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MKT320 Homework Assignments SUPPLEMENT

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MKT320 Homework Assignments

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CONTENTS CHAPTER 1 2

CHAPTER 2 4

CHAPTER 3 7

CHAPTER 4 9

CHAPTER 5 11

CHAPTER 6 13

CHAPTER 7 16

CHAPTER 8 18

CHAPTER 9 21

CHAPTER 10 23

CHAPTER 11 25

CHAPTER 12 28

CHAPTER 13 30

CHAPTER 14 33

ANSWERS 36

The following are assigned review questions from each chapter in your textbook. The sample answers provided are for example only, your answer may vary depend- ing on your personal perspective. These exercises are ungraded. You do not have to submit your answers to the school.

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CHAPTER 1

CHAPTER 1 REVIEW QUESTIONS 1. Consumer behavior is a field of study that borrows heavily from other disciplines.

Why is such borrowing necessary to understand consumption-related behaviors fully?

2. Media reports show that manufacturing is slowing, consumer confidence is sliding, home values are falling, and food and energy prices are rising. Do such negative media reports constitute factors that contribute to sliding levels of consumer confidence that, in turn, cause the economy to drag even further?

3. Personal safety and security have become major concerns for many people. These concerns have affected products that consumers buy to enhance their sense of safety and changed the way people shop for products and services. How have these concerns changed consumer behavior?

CHAPTER 1 CASE STUDY AND QUESTIONS What’s in Your Burger?

Recent media reports revealing that Americans get more than one-third of their daily cal- ories from restaurant foods have raised major health concerns among many consumers. This apprehension has resulted in a new drive to require food establishments to provide critical calorie information on their various menu items. Disclosing to consumers information about how these menu items would affect their waistline is seen by many as desirable and necessary to help restaurant customers make healthy menu choices.

The practice of listing vital information including the ingredients and calorie content of all processed foods is mandated by the Food and Drug Administration (FDA) in the United States. All grocery items purchased in the supermarket carry labels that provide detailed nutritional information. Studies show that 75 percent of supermarket customers check label information, and half of those who do report that they’ve changed their brand choices based on such knowledge. However, surprisingly, when it comes to meals purchased by consumers in restaurants or fast-food establishments, this practice in many cases has been overlooked.

This situation has caused many consumers to question the inconsistency in government food information mandates. A Keystone Center report revealed that national polls indicate 60 percent of restaurant patrons felt caloric content should be listed on menus. However, the Center, in the meantime, found that only one-half of the 300 large restaurant chains surveyed provided some nutritional information on meals served. Some major restaurants,

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such as Ruby Tuesday, Subway, McDonald’s, and TGI Fridays, among a few others, have voluntarily provided more caloric information about menu choices, but many others have failed to follow suit.

This situation, in recent years, has brought about increasing political support for a move- ment to provide consumers with nutritional labeling at restaurants to help them make more informed choices about the food they purchase. Such information, the FDA believes, would help people limit excessive calorie intake and support the fight against obesity.

As part of the healthcare reform of 2010, the FDA imposed a new regulatory procedure that covers restaurant chains, which became effective on January 1, 2013. This require- ment has been updated yearly by the FDA. An update enacted in July 2015 required that additional information specifically addressing added sugars be provided on the labels of packaged foods, similar to that already required for sodium and fat content. This new labeling law required chain restaurants to provide extensive nutritional information about every regular menu item they serve. For example, information on calorie counts must be placed on every menu and menu board.

This law, however, doesn’t apply equally to every establishment that sells food. Rather, it covers only restaurants that are part of a chain with 20 or more locations, regardless of the prices charged, the kind of food served, or whether or not there’s table service—as long as the sale of food is the establishment’s primary business activity.

The intent of the FDA is to exempt movie theaters, amusement parks, general merchandise stores, hotels, trains, and planes, but not grocery or convenience stores. However, those establishments aren’t exempt if they choose to make certain claims about ingredients contained in the foods they serve.

The menu labeling law has placed a significant burden on restaurants in terms of added costs associated with providing calorie information. Such costs include laboratory analysis required to calculate calorie content of every menu item, the cost of printing the informative menus, and the need for new, larger menu boards.

While there are those individuals who question whether the public truly wants such informa- tion to be provided, there are others who welcome the move due to its anticipated positive effect on public health. Regardless of the arguments for and against this new measure, the final responsibility for making the right menu choices rests with individual consumers.

To help people dine healthfully, nutrition experts suggest a few strategies that include ordering an appetizer instead of an entree, sharing an entree with a friend, or asking for a take-out box at the beginning of the meal to avoid overeating. As always, the true secret in staying healthy, nutritionists claim, is moderation in food consumption.

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Respond to the following based on the reading.

1. The menu labeling law doesn’t apply equally to every “restaurant or similar retail food establishment,” but only to those that are “part of a chain with 20 or more locations.” In other words, this law exempts millions of other establishments that sell food, such as smaller restaurant chains, hotels, movie theaters, amusement parks, bowling alleys, and similar establishments. As such, do you think that this law is discriminatory? What is the logic or justification behind these arbitrary exemptions? Would you recommend that the same rules should apply equally to all establishments that sell food?

2. Restaurants often make health or nutritional claims, such as “low-fat” or “sugar-free.” Under the proposed legislation, a claim of “low-fat,” for example, would be allowed only if a standard serving contains no more than three grams. However, restaurants often serve portions several times larger than the standard serving size. Similarly, “sugar-free” claims don’t mean “calorie-free” or “fat-free” foods. To curtail consumer misunderstanding of the actual calorie content of the food they order, what solutions would you suggest to lessen the effect of such claims and to enhance consumer understanding of what these terms really mean?

3. Since consumers are left with the major responsibility for making the right food choices in restaurants, what would you suggest as strategies that consumers may follow or knowledge they may need to maintain a healthy lifestyle? Do you expect that everyone would be equally interested in getting this type of information or following food consumption guidelines? Why or why not?

CHAPTER 2

CHAPTER 2 REVIEW QUESTIONS 1. A number of variables, such as demographic, psychographic, and geodemographic

variables, have been used to segment consumer markets. Discuss what’s meant by psychographic segmentation and the role of AIO inventories in categorizing consumers into various segments.

2. PRIZM is a geodemographic clustering system developed by the Nielsen Claritas Corporation. How is this system structured? For what purposes can this system be applied?

3. There are four basic types of market-targeting strategies. Compare and contrast what they mean to marketers.

4. Marketing managers evaluate each market segment against a number of criteria to determine whether or not it should be pursued by the firm. Explain what these criteria are.

5. Briefly explain the interrelationships among the three steps of segmentation, target- ing, and positioning. Emphasize the logic behind the sequential ordering of these three steps.

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CHAPTER 2 CASE STUDY AND QUESTIONS A Starbucks Lifestyle Experience

Starbucks is one of the most prominent American success stories of the twenty-first cen- tury. The company has grown from a single coffee shop in Seattle, Washington, back in 1971, to a multibillion-dollar corporation in the year 2016, operating more than 23,000 coffee houses in 65 countries, including more than 12,000 in the United States alone.

A clear understanding of the concepts of segmentation and targeting was the underlying force behind such growth. The company was able successfully to transform a pedestrian commodity into a high-end accessory, creating what can be termed as a “Starbucks life- style experience.” This image appealed to the business community and socialites alike.

According to this view, the coffee house wasn’t viewed as just a place to get a cup of good coffee, but rather as a center for socializing and meeting friends for intellectual discussions. This was particularly the case among young urban professionals and students. This unique selling proposition and image were clearly relevant to the market segment the company aimed to target. It resulted in turning an “ordinary product” into an “extraordinary experi- ence” the targeted consumers loved and were eager to embrace, even though it meant paying a premium price.

Focusing on selecting locations for its coffee houses, the company based its strategy on choosing appropriate sites that appealed most to the lifestyle of the targeted market segment. Contrary to the established tenets of retailing, Starbucks established its coffee houses in well-chosen areas, making its coffee houses visible and noticeable in high-traffic locations. It also used the practice of blanketing an area with its coffee houses—a strategy that helped Starbucks achieve a position of market dominance, particularly with the proliferation of competitive coffee vendors.

One of the main reasons for Starbucks’ success in the business community is the compa- ny’s decision to adopt the concept of corporate social responsibility (CSR), which is outlined in the firm’s mission statement. The premise of CSR is that management shouldn’t concern itself with profits only, but more importantly with being socially, environmentally, and ethically responsible. This expanded focus includes the firm’s customers, stakeholders, and the com- munity at large. For example, the company uses ethical means to acquire the coffee beans from sustainable sources and employs innovative techniques to produce quality products at reduced costs. Furthermore, the firm is committed to minimizing its environmental footprint and to investing generously on employee education, training, and welfare.

In an effort to pursue members of each market segment, Starbucks sought to estab- lish strategic partnerships with other businesses that serve the same clientele. In 1993, the company partnered with Barnes & Noble bookstores in the United States to make its coffee available to bookstore customers. It also established a strategic alliance with

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Canadian bookstore Chapters Inc. in 1995. In addition, it entered into a partnership with Pepsi-Cola company in 1996 to start “North American Coffee” partnership, which intro- duced a bottled version of Starbucks’ Frappuccino blended beverage.

Furthermore, a partnership was established with Dryer’s Grand Ice Cream, Inc., that resulted in selling Starbucks ice cream and ice cream bars. In the company’s robust plans to expand internationally, China and the Asia-Pacific region are the new targets. Starbucks has recently pursued these markets due to their huge untapped potential. In 2014, for example, the company opened 742 stores in China and the Asia-Pacific region, with plans to increase its Chinese store count to 3,000 by the year 2019.

Recently, Starbucks adopted a successful formula for social media communication with its target market. This strategy employs Twitter, Facebook, and YouTube. On Twitter, the company engages with customers via answering questions and retweets in addition to maintaining an open communication channel with the public. On Facebook, Starbucks uploads content—such as videos, blog posts, and photos—to the firm’s page. Starbucks also uses its Facebook page to invite customers to upcoming events. On YouTube, cus- tomers are able to upload commercials as well as informative videos on the origins of various coffee blends.

In terms of promotion, a successful campaign that the company implemented in 2014– 2015 was the “Starbucks For Life” sweepstakes, which offered winners one free food or beverage item every day for 30 years. Ten individuals won the grand prize in the promo- tional giveaway. In December 2015, the promotion was reinstated and expanded, in which every “My Starbucks Rewards” transaction gave customers a chance to win prizes that included “Starbucks For Life,” “Starbucks For a Year,” “Starbucks For a Month,” “Starbucks For a Week,” as well as bonus stars.

Respond to the following based on the reading.

1. A number of factors have propelled Starbucks’ growth in the United States. Identify and evaluate four such factors in light of what you already know and have experienced concerning the company.

2. Considering the targeting and partnership strategies employed by Starbucks domestically, do you think that following the same or similar strategies would be equally successful abroad? Why or why not?

3. From a promotional standpoint, how effective is the “Starbucks For Life” promotional strategy in terms of enhancing the company’s profits? From a cost perspective with regard to the prizes awarded, promotional efforts undertaken, as well as the initiated managerial and service programs, were the benefits to Starbucks worth their cost?

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CHAPTER 3

CHAPTER 3 REVIEW QUESTIONS 1. Considering perceptual threshold levels, researchers agree that there are three

threshold levels for each sense: an absolute threshold, a terminal threshold, and a differential threshold or a just-noticeable difference (JND) threshold. Explain what’s meant by the JND and show how this concept can be of value to marketers.

2. Consumers are affected by the situations in which they buy or use products. These situational variables are environmental circumstances that surround product purchase, use, or related information. Explain how these factors affect the buying or using of products.

3. In contrast to the traditional view of perception, Gestalt psychologists suggest a different way of looking at perception. What does their view encompass? Briefly cite two Gestalt principles that you’re familiar with and explain how they can be applied in marketing.

4. Image perception is an important topic for marketers. Image is a person’s net impression of what a company, product, brand, or store is all about. Are images for a given product, brand, or store uniform among consumers? What factors affect image formation? How do marketers use image as a strategy for a brand or a store?

5. Many retailers use their pricing strategy to communicate desired images of product offerings to their customers. A high price can convey the impression of the superior quality and distinction of an item to consumers, whereas a lower price for the same product can cause it to be perceived as inferior or ordinary. Explain the psychologi- cal reasons behind this phenomenon, and name other surrogate indicators that can produce similar perceptual reactions in consumers.

CHAPTER 3 CASE STUDY AND QUESTIONS Guns Anyone?

In the United States, the debate over availability of firearms to individuals has been going on for many years. The right to bear arms was established in the Second Amendment to the US Constitution. On the two sides of the debate are gun rights supporters on one hand, and the gun control advocates on the other.

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Gun rights supporters promote firearms for self-defense, hunting, sporting activities, and security against tyranny, while gun control advocates argue that where guns are readily accessible, they can more easily fall into the hands of criminals, as well as children— causing accidental discharges and deaths. This debate continues to the present day, and it’s the reason for the formation of gun control laws.

Among the facts brought up in the gun control laws debate is widespread gun ownership in the United States compared with that in the rest of the world. Nearly half of US households own at least one gun, and thousands of people die from gunshot wounds each year. From this perspective, it’s easy to see why gun control is such a hotly debated issue in America. These figures explain the wide base of support in the arena of gun-control legislation.

Gun rights supporters often raise the question of the extent to which gun controls really work. They admit that there are already a number of laws on the books both at the federal as well as the state levels restricting the sale, purchase, possession, and use of guns. However, pro-gun advocates question the degree of enforcement of these laws.

The main issue underlying this debate, therefore, boils down to the question of whether or not Americans would like the gun control laws—which were created to protect them— to take away some of their basic rights as citizens. This pro and con debate involves at least three entities who happen to have different interests and views regarding how to deal with the gun control issue. These three interested parties are the existing political regime, the citizens of the society, and the criminal element.

From the political regime’s perspective, there are two major sides to the issue, with both lobbying either for or against gun control. Republicans have long been supporters of the pro-gun movement due to their conservative beliefs and backing by the National Rifle Association (NRA). Democrats, on the other side, are split, with some lawmakers cautious about going against the views of their more conservative constituency, especially in rural districts, and a fear of upsetting the gun lobby.

The second entity involved in this debate is society’s citizens. Some are motivated to pro- mote the issue of gun control while others act to prevent it altogether. Society as a whole is a powerful force in the gun control debate. The split in the opinion of citizens on this issue is caused by their varied perception of whether owning or purchasing a gun is a significant social issue related to America’s high rate of homicide, suicide, and accidental death. This perception is the backbone of the gun control debate and is an important reason why gun control laws were enacted in the first place.

The third entity in this debate involves the criminal element of society. The purpose of gun control laws is to ensure that guns never reach the hands of criminals. However, criminals often see little or no barrier when attempting to acquire a gun—in spite of the numerous efforts to deter their ownership. It’s apparent to most citizens that these efforts aren’t accomplishing what they were set out to achieve—as evidenced by the frequent and highly publicized mass shootings involving assault weapons that are often in the news.

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Therefore, it becomes obvious that it’s primarily the terrorist and criminal aspects that seem to cause the significant strife which motivates pro and con gun-control parties to require legislative action. Thus, it’s safe to suggest that the interplay among these three entities works to prevent or promote passage of gun control laws—the future of which is certain to impact every person on both sides of the debate.

Respond to the following based on the reading.

1. In view of this polarizing issue, which of those two sides do you tend to support? Defend your answer.

2. The debate over the Second Amendment and gun rights in the United States was reignited when a District of Columbia Federal Appeals Circuit Court struck down a 30-year old law that bars almost all DC residents from owning handguns. This action was based on the belief that tougher laws restricting gun ownership are needed to curb rising rates of gun-related violence in the nation’s cities. In your opinion, do America’s cities have the right to ban hand guns? Explain why or why not.

3. Nobody can deny the major power and influence of the NRA, the leading gun- rights organization, in promoting the right to bear arms. The influence of the NRA is enhanced by means of its broad and passionate membership base, its mastery of grassroots politics, its powerful gun lobby, and its limitless stash of cash being donated to a variety of entities including federal candidates, party committees, as well as other politicians and officials. Clearly, these actions by the NRA tend to tip the scale in favor of the gun rights supporters. Gun control advocates, on the other hand, lack any such organized backing. In a democratic society such as ours, is this one-sided concentration of influence ethical? If not, what can be done and by whom to correct this imbalance?

CHAPTER 4

CHAPTER 4 REVIEW QUESTIONS 1. Classical conditioning views learning as forming connections or associations

between environmental events. How does learning occur under the classical conditioning model? What are the four prerequisites for this type of learning to occur?

2. How does operant conditioning as a learning theory differ from classical condi- tioning? Explain and cite some of the challenges that marketers face in applying operant conditioning.

3. It has been claimed that the right and left hemispheres of the brain aren’t identical in their function—a tendency known as hemispheric specialization. Discuss this view and explain how such distinction can be helpful to marketers in the selection of advertising media.

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4. Explain what’s meant by vicarious learning and show how advertisers apply this concept to enhance the effectiveness of their messages.

5. The three components of memory are sensory, short-term, and long-term memory. What are the functions of these memory components? Is information passively or actively stored in long-term memory? Explain.

CHAPTER 4 CASE STUDY AND QUESTIONS The Attractiveness of Lottery Tickets

The widely publicized January 2016 Powerball Lottery Drawing created the largest jack- pot in the history of the world, totaling more than $1.5 billion. Millions of individuals in California, Florida, and Tennessee lined up for hours in front of gas stations and other lottery retailers to purchase tickets. Many people living outside of these three states took the trouble of driving to an adjacent state that sells the tickets in order to purchase them.

As images and stories that accompanied this major event were covered in almost all media types, questions arose in the mind of many people as to the motives that lead people to go through the trouble of purchasing these tickets, knowing that the odds of winning are a mere 1 in 292 million.

Among those who were pondering this issue were academicians who happened to be attending a business conference in a large metropolitan city at the time leading up to the drawing. As some of them gathered in a conference session room, a discussion was sparked regarding the underlying psychological drives that impel individuals to purchase lottery tickets. The first speaker explained that the act of purchasing lottery tickets is sim- ply a learning process by which lottery officials attempted to achieve a desired consumer reaction by forming a link between a coveted reward (the jackpot) and a desired action (purchasing the lottery ticket). He further elaborated that concept of heuristics (like the tendency of people to apply simple rules of thumb to save mental effort) explains why people would participate in lotteries. People realize that the most practical way to attain this coveted reward is simply by applying the rule of thumb of purchasing these affordable tickets.

Another attendee sitting at the back of the room and listening to this explanation argued that she believes that it’s framing rather than heuristics that explains the purchasing behavior better. She added that framing (the tendency to structure an action—such as purchasing or not purchasing—from a gain or a loss perspective) would be a more logical explanation. People tend to focus their thoughts on what they would do if they won the lottery (gain) versus worrying about the consequences of their minor monetary loss if they don’t win (loss). She explained that this is precisely the reason why marketers of lotteries provide prospects with huge jackpots, images of dream lifestyle changes when they win, display elated prize winners, and stress easy wins, all with minimum reference to the meager odds of actually winning.

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Another attendee who seemed less satisfied with these views stated that he’s a frequent lottery ticket buyer. He admitted that he has been buying lottery tickets for years without winning even once. In spite of that, he added that he continues to purchase them loyally because he feels that he has already invested so much into the lottery that if he were to give up playing the game, he would never win his money back.

At this point, the session moderator—having been listening to these views—finally spoke up and added that he too, along with his wife, are frequent buyers of lottery tickets. He explained that this habit developed after his father-in-law had won a significant jackpot a year earlier. As a result of this positive memory, they felt that the possibility of winning had become for them a reality rather than just a dream. He stated that now as his family buys lottery tickets, they automatically think of those who win rather than contemplate the millions of people who don’t. At the end of the session, some attendees mentioned other reasons for purchasing lottery tickets. Among these is the notion of unrealistic optimism on the part of some people who feel they’re luckier than others. Others only purchase lot- tery tickets if the jackpot is significant, or purchase them based on humanitarian reasons, such as supporting education in the state.

Respond to the following based on the reading.

1. Lottery critics argue that the poor, who can least afford to lose any money, are the most likely parties to buy lottery tickets. Based on this known tendency, should states stop running lotteries?

2. Based on your knowledge of and experience with state lotteries, in the 44 states that have lotteries, where does the profit from lottery ticket sales go?

3. Are lottery tickets really considered to be “products”? If so, are the motivations to purchase lottery tickets typical of those present when people purchase other consumer products?

CHAPTER 5

CHAPTER 5 REVIEW QUESTIONS 1. It’s been said that attitudes serve a number of functions for individuals. The dis-

tinction among attitude functions helps marketers recognize that attitudes toward different product categories tend to be associated with different attitude functions. Explain and give examples.

2. The traditional model of attitudes suggests that attitudes consist of three compo- nents. Cite and explain the operation of each. Can overt behavior be predicted easily through the knowledge of a person’s attitudes? Why or why not?

3. The theory of reasoned action emphasizes intentions as a primary consideration in predicting behavior. Goal pursuit and trying theories, on the other hand, propose that attitudes toward the consequences of trying are the main predictors of behavior. Explain the difference between these two points of view.

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4. For many marketers and advertisers, attitude change is a primary goal. In this endeavor, marketers use a number of strategies that stem from the information- processing model to change consumer attitudes. Explain these strategies. Is attitude change generally an attainable goal? Why or why not?

5. What are the tenets of the elaboration-likelihood model of attitude formation? What are the explanatory roles of the central and peripheral routes to persuasion presented in this model? Is such information useful for advertisers? How?

CHAPTER 5 CASE STUDY AND QUESTIONS Inside the War on Coal

Climate change has become the most significant environmental challenge of our times, affecting national public health, welfare, and the environment itself. During the Obama administration, the coal industry saw increased federal regulations from President Barack Obama’s Clean Power Plan, which went into effect in October 2015. The plan sought to reduce carbon emissions by 32 percent by the year 2030. Calls from consumers and activists who support the plan to close aging coal-fired power plants resulted in two of the largest coal producers to file for bankruptcy, and more than 100 of the 500 coal-burning power plants to shut down. The plan was aided by $50 million from billionaire businessman and three-term New York City Mayor Michael Bloomberg, who views the campaign as part of a public health effort, and $26 million from a top official of a natural gas company.

More damaging than the pressure from environmentalists was the competition from plen- tiful, low-cost natural gas, which most electric companies began to favor as a cleaner and cheaper substitute for coal. The decline in the price of gas has been intensified further by hydraulic fracturing and horizontal drilling techniques.

The major blow to the industry came about when President Obama used his executive authority to activate the Clean Power Plan. The plan limited global warming to less than 2 degrees Celsius (3.6 degrees Fahrenheit), using pre-industrial temperatures as a base- line. On December 12, 2015, at the Paris Climate Conference, 55 world nations approved the measure.

Coal still helps keep the lights on. However, it now accounts for only one-third of the nation’s power generation, compared to 50 percent just more than a decade ago. The question for the economy now is how rapidly this decline will continue, knowing that the coal industry that once employed thousands of workers currently employs fewer than the solar industry, which barely existed in the year 2010.

The coal industry mustered all the weapons at its disposal—lobbying, legislation, litigation, and a multimillion-dollar advertising campaign—to highlight the benefit of “clean coal” and point out the loss of jobs for thousands of coal-industry workers. Furthermore, a group of coal-burning utility companies, along with 29 largely Republican-led states, filed a legal

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challenge against the Clean Power Plan and the EPA. The challenge contended that the plan infringed on states’ authority to decide what’s best for their constituents. These law- suits over the Clean Power Plan are a serious matter and would almost certainly end up before the Supreme Court.

Respond to the following based on the reading.

1. Even though science is clear about the reality of global warming and the fact that climate change can affect so many facets of the planet, there are those who doubt and reject the scientific proof of this phenomenon—including major public leaders, politicians, and corporate CEOs. How can you explain this defiant tendency of these groups? What are the motivating forces that impel them to reject the reality of global warming and climate change despite the evidence?

2. To fight back against measures imposed by the new environmental rules, many of the largest coal mining companies, electric utilities, and railroads have launched a multimillion-dollar marketing campaign aimed at convincing the public that coal- fired power is environmentally sustainable, while touting the benefits of “clean coal.” Are these claims realistic and effective in changing the public’s sentiment toward the coal industry? Why or why not?

3. The legal challenge against the Clean Power Plant (CPP) and the Environmental Protection Agency (EPA) filed in October 2015 by the utility companies, along with 29 states, claimed that the EPA had intruded on states’ sovereign rights over indus- try within their borders by ordering them to meet specific environmental standards. In your opinion, does this argument stand a chance of being upheld by the courts based on its merits? Why or why not?

CHAPTER 6

CHAPTER 6 REVIEW QUESTIONS 1. It has been proposed that four key elements of motivation are needs, motives,

goals, and desires. Briefly explain each and show how these four elements overlap or interact in producing a motivated state.

2. One of the assumptions made by arousal theories of motivation is the tendency of consumers to seek stimulation. These theories classify consumers into high versus low sensation seekers. Explain these typologies and show how marketers can benefit from knowledge of such consumer classifications.

3. Lewin identified three common types of motivational conflict. What are they? How do these types of conflict relate to the field of consumer behavior? Explain through an example.

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4. What causes reluctance on the part of consumers to discuss the reasons for their consumption behaviors? How can researchers overcome this tendency?

5. Distinguish and contrast human emotions and moods. What causes each to come about? What implications do these two states hold for marketers?

CHAPTER 6 CASE STUDY AND QUESTIONS You Have Nothing to Lose but Your Weight

Excessive weight and even obesity have become major issues that are presently haunting the well-being of Americans as well as many other people globally. This epidemic in both adults and children has captured headlines as the number-one cause of many ailments that inflict society today, such as heart disease and diabetes. Remedies that have been sug- gested for individuals to overcome this problem include participation in weight-management programs and slimming centers, considering invasive or non-invasive surgeries for weight loss, joining health clubs and exercise centers, and following strict dietary food regimens. In the United States, one of the more popular alternatives appears to be pursing the services of weight-management centers. Such services operating nationally include Nutrisystem, Weight Watchers, Jenny Craig, Atkins, and the South Beach diet, among other competitors.

The most evident challenge for these centers is to design effective behavior modification systems in two areas. The first deals with developing a behavior modification program to assist participants in completing the challenging weight-loss task. The second deals with designing the components of a weight-loss program that a participant finds pleasing, and on the basis of which he or she joins a specific center.

In terms of the first challenge, behavior modification programs for weight loss focus on self-monitoring of eating triggers. Individuals keep logs of what they eat and the amount consumed. They provide counselors with information on precipitating conditions to inap- propriate eating and their emotional state at the time. In addition to positive reinforcement from counselors and peers for meeting weight-loss goals, participants are encouraged to give themselves rewards when they achieve agreed-upon goals. In dealing with the issue of stimulus control, counselors ask participants to become sensitive to the cues that precede inappropriate eating. The counselor helps the weight-loss participant to select an alternate and incompatible behavior when facing the eating-stimulating conditions. Other self-monitoring data that the participant provides include charting actual weight loss and exercise.

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Regarding the second issue involving the components of competing services’ weight-loss programs, a wide variety of diverse programs are available. Weight Watchers’s program, for example, inspires candidates with the new “Freestyle” program, which replaced the com- pany’s previous “PointsPlus” system. The new program starts with a personal assessment that captures information regarding the member’s lifestyle, goals, and challenges. Based on this assessment, the member gets a personalized program that includes daily and weekly “SmartPoints” targets, a personalized activity goal, and content tailored to the member’s specific needs. The program promotes a pattern of eating that includes more lean protein, fruits, and vegetables, and less sugar and saturated fats. Moreover, this program maintains communication with members through the online social tool “Connect,” as well as with a “Refreshed Meeting Experience,” which is a review of the member’s goals, motives, and social environment.

Another program—that of Nutrisystem—allows candidates to choose from personalized plans, hand-pick their entire menu, or go with the company’s preselected favorites pack. Participants have the choice among three programs:

1. A “Basic” program, with preselected foods in an easy-to-follow four-week plan

2. A “Core” program, which adds to the basic plan a choice among 100 foods

3. A “Uniquely Yours” program, which adds to the core plan a choice among 150 foods, including frozen items. It also allows participants to incorporate fitness into their regimen with the company’s “My Daily 3” exercise program, track their progress with online tools and daily planner, and have their food delivered to their door.

Still other services use positive reinforcement to attain behavior modification. Incentives or rewards—such as extra privileges and monetary or nonmonetary bonuses—are contingent upon actual weight loss, program attendance, or habit change. Among such programs are behavioral deposit contracts, which are documents drawn up between a counselor and a participant stipulating that a sum of money provided by that individual would be returned to him or her when a specified goal is attained.

Respond to the following based on the reading.

1. What do you think constitute the main psychological/motivational forces that render many of these weight-loss programs successful?

2. What reasons underlie the fact that a large percentage of weight-loss program participants fail to complete the program or become unsuccessful in attaining their desired weight-loss goals?

3. Evaluate the specifics stated in the case regarding the Weight Watchers program versus that of Nutrisystem in terms of pros and cons as well as ability to attain desired behavioral modification.

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CHAPTER 7

CHAPTER 7 REVIEW QUESTIONS 1. Freudian psychoanalytic personality theory is based on a presumed interaction

between three components of personality: the id, the ego, and the superego. Explain the basic tenets of this view and show how advertisers use this knowledge to enhance the effectiveness of their promotional messages.

2. In contrast to Freudian psychoanalytic personality theory, trait theory classifies people according to their consistent responses to environmental stimuli. For pur- poses of making this theory operational, what are traits? How can these traits be measured? How do marketers correlate personality traits with their strategies? Give some examples.

3. Unlike personality theories, psychographics aims to assess consumers’ lifestyles so that meaningful consumer typologies can be identified. What methods do researchers use to identify consumers’ lifestyles? How is psychographics different from demographics?

4. A landmark effort in the area of values and lifestyle research is Strategic Business Insights’ VALS program. What is VALS? How can VALS help marketers segment the market more effectively? Give an example.

5. Whereas the self-concept is closely associated with personality, the self is a more narrowly defined notion. What is the self-concept? What are some of the forms the self-concept takes? Is the self-concept a factor in determining what a person consumes? Explain.

CHAPTER 7 CASE STUDY AND QUESTIONS Beauty for Billions or Billions for Beauty?

A glance at the majority of today’s movies, television shows, or events—such as the Academy Awards—immediately reveals the great deal of money and effort expended by producers and directors of these shows on selecting the most attractive and glamorous characters as their star performers. Welcome to a trend cultivated in contemporary society, which is the pursuit of beauty and captivating appearance.

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The reason for such emphasis on beauty is that physically attractive individuals can greatly enhance the success of any endeavor in which they happen to participate. According to a University of Texas researcher, Daniel Hamermesh, companies that place a premium on hiring attractive people generate, on the average, higher revenues than similar companies that don’t.

He also found that the public clearly rewards businesses with beautiful faces behind them. For example, most people, regardless of their professed attitudes, prefer as customers to buy from better-looking sales people; as jurors to listen to better-looking attorneys; as voters to be led by better-looking politicians; and as students to learn from better-looking professors.

Another study by Gordon Patzer, a researcher on physical attractiveness, reported that his findings proved that human beings are hardwired to respond more favorably to attrac- tive people, and that good-looking individuals are generally regarded to be more talented, kind, honest, and intelligent than their less-attractive counterparts. No wonder beauty has become a coveted goal for most individuals who are able and willing to spend dearly to look attractive.

Beauty, in fact, is celebrated throughout the world. Today, beauty pageants have become annual traditions in almost all nations. In the United States, for example, the Miss America Pageant was organized in 1921 by a local entrepreneur to entice tourists to visit Atlantic City, New Jersey. This event was so successful that it attracted 100,000 visitors. From this modest beginning, an entire global beauty pageant industry was born.

Today, there are four major global beauty pageants: the yearly “Miss World,” “Miss Universe,” “Miss International,” and “Miss Earth.” These global pageants constitute the final stages of thousands of multi-tiered local beauty competitions. In the United States, the commercial beauty pageant industry organizes the thousands of local and regional events. The national and international pageants are significant undertakings, with billions of dollars spent on items that range from wardrobes and cosmetics to coaches who teach the contestants how to walk, talk, and present themselves in a manner that entices the judges.

Both critics and supporters offer strong opinions in this arena. Advocates argue that such pageants are a means for many countries to promote their culture, progress, and talents to the rest of the world. Such events also help to boost the self-concept and confidence of participating women, as well as that of all the viewers who identify with these contestants.

Critics, on the other hand, contend such competitions reinforce the notion that women are to be valued primarily based on their physical appearance. This emphasis on mere external beauty creates a powerful drive for many women to conform to conventional glamour standards glorified by these shows. The result is the unnecessary expenditure of time and money on cosmetics, fashions, hair styling, elective surgical procedures, dieting,

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training, coaching, and modeling—all in the name of looking attractive and captivating. These efforts, in their view, ignore the true meaning of beauty, which rests not with the external—but rather with the internal qualities of the individual.

Respond to the following based on the reading.

1. While some critics claim that the goal of global beauty pageants is merely to pro- mote the glorification of beauty—leading women to focus on external looks and spend extravagantly on unnecessary self-beautification, proponents defend these pageants on the basis of the various benefits that participating countries realize by holding them. Enumerate a number of benefits that participating countries attain by hosting these pageants.

2. Critics argue that while beauty is a great asset to possess and to maintain, many women who search for it tend to spend hefty sums to enhance their natural looks. These extravagant expenditures, critics claim, are being made on unnecessary goods and services such as fashions, cosmetics, hair, nails, perfumes, body treat- ments, elective surgeries, and dieting, among others. From a societal point of view, are these expenditures economically justifiable or are they wasteful as the critics claim? Explain.

3. Research studies claim that companies that place a premium on hiring attractive people seem to be more successful than others that don’t; and that the public clearly rewards businesses with beautiful faces. These studies suggest that good looks are the key to success and happiness. Do you agree with these assessments? Support your position.

CHAPTER 8

CHAPTER 8 REVIEW QUESTIONS 1. It has been suggested that decision-making processes fall along a continuum that

ranges from programmed decisions at one end to nonprogrammed decisions on the other. Explain the difference between these two types of decision-making formats. What are the implications of this knowledge to marketers?

2. According to Dewey’s five stages of problem solving, two types of search—internal and external—take place after a consumer recognizes a problem. Discuss both types and elaborate on the factors that are likely to affect the amount of external searching that consumers tend to undertake.

3. Prospect theory has been advocated as a tool to assess the positivity or negativity of alternatives in consumers’ decision-making processes. What are the main tenets of prospect theory? Explain this theory in terms of gains or losses experienced in a gambling situation.

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4. Research suggests that customer satisfaction is influenced both by the level of effort expended by consumers as well as by their level of expectation. Explain this view and show through an example how marketers can enhance customer satisfaction for a product or service.

5. Many companies today have started to view complaints as an opportunity rather than as a liability. What are the major causes of consumer complaints? What efforts can businesses undertake to deal with these complaints?

CHAPTER 8 CASE STUDY AND QUESTIONS An Inquiry into the College Choice Process

Ms. Walker, the admissions director at a well-known Ivy League university, is meeting with her staff to discuss the changes that characterize students’ college selection processes and the significant implications of that change on admissions and financial aid policies of schools nationwide. This meeting was considered by Ms. Walker to be a necessary step in view of the recent changes taking place in society today. With student debt rising, and those enrolled failing to graduate in four years, there appears to be a growing sentiment that college may not be the best option for all students.

To be able to assess future trends in college enrollment, Ms. Walker and her staff consid- ered several reports regarding the number of students who are expected to graduate from high school. That number in academic year 2015–2016 was around 3.3 million students, including 3.0 million students from public high schools and 0.3 million from private schools. Not all these students, however, were expected to pursue a college education. For exam- ple, in 2013, the percentage of students enrolling in college in the fall immediately following the completion of high school was 65.9 percent for males and 71.3 percent for females.

The committee also reviewed a report regarding total enrollment of students in college for the school year 2015. In the fall of 2015, a record 20.2 million students attended American colleges and universities. That number constituted an increase of about 4.9 million since the fall of the 2000 school year.

One interesting statistic, the committee observed, was the higher number of female stu- dents seeking college education compared with their male counterparts. In 2015, females comprised the majority of college students, reaching 11.5 million females compared with 8.7 million males. Most of these students were planning to attend school on a full-time rather than part-time basis.

Concerning student enrollment numbers in two-year versus four-year colleges, in the fall of 2015, about 7.0 million students attended two-year institutions and 13.2 million attended four-year institutions. Some 17.3 million students enrolled in undergraduate programs, and about 3.0 million enrolled in post-baccalaureate programs.

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The committee also observed that the record college enrollment has been driven by the increase in the number of individuals within the traditional college age range. For further analysis, the issue of how students choose a college was brought up at the meeting. Student decisions regarding college choice were influenced by many factors, such as cost, fit, school size, school reputation, major, faculty, financial aid, and location. Selection has also been influenced by the special annual issues published by Money and U.S. News & World Report magazines, which rank colleges according to criteria such as “best value” per dollar. Such guides seem to have grown in popularity among many students in guiding their college choice.

Students also shop for colleges online at sites such as GreatSchools (https://www. greatschools.org/), CollegeBoard (https://www.collegeboard.org/), and GoCollege (http://gocollege.com/). Most high school juniors and seniors have Internet access at home or at school. They surf the Internet and check social media to determine which school can give them the best value for their money. In this sense, many students have come to regard the college experience as a product rather than a process. These con- sumerist students shopping for a college tend to study the product’s long-term yield—that is, the potential job that will materialize or the quality of the graduate program for which the degree will qualify them.

This change has forced college recruiters to defend tuition rates by citing job placement and graduate school acceptance figures that prove there’s a payoff to the large investment required to obtain a college education.

Ms. Walker claimed that from her experience and from the reports she has been reading, value seems to have been the most important factor in college choice among many high school seniors and transfer students. The college choice decision has become much more money driven, and availability of student aid has become a significant component of that decision. It’s not uncommon today to see college recruiters lavish high school seniors with gifts, merit awards, and hard-to-refuse financial aid packages to get them to apply to a specific school. Such practices are common today among many public as well as private college recruiters.

Respond to the following based on the reading.

1. The concept of value treats selecting a college like purchasing a car. It ignores the important issue of whether a particular school is the right choice for a specific student. How do you feel about this issue?

2. In your opinion, what factors truly affect most students’ choice of a college?

3. What additional information, activities, or incentives could schools provide to help students, perhaps in conjunction with their parents, arrive at a better-informed choice of which college to attend?

https://www.greatschools.org/

https://www.collegeboard.org/

http://gocollege.com

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CHAPTER 9

CHAPTER 9 REVIEW QUESTIONS 1. Explain the differences among discontinuous, dynamically continuous, and contin-

uous innovations. In what way do these categories of innovations help marketers understand the consumer process of adopting new products?

2. Select and explain two of the factors that influence consumers’ acceptance of new products and give an example for each.

3. The social system plays a major role in the diffusion process. Explain how.

4. Based on the amount of time it takes to adopt an innovation, consumers are typically classified into categories that reflect how soon they acquire a specific innovation after its introduction. Cite and explain each of these adopter categories.

5. Rogers proposed a five-stage decision-making model for the adoption of innovations. Briefly discuss each stage and indicate how typical this model is in reflecting the adoption of an innovation phenomenon.

CHAPTER 9 CASE STUDY AND QUESTIONS Drones: The Pros and the Cons

Until recently, the mere mention of the term “drones” conjured up visions of covert military operations taken up by the government to target enemies overseas. This image, however, has undergone a dramatic change over the past few years. Drones now are playing an increasingly important role in businesses including agriculture, engineering, and real estate, in addition to their other applications that include package delivery to customers, conduct- ing search and rescue operations, as well as assisting the media and movie industry in capturing video and audio of events in real time.

Today, millions of consumers are buying these machines and taking to the sky. Novices have become just as interested in them as hobbyists. The demand has grown significantly in the past few years, with drone sales topping 1 million units in 2015. Drones are no lon- ger viewed as obscure futuristic products found only at niche websites—they now occupy prominent positions on the shelves of major retailers and big-box stores.

Drone technology is rooted in military aviation technology and radio-controlled hobbies. Advances in processors, operating systems, and radio and video camera technology make these flying machines more useful, easier to operate, and less expensive.

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Most observers in the industry believe that consumers will eventually adapt to drones as they’ve done with other technologies such as smart phones and the Internet. Top manage- ment at DJI, the world’s premiere consumer drone company, predicts that the public’s fear as well as safety and privacy concerns about drones will soon disappear as consumers learn how useful these drones can be.

There are now hundreds of models to choose from, with prices ranging from less than $100 to thousands, depending on features. For example, a DJI Phantom 2 Vision+, a popular model, currently retails for about $1,000. Another popular DJI model, the Inspire, can be controlled by two people, a pilot and camera operator. On the more casual side of the drone assortment, a Parrot 2 drone copter retails for $299—a model that has become a favorite with teenagers.

Tech experts at DJI indicate that the company’s latest drones have an automatic altitude cap of 400 feet, even though technically they could go as high as 1,200 feet. In addition, geo-sensors don’t allow such drones to fly close to any major airports.

Regardless of these precautions, there still remain issues of safety and privacy. For exam- ple, reports of “potentially unsafe” drones increased dramatically in 2015 to 193 incidents. Some drones are being flown at high altitudes in airspace where passenger aircraft fly. A case in point was the near-miss that occurred in July 2014, when an Airbus A320 had a close call with a mini-drone.

Other major concerns, however, are that drones represent a perfect economical weapon offering terrorists and criminals a real-time view of their intended targets. Authorities within the United States and other countries are scrambling to regulate the use of drones, set guidelines on where and at what maximum altitude drones are allowed to fly, as well as to initiate requirements for registration of these devices. In the past years, federal regulations have prohibited the use of drones for commercial purposes. However, this restriction is now being lifted, with the Federal Aviation Administration (FAA) softening its posture to allow certain lightweight drones to make commercial flights up to 400 feet in altitude.

The young field of drones is already lucrative, and it’s set to grow exponentially. The Association of Unmanned Vehicle Systems International, a trade organization, predicts that the global market for drones will be $140 billion by the year 2025, and that as many as 100,000 new jobs will be created in this field over the next 10 years. Big companies, such as Amazon and Facebook, are now looking for pilots who fly drones, as well as engineers with experience in building these unmanned aircraft.

Respond to the following based on the reading.

1. The affordability and availability of drones are prompting some serious safety, regulatory, and insurance issues. Discuss.

2. The corporate sector, especially big delivery and service companies such as Amazon.com, Alibaba Group, and Deutsche Post, already has plans for turning drone technology into new streams of revenue. Explain by citing pending actions of familiar companies.

3. In your estimation, what are some of the hurdles that would either delay or hinder the effective commercial use of drones?

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CHAPTER 10

CHAPTER 10 REVIEW QUESTIONS 1. Compare the concepts of brand communities and brand tribes, explaining what

constitutes these types of groups and the distinctions between them.

2. Concerning online communities and social networks, it’s been suggested that smaller, tighter networks are less useful to an online group than more open networks with many weak ties and social connections. Explain why.

3. Choose two types of social power covered in this chapter and show through specific examples how marketers use these types of power to influence consumer behavior.

4. Reference groups are classified into three major categories: membership, aspira- tional, and dissociative types. Explain each briefly, emphasizing in each case the type of effect it has on an individual.

5. Degrees of reference group influence vary from weak to strong. They range from compliance to identification and even to internalization. Explain each case and describe the circumstances under which each type of influence might occur.

CHAPTER 10 CASE STUDY AND QUESTIONS Teen Peer Pressure

The last history class of the day for Spencer, a junior at an urban high school in Dallas, Texas, was about to end. He looked at his watch as he prepared to leave the class to meet with Mr. Rambush, the school’s principal, and Ms. Kurzan, the student counselor. Two other students―Shaunte, a sophomore, and Maria, a senior―were also attending the same meeting.

The three students had agreed to talk to school officials, who were increasingly getting concerned about the problems of violence, drug abuse, and increased sexual activity that were taking place on campus. These problems had become major concerns for many parents. As a result, school officials thought that perhaps talking to students about the possible causes of these problems might provide clues regarding how to deal with them.

As the three students, along with Mr. Rambush and Ms. Kurzan, sat around a small table in the principal’s office, Mr. Rambush started the meeting by thanking the students for their willingness to talk about these important issues and assured them of the confidentiality of their conversation.

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After this brief introduction, he said, “We feel that the school campus is no longer a safe haven for many of our students. Parents tell us that they’re concerned about the safety of their children here. The increased violence, sexual activity, and drug abuse that we have all witnessed here scares everyone. Parents don’t know what to do about it. We too feel responsible to some extent.”

Then, in a desperate tone, Mr. Rambush added, “If we only knew where the problem lies, perhaps we could do something about it. But until then, our hands are tied...” He then paused to allow the students to speak.

“Well, I think peer pressure has a lot to do with many of these problems,” said Spencer. “You’ve got to be aware of your surroundings and have your head clear. That’s why I’m playing baseball—to stay off the streets.”

Nodding her head in approval, Maria supported Spencer’s comments. “To me, this is a whole different generation. I think that’s why we have a harder time than our parents when they were in high school. Generations change and people change. Sex and drugs... that’s pressure for us,” she continued. “Your boyfriend is pressuring you to have sex, your friends want you to share drugs, and you see everyone else is doing it. If you’re part of a group, what’re you going to say? Saying ‘no’ isn’t that easy. Besides, no one would want to be with you if you always said ‘no.’”

Shaunte, who had been listening quietly to the conversation up to this point, joined in. “You know, it’s like in this whole world, everyone thinks about violence now. It’s dangerous out there. You may not be able to go to the next street without fear for your life. That’s why I feel the need to do everything now—I may not be here tomorrow. My philosophy? Enjoy life with your friends, even if it’s dangerous.”

Listening carefully to the students’ comments and taking notes, Ms. Kurzan joined the dis- cussion at this point. “I have a child who is eleven years old. I try to tell him that if someone asks him to do something that’s wrong, he should just say ‘no’ or get up and leave ... but I see you don’t think this is an easy way to avoid trouble.”

In a somewhat sarcastic tone, Shaunte replied, “You parents don’t recognize how serious peer pressure is. You think of your kids as little darlings who will always do the right thing. I can assure you this isn’t the way it is in real life. You have to see your kid in a group situation. Then you’ll understand.”

As the meeting went on for another couple of hours, it became evident to the school administrators that peer pressure plays a significant role in bringing a major part of these problems to the school environment.

When the students had left his office, Mr. Rambush and Ms. Kurzan commenced to con- sider alternatives that could help tackle these issues. Ms. Kurzan suggested looking into a corrective program based on peer pressure she had read about in the newspaper the previous week.

Developed by a school in Kilgore, Texas, the program was designed to maintain a drug- free school environment. The Kilgore group is a student-run program that relies mostly on peer pressure to keep its members off drugs. Perks include recognition from the school

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and community, discounts at local businesses, and other privileges. Students who join the Kilgore group pledge to remain drug free. They’re subjected to initial drug testing and then random future testing. The results of these tests are handled in such a way that the identi- ties of the test subjects are known only to other students, but not to the students’ parents.

As Mr. Rambush contemplated this possibility, he recognized that initiating this pro- gram at his school would require a lot more than the school’s commitment to adopt it. Community support, he thought, would be vitally needed for such a program to bear fruit.

Respond to the following based on the reading.

1. What factors underlie the strength of peer pressure as a type of influence? Why is it difficult for most people to go against group mandates?

2. Do you agree with the claim that today peer pressure underlies most teens’ devious behavior? Support your answer.

3. Do you feel that corrective programs such as the one developed by the school in Kilgore, Texas, would be effective in alleviating the drug problem in schools? Why or why not?

CHAPTER 11

CHAPTER 11 REVIEW QUESTIONS 1. In general, why is the US Census Bureau’s current definition of the term family

considered inadequate? In light of the ever-increasing number and diversity of nontraditional households, what revised definition of family would you propose?

2. In the realm of decision making within the family, research has revealed the important role children play in the decision process. For what types of products do children exert the greatest influence? How does the age of the child affect the degree of his or her influence?

3. As households progress through the successive stages of the family life cycle, the categories of products and services acquired at each stage tend to change. Cite examples of products and services that are likely to be needed and purchased during the honeymooner stage and those that are typical during the parenthood stage.

4. Assume you’re a marketer of family vacation cruises and would like to broaden your customer base to include singles. What strategies or actions would you consider taking to accomplish this objective?

5. One of the benefits of generational marketing is its ability to help segment the market based on the similarity of life experiences within specific customer groups. Consider the generation known as the Boomers I cohort. What specific language and symbols would you suggest advertisers use to evoke an emotional response from members of this group?

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CHAPTER 11 CASE STUDY AND QUESTIONS The Issue of Employing Older Workers

Today, the United States is undergoing a major demographic shift in the age structure of its population. The average and median age of Americans is rising and affecting the com- position of the workforce. For example, by the year 2020, 55 percent of the civilian labor force will be age 55 years and over, up from only 13 percent in the year 2000.

Moreover, the number of workers beyond the traditional retirement age of 65 is increasing, and will constitute more than 7 percent of the American labor force by 2020. It’s also pre- dicted that by the year 2030, the number of people age 65 and older will double, reaching a staggering 72 million adults, representing 20 percent of the total US population.

These shifts in the demographic structure of society are largely attributed to advances in public health and medical sciences, as well as improvements in technology. This prog- ress has permitted not only the enhancement of health, but life expectancy as well. For instance, in the past 50 years, life expectancy has risen from an average of 70 years to an average of 78 years. These improvements brought with them the willingness of many older adults to work beyond the traditional retirement age, either to remain active and productive or out of financial need.

Recognizing these shifts in society, the US government, as well as many private firms and industries, have initiated steps to help accommodate this new trend. For instance, the US Department of Labor’s Employment & Training Administration (ETA) established the Senior Community Service Employment Program (SCSEP), which provides on-the- job skills training to individuals 55 years of age or older with limited financial resources. The ETA also designated the last full week of September of every year to celebrate and promote “National Employ Older Workers Week,” which aims to increase awareness of this labor segment and develop innovative strategies to tap it.

Concerning private industry, there are a large number of entities that have initiated hir- ing policies to accommodate older workers. These include various firms ranging from McDonald’s and Walmart to the National Institutes for Health, where workers over 50 are welcomed and hired.

A closer look at the prevailing attitudes of firms regarding employing older workers reveals two distinct managerial views concerning such a policy. Successful employers of older workers maintain that such individuals have the following characteristics:

n Are as productive as their younger counterparts

n Have a broader range of experience

n Display greater loyalty to the firm

n Have capacity to mentor less-experienced workers

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n Have a strong work ethic and commitment to the job

n Have lower propensity to quit or change jobs

n May have an established network of contacts and clients

On the other side of the issue are some recruitment managers who falsely assume that there are risks in employing older workers. There exists a common belief that such workers have the following negative characteristics:

n Are less productive than their younger counterparts

n Are less successful in training

n Tend to require more short-term sickness time and leaves of absences

n Exhibit reduced speed and judgment capabilities

n Cost the firm more due to health problems

n Are only interested in working for short time spans

n Require that firms create a system of flexible and part-time working schedules

Observers have always advocated the idea that employment of older workers shouldn’t be viewed as a “younger versus older” battle for jobs. Some firms and institutions mistak- enly believe that productive older workers should make way for younger employees and open up the job market for those starting their careers. Nevertheless, the facts show that such actions may negatively affect productivity, increase staff turnover costs, and may even be illegal, since it’s unlawful to discriminate directly or indirectly on the basis of age in the workplace.

Respond to the following based on the reading.

1. A few companies and institutions have attempted to adopt an employment policy that advocates the replacement of productive older workers to open up career slots for younger individuals. Do you support such actions? Defend your reasoning.

2. What effect does eligibility for Social Security benefits have on the stature of older workers in society?

3. Public pension programs have largely been deemed unsustainable since the Great Recession of 2007. Most of the largest public entities have a standard retirement age of 65, but recent efforts by government and others are pushing to raise the retirement age. Is the effort to do so justified in terms of benefits to society? Explain.

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CHAPTER 12

CHAPTER 12 REVIEW QUESTIONS 1. Once a firm has been able to identify influencers, the next step is to initiate strategies

that can enhance engagement of those influencers. Identify a number of practices that companies may be able to employ as tools toward attaining this objective.

2. Sports heroes, movie stars, and other popular celebrities are often used by adver- tisers as opinion leaders and influencers. How do you explain people’s tendency to heed such advice, particularly in cases where no relationship exists between a celebrity’s expertise and the promoted product or service?

3. The exponential growth of the Internet and social media has significantly altered the way word of mouth (WOM) operates in society. As a result, a group known as the brand advocates has emerged. What characteristics tend to distinguish individuals who fall into this category?

4. Assume that a popular motorcycle company hired you as a consultant to identify influencers that the firm can contact to help promote its line of bikes. What method or methods of identifying influencers would you employ to accomplish this objective?

5. Executives of a California winery were wrestling with the question of how best to spend the company’s promotional dollars. One alternative was to allow tours of the winery during which wine tasting would occur as guests sample hors d’oeuvres. The second alternative would be simply to spend money on an advertising campaign in the mass media. The third alternative doesn’t require major dollar expenditures for advertising, but rather relies on viral WOM by circulating newsworthy information about the winery on the Internet and in social media. In your opinion, which strategy would likely be more effective in promoting the winery’s products? Why?

CHAPTER 12 CASE STUDY AND QUESTIONS Obesity…and the Expanded Role of Healthcare Providers

The problem of obesity has hit epidemic proportions in the United States. Adult obesity rates have more than doubled since 1980, from 15 percent to more than one-third of the population in 2015. Rising obesity rates have major health consequences, contributing to the increased occurrence of more than 30 serious diseases. For example, obesity relates to conditions that include heart disease, strokes, type 2 diabetes, and certain types of cancer. Increased intake of unhealthy foods, lack of physical activity, and prevalence of stressful jobs are among the major factors that have contributed to this epidemic.

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Modern consumers who are experiencing weight issues usually attempt to lose weight through various means, such as dieting and exercising. In addition to making lifestyle changes, many people diet by skipping meals, reducing their food intake, avoiding foods known to be high in fat and sugar content, and taking diet pills and various herbal supplements.

This last alternative—taking dietary supplements—seems to be one of the favorite courses of action among dieters, largely due to the ease of buying these pills, their wide availability, and their relatively low cost. Dieters—influenced by advertising claims or sim- ply by the recommendations of friends and online acquaintances—proceed to purchase and use these supplements. This self-diagnostic action is taken without any consultation with a physician and often without any knowledge of the possible negative side effects.

While many such pills and supplements are suitable and helpful in addressing the prob- lem of excessive weight, a number of them have been shown to be unhealthy and even dangerous. Many users of such pills and supplements cut out basic food groups, such as carbohydrates, meat, fruit, or vegetables. The wrong choice of diet pills or herbal supplements can sometimes lead to deficiencies and dire health consequences.

Among obese patients, the main reason for self-diagnostic and self-prescribing behavior is to avoid the high cost of seeing a physician. Insurers and government health programs have traditionally refused to reimburse doctor-supported weight-loss counseling. It was a well-known fact among physicians that a diagnosis code of obesity on their insurance claims would result in getting them rejected for payment.

It’s ironic that insurance companies would pay for hypertension, diabetes, osteoarthritis, heart attacks, sleep apnea, low testosterone, congestive heart failure, and strokes—all consequences of obesity—but wouldn’t pay for treating obesity itself. In seeing a physi- cian, an obese patient would thus be responsible to pay charges for the services of the doctor, which are usually hefty, especially when a multi-visit program is recommended.

Therefore, it was welcome news to overweight individuals when the Centers for Medicare and Medicaid Services (CMS) announced in November 2011 that Medicare would begin paying for obese patients to undergo physician-supervised treatment for weight loss. In announcing that it would cover obesity treatments, CMS—in effect—was admitting that the decision had been based on economic factors. The agency came to realize that treat- ing obesity may be cheaper in the long run than treating the diseases mentioned above, toward which overweight persons are predisposed.

In addition, the personal influence of a physician within a face-to-face office visit can be valuable in getting an obese patient not only to comply with the doctor’s recommendations but to stick with the prescribed weight-loss program. Such individualization can also result in a personalized diet or fitness program for the patient as well as the opportunity to assess the patient’s serious health concerns and address any emotional and psychological issues that contributed to the weight gain in the first place.

In addressing the obesity treatment issue as a preventive service, the CMS announced that obese Medicare beneficiaries were eligible for face-to-face visits with a qualified primary care practitioner in a primary care setting. During the first month, patients qualify

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for one face-to-face office visit per week. During months two though six, they’re eligible for one visit every other week. For months seven through twelve, patients are eligible for one face-to-face visit per month if the beneficiary meets the 3 kg weight-loss requirement.

This action by CMS perhaps represents an initial step in triggering a change in society’s perspective and understanding that obesity is a disease, not unlike diabetes, and that it requires both physiological and psychological treatment and support for patients who need help the most.

Respond to the following based on the reading.

1. The action to permit payment for doctor-supervised weight-loss services for obese patients confirms the belief of the CMS that the presence of a healthcare provider in the process of treating obese patients can help accomplish patients’ weight-loss objectives. In your opinion, what factors serve to confirm this belief?

2. Weight-loss programs for the obese are lengthy and require many face-to-face visits with the physician. They also require regular monitoring of patients’ compliance and progress by doctors. Do you believe that healthcare providers would endorse such a program in view of their already busy schedules? Why or why not? What would you recommend to get healthcare providers to sign on and offer personalized weight-loss programs for obese patients?

3. Many diet-pill and herbal-supplement companies as well as so-called diet centers spend millions of dollars every year promoting their brands. Many knowingly over- state the effectiveness and speed of results from using their products or services. They often recruit well-paid celebrities to endorse and promote their brands. With the prevalence of exaggerated claims and hype over many popular weight-loss products and services, what advice would you offer overweight individuals to help them make an informed choice among the myriad of alternatives available?

CHAPTER 13

CHAPTER 13 REVIEW QUESTIONS 1. In the United States, the entire class structure is currently going through some

major changes and shifting patterns. Describe the nature and causes of these changes or shifts.

2. Consumer researchers use a number of methods to measure social class. Briefly explain each method and comment on its practicality and value from the perspective of studying consumer behavior.

3. The class stature of women in today’s society has changed drastically. Comment on this statement, citing the ramifications of this trend both to society as a whole and to the field of consumer behavior.

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4. In contrast to some foreign countries, it has been said that the United States has an open class system. What are the main factors that permit such mobility in society?

5. It’s been suggested that social class influences various aspects of consumer behavior such as retail store choice and media habits. Explain, and support your answer with specific examples.

CHAPTER 13 CASE STUDY AND QUESTIONS Walmart Chases the Affluent

A few years ago, the phone on Ms. Kaplan’s desk was ringing. The caller was her boss, Mr. Donald Soderquist, who was, at that time, the chief operating officer of Walmart. He asked her to bring in the file on the new Evergreen, Colorado, store. He requested the folder that morning to prepare for the executive planning session scheduled for later that afternoon.

The meeting was to be attended by the other Walmart top executives, including H. Lee Scott, the company’s executive vice president of merchandising; Thomas Coughlin, chief operating officer of Walmart’s store division; and Robert Walker, manager of the newly planned Evergreen store. The purpose of the meeting was to address merchandising and other policies for a new store that Walmart was planning to open the following year in Evergreen, Colorado. Additional topics that were covered in the meeting included plan- ning the store layout, staffing, and promotions, as well as identifying the competition the new store was expected to encounter.

What was different about this meeting was Walmart’s new strategy of locating stores in upscale, ritzy suburbs. Evergreen, Colorado, was a town of 20,000 upper-middle-class residents, mostly composed of artists, engineers, scientists, and doctors, as well as other professionals whose median family income was $113,000, which was double the then national average.

At that time, the self-proclaimed “discount king” had catered mainly to rural and middle- income shoppers. The company, however, felt that beyond wooing middle-income shop- pers, there was nowhere to go but upscale. The greatest potential for growth, the company executives felt, lay in catering to people with high incomes. With the company’s more than 2,400 stores nationwide at that time populating the majority of rural and middle-income areas, little remained to be pursued except the upper middle class.

As Mr. Soderquist leafed through the folder on the Evergreen store, he recalled the modest beginnings of the Walmart empire when its founder, Sam Walton, opened his first store in Rogers, Arkansas. Basing his strategy on price discounting and driving costs out of the merchandising system, Sam Walton’s chain rapidly began to take off. In 2011, Walmart was the number 2 company in the Fortune 500, with annual revenues reaching $447 billion, and profits amounting to $15.7 billion.

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Mr. Soderquist had always marveled at how Sam Walton selected cities for his new stores. He would buzz towns in a low-flying airplane, studying the lay of the land. When he had triangulated the proper intersection among a few small towns, he would touch down, buy a piece of farmland at that intersection, and build up another Walmart store. Mr. Soderquist thought to himself how drastically different the site selection procedure is today in compari- son to its predecessor. Today, sophisticated scientific and business analysis techniques are used to select the appropriate sites.

The challenge with opening stores in upscale neighborhoods is the folksy, down-home image customers have of Walmart. The company’s advertising and corporate culture have always stressed the working class and poked fun at the upper crust and the fashion conscious. The company’s ads typically feature chunky, middle-aged employees in boxy clothes reiterating the low-price policy typical of Walmart.

When the meeting commenced later that afternoon, two major issues dominated the discussion. The first dealt with the expected competition for the new store and the second addressed the store’s merchandising strategy and layout.

Regarding the first issue, the executives recognized that the competition in the Evergreen area was expected mainly from the Minneapolis-based Target chain. Long before Walmart’s efforts to invade urban areas, Target established its presence in cities and suburban markets with discount stores that appealed to both the upper middle class and low-income shoppers. With its signature of wide aisles, shiny floors, upscale merchandise, and cheery “team members,” a prevailing belief was that wealthier shoppers find Target stores appealing.

The committee also examined a recent report regarding the tendency of high-income Americans to shop at Walmart versus other competing stores. In the category of “affluent Americans’ favorite stores,” Walmart ranked first at a 35 percent preference rate versus Target at 22 percent, Home Depot at 17 percent, Best Buy at 15 percent, and Walgreens at 12 percent.

Concerning the layout, the committee felt that the store’s design should be markedly differ- ent from the boxy style characteristic of other Walmart stores. Members felt that it should feature a stone pillar and oak exterior, vaulted roof, and a parking lot beautifully landscaped with evergreen trees. A layer of sod was also suggested to surround the store to create an atmosphere likely to attract a herd of elk that live in a nearby woods. Regarding the mer- chandising strategy, the committee recommended stocking more high-end merchandise, including computers, sporting goods, jewelry, and apparel—particularly an expanded array of infant clothing.

As the committee deliberated for two hours over the plans for the new store, a disturbing issue arose—the Evergreen store’s margin. At the crux of the problem are the operat- ing costs of the store, which were expected to be very high. In the meantime, Walmart was anticipated to continue its low-price strategy. These facts meant that prices at the Evergreen store could never be high enough to reflect the exceptionally high operating

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cost. The result? Margins of stores run in such affluent suburbs are doomed to be sub- standard—a price Walmart would have to pay if it were to continue its strategy of chasing after the upper class.

Respond to the following based on the reading.

1. In your opinion, should Walmart continue to pursue its strategy of opening stores in upscale suburbs in view of the low margins expected to materialize at these sites? Why or why not?

2. Some observers claim that the upscale appeal Walmart is attempting to establish not only will confuse its present core customers in the working class but also will fail to gain sufficient volume from upscale shoppers. As such, this strategy appears doomed to fail. Do you agree?

3. Considering the strong competitive position that Target has already established in upscale suburbs, can Walmart successfully compete? What strategies can Walmart use to penetrate the competitive barrier?

CHAPTER 14

CHAPTER 14 REVIEW QUESTIONS 1. Ethnocentrism is the tendency to make cross-cultural evaluations of others based

on one’s own views. What causes this tendency to arise, and what can be done to avoid or lessen it?

2. Researchers have developed a number of methods to assess culture. Explain these methods and comment on which would provide results quickly and economically.

3. Hofstede’s five cultural dimensions help explain how and why people from various cultures behave as they do. Select two of these dimensions and discuss them from the point of view of their ramifications for consumption behavior.

4. One of the 10 sociocultural dimensions proposed by Harris and Moran on which cul- ture can be analyzed is values and norms. How do values influence behavior? What is the relevance of means-end chains in learning about the relationship between values and behavior in a culture? Explain via an example.

5. Based on what you’ve learned from the discussion on subcultures in this chapter, compare and contrast the profiles of black and Hispanic American consumers. What cultural similarities or differences characterize these two subcultures?

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CHAPTER 14 CASE STUDY AND QUESTIONS Enabling the Disabled

In April 2011, Ms. Jo Heath, who was wheelchair bound and suffered from multiple scle- rosis, was about to board RyanAir on one of her trips. As departure time approached, she moved closer to the boarding gate to get on the plane. However, the airline staff refused to offer her any boarding assistance, claiming that health and safety reasons prevented them from accommodating her.

Ms. Heath took her case to the courts, where she spoke about the humiliation she felt, as her husband had no choice but to carry her onto the plane with everyone watching. In her lawsuit, she informed the judge that she had been treated like an inconvenience, not as a passenger, and that the airline had made her feel as though it were her fault for being a disabled person.

The judge ruled in her favor, and Ms. Heath received a generous settlement in her case. The ruling in her favor was in line with both Title 1 of the Americans with Disabilities Act of 1990 and the Air Carrier Access Act of 1986. The latter act prohibits discrimination in air transportation by domestic and foreign air carriers against qualified individuals with physical and mental impairments.

This case is by no means unique. Such tales of discrimination abound in society, where 21.8 percent of the labor force consists of persons with disabilities. In the workplace, dis- crimination against persons with disabilities has been one of the worst social stigmas facing society. Governments all across the world have been passing laws that attempt to prohibit workplace prejudice against the disabled. Many of the enacted provisions address issues related to job accessibility and fair treatment. For example, lack of appropriate infrastructure necessitates physical accommodations for employees, such as ramps for wheelchairs, documents printed in Braille, or closed captioning for videos.

Another provision covers the recruitment process, where establishments are prohibited from rejecting job applicants based solely on their disability. Such mandates also establish guidelines for the appraisal of salaries, promotions, separations, and termination of the disabled. Other provisions include medical expense coverage and disability insurance.

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In the United States, accommodating persons with disabilities has become a major social issue for federal and local governments, which have enacted a number of regulations to enhance the conditions of the disabled and protect them from possible discrimination. Among the federal mandates are the following:

n The Rehabilitation Act of 1973 prohibits discrimination on the basis of disability in programs receiving federal financial assistance and ensures that electronic information is accessible to persons with disabilities.

n The Individuals with Disabilities Education Act (IDEA) governs how states and pub- lic agencies provide early intervention, special education, and related services to eligible infants, toddlers, and youth with disabilities.

n The Civil Rights of Institutionalized Persons Act (CRIPA) grants authority to investi- gate abuse and neglect in places such as jails, prisons, mental health facilities, and nursing homes.

n The Air Carrier Access Act of 1986 prohibits discrimination against the disabled by domestic and foreign air carriers.

n The Fair Housing Act prohibits housing discrimination on the basis of race, color, religion, sex, disability, and national origin.

n The American with Disabilities Act (ADA) was enacted in 1990 with the goal of elim- inating discrimination in areas of operated public accommodations, transportation, and telecommunications, to secure equal opportunities and rights for persons with disabilities.

With today’s high unemployment rate, the disabled are the first to suffer in terms of locat- ing and keeping jobs. Employers today have a moral and legal responsibility to make reasonable adjustments to the practices, policies, procedures, and physical features of their premises to enable the hiring and retention of disabled persons—particularly since these accommodations frequently involve little or no cost to the business.

Respond to the following based on the reading.

1. In view of all the laws that have been enacted to curtail discrimination against the disabled, how would you explain the ongoing occurrence of cases such as that of RyanAir? Aside from legal penalties, what other procedures, policies, and practices would you suggest be adopted to prevent such violations?

2. What measures, programs, or actions should human resource departments in US firms put in place to attain the goal of hiring and retaining qualified disabled individuals?

3. While most major US corporations today do their best to accommodate the needs of disabled employees, owners and managers of some smaller firms still think that the added cost of adjusting their facilities, policies, and work procedures to accommodate the disabled is a major and costly undertaking. As such, these modifications or adjustments are economically unrealistic, particularly in today’s less-than-favorable economy. Is this view justified? Should exceptions be made for small businesses? Why or why not?

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ANSWERS Chapter 1

Chapter 1 Review Answers

1. Consumer behavior (CB) is a field of study that addresses how people buy and why they act as they do. The study of CB investigates how individuals plan, purchase, use, and dispose of goods and services that satisfy personal or household needs.

Analysis of CB is a complicated topic that entails surveying numerous theories and published research studies that offer insight into purchasing tendencies. No single discipline adequately explains all aspects of consumption; thus, the study of CB borrows from diverse disciplines, spanning the spectrum of the behavioral sciences. Such disciplines include psychology, sociology, social psychology, anthropology, and economics.

2. Negative media reports have the effect of raising people’s psychological concerns about the future. These feelings lessen consumer confidence in the economy and have the ripple effect of a self-fulfilling prophecy.

3. Concern about personal safety and protection of property has affected the products and services consumers buy. Many have resorted to arming themselves, installing sophisticated security systems in their homes and cars, and moving to remote suburbs.

Concern for personal safety also affects the ways consumers shop. Some shop during daylight hours, shop with a companion, drive to safer neighborhoods to shop, shop at stores that provide close-by and well-lit parking lots, or shop at outlets where security personnel escort customers to their cars. Some fear traveling to downtown shopping districts and prefer to shop at neighborhood centers and suburban malls. Many are reluctant to load themselves down with packages if they rely on public transportation. Others use services such as Peapod, personal shoppers, or simply buy from catalogs or online and have purchases delivered to their door.

In recent years, one of consumers’ major fears is identity theft. Identity theft begins with misappropriation of names and other pieces of personal information and isn’t recognized until consumers see mysterious charges on credit card bills or get turned down for credit.

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Chapter 1 Case Study Answers

1. In many ways, this is discriminatory since it excludes many food establishments that are a significant part of this regulatory “food establishments” law. Consider, for example, the case of the exempted movie theaters (some movie chains have 548 theaters), where a medium-sized tub of unbuttered popcorn can contain 1,200 calories. The act, similarly, doesn’t apply to most pizza parlors, bowling alleys, air- planes, and other places where less than half of the floor space is devoted to food sales. The food purchased from such places represents an equal component of people’s calorie intake.

The justification for such exemptions is the cost of implementing the new regula- tions. These supposedly small establishments would bear a high cost for putting into effect such legislation, since calculating calorie counts is difficult, particularly when consumers have the opportunity to customize their orders.

2. Diners must be aware of restaurants’ continuous attempts to make health claims about their foods. For example, “cholesterol free,” “fat free,” and “calorie free” are all popular claims on restaurant menus. Diners seeing “low fat” on an item (like ice cream) should realize that this description means no more than three grams of fat in a standard-size order. Restaurant often serve much larger portions than the so-called standard size. Restaurants are unlikely to reveal the true fat or calorie count for such orders—a situation that requires customers to beware.

Thus, in the absence of such information on restaurant menus, diners have the option of asking for nutritional information for the foods they order. Restaurants are legally obligated to provide such information. Also, since restaurants are free to determine their own serving sizes (compared with standard serving sizes), diners may choose smaller portions. Other alternatives include customers’ requests for their foods to be specially prepared or choosing healthy substitutes for calorie-laden menu items.

3. The following are tips for healthy eating at fast food restaurants:

n Make careful menu selections by paying attention to the descriptions on the menu. For example, dishes labeled “deep-fried” or “pan-fried” are usually high in calories as well as fat and sodium content.

n Drink water with your meal, since soda is a large source of hidden calories.

n “Undress” your food. Beware of calorie- and fat-packed salad dressings, spreads, cheeses, sour cream, gravies, and so on.

n Don’t be afraid to special order. For example, if your food is fried or cooked in oil or butter, ask to have it broiled or steamed.

n Watch portion size.

n Watch your salt intake. Fast food restaurant items tend to be very high in sodium content.

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n Avoid buffets—even seemingly healthy ones like salad bars. You’ll likely overeat to get your money’s worth.

n Eat mindfully. Chew your food more thoroughly and avoid eating on the run.

n Remember the big picture. Moderation is always key.

Interest in heeding such suggestions varies significantly from one person to another. Such differences are related to factors like ethnicity, health awareness issues, situational factors, interpersonal influences, and culture.

Chapter 2

Chapter 2 Review Answers

1. Psychographic segmentation is based on the study of consumers’ lifestyle and per- sonality characteristics. Thus, psychographic profiles are descriptive sketches of consumers’ lifestyles, obtained by having individuals respond to a battery of state- ments—called AIO inventories—designed to reveal their activities, interests, and opinions. AIO inventories are lengthy questionnaires in which respondents indicate how strongly they agree or disagree with each statement provided—usually on a six-point scale. Subjects’ responses are cluster-analyzed and results are cross- tabulated with a particular purchasing behavior of interest to the researcher. One of the best known and most widely used psychographic systems is VALS, a service of SRI Consulting Business Intelligence.

2. Geodemographic segmentation blends geography and demographics to explain and predict behavior by using typologies—placing consumers into categories whose members are assumed to behave similarly. Geodemographic cluster systems sort neighborhoods on the basis of income, education level, occupation, home-ownership rate, family type, age grouping, and other characteristics. Geodemography blends household databases developed by the direct marketing industry with government census data using census tracts or block groups to produce a cluster system in which consumer categories could be assigned to small units of geography (ZIP codes, ZIP+4, or census tract and block group). Geodemographic segmentation assumes that people who live in close proximity within the same neighborhood tend to be alike and buy much the same types of products and services; thus, a ZIP code can classify individuals according to their tastes.

PRIZM (Potential Rating Index by Zip Market, from Nielsen Claritas, Inc.) is just one of the useful geodemographic taxonomies of US consumers by postal ZIP code. Clusters are assigned colorful names and descriptive labels as well as consumption indices for a variety of product categories. A broad range of companies use PRIZM. Some merge PRIZM data with their own internal databases or research to better understand their markets. Geodemographic segmentation systems like PRIZM have proven successful in store-location analyses, in directing advertising media buys, in locating pockets of prospects for a product or service, and in providing direct marketers with a highly effective tool for precision targeting.

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3. There are four basic market-targeting strategies:

n Firms that follow an undifferentiated strategy view the market as a single large domain with no individual segments, and assume that individual con- sumers have similar needs that can be met with a single marketing mix. An undifferentiated approach is feasible in the case of homogeneous product commodities or when a firm markets a product that’s new to the marketplace and where competition is minimal. Advantages of this strategy mainly relate to savings in production and marketing costs due to standardization.

n Firms that follow a multisegment strategy serve two or more segments and develop separate marketing mixes to suit the needs of each. Such firms serve a number of different market segments and offer a diversified product line. Unique product features designed specifically to appeal to the peculiarities of each market segment allow the firm to charge higher selling prices. Market risk is low, since sales declines or losses in some segments are usually cushioned by profits realized in others.

n Firms that follow a concentration strategy focus their marketing effort on one segment of a larger market and develop products and marketing pro- grams tailored specifically to the needs and preferences of that segment. Specialization enables firms to achieve a prominent position in the market due to their precise knowledge of the specific preferences of their target market segment.

n Many small neighborhood stores, many service providers, and some large- scale marketers follow a customization strategy and tailor their goods or services to meet each customer’s requirements. While individualization is costly, the high level of customer satisfaction that results empowers firms to charge higher selling prices.

Mass customization and personalization are two concepts that relate to a customization strategy. Mass customization entails combining technology and customer information to tailor products and services to the specific needs of each customer, while still maintaining the advantages of large-scale oper- ations. Personalization of standard items is also widely used as a targeting strategy. Personalizing has been used successfully for products such as lin- gerie, sweaters, shirts, bags, slacks, shoes, greeting cards, and bicycles, as well as for services such as those provided by physicians, lawyers, tax consultants, hairstylists, and interior decorators.

4. Targeting criteria include

n Size (is the segment large enough)

n Potential (the segment’s resources, willingness, ability, and authority to buy)

n Measurability (availability of data to determine potential)

n Accessibility (can the segment be reached economically)

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n Compatibility with the company’s current line and objectives

n Stability, particularly over the long run

n Defendability against aggressive competitors.

5. Market segmentation entails three inseparable steps:

n Segmenting is the act of dissecting the overall marketplace into a number of submarkets that may require different products or services and that can be approached with different marketing mixes.

n Targeting entails reviewing the segments and deciding which one(s) to pur- sue. Segmentation efforts produce a market profile (a portrait that includes the number of segments that exist within the larger market and outlines the characteristics and motivations of people or organizations within it, as well as competitors’ positions relative to the specific product of interest). Based on this profile, marketing managers have to evaluate the various segments and decide how many and which one(s) to target.

n Positioning establishes an intended and differentiating image for a product or service. This image communicates to the target segment(s) the uniqueness of the brand. Positioning strategy follows logically from targeting and has no significance apart from it.

Chapter 2 Case Study Answers

1. The growth of Starbucks in the United States has been astronomical, with the company having expanded from a single shop in Seattle in 1971 to more than 23,000 coffee houses worldwide. Among the factors that propelled this growth were the following:

n Innovation—the company’s ability to roll out various types and flavors of gourmet coffees for customers to choose from, as well as the firm’s success in providing healthful snacks such as sandwiches, salads, and baked goods designed to appeal to health- and cost-conscious consumers. All is done in a homelike environment and elegant atmosphere.

n Employment philosophy—a great deal of care was taken by the company to ensure employees’ courteous and friendly interaction with customers to maintain and enhance the “lifestyle experience” customers seek and expect. Starbucks invests heavily in training its staff, where each employee is viewed as a business partner.

n Expansion strategy—Starbucks established strategic partnerships with many other businesses that serve the same clientele. This cooperation ranged from manufacturing (like VIA Ready Brew coffee packs) to retailing (like bottled versions of Starbucks’ Frappuccino), to ice cream parlors (like Starbucks ice cream bars). In addition, Starbucks recently expanded to China and the Asia-Pacific Region, adding them to its existing international presence.

n CSR—the philosophy that the company adopted as part of its mission statement to commit to social, environmental, and ethical aspects of the business.

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2. Starbucks’ strategy overseas reflects essentially the same pattern that the company employs domestically. The firm maintains the same product mix, which includes coffees, teas, a variety of fresh food items, sandwiches, desserts, as well as other beverages and snacks. It also sells a variety of coffee and tea products, as well as various coffee-related items. For store design, the company maintained essentially the same decor and elegance, as well as Internet access for its custom- ers. In addition, Starbucks applied the concept of CSR in training and treating its employees.

The company also realizes that within every society, including developing coun- tries, there’s a market segment that’s very willing and able to pay higher prices for Starbucks coffee—believing that they’re not only buying an enjoyable beverage, but also are making a social statement at the same time. Proof for this phenome- non is demonstrated by Starbucks’ profitable operations in more than 55 countries in North, Central, and South America, Oceania, Europe, Africa, and Asia.

3. Winning a free beverage or food item every day for 30 years had a magical effect on the company’s bottom line. In 2015, more than 2.3 million customers entered the company’s first “Starbucks For Life” prize giveaway. The promotion invited customers to participate in a chance to win one of 482,000 instant prizes, and an additional 10 customers would receive the ultimate prize valued at $54,275. This latter prize included an engraved Starbucks card made of 10 carat hammered gold and inscribed with the winning customer’s name.

Starbucks’ business is enhanced greatly due to the fact that it was necessary for a consumer to enter the online “Wonderful Card Ultimate Giveaway” for a chance to participate in this promotion and win. Customers may do so up to twice a day, using two different entry codes from the bottom of their Starbucks receipts, an action that greatly enhanced the traffic into the company’s stores.

In terms of the program’s cost to the company, the total value of the 10 grand prizes is estimated to be around $600,000. In addition, the cost of other instant prizes is estimated be an additional $200,000—with most of these prizes selected from Starbucks’ own merchandise offerings. These figures together would bring the total prize cost to less than $1 million. However, the major cost isn’t limited to the value of the prizes themselves, but rather in the managerial aspects of run- ning and maintaining the promotional program. Such activities range from various online administrative services to actually allocating, distributing, keeping track of, and communicating with winners. Moreover, with the enhanced traffic to Starbucks stores, hiring additional personnel becomes a necessity.

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Chapter 3

Chapter 3 Review Answers

1. The differential threshold or JND is the smallest increment in the intensity of a stim- ulus that can be detected. Weber’s Law describes the relationship between the original intensity of a stimulus and the change in intensity that’s required to produce a recognizable difference. According to Weber’s Law, the size of the least detectable change in the intensity of a stimulus—the JND—is a function of the original intensity.

Marketers concern themselves with the JND for a number of reasons. Whether marketers desire a change to be discernible by consumers or not, they need to estimate the JND. Marketers want consumers to notice price markdowns; thus, price cuts would be likely more than the JND. On the other hand, marketers don’t want consumers to notice price increases, reduced product quality, or product downsizing; thus, changes would likely be less than the JND. In addition, market- ers that follow a strategy of price lining may widen the price gap between lines to create the impression of distinct and noticeable differences between them.

2. Consumers are usually affected by the situation in which they buy and use products. Situations entail factors above and beyond an individual’s characteristics and those of a product or ad.

Researchers of consumer behavior know that consumers tailor their purchases according to how they feel at a given time and the specific circumstances in which they find themselves. Such factors reflect people’s situational self-image—the physical and mental state they’re experiencing at a specific moment in time.

Situational variables are environmental circumstances that constitute the context within which purchases, product usage, and product-related communications occur. There are five classes of situational variables:

n The physical surroundings are readily apparent properties of a site that act on a shopper’s five senses.

n The social surroundings are other persons present in the shopping environment.

n Task definition refers to an individual’s defined role in the shopping process or a shopper’s reason for engaging in a particular behavior.

n The time perspective acknowledges that time can be regarded absolutely (hour of day, day of the week) or relatively (time until ... or time since ...).

n The antecedent state is the physical or psychological state of an individual immediately preceding his or her current state. Antecedent states are tem- porary and can be classified as momentary conditions (such as having cash on hand or having none) or momentary moods (states of being happy or sad, calm or angry, relaxed or excited).

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3. Gestalt psychology is a perspective that emphasizes perceiving cohesive wholes, recognizing meaningful patterns, and formulating total impressions rather than noting discrete elements of a stimulus. According to this view, the total configuration of the marketing mix is more important than product design, price, distribution, or promotion separately. Similarly, a brand, store, or company image is a total perception formed by processing information from many sources over time. Altering a seemingly minor element of product, package, or ad sometimes alters its entire character.

Consumers usually perceive environmental stimuli in a manner consistent with gestalt principles. These principles include the following:

n Closure (the tendency to perceive a complete picture even though some parts are missing)

n Grouping (the tendency to perceive large data chunks rather than small units—consumers integrate bits of information into organized wholes that enable them to evaluate brands over a variety of product attributes)

n Proximity (an object may become associated with another because of spatial or temporal nearness—objects close together seem to belong together or appear related in some way)

n Context (the surroundings, circumstances, or setting in which stimuli occur affects the way they’re perceived)

n Figure and ground (interaction between an object and its background is instru- mental in creating a desired perception; individuals also tend to distinguish stimuli that are prominent, such as a figure in the foreground, from those that are less prominent, such as one in the background)

4. Image is a person’s net impression of what a company, product, brand, or store is all about. It’s the mental picture, personality, and feelings that an object conveys to consumers. Since human perception is highly subjective, different consumers can have different images or impressions of the same product, brand, or store. Images can be built around notions of economy, safety, reliability, pleasure, status, distinc- tiveness, and so on. A product’s image can differ greatly from its physical attributes. For example, consumers often find it difficult to believe that brands in certain product categories are virtually identical. They come to insist on a particular brand largely due to image-building factors initiated by marketers (branding, packaging, pricing, and promotion).

Sources of images include sensory information from various sources that has been processed over time, personal experiences, and symbols that people have come to recognize and respond to. Together with other ingredients of the marketing mix, promotion—advertising in particular—plays an important role in establishing and enhancing favorable corporate, brand, and store images. To attract customers, manufacturers and retailers must project an image that’s acceptable to their tar- get market. Marketers know that consumers frequently form a preference for one brand or store over another because of its image. Image building presents a chal- lenge for marketers, since a mental image encompasses product attributes, types of people who use a brand, situations surrounding brand use, and so on.

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Retail stores also have images. In selecting stores, consumers look for those that match their self-concept; stores can comfortably attract shoppers or intimidate them. For some consumers, the same store is regarded as an acceptable source for some types of merchandise but not for others. Stores can’t be all things to all people. Retailers attempt to create images congruent with the self-images held by the market segment they target. Store images are shaped by retailers’ merchan- dise assortment, level of customer services, pricing policies, promotional activities, reputation for integrity, degree of community involvement, and atmospherics. Interestingly, consumers formulate images of stores regardless of whether or not retailers deliberately attempt to covey a specific image.

5. Consumers often judge the quality or value of a product on the basis of a variety of informative cues that they associate with the item. Some cues are specific product characteristics, whereas others are external to the product itself.

External cues include the price charged by the seller. This strategy, used over the long run, can create a psychological impression that the product is of high quality, unique, and prestigious. This price policy is often referred to as “prestige” or “sym- bolic” pricing. It’s commonly used for some brands of cars, clothing, perfumes, jewelry, cosmetics, and liquors.

Other cues that can influence consumers’ perceptual evaluation of a product or service may include uniqueness of the product (art objects), its innovative features (the iPhone), its prestigious brand name (Rolex watches), its associated superior service (BMW), and the distinctiveness of the channel that distributes it (Tiffany). Still others may include the container, country of origin, and warranty.

Chapter 3 Case Study Answers

1. Gun control advocates argue that:

n There are too many accidents involving unsupervised children playing with guns.

n Too many criminals purchase guns legally and then use them to commit crimes.

n Semi-automatic weapons are intended for military use only.

n Where guns are readily accessible, they can easily fall into the wrong hands.

n Privately held guns would not be a match to those used by criminals.

n There are significant loopholes in current gun regulations.

n There are many misguided individuals in society.

Gun rights supporters argue that:

n The Second Amendment protects private ownership of guns as necessary for protection of Americans’ liberties.

n Restrictions place citizens at the mercy of gun-toting criminals.

n Citizens have the right to self-protection.

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n Local police forces alone are unable to protect citizens adequately.

n Criminals are often able to buy guns without background checks even when the law bars such ownership.

n Guns don’t kill people, people do.

2. Gun control advocates argue that:

n Over the years, federal courts have been unanimous in holding that the Second Amendment protects only the collective rights of the states to maintain militias, not individuals’ right to own guns.

n Tougher laws restricting gun ownership are needed to curb rising rates of gun-related violence in the nation’s cities.

n Free access to handguns encourages people to take the law into their own hands and promotes vigilantism.

Gun proponents argue that:

n In society today, there’s an emerging consensus that the Second Amendment guarantees an individual’s right to keep and bear arms.

n There is no evidence that restrictions on gun ownership reduce the rate of violent crimes.

n City residents should be able to keep guns in their own homes to protect themselves against crime.

3. Throughout its 142-year history, the NRA has relied for financial support on its membership of more than 5 million, who pay yearly dues. In the last two decades, however, the deep-pocketed NRA has increasingly relied on the support of another constituency—the $12 billion a year gun industry—composed of manufacturers and vendors of firearms, ammunition, and related wares.

This alliance, which has grown even closer in recent years, includes ties that are both financial and personal and has led to mounting questions from gun control advocates about the NRA’s priorities. The key question was whether the nation’s most potent gun lobby was mainly looking out for its base constituency—the estimated 100 million Americans who own firearms (on the average, each owns 8 guns)—or whether it was acting on behalf of those who manufacture and sell those guns.

The questions about the NRA’s partnership with the gun industry, and whether such ties influence its agenda, have come to the forefront in the wake of the horrific mass shootings in recent years at various places. This suspected link prompted some lawmakers to introduce gun control bills responding to such horrendous events.

Many lawmakers along with the administration felt the responsibility to stand against the NRA’s clout by considering the passage of laws to curb gun violence. Among those are laws that place a ban on assault weapons and large ammuni- tion clips, mandatory background checks on all gun purchasers, increased mental health checks, and expanded penalties for carrying guns near schools. Also among those steps is an effort to secure backing from large-scale mass merchandisers (like Walmart) that sell guns, with an eye to undercut the influence of the NRA and gun industry allies.

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Chapter 4

Chapter 4 Review Answers

1. There are four major learning principles in classical conditioning:

n Repetition refers to the frequency of pairing a conditioned stimulus (CS) with an unconditioned stimulus (US). The more often they’re coupled, the more quickly learning occurs. Repetition offers a potential explanation for advertising wear-out.

n Contiguity entails spatial or temporal nearness. Learning occurs more quickly when the CS is presented close to the US. Marketers often attempt to associate products or product use with pleasant imagery via spatial or temporal proximity.

n Contingency suggests the CS should precede the US. The CS has predictive/ informational value—it’s anticipatory and signals that the US is about to occur.

n Congruity involves the consistency or relatedness of sequentially presented pairs of informational cues or concurrently encountered elements comprising a stimulus event. Congruity or relatedness facilitates encoding and retrieving information; on the other hand, presenting irrelevant material tends to produce lower recall.

2. Classical conditioning involves forming a connection between a CS and a US to teach a desired reaction. Eventually, the CS comes to produce the same response as the US. Operant (instrumental) conditioning, on the other hand, is driven by the consequences of behavior as subjects discover that certain actions produce more desirable outcomes than others.

Operant conditioning occurs through trial and error; subjects are likely to repeat behaviors that are followed by a reward and form a habit or response tendency. When behavior is punished, subjects test new responses until their actions are rewarded. While it might be said that classical conditioning involves stimulus substitution (a CS for a US), operant conditioning involves response substitution— fruitless behaviors are replaced with ones that are reinforced.

Marketers face at least one major challenge when applying operant conditioning— getting the desired behavior to occur so that it can be rewarded. Toward this end, marketers can apply the concepts of behavior shaping or ecological design.

n Where the probability that individuals will perform a desired behavior is small, marketers frequently break down a complex behavior into a sequence of simple component actions and then reinforce the successive components to increase the probability that the final action will occur. This practice is known as behavior shaping.

n Ecological design entails calculated planning of physical space and other facets of the environment to modify human behavior and expedite a desired response.

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3. The left hemisphere of the brain specializes in sequential processing, logical and analytical thinking, verbalization, and algebraic calculations. The right hemisphere specializes in interpreting and recognizing visual patterns, spatial perception, tac- tile sensation, and holistic understanding. For many individuals, the brain’s right (creative) and left (logical) hemispheres work together to process information.

One application of hemispheric specialization lies in the selection of advertising media. Since the left hemisphere is involved primarily with language and logic, it’s credited with processing the kind of information consumers receive from newspa- per and magazine ads. In the case of print ads, the written arguments, logic, and cues presented trigger left-brain processing and generate cognitive activity that encourages consumers to evaluate the pros and cons of a product or message.

The right hemisphere, which houses spatial perception, holistic understanding, per- ceptual insight, sensation, artistic talent, and recognition of faces, is credited with processing the kind of information one receives from TV commercials. In the case of television advertising, the passive and holistic processing of images viewed on the screen falls in the domain of the right hemisphere, which deals with the visual and audible components of the commercial, including the creative use of symbols, music, and art.

4. In vicarious learning, behavior change occurs because of observing the activity of others, called models, and the consequences of their behavior. Advertisers apply vicarious learning concepts in several ways. To develop a desired behavior, ads depict models (similar to the target audience) who use a sponsor’s product with satisfactory results, suggesting that the same rewards await viewers who use the advertised brand. To alter behavior, ads depict the mishaps that result from not using the sponsor’s brand and suggest the dire consequences can be avoided with the right product choice. To build upon responses already learned, ads depict models using familiar products in innovative ways or in ways other than those with which the items are usually associated.

Certain print and broadcast advertising copy formats such as problem-solution, slice-of-life, and testimonials are used to expose audiences to other people’s product experiences. In doing so, these copy formats employ vicarious learning concepts.

5. Sensory memory entails preliminary processing based largely on physical qualities of a perceptual object. In sensory memory, instantaneous processing of visual and auditory data occurs.

Short-term memory (STM) is the workbench for information-processing activity. It has very restricted capacity. In short-term memory, rehearsal and encoding occur. Rehearsal entails silent, mental repetition and linkage of data input to other infor- mation. It keeps information in the STM long enough to be encoded. Encoding is a process through which individuals select words or visual images to represent a perceived object.

Long-term memory (LTM) is the long-term information warehouse. When people sift through LTM to find the specific information they need, retrieval occurs.

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Information stored in LTM isn’t passive. People actively use knowledge structures, or arrangements of related bits of information, to store and organize information about products, brands, and stores in memory. The way they interpret and respond to incoming messages depends on how the information fits into their knowledge structures. If new information coincides with stored information, the communica- tion is more effective. If new information contradicts stored information, they may become confused and the incoming message will be less effective. Knowledge structures include product types and brand names as well as personal experiences and information acquired from such sources as media, salespeople, colleagues, friends, and family.

New information people acquire also affects the structure of stored information. Information in LTM constantly goes through a process of reorganization, and new links between information chunks are always being formed. This process links fresh material to information already in storage to make new data inputs more meaningful.

Chapter 4 Case Study Answers

1. It’s true that low-income people account for the majority of lottery ticket sales, and that lottery ticket sales are highest in the poorest areas. One study found that the poorest third of all households buy more than half of all the tickets sold in any given week. However, with these facts in mind, supports of lotteries argue that while win- ning the lottery may be an unlikely avenue for the poor to get rich, that’s also true with regard to the likelihood that they would land a job that pays high earnings. To them, the purchase of a lottery ticket constitutes both a form of entertainment and an investment of a seemingly small amount of money that just might give them a chance to change their lives.

2. Profits from lottery ticket sales go to government coffers. The share of lottery profits that’s paid out to players varies significantly by state—for example, from just 15 per- cent in West Virginia to 76 percent in Massachusetts. In some states, income from lottery revenue brings in more dollars than that brought in by corporate taxes. Thus, the lottery in these cases acts like an implicit 38 percent tax.

The promise of many lotteries is that the extra government revenue will benefit the communities by funding services such as public schools (California), environmental protection (Colorado), or school aid and crime control (Montana). In many cases, however, such intentions fail to materialize due to the fact that the revenue from lottery ticket sales tends to be unstable and hard to predict over the long term. Moreover, it’s also easy for lawmakers to divert the funds away from their intended lofty purpose to fund a more pressing or urgent issue.

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3. Studies show that the lottery in the United States represents one of the consumer products where spending on it holds reasonably steady over the long term, and even tends to increase during periods of recession. Among the specific reasons for purchasing lottery tickets are the following:

n The allure of a large jackpot in exchange for a small investment

n Aggressive and successful advertising

n Publicity about jackpot winners

n Ignorance of probability theory

n Televised drawings

n Overestimating the positive outcomes and underestimating the negative ones

n The credibility of government backing

n Players’ belief in their own luck

All of these are evidence that a lottery ticket qualifies as a product, albeit a partially intangible one.

Chapter 5

Chapter 5 Review Answers

1. Attitudes toward different product categories have a bearing on whether marketers use utilitarian-oriented or image-oriented ads. Attitudes serve four basic functions. When products help consumers gain rewards or avoid punishments, they serve a utilitarian function. If a product helps consumers achieve a goal, the resulting attitude would be positive. If a product doesn’t contribute to reaching their goal, consumers’ attitude would be negative. To promote a product, marketers can emphasize a utilitarian purpose the item can serve.

Some attitudes serve the purpose of social adjustment, which translates into a tendency to conform to the expectations of others and to permit social interactions to run smoothly and more efficiently. When products help consumers protect their ego and disguise their inadequacies, these products serve an ego-defensive func- tion. Consumers often prefer products because of their compensatory value. When the external environment presents threats to the ego, internal anxieties arise, and defensive behavior stems from attitudes that protect the ego’s delicate sensitivities. Marketers recognize that some products are bought to avoid anxiety-producing situations and offer reassurances of protection for consumers’ ego states.

Some attitudes help consumers express their central values (for example, patrio- tism) and idiosyncratic preferences (for example, preference for luxuries). When products or services help consumers achieve self-enhancement, self-extension, and self-expression by communicating to others the values they revere, these

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products serve a value-expressive function. Behavior stemming from value- expressive attitudes demonstrates a consumer’s core values. Marketers of con- sumer goods attempt to identify their brands with widely held or deeply seated values, portray their brands as a means of expressing them, and surround brands with symbols of them.

When products help consumers simplify their life or provide stability and predict- ability in their interaction with the environment, they serve the knowledge function. Knowledge helps people simplify and give meaning to a complex and chaotic universe. The quest for knowledge is prompted by curiosity and the desire to deal with life’s varied predicaments competently and effectively. Marketers apply the knowledge function when they clearly and unambiguously position their brands and explain the benefits that differentiate a brand from its competition.

2. According to the traditional model, attitudes consist of three components:

n The cognitive component is what a person thinks he or she knows about an attitude object; these beliefs can be based on knowledge, opinion, faith, or value systems.

n The affective component is a person’s reaction to the cognitive aspect of the attitude; it entails one’s evaluation or feelings of like or dislike toward an attitude object.

n The behavioral or conative component is a person’s tendency to respond in a certain way as an expression of his or her favorable or unfavorable feelings.

Following the traditional model to create or change attitudes, marketers appeal to consumers at the cognitive level with informative messages, at the affective level with emotionally toned messages, and at the behavioral level with various incentives (sales promotions).

Consumers’ overt behavior sometimes concurs with their attitudes. At other times, consumers’ beliefs, feelings, and behavior conflict. Over the years, researchers have dealt with three fundamental issues concerning the link between attitudes and behavior.

n Do attitudes influence behavior? In this regard, researchers have found conflicting evidence.

n When could a link between attitudes and behavior be expected? In this regard, researchers have identified factors that are instrumental in determining whether the relationship between attitudes and behavior is strong or weak. A number of moderating variables govern this relationship, including qualities of the behav- ior, of the person, of the situation in which the behavior is exhibited, and of the attitude itself.

n How do attitudes guide behavior? Attitudes often—but not always—guide behavior. In other words, how consumers say that they feel about some matter can be quite different from what they say they intend to do about it.

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3. According to the theory of reasoned action (TORA), behavior is determined by a person’s intention to behave. Intention, in this sense, is a person’s subjective resolution to behave in a certain way toward an attitude object. In taking action, a person considers, weighs, and combines two factors:

n Attitude toward the behavior (the individual’s belief that the behavior leads to specific outcomes—positive or negative—and evaluation of these outcomes)

n Subjective norms (the individual’s beliefs about what significant others think should or shouldn’t be done as well as the person’s inclination to comply with their desires).

The more positively people view the outcome of a behavior and the greater the approval they anticipate for the action, the more likely they are to arrive at the intention to undertake the action.

The TORA fails to explain conditions where purchase situations are hindered by some adverse personal or environmental circumstances—it presumes that if the consumer tries to act, no impediments are likely to stand in the way. In many instances, however, behavior can be impeded by real or imagined factors such as limits on consumers’ ability, time constraints, and environmental contingencies.

In the theories of goal pursuit and trying, pursuits where an individual thinks that impediments stand in the way of attaining a desired objective are termed goals. Virtually all pursuits are seen as goals. Since most actions are forestalled by some unforeseen event, and since there’s no certainty in goal achievement, behavior is reduced to merely trying to achieve the goal. If consumers feel that a goal is too difficult to achieve or a task is too complicated to handle, intentions to try tend to subside.

The theory of trying proposes there are three attitudes toward goals:

n Attitudes toward the consequences of succeeding to achieve a goal

n Attitudes toward the consequences of trying but failing to achieve a goal

n Attitudes toward the process of striving to achieve a goal

Astute marketers recognize the importance of trials in getting consumers to buy products. Since consumers may perceive the purchase of a product as a goal, marketers can use strategies to enhance trial (distribute free samples, allow product trials in the store).

4. Marketers use a number of strategies that stem from the information-processing model to change consumer attitudes. These strategies include the following:

n Making comparisons against competition—emphasizing advantages against competing brands, often via comparative advertising

n Emphasizing brand attributes—enhancing consumer knowledge of certain features of the brand, especially less familiar attributes

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n Adding new attributes—adding one or more beneficial features to a brand or offering additional customer services to increase the brand’s attractiveness to consumers

n Providing knowledge of alternatives or consequences—supplying consumers with evidence, facts, or figures that allow them to make an informed choice concerning which alternative is best for them; changing the relative value of attributes by shifting the relative values of specific attributes the product possesses.

Attitude change isn’t always an attainable goal. The probability of attitude change varies inversely with the intensity of the attitude. Strong attitudes involve intense feel- ings about an attitude object and resist change. Weak attitudes, on the other hand, are less-intense feelings about an attitude object and are susceptible to change.

Attitudes also vary in centrality—how closely an attitude reflects a person’s core values and beliefs. Central values cover such things as religion, ethics, political affiliation, and personal values and goals—all of which are resistant to change. Attitudes toward certain products and designer brands have a high level of central- ity because they’re psychologically important to most people. For instance, highly visible, expensive, and prestigious goods are often used as symbols to reflect a person’s self-concept and feelings of self-worth. On the other hand, most shop- ping-related activities are peripheral and don’t relate to a person’s central values and beliefs. As such, peripheral attitudes are susceptible to change.

Finally, people tend to attend to those messages with which they agree and avoid those messages with which they disagree. This means that those persons who disagree with a communicator’s point of view are least likely to pay attention to and process the arguments presented. Information is a communicator’s most basic tool, but information alone may not be enough to change many people’s attitudes.

5. The elaboration-likelihood model (ELM) relates to consumers’ reactions to marketers’ attitude-related strategies. A person exposed to an ad relates the new information it contains to prior experiences and knowledge to arrive at new ideas that were present neither in the ad nor in his or her previous knowledge set. The degree to which a person elaborates on a message depends on its relevance to him or her; the more relevant the message, the more elaboration occurs. The central route to persuasion requires greater elaboration; the peripheral route requires less.

The central route to persuasion is presumed to prevail under conditions of high involvement, where the message recipient has both the ability and motivation to process the information. The recipient is likely to think about the evidence and arguments presented in the message, determine whether they’re compelling, and then develop his or her position on the matter. The central route to persuasion can produce a lasting change in attitudes, but this change may be hard to accomplish.

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The peripheral route to persuasion is likely to prevail under conditions of low involvement, where message recipients are unlikely to have strong feelings about the issue or possess a great deal of prior knowledge about it, nor would they devote a great deal of thought to the issues, evidence, or arguments presented in the message. Instead, they resort to simple means for deciding what is good or bad, desirable or undesirable, such as responding to source cues or applying uncomplicated rules of thumb.

Since most people can’t exert extensive mental effort to analyze all persuasive communications to which they’re exposed, it may suffice in some cases for com- municators merely to expose consumers to an issue or remind them of it, rather than present substantive arguments to achieve the desired attitude confirmation or change. By simply associating a product or issue with other positive information or goals the message recipient may already hold, marketers could modify consumers’ attitudes and behavior.

Recent research on the role of the ELM in consumer processing of Internet adver- tising proposed a modified ELM that incorporates elements unique to the Internet environment. Similar to the case of other media types, high involvement leads to click-through of banner ads via the central route. However, in low-involvement cases, factors such as larger-than-average ad size and dynamic animation tend to enhance click-through via the peripheral route. Other moderators of ad click-through were found to be product-category relevance, attitude toward web advertising, and consumers’ experience with the web.

Chapter 5 Case Study Answers

1. Campaigns to undermine public trust in climate science have been advocated by industrial, political, and ideological interests, and supported by conservative media and skeptical bloggers. Entities that insist on denying global warming are found in the following:

n The political sphere, where the Senate Environmental Committee called climate change “the greatest hoax perpetrated on the American people”

n The conservative economic sphere, which is backed by industrial interests opposed to the regulation of CO2 emissions

n The competitive sphere, in which fossil fuels lobbyists are out to protect their interests in continuing their hold on the market

n The state policy network sphere, represented by a group of think-tanks that are lobbying on behalf of corporations that reject spending money on taking corrective environmental action.

Among all these groups, the main thrust is to avoid spending billions of dollars annually to abide by the new regulations.

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2. The marketing campaign of the coal industry uses the term “clean coal” in refer- ence to its promise of zero-emissions coal, which the industry claims could be used without causing any environmental damage. The technology that the advertising campaign refers to is based on the development of zero-carbon emissions coal, via a process called “carbon capture and storage” (CCS), which involves separating out carbon dioxide when burning fossil fuels, collecting it, and subsequently dumping it underground or in the sea.

Presently, however, there are no coal-fired power plants in commercial production that perform this process of capturing carbon dioxide emissions. Scientists estimate that it will take at least 15 to 20 years before any commercial-scale “clean coal” power station would be viable. This revelation makes the coal industry’s claim of “clean coal” simply a hoax and merely another example of deceptive advertising. Recently a national grassroots effort launched an advertising campaign to tell the public the simple truth that “there is no such thing as clean coal.”

3. In February 2016, the US Supreme Court blocked President Obama’s plan to lower greenhouse gas emissions. The Court ordered the Obama Administration not to implement the clean power plan (CPP) until it had been reviewed by the US Court of Appeals for the District of Columbia Circuit. This ruling spares coal power plant operators from having to do anything with regard to planning for a shift to energy sources that the government considers to be clean.

Disappointed environmentalists, however, remain confident that the D.C. District Court will uphold the Clean Power Plan on its legal merits, and that clean energy, with its wide public support, will triumph over the fossil fuel industry.

Chapter 6

Chapter 6 Review Answers

1. The four key elements are as follows:

n Needs are internal forces—human requirements—that prompt behavior toward goal-oriented solutions. Once a need has been activated, a state of tension exists that pushes an individual to reduce or eliminate the need.

n Motives arise out of states of imbalance or tension and carry out the function of energizing, activating, and directing behavior toward desired goals. Motives are directed toward reducing bodily deficiencies, whether biogenic or psychogenic, and may push individuals away from dangerous situations or harmful products.

n Goals are the sought-after results of motivated behavior. While needs and motives push individuals to correct a state of imbalance, goals pull them toward something perceived as desirable (a reward). Of course, the challenge for marketers is to persuade consumers to perceive their product or service offerings as desirable goals that will satisfy their needs.

n Desires are belief-based passions that involve longing, yearning, and fervently wishing for something.

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By definition, motivation is a state in which bodily energy is mobilized and directed in a selective fashion toward states of affairs in the external environment called goals. From a marketing and consumer behavior perspective, both arousal and direction are necessary prerequisites for a motivated state to exist. Arousal involves a tension mainly resulting from unfulfilled needs. Direction entails purposive, goal-directed behavior.

2. According to arousal theories, people have a level of stimulation that’s right for them at a particular point in time. Optimal stimulation level refers to the tendency of people to either seek or avoid thrilling, challenging activities. High sensation seekers are individuals who have a stronger-than-average need to seek and approach activities that are novel, surprising, and intense. On the other hand, low sensation seekers are individuals who are less willing to seek thrilling, challenging activities. Differences in individuals’ sensation seeking can be measured by using Zuckerman’s general sensation seeking scale.

Marketers stand to benefit from knowledge about the classification of consumers according to their optimal stimulation levels. Some marketers direct separate promotions and incentives to high sensation seeking and low sensation seeking consumers.

3. Motivational conflict is a situation where multiple needs function simultaneously and fulfilling one goal causes another to remain unsatisfied. The end result of such situations is frustration—an emotional state that arises when barriers interfere with goal-directed behavior. Lewin identified three cases of motivational conflict:

n Approach-approach conflict occurs in cases when a consumer faces a choice among desirable options (filet mignon versus lobster).

n Avoidance-avoidance conflict is when a consumer must choose one of two unpleasant alternatives (make expensive repairs on a car versus risk getting stranded on the road).

n Approach-avoidance conflict is when a consumer must surrender money or time, forego other opportunities, expend effort, and incur risk to procure product benefits (for example, buy a new home and incur a huge mortgage).

4. Researchers of consumer behavior know that consumers differ in their willingness and ability to provide the information that marketers require; that individuals may or may not know their motives; that individuals may be unwilling to reveal what they do know because they feel it’s personal or socially unacceptable; or that consum- ers might not express their motives simply because they’re unaware of the forces that underlie their behavior.

Consumers who are able and willing to discuss their buying motives when directly asked represent the easiest situation for marketers to deal with. Motives that relate to aspects of products such as brand attributes, benefits, and image are conscious, and subjects don’t try to hide them.

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Even when consumers are aware of their basic motivations, they’re often reluctant to admit or reveal information that’s personal, unpleasant, or shows them in an unfa- vorable light. In such circumstances, direct question-and-answer approaches are ineffective. To overcome consumer reluctance to cooperate, researchers often rely on projective techniques. Projective techniques are based on the idea of relieving subjects of direct responsibility for the feelings they express. Such methods have subjects assume the role of someone else and speak on their behalf—in doing so, respondents reveal their own motives.

Consumers who are unaware of their motives and can’t directly report them pres- ent a challenge for researchers. In this case, projective techniques (such as the T.A.T. and cartoons) as well as association tests (such as free-word associations and sentence completions) can be helpful.

5. Emotion entails an individual’s response to particular stimuli (ads, products, stores) in the environment. In other words, a particular stimulus or circumstance might make someone feel happy, sad, or angry. Mood, on the other hand, entails a temporary feeling state or frame of mind that’s already present when an individual encounters a particular stimulus (such as an ad, a product, or an in-store display).

Marketers attempt to create ads and design products that precipitate a favorable emotional response from consumers who encounter these items. Moods, on the other hand, can affect whether consumers shop, when and where they shop, and whether they shop alone or with others as well as the way they respond to shop- ping environments and cues. Even though customers enter a store with preexisting moods, retailers often try to create a mood for shoppers through store atmospherics to make consumers more receptive to merchandise offerings.

Chapter 6 Case Study Answers

1. The most effective weight-loss programs are those that combine diet, exercise, and psychological intervention. According to recently published research on this topic, increasing the length or intensity of the psychological components of a weight-loss intervention program significantly improves patients’ outcomes. A cognitive ther- apy approach, based on traditional cognitive-behavioral principles, recommends tips such as planning what to eat, scheduling one’s day to include food shopping, determining meal times, arranging the environment to support weight loss, and planning for high-risk situations such as invitations to parties or dinners out.

These efforts should also include developing one’s “innate wisdom” about types of foods to eat and being mindful of cues that stimulate appetite. Other suggestions include purchasing healthy snacks, seeking social support of family and friends, avoiding multitasking while eating, and constantly keeping in mind one’s weight-loss goal.

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2. There are a number of factors that act as hindrances to fulfillment of the weight- loss program goals for individuals. Among these are cultural factors, social factors, familial factors, and individual/situational factors. For example, individual factors could include:

n Lack of readiness for change, such as an absence of awareness of what needs to be done to achieve weight-loss goals, as well as reluctance to commit to these goals

n Failure of self-monitoring, like a lack of awareness of what can trigger hunger and what really constitutes healthy foods to eat, as well as what are considered appropriate portions of food

n Inability to break linkages, such as failure to fight temptations to eat favorite foods or to control overindulgence in food, especially on occasions such as parties or when dining out

n Social support from family and friends, particularly when family members and friends aren’t dieting

n Self-defeating thoughts, such as “This is too hard, I can’t do it”

n Perceiving the role of food as a coping mechanism to deal with negative feelings

3. In the case of Nutrisystem, it’s an online program that offers a packaged meal plan. Dieters order meals, snacks, and desserts monthly from Nutrisystem and receive them in the mail. All foods sent by Nutrisystem are shelf stable and don’t require refrigeration. Dieters supplement Nutrisystem foods with fresh produce and dairy products. There are no meetings for public weigh-ins. There’s no additional fee for counseling, which is part of the program. The only cost to participants is the cost of the meals themselves.

In the case of Weight Watchers, it’s a flexible weight-loss program that encourages dieters to eat modest portions of all foods. All foods are assigned a point value. No food is restricted, but higher-calorie foods have a higher point value. Dieters count points instead of calories. A daily point allowance is assigned to each dieter based on gender, age, weight, and activity level. Dieters weigh in at weekly Weight Watchers meetings. The system is based on the program’s “Four Pillars,” which are behavior, food, support, and exercise. Management of this program insists that each one of these “Four Pillars” is equally important.

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Chapter 7

Chapter 7 Review Answers

1. According to Freud, personality is a result of interaction among three components: the id, the ego, and the superego. The id is an unconscious reservoir of human instincts that seeks pleasure and demands immediate satisfaction. The superego is a largely unconscious repository of social, moral, and ethical codes that restricts how far a person can go to acquire goals and steers instinctive drives into acceptable avenues. The ego is the conscious control center that mediates the id’s uninhibited impulses and superego’s constraints.

Each person must achieve balance as the id’s desires encounter the ego’s logic and the superego’s prohibitions. The ego pursues the goals of the id in a socially responsible manner. In the Freudian model, sexually related biological motivation and continual conflict among the id, ego, and superego permeate human person- ality. The way children manage conflict determines their adult personality, and unresolved childhood conflicts continue to affect adult behavior.

Promotional appeals frequently address the three components of personality the- ory. Promoters address the id when they emphasize pleasure and self-indulgent aspects of products; use sexual themes, sensuous illustrations or stories, and suggestive double meanings; depict aggressive scenes or violent acts; and employ dream sequences, fantasy, and wish-fulfillment themes.

Promoters address the ego when they design credit policies to gloss over the real- ity of spending money, extend payment plans, and offer buying incentives or free goods/services to facilitate buying; stress the desirability of fleeing from and elud- ing life’s troubles, pressures, and worries by using escape, leisure, freedom, and fantasy appeals.

Promoters address the superego when they make references to social amenities, moral and ethical protocol, and tradition, and advance both legitimate and spurious arguments designed to help consumers surmount guilt feelings and rationalize or justify purchases.

2. Trait theory classifies people according to their dominant characteristics or iden- tifiable traits, which are manifested in the form of consistent responses toward environmental stimuli. In this view, traits are characteristics that distinguish individ- uals from one another and that translate into relatively permanent and consistent response patterns. Through standard psychological inventories, personalities are described and classified in terms of traits.

Personality-trait assessment relies on personality tests (questionnaires designed to measure one or more traits). To apply standardized tests, marketers and research- ers must first speculate which traits are likely to influence brand preference before choosing a particular personality test. Merely borrowing standard personality inven- tories designed for clinical purposes frequently produces poor results. Tailor-made

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personality inventories or modified tests that focus on specific constellations of traits that researchers suspect are related to product use are more likely to be useful for purposes of consumer research than standard clinical tests.

Test results produce trait profiles of participating individuals that are then correlated with data on their product purchases. The purpose of this procedure is to identify behavioral patterns that can be generalized to an entire market segment. The market- ing value of trait theory stems from the possibility of treating consumers who display similar personality traits as market segments and then developing appropriate appeals for such groups of consumers based on their distinguishing traits.

A number of traits (such as innovativeness, materialism, self-consciousness, need for cognition, tolerance for ambiguity, dogmatism, category width, social character, compulsiveness, variety seeking, tendency to conform, vanity, deal proneness, extroversion/neuroticism, and need for emotion) have been used as correlates in CB studies to research the link between personality traits and various consumer behaviors such as product purchases, brand choice, retail store selection, media selection.

3. Psychographics is a research approach (not a personality theory) that investigates consumer lifestyles and explores the possibility of developing meaningful catego- ries out of the infinite range of activities, interests, and opinions that characterize consumers.

Psychographics uses statements designed to reveal the activities, interests, and opinions (AIO) of consumers. AIO inventories are constructed specifically for each study to assess the lifestyles of a target group and link AIO with a specific consump- tion behavior or preference. AIO inventories contain a large number of statements; respondents are instructed to express their degree of agreement or disagreement with each. Data obtained from AIO inventories are analyzed using a variety of sta- tistical techniques to identify meaningful groupings that seem to share a particular consumption tendency or that form a distinguishable profile. Typologies based on lifestyle are useful in a variety of ways: To define new product targets, to position products through advertising, to design campaign themes or appeals, and to determine which media to use to reach various prospect groups.

Unlike psychographics, demographics refers to measurable characteristics of human populations, such as population size, composition, distribution, density, and growth, as well statistics concerning such variables as sex, age, marital status, stage in the family life cycle, education, occupation, income, ethnicity, and religion.

4. Strategic Business Insights’ VALS program breaks consumers down into value segments according to their resources (minimal to abundant), innovation (low to high), and their primary motivations (ideals, achievement, and self-expression). It divides adult consumers with different values, behavior, and decision-making patterns into eight segments of approximately equal size. These segments are the innovators, survivors, thinkers, believers, achievers, strivers, experiencers, and makers. Each segment has a unique combination of psychological attributes and demographics that underlie consumer decision making. Hence, each segment has a distinct consumer mindset and exhibits distinct patterns of consumer behavior.

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VALS helps marketers select target markets, develop effective media plans, and create ads that match the attributes and images of products with types of con- sumers who use these products. VALS works best for product categories where emotional involvement impacts consumers’ buying processes (cars, homes, gar- ments, jewelry, and furnishings). Lack of consumer involvement or low involvement lessens the chance that marketers would create products or ad appeals for specific VALS groups (for example, staple food products). A single segmentation system can’t be applied cross-culturally.

5. The self-concept is the overall image that a person holds of him- or herself. It rep- resents the sum total of individuals’ beliefs and feelings about themselves. Different types of self-concepts manifest themselves in different buying situations: the real self, the ideal self, the self-image, the apparent self, the reference-group self, the extended self, and the possible self.

The term self/product congruence refers to the tendency of individuals to select and use products that match some aspect of the self. The importance of the self-concept stems from the observation that consumers’ feelings about themselves shape their consumption patterns. Consumers buy many products in attempts to manifest a positive attribute or hide a negative aspect of their self.

Not only are goods instrumental in defining a person’s own concept of self, but goods also serve as symbols and a means of communication between individuals and their significant others. Thus, consumption of products and services contrib- utes to a person’s definition of self and affects other people’s perceptions of him or her. The products that consumers use as symbols tend to be conspicuous, bear a distinctive brand name, carry a steep price tag, and have prestigious origin.

Chapter 7 Case Study Answers

1. Benefits of beauty pageants to participating countries may include:

n Promotion of tourism to such countries, by showcasing the attractions of such locations to viewers of these shows

n Enrichment of international relations, by enhancing camaraderie among participating nations

n Building discipline and self-confidence among contestants, as the pageant gives them an opportunity to explore and enhance their skills and talents

n Enhancement of the spirit of competitiveness among the various participating nations, as well as among the contestants themselves

n Creating new opportunities for young contestants, including not only the monetary and educational rewards, but also career opportunities in fields such as acting, entertainment, and modeling, among others

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2. In response to criticism with regard to excessive expenditures on beauty products and services, critics fail to recognize that such spending, in addition enhancing the attractiveness of individuals and boosting their self-image and confidence, helps to keep the economy functioning. In terms of employment in beauty-related industries alone, such expenditures create hundreds of thousands of jobs, as well as fuel progress in such industries.

To explain, consider the example of one industry in the beauty field, such as plastic surgery procedures. According to industry statistics, there were 15.9 million surgical cosmetic procedures performed in 2015, at a total cost of $12.6 billion. These pro- cedures included facelifts, breast lifts, buttock lifts, lower body lifts, upper arm lifts, breast augmentation, liposuction, nose reshaping, eyelid surgery, tummy tucks, and lip augmentation, not to mention Botox and other injections. The billions spent on all these procedures create thousands of jobs in that industry, reduce the unemploy- ment rate of the economy, and infuse billions of dollars that keep surgical centers, hospitals, and providers’ medical practices alive and functioning.

3. Opinions are divided regarding the answer to this question. Some vehemently argue against this proposition, while others support it. Whatever the case may be, it has been scientifically proven by various researchers in culcronomics (the eco- nomic study of beauty) that the correlation between physical beauty and success is strongly positive. The following are some excerpts from studies from Psychology Today and Business Insider:

n Physical attractiveness is significantly positively associated with general intelligence. Attractive men have IQs 13.6 points above average, while attractive women score 11.4 points higher.

n Beautiful people tend to bring in more money for their companies and are, therefore, perceived as more valuable employees and harder workers.

n Beauty significantly influences chances of success in job interviews and in getting hired.

n Research showed that respondents tended to rate the competence, dominance, likeability, maturity, and trustworthiness of better-looking CEOs more highly based on their appearance in facial photos.

n In brief encounters with people, respondents were able to identify the personality traits of physically attractive individuals much better than in the case of others who were less attractive.

n Attractive people tend to have desirable personality traits, such as higher self-confidence, that appeal to employers.

n In a recession, better-looking individuals have a higher chance of keeping or finding a job.

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Chapter 8

Chapter 8 Review Answers

1. Nonprogrammed decisions are novel to consumers or are infrequently encountered; a consumer’s prior experience holds little value. A customized, tailored approach is required (no standardized solution for the problem exists). Thus, consumers will- ingly expend cognitive effort, become receptive to information sources, and process acquired information.

Extended problem solving involves decision situations characterized by high per- ceived risk (require significant financial commitments, have social or psychological implications, entail symbols that communicate an image of the owner to others). Internal and multiple external information sources are sought and information is actively and carefully processed.

In limited problem-solving cases, consumers have some experience with the pur- chase situation and establish criteria for evaluating alternatives within the choice category. Impulse purchases are a special case of nonprogrammed decisions that involve little deliberation and limited or no external search, are triggered by mar- keters’ strategically situated cues, occur within a short time span, entail little or no cognitive effort, or are usually influenced by emotional appeals.

Programmed decisions are made with little or no conscious cognitive effort. Consumers follow repetitive or habitual buying routines and minimize the time and effort spent on purchasing familiar, frequently bought, and often-used goods. Brand loyalty, one case of programmed decisions, entails repetitive buying of brands that have proven satisfactory in the past. Of course, programmed decisions are revo- cable and can be reprogrammed. Similarly, customer loyalties are fickle and can change if products fail to provide sought benefits or if competitors uproot previous purchasing routines with enticing price or promotional tactics.

2. During internal search, a consumer retrieves information (and results of prior experience) stored in long-term memory about products or services that can help him or her solve a problem. Two processes known as sharpening and leveling occur to simplify internal search.

During external search, a consumer seeks out new information from market- oriented sources (advertising, promotional materials, packaging) and interpersonal sources (store visits, salespeople, peers, email, or communication via electronic media). Consumers become more familiar with alternative brands, criteria on which to compare them, the relative importance of the criteria, and the attributes and benefits of various brands. Surprisingly little external search actually occurs—even when additional information is beneficial and readily available (except when products have symbolic meanings).

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Four factors affect the amount of external search consumers undertake:

n Individual learning style (not all consumers have the same ability to explore, search, and process information)

n Product involvement (the higher the degree of involvement, the more likely a consumer will seek and systematically process information)

n Experience (novice buyers tend to expend more time and effort than experienced buyers)

n Risk perception (in general, the higher the perceived risk, the greater time and effort a consumer expends on external search)

3. Prospect theory attempts to explain how decision makers under risk conditions value different options (prospects) and assess the positivity or negativity of their outcomes. The method that a decision maker uses to evaluate the positivity or negativity of options (prospects) doesn’t necessarily coincide with their objective or actual value, but rather with their psychological valuation. A hypothetical value function explains the relationship between the actual and psychological valuation of gains and losses resulting from a course of action.

In a graphic depiction, where the horizontal axis represents the actual value of an alternative and the vertical axis represents the psychological value of that alternative, the value function for losses is steeper than the value function for gains, and the value function for gains is concave above the origin and convex below it. All of this means that in decision situations that involve risk, losses loom larger than gains.

In the domain of gains, increasing gains have decreasing psychological value. In the domain of losses, on the other hand, additional losses are weighted more heavily than gains. Thus, in a gambling situation, gamblers in the loss domain who have already squandered large sums of money are prone to take further risks trying to recoup losses and hopefully break even. On the other hand, gamblers in the gain domain are likely to act more conservatively, since each additional gain is perceived as having less and less psychological value.

Prospect theory also deals with the concept of framing, which is the notion that the same decision can be framed from either a gain or loss perspective, depending on the reference point that an individual applies.

In addition, according to prospect theory, when consumers evaluate the possible consequences of a decision, they may recollect the outcomes of similar incidents. Linkages that a person makes between prior events and the alternatives currently under scrutiny can precipitate positive or negative evaluations of these options.

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4. Consumer satisfaction is an attitude formed toward a purchase, influenced both by the level of effort expended by consumers and their level of expectations. Effort is often equated with a combination of sacrifices (relinquished financial resources, lost time, work required to learn how to use a product) and can be measured in finan- cial, physical, or mental units. Satisfaction is a mental state of feeling adequately or inadequately rewarded in a buying situation for the sacrifice a buyer has undergone.

Research has shown that the level of satisfaction is positively associated with the amount of expended effort. In other words, the greater the sacrifice of resources a consumer makes, the more he or she magnifies the satisfactions and benefits received from the purchase.

Research also shows that the level of consumer expectations (rather than actual product performance) has bearing on consumer satisfaction. Satisfaction is a func- tion of the discrepancy between obtained and expected outcomes. If a consumer’s expectations are high and performance falls short of these expectations, dissatis- faction results. If actual performance meets or exceeds a consumer’s expectations, satisfaction results. Of course, a firm’s promotional strategy and claims made can influence consumers’ expectation levels and, in turn, satisfaction. Overstated prod- uct claims raise consumers’ expectation levels. If product or service performance fails to meet them, dissatisfaction is higher. On the other hand, understated product claims generate moderate expectations that can be surpassed by actual product performance and, thus, lead to higher satisfaction.

5. Consumer complaints occur for any number of reasons, including poor product qual- ity or performance, defective or damaged merchandise, inadequate instructions for product use or assembly, product-related injuries, unfulfilled promises concerning product availability or delivery schedules, disappointment when a product fails to serve the purpose for which it’s advertised or sold, deceptive advertising or pushy sales tactics, or substandard or rude customer service.

Good customer service programs entail having an effective complaint-handling system in place and conducting aggregate complaint analysis. The individual complaint-handling function promptly addresses individual complaints to immediately redress consumer satisfaction. Aggregate complaint analysis identifies the causes of consumer dissatisfaction when it occurs consistently over time and helps formu- late managerial strategies to correct the underlying cause of complaints. It tracks complaints based on numbers, trends, and sources and establishes complaint benchmarks against which firms can monitor the effectiveness of service quality over time.

Many companies sponsor toll-free 800 hotlines that offer consumers a chance to air their gripes. In addition, many firms maintain a consumer affairs office to collect complaints, analyze their nature, contact complainants, suggest corrective action, and follow up with suggested solutions. Finally, many companies sponsor consumer education programs to disseminate product information to the public.

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Chapter 8 Case Study Answers

2. Answers will vary. It’s imperative that a student gives primary attention to fit since this could determine the student’s academic success and possible job-placement opportunities. When determining personal fit, a student should regard the overall reputation of the institution, the reputation of the specific program of interest, the reputation of the faculty, and the success of graduates from the program. Students would be best off selecting three or four institutions for the best fit on a national level and from this group choosing one or two that offer the best value in terms of assistantship or scholarship financial aid opportunities.

When assessing fit, prospective students would benefit from the following:

n Reading the school’s campus newspaper (especially if it’s available online) n Scanning blogs hosted on the websites of the institutions they might

consider attending n Reading Twitter posts about schools under consideration n Visiting the institution’s Facebook page, as well as the Facebook pages of the

school’s many programs, departments, and student service organizations

3. There are several factors that affect students’ choice of a college. In the case of the high school athlete, he or she would undoubtedly attend the college that sponsors a team in the particular sport(s) in which this student-athlete excels, and preferably an institution that would offer a scholarship. Parents would influence the choice, particularly if they themselves are college graduates. They might want their child to attend the same institution.

Cost would be a strong factor. Location could also be a factor, since in-state tuition is usually more affordable than out-of-state tuition. Some students would prefer to live at home; they may choose a small, reputable college nearby and then commute to and from school daily. Academic programs that are available at various schools and their reputations would also strongly affect one’s choice of a college.

4. Colleges can scan the local media and visit high school websites to collect the names of junior and senior high school students listed in published “honor rolls” or “dean’s lists,” as well as those who are active in various campus activities, sports, debate team, organizations, or are officers in the school’s student government.

Four-year institutions can obtain lists of graduates of two-year community colleges, since many of these same students would be seeking to pursue a B.S or B.A. after completing their Associate degree. Colleges, in turn, could use this knowledge to direct information not only to students, but also to their parents. For example, this type of information could address such issues as the institution’s innovative program offerings, including its career-planning and placement resources, as well as the campus environment—including campus facilities, policies on drinking and hazing, rules that govern fraternities and sororities, and—particularly for female students—facts about campus safety.

College counselors should always avail themselves of the opportunity to attend College Days at high schools and community colleges, particularly if these programs are held in the evening when parents can attend.

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Colleges should also advertise open-house days when parents and students can visit a campus together. During such programs, a walk through the campus is included, along with an address by some of the department chairpersons, faculty, and admin- istrators. On open-house days, students and their parents may be allowed to visit lectures and labs while classes are in session to observe firsthand the instructional methods being used and the quality of in-class discussions. Prospective students present at these open-house days might benefit greatly by talking to students who currently attend the college or university under consideration.

The websites of colleges and websites should provide detailed depictions—both verbal and visual—of what it would be like to live and take classes on the campus. These websites should also contain user-friendly “Frequently-Asked-Questions (FAQ)” pages that clearly and directly answer the questions most commonly posed by prospective students and their parents. Current and back issues of campus news- papers could be made available online for prospective students and their parents to read. Likewise, institutions can host Facebook pages, blogs, and the like with numerous postings from current and prospective students.

Chapter 9

Chapter 9 Review Answers

1. Innovations are often classified based on the extent to which they represent changes in technology and require changes in adopters’ established consumption or usage patterns. The greater the required change in established consumption habits result- ing from the innovation, the less the chance that it will gain quick acceptance. In this regard, three basic types of innovations have been identified:

n Discontinuous innovations are unique, pioneering products that significantly disrupt and alter established purchasing and consumption routines. They’re rare, involve major technical advances, and require consumers to learn con- sumption or usage patterns. Marketers must sell prospective customers on the concept behind discontinuous innovation before they can sell the product.

n Dynamically continuous innovations are new product creations or alterations in existing products that entail minor technical advances and that don’t strik- ingly alter established consumer buying and usage patterns. They include adaptations of, replacements for, or improvements to existing products. As such, dynamically continuous innovations have some disrupting influence on customary consumption practices and require some learning on the part of consumers.

n Continuous innovations are extensions or modifications of existing products with little or no change in technology. They’re low-learning cases requiring minimal, if any, adjustments in conventional consumption routines. Continuous

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innovations can take the forms of imitative products (such as a new brand or line extension in a familiar product category), slightly changed products (such as changes related to appearance, style, packaging, size, color, and new flavors, as well as new uses or applications of familiar products) or symbolic innovations (which convey new social or psychological meanings).

2. Five factors that influence consumer acceptance of new products are as follows:

n Relative advantage—The degree to which consumers perceive a new product as different from and better than its dated substitutes. Perceived superiority speeds up acceptance.

n Compatibility—New products should be consistent with consumers’ existing needs, beliefs, values, attitudes, experiences, and habits. Compatibility with consumers’ lifestyles and established practices speeds up acceptance.

n Simplicity/complexity—The extent to which consumers perceive a new product as easy to understand, assemble, and operate. Perceived simplicity speeds acceptance; complexity slows it down.

n Observability—The extent to which an innovation is visible and communicable to potential adopters. Highly visible products are more quickly adopted and diffused than those used in private.

n Trialability/divisibility—The ability to experiment with a new product on a lim- ited basis and evaluate its merits before making a purchase. Commitment speeds up acceptance. To enhance trialability of nondurable goods, market- ers often distribute free trial-size samples for consumers to test. To enhance trialability for durable goods, marketers can use product demonstrations in retail showrooms or consumers’ homes, in-home product placements, lease- with-option-to-buy plans, and 100 percent satisfaction guarantees. Divisibility is achieved when consumers can try new products in small quantities.

3. The social system is a physical, social, or cultural environment to which individuals belong and within which they function. The social system serves as a reference group as individuals carry over its norms and values into their purchase decisions. The specific norms, values, traditions, standards, attitudes, and expectations of the social system influence the acceptance of innovative products and ideas. Of course, norms, values, attitudes, and expectations vary among social systems, and the expanse of specific orientations can vary within a society.

The acceptance of new products is both shaped by and emulated by interaction among the people who belong to a particular social system. In general, three aspects of the social system influence the speed of diffusion:

n The greater the degree of compatibility between the innovation and values held by a social system’s members, the more brisk is the pace of diffusion.

n The more homogeneous (nonsegmented) the social system, the quicker the diffusion process.

n Diffusion of innovations across cultures depends largely upon the distance between the countries and the social similarity of their cultures.

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Companies that introduce domestically successful products frequently have to adjust their products and supporting marketing strategies to accommodate the dissimilar social systems in host countries.

4. The five adopter categories are based on relative adoption times.

n Innovators are the first 2.5 percent of the market to adopt a new product, even at some risk. They tend to have higher social status and enjoy higher incomes; tend to be younger, better educated, more cosmopolitan and mobile, more self-confident, and more reliant on their own values and judgment than group norms; and tend to be less brand loyal and more attracted to products and situations that provide diverse challenges.

n Early adopters are the next 13.5 percent of the market to adopt a product. They adopt early—but carefully—during the product’s life cycle. EAs tend to be socially integrated and involved within their local community, rely on group norms and values, and are likely to be opinion leaders in their community. They tend to display high usage rates in the product category in which the innovation falls.

n The early majority consists of the next 34 percent of the market to adopt a product. EMs adopt just before the average consumer in a social system and carefully deliberate their decision to do so. EMs are slightly above average in social and economic standing.

n The late majority is the next 34 percent of the market to adopt. LMs tend to be skeptical and adopt an innovation to save money or in response to social pressure to conform—but only after most acquaintances have already done so. They tend to be below average in income and education level.

n Laggards are the last 16 percent of the market to adopt. They tend to fall at the low end of the socioeconomic scale and are independent and tradition-bound. Laggards tend to be suspicious of change and resist it.

5. Rogers proposed a revised decision-making model for adoption of innovations that consists of five stages:

n Knowledge—a consumer is exposed to an innovation’s existence and obtains some understanding of how it functions; is aware of the innovation but has made no judgment concerning its relevance to a recognized problem or need.

n Persuasion—a prospect formulates a favorable or unfavorable attitude toward the new product and may mentally imagine how helpful or satisfying the product might be in some anticipated future-use situation.

n Decision—a prospect engages in activities that lead to a choice to adopt or reject the new product.

n Implementation—a prospect puts the adoption idea into action.

n Confirmation—after making the decision to adopt, a consumer may perceive some post-purchase doubt and seek reassurance that the decision to buy and use the product was appropriate or correct.

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Consumers don’t pass through all stages of the adoption process each and every time they purchase goods and services. The adoption process specifically addresses the individual’s deliberation of whether or not to accept new, previously unfamiliar products or services. The more novel, complex, expensive, or poten- tially risky the innovation is perceived to be, the more likely people are to progress systematically through the entire process and spend more time at any given stage. The time interval spent at any given stage or between stages varies among differ- ent individuals. Stages leading up to adoption may not always occur in the specific order proposed—some stages may be omitted and multiple stages may occur simultaneously. A prospect may reject an innovation at one stage of the adoption process but resume the process at a later date. An individual could eventually adopt a product or service that he or she had previously rejected.

Chapter 9 Case Study Answers

1. Air safety issues: A number of drones have been flown dangerously close to com- mercial and private aircraft, violating federal rules. In 2015, according to the FAA, more than 650 pilots have reported seeing drones in the vicinity of their on-route planes. Drones also can be turned into potential weapons in the hands of terrorists.

Regulatory issues: As of 2015, only 36 states had introduced legislation to protect individuals from drone-related invasion-of-privacy issues. But so far (as of this writing), only 17 states have passed laws restricting drone usage.

Insurance issues: The potential legal issues of drone use or abuse make insurance underwriting for drone-related liabilities a challenging endeavor. There is a wide spectrum of variables that insurers must consider when addressing drone-related coverage—such as potential aviation liability and workers’ compensation issues.

2. Three areas where drones are most useful may include e-commerce, construction, and farming. In the area of e-commerce, Amazon has announced its “Prime Air,” a delivery system the company claims will eventually allow safely getting packages into customers’ hands in 30 minutes or less using small drones. In 2015, DHL Parcel announced the start of autonomous drone flights to deliver medicines and other urgently needed goods to remote areas of the country. In addition, Google (GOOG) has a drone delivery service called “Wing” in the works.

In the arena of construction, currently real estate photography is the primary use for drones. Every large city has a number of photographers who employ radio- controlled drones to take pictures of buildings and developments for marketing purposes and analysis.

In the field of agriculture, corporate farms are currently using drones to monitor crop health, to identify problematic areas in the field, and even to sow seeds. Ranchers are also using drones to monitor where their cattle are grazing and to locate appropriate spots for future grazing.

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3. While regulation can move drone-based delivery forward rapidly, technology presents the tougher hurdle to overcome. Since drones are electrically powered, the current lithium battery technology means that these drones can deliver only lightweight par- cels to locations within a relatively short distance. Add to that weather conditions and the presence of power lines within the delivery path. Like marketers of laptops, smart phones, and electric cars, drone makers attempt to pack more energy into smaller and lighter batteries. However, until now, battery technology has been lagging behind widespread drone application. For example, Amazon wants its drones to be able to carry 5-pound packages on a 20-mile roundtrip route. Today, that performance is impossible with the 8-rotor drone Amazon now has.

Other hurdles include drones’ lack of navigation technology to avoid crashing into other flying devices. They also lack the technology needed to prevent lost con- nections with their ground control station. The FAA hasn’t yet developed standard procedures for air traffic controllers to guide drones, particularly because the agency’s air traffic control equipment wasn’t developed with drones in mind.

Chapter 10

Chapter 10 Review Answers

1. A brand community is a group of people who share their interest in a specific brand and create a parallel social universe, with its own values, rituals, vocabulary, and hierarchy. The brand becomes the ultimate expression of self.

The brand is selected by consumers based on favorable attitudes and depth of knowledge about a product or brand (for example, Apple iPhones, Harley-Davidson motorcycles). Consumers use the brand to create an imagined identity that they share with like-minded people. The level of engagement and connection is high.

Behavior of participants is identified by their opposition to other brands and their desire to play a part in the firm’s decisions that concern their object of passion. A company’s promotional effort in this case isn’t a matter of attempting to influence consumers directly, but rather to provide them with support in interacting with one another through activities in their community.

A brand tribe, on the other hand, is a group of individuals who aren’t necessarily homogeneous, but are linked by the same passion and collective action. They represent emotionally bonded people. Tribes are open systems to which a person belongs (for example, a political party) based on their shared set of beliefs, views, experiences, and expectations. Tribes represent relationships between individuals and center around ties among their varied members.

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2. Recently, there has been a shift in online behavior for users of social media to gravitate toward microsocial networks and smaller, more socially curated sites. A rise in microlending, microgiving, and localization has been witnessed. There’s also a higher level of participation in smaller-scale forms of online research, a growth in the number of “friends” on social networks, and a tightening of privacy controls. This trend is a manifestation of a few basic human tendencies:

n The desire of individuals to feel that they’re having impact on others like themselves

n The desire of individuals to have smaller, more intimate, and more meaningful social circles

n The desire of individuals to want brand relationships with a human face

n The desire of individuals to be confident of privacy and security

3. Marketers, as influencing agents, use five power bases to influence consumer behavior:

n Reward power is based on a group’s ability to dispense rewards. The greater the reward a group can administer, the stronger its power to gain compliance with group norms.

n Coercive power involves a group’s ability to punish members. The more severe the punishment a group can administer, the stronger its power to gain compliance with group norms. Group pressure permeates in-home party sell- ing strategies. However, in general, marketers don’t possess coercive power. Marketers frequently employ modified types of coercive power when they use fear or guilt appeals in ads or emphasize the negative consequences that can result if consumers fail to use an advertised product.

n Legitimate power occurs when group members internalize feelings that they should, ought to, or must not undertake certain actions or think in certain ways. Such feelings may originate from mandates of parents, religion, or patriotism; over time, individuals appropriate these standards of conduct as their own. Marketers that use patriotic “buy American” appeals employ a form of legitimate power.

n Referent power is manifested through a desire to identify with a group and to share a sense of oneness with it. The greater the attraction of the referent, the greater the identification and the more powerful is the referent’s influence. Some advertisers spend handsomely to secure well-known, liked personalities and celebrities to promote their brands, boost awareness of their companies and brands, strengthen their image, or increase attention to their messages.

n Expert power is derived from an influencing agent’s possession of specific knowledge or skills that another individual is lacking. The wisdom or ability the expert exhibits in a specific area is sufficient to induce compliance. Advertisers frequently use experts (engineers, doctors, scientists, or researchers) to pres- ent an objective evaluation of a product or service. The audience’s acceptance of claims made by such experts is a function of how credible they’re perceived to be. Marketing strategies may use one or more types of social power, especially reward, referent, and expert power.

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4. Membership reference groups (RGs) are groups to which an individual currently belongs or qualifies for membership. The person has been accepted and is per- ceived by others as belonging to the group. While membership in certain groups is automatic, membership in some others is voluntary.

Aspirational RGs are groups in which a person seeks membership but lacks the qualifications or abilities required to join. Individuals generally try to emulate the beliefs, values, attitudes, and behavior of members of those groups that they aspire to join. Anticipatory aspirational RGs are groups with which an individual has at least some direct contact and somewhat reasonable expectations of joining at a future time. Symbolic aspirational RGs, on the other hand, are groups in which a person’s chances of achieving membership are remote at best, regardless of his or her desire to join and willingness to adopt and emulate group beliefs, norms, values, attitudes, or behavior.

Dissociative RGs are groups that offer a negative reference point. Individuals may wish to differentiate themselves from or establish distance between themselves and certain undesirable groups. Individuals may simply reject the objectives, agenda, or methods of the negative group or dissociation with a particular group can be based largely on the biases of people outside the negative group (rather than on the group itself). The term negative RGs refers to those groups with which individuals wish to avoid association or identification.

Disclaimant groups, on the other hand, are groups that individuals may have pre- viously joined or otherwise belonged to, but whose values they later reject. While negative RGs can impact consumption behavior, marketers rarely appeal to the desire to avoid or disclaim a group. Rather, advertisers attempt to ensure that targeted consumers don’t link their products to dissociative groups. Marketers’ appeals to nonconformity often take on a positive rather than a negative tone (for example, stressing individuality and self-expression).

5. Compliance, the weakest degree of influence, occurs when a person goes along with a group to obtain approval or avoid disapproval. One adopts group dictates not out of genuine belief in their content or worth, but because they’re instrumental in producing a satisfying social effect. Behaviors adopted via compliance are only expressed when a person’s behavior is visible to the influencer.

Identification denotes a closer and more dependent relationship with the group. People accept group influence because it’s associated with a satisfying, self-defining relationship with the influencer and doing so validates their connection to a group in which their self-identity is anchored. People model their identity along particular lines to meet the expectations of fellow group members. Identifiers actually believe in the attitudes or behaviors adopted and accept them both publicly and privately.

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In the case of classical identification, people accept influence as a means of establishing or maintaining their self-image and/or relationship to the group. The identifier desires to be like the influencing agent and takes on some part or all of the influencer’s role. In the case of reciprocal identification, an individual is involved in a complementary relationship with another person or enacts a social role that’s defined with reference to the influencing agent. The identifier and influencer share expectations of each other’s behavior. The identifier empathically reacts in terms of the influencer’s expectations, views, or recommendations.

Internalization, the strongest degree of influence, occurs when people accept group norms/values as their own.

Chapter 10 Case Study Answers

1. Among those factors that underlie the strength of peer pressure as a type of influ- ence are rewards and punishments, which peer groups impose on those seeking membership. They can reward or punish behavior that’s deemed acceptable or unacceptable to the group. In terms of social power, the group possesses reward and coercive types of power. The individual desires to identify with the peer group (referent power) and share a sense of oneness with it. Thus, the individual conforms to the group’s norms.

Depending on the specific group, refusal to accept group mandates may mean social ostracism. In the case of a gang, physical harm could be imposed on individuals who engage in behavior that group members consider errant.

2. Many people would agree with the statement that most misbehavior is due to peer pressure. This can start as early as four years of age, when children seek to iden- tify with sports teams and star athletes by wearing caps, jackets, and numbers of their favorite teams and players.

As children grow older, usually between 12 and 18, the identification turns into more of a sense of belonging, and the pressure becomes even more intense. Since 21.2 million children are bought up in 13.6 million single-parent homes, which translates into 26 percent of all children under 21 years of age being raised in a single-parent home, the lack of discipline, examples (role models), and cohesiveness of family life affect the degree of peer influence on kids.

3. Programs like the one developed by the Kilgore School in Texas could be successful provided that students, parents, and the community back them. The parents and community should have no trouble in supporting such programs. Of course, the hard sell arises in obtaining students’ support. This can be accomplished by building an intense pride in being a part of a drug-free school.

Some schools have programs in which a number of times a year, parents and students gather to hear guest speakers from various governmental agencies talk about the hazards of drug abuse. While such programs aren’t as intense as the program in Kilgore, Texas, they’re often credited with reducing drug abuse by students in these communities.

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Chapter 11

Chapter 11 Review Answers

1. The US Census Bureau defines family as two or more persons, related either through birth, marriage, or adoption, living under one roof. This definition needs updating to reflect the ever-increasing number and diversity of nontraditional house- holds. Contemporary families come in many different forms and sizes—traditional families, step families, blended families, single-parent households, childless couples, extended families, same-sex unions, and various other possibilities.

2. Children’s influence on family purchase decisions was found to vary by product type. Children have significant influence especially on product decisions for which they’ll be the primary user. For example, children have been found to have substantial impact in decisions for breakfast cereals, snack foods, toys, children’s clothing, and school supplies.

Children also influence decisions about family leisure time activities (such as vaca- tions, movie attendance, meals consumed out of the home, and TV subscriptions) as well as in the selection of a car or household pet, although they have less influ- ence in these decisions than in decisions for products of their own use. Research reveals that older children have significantly more influence than younger children on family purchase decisions. This is due partially to older children’s greater cog- nitive ability compared to younger children. Older children also tend to have more experience with products, have already formed brand preferences, and have learned more about consumer roles.

3. Honeymooners (young married couples without children) are likely to spend heavily on home furnishings, home appliances, recreation- and relaxation-related products, and travel. Members of this group have a high purchase rate of durables.

During the parenthood stage, purchase patterns evolve as the children grow older. Initially, there may be heavy expenditures for starter housing, insurance, and appli- ances, as well as expenses for baby food and clothing, nursery furniture, medical services and supplies for the children, and toys. Later in the parenthood stage, there will be expenditures for school, children’s lessons (such as piano, dance, or Little League), large food purchases (in response to bulk-buying deals), clothing, dental care, higher-priced furniture, autos, housing, and fast food restaurant meals.

4. Of course, one of the primary motivations of singles for taking a vacation cruise is the social aspects of meeting other singles. In addition to emphasizing opportunities for meeting a prospective mate, marketers of vacation cruises could offer carefree, inclusive vacation packages, where everything—transportation, lodging, meals, entertainment, and activities—are provided. Cruises to exciting destinations at reasonable cost should be enticing for singles.

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5. The Boomers I cohort includes individuals who were 58–66 years of age in the year 2012. Members of this group were brought up during the assassinations of John F. Kennedy and Martin Luther King Jr., the first moonwalk, and the Vietnam War. The Boomers I cohort values youthfulness, invincibility, and freedom. The hip- pie movement was a natural outcome of this orientation. Members of the Boomers I cohort like to spend, borrow, and in many cases, live beyond their means. They enjoy owning conspicuous products and like rock-and-roll music. The Beatles and Elvis Presley are among their favorites.

Chapter 11 Case Study Answers

1. Firms that attempt to replace older employees with younger workers defend their actions based on the following:

n The high cost of retaining older workers due to their elevated pay scale;

n The need for up-to-date skills (like tech savviness);

n The idea that older workers exhibit lower energy levels than younger ones;

n The idea that older workers have more health problems;

n The fear of increased insurance rates;

n The fact that older workers have fewer productive years until retirement;

n The idea that older workers have greater family obligations

The opposing side of this issue contends that older employees display a stronger work ethic, exhibit greater loyalty to the firm, and have better communication skills.

The phenomenon of replacing older workers with younger ones was particularly prevalent during the economic recession, when more attention was placed on hir- ing less-costly, younger workers with little experience. In most cases, such action has led to disruption of work schedules, lowered morale among personnel, and increased hiring costs.

2. The majority of both men (70 percent) and women (60 percent) in their 50s work on a full-time basis. After the age of initial eligibility for Social Security benefits, labor force activity declines. By age 65, male and female labor force participation is close to half of what it was for people in their 50s. The nature of work also changes with age. By age 65, more than half of working women are employed in part-time—as opposed to full-time—positions. For both genders, part-time employment accounts for the majority of total employment of people aged 70 and older.

Research also shows that older married workers are more likely to continue work- ing than their unmarried counterparts. Conversely, unmarried individuals are more likely to retire. Older married people are also less likely than unmarried people to report themselves as “disabled,” which may partially account for the continued participation of married people in the workforce at older ages.

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3. In response to individuals’ extended life spans and exasperated by long-term budget deficits, the government—as well as many public and private institutions— attempt to defend the increase in retirement ages. This defense is based on the fact that the average life expectancy of the US population is increasing, and that modern medicine is allowing people to remain vital and active for many years. These facts mean that more people will enjoy retirement for longer periods, and therefore should work for more years to fund their retirement.

Chapter 12

Chapter 12 Review Answers

1. To initiate a relationship with influencers, the company may adopt any or all of the following practices:

n Engage with influencers in conversations and mutual exchanges to gain their trust and collaboration.

n Connect with them online.

n Focus on providing them with relevant content, such as news and information that they can share with others.

n Reward influencers by allowing them privileges such as private access to company facilities, executives, special deals, and gifts.

n Close the loop with influencers in regard to what the firm is doing with their suggestions.

n Recognize those who influence the influencers and attempt to initiate relationships with such key enablers.

2. People tend to heed the advice of celebrities for a number of reasons. In cases where a relationship exists between a famous personality and the promoted product, expert power prevails. The influential celebrity provides useful advice or information. In those cases where no relationship exists between famous personality and the promoted product, referent power prevails. In either case, identification can occur.

A consumer accepts influence because doing so is associated with a satisfying, self-defining relationship with the influencer. The identifier may desire to be like the influencing agent and consequently may emulate his or her actions or heed his or her advice. Using the same equipment as the celebrity, wearing the same brand of clothing or shoes, and eating or drinking whatever the celebrity eats or drinks makes the identifier feel similar to the influencing agent in some way.

Finally, the selective nature of perception suggests that consumers who like or somehow relate to an attractive or popular celebrity are apt to pay attention to ads or commercials in which this famous individual acts as the spokesperson.

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3. Brand advocates are individuals who companies use to spread WOM about their products or services. Characteristics that distinguish these individuals include the following:

n Creating and curating more than twice as many communications about a brand as the average web user

n Being savvy in writing meaningful content and sharing it with others on highly visible sites

n Focusing on topics of food, personal-care items, and household products

n Believing that information-sharing represents a relaxing and enjoyable activity

These individuals receive incentives such as free merchandise or discounts— rather than monetary rewards—from the companies for which they advocate.

4. More than 70 companies offer influencer-identification tools. Among them are Buzzlogic and Nielsen BuzzMetrics, which can provide a company with knowledge of who is talking about its brands and pinpoint the most influential communities in its case. Other similar services include Liquid Intelligence, DesignKarma, Inc., and the Avant-Guide Institute.

In addition, there are plenty of free tools for the purpose of developing a com- pany’s influencer-identification system. Included among these are Google Blog Search, BlogPulse, Ice Rocket, Blogrolls, Boardreader, TouchGraph, HootSuite, and Facebook Search. Other helpful search engines include Technorati, PostRank Connect, Buzzstream, Termatic, and Twend.

5. The specific strategy or combination of tactics concerning how best to spend the company’s promotion dollars depends on a number of factors, such as the audience being targeted, the grade of the wine, the size of the promotional budget, and the specific objectives of the campaign.

Concerning the first alternative, the winery should allow tours to the winery during which wine-tasting would occur. If participation in the tours is open to the general public, upon sampling the wine, visitors may spread positive word-of-mouth concern- ing the company’s wines to their acquaintances. If, on the other hand, participation in the tours is restricted by invitation to sophisticated wine connoisseurs on a mailing list, endorsements and comments made by these wine aficionados could appear as testimonials in ads run in wine-related magazines. In either case, sampling the wines firsthand is more apt to motivate consumers who may already have wine preferences to switch brands or get them to spread word-of-mouth than simply running ads in the media.

Concerning the second strategy of running an ad campaign, the mass media can transfer information to influencers as well as the public at large, but there’s apt to be a great deal of waste circulation, even for general-appeal varieties of wine. For premium-priced wines, specialized media such as magazines that target wine connoisseurs would offer a precisely targeted audience and minimize waste circulation.

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Concerning the third strategy that relies on viral WOM rather than hefty expendi- tures for media advertising, various advantages and limitations can be identified. On the positive side, implementing such a strategy would be inexpensive and offer vast coverage of the marketplace. On the minus side, however, the coverage likely would be unfocused. In addition, the winery would surrender control over the con- tent of messages. While such a strategy can be a valuable supplement to media advertising, publicity, websites, and other forms of communication and activities, such a strategy may or may not be sufficient to stand alone.

Chapter 12 Case Study Answers

1. Basic treatment of overweight and obese patients requires a comprehensive approach, not only involving diet and regular physical activity, but also—more importantly—the presence of a structured physician-supervised system that ensures patients’ behavioral change, with an emphasis on long-term weight management rather than just short-term weight reduction. Physicians and other healthcare professionals are the logical parties that can play a significant role in promoting preventive measures and encouraging positive lifestyle behaviors in their patients. They can, at the same time, treat obesity-related comorbidities. Health professionals also have the role of counseling patients about safe, effective weight loss and weight maintenance programs. Due to their expert knowledge and supportive attitude, patients are more inclined to follow the recommended regimens and stick with the program for the long run.

2. In many cases, obese patients have reported that they faced medical-care dis- crimination, in which physicians turned them away. In one well-publicized case that occurred in Shrewsburg, Massachusetts, one physician’s admittance policy denies service for patients weighing more than 200 pounds. Many physicians feel that there’s nothing illegal or unethical about denial of service to obese patients. They claim that obesity is a complex condition that requires specialized training in obesity medicine, as well as a physical office environment designed to accommodate the obese (furnishings and medical equipment). In fact, the position of the American Medical Association (AMA) on this issue of service denial for the obese is that “patients and doctors can exercise freedom in choosing with whom to enter into a patient-physician relationship.”

Many medical societies, however, have recently begun to encourage society members to support the practice of obesity medicine. Among those is the American Society of Bariatric Physicians (ASBP), a medical professional association for physi- cians, nurse practitioners, and assistants who are focused on medical treatment for the obese.

Willingness of physicians to participate in this program depends on the degree of success of the association’s efforts to recruit doctors to sign up for the specialized treatment needed. In addition, physicians have to invest in the needed physical environment and office procedures to match obese patients’ needs.

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3. With the rise of fad dieting, choosing a safe and reliable diet pill becomes a challenge for most overweight patients. This is particularly true when there are hundreds of diet pills around, all of which are claiming to be the best ever. In this situation, a dieter can rely on a number of trusted online review sites that are devoted to comparing and finding the best diet pill that’s suitable for individual use. There are many such sites that maintain a panel of experts—including physicians, dieticians, and professionals—to compare various diet pills available on the market and write credible reviews about them. These panels of specialists consider every- thing related to the pills, such as ingredients, side effects, how they work, and their effectiveness. Such independent reports make it easy for consumers on diets to arrive at a sound choice.

Chapter 13

Chapter 13 Review Answers

1. Today, the economic and social trends taking place in society are drastically alter- ing the profile of the middle class. The present adverse economic conditions in the United States, including high unemployment rates, the recent housing crisis, and the instability of the financial markets at home and abroad are all taking their toll on the middle class. Reports indicate that job losses in 2011 amounted to 10.5 million, and that 5 million jobs vanished from manufacturing. In the meantime, the rising standard of living among the more financially privileged members of society, along with higher prices and the escalating cost of education, caused the middle class to suffer a great blow. Its size and purchasing power were significantly reduced. Today, it’s presumed that a significant percentage of the “middle social class” has dropped down to join either the ranks of the working class, or worse yet, members of the underclass.

2. There are three basic methods used to measure social class:

n Subjective measures probe individuals’ class-consciousness or sense of belonging and identification with others. In this method, researchers let par- ticipants classify themselves, based largely on their self-images, to determine the social class structure. This approach is simple and convenient but may lead to an erroneous profile of the social classes, as many respondents over- or understate their class standing, causing serious over- and undercounts of various class memberships.

n Reputational measures ask individuals to rank the social position of other individuals in the community with whom they’re familiar. Using this method, researchers request key informants within a group to provide preliminary judg- ments of other members’ social class standing. Trained researchers assign community members to the various social-class positions. This approach is accurate and thoroughly validated, but marketers and researchers of CB are interested in identifying specific class attributes that have a bearing on consumption patterns.

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n Objective measures apply relevant demographic and socioeconomic criteria to assess individuals’ social class membership. Specific variables employed include amount or source of income, location or type of residence, occupa- tion, education, and possessions. Such variables can be used separately (single-variable indexes) or in combination (composite-variable indexes).

3. As women increasingly advance their education and acquire better jobs, their sta- tus and income have risen. Women with families are working in greater numbers than in the past decade. Women now fill a majority of jobs in the United States, including 51.4 percent of managerial and professional positions. In terms of rela- tive pay, 4 in 10 working wives outearn their husbands. Women are now marrying later, tend to have fewer children, and give birth to their first child later in life. An ever-growing number of women raise children without a spouse.

4. The United States exhibits an open class system, which means that families and individuals can both rise or fall on the social ladder. In this regard, education, occu- pation, achievement, talent, and sometimes marriage are often cited among the forces that propel upward mobility. Unfortunately, many families and individuals have fallen on the social ladder due to recent financial woes, unemployment, and declining household incomes.

5. Social class is known to influence shoppers’ retail store choices. It’s unlikely that any given store could simultaneously cater to all classes. For example, a study that dealt with shopping behavior and store avoidance of different social classes revealed that Kmart was seen as appealing to lower- and lower-middle-class customers, whereas Nordstrom was seen as appealing mainly to upper- and upper-middle-class con- sumers. The study proposed the factor of social distance (the difference between the individual’s social position and the store’s perceived image) as an explanatory measure for the shopping preferences of different social classes. It’s therefore cus- tomary in retailing to determine the class of the customer base from which a store is expected to draw to design effective layouts, develop suitable in-store strategies, and communicate appropriate class messages via store advertising.

Social class also has a bearing on consumers’ media habits and the degree of use of social networks. As the level of social class rises, so also does consumers’ access to both online and offline information. Educational level, household income, ethnicity, and racial identity are significant factors affecting the extent of social media use.

Among the elements of behavior affected by social class standing are individuals’ saving and investing patterns, use of credit cards, their recreational activities, and choice of manufacturers’ versus store brands.

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Chapter 13 Case Study Answers

1. Before Walmart rushes to open more stores in upscale suburbs, management should wait until performance of the experimental upscale store can be assessed. It’s a well-known fact in retailing that for a low-margin retail policy to work, it has to be supported by high volume. However, if high volume doesn’t materialize in upscale suburbs due to reluctance of upper-middle-class customers to shop in such establishments, a problem arises. For these high overhead stores to survive, either a high-margin policy or an alternate one that maximizes stock turnover would be necessary.

2. In retailing, it’s a well-known fact that a single store can’t be everything to everyone. A store has to target a specific market segment and create appeals appropriate for this class of clientele. The appeals used for working class consumers aren’t the same as those that are effective for upscale customers. If Walmart were to use the upscale appeals of high quality/high price to lure the elite, it may give the wrong sig- nals to working-class shoppers, who constitute the majority of the chain’s customer base. On the other hand, a low-price appeal used to attract the working class is seldom effective with upscale consumers. Therefore, attempting to attract widely disparate social classes may prove to be an unworkable strategy for Walmart.

3. Walmart may be able to compete against Target in upscale suburbs, albeit at a higher operating cost, provided that the company makes some necessary adjust- ments. In addition to the company’s emphasis on low price, the store’s interior and exterior appearance and design will have to be markedly different than the boxy-warehouse style typical of other Walmart stores. The motif has to give the impression of open space and artistic design. Moreover, the merchandise assort- ment has to be wider and the brands carried more exclusive than those offered in typical Walmart stores. Additionally, more knowledgeable sales personnel must be available in these upscale stores to offer personalized services to a more discriminating class of customer.

Chapter 14

Chapter 14 Review Answers

1. Ethnocentrism is the tendency to make cross-cultural evaluations on the basis of pre-reflective beliefs and values that are rooted in an individual’s own culture. The dangers of ethnocentrism become particularly apparent when individuals make cross-cultural judgments on the basis of myopic beliefs.

2. Culture can be studied in several ways:

n Ethnography is the study of culture by unobtrusive observation, such as living in a foreign culture, going undercover, and scrutinizing it from within.

n Direct questioning entails constructing and administering questionnaires that relate to the likelihood of product purchase and use.

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n Content analysis entails reviewing the media and literature coming out of a society and searching for recurrent themes.

n Consulting with key informants entails conferring with individuals who are familiar with and knowledgeable about the culture of interest (for example, expatriates who have lived in a foreign country for an extended period of time, members of diplomatic or commercial corps, consulate and embassy personnel).

3. Hofstede’s five cultural dimensions help explain how and why people from various cultures behave as they do.

n Power distance is the degree to which less powerful members of a society accept the fact that power isn’t distributed equally. In high power-distance cultures, people obey authority without question. In low power-distance cul- tures, people are seen as equals; members place value on independence and individuality.

n Uncertainty avoidance is the extent to which people feel threatened by ambiguity and have created institutions and beliefs for minimizing or averting uncertainty. People in high uncertainty-avoidance societies attempt to reduce risk by developing systems and methods for dealing with ambiguity—they trust experts and their knowledge and formulate beliefs and pass rules to ensure people know what to do. High anxiety, stress, and concern with secu- rity characterize such societies. People in low uncertainty-avoidance societies need less structure in their activities and are willing to assume greater risk or tolerate ambiguity.

n Individualism is a tendency of people to look after themselves and their immediate family only. People in high-individualism countries tend to be self-sufficient and value individual initiative and autonomy. They tend to be inner-directed and make individual decisions based on their own values without a need for or reliance on group support. Such people are likely to be innovative consumers and tend to prefer ads that emphasize product attributes and personal benefits.

n People in collectivist (low-individualism) societies tend to belong to groups that look after each other in exchange for loyalty. They tend to be other- directed and value group decision making, affiliation, and approval of others. Such people are less apt to be innovative consumers and tend to prefer ads that feature a social environment or stress social acceptance.

n Masculinity is the degree to which dominant values in society are success, money, and things (measured on a continuum ranging from masculinity to fem- ininity). Countries with a moderate to high masculinity index value earnings, recognition, material possessions, and challenge. In such nations, achievement is defined in terms of wealth and recognition. In low masculinity (high femininity) cultures, the dominant values in a society are caring for others and quality of life. Achievement is defined in terms of human contacts and concern about the environment. People place importance on cooperation, maintaining a friendly atmosphere, and employment security.

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n Term orientation concerns more than just time. Long-term-oriented cultures are characterized by patience, perseverance, respect for elders and ances- tors, along with a sense of obedience and duty toward the larger good. In such cultures, people tend to be driven to seek permanent solutions to prob- lems rather than make temporary quick fixes. Short-term-oriented cultures are characterized by less patience, expectations of immediate results, and a tendency to make quick fixes for problems.

4. Values are enduring beliefs and ideals concerning what a person should or ought to do, goals that are worth pursuing, and appropriate ways to pursue goals. As such, consumers’ values represent end states that are worth striving for.

To determine the acceptability or appeal of their products in various cultures, marketers often use means-end chains. Means-end chains depict the postulated linkages between a product’s attributes, consequences of that product’s use, and consumer values as they exist in a particular culture. Means-end chains are based on the premise that consumers buy product benefits rather than physical products per se; the specific benefits that consumers seek from the products they buy and use are culturally determined. For example, in cultures where people place high value on a pristine environment, ecologically sensitive products and products that come in recyclable and reusable containers are likely to be preferred and in high demand, even if they cost a bit more than traditional products.

5. Black American consumers constitute a slightly smaller market than Hispanic Americans. Both populations are younger and growing at a faster rate than their white counterpart. Both the black and Hispanic American markets are very diverse in their composition, and each group displays its own set of characteristics and tendencies, including shopping patterns and product preferences, as well as on- and offline media habits.

Black Americans accounted for 45.7 million, or 14.7 percent, of the US population in 2016. They’re projected to reach 74.5 million by 2060. Their median income is more than $35.5K per year, and their median age is 31 years old, compared with 43 years for the general population. Seventy percent of the age 25 and older seg- ment hold a high school diploma, and 18 percent hold bachelor’s degrees. Black Americans constitute 12 percent of the US labor force. With an estimated buying power of $1.2 trillion, they tend to (1) spend generously to enhance their personal image; (2) prefer name brands and are less apt to purchase generic or store brands; (3) be early adopters; (4) exhibit high ownership of new electronics; and (5) spend more on groceries and clothing than whites.

Hispanic Americans accounted for 55.4 million, or 17.4 percent of the US popula- tion in 2014. They represent the largest ethnic minority in the United States and are projected to reach 119 million individuals in 2060. Their median income is $40.9K, and their median age is 29. Sixty-four percent of the age 25 and older segment hold a high school diploma, and 14 percent hold a bachelor’s degree. With an esti- mated buying power of more than $1.5 trillion, Hispanic Americans tend to (1) exhibit greater expenditure on grocery items and specialty foods, due to an eat-at-home

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tendency; (2) spend more on clothing, particularly for infants; (3) be heavy users of all electronic gadgetry; (4) be brand loyal and buy established, prestigious brands; and (5) prefer to shop at smaller stores.

Chapter 14 Case Study Answers

1. The Department of Justice and the Equal Employment Opportunity Commission (EEOC) continue to handle many disability discrimination cases against various US businesses. The violations range from accessibility, discriminatory hiring practices, and failing to provide work accommodations all the way to firing disabled workers.

Correcting such unfortunate situations can’t be accomplished simply by imposing pen- alties on violating firms, but rather requires reducing the false perceptions businesses have toward hiring and retaining disabled workers. By raising awareness that the company is a disability-friendly business, the firm can attract qualified job candidates and new customers. A recent study from the University of Massachusetts reports findings that confirm positive attitudes among consumers for socially responsible companies, and in particular, toward those that hire individuals with disabilities.

There are many resources available in just about any community that can direct a firm to qualified workers with disabilities. These programs, administered by the Rehabilitation Services Administration (RSA) of the Office of Special Education and Rehabilitation Services (OSERS), include states’ Vocational Rehabilitation (VR) program and the Centers for Independent Living (CIL). The VR program is a strong state-federal partnership that promotes the employment and independence of peo- ple with disabilities. The CILs are cross-disability, nonprofit organizations that are designed and operated within a local community by individuals with disabilities.

2. One of the best ways to tap into the disability market is to ensure that it’s well rep- resented in the firm’s workforce. Some of the successful approaches that large and small employers can use in this endeavor include the following:

n Developing and communicating policy statements and other demonstrations of the company’s commitment to inclusion of workers with disabilities

n Establishing a company-wide team consisting of executives, managers, and employees with disabilities to support and advance recruiting, hiring, reten- tion, and promotion of individuals with disabilities

n Forming and publicizing the business case for employing qualified individuals with disabilities

n Including disability as part of the company’s diversity policies and activities

n Affirming in policy statements the company’s commitment to equal employment opportunities for people with disabilities

n Encouraging workers with disabilities and other employees to identify barriers, as well as individual systemic concerns, without fear of reprisal

n Establishing a universal policy providing workplace flexibility in accommodations for all applicants and employees

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3. Small businesses are an ever-increasing source of jobs, many of which can be filled with individuals with disabilities who are able and willing to work. Unfortunately, the unemployment rate of individuals with disabilities remains high. By some estimates, more than 70 percent of individuals with disabilities aren’t working—although many of them are able and willing to do so.

There are basically no laws to govern the employment practices of such small businesses. The Americans with Disabilities Act (ADA) applies only to businesses with 15 or more employees. Many small business owners feel that when they hire disabled workers, they find out that in addition to the cost associated with hiring, there are tax, safety, benefits, and privacy-related legal issues that must be faced in addition to the needed work accommodations for the disabled person.

Even though this view is understandable, many of those small business owners have been hiring disabled workers voluntarily to take advantage of various pro- grams that encourage such employment. Such programs include benefits such as the tax credits permitted by IR Code Section 44, called the “Disabled Access Credit,” and the IR Code Section 190, called “Barrier Removal,” that help cover the cost of accommodations for employees with disabilities.