QUESTION 1: Explain the concept of the 80/20 rule and why it is important to marketers.
The 80/20 rule of marketing is derived from the broader Pareto Principle concept introduced by Italian economist Vilfredo Pareto in 1906. Pareto noted that the majority of wealth in a free market economy is concentrated within a relatively small group of people -- roughly 20 percent of the population.
Importance of rule 80/20 to marketers:
Marketing investment: relates to how money is spent on advertising & marketing campaigns. Generally, 20% of marketing messages produce 80% of campaigns results. Understanding this, marketers will be able to eliminate costs associated with less productive techniques=> improves marketing efficiency & returns.
Product mix: 80% of company’s revenue is derived from 20% of its products or services. Marketers =>can emphasize the value of core products in a better way to target customers & expand business by targeting new customer groups.
Profits: most useful applications of 80/20 rule in marketing relaters to profits. A company can earn 80% of its profits from the top 20% of its customer base. It helps company to focus on maintaining relationships with these top customers=> increases loyalty from customers will offer best value to companies.
QUESTION 2: List and briefly characterize four types of relationships a person might have with a product. Be specific.
Self- Concept attachment – The product helps to establish the user’s identity
Nostalgic attachment- The product serves as link with a past -self
Interdependence- The product is a part of user’s daily routine
Love- The product elicits emotional bonds of warmth, passion of other strong emotion.
QUESTION 1: List the three stages of the perception process and give a brief definition of each.
They are: Selection, Organization and Interpretation
Selection: 1st stage of perception process and in this stage, we select stimuli to which we attended. We select