U1 AOS3 - Strategies used by Businesses to Influence Consumer Behaviour

Question 1

Strategies used by business to influence consumer behaviour

Answer 1

• Marketing
• Nudges
• Multi-branding

Question 2

Marketing Mix (5 Ps of Marketing)

Answer 2

• Product - how does the quality/reliability/ease of the product compare to other products on the market?
• Price - is the product cheaper than competitors, or do special deals apply?
• People - are staff customer-oriented, efficient and positive?
• Place - does the location of the store suit the target market and is convenient?
• Promotion - how well does the brand advertise/inform the public of its product?

Question 3

Nudge

Answer 3

When consumers are gently steered or coaxed toward a wanted outcome, while still offering free choice

Question 4

Woolworths has recently been using terms such as ‘lower Autumn price’ and ‘lower Summer price’ on price tickets across items in store.

Despite the labels, on further investigation, the prices are often higher than what they were earlier in the year/last year.

This is an example of a business using:
A. Incentives
B. Disincentives
C. Nudges
D. Education campaigns
E. Bounded willpower

Answer 4

C - acts as a way of gently steering consumers to these products, while maintaining consumer choice/sovereignty

Question 5

On some products, Coles offers triple Flybuys points, which is their consumer loyalty program that allows consumers to exchange points for rewards. There is no change in price for these goods.

How does this influence consumer behaviour?

Answer 5

This is an example of a nudge, as consumers are gently pushed towards purchasing the products labelled with triple points, and consumers may be encouraged to buy more of the good than they usually would to take advantage of the short time promotion.

Consumers may believe on face value that this promotion is a valuable deal, and that their net benefit through the rewards will exceed the cost of the good compared to alternatives (although this is unlikely to actually be the case).

Question 6

Golden Nugget Bakery offers every 10th coffee free with a coffee card.

How does this influence consumer behaviour?

Answer 6

This is an example of a nudge, as consumers are gently pushed towards purchasing coffee at Golden Nugget. This card promotes loyalty to Golden Nugget and seeks to discourage buying coffee at other stores, given the tangible reward on the 10th cup.

Question 7

To steer consumers to buying their product and increasing sales, firms use marketing ideas drawn from:

A. the traditional viewpoint of consumer behaviour only
B. behavioural economics only
C. both the traditional and behavioural viewpoints of consumer behaviour

Answer 7

C

Question 8

Costco recently moved one of their retail warehouses from Docklands to Ardeer. This is an example of the businesses trying to improve their:

A. People
B. Product
C. Place
D. Price
E. Promotion

Answer 8

C

Question 9

Which of the following is not part of the marketing mix/5Ps of marketing?

A. Product
B. Profit
C. Price
D. Promotion
E. Place

Answer 9

B. Profit is not included (applies to all 5 categories).

People is missing

Question 10

True/False

Nudges do not apply under the traditional viewpoint of consumer behaviour.

Answer 10

True.

The traditional viewpoint assumes that consumers always make rational decisions; however, nudges exploit this assumption, given that nudges rely on framing or a lack of information, and may not actually be in the consumer’s self interest.

Question 11

Which of the following is not a nudge?

A. A service station offering 5¢ a litre off petrol if a consumer buys $5 worth of drinks or snacks inside the store
B. A supermarket placing confectionary closer to the front of the store
C. An online store using pop-ups to inform consumers of current sales/promotions
D. A car showroom reducing the drive-away price of some of their models by $2,500
E. A hardware store placing a quantity limit on the number of a product that a customer can buy

Answer 11

D

Question 12

Bega Group owns the milk brands Pura, Big M, Farmers Union, Dairy Farmers and Dare, in addition to their Bega brand.

How does this influence consumer behaviour?

Answer 12

This is an example of multi branding.

Bega is able to take up a greater proportion of shelf space, and is able to create an illusion of choice. By having more similar products on the market, Bega increases their chances of generating sales for a product which they own.

This also forces competitors out of the market and pushes consumers away from competitor’s products.

Question 13

Multibranding

Answer 13

Individual companies market their products under separate and distinct brand names → allows businesses to increase the number of products sold and makes it hard for new entrants in the market