Lecture 4 Consumer Behaviour 2

Question 1

What is the 5-step adoption process for new products?

Answer 1

1. Awareness: The consumer becomes aware of the product
2. Interest: consumer seeks out information about the product
3. Evaluation: consumer considers trying out the product
4. Trial: consumer trie the product on a small scale
5. Adoption: consumer makes use of the product regularly

Question 2

What is endowment effect, give an example and what are it’s implications for marketers?

Answer 2

endownment effect is people place higher valueon objects they own rather than identical objects they don’t own. Ex: 11% of mug owners traded for chocolate and 10% chocolate owners traded for mugs as you can see very little amount>

Implications for marketers: people value objects more after ownership

Question 3

What are strategies to overcome endowment?

Answer 3

• Free trials (apple music, amazon)
• try before you buy approach
• sensory exposure to products (smell, touch)

Question 4

What is loss aversion and give some examples?

Answer 4

Loss aversion: cost of losing something is greater than cost of gaining something of same value.

Case study: Kahneman and tversky: people choose policy that specified amount of lives said or people avoided form dying.

Examples: - Disney: overestinates time to create positive surprises
- Marketing tactics: framing promotions to highlight potential loses avoided

Question 5

What is olfaction in marketing, what it does and give some real-life examples?

Answer 5

olfaction (sense of smell): strongely linked ot emotions and memory:

What it does: - small affects mood without conscious awareness
- Flavour perception relies heavily on smell

Ex: - Cinnabon: places their oven at store entrances
- Abbrecombie and finshc: use their signature scent in stores

Question 6

What are the CRM measures and it’s trade-offs?

Answer 6

CRM measure:
- CPV (customer perceived value ): difference between benefits and costs of market offering
- CS (customer satisfaction): PP- CPV (perceived performance - customer perceived value)

Tradeoffs:
- setting CPV too low affects customer attraction
- setting CPV too high prevents customer retention/loyalty