Consumers respond to the "Buy One Get One Half Off" (or BOGO 1.5) sales promotion because it gives an impression of savings and serves as an incentive for the consumer to get two items for one and a half price. Perhaps, rational consumers evaluate their choices and act systematically to achieve their objectives. Marginal changes are incremental changes to the existing plan of action. The rational consumer can precede a better decision when thinking of the margin. They only act if marginal benefit exceeds the marginal cost. If acting on the promotions, the consumers will receive a better value by purchasing the products. On the other hand, if the consumers choose to forego the deals then the promotion does not support consumers' objectives. By accepting the promotion, she can achieve a consumer surplus/ net savings of 50 percent of one shampoo. Perhaps, her marginal benefit outweighed the marginal cost so it alters her consuming plan to suit her objectives.
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The upcoming example can illustrate this behavior. For instance, one consumer notices the local market is offering a B...
Persuasion has always played an intricate role, in many ways, when it comes to promotion of a Fortune 500 companies like C.V.S. corporation. With the largest pharmacy chain of over 7400 stores in United States; no wonder they are at the top five largest pharmacies in the United States based on revenue generated from prescription only. However it's not only prescription is sold in stores; there are assortment of general merchandise including food, sundries, beauty products as well as health products sold there. In one of the stores I visited for this paper, located at 39th and Main street, I noticed that the products were sold in minute quantities so as to reduce the price of the merchandise.
In the article “Opportunity Cost Consideration”, Stephen Spiller aims at addressing the various issues that are involved in the decision making process of consumers. Spiller argues that buyers need to involve the concept of opportunity cost in their purchasing decisions so that they can manage to meet their unlimited wants using limited resources (Spiller 595). In relation to this, the article focuses on when buyers should embrace opportunity cost, individuals or parties that embrace opportunity cost, opportunity cost that spring into buyers’ minds and consequences involved in the consideration of the opportunity cost. The author accomplishes his goal by conducting several studies. These studies are fall under various categories such as application of multiple mechanisms in assessing opportunity cost consideration, self-reported consideration, thought listings and possibility of purchase. Thus, the author’s findings play a vital role in highlighting consumers’ need to embrace opportunity costs in their purchase decisions.
Mary Kay Cosmetics is a company known for providing women with exceptional opportunities for professional achievement and economic success and rewarding women for their success. Mary Kay Cosmetics uses several programs to motivate, recognize, and develop its beauty consultants, which include recognition in a monthly magazine, annual events, gifts and prizes and most importantly, financial incentives. At the heart of the financial incentives Mary Kay provides is the three car programs offered to beauty consultants at different stages of their career. The car programs have proven to be effective motivators; however the costs to the company have skyrocketed as the number of car winners as a percentage of beauty consultants has doubled, despite increases in program qualification requirements. The VIP car program is the main cause of concern for May Kay because of the large number of leased VIP cars, high interest rates and insurance premiums, and large losses on cars in service for short periods of time. Mary Kay's top management is now faced with finding a solution to rising program costs of their powerful incentive plan while maintaining sales force moral and motivation. The key issues that must be considered in finding a solution to the high costs of Mary Kay's Marketing Plan are how beauty consultants will respond to changes in the incentive plan and how implementing the necessary changes will affect the sales force.
Ticket scalping has been around for many years and is defined as ‘an unsanctioned ticket investor who purchases tickets to an event and resells them at raised prices.’ The action to ‘scalp’ has been referenced as early as 1869 in American English to theater tickets but mostly to that of the 19th century referencing railway tickets. A scalper was a common utterance for “con man or cheater” in the late 19th century. (Scalper) The second-hand market grew exponentially as opportunists realized they could sell tickets at a higher price. The secondary market thrived underground for the majority of the 20th century, no federal laws restricted scalping, however, many states had laws limiting how and where tickets could be resold. The internet made it
Also, the retailers can send ads, coupons to their customer base on the information they have to get their customers to come back. It is really easy for the retail to bond the relationship with their customers by knowing what their customers’ need and desire. Importantly, it is all about making people feel comfortable into liking the place, and they will likely to come back. According to the book “Why We Buy the Science of Shopping”, written by Paco Underhill, people doesn’t like to be brushed or touched from behind. They’ll even move from the merchandise they’re interested in avoiding it. The sales from a tie rack were lower than expected; it was because of the butt-brush factor. After they moved the rack; the sale went up quickly and substantially (fbdfjbsjfbsj). That implies the retailers are always looking to chance in order to match customers’ interest. Not only that, they could also use the data from to send out the deal to the customer base on their interest. As a result, the customer will most likely to come back to the store they already familiar with. In extend, the retailers can also send out gift cards, reward cards to customers rewarding them for being loyalty to the store. Some people think it is manipulating people into buying goods, but it is not true. The customer always has to choice whether to buy or not. No one is forcing them to buy anything. Often, people came
Price elasticity plays an important role in the lives of consumers. The price elasticity of demand is the sensitivity of the demand for a product when its price changes (McConnell, Brue, & Flynn, 2009)iv. Cafes like Panera Bread refuses payments from customers and politely asked them instead to “take what you need, and leave your fair share” (Strom & Gay, 2010)v, resulting in more people getting goods like food at a fair price that they are willing to pay. Based on the income elasticity of demand, consumers can get a better and healthier life as they will buy things with better quality as their income rises. People will go to Italiannies for pizza and not to Pizza Hut as Italiannies offers a better, tastier, healthier and wider variety of choices, even when it is more expensive. With cross elasticity of demand, consumers can get the same quality product at a cheaper price as the rivalry between substitute goods will result in price reduction or improved quality. Consumers get to travel by MAS Airlines at a cheaper price as the rivalry between MAS and other airline companies has caused its price reduction (Gunasegaran, 2011)vi. Consumers with a low budget can also buy what they need. Consumers can get more value from a package offer when buying complementary goods as they “go together”, for example: McDonald's McValue Lunch which comprises of a burger, fries, and soft drink, all for only RM5.95 onwards (My Food Fetish, 2009)vii. With this, consumers can get convenience when buying certain products.
This report aims to provide a mix review of theories and personal case study. I will apply two consumer behaviour theories in relation to my own purchase decisions.
“Apply the concepts of marginal utility theory, product differentiation, and revenue/profit maximization to some event in your personal, daily lives.” [1]
Consumers are motivated to spend more when there are incentives presented in the form of discounts and special promotions. Their satisfaction in spending less to buy a desired item indicates how incentives work by influencing an individual’s decision making ability. The fact that the item was on a discount enabled the individual to buy it as the reduction in the price of the item was a strong economic incentive. The concept of incentive is present in everyday life situations as it basically impacts the actions of every individual. Incentives are efficient tools used to manipulate the human behaviour in order to achieve desired outcomes.
... these findings could assumedly be quite broad. While priming may not convince consumers to buy everything in a shop, it could influence their choice of a single product if primes related to that product are exposed in the environment. Present research also shows that the nonconscious influence of visual and even olfactory primes influence an individual 's thinking and behavior. These could be applied to store and shop settings to influence a consumer 's choice of product. Advertised reference prices have been the study of marketing and pricing research for many years. With the continued success of sales when advertising a reference price and offer price simultaneously, it does not look like stores will be changing that sale tactic anytime soon. So next time you see that sale sign, commercial, or even catch a scent of cleaner, just know you are already being primed.
Consumer can benefit in cheaper goods, when presented with two products that offer similar benefits, customers vote with their purchases and decide which product will survive. Customers also determine the ultimate price point for a product, which requires producers to set product prices high enough to make a profit, but not so high that customers will hesitate to make a purchase.
For example, when McDonald’s was exploring to add Fish-O-Fillet to the menu, the creator of this menu item wanted to use halibut for fish but to use halibut would mean that Fish-O-Fillet could not be sold for less than 25 cents (Clark, 2007). McDonald’s ended up substituting the fish with cheaper type of fish than halibut and over time, to fit the cost of fish under the price point, McDonald’s would change the type of fish to be the most cost effective.
An oligopolistic market has a small number of sellers dominating market share and therefore barriers to entry are high. These sellers are highly competitive and do not act independently of each other. Access to information is limited so sellers can only speculate of their competitor’s actions. Sellers will take advantage of competitor’s price changes in order to increase market share.
would like to put you in a situation and show you how a consumer can
The second market structure is a monopolistic competition. The conditions of this market are similar as for perfect competition except the product is not homogenous it is differentiated; thus having control over its price. (Nellis and Parker, 1997). There are many firms and freedom of entry into the industry, firms are price makers and are faced with a downward sloping demand curve as well as profit maximizers. Examples include; restaurant businesses, hotels and pubs, specialist retailing (builders) and consumer services (Sloman, 2013).