# Shared Flashcard Set

## Details

HACE exam 2 chapter 7
exam 2
45
Economics
03/07/2011

Term
 Parkinson's Law
Definition
 Work expands so as to fill the time available for its completion.   ex: An example is provided of two people writing a postcard.  An elderly retired person may consume an entire day for this task: carefully choosing the card, contemplating the word choice, followed by a long, leisurely walk to the post office. A busy person will pick the first appropriate card, write it and mail it on the way home.
Term
 Pareto Principle
Definition
 80/20 rule  20 % of the time expended produces 80% of the results.  80% of the time expended produces 20% of the results.  More generally, the Pareto Principle is the observation (not law) that most things in life are not distributed evenly. It can mean all of the following things: 20% of the input creates 80% of the result 20% of the workers produce 80% of the result 20% of the customers create 80% of the revenue 20% of the bugs cause 80% of the crashes 20% of the features cause 80% of the usage And on and on…
Term
 Rules of Thumb
Definition
 Principles that guide purchases such as only buying certain brands or only shopping at certain store or buying certain styles are you a rational/impluse shopper? bargain vs innovator, malls vs discount stores?
Term
 impulse shopping
Definition
 Retail items known for their unplanned purchases and, therefore, kept near the checkout counters, such as candy, chocolate, magazines, novelties, snacks.
Term
 Rule of Thumb: Price
Definition
 Price along with our income and our preferences helps determine our consumption choices.  most consumers try to stay within their budget constraint
Term
 Budget Constraint
Definition
 The quantity of goods that you can buy given:  -set prices -limited income -It shows all the possible combinations of X and Y the consumer can buy when spending all of her income.    formula:  C= (Y/Pc)-(Pf/Pc)F   All combinations of goods outside of the budget set is NOT affordable and within the budget set is affordable.
Term
 Consumption Possibility Frontier
Definition
 Also known as the budget constraint.  it is the line that shows the tradeoffs in the production of goods.
Term
Definition
 any point on the budget constraint line is indicative of a person'e ability to trade between two goods X and Y The line slopes downward because it represents a trade off between good X and good Y you have to give up some of one good to gain some of the other good.
Term
 price discrimination
Definition
 when some people are charged different prices charged by hotels, airlines, depending on group affiliation or who is making the purchase.  it can be based on gender, race, age...
Term
 What are some ways to seperate customers for price discrimination?
Definition
 geography income gender age time race langage residency ability to haggle
Term
 what is "all or nothing" price discrimination?
Definition
 can only buy a group of items, but CANNOT buy them individually   ex: can buy 4 lightbulbs in a pack but not just 1.  candy bars in a movie theater --large size and how you are not permitted to bring FOOD into a movie theater.
Term
 What is "two-part" pricing?
Definition
 1) a price for the priviledge of buying items and then 2) the actual price per item   ex: cabana club membership to just go to the beach and then the actual cost of the food there ex: cover charge to enter the bar and then actually buying the drinks
Term
Definition
 personal selling is PREFERRED, but it can be very costly to try to contact everybody Therefore we engage in advertising so that the seller can reach more potential consumers.
Term
 How much do advertises spend in the US each year? How about worldwide?
Definition
 US: \$237 billion Worldwide: \$470 billiion
Term
 Identity Market
Definition
 Consumers wear or display their homes product logos (athletic Nike gear or displaying Georgia gear in their homes) our identities are formed through an allegiance to common value systems expressed through affiliation with product sets.
Term
Definition
 Product generated information about products and services.    The activity of attracting public attention to a product or business by paid announcements in the print, broadcast, or electronic media.  It is an impersonal, one-way communication that can be repeated several times.
Term
 What are the four components of advertising?
Definition
 To inform, persuade, compare, remind   IPCR  I paint colorful rainbows.
Term
 Commercial components
Definition
 Familiarity Humor ( Positive Association) Sexuality Animals
Term
 Infomercials
Definition
 Infomercials are long-format television commercials, typically five minutes or longer. Infomercials are also known as paid programming.This phenomenon started in the United States where infomercials were typically shown overnight (usually 2:00 a.m. to 6:00 a.m.)--outside of peak hours.
Term
 Since we typically T'VO our shows and skip through the commercials, what are companies doing to advertise their products now?
Definition
 Product Placement! They are placing their products on actresses and celebrities in movies and during TV shows.
Term
 Consumer Space
Definition
 a system in which companies are selling WITH consumers.    ex: when you wear a t-shirt with a business' name located on the front you are advertising for that company.
Term
Definition
 Ads are placed all throughout magazines but they are placed according to the reader's interest.
Term
 Sporting Events
Definition
 corporations use major sporting events to advertise their products  ex: coors light in car racing and advertising in arenas
Term
 How much did an ad during the superbowl cost?
Definition
 \$2.5 million
Term
Definition
 also called "pioneer" advertising provides the consumer with specific, understandable, verifiable claims.  informative advertising REDUCES consumers uncertainty about the attributes of the promoted product.  Their tendency to purchase a product increases with the number of ads they were exposed to.  an increase in exposure to advertising leads to an increase in the expected satisfaction.
Term
Definition
 ads that do not give any relevant information but also do not mislead the consumer.  ex: America's best cup of coffee.  the words "best" and "favorite" are not misleading facts but mere puffery.
Term
Definition
 tendency to decieve impression that the ad isnt truthful when it isnt omission of important information
Term
 Bait and Switch
Definition
 First, customers are "baited" by advertising for a product or service at a low price; second, the customers discover that the advertised good is not available and are "switched" to a costlier product.   The goal of the bait-and-switch is to persuade buyers to purchase the substitute goods as a means of avoiding disappointment over not getting the bait, or as a way to recover sunk costs expended to try to obtain the bait. It suggests that the seller will not show the original product or service advertised but instead will demonstrate a more expensive product or a similar product with a higher margin.
Term
Definition
 companies used to hesitate to do this, but now they do it freely.  sometimes it can backfire and cause the viewer to NOT want to buy the product--if the comparison is too harsh  ex: political advertising that is too nasty
Term
Definition
 In a market that is saturated with a certain product, everyone selling that product has to advertise or be left out of the market.  You dont gain anything necessarily by advertising but at least you are still in the game.
Term
Definition
 is a specific communication task to be accomplished with a specific target audience during a specific period of time
Term
 What are the two major elements of developing an advertising strategy?
Definition
Term
 The message strategy
Definition
 identify customer benefits of buying the product The ad should be meaningful, believeable, and distinctive.
Term
 Message execution
Definition
 Choose a tone ( animal cruelty vs doritos) use memorable attention-getting words ex: "Snap, crackle, pop!", "just do it"
Term
Definition
Term
 Planning the Best Message:   A I D A
Definition
 Attention Interest Desire Action
Term
 Selecting Advertising Media: Reach, Frequency, Media Impact
Definition
 Reach: % of people exposed to the ad Frequency: # of times a person is exposed to the ad Media Impact: The qualitative value of a message exposure through a given medium
Term
 Deciding on Media TIMING:
Definition
 should you follow a seasonal pattern? oppose seasonal pattern? same coverage all year?
Term
Definition
 Is the ad increasing sales? increasing base consumers? can you build other ad campaigns off of this one?
Term
 What are America's Top 5 advertisers?
Definition
 Proctor and Gamble Phillip Morris General Electric Time Warner Disney
Term
Definition
 can issue a consent decree can ask for ad substantiation can issue a cease or desist order can require a corrective ad
Term