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. CHAPTER 2
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 the stimuli through our senses: sight, sound, smell, taste, and touch. Organization: 2nd stage in the perception process. We organize and prioritize the information and data that we have become aware of and so that certain information stands out over other information. Interpretation: last stage in the perception process. In this stage, we manipulate the data to give meaning to the information that has been selected and sorted. All we have is data which makes no sense and has no meaning. We search our memory and assign meaning to the databases on its similarity to our previous experiences. QUESTION 2: As a personal selection factor, adaptation is seen as the degree to which consumers continue to notice a stimulus over time. Five factors can lead to adaptation. List and briefly describe the connection with adaptation. They are: intensity, duration, discrimination, exposure and relevance. Intensity —Less-intense stimuli (e.g., soft sounds or dim colors) habituate because they have less sensory impact. Duration — Stimuli that require relatively lengthy exposure to be processed habituate because they require a long attention span. Discrimination— Simple stimuli habituate because they do not require attention to detail. Exposure — frequently encountered stimuli habituate as the rate of exposure increases. Relevance— Stimuli that are irrelevant or unimportant habituate because they fail to attract attention. Chapter 3
1) Give a brief explanation of cognitive learning.
Cognitive learning is theory of psychology that attempts to explain human behavior by understanding the thought processes. In contrast to behavioral theories of learning, cognitive learning theory approaches stress the importance of internal mental processes. This perspective views people as problem solvers who actively use information from the world around them to master their environment. 2) The process of stimulus generalization is often central to branding and packaging decisions that attempt to capitalize on...
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