Lecture 1 – INTRODUCTION

Question 1

CONSUMPTION

Answer 1

process by which goods, services or ideas are transformed into value (value creation)

Question 2

CONSUMER BEHAVIOUR

Answer 2

totality of consumers’ decisions wrt acquisition of offerings

Question 3

Why does understanding consumers matter?

Answer 3

1. product orientation
2. competition orientation
3. demand orientation
4. customer centric orientation

Question 4

How to use consumers insights?

Answer 4

1. segmentation & targeting
2. optimise interaction with consumers
3. develop, package & promote products to maximise value

Question 5

who benefits from understanding consumers?

Answer 5

1. managers
2. policy makers
3. consumers

Question 6

Marketing emphasises utility/ value maximisation. How?

Answer 6

1. improves expectations
2. helps consumers getting value

Question 7

Factors that reduce uncertainty about value:

Answer 7

1. past consumption
2. brand familiarity
3. trustworthy recommendations

Question 8

EXPECTED VALUE of a product=

Answer 8

estimated benefit- estimated cost

Question 9

Why can’t consumers always calculate the expected value?

Answer 9

Bc they can’t always estimate benefits and costs due to:
1. cognitive limitations
2. time limitations

–> so they use shortcuts/ heuristics

Question 10

Daniel Kahneman’s system of thinking

Answer 10

• system 1: automatic, impulsive
• system 2: reflective

Question 11

To make more efficient decisions

Answer 11

use REFERENCES

Question 12

PROSPECT THEORY

Answer 12

People use their existing condition as a reference point to evaluate gains and losses

Question 13

Why is the value function inconsistent with standard “rational” economics

Answer 13

1. there are diminishing utilities for both gains and losses
2. loss aversion

Question 14

2 main observations on prospect theory

Answer 14

1. impact of changes diminishes (from 0 to 1 > than from 1 to 2)
2. loss aversion: the slope is steeper for losses