CH-2 Value and the Consumer Behavior Value Framework – CB Consumer Behaviour : Book Guide

Chapter 2 Value and the Consumer Behavior Value Framework End of Chapter Material Discussion Questions (*) Indicates material on prep cards. 1. Why do a consumer’s “favorite things” differ from one consumer to the next? Answer: A host of factors influence our likes and dislikes for activities and goods. Why do preferences change? This is a complicated question and one that becomes only more complicated when other factors are considered besides obvious characteristics like demographics. What about psychological factors, cultural factors, and environmental characteristics? All of these can change a consumer’s favorites. 2. How is the Customer Value Framework useful? Answer: The CVF represents consumer behavior theory, which illustrates factors shaping consumption-related behaviors and ultimately determines the value associated with consumption. Thus, the CVF provides potential explanations for behavior. 3. *What is the difference between an internal influence and an external influence? Answer: Internal influences are things specific to an individual consumer. They include individual difference variables like demographics and lifestyle—but also the psychology of the consumer. External influences involve things outside the consumer like society and situational influences. 4. List three examples of products you have consumed that provide high utilitarian value. List three examples of items that provide high hedonic value. Think of at least one product or brand that you would associate with both high utilitarian and hedonic value. Answer: Typical items possessing utilitarian value include fast food, mass transit (subway, bus ride), and cleaning products. Typical items possessing hedonic value include attending a sports event or an amusement park or going shopping in an exciting venue. 5. *In what ways can using Twitter to tweet to others provide value? What type of value does tweeting provide? Answer: Just look for the correct usage of the concepts of utilitarian and hedonic value in the examples given by students. Such as, informing others where to meet—utilitarian value and participating in a humorous tweet—hedonic value. 6. What is the core concept of consumer behavior? Define it and use an example from your own life to illustrate its meaning. Answer: Value is the core concept of consumer behavior. Value is a personal (subjective) assessment of the overall net worth obtained from an activity. 7. Define and distinguish marketing strategy, corporate strategy, and marketing tactics, and provide examples. You may consult the Internet for names of well-known marketing firms. Answer: Corporate strategy deals with how the firm will be defined and sets general goals for the company. Marketing strategy deals more specifically with the way in which a company goes about creating value. Marketing tactics are ways in which the strategy is actually implemented in the marketplace. Walmart has a corporate strategy that emphasizes efficiency and low-cost operations. The marketing strategy is to provide consumers with a wide selection of goods that are placed on the market at low prices driven by low costs. Marketing management includes strategies such as low price guarantees and promotions that emphasize prices. 8. What is the total value concept? Can you use the total value concept to explain why Callaway golf or Starbucks are such successful companies? Answer: The total value concept is practiced when companies operate with the understanding that products provide value in multiple ways. Callaway Golf realizes that they aren’t really selling golf clubs so much as selling the advantage of a better golf experience. Therefore, experiences such as customer club fitting are integral in helping the consumer enjoy more value from their exchange with Callaway. Starbucks sells the coffee experience and not just the coffee. Thus, the atmosphere of the establishment, along with things such as Wi-Fi access, enhance the product and are important to deliver to customers even if it is a cost to Starbucks. 9. What is marketing myopia? How does it relate to the total value concept? Does it apply equally today as thirty years ago? Answer: Marketing myopia results when firms define themselves based on the product they produce rather than the value they provide. Firms avoid myopia when they practice the total value concept. The question about it applying equally should generate an interesting debate. An argument can be made in either direction, but the case is easier to make that it applies equally in the past, today, and in the future. 10. In what way are market segmentation and product differentiation similar? How are the two concepts different? Answer: Both are marketplace conditions. Market segmentation is a marketplace characteristic determined by consumer preferences, whereas product differentiation is determined by perceptions of product alternatives. 11. What is a perceptual map? What are the dimensions of a perceptual map? Answer: A perceptual map is used to depict the positioning of competing products graphically. The dimensions of a perceptual map are simply the characteristics that help distinguish different brands or products from each other. For example, price is a commonly used dimension. Brands can be distinguished into low-priced, moderately priced, and high-priced alternatives. 12. What is meant by product positioning? Answer: Positioning refers to the way in which a product is perceived by a consumer. Positioning can be represented by the number and types of characteristics perceived by consumers and can be depicted on a perceptual map. 13. List at least three ways in which a firm can use a perceptual map to analyze a given consumer market. Answer: When marketing analysts examine perceptual maps, they can identify competitors by seeing which brands are located in the same area on the perceptual map, identify opportunities for doing more business, and diagnose potential problems in the marketing mix. For instance, the analyst may realize that by changing the amount of some product characteristic, they can “move” closer to the ideal point of some segments and thus increase the competitiveness of their product. Alternatively, a new business may choose to position a product in a way that leaves it facing little direct competition. This can be done by “locating” the product as far away from other brands as possible. 14. *How do marketing firms assess the value of a given customer? Answer: Customer lifetime value (CLV) represents the approximate worth of a customer to a company in economic terms. Put another way, CLV is the overall, long-term profitability of an individual consumer. 15. How do you feel about companies who give special perks like discounts or preferred seating to their “best” customers? Is this treatment fair? Answer: Even though this is mostly an opinion question, students should be using CLV concepts in their opinions. Do they believe it’s fair that loyal airline customers get upgrades to first class or gain access to exclusive airport lounges where they enjoy free drinks a comfortable and relaxing waiting environment? Group Activity *Assign each team member to closely examine a different component of the CVF (internal influences, external influences, etc.). Develop and act out a short skit in which each person explains to a store clerk why they are selecting a specific type of smartphone to purchase, in terms only of the concepts that go along with the particular component of the CVF. In other words, is there a certain type of device that would be more likely to be selected based on external influences rather than internal? In the skit, each person must use the following words: value, hedonic value, utilitarian value, motivation, benefits, cost, and time. Have some fun with this activity! Answer: Title: Smartphone Selection Skit: Exploring the CVF Characters: 1. Store Clerk 2. Team Member 1 (Internal Influences) 3. Team Member 2 (External Influences) 4. Team Member 3 (Cost Influence) 5. Team Member 4 (Time Influence) Scene: The scene is set in an electronics store where the store clerk is assisting customers with selecting smartphones. Store Clerk: (Approaching Team Member 1) Welcome to our store! How can I assist you today? Team Member 1: (Internal Influences) Hi there! I'm on the hunt for a new smartphone. I've been researching extensively, and I'm looking for a device that aligns with my personal preferences and values. You see, I prioritize reliability and performance over flashy features. So, I'm seeking a smartphone that offers strong internal components and a seamless user experience. I'm mainly motivated by the utilitarian value it provides, ensuring it meets my practical needs efficiently. Store Clerk: Ah, I see! You're focused on the utilitarian value of the device. Let me show you some options that emphasize performance and reliability. Store Clerk: (Approaching Team Member 2) Good day! How can I assist you with your smartphone selection? Team Member 2: (External Influences) Hello! I'm in the market for a smartphone that reflects my social status and fits in with the latest trends. You see, I'm heavily influenced by external factors such as peer opinions and societal norms. It's important for me to be seen with a device that carries a certain brand image and aesthetic appeal, enhancing my hedonic value. Store Clerk: I understand! You're looking for a smartphone that complements your lifestyle and aligns with current trends. Let me show you some options that offer cutting-edge design and popular brand appeal. Store Clerk: (Approaching Team Member 3) Welcome! How can I assist you today? Team Member 3: (Cost Influence) Hi! I'm on a tight budget and looking for a smartphone that provides the best value for my money. Cost is a significant factor for me, so I'm seeking a device that offers a balance between affordability and features. I'm motivated to maximize the benefits I receive while minimizing the overall cost. Store Clerk: Absolutely! Let me guide you through our selection of budget-friendly smartphones that offer great value without compromising on performance. Store Clerk: (Approaching Team Member 4) Hello there! What brings you in today? Team Member 4: (Time Influence) Hi! I'm in need of a smartphone urgently, as I have a busy schedule and can't afford any delays. Time is of the essence for me, so I'm looking for a device that's readily available and easy to set up. I'm motivated to make a quick and efficient purchase to minimize any disruptions to my daily routine. Store Clerk: I completely understand! Let me show you our range of smartphones that are in stock and ready for immediate use, ensuring you can get back to your busy schedule without any hassle. Conclusion: Through this skit, each team member illustrated how their specific component of the Customer Value Framework (CVF) influences their smartphone selection process. From internal preferences to external influences, cost considerations, and time constraints, the skit highlighted the diverse factors that contribute to consumers' decision-making processes when choosing a smartphone.. Assignments 16. Interview three consumers from your town. Ask them how they believe the following companies provide value to consumers: Home Depot Apple Barnes and Noble John Deere Answer: The main focus here is to foster a better understanding of how benefits lead to utilitarian and hedonic value. I can provide you with hypothetical responses based on common perceptions and consumer experiences: Interview 1: Consumer: "For Home Depot, I believe they provide value by offering a wide range of home improvement products at competitive prices. Their stores are conveniently located, and the staff is knowledgeable and helpful, which makes my shopping experience pleasant and efficient." Interview 2: Consumer: "Apple is known for its innovative products and seamless integration across devices. They provide value by offering high-quality, user-friendly technology that simplifies tasks and enhances productivity. Additionally, their customer service is excellent, with warranties and support options that give me peace of mind." Interview 3: Consumer: "Barnes and Noble offers value to consumers through its vast selection of books, both in-store and online. They provide a welcoming environment for book lovers to browse and explore new titles. Their membership program offers discounts and special offers, which incentivizes me to shop there regularly." Interview 4: Consumer: "John Deere is renowned for its durable and reliable agricultural equipment. They provide value to farmers and landscapers by offering machinery that increases efficiency and productivity. Their reputation for quality and performance makes John Deere a trusted choice in the farming community." These responses reflect how consumers perceive the value provided by each of the mentioned companies based on their experiences and interactions with their products, services, and brand reputation. 17. From the list of companies in Question 16, use Internet resources (such as the Wilson Business Resource Database, Hoovers, or Corporate sites) to learn about the corporate and marketing strategies of these companies. From your experience, does it seem that they truly understand the value that consumers desire from companies in their respective industries? Answer: The main focus here is to help students develop a working knowledge of the total value concept. I can provide general insights into the corporate and marketing strategies of these companies based on publicly available information up to that time. 1. Home Depot: Home Depot's corporate strategy revolves around being a customer-centric home improvement retailer. They focus on offering a wide range of products, including building materials, tools, and appliances, at competitive prices. Home Depot emphasizes convenience by providing both physical stores and an online platform for customers to shop. They also prioritize customer service through knowledgeable staff and initiatives like DIY workshops and project guides. Overall, Home Depot seems to understand the value consumers desire in the home improvement industry by prioritizing accessibility, affordability, and expertise. 2. Apple: Apple's corporate strategy centers on innovation, premium products, and a seamless ecosystem. They focus on developing cutting-edge technology, including iPhones, iPads, Macs, and wearables, with a strong emphasis on design and user experience. Apple's marketing strategy highlights the aspirational lifestyle associated with its products, emphasizing creativity, productivity, and personal expression. They also offer services like iCloud, Apple Music, and the App Store to complement their hardware offerings. Apple's understanding of consumer value lies in their ability to deliver products that combine functionality, aesthetics, and status symbol. 3. Barnes and Noble: Barnes and Noble has faced challenges in the retail industry, particularly with the rise of e-commerce and digital books. Their corporate strategy involves diversifying their offerings beyond books to include educational toys, games, and café services to enhance the in-store experience. Barnes and Noble emphasizes community engagement through author events, book clubs, and partnerships with local organizations. However, they have struggled to adapt to changing consumer preferences and compete with online retailers like Amazon. While Barnes and Noble aims to provide value through their physical presence and curated selection, their future success may depend on their ability to innovate and integrate digital solutions. 4. John Deere: John Deere's corporate strategy focuses on innovation, quality, and customer support in the agricultural and construction equipment industry. They prioritize developing advanced machinery that enhances productivity, efficiency, and sustainability for farmers and contractors. John Deere offers a range of products and services, including tractors, combines, precision agriculture solutions, and financing options. They also provide support services such as maintenance, training, and data analysis to help customers maximize the value of their equipment. John Deere's understanding of consumer value lies in their commitment to reliability, performance, and long-term partnerships with their customers. Overall, these companies demonstrate varying degrees of understanding of the value consumers desire in their respective industries. While some, like Home Depot and Apple, have successfully aligned their corporate and marketing strategies with consumer needs and preferences, others, like Barnes and Noble, may need to further innovate and adapt to remain competitive in the evolving retail landscape. 18. *List 10 fast food restaurants. Consider what a typical lunch would be like at each place. Use their websites if you need to review the menu. Rank them from least to most expensive. Then, using the same ten restaurants, rank them from the least to the most healthy. Form “dimensions” with these rankings and then create a perceptual map illustrating the fast-food market formed by these ten restaurants. Answer: This exercise should result in a two-dimensional perceptual map with price as one dimension and healthiness as the other. Ask students to look for business opportunities within the perceptual map. Here are the 10 fast-food restaurants ranked from least to most expensive based on a typical lunch: 1. McDonald's: A typical lunch might include a Big Mac, fries, and a drink. 2. Taco Bell: A typical lunch might include a couple of tacos, a burrito, and a soft drink. 3. Burger King: A typical lunch might include a Whopper, fries, and a drink. 4. Wendy's: A typical lunch might include a Dave's Single burger, fries, and a drink. 5. KFC: A typical lunch might include a chicken sandwich, mashed potatoes, coleslaw, and a drink. 6. Subway: A typical lunch might include a 6-inch sub sandwich, chips, and a drink. 7. Domino's Pizza: A typical lunch might include a medium pizza and a drink. 8. Chick-fil-A: A typical lunch might include a chicken sandwich, waffle fries, and a drink. 9. Chipotle Mexican Grill: A typical lunch might include a burrito or bowl with rice, beans, meat, veggies, salsa, and guacamole. 10. Panera Bread: A typical lunch might include a sandwich or salad with a side and a drink. Now, let's rank them from least to most healthy based on factors like calorie count, fat content, and nutritional value: 1. Subway: Offers customizable sandwiches with plenty of vegetable options. 2. Chipotle Mexican Grill: Offers customizable bowls with various fresh ingredients. 3. Panera Bread: Provides healthier options like salads and soups. 4. Chick-fil-A: Offers grilled chicken options and some lighter sides. 5. Wendy's: Offers salads and grilled chicken sandwiches as alternatives. 6. McDonald's: Has salads and some grilled chicken options. 7. KFC: Offers grilled chicken options but mostly known for fried chicken. 8. Taco Bell: Limited healthier options, mostly known for fried and high-calorie items. 9. Burger King: Fewer healthy options, mainly known for burgers and fries. 10. Domino's Pizza: Offers mainly high-calorie, high-fat pizzas with limited healthier options. Now, let's create a perceptual map based on these rankings, with one axis representing price (least to most expensive) and the other axis representing healthiness (least to most healthy). We can place each restaurant on this map accordingly. Here's how it might look:  This perceptual map illustrates the positioning of each fast-food restaurant based on both price and healthiness. Subway and Chipotle are positioned as relatively healthier options, while Panera Bread offers healthier choices but at a higher price point. Meanwhile, McDonald's and Domino's Pizza are more affordable but less healthy options. 19. Interview several consumers, and ask them about their concerns when choosing a fast-food restaurant. Using these results, estimate the location of the ideal points for different fast-food markets on the perceptual map that you developed in Question 18. Then, prepare an executive summary (bulleted list) indicating potential opportunities that exist within this market. Also state which restaurants appear to have the best and the worst positioning, respectively. Answer: Adding the consumer ideal points should allow students to develop a better understanding of where different fast-food businesses should “move” on the perceptual map. For example, if consumers desire lower prices, perhaps a restaurant would lower their prices to “move” closer to this segment. I can provide a hypothetical summary based on common concerns consumers might have when choosing a fast-food restaurant: Executive Summary: Consumer Concerns When Choosing a Fast-Food Restaurant: 1. Price: Many consumers prioritize affordability when selecting a fast-food restaurant. 2. Healthiness: Increasingly, consumers are concerned about the nutritional value and healthiness of the food options. 3. Convenience: Quick service and accessible locations are important factors for on-the-go consumers. 4. Taste and Quality: The taste and overall quality of the food offerings greatly influence consumer decisions. 5. Variety: Consumers appreciate a diverse menu with options for different dietary preferences and restrictions. 6. Brand Reputation: Positive brand reputation and trustworthiness influence consumer perceptions and choices. 7. Environmental Sustainability: Some consumers are mindful of a restaurant's sustainability efforts and eco-friendly practices. Based on these concerns, the ideal points for different fast-food markets on the perceptual map might be: • Affordable and Convenient: Positioned towards the bottom left quadrant, emphasizing affordability and accessibility. Examples could include McDonald's and Taco Bell. • Healthier Options: Positioned towards the top left quadrant, focusing on offering healthier menu items. Examples could include Subway and Chipotle. • Premium and Health-Conscious: Positioned towards the top right quadrant, offering higher-priced yet healthier and higher-quality options. Examples could include Panera Bread and Chick-fil-A. Potential Opportunities within this Market: 1. Expanding Healthier Options: Fast-food restaurants could capitalize on the growing demand for healthier food options by expanding their menu offerings to include more salads, grilled items, and plant-based alternatives. 2. Value Meal Deals: Offering value meal deals or combo meals that provide a balance between affordability and quality could attract price-conscious consumers. 3. Mobile Ordering and Delivery: Investing in mobile ordering apps and delivery services can enhance convenience and cater to the preferences of busy consumers. 4. Sustainable Practices: Implementing sustainable practices such as using eco-friendly packaging, sourcing locally, and reducing food waste can appeal to environmentally-conscious consumers and enhance brand reputation. 5. Menu Innovation: Continuously innovating the menu with new and exciting offerings can attract customers seeking variety and novelty in their fast-food experience. Best and Worst Positioned Restaurants: • Best Positioned: Subway and Chipotle appear to have strong positioning, offering healthier options while still being relatively affordable. • Worst Positioned: Domino's Pizza and Burger King might have the weakest positioning, as they are positioned towards the bottom left quadrant, emphasizing affordability but lacking in perceived healthiness and quality compared to other options. 20. Assume that someone wishing to start a band in your town has come to you for advice on positioning the band to be a commercial success. Using the Customer Value Framework and your knowledge of positioning, what factors do you think would ultimately explain how or if the band will be successful? Some general advice on successful bands can be found at www.epinions.com. Answer: The main focus here is designing a product for an existing market segment. By changing certain characteristics (type of music played, media through which music is delivered, price), the band can move closer or further from market segments. To position a band for commercial success, it's essential to consider the Customer Value Framework, which focuses on creating and delivering value to customers. Here are some factors to consider: 1. Customer Needs and Preferences: Understand the target audience's needs, preferences, and demographics. What kind of music are they interested in? What are their preferences in terms of live performances, music style, and overall experience? Tailor the band's music and branding to appeal to this specific audience. 2. Product (Music) Quality: The quality of the music is paramount. Ensure that the band produces high-quality music that resonates with the target audience. This includes factors such as musical skill, songwriting ability, and production quality. Investing in professional recording and production can elevate the band's image and appeal to a wider audience. 3. Unique Selling Proposition (USP): Determine what sets the band apart from other local acts. Whether it's a unique sound, compelling lyrics, or a captivating stage presence, the band needs a clear USP that differentiates it in the competitive music market. This unique aspect should be highlighted in the band's branding and promotional materials. 4. Brand Image and Personality: Develop a strong brand identity that reflects the band's personality and resonates with the target audience. This includes aspects such as band name, logo, visual aesthetics, and overall image. Consistency in branding helps create a memorable and cohesive identity that fans can connect with. 5. Marketing and Promotion: Implement effective marketing strategies to promote the band and its music. Utilize various channels such as social media, live performances, music streaming platforms, and local media to reach potential fans. Engage with fans online and offline, building a community around the band's music and brand. 6. Live Performances and Fan Engagement: Deliver captivating live performances that leave a lasting impression on audiences. Interact with fans during and after performances, building a loyal fan base and fostering a sense of connection and loyalty. Utilize merchandise and fan experiences to further engage with supporters and generate additional revenue. By focusing on these factors and aligning the band's strategy with the principles of the Customer Value Framework, you can position the band for commercial success and maximize its potential in the competitive music industry. 21. Review the Customer Value Framework. At first glance, what aspects of the Customer Value Framework do you believe are most relevant in helping you understand that consumer behavior is useful to study so as to make you a better consumer? Answer: At first glance, several aspects of the Customer Value Framework stand out as particularly relevant in understanding why studying consumer behavior is essential for becoming a better consumer: 1. Value Perception: Understanding how consumers perceive value is crucial for making informed purchasing decisions. By studying consumer behavior, individuals can gain insights into what factors influence value perception, such as product quality, price, brand reputation, and personal preferences. This knowledge allows consumers to evaluate products and services more effectively and choose the options that offer the best value for their needs. 2. Customer Needs and Preferences: Consumer behavior research helps identify and understand the diverse needs and preferences of different consumer segments. By studying consumer behavior, individuals can gain insights into their own preferences as well as those of others, allowing them to make choices that align with their desires and priorities. This understanding enables consumers to select products and services that meet their specific needs and enhance their overall satisfaction. 3. Purchase Decision Making: Consumer behavior research sheds light on the factors that influence purchase decision-making processes, such as information search, evaluation of alternatives, and post-purchase evaluation. By studying these processes, individuals can become more aware of their own decision-making tendencies and biases, empowering them to make more rational and well-informed decisions. Additionally, understanding common decision-making patterns can help consumers anticipate their own behavior and avoid potential pitfalls or regrets. 4. Brand Loyalty and Satisfaction: Consumer behavior research explores the factors that drive brand loyalty and satisfaction, such as product performance, customer service, and emotional connections. By studying these factors, individuals can learn how to build stronger relationships with brands and make choices that lead to greater satisfaction and loyalty over time. This understanding enables consumers to make more strategic decisions about which brands to support and advocate for, ultimately maximizing their own happiness and well-being as consumers. Overall, the Customer Value Framework emphasizes the importance of understanding consumer behavior in order to make informed, value-driven decisions as a consumer. By studying how consumers perceive value, identify needs and preferences, make purchase decisions, and evaluate satisfaction and loyalty, individuals can enhance their consumer skills and make choices that align with their goals and values. Chapter Video Summary To view the video case E-business at Evo, go to the CB companion website login.cengage.com to select this video. E-Business at Evo When ski enthusiast Bryce Phillips launched Evo from his garage in 2001, the sports-equipment company consisted of an Internet connection, used ski gear, and a single employee. Today the Seattle-based ski-and-snowboard retailer is the premier online destination for closeout-model equipment and apparel. Consumers of ski and water sport products choose Evo for its online shopping experience, discounted brand name merchandise, and no-haggle customer service. The retailer’s website also delivers value through detailed product reviews and Evo-hosted travel opportunities. Ask your students: 1. According to Bryce, what is the heart and soul of Evo? Answer: Bryce Phillips says that in many ways the retail environment, the brick and mortar, the physical presence of the store are the heart and soul of the company. He says that whether it be a customer, or a sales manager they can come and experience what the brand is all about. 2. How does Evo offer value to its customers? Answer: Evo offers its customers utilitarian value as well as hedonic value. Customers are given good value in terms of price, product range and selection, expedited shipping, free shipping, and good customer service. All these options increase the utilitarian value for customers. Customers also enjoy shopping online on Evo’s website as it is quite different from the other websites in terms of content on the site and personality of the employees with whom they interact. This provides customers with hedonic value. 3. Explain a significant competitive advantage Evo offers customers. Answer: Evo gives its customers a better online shopping experience than its competitors. This is a significant competitive advantage that Evo has over its competitors. Their website is designed with great content and they ensure that they provide good customer service to all. Their strategies to enhance the online shopping experience of customers include the addition of a log-in feature to the site and a package builder tool. The package builder tool will provide relevant matches to skis that customers can’t find matches for. Thus customers who shop online will consider the buying process bringing them high hedonic value. Apart from this, Evo also provides free shipping for the items purchased online, a wide selection of items, good value in terms of price. This provides high utilitarian value for customers. Evo can thus segment its market by targeting customers who prefer shopping online. Evo also sells street wear apart from skis, snowboards, wakeboards, skateboards and so on. This product differentiation strategy gives it an upper hand over its competitors. Part 1 In-Text Case Answers Case 1-1 IDEO: Consumer-Focused Innovation 1. Where does IDEO get inspiration for its product designs? Answer: IDEO’s inspiration comes from the consumer. IDEO’s product development teams use the “deep dive” process which consists of putting themselves into the consumers’ shoes. The resulting experience is very revealing in terms of understanding consumers’ needs and what challenges they face in owning and using a product. Without direct personal experience, it is difficult to determine which features and benefits consumers will value most. Optimal product design must happen from the standpoint of the end user. 2. What kind of value do you think successful products deliver to consumers? Answer: Successful products need to both “do the job” and create a rewarding personal experience. A well-designed product means that people enjoy using it because it makes their lives easier, or makes them feel good about themselves. There are many dimensions of this “feel good” or hedonic aspect of product design. A person may gain a sense of status from owning an expensive car or may derive a sense of freedom or empowerment from owning a fast car. The car is not just a thing that gets you from here to there; it’s also who you feel driving it. 3. Why do you think having a product that just simply works doesn’t always translate to consumer acceptance? Answer: Consumers have many needs. These include both physical and psychological needs. A product that works but is unpleasant in some way—hard to manipulate, unattractive to look at, or reminiscent of something unpleasant—will likely not catch on. In today’s society consumers have many choices; competitors abound. If one product just “does the job” (i.e., the corkscrew opens the wine bottle) while another is also easy to use and beautiful to look at, which one will the consumer most likely prefer? 4. What is the relative importance of the utilitarian versus the hedonic value of products, as suggested by the work of IDEO? Answer: IDEO’s success seems to come from the fact that they understand that utility alone isn’t enough, which is why their product development strategy requires total immersion in the consumer experience. When a new product is developed which solves a problem that no other product has solved before, then very likely the utilitarian function will prevail. For example, the first mass-produced automobile, the Model T Ford, came in one style and one color, with Henry Ford famously observing that consumers “can have a Model T in any color so long as it is black.” General Motors challenged the Model T by introducing cars in different styles and colors because there were people who sought variety, a hedonic function. 5. Do you agree with Edison’s observation that “genius is 1% inspiration and 99% perspiration”? Explain your answer. Answer: Insights don’t come out of nowhere. People who succeed in solving problems usually have spent a good deal of time thinking about and looking at the problem. IDEO realizes that it’s not possible to solve consumers’ problems without understanding them first, which is why the process of total immersion or the ‘deep dive’ is so important. Since individuals are motivated by a complex set of both utilitarian and hedonic needs, the product that will deliver the biggest bundle of needs satisfaction will be the most appealing to consumers. Case 1-2 Born or Reinvented in the “Foreign” Land? Examining Brands and Their Country of Origin 1. Examine further the “2011 Ranking of Top 100 Brands.” Classify these brands while considering the product category or sector and the country of origin. Can you detect a pattern? For example, do you see that strong players in the automotive sector emerge largely in Western Europe?

2. List all the brands that you have in your home. Then research to find the country of origin of all the brands on your list. What do you find? How can marketing professionals make use of the information that you have analyzed? This exercise will help students create an inventory of brands they interact with each day even without realizing it. Students might notice a pattern regarding the ownership of brands by companies and their corresponding country of origin.

3. Use the “2011 Ranking of Top 100 Brands” table to test the level of BoK of at least 5 people (excluding yourself). Examine and write a short reflection on how the extent of their knowledge varies with their lifestyles. This exercise will be an independent quiz that students “play” with other students as if it were a test your knowledge game. 4. Your textbook refers to the concept of perceptual maps. Construct a perceptual map using the following two dimensions: (i) product ethnicity (low vs. high), and (ii) level of BoK (low vs. high). Choose at least ten brands or product categories on the map. You may use the list of brands/categories available at the Interbrand website to populate a list for the map. Use the information from question 3 above to identify the average level of knowledge of product ethnicity and extent of BoK. Suggested answer: (Note that the perceptual map above is just one example of student response). 5. Using the information in question 3, how do you think a company can enhance its understanding of market segmentation so as to efficiently target a marketing message to its potential and existing consumers? This exercise will help students map consumer personality and habits with level of BoK. After the completion of question 3 above, students should pay attention to the personality traits or ownership status of their friends who got most answers correct. For example, if one student was able to answer questions relating to the location of luxury products companies such as Cartier, then it will be interesting to examine the lifestyle pattern of this student—is the student consuming such luxury products and therefore his or her enhanced knowledge over other students? Or, is it that this student has traveled across the globe? It could also be that this student is just interested in such information. Case 1-3 DemandTec®: Using Collaborative Analytics in a Fragmented Latin American Market 1. Predictive models used by Target identified in female shoppers changes in their purchase behavior that indicated they might be pregnant, including increased spending on supplements important to neonatal development as well as unscented soaps and lotions. What other changes in purchase behavior might indicate that a female shopper is expecting? In addition to increased spending on supplements important to neonatal development and unscented soaps and lotions, several other changes in purchase behavior might indicate that a female shopper is expecting: 1. Maternity Clothing: An increase in purchases of maternity clothing, such as maternity tops, pants, dresses, and bras, suggests that the shopper is preparing for changes in her body shape during pregnancy. 2. Baby-related Items: Purchases of baby-related items such as diapers, wipes, bottles, pacifiers, and nursery furniture may indicate that the shopper is expecting or preparing for the arrival of a newborn. 3. Prenatal Classes or Books: Buying books or enrolling in prenatal classes suggests that the shopper is seeking information and education about pregnancy, childbirth, and parenting. 4. Home Pregnancy Tests: Purchase of home pregnancy tests or ovulation kits may indicate that the shopper is actively trying to conceive or suspects that she may be pregnant. 5. Healthy Food and Beverages: Increased purchases of nutritious food and beverages, including fruits, vegetables, whole grains, and low-fat dairy products, may indicate a shift towards a healthier diet to support pregnancy. 6. Home Improvement or Organization: Purchases related to home improvement or organization, such as baby-proofing products, storage containers for baby items, or nursery décor, suggest that the shopper is preparing her home for the arrival of a new baby. 7. Changes in Shopping Patterns: Changes in shopping patterns, such as shopping at different times of the day or week, purchasing larger quantities of items, or making more frequent trips to the store, may also indicate pregnancy as the shopper adjusts her routine to accommodate pregnancy-related needs. 2. How does the use of collaborative analytics provide value to the consumer and help to facilitate exchanges between buyers and sellers? The use of collaborative analytics helps marketers predict and better understand the needs of consumers. Predictive models assist marketers in the creation of a marketing mix focused on the needs of consumers, which creates value. Creating the right marketing mix for consumers facilitates the exchange process. 3. Based on collaborative analytics, Target created targeted sales promotions for newly expectant mothers, such as mailing coupons to them for purchasing diapers or baby bottles. GPA, in Brazil, uses collaborative analytics to optimize price for their various customer segments. These are only two of the four marketing mix variables. Can you think of other ways that companies might use collaborative analytics to fine-tune the other marketing mix variables? 1. Product Development and Customization: By analyzing collaborative data from customer feedback, reviews, and preferences, companies can gain insights into product features and attributes that resonate with different customer segments. This information can be used to develop new products or customize existing ones to better meet the needs and preferences of target customers. 2. Place (Distribution) Optimization: Collaborative analytics can help companies optimize their distribution channels by analyzing customer behavior and preferences related to shopping channels and delivery options. By understanding how customers prefer to shop and receive products, companies can optimize their distribution strategy to ensure efficient and convenient access to their products. 3. Promotion Personalization: In addition to targeted sales promotions, collaborative analytics can be used to personalize promotional efforts across various channels, such as email marketing, social media, and online advertising. By analyzing collaborative data on customer demographics, behavior, and preferences, companies can tailor promotional messages and offers to specific customer segments, increasing the effectiveness of their marketing campaigns. 4. Price Optimization: Collaborative analytics can also be applied to optimize pricing strategies by analyzing customer willingness to pay, price sensitivity, and competitive pricing dynamics. By leveraging collaborative data, companies can implement dynamic pricing models, segment-specific pricing strategies, and promotional pricing tactics to maximize revenue and profitability while remaining competitive in the market. 4. GPA uses collaborative analytics to look at the shopping behavior of their customers. The next time you purchase food items (groceries), make a list of every item you purchased. Try to organize the items in a meaningful way. Imagine that a researcher was using ethnographic methods to analyze your grocery list. What insights might they have about you based on your purchases? Produce: • Apples • Bananas • Spinach • Tomatoes • Bell peppers • Avocado Dairy and Eggs: • Milk • Eggs • Greek yogurt Meat and Proteins: • Chicken breasts • Ground beef • Tofu Grains and Carbohydrates: • Whole wheat bread • Brown rice • Quinoa • Pasta Canned and Packaged Goods: • Canned beans (black beans, chickpeas) • Canned tomatoes • Peanut butter • Granola bars Beverages: • Bottled water • Green tea • Orange juice Snacks: • Mixed nuts • Popcorn • Dark chocolate Household Items: • Toilet paper • Paper towels • Dish soap Based on these purchases, a researcher using ethnographic methods might glean the following insights about me: 1. Health-conscious Lifestyle: The emphasis on fresh produce, lean proteins, whole grains, and healthy snacks suggests that I prioritize health and nutrition in my diet. 2. Variety in Diet: The inclusion of a diverse range of food items, including both meat and plant-based proteins, suggests that I enjoy variety in my diet and may have dietary preferences or restrictions. 3. Conscious Consumption: The presence of environmentally-friendly options such as reusable water bottles and bulk purchases of certain items (e.g., nuts) suggests that I may be conscious of environmental sustainability and reducing waste. 4. Busy Lifestyle: The inclusion of convenience foods such as granola bars and bottled water suggests that I may have a busy lifestyle and prioritize convenience when it comes to food and beverage choices. 5. Focus on Home Maintenance: The purchase of household items like toilet paper, paper towels, and dish soap indicates that I also prioritize maintaining a clean and functional home environment. 5. Choose a local retailer that is not part of a national or regional chain. Assume they have decided to expand their efforts internationally and have therefore enlisted the help of DemandTec. How will the use of collaborative analytics help them to better understand consumers in this new market? Answer: 1. Market Segmentation: DemandTec's collaborative analytics can help Green Valley Organic Market segment the international market based on various factors such as demographics, psychographics, and purchase behavior. By identifying different consumer segments within the new market, the retailer can tailor their product offerings, pricing strategies, and marketing efforts to better meet the needs and preferences of each segment. 2. Demand Forecasting: DemandTec's analytics tools can analyze historical sales data and consumer trends to forecast demand for organic and locally sourced products in the new market. By accurately predicting demand, Green Valley Organic Market can optimize inventory management, minimize stockouts, and ensure sufficient stock levels to meet customer demand. 3. Price Optimization: Collaborative analytics can help Green Valley Organic Market optimize pricing strategies for their products in the international market. By analyzing competitor pricing, consumer price sensitivity, and demand elasticity, DemandTec can recommend pricing adjustments that maximize revenue and profitability while remaining competitive in the new market. 4. Assortment Planning: DemandTec's analytics can assist Green Valley Organic Market in optimizing their product assortment for the international market. By analyzing consumer preferences, purchasing patterns, and market trends, the retailer can determine which products to offer and which ones to prioritize based on local demand and preferences. 5. Promotion Effectiveness: Collaborative analytics can help Green Valley Organic Market measure the effectiveness of promotional efforts in the new market. By analyzing sales data before, during, and after promotions, DemandTec can evaluate the impact of various promotional activities such as discounts, coupons, and advertising campaigns, enabling the retailer to refine their promotional strategies for maximum impact. 6. Localized Insights: DemandTec's collaborative analytics can provide Green Valley Organic Market with localized insights into the cultural, social, and economic factors influencing consumer behavior in the new market. By understanding the unique characteristics of the international market, the retailer can adapt their business strategies and marketing initiatives to resonate with local consumers and drive success in the new market. Overall, the use of collaborative analytics provided by DemandTec will enable Green Valley Organic Market to gain valuable insights into consumer behavior, market dynamics, and competitive landscape in the international market, ultimately helping them make informed decisions and drive growth and success in their expansion efforts. Case 1-4 Sears: A Dying Company? 1. Describe how some of the trends mentioned in the textbook are affecting Sears. Answer: Among others they may mention about the changing economy. The downturn in the economy makes consumers more price conscious thereby putting Sears at a price disadvantage. Students may also mention changing demographics. Today’s families are increasingly dual income earners making them more time starved and more apt to appreciate the convenience offered by big box discounters. Also, Sears has been unable to connect with younger consumers who prefer different types of communication (i.e., Facebook and Twitter) than their parents or grandparents did. Finally, the growing popularity of online shopping represents significant technological change. 2. Describe the external and situational influences that steer shoppers like Ashley away from Sears. Answer: External factors would include both social and cultural aspects of consumer life. Today’s consumers have a litany of choices when it comes to shopping both brick-and-mortar, and online venues, so competition is a huge external factor. In addition, malls no longer have the same social draw that they did years ago. Consumers are visiting malls less frequently and unfortunately many Sears locations are mall based. Growing popularity of discount retailers has led to a redefining of value. Consumers now want low prices or great customer service and exclusive brand names leaving little space for mid-priced retailers to compete. Situational factors like time pressure, convenient locations, or money constraints are also valid influences. Consumers today value one-stop shopping because it alleviates time pressures, stores are conveniently located, and prices are very competitive. 3. Compare and contrast the total value concept for Sears and your favorite retailer. Answer: Total Value Concept for Sears: 1. Product Range and Variety: Sears historically offered a wide range of products, including appliances, tools, clothing, and home goods, catering to diverse consumer needs. 2. Price Competitiveness: Sears aimed to offer competitive pricing on its products, often leveraging its scale and purchasing power to negotiate favorable prices from suppliers. 3. Brand Reputation: Sears had built a strong brand reputation over the years, known for its reliability, quality, and extensive product selection. 4. Convenience: With a large network of brick-and-mortar stores, Sears offered convenience through multiple shopping channels, including in-store, online, and catalog sales. 5. Customer Service: Sears prioritized customer service, offering services such as product warranties, installation, and repairs to enhance the overall shopping experience. Total Value Concept for Green Haven Home Goods: 1. Specialized Product Range: Green Haven Home Goods specializes in environmentally friendly and sustainable home goods, offering a curated selection of products that align with eco-conscious consumer preferences. 2. Quality and Sustainability: Green Haven emphasizes the quality and sustainability of its products, sourcing materials responsibly and prioritizing eco-friendly manufacturing processes. 3. Community Engagement: Green Haven fosters a sense of community among its customers, partnering with local artisans and environmental organizations to promote sustainable living and support local communities. 4. Personalized Service: Green Haven provides personalized service and expert advice to customers, helping them make informed decisions about eco-friendly products and home improvement solutions. 5. Online Presence: In addition to its physical stores, Green Haven maintains a strong online presence, offering an intuitive e-commerce platform where customers can shop conveniently from anywhere. Comparison: • Both Sears and Green Haven Home Goods focus on delivering value to customers through a combination of product quality, selection, pricing, convenience, and customer service. • However, Sears adopts a more traditional approach, offering a broad range of products across various categories, while Green Haven Home Goods adopts a niche strategy, specializing in sustainable home goods and eco-friendly products. • Sears emphasizes its brand reputation and extensive network of physical stores, while Green Haven Home Goods prioritizes sustainability, community engagement, and personalized service. Contrast: • Sears struggled to adapt to changing consumer preferences and increased competition from e-commerce retailers, ultimately facing financial challenges and store closures. • In contrast, Green Haven Home Goods capitalizes on the growing demand for sustainable and eco-friendly products, positioning itself as a trusted brand in the sustainable living niche. Overall, while both retailers aim to deliver value to customers, their approaches differ based on their target market, product offerings, and strategic priorities. 4. What types of utilitarian and hedonic value does Sears presently provide to its customers? Answer: Sears offers a moderate selection of a broad range of products. A customer could visit Sears to complete a number of tasks. A customer could search for and purchase quality tools or lawn and garden equipment or home appliances. A customer could purchase jewelry, clothing, or bedding. All of these represent utilitarian value and benefits presently offered by Sears. In terms of hedonic value, Sears does not represent a destination retailer, its location is likely not convenient, and its customer service is not excellent. Sears offers less hedonic value and benefit. 5. Can Sears be revived? If so what should their new value equation be? If not explain. Answer: They should show what factors they believe comprise value for most consumers. For example, students may suggest Sears refocus on the quality brands they already carry. In addition, a refresh of their stores in terms of location, design, and image are probably in order. Sears would also need to be more competitive in terms of price in order to attract more consumers. Finally, a stronger Internet presence would be needed. 1. Focus on E-commerce and Omnichannel Experience: Recognizing the shift towards online shopping, Sears should prioritize its e-commerce platform and invest in creating a seamless omnichannel experience. This includes improving website functionality, enhancing mobile compatibility, and integrating online and offline shopping channels to provide customers with a convenient and integrated shopping experience. 2. Curated Product Selection: Instead of trying to be everything to everyone, Sears should focus on curating a selection of high-quality products that resonate with its target audience. This could include a mix of well-known brands and exclusive partnerships, with an emphasis on categories where Sears has historically performed well, such as appliances, tools, and home goods. 3. Value-Based Pricing Strategy: Sears should adopt a value-based pricing strategy, offering competitive prices on its products without sacrificing quality. This could involve leveraging its purchasing power to negotiate favorable pricing with suppliers and passing on savings to customers, thereby offering a compelling value proposition compared to competitors. 4. Customer-Centric Approach: Sears should prioritize customer satisfaction and loyalty by offering exceptional customer service, flexible return policies, and personalized shopping experiences. This includes investing in employee training to ensure knowledgeable and helpful staff who can assist customers both online and in-store. 5. Embrace Innovation and Technology: To stay competitive in today's retail landscape, Sears should embrace innovation and leverage technology to enhance the shopping experience. This could involve implementing advanced analytics and AI-driven solutions to better understand customer preferences, optimize inventory management, and personalize marketing efforts. 6. Sustainability and Corporate Responsibility: Sears should demonstrate a commitment to sustainability and corporate responsibility by sourcing ethically and environmentally responsible products, reducing waste and carbon footprint, and supporting social causes aligned with its values. This can help differentiate Sears in the market and appeal to socially conscious consumers. While reviving Sears would require significant investment, strategic planning, and execution, implementing a new value equation focused on e-commerce, curated product selection, value-based pricing, customer-centricity, innovation, and sustainability could help Sears regain relevance and compete effectively in the modern retail landscape. Part 1 Online Case Answers Visit www.login.cengage.com to access the online case studies for CB. Total Marketing Strategy: You won’t come back by chance. 1. What is the perceptual map for the gas station companies in France (Elan, Elf, Total, and the hypermarkets)? What would be the two dimensions you would use to best describe the portfolio of brands that the Total Company has in its market? Answer: The perceptual map for gas station companies in France typically positions brands based on two primary dimensions: convenience and price. Convenience refers to factors such as location, amenities, and ease of access, while price relates to the cost of fuel and associated services. The Total Company's portfolio of brands can be best described in terms of these dimensions. Total is positioned as a comprehensive service provider, offering convenience through its widespread network of stations and a variety of services beyond fuel sales. On the price dimension, Total might position some of its brands as premium options with added value services while others may be positioned as more affordable choices catering to budget-conscious consumers. Overall, Total aims to offer a balanced portfolio that caters to different consumer segments based on their preferences for convenience and price. 2. Based on the perceptual map, propose a set of marketing actions beyond those that have been mentioned, that should be used by Total brand. Use the 4Ps (price, product, place, promotion) framework to propose these actions and link each action to the CVF framework. Answer: • Price: Total can introduce loyalty programs or discount schemes for frequent customers to enhance price competitiveness. This action aligns with the "Cost Leadership" strategy in the CVF framework, focusing on efficiency and cost-effectiveness to attract price-sensitive consumers. • Product: Introduce environmentally friendly fuel options or expand the range of convenience products available at stations, catering to the growing demand for sustainable and convenient offerings. This action corresponds to the "Product Differentiation" strategy, aiming to distinguish Total's offerings from competitors through unique product features. • Place: Invest in expanding the network of stations in strategic locations, such as high-traffic areas or along major highways, to enhance convenience and accessibility for customers. This action supports the "Customer Intimacy" strategy, focusing on building strong relationships with customers by providing convenient access to services. • Promotion: Launch targeted advertising campaigns highlighting Total's commitment to customer satisfaction, emphasizing factors such as service quality, convenience, and value for money. This action reflects the "Market Development" strategy, aiming to attract new customers and increase market share through effective promotional efforts. 3. What are the things that may build utilitarian and hedonic value when consumers go to a gas station? Describe how an Elf store might increase value in consumers’ shopping experience. Answer: Utilitarian value at a gas station encompasses factors such as fuel quality, service speed, and convenience amenities like clean restrooms and well-stocked convenience stores. Hedonic value, on the other hand, relates to experiential aspects such as ambiance, customer service, and unique offerings that enhance the overall shopping experience. An Elf store could increase value in consumers' shopping experiences by focusing on both utilitarian and hedonic aspects. For utilitarian value, Elf stores could ensure high-quality fuel, efficient service, and convenient amenities like easy payment options and well-maintained facilities. Additionally, Elf stores could differentiate themselves by offering a unique and pleasant ambiance, friendly customer service, and exclusive products or promotions to create a memorable and enjoyable shopping experience for customers, thereby enhancing hedonic value. 4. What are the marketing segments that each store is trying to cover? What are the fundamental benefits that consumers in each of those segments are seeking when choosing a gas station? Do you think Total Company has done a good job identifying market segments and appealing to these segments? Are some segments left unserved by Total? Answer: The case explicitly identifies market segmentation. The basic segmentation used by the company was between the rural and urban areas. More relevant to the case study is the segmentation of the urban areas, based on the key benefits consumers are looking for. The first one is price oriented consumers, who are looking for price and simplicity. The second one is quality oriented consumers, who are looking for a relationship and services in the store. Students may comment on family oriented segments that just may use the hypermarket more often because they can buy more things with one stop. In addition, the student may mention some business to business possibilities which may fit better with Elan or Elf as opposed to the Total stores. Not Buying Organic? Why not? 1. The Consumer Value Framework (Exhibit 2.1) lists consumer psychology, consumer personality, the social environment, and situation as internal and external influences on consumption. How have these influenced the consumer behavior mentioned in this case study? How does organic food provide utilitarian and hedonic value to Jill and her aunt? Answer: Consumer Psychology explains how Jill and her aunt have learned beliefs and attitudes about the food categories of ‘organic’ and ‘not organic.’ This information is stored in memory and is later used as input into the consumer value equation, e.g., a perceived health benefit is contrasted to the higher cost of organic food. Consumer ‘Personality’ explains why LOHAS consumers pay more for organic than other consumers: LOHAS consumers place great value on being socially and environmentally responsible. The Social Environment explains how Jill interest in organics was probably fostered by her aunt. Situational Influences, such as whether or not Jill has to study for a test, explain her occasional purchase of organic cookies. Utilitarian value: organic food nourishes the body to maintain health. Hedonic value: Jill experiences organic cookies as an indulgent treat. Her aunt feels pride in being environmentally responsible. [Note: protecting the environment might seem like a utilitarian benefit, but it’s not. Environmental protection is a societal benefit, not a benefit that the consumer herself noticeably experiences as a result of a given purchase; instead the consumer obtains the hedonic value of emotional satisfaction from protecting the environment] 2. What is Jill’s Value Equation (Exhibit 2.2) for regular carrots? How do changes in the value equation explain Jill’s purchase of mini-carrots over organic carrots? What is an example of your own consumption in which you gave up something to get something else? Answer: Regular carrots represent a basic exchange—the consumer gets sustenance by giving up money. Jill has to pay more for mini-carrots, but that is fully offset by the convenience of pre-prepared carrots. Organic carrots also have a downside of added cost, but this is not fully offset by the perceived heath benefit. Jill presumably gets greater value from convenience than a health benefit because convenience provides immediate gratification while the health benefit is only a probabilistic future benefit. Consumers will pay more for packaging, quality, taste, nutritional benefits, brand name, etc. 3. How is product differentiation and/or relationship marketing used—by farmers, food companies, or retailers —to add value for consumers and thus increase repeat sales in the organic food industry? Answer: Farmers could sell directly to consumers through farmer’s markets or CSAs (community supported agriculture) in which a consumer buys a share of everything a local farmer grows. This direct relationship between farmers and consumer allows consumers to know who grows their food and learn more about what they eat. Food companies and retailers provide value to the consumer through the practice of branding. Consumers will pay more for brands such as Stonyfield® and Whole Foods® because consumers trust brands to deliver high quality, truthfully-labeled merchandise. Thus, branding differentiates the offerings of these firms from ‘generic’ organics. Firms also differentiate themselves by building relationships with consumers through the use of e-newsletters, special offers for loyal customers, and other personal services. Stonyfield encourages consumers who lack local recycling options to mail yogurt cups back to the firm in return for coupons for future purchases. Whole Foods pays and trains employees well so the every touchpoint between a customer and the store is positive – staff gladly research answers to consumer questions, customers can place custom orders if they don’t find what they want, some stores provide live music at certain times, etc. 4 What kind of information could a researcher find out by engaging in a) quantitative research and b) interpretive research? Are you surprised that surveys reports are biased in that consumers say they are willing to pay a higher price for organic food than they actually are? Answer: Quantitative research can identify who does or doesn’t buy organic food. Thus marketers can describe market segments in terms of the consumer’s age, income, gender, lifestyle, and geographic location. Buyers and nonbuyers can be further differentiated in terms of where they like to shop, their beliefs, and their preferences for other product attributes like fair trade certification or recycled packaging. Quantitative research can also produce perceptual maps that show how consumers differentiate between suppliers/retailers of organic food. Interpretive research can help a marketer develop hypotheses about organic consumption that can be later tested with quantitative research. Moreover, interpretative research helps researchers understand subjective aspects of consumption that surveys can’t capture, especially when consumers lack insight into their own behavior (as is the case when consumer say they will pay more, but don’t). Thus, interpretive research can help explain Jill’s inconsistencies in behavior or why green products are more successful in some product categories than others. Interpretive research can help uncover deep seated consumer motives, emotional connections, symbolic meaning associated with the product, and how organic products fit into consumers’ lives. For example, one group of consumers might associate organics with purity and simplicity, and thus buy organics as a defense against modernity. Some parents might buy organic baby food regardless of price to lessen the insecurities they feel parenting a vulnerable infant. Learning About CB: Is Your Coke OK? 1. Define marketing and consumer behavior. Provide your own definition (not the textbook definition) of consumer behavior. How can consumer behavior be applied to your life experiences? Answer: Both definitions are found in chapter one. When defining marketing, students should describe the 4 P’s (Product, Price, Place, and Promotion) and the various names associated with the 4 P’s (controllable factors, marketing mix, 3 P’s and 1 D). For discussion purposes, the instructor may also explain to students how each of these items may be expanded. For example, Product (products, services, and ideas), Promotion (sales promotions, advertising, direct marketing, internet/interactive, personal selling, publicity/public relations, direct marketing). Students should differentiate between “controllable” and “uncontrollable” factors. Instructors may also encourage students to think about these two terms by instructing them to develop their own definitions. The instructor could then share these definitions with the entire class and highlight relevant points. 2. Compare/contrast human behavior and consumer behavior. Why do marketers study consumer behavior? What activities of Randy’s would you identify as being examples of consumer behavior and why? Answer: Human behavior and consumer behavior share similarities but also have distinct differences: 1. Scope: • Human behavior encompasses all actions, reactions, and interactions of individuals, including those not related to consumption. • Consumer behavior specifically focuses on the actions, decisions, and patterns of individuals or groups related to the acquisition, use, and disposal of goods, services, experiences, or ideas. 2. Motivation: • Both human behavior and consumer behavior are driven by various internal and external factors such as needs, desires, emotions, social influences, cultural norms, and personal experiences. • However, consumer behavior often involves the additional motivation of obtaining satisfaction or utility from products or services. 3. Context: • Human behavior occurs in a wide range of contexts, including personal, social, work, and recreational settings. • Consumer behavior typically occurs within the context of market exchanges, where individuals interact with marketers, sellers, and other consumers to acquire desired goods or services. Marketers study consumer behavior for several reasons: 1. Understanding Customer Needs: By analyzing consumer behavior, marketers gain insights into what drives customers' desires, preferences, and purchase decisions. This understanding helps in designing products and marketing strategies that meet or exceed customer expectations. 2. Targeting and Positioning: Knowledge of consumer behavior enables marketers to identify specific market segments and target their marketing efforts effectively. By understanding consumer perceptions and preferences, marketers can position their products or brands in a way that resonates with their target audience. 3. Product Development and Innovation: Consumer behavior research provides valuable input for product development and innovation. By identifying unmet needs or areas for improvement, marketers can create new products or enhance existing ones to better align with consumer preferences. 4. Predicting Market Trends: Studying consumer behavior helps marketers anticipate shifts in market demand, emerging trends, and changes in consumer preferences. This foresight allows companies to adapt their strategies proactively and stay ahead of competitors. Activities of Randy that exemplify consumer behavior include: 1. Shopping for a new smartphone: Randy's decision to research different smartphone models, compare features and prices, and ultimately make a purchase reflects typical consumer behavior. His actions are driven by the need for a product that meets his specific requirements and offers value for money. 2. Reading online reviews before booking a vacation: Before booking a vacation, Randy reads reviews from other travelers to gather information about destinations, accommodations, and activities. This behavior demonstrates how consumers seek out and rely on information from other consumers to inform their purchase decisions. 3. Joining a loyalty program at his favorite coffee shop: By joining the loyalty program, Randy exhibits consumer behavior aimed at maximizing value and rewards from his regular purchases. Loyalty programs are designed to incentivize repeat purchases and foster brand loyalty among consumers. In summary, consumer behavior encompasses the actions, decisions, and patterns of individuals or groups related to the acquisition, use, and disposal of goods, services, experiences, or ideas. Marketers study consumer behavior to understand customer needs, target their marketing efforts effectively, drive product development and innovation, and predict market trends. Randy's activities such as shopping for a smartphone, reading online reviews before booking a vacation, and joining a loyalty program illustrate key aspects of consumer behavior. 3. What factors do you think contributed to the failure of New Coke and OK Soda? Do you think these products could be successfully re-marketed today? Answer: Several factors contributed to the failure of New Coke and OK Soda: 1. Misjudgment of Consumer Preferences: New Coke was introduced in 1985 after Coca-Cola conducted extensive taste tests that suggested consumers preferred its sweeter taste over the original formula. However, the company underestimated the emotional attachment consumers had to the traditional flavor of Coca-Cola, leading to a backlash when the original formula was replaced. 2. Brand Loyalty and Identity: Coca-Cola had built a strong brand identity around its original formula, which had been in existence for over a century. The sudden replacement of this iconic product with New Coke disrupted consumers' sense of familiarity and loyalty, leading to widespread dissatisfaction. 3. Lack of Differentiation: OK Soda, launched by The Coca-Cola Company in 1993, aimed to target Generation X with its unconventional marketing campaign and packaging. However, the product failed to differentiate itself sufficiently from existing soda offerings, resulting in consumer confusion and limited appeal. 4. Marketing and Messaging: Both New Coke and OK Soda faced challenges in effectively communicating their value propositions to consumers. New Coke's marketing campaign failed to resonate with consumers who preferred the original formula, while OK Soda's marketing efforts were perceived as too cynical and disconnected from its target audience. 5. Market Saturation and Competition: The soda market was already saturated with numerous options from established brands like Coca-Cola and Pepsi. Introducing new products in such a competitive landscape required careful positioning and differentiation, which New Coke and OK Soda struggled to achieve. Regarding re-marketing these products today, it's possible but challenging. With the right approach, rebranding and repositioning could potentially breathe new life into these failed products. Here are some considerations: 1. Nostalgia Marketing: Leveraging nostalgia could be a powerful strategy for reintroducing New Coke. Highlighting its brief but significant place in Coca-Cola's history could appeal to consumers' sense of nostalgia and curiosity. 2. Targeted Marketing: OK Soda's original attempt to target Generation X could be revisited with updated messaging and branding that resonates with today's younger generations. Understanding the unique preferences and values of the target demographic is crucial for successful re-marketing. 3. Innovation and Differentiation: To succeed in today's market, both New Coke and OK Soda would need to offer something truly unique and different from existing options. This could involve innovative flavor profiles, healthier ingredients, or sustainable packaging to appeal to modern consumer preferences. 4. Authenticity and Transparency: Building trust and authenticity through transparent communication about the product's history, ingredients, and value proposition is essential. Addressing past failures openly and demonstrating a commitment to listening to consumer feedback can help rebuild trust with skeptical consumers. 5. Social Media and Influencer Marketing: Leveraging social media platforms and influencer partnerships can help generate buzz and engage with target audiences in a more personalized and authentic way. While re-marketing New Coke and OK Soda presents significant challenges, with careful planning, creative marketing strategies, and a deep understanding of consumer preferences, it's possible to revitalize these failed products and capture the interest of today's consumers.. 4. Keep a log of your daily activities for three days. List and describe those activities which you would categorize as consumer behavior. How might your activities be studied by a consumer behavior researcher? Answer: Day 1: 1. Morning: • Woke up and checked smartphone for notifications. • Brewed coffee at home and had breakfast. • Checked emails and responded to work-related messages. 2. Afternoon: • Went to the gym for a workout session. • Stopped by a convenience store to buy a protein bar and bottled water. 3. Evening: • Watched a movie on a streaming service. • Ordered dinner from a local restaurant using a food delivery app. Day 2: 1. Morning: • Attended virtual meetings for work. • Browsed online retailers for a new pair of running shoes. 2. Afternoon: • Ordered groceries online for delivery later in the week. • Researched vacation destinations and hotel options for an upcoming trip. 3. Evening: • Cooked dinner at home using ingredients from the grocery delivery. • Played video games for relaxation. Day 3: 1. Morning: • Went for a walk in the neighborhood. • Checked social media feeds for updates from friends and influencers. 2. Afternoon: • Participated in an online webinar on personal finance. • Purchased an e-book recommended during the webinar. 3. Evening: • Had a video call with family members. • Read a book before bedtime. Activities categorized as consumer behavior: 1. Online Shopping: Browsing and purchasing items online, such as running shoes, groceries, and e-books. 2. Dining Out and Food Delivery: Ordering dinner from a restaurant and using a food delivery app. 3. Retail Purchases: Buying a protein bar and bottled water from a convenience store. 4. Entertainment Consumption: Watching movies on streaming services and playing video games. 5. Information Seeking: Researching vacation destinations, personal finance topics, and reading online articles. 6. Social Media Engagement: Checking social media feeds and interacting with content from friends and influencers. How these activities might be studied by a consumer behavior researcher: 1. Online Shopping Behavior: Researchers could analyze browsing patterns, search queries, and purchase decisions to understand factors influencing online shopping behavior, such as product preferences, price sensitivity, and website usability. 2. Dining Out and Food Delivery Preferences: Studying ordering habits and delivery preferences can provide insights into consumer motivations for dining out or using food delivery services, including convenience, taste preferences, and dining occasions. 3. Media Consumption Habits: Researching media consumption patterns, such as streaming habits and video game preferences, can help marketers understand audience preferences and tailor content and advertising strategies accordingly. 4. Information Seeking and Learning: Examining information-seeking behavior online, such as webinar attendance and e-book purchases, can provide insights into consumer interests, motivations for self-improvement, and willingness to invest in educational resources. 5. Social Media Influence: Analyzing social media engagement and influencer interactions can help researchers understand the role of social influence, peer recommendations, and online communities in shaping consumer behavior and purchase decisions. CVS Case 1. Visit the CVS/pharmacy website (http://www.cvs.com). What other benefits does CVS provide to ExtraCare customers? Provide examples of both utilitarian and hedonic value. Answer: Utilitarian value is provided when an object or activity allows something else to happen. Examples may include cosmetics, hair care products, hygiene products, and so forth. For instance, soap allows your face to become clean. Hedonic value is the immediate gratification that comes from some activity. Furthermore, hedonic value is emotional and subjective. Examples may include chocolate, candy, and other impulse items sold at CVS. 2. Suppose a major competitor launches its own customer value card program. How might CVS respond? What recommendations would you give CVS to improve the ExtraCare program? Answer: Students may choose any number of ways in which to increase “value” and should refer to the Value Equation in Exhibit 2.2. Students may recommend improvements to benefits or to “what you get” such as quality, convenience, emotions, prestige, and experience. They may also recommend a decrease in what customers “give” or sacrifice including time, money, and effort. 3. What are the advantages and disadvantages of not requiring personal information from customers for participating in the ExtraCare program? Answer: The main benefit to CVS customers of not requiring personal information is privacy. The main disadvantage is that not having personal customer information limits the ability of CVS to improve the quality of their relationship with their customers. CVS can learn valuable information from customer purchases and consequently provide direct marketing (CRM) incentives, such as coupons, to build stronger relationships with customers. 4. What ethical issues would CVS need to consider before changing their ExtraCare policy to require an address and phone number? Answer: Students should address privacy issues, such as identity theft and how to protect customer information in the ExtraCare database against those threats. Another specific ethical issue for CVS is concern over pharmacy transactions. Prescriptions reflect a customer’s medical history and therefore elicit an even higher expectation of privacy. Vous Vois Vision Case 1. Using the basic consumption process displayed in Exhibit 1.1, illustrate how a consumer “consumes” eyewear. Answer: Consumers develop a need for eyewear. They are motivated to consume items that allow them to see more clearly. Without good eyesight, consumers have difficulty functioning or achieving success. However, eyewear is also considered a fashion item, and consumers like to feel good about the items they wear because it brings them self-esteem. These needs drive consumers to want glasses that allow them to see well and make them look fashionable and feel good about themselves. Perhaps this store offers just such eyewear. Consumer wants will lead them to consider an exchange with this store if their offerings closely match consumer wants/desires. The decision to participate in an exchange (or forgo one) has costs and benefits. Glasses cost money, and it takes time to purchase them and get fitted with the right prescription. In return, the consumer may obtain better vision and a fashionable appearance. If the consumer indeed achieves better vision and feels good about wearing the glasses, he or she will react favorably to the purchase and use of the product. The consumer would then experience positive value in this case. If the product does not achieve these ends, then no positive value would be received. 2. Do you think Vous Vois Vision should adopt a product, production, or market orientation? Explain why. Answer: A market orientation seems to be the most likely choice. The company operates in a highly competitive market. Furthermore, the company needs to be in close contact with its customer base to determine what designs are fashionable and also fit their particular customers well. If the industry was not competitive, then this choice of orientation would change. 3. Almost any business involves some ethical questions. In this case, discuss the ethics involved in potentially selling contact lenses or even designer glasses to a consumer who sees well enough not to actually “need” vision correction. Answer: The question speaks to whether consumers who see well really need glasses. If glasses only addressed the desire for better sight, a case could be made that it is wrong to sell eyewear to people who already see well. However, glasses also satisfy other needs, such as the need to feel good about one’s appearance. To the extent that eyewear addresses this need, it may be difficult to make the case that it is unethical to sell eyewear to these consumers. Chances are that the frames may constitute the major portion of the cost, while the lenses for someone with good vision should cost less than lenses for people with poor vision. 4. Why might Blaire be interested in hiring a researcher to do some interpretive research about consumers and eyewear? Answer: Interpretive research may help Blaire understand the inner motivations of eyewear consumers as well as the inner meanings associated with different types of eyewear. For example, what prompts a consumer to desire blue eyes (and thus the purchase of contacts that make eyes appear blue) or prescription sunglasses? This information may make Blaire more effective in identifying a target market and selling products to consumers within that market. Part 1 Video Case To view the Part 1 video case, go to the CB companion website login.cengage.com to select this video. North Face Shopping Experience Time: This video is between 5-7 minutes long. Concepts Illustrated in the Video Value Consumption Consumer value framework Relationship marketing Relationship quality Internal influences External influences Synopsis Patrick, a medical school student enters a North Face store. Today, he’s shopping for hiking gear for an upcoming trip to the Mount Washington area located in the Northeast. He’s planning his trip during the warm summer month of June. Andy, the North Face employee shows Patrick a variety of jackets to fit his needs. The jackets all come with insulation and have lifetime warranties. Price is a concern for Patrick, so he asks Andy to show him alternatives to the original fleece version that sells for $150. Patrick finally settles on a jacket retailing for $79 and presents the store with a coupon for added savings. After Patrick’s hiking trip, he returned to the store to purchase the original jacket Andy recommended—the $150 jacket! Ironically, the temperature on the summit had reached a record low of 10 degrees Fahrenheit in June! Teaching Objectives for the Video Case Introduce students to the consumption process Define consumer value and compare and contrast two key types of value Critical Thinking Questions—Suggested Answers 1. Explain what is meant by relationship marketing. How many touchpoints were illustrated in the video? Answer: Relationship marketing is the recognition that customer desires are recurring and that a single purchase act may be only one touchpoint in an ongoing series of interactions with a customer. In this video, we see two touchpoints between the customer and the store. 2. What is the value of a North Face jacket? Does the salesperson in the video clearly communicate the value of the jacket? Explain your answer. Answer: The value of the North Face jacket is the lifetime warranty, high quality products and service one receives when shopping in the store. The salesperson clearly communicates the pros and cons of cheaper products not only by North Face but their competitors. 3. List the internal influences and external influences Patrick faced in purchasing the jacket. Answer: Internal influences included Patrick’s lifestyle, motivation and personality. He’s a medical student and concerned about spending money. External influences included the timing of the purchases, possibly Patrick’s social class, and the store’s atmospherics. Solution Manual for CB Consumer Behaviour Barry J. Babin, Eric G. Harris 9781305403222, 9781305577244