Project flashcards

Question 1

Q1: What is the primary focus of your project?

Answer 1

A1: The project analyzes how Temu’s aggressive low-price strategy influences consumer perceptions of quality among young consumers under 30.

Question 2

Q2: Why was the age group under 30 chosen for this study?

Answer 2

A2: Younger consumers are more price-sensitive, making them a relevant demographic for analyzing the effects of Temu’s low-price strategy.

Question 3

Q3: How does Temu keep its prices so low?

Answer 3

A3: Temu uses economies of scale, direct shipping from suppliers, and data analytics to minimize costs. They also leverage psychological pricing tactics like charm pricing.

Question 4

Q4: What is Temu’s main pricing objective?

Answer 4

A4: Temu prioritizes maximizing market share through affordability and operational efficiency.

Question 5

Q5: What pricing strategies does Temu employ?

Answer 5

A5: Temu uses promotional pricing (discounts, coupons), loss-leader pricing, and charm pricing to attract customers and build brand exposure.

Question 6

Q6: How does Maslow’s Hierarchy of Needs relate to Temu’s strategy?

Answer 6

A6: Temu’s pricing fulfills lower-level needs (physiological and safety) for price-sensitive consumers and higher-level needs (social belonging, esteem) for younger, trend-conscious individuals.

Question 7

Q7: What role does price-quality inference play in Temu’s challenges?

Answer 7

A7: The theory suggests that low prices often signal low quality. This perception makes some consumers skeptical of Temu’s product reliability and durability.

Question 8

Q8: How do reviews impact consumer perceptions of Temu?

Answer 8

A8: Positive reviews help mitigate doubts about product quality and reduce perceived risks, increasing trust in Temu’s offerings.

Question 9

Q9: Why might some consumers avoid Temu despite its low prices?

Answer 9

A9: Ethical concerns, such as accusations of poor working conditions and overconsumption, deter some consumers.

Question 10

Q10: How does Temu compete with local and global brands?

Answer 10

A10: Temu outcompetes by offering significantly lower prices and targeting price-sensitive consumers with tailored promotions and discounts.

Question 11

Q11: How has Temu’s pricing strategy affected the Danish market?

Answer 11

A11: Temu has become the second most-used webshop in Denmark, appealing to nearly 40% of consumers with at least one monthly purchase.

Question 12

Q12: What are the risks of Temu’s low-price strategy?

Answer 12

A12: Risks include the “low-quality trap,” where consumers associate low prices with poor quality, and the “fragile market share trap,” where loyalty is weak.

Question 13

Q13: What methods were used to analyze consumer perceptions?

Answer 13

A13: A survey targeting consumers under 30, combined with qualitative and theoretical analyses, provided insights into perceptions of price and quality.

Question 14

Q14: How did the survey minimize bias?

Answer 14

A14: The survey first addressed price and quality perceptions in general before introducing questions about Temu to avoid leading responses.

Question 15

Q15: What were the key findings from the empirical study?

Answer 15

A15: The study revealed that while Temu appeals to price-sensitive consumers, many associate its products with low quality and have ethical concerns.

Question 16

Q16: How do young consumers view Temu’s products compared to other low-cost firms?

Answer 16

A16: Temu faces greater skepticism, with 36% of respondents perceiving all its products as poor quality compared to 12.9% for low-cost firms in general.

Question 17

Q17: What motivates consumers to choose Temu?

Answer 17

A17: Price sensitivity, perceived value for money, and positive reviews are key motivators for Temu’s customers.

Question 18

Q18: How does the value-based pricing theory apply to Temu?

Answer 18

A18: Temu enhances perceived value through affordability, reviews, and trust-building measures like detailed product information and delivery transparency.

Question 20

Q19: What is the significance of low involvement in Temu’s product offerings?

Answer 20

A19: Low prices reduce perceived risks, making even high-involvement products like electronics feel like low-involvement, impulse purchases.

Question 21

Q20: What are the ethical concerns associated with Temu?

Answer 21

A20: Concerns include accusations of poor working conditions, environmental harm, and fostering a “disposable culture” through overconsumption.

Question 22

Q21: How can Temu address consumer skepticism about quality?

Answer 22

A21: By emphasizing transparency, leveraging reviews, collaborating with influencers, and improving trust-building strategies.

Question 23

Q22: How does Temu’s strategy create both opportunities and challenges?

Answer 23

A22: Opportunities lie in appealing to price-sensitive consumers, while challenges involve addressing quality perceptions and ethical concerns.

Question 24

Q23: Why is Temu considered a “low-cost firm”?

Answer 24

A23: Temu achieves low costs by avoiding production expenses, collaborating directly with manufacturers, and using streamlined distribution to minimize overhead.

Question 25

Q24: What is Temu’s approach to promotional pricing?

Answer 25

A24: Temu uses temporary discounts, special event pricing, and limited-time offers to attract customers and encourage quick purchases.

Question 26

Q25: How does Temu’s loss-leader strategy work?

Answer 26

A25: Temu sells some items below cost to attract customers, expecting them to buy additional, more profitable products during the same shopping session.

Question 27

Q26: How does Temu target young consumers’ social needs?

Answer 27

A26: By offering trendy and affordable products, Temu allows young consumers to participate in social trends and gain social approval without financial strain.

Question 28

Q27: Why are younger consumers more likely to shop on Temu?

Answer 28

A27: Younger consumers are more price-sensitive, value affordability, and often prioritize value for money over absolute quality.

Question 29

Q28: How does price sensitivity influence consumer behavior on Temu?

Answer 29

A28: Price-sensitive consumers are attracted to Temu’s aggressive discounts and low prices, perceiving it as a low-risk way to try new products.

Question 30

Q30: How does Temu handle pricing in different geographical markets?

Answer 30

A30: Temu adapts prices to regional conditions, such as shipping costs, taxes, and local purchasing power, ensuring competitive pricing globally.

Question 31

Q31: What is the impact of Temu’s pricing on market competition?

Answer 31

A31: Temu’s low prices push competitors to either lower their prices or focus on differentiating their products through quality or unique features.

Question 32

Q33: Why are influencer collaborations important for Temu?

Answer 32

A33: Influencers provide social proof by showcasing products in real-life situations, reducing skepticism and encouraging purchases among younger audiences.

Question 33

Q34: How do reviews mitigate the perception of low quality?

Answer 33

A34: Positive reviews with photos and videos reassure customers about the product’s functionality and value, making low prices seem less suspicious.

Question 34

Q35: What is the "throwaway culture" associated with Temu’s strategy?

Answer 34

A35: Temu’s low prices encourage frequent purchases and disposal of products, leading to overconsumption and waste.

Question 35

Q37: What are the pitfalls of aggressive low pricing?

Answer 35

A37: Pitfalls include the low-quality trap, fragile market share trap, and price wars with competitors, which can erode profits and brand equity.