BUAD 307 - Perner - Final Exam with
Complete Solutions
Customer Value - ANS-Value = benefits received/sacrifices made
People must see what the product does in order to see value, must be convenient and
cost effective
4 P's - product, place, price and promotion provide value
Considerations in determining suitability
for products and services for sale online: two factors - ANS-Value to bulk
Absolute Margins
Value to Bulk - ANS-Value to Bulk Ratio - value generally refers to market price, bulk
involves anything making it difficult and/or costly to ship - large volume, heavy, oddly
shaped, perishable, fragile or hazardous objects.
Absolute Margins - ANS-Absolute Margins - ability of consumer to evaluate quality and
fit through online description, convenience to the customer and willingness to pay for
this convenience, customer sensitivity to delayed delivery, extent of customization -
highly customized = customer doing more work, geographic dispersal of consumers,
extent of inventory value decline over time.
Profitability of online firms in markets where costs of selling online are lower - ANS-
profits will return to normal because more competitors will enter the market if someone
is making more money
Relative costs in selling online, in retail setting, and combined mode - ANS-some costs
are greater in brick and mortar stores, but some are greater online. less loss of
inventory value over time when selling online because avoiding over or under stocking.
selling online has bigger costs of returns, have to process a return
Collaborative filtering - ANS-ability to recommend additional products of possible
interest based on a customers overlap with purchases of another product level - items
bought together at higher rates than chance
Basic Internet Economics - ANS--online merchants generally have higher costs than
conventional retailers
-intermediaries usually add value through specialization of labor and consolidation of
tasks
,-customers do a lot of the work when they select, aggregate, bring for check-out, and
carry away their products - selling in store
Micro-payments - Problems, opportunities, and applications - ANS-considerable online
content and services could be made profitably available for a small charge. this is
usually only viable for electronic content, not for tangible goods (taco recipes for $.5)
however collecting small amounts of money can be costly (credit cards charge
percentages) and inconvenient
mobile technology, with active login, may be helpful for the higher end.
micro-payments are generally not for tangible goods because shipping is too expensive.
it is also not for paying over time because the cost of cutting a payment into very small
payments is too high given credit card transaction fees
Consumer involvement: Duration of Involvement, Temporary Involvement and Enduring
involvement - ANS-Duration of involvement - intent to which the consumer is willing to
make an effort to make the best decision, continuum of levels from very low to very
high, dependent on the importance of the product category
Temporary involvement - may temporarily become highly involved to make an
impending decision on an important purchase but may then stop following the category
if it is not of great interest
Enduring involvement - consumer has a lasting interest in the product category even if
he or she will not need to make a purchase in the near future (apple products)
Consumer decision making: compensatory vs. non-compensatory, Hybrid, Abandoned
Strategy - ANS-Compensatory - decision based on overall value of alternatives, good
attribute can outweigh bad ones
Non Compensatory - must meet at least one important criterion
Hybrid - combination of the two
Abandoned strategy - consumer finds initial criteria unrealistic and proceeds to less
desirable solution
Associative network of knowledge - ANS-In order for consumers to function effectively
in society and make the best use of information they have accumulated, it is important
that different ideas and pieces of knowledge be retrieved when they are more likely to
be useful.
Tippability - ANS-Likelihood that a consumer will buy a good or service after being
introduced to it.
, Segmentation: - ANS-dividing into sections to determine strategies/objectives
Segmentation: Bases - ANS-Geographic Segmentation - grouping based on where you
live
Demographic Segmentation - grouping based on characteristics such as age, gender,
income, and education.
Psychographic Segmentation - segmenting customers based on how they spend their
time and money, what activities they pursue, attitudes/opinions about the world in which
they live.
Segmentation: Variables, levels, and segments - ANS-Variables - involve descriptors
such as age, gender, income, price sensitivity, brand loyalty, geographic location, usage
rate, and involvement. In order to buy certain high priced items, a certain level of
income or salary is a necessary, but not sufficient condition.
Levels - involve the different categories within each variable. For example, for age,
levels might be 0-20, 21-30, 31-40, 41-55, 56-65, and 66+; for gender, male, female; for
geographic location, Northeast, Southeast, Midwest, Southwest, West or urban, rural.
Segments - are obtained by "crossing" the combinations—e.g., crossing gender (male,
female) with brand loyalty (high, medium, low) gives six combinations (e.g., male, high;
female, high; ... male, medium; ... female, low).
MOSAIC segments (general idea) - ANS--segmentation system
-classifies U.S. households into 71 unique types and 19 overreaching groups.
360-degree view of consumer's choices, preferences, and habits.
Dynamic Pricing - ANS-Refers to the process of charging different prices for goods or
services based on the type of consumer, time of the day, week, or even season, and
level of demand.
Targeting: Process and Approches - ANS-Selecting segments and specializing a market
plan
Process - Evaluating segments: identifiability, reachability, substantiality, profitability,
responsiveness
Approaches-
Undifferentiated - offering sold as a commodity
Differentiated - different offerings produced to several different segments
Concentrated - firm focuses on serving one segment
Micro-marketing - one to one, unique offerings to each customer
Complete Solutions
Customer Value - ANS-Value = benefits received/sacrifices made
People must see what the product does in order to see value, must be convenient and
cost effective
4 P's - product, place, price and promotion provide value
Considerations in determining suitability
for products and services for sale online: two factors - ANS-Value to bulk
Absolute Margins
Value to Bulk - ANS-Value to Bulk Ratio - value generally refers to market price, bulk
involves anything making it difficult and/or costly to ship - large volume, heavy, oddly
shaped, perishable, fragile or hazardous objects.
Absolute Margins - ANS-Absolute Margins - ability of consumer to evaluate quality and
fit through online description, convenience to the customer and willingness to pay for
this convenience, customer sensitivity to delayed delivery, extent of customization -
highly customized = customer doing more work, geographic dispersal of consumers,
extent of inventory value decline over time.
Profitability of online firms in markets where costs of selling online are lower - ANS-
profits will return to normal because more competitors will enter the market if someone
is making more money
Relative costs in selling online, in retail setting, and combined mode - ANS-some costs
are greater in brick and mortar stores, but some are greater online. less loss of
inventory value over time when selling online because avoiding over or under stocking.
selling online has bigger costs of returns, have to process a return
Collaborative filtering - ANS-ability to recommend additional products of possible
interest based on a customers overlap with purchases of another product level - items
bought together at higher rates than chance
Basic Internet Economics - ANS--online merchants generally have higher costs than
conventional retailers
-intermediaries usually add value through specialization of labor and consolidation of
tasks
,-customers do a lot of the work when they select, aggregate, bring for check-out, and
carry away their products - selling in store
Micro-payments - Problems, opportunities, and applications - ANS-considerable online
content and services could be made profitably available for a small charge. this is
usually only viable for electronic content, not for tangible goods (taco recipes for $.5)
however collecting small amounts of money can be costly (credit cards charge
percentages) and inconvenient
mobile technology, with active login, may be helpful for the higher end.
micro-payments are generally not for tangible goods because shipping is too expensive.
it is also not for paying over time because the cost of cutting a payment into very small
payments is too high given credit card transaction fees
Consumer involvement: Duration of Involvement, Temporary Involvement and Enduring
involvement - ANS-Duration of involvement - intent to which the consumer is willing to
make an effort to make the best decision, continuum of levels from very low to very
high, dependent on the importance of the product category
Temporary involvement - may temporarily become highly involved to make an
impending decision on an important purchase but may then stop following the category
if it is not of great interest
Enduring involvement - consumer has a lasting interest in the product category even if
he or she will not need to make a purchase in the near future (apple products)
Consumer decision making: compensatory vs. non-compensatory, Hybrid, Abandoned
Strategy - ANS-Compensatory - decision based on overall value of alternatives, good
attribute can outweigh bad ones
Non Compensatory - must meet at least one important criterion
Hybrid - combination of the two
Abandoned strategy - consumer finds initial criteria unrealistic and proceeds to less
desirable solution
Associative network of knowledge - ANS-In order for consumers to function effectively
in society and make the best use of information they have accumulated, it is important
that different ideas and pieces of knowledge be retrieved when they are more likely to
be useful.
Tippability - ANS-Likelihood that a consumer will buy a good or service after being
introduced to it.
, Segmentation: - ANS-dividing into sections to determine strategies/objectives
Segmentation: Bases - ANS-Geographic Segmentation - grouping based on where you
live
Demographic Segmentation - grouping based on characteristics such as age, gender,
income, and education.
Psychographic Segmentation - segmenting customers based on how they spend their
time and money, what activities they pursue, attitudes/opinions about the world in which
they live.
Segmentation: Variables, levels, and segments - ANS-Variables - involve descriptors
such as age, gender, income, price sensitivity, brand loyalty, geographic location, usage
rate, and involvement. In order to buy certain high priced items, a certain level of
income or salary is a necessary, but not sufficient condition.
Levels - involve the different categories within each variable. For example, for age,
levels might be 0-20, 21-30, 31-40, 41-55, 56-65, and 66+; for gender, male, female; for
geographic location, Northeast, Southeast, Midwest, Southwest, West or urban, rural.
Segments - are obtained by "crossing" the combinations—e.g., crossing gender (male,
female) with brand loyalty (high, medium, low) gives six combinations (e.g., male, high;
female, high; ... male, medium; ... female, low).
MOSAIC segments (general idea) - ANS--segmentation system
-classifies U.S. households into 71 unique types and 19 overreaching groups.
360-degree view of consumer's choices, preferences, and habits.
Dynamic Pricing - ANS-Refers to the process of charging different prices for goods or
services based on the type of consumer, time of the day, week, or even season, and
level of demand.
Targeting: Process and Approches - ANS-Selecting segments and specializing a market
plan
Process - Evaluating segments: identifiability, reachability, substantiality, profitability,
responsiveness
Approaches-
Undifferentiated - offering sold as a commodity
Differentiated - different offerings produced to several different segments
Concentrated - firm focuses on serving one segment
Micro-marketing - one to one, unique offerings to each customer
