure that customers receive both hedonic and utilitarian value from its brand.
Ask your students:
1. Evo Founder Bryce Phillips says that e-commerce is yet in its infancy and has not attained its fullest marketing potential. What is Phillips’ vision for improving e-commerce, and do you agree with his perspective? Explain.
Answer: Bryce Phillips says that e-commerce has focused too much on sales transactions and too little on creating loyal customers who connect emotionally with brands online. He explains that many online shoppers conduct quick searches on Google or at electronic storefronts but don’t get personally involved beyond that limited transaction. According to Phillips, that scenario doesn’t produce loyal customers. The Evo founder envisions an e-marketing strategy that combines hip content, social networking, interactive media, and blogs to engage and retain online customers for the long term.
BUSPROG: Analytic
DISC: Customer
LO: 2-1
Topic: A-head: The Consumer Value Framework and Its Components
Bloom’s: Knowledge
Difficulty: Easy
2. How does Evo offer value to its customers?
Answer: Evo offers its customers utilitarian value as well as hedonic value. Customers are given good value in terms of price, product range and selection, expedited shipping, free shipping, and good customer service. All these options increase the utilitarian value for customers. Customers also enjoy shopping online on Evo’s website as it is quite different from the other websites in terms of content on the site and personality of the employees with whom they interact. This provides customers with hedonic value.
BUSPROG: Analytic
DISC: Customer
LO: 2-2
Topic: A-head: Value and Two Basic Types of Value
Bloom’s: Comprehension
Difficulty: Moderate
3. Explain a significant competitive advantage Evo offers customers.
Answer: Evo gives its customers a better online shopping experience than its competitors. This is a significant competitive advantage that Evo has over its competitors. Their website is designed with great content and they ensure that they provide good customer service to all. Their strategies to enhance the online shopping experience of customers include the addition of a log-in feature to the site and a package builder tool. The package builder tool will provide relevant matches to skis that customers can’t find matches for. Thus customers who shop online will consider the buying process bringing them high hedonic value. Apart from this, Evo also provides free shipping for the items purchased online, a wide selection of items, good value in terms of price. This provides high utilitarian value for customers. Evo can thus segment its market by targeting customers who prefer shopping online. Evo also sells street wear apart from skis, snowboards, wakeboards, skateboards and so on. This product differentiation strategy gives it an upper-hand over its competitors.
BUSPROG: Analytic
DISC: Customer
LO: 2-3 | 2-4
Topic: A-head: Marketing Strategy and Consumer Value | Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Analysis
Difficulty: Challenging
PART 1 In-Text Case Answers
Case 1-1 IDEO: Consumer-Focused Innovation
1. Where does IDEO get inspiration for its product designs?
Answer: IDEO’s inspiration comes from the consumer. IDEO’s product development teams use the “deep dive” process which consists of putting themselves into the consumers’ shoes. The resulting experience is very revealing in terms of understanding consumers’ needs and what challenges they face in owning and using a product. Without direct personal experience, it is difficult to determine which features and benefits consumers will value most. Optimal product design must happen from the standpoint of the end-user.
BUSPROG: Reflective Thinking
DISC: Product
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Analysis
Difficulty: Challenging
2. What kind of value do you think successful products deliver to consumers?
Answer: Successful products need to both “do the job” and create a rewarding personal experience. A well-designed product means that people enjoy using it because it makes their lives easier, or makes them feel good about themselves. There are many dimensions of this “feel good” or hedonic, aspect of product design. A person may gain a sense of status from owning an expensive car, or may derive a sense of freedom or empowerment from owning a fast car. The car is not just a thing that gets you from here to there; it’s also who you feel driving it.
BUSPROG: Reflective Thinking
DISC: Product
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Analysis
Difficulty: Challenging
3. Why do you think having a product that just “works” doesn’t always translate to consumer acceptance?
Answer: Consumers have many needs. These include both physical and psychological needs. A product that works but is unpleasant in some way – hard to manipulate, unattractive to look at, or reminiscent of something unpleasant – will likely not catch on. In today’s society consumers have many choices; competitors abound. If one product just “does the job” (i.e., the corkscrew opens the wine bottle) while another is also easy to use and beautiful to look at, which one will the consumer most likely prefer?
BUSPROG: Reflective Thinking
DISC: Product
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Analysis
Difficulty: Challenging
4. What is the relative importance of the utilitarian versus the hedonic value of products as suggested by the work of IDEO?
Answer: IDEO’s success seems to come from the fact that they understand that utility alone isn’t enough, which is why their product development strategy requires total immersion in the consumer experience. When a new product is developed which solves a problem that no other product has solved before, then very likely the utilitarian function will prevail. For example, the first mass-produced automobile, the Model T Ford, came in one style and one color, with Henry Ford famously observing that consumers “can have a Model T in any color so long as it is black.” General Motors challenged the Model T by introducing cars in different styles and colors because there were people who sought variety, a hedonic function.
BUSPROG: Reflective Thinking
DISC: Product
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Analysis
Difficulty: Challenging
5. Do you agree with Albert Einstein’s observation that “genius is 1% inspiration and 99% perspiration?” Explain your answer.
Answer: Insights don’t come out of nowhere. People who succeed in solving problems usually have spent a good deal of time thinking about and looking at the problem. IDEO realizes that it’s not possible to solve consumers’ problems without understanding them first, which is why the process of total immersion or the ‘deep dive” is so important. Since individuals are motivated by a complex set of both utilitarian and hedonic needs, the product that will deliver the biggest bundle of needs satisfaction will be the most appealing to consumers.
BUSPROG: Reflective Thinking
DISC: Product
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Analysis
Difficulty: Challenging
Case 1-2 Born or Reinvented in the “Foreign” land?: Examining Brands and their Country–of-Origin
1. Examine further the “2011 Ranking of Top 100 Brands.” Classify these brands while considering the product category/sector and the country of origin. Can you detect a pattern? For example, do you see that strong players in the automotive sector emerge largely in Western Europe?
| Industry/Sector | Country/ Region | Brands |
| Automobiles | Western Europe (Germany, Italy) | BMW, Porsche (Germany) Ferrari (Italy) |
| Apparel |
BUSPROG: Reflective Thinking
DISC: International Perspective
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Analysis
Difficulty: Challenging
2. List all the brands that you have in your home. Then, research to find the country-of-origin of all the brands on your list. What do you find? How can marketing professionals make use of the information that you have analyzed?
This exercise will help students create an inventory of brands they interact with each day even without realizing it. Students might notice a pattern regarding the ownership of brands by companies and their corresponding country-of-origin.
| Brand | Company | Country/Region (of company headquarters) |
| Colgate Toothpaste | Procter and Gamble | USA |
| Oreo cookies | Kraft Foods | USA |
| Macaroni and Cheese | Kraft Foods | USA |
BUSPROG: Analytic
DISC: International Perspective
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Analysis
Difficulty: Challenging
3. Use the “2011 Ranking of Top 100 Brands” table to test the level of BoK of at least 5 people (excluding yourself). Examine and write a short reflection on how the extent of their knowledge varies with the lifestyles of these individuals.
This exercise will be an independent quiz that students “play” with other students as if it were a test your knowledge game.
BUSPROG: Reflective Thinking
DISC: Strategy
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Analysis
Difficulty: Challenging
4. Your textbook refers to the concept of perceptual maps. Construct a perceptual map using the following 2 dimensions: (i) product ethnicity (low vs. high), and (ii) level of BoK (low vs. high). Choose to represent at least 10 brands or product categories on the map. You may use the list of brands/categories available at the interbrand website to populate a list for the map. Use the information from c) above to identify average level of knowledge for product ethnicity and extent of BoK.
Suggested answer:
(Note that the perceptual map above is just one example of student response).
BUSPROG: Analytic
DISC: Product
LO: 2-5
Topic: A-head: Analyzing Markets with Perceptual Maps
Bloom’s: Analysis
Difficulty: Challenging
5. Using the information in question c) above, how do you think a company can enhance its understanding of market segmentation so as to efficiently target a marketing message to its potential and existing consumers?
This exercise will help students map consumer personality and habits with level of BoK. After the completion of c) above, students should attention to the personality traits or ownership status of their friends who got most answers correct. For example, if one student was able to answer questions relating to the location of luxury products companies such as Cartier, then it will be interesting to examine the lifestyle pattern of this student – is the student consuming such luxury products and therefore his or her enhanced knowledge over other students? Or, is it that this student has traveled across the globe? It could also be that this student is just interested in such information.
BUSPROG: Analytic
DISC: Customer
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Reflective Thinking
Difficulty: Challenging
Case 1-3 DemandTec®: Using Collaborative Analytics in a Fragmented Latin American Market
1. Predictive models used by Target®, identified changes in the purchase behavior of female shoppers, which indicated they might be pregnant, including increased spending on supplements important to neonatal development as well as unscented soaps and lotions. What other changes in purchase behavior might indicate that a female shopper is expecting?
Answers will vary. Students may list types of products an expectant mother might purchase including infrequently purchased items (crib, high chair, car seat) as well as volume purchases of newborn supplies (newborn diapers, baby bottles, formula). Students may also list products which indicate a lifestyle change.
BUSPROG: Reflective Thinking
DISC: Customer
LO: 2-1
Topic: A-head: The Consumer Value Framework and Its Components
Bloom’s: Application
Difficulty: Challenging
2. How does the use of collaborative analytics provide value to the consumer and help to facilitate exchanges between buyers and sellers?
The use of collaborative analytics helps marketers predict and better understand the needs of consumers. Predictive models assist marketers in the creation of a marketing mix focused on the needs of consumers, which creates value. Creating the right marketing mix for consumers facilitates the exchange process.
BUSPROG: Reflective Thinking
DISC: Customer
LO: 2-5
Topic: A-head: Analyzing Markets with Perceptual Maps
Bloom’s: Knowledge
Difficulty: Moderate
3. Based on collaborative analytics, Target® created targeted sales promotions for newly expectant mothers, such as mailing coupons to them for purchasing diapers or baby bottles. GPA, in Brazil, uses collaborative analytics to optimize price for their various customer segments. These are only two of the four marketing mix variables. Can you think of other ways that companies might use collaborative analytics to fine tune the other marketing mix variables?
Answers will vary. Students should demonstrate knowledge of the other two marketing mix variables, which are product and place/distribution. They should also show an understanding of how collaborative analytics work and how it might be used to adapt or adjust the other two variables.
BUSPROG: Reflective Thinking
DISC: Customer
LO: 2-5
Topic: A-head: The Consumer Value Framework and Its Components
Bloom’s: Synthesis
Difficulty: Challenging
4. GPA uses collaborative analytics to look at the shopping behavior of their customers. The next time you purchase food items (groceries), make a list of every item you purchased. Try to organize the items in a meaningful way. Imagine that a researcher was using ethnographic methods to analyze your grocery list. What insights might they have about you based on your purchases?
Answers will vary. At first, students might list “surface” responses about the types of products they purchased. However, as they start to think critically about the list they may make inferences about lifestyle based on the nature of the products (i.e. natural, healthy, unhealthy, vegan) or the way the products might be used (i.e. for entertaining). This question could be adapted to provide students with a list from an anonymous shopper, which would remove their knowledge of their own lifestyles and purchase behavior.
BUSPROG: Reflective Thinking
DISC: Customer
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Analysis
Difficulty: Challenging
5. Choose a local retailer that is not part of a national or regional chain. Assume they have decided to expand their efforts internationally and have therefore, enlisted the help of DemandTec®. How will the use of collaborative analytics help them to better understand consumers in this new market?
Answer: Answers will vary. Student answers should demonstrate an understanding of how collaborative analytics works, which would include an explanation about the vast amount of information processed to provide optimized solutions for consumers.
BUSPROG: Diversity
DISC: International Perspective
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Analysis
Difficulty: Challenging
Case 1-4 Sears: A Dying Company?
1. Describe how some of the trends mentioned in the textbook are affecting Sears.
Answer: Students may mention many things, but especially the changing economy. The downturn in the economy makes consumers more price conscious thereby putting Sears at a price disadvantage. Students may also mention changing demographics. Today’s families are increasingly dual income earners making them more time starved and more apt to appreciate the convenience offered by big box discounters. Also, Sears has been unable to connect with younger consumers who prefer different types of communication (i.e., Facebook and Twitter) than their parents or grandparents did. Finally, the growing popularity of online shopping represents significant technological change.
BUSPROG: Analytic
DISC: Strategy
LO: 2-4
Topic: A-head: Market Characteristics: Market Segments and Product Differentiation
Bloom’s: Evaluation
Difficulty: Challenging
2. Describe the external and situational influences that steer shoppers like Ashley away from Sears.
Answer: External factors would include both social and cultural aspects of consumer life. Today’s consumers have a litany of choices when it comes to shopping both brick-and-mortar, and online venues, so competition is a huge external factor. In addition, malls no longer have the same social draw that they did years ago. Consumers are visiting malls less frequently and unfortunately many Sears locations are mall-based. Growing popularity of discount retailers has led to a redefining of value. Consumers now want low prices or great customer service and exclusive brand names leaving little space for mid-priced retailers to compete.
Situational factors like time pressure, convenient locations, or money constraints are also valid influences. Consumers today value one-stop shopping because it alleviates time pressures, stores are conveniently located, and prices are very competitive.
BUSPROG: Reflective
DISC: Strategy
LO: 2-1
Topic: A-head: The Consumer Value Framework and Its Components
Bloom’s: Analysis
Difficulty: Challenging
3. Compare and contrast the total value concept for Sears and your favorite retailer.
Answer: Students may mention concepts of utilitarian values like product benefits and features as well as hedonic values like atmosphere, fun, and enjoyment. A student’s favorite retailer will probably provide value in terms of varied selection. The store carries the products I need and the brands I want. The products are high in quality and offered at a fair price. In addition, the stores products appeal to them in terms of tastes and design.
BUSPROG: Reflective Thinking
DISC: Product
LO: 2-3
Topic: A-head: Marketing Strategy and Consumer Value
Bloom’s: Evaluation
Difficulty: Moderate
4. What types of utilitarian and hedonic value does Sears presently provide to its customers?
Answer: Sears offers a moderate selection of a broad range of products. A customer could visit Sears to complete a number of tasks. A customer could search for and purchase quality tools or lawn and garden equipment or home appliances. A customer could purchase jewelry, clothing or bedding. These all represent utilitarian value and benefits presently offered by Sears. In terms of hedonic value, Sears does not represent a destination retailer, its location is likely not convenient, and its customer service is not excellent. Sears offers less hedonic value and benefit.
BUSPROG: Reflective Thinking
DISC: Product
LO: 2-2
Topic: A-head: Value and Two Basic Types of Value
Bloom’s: Knowledge
Difficulty: Moderate
5. Can Sears be revived? If so what should their new value equation be, if not explain.
Answer: Answers will vary but should show what factors they believe comprise value for most consumers. For example, students may suggest Sears refocus on the quality brands they already carry. In addition, a refresh of their stores in terms of location, design, and image are probably in order. Sears would also need to be more competitive in terms of price in order to attract more consumers. Finally, a stronger Internet presence would be needed.
BUSPROG: Reflective Thinking
DISC: Strategy
LO: 2-2
Topic: A-head: Value and Two Basic Types of Value
Bloom’s: Analysis
Difficulty: Moderate
PART 1 online Case Answers
Visit www.login.cengage.com to access the online case studies for CB.
Total Marketing Strategy: You won’t come back by chance.
1. What is the perceptual map for the gas station companies in France (Elan, Elf, Total, and the hypermarkets)? What would be the two dimensions you would use to best describe the portfolio of brands that the Total Company has in its market?
Answer: Students can use price (high vs. low) and quality/service (high vs. low) as the 2 dimensions to build the perceptual map. The important point is to clearly position the brand Elf, the brand Total as well as the hypermarkets. Total must be placed at the relatively high price and relatively high quality/service, while Elf and the hypermarkets must be on the low price/low quality/service quadrant.
Students should be able to describe the utilitarian and the hedonic value involved in the choice of a gas station.
Instructors may also encourage students to think about price elasticity in the market, as well as the price delta that can be demand by Total stores. Students might want to use the value function to think about the price point for gas at Total. The instructor could also use this to explain the importance of the coherence among all elements of the marketing mix in line with the company positioning.
2. Based in the perceptual map, propose a set of marketing actions beyond those that have been mentioned on the case that should be used by Total brand. Use the 4Ps framework to propose these actions and link each action to the CVF framework?
Answer: Students should use the 4Ps framework to propose the actions that would fit the positioning of Total. Instructors might want to reinforce the need of these actions using the customer value framework.
For example, a new payment system for the loyal customers that would recognize the consumers through their loyalty card using the RFID could be interesting. This system would recognize the customer when she arrives in the pump. When finished, the consumer would be billed at home after putting her digital print just aside the pump. This would allow saving significant amount of time and it would increase the utilitarian value for consumers.
Other propositions like this one should be highlighted by the students.
3. What are the things that may build utilitarian and hedonic value when consumers go for a gas station? Please, describe how an Elf store might increase value in consumers’ shopping experience.
Answer: The instructor may point out that the two positioning goals are delivering utilitarian and hedonic value. The most important issue for the students is to be able to rightly classify what are the elements that are related to both values.
Students should be instructed to brainstorm on whether or not they think Elf could build hedonic value and what kind of actions could be used to make that.
4. What are the marketing segments that each store is trying to cover? What are the fundamental benefits that consumers in each of those segments are trying to have while choosing a gas station? Do you think Total Company has done a good job identifying market segments and appealing to these segments? Are some segments left unserved by Total?
Answer: The case explicitly identifies the market segmentation. The basic segmentation used by the company was between the rural and urban areas. More relevant to the case study is the segmentation for the urban areas, based on the key benefits consumers are looking for. The first one is the price oriented consumers, who are looking for price and simplicity. The second one is the quality oriented consumers, who are looking for a relationship and services in the store. Students may comment on family oriented segments that just may use the hypermarket more often because they can buy more things with one stop. In addition, the student may mention some business to business possibilities which may fit better with Elan or Elf as opposed to the Total stores.
Not Buying Organic? Why not?
1. The Consumer Value Framework (Exhibit 2.2) lists consumer psychology, consumer personality, the social environment, and situation as internal and external influences on consumption. How have these influenced the consumer behavior mentioned in this case study? How does organic food provide utilitarian and hedonic value to Jill and her aunt?
Answer:
· Consumer Psychology explains how Jill and her aunt have learned beliefs and attitudes about the food categories of ‘organic’ and ‘not organic,’ this information is stored in memory and is later used as input into the consumer value equation, e.g., a perceived health benefit is contrasted to the higher cost of organic food.
· Consumer ‘Personality’ explains why LOHAS consumers pay more for organic than other consumers: LOHAS consumers place great value on being socially and environmentally responsible.
· The Social Environment explains how Jill interest in organics was probably fostered by her aunt.
· Situational Influences, such as whether or not Jill has to study for a test, explain her occasional purchase of organic cookies.
· Utilitarian value: organic food nourishes the body to maintain health.
· Hedonic value: Jill experiences organic cookies as an indulgent treat. Her aunt feels pride in being environmentally responsible.
[Note: protecting the environment might seem like a utilitarian benefit, but its not. Environmental protection is a societal benefit, not a benefit that the consumer herself noticeably experiences as a result of a given purchase; instead the consumer obtains the hedonic value of emotional satisfaction from protecting the environment]
2. What is Jill’s Value Equation (Exhibit 2.3) for regular carrots? How do changes in the value equation explain Jill’s purchase of mini-carrots over organic carrots? What is an example of your own consumption in which you gave up something to get something else?
Answer:
· Regular carrots represent a basic exchange: the consumer gets sustenance by giving up money.
· Jill has to pay more for mini-carrots, but that is fully offset by the convenience of pre-prepared carrots. Organic carrots also have a downside of added cost, but this is not fully offset by the perceived heath benefit. Jill presumably gets greater value from convenience than a health benefit because convenience provides immediate gratification while the health benefit is only a probabilistic future benefit.
· Consumers will pay more for packaging, quality, taste, nutritional benefits, brand name, etc.
3. How is product differentiation and/or relationship marketing used — by farmers, food companies, or retailers — to add value for consumers and thus increase repeat sales in the organic food industry?
Answer:
· Farmers could sell directly to consumers through farmer’s markets or CSAs (community supported agriculture) in which a consumer buys a share of everything a local farmer grows. This direct relationship between farmers and consumer allows consumers to know who grows their food and learn more about what they eat.
· Food companies and retailers provide value to the consumer through the practice of branding. Consumers will pay more for brands such as Stonyfield® and Whole Foods® because consumers trust brands to deliver high quality, truthfully-labeled merchandise. Thus, branding differentiates the offerings of these firms from ‘generic’ organics. Firms also differentiate themselves by building relationships with consumers through the use of e-newsletters, special offers for loyal customers, and other personal services. Stonyfield encourages consumers who lack local recycling options to mail yogurt cups back to the firm in return for coupons for future purchases. Whole Foods pays and trains employees well so the every touchpoint between a customer and the store is positive – staff gladly research answers to consumer questions, customers can place custom orders if they don’t find what they want, some stores provide live music at certain times, etc.
4 What kind of information could a researcher find out by engaging in a) quantitative research and b) interpretive research? Are you surprised that surveys reports are biased in that consumers say they are willing to pay a higher price for organic food they actually are?
Answer:
· Quantitative research can identify who does or doesn’t buy organic food. Thus marketers can describe market segments in terms of the consumer’s age, income, gender, lifestyle, and geographic location. Buyers and nonbuyers can be further differentiated in terms of where they like to shop, their beliefs, and their preferences for other product attributes like fair trade certification or recycled packaging. Quantitative research can also produce perceptual maps that show how consumers differentiate between suppliers/retailers of organic food.
- Interpretive research can help a marketer develop hypotheses about organic consumption that can be later tested with quantitative research. Moreover, interpretative research helps researchers understand subjective aspects of consumption that surveys can’t capture, especially when consumers lack insight into their own behavior (as is the case when consumer say they will pay more, but don’t). Thus, interpretive research can help explain Jill’s inconsistencies in behavior or why green products are more successful in some product categories than others. Interpretive research can help uncover deep seated consumer motives, emotional connections, symbolic meaning associated with the product, and how organic products fit into consumers’ lives. For example, one group of consumers might associate organics with purity and simplicity, and thus buy organics as a defense against modernity. Some parents might buy organic baby food regardless of price to lessen the insecurities they feel parenting a vulnerable infant.
Learning About CB: Is Your Coke OK?
1. Define marketing and consumer behavior. Provide your own definition (not the textbook definition) of consumer behavior. How can consumer behavior be applied to your life experiences?
Answer: Both definitions are found in chapter one. When defining marketing, students should describe the 4 P’s (Product, Price, Place, and Promotion) and the various names associated with the 4 P’s (controllable factors, marketing mix, 3 P’s and 1 D). For discussion purposes, the instructor may also explain to students how each of these items may be expanded. For example, Product (products, services, and ideas), Promotion (sales promotions, advertising, direct marketing, internet/interactive, personal selling, publicity/public relations, direct marketing).
Students should differentiate between “controllable” and “uncontrollable” factors.
Instructors may also encourage students to think about these two terms by instructing them to develop their own definitions. The instructor could then share these definitions with the entire class and highlight relevant points.
2. Compare/contrast human behavior and consumer behavior. Why do marketers study consumer behavior? What activities of Randy would you identify as being examples of consumer behavior and why?
Answer: Students should highlight that human behavior is more broadly defined to include all behavior, while consumer behavior is more narrowly defined in scope and its focus is on the consumer decision-making process. A parallel comparison of social psychology and consumer behavior may also be provided by the instructor.
Students should include the reasons why marketers study consumer behavior. For example, to better understand the actions of consumers in the marketplace.
Students should include several of Randy’s activities including his decision to: 1) attend college, 2) purchase his CB textbook, 3) enroll in a consumer behavior course, and 4) purchase a Coca-Cola.
3. What factors do you think contributed to the failure of New Coke and OK Soda? Do you think these products could be successfully re-marketed today?
Answer: Several factors may have led to the demise of New Coke and OK Soda. Plausible answers include; misinterpretation of market research, poor timing, the elimination of a renowned brand, and the competition.
The instructor may also point out to students that consumer behavior is dynamic and consumers often times react in unexpected ways. It may be helpful for instructors to explain to students the purpose of market research, and how, at times, even the best market research may still result in a failed product.
Students should be instructed to brainstorm on whether or not they think these products could be successfully re-introduced.
4. Keep a log of your daily activities for three days. List and describe those activities which you would categorize as consumer behavior. How might your activities be studied by a consumer behavior researcher?
Answer: This exercise should help demonstrate to students how their daily activities are related to the study of consumer behavior.
CVS Case
1. Visit the CVS/pharmacy website (http://www.cvs.com). What other benefits does CVS provide to ExtraCare customers? Provide examples of both utilitarian and hedonic value.
Answer: Utilitarian value is provided when an object or activity allows something else to happen. Examples may include cosmetics, hair care products, hygiene products, and so forth. For instance, soap allows your face to become clean. Hedonic value is the immediate gratification that comes from some activity. Furthermore, hedonic value is emotional and subjective. Examples may include chocolate, candy, and other impulse items sold at CVS.
2. Suppose a major competitor launches their own customer value card program. How might CVS respond? What recommendations would you give CVS to improve the ExtraCare program?
Answer: Students may choose any number of ways in which to increase “value” and should refer to the Value Equation in Exhibit 2.2. Students may recommend improvements to benefits or to “what you get” such as quality, convenience, emotions, prestige, and experience. They may also recommend a decrease in what customers “give” or sacrifice including time, money, and effort.
3. What are the advantages and disadvantages of not requiring personal information from customers for participating in the ExtraCare program?
Answer: The main benefit to CVS customers of not requiring personal information is privacy. The main disadvantage is that not having personal customer information limits the ability of CVS to improve the quality of their relationship with their customers. CVS can learn valuable information from customer purchases and consequently provide direct marketing (CRM) incentives, such as coupons, to build stronger relationships with customers.
4. What ethical issues would CVS need to consider before changing their ExtraCare policy to require an address and phone number?
Answer: Students should address privacy issues, such as identity theft and how to protect customer information in the ExtraCare database against those threats. Another specific ethical issue for CVS is concern over pharmacy transactions. Prescriptions reflect a customer’s medical history and therefore elicit an even higher expectation of privacy.
Vous Vois Vision Case
1. Using the basic consumption process displayed in Exhibit 1.1, illustrate how
a consumer “consumes” eyewear.
Answer: Consumers develop a need for eyewear. They are motivated to consume items that allow them to see more clearly. Without good eyesight, consumers have difficulty functioning or achieving success. However, eyewear is also considered a fashion item, and consumers like to feel good about the items they wear because it brings them self-esteem. These needs drive consumers to want glasses that allow them to see well and make them look fashionable and feel good about themselves. Perhaps this store offers just such eyewear.
Consumer wants will lead them to consider an exchange with this store if their offerings closely match consumer wants/desires.
The decision to participate in an exchange (or forgo one) has costs and benefits. Glasses cost money, and it takes time to purchase them and get fitted with the right prescription. In return, the consumer may obtain better vision and a fashionable appearance.
If the consumer indeed achieves better vision and feels good about wearing the glasses, he or she will react favorably to the purchase and use of the product. The consumer would then experience positive value in this case. If the product does not achieve these ends, then no positive value would be received.
2. Do you think Vous Vois Vision should adopt a product, production, or market orientation? Explain why.
Answer: A market orientation seems to be the most likely choice. The company operates in a highly competitive market. Furthermore, the company needs to be in close contact with its customer base to determine what designs are fashionable and also fit their particular customers well. If the industry was not competitive, then this choice of orientation would change.
3. Almost any business involves some ethical questions. In this case, discuss the ethics involved in potentially selling contact lenses or even designer glasses to a consumer who sees well enough not to actually “need” vision correction.
Answer: The question speaks to whether consumers who see well really need glasses. If glasses only addressed the desire for better sight, a case could be made that it is wrong to sell eyewear to people who already see well. However, glasses also satisfy other needs, such as the need to feel good about one’s appearance. To the extent that eyewear addresses this need, it may be difficult to make the case that it is unethical to sell eyewear to these consumers. Chances are that the frames may constitute the major portion of the cost, while the lenses for someone with good vision should cost less than lenses for people with poor vision.
4. Why might Blaire be interested in hiring a researcher to do some interpretive research about consumers and eyewear?
Answer: Interpretive research may help Blaire understand the inner motivations of eyewear consumers as well as the inner meanings associated with different types of eyewear. For example, what prompts a consumer to desire blue eyes (and thus the purchase of contacts that make eyes appear blue) or prescription sunglasses? This information may make Blaire more effective in identifying a target market and selling products to consumers within that market.
PART 1 VIDEO CASE
To view the Part 1 video case, go to the CB companion website login.cengage.com to select this video.
North Face Shopping Experience
Time: This video is between 5-7 minutes long.
Concepts Illustrated in the Video
· Value
· Consumption
· Consumer value framework
· Relationship marketing
· Relationship quality
· Internal influences
· External influences
Synopsis
Patrick, a medical school student enters a North Face store. Today, he’s shopping for hiking gear for an upcoming trip to the Mount Washington area located in the Northeast. He’s planning his trip during the warm summer month of June. Andy, the North Face employee shows Patrick a variety of jackets to fit his needs. The jackets all come with insulation and have lifetime warranties. Price is a concern for Patrick, so he asks Andy to show him alternatives to the original fleece version that sells for $150. Patrick finally settles on a jacket retailing for $79 and presents the store with a coupon for added savings. After Patrick’s hiking trip, he returned to the store to purchase the original jacket Andy recommended—the $150 jacket! Ironically, the temperature on the summit had reached a record low of 10 degrees Fahrenheit in June!
Teaching Objectives for the Video Case
· Introduce students to the consumption process
· Define consumer value and compare and contrast two key types of value
Critical Thinking Questions – Suggested Answers
1. Explain what is meant by relationship marketing. How many touchpoints were illustrated in the video?
Answer: Relationship marketing is the recognition that customer desires are recurring and that a single purchase act may be only one touchpoint in an ongoing series of interactions with a customer. In this video, we see two touchpoints between the customer and the store.
2. What is the value of a North Face jacket? Does the salesperson in the video clearly communicate the value of the jacket? Explain your answer.
Answer: The value of the North Face jacket is the lifetime warranty, high quality products and service one receives when shopping in the store. The salesperson clearly communicates the pros and cons of cheaper products not only by North Face but their competitors.
3. List the internal influences and external influences Patrick faced in purchasing the jacket.
Answer: Internal influences included Patrick’s lifestyle, motivation and personality. He’s a medical student and concerned about spending money.
External influences included the timing of the purchases, possibly Patrick’s social class, and the store’s atmospherics. However, students’ answers to this question may vary.
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