Week 11- The economy of doomsday

December 21st, 2012 is coming! According to doomsday predictions by Mayan, that day will be the end of the world and the sun will not rise in December 22rd.

Due to this prediction, some products which connect with doomsday are very popular such as life buoys, lighters and medical kits et al. 2012 doomsday, a famous American film, has swept the world. In this film, it described what will happen around December 21^st. All kinds of disasters, including earthquake, volcanic eruption and flooding and so on, occurred. All of people sought the opportunities to survive. Owing to the prediction and film which called 2012 doomsday, the economy of doomsday emerged from it.

Recently, most businesses catch the idea of doomsday to sell their products, since it became a very hot topic. These goods, which relates to the end of the world, have a good market. Take household first aid kit for example, the vast majority of it are called equipment of doomsday in Taobao. It also includes mask, eye patch and ship biscuits and so on. Even thought the price is not reasonable, it still became the hot products and sold approximately 1000 items within a month. Because consumers have focused on doomsday, products easily drew buyers’ attention by connect with doomsday. Thus, products which relate to doomsday are on hot sale.

However, the economy of doomsday also has some disadvantages. First of all, it just can use in a short time. One of reasons is that special things just happened in a short time and then disappeared. Another reason is that fixed time is short and buyers’ attention just can catch within a short time. Secondly, selling products by using the strategy of doom economy probably cause social panic. Some audiences believe 2012 years is the end of the world so that they probably enjoy their live, even though commit a crime.

The economy of doomsday is a good strategy to sell products. It can earn huge profit if it uses in appropriate. Otherwise, it is possible to have a negative impact on social like causing social panic.

Week 10-The Twilight Saga: reviews & box office

                                                                                                                                                                                                           (from fanpop)

Recently, the Twilight Saga: Breaking Dawn – Part 2 has run for nearly 1 month. It is very popular and it has made ﹩141,067,634 on the opening weekend. Furthermore, it grossed around ＄706,192,715 from all over the world until December 5, 2012 (Box Office Mojo, 2012). Is it a huge number? Sure! For the Twilight films, most of them grossed a lot of money worldwide. However, most impressively of all, critical responses of the films have been mixed to negative while the Twilight Saga has been so successful in the box office, especially the Twilight Saga: New Moon.

Votes to the Twilight Saga: New Moon

                                                                       (from IMDb)

The Twilight Saga: New Moon has made ﹩142, 203,828 on the opening weekend and grossed about ﹩709,827,462 from different countries and regions (Box Office Mojo, 2012). Money of the Twilight Saga: New Moonwhichhas made is more than the Twilight Saga: Breaking Dawn – Part 2. At the same time, The Twilight Saga: New Moon was described with more negative reviews. In IMDb (2012), the average vote of four and half stars out of ten has given by 140959 IMDb users. Approximately 22.9% people gave the film one stars out of 10. On the contrary, only 13.5% users gave the film ten out ten (IMDb, 2012). Why? Why did this film have so much negative reviews, even though it has been so successful in the box office?

      (Maslow’s hierarchy of needs )

According to Maslow’s hierarchy of needs, everyone needs love and belongingness (Cathrine, J., 2010. Pp. 119-120). To be more exactly, people have a sense of belonging to a group. They are willing to take part in a group as a team member and they are prefer to take good care of each other. To achieve the goal, people needs exchange their emotion by communicating with other people. Communication means exchange emotion, information and message. To achieve this goal, people need have some information or message to communicate with other man. Due to the film of the Twilight Saga: New Moon as a kind of information, audiences would like to watch it to get enough information to chat with their friends even though it had the negative reviews. Therefore, people would watch a film which had negative reviews to fit into the group.

To sum up, although the Twilight Saga: New Moon had negative reviews, it still have made a large amount of money from over the world because of love and belongingness within a group. Everyone needs communicate with the others. The Twilight Saga: New Moon as information probably helps people to realize their need.

References:

Box Office Mojo (2012). Box Office Mojo. Retrieved 7 December 2012, from http://www.boxofficemojo.com/movies/?id=breakingdawn2.htm

Box Office Mojo (2012). Box Office Mojo. Retrieved 7 December 2012, from http://www.boxofficemojo.com/movies/?id=newmoon.htm

Cathrine, J. (2010). Consumer Psychology. Bangor Library [Online]. Pp.119-120.

IMDb (2012). IMDb. Retrieved 7 December 2012, from http://www.imdb.com/title/tt1259571/ratings

Week 9-Does online reviews influence consumers’ decision making?

Online reviews are one of the ways to share the shopping experience. Due to online review are the comments that people giving after buying a product. When people shopping online, most of them prefer to read online comments about the products which they willing to take. Moreover, positive comments, neutral comments and negative comments compose online review. Next, I am going to focus on the effects of the positive comments and negative comments.

Zhang X. Q. and Zhu F. (2010) finds evidence that consumers’ decision making are influenced by online reviews when they have internet experience. People only can get some niche products online so that most of them evaluate the products by online reviews. It also decreases their search costs, such as the cost of the transportation and time consumption. To be more exact, people, who are confident to search online review in the internet, are more easily affected by online reviews.

Different people have different evaluations and emotional responses toward the same thing. According to the research of the pioneers, the positive comments efficiently attract the new clients to increase the sales revenue (Reichheld F. F., & Sasser W. E., 1990). Consumers’ decision making are always influenced by the positive comments, including degree of the positive comments, quantity and timeliness of the positive comments. In particular, shoppers often have a tendency to purchase a product when the positive comments are posted by some senior commentators or professors (Chang Y. P., et al, 2012). At the same time, Local Consumer Review Survey (2012) shows that consumers (around 52%) are more likely to purchase goods through the positive online comments (Anderson M., 2012).

On the contrary, Utz S., Matzat U. and Snijders C. (2009) find that the negative comments decrease the belief of consumers to the sellers. As we all know, the reputation of the firms is important in marketing. Most people are unwilling to buy a product from no credibility of the companies for the products in these companies are worried. To be more exact, the negative comments are one of the reasons why consumers think the companies are without reputation. Thus, the negative comments reduce trust of companies and affect people’s decision making, most of them are unwilling to buy it.

To sum up, online reviews affect consumers’ decision making. More exactly speaking, the positive comments often attract people to buy the goods. However, the negative comments decrease shoppers’ purchasing behavior since it reduces the trust of firms.

Week 8-Why Different Products have Different Shape?

Shopping in the supermarket, we always find that there are different kinds of products put on the shelves. Furthermore, these products are different in many ways, such as color, shape and size and so on. Next, I am going to shine a light on the different products design between milk and Coca Cola.

Why are the products design between milk and Coca Cola so different, even though both milk and Coca Cola are liquid? To be more exact, most milk is often poured into the square box to sell. On the contrary, Coca Cola is always poured into the aluminum cans or the round bottles to sell.

Frank (2007, The Economic Naturalist: In Search of Explanations for Everyday Enigmas, Chapter 1, pp.13-28) explains that the square containers could contain more liquid than the cylindrical containers under the same circumstances. Due to the cost effectiveness principle, product design should accord with it. That is, products design should satisfy consumers’ needs and fulfill the sellers’ competitive demand to build market share, such as the lower price (bized, 2012).

Milk is quickly deteriorating without putting in refrigerators. Therefore, milk need to put in the refrigerating cabinets to sale. However, use refrigerating cabinets to sell the milk means that cost increases because of electricity consumption (Frank R. H., 2007, The Economic Naturalist: In Search of Explanations for Everyday Enigmas, Chapter 1, pp.13-28). Thus, pour milk into the square box could get the most profit from selling the milk. The second reason is about the weight of the milk packaged. Previously, milk use glass bottle to package. What’s more, glass bottle take up a third of weight of the milk packaged. It is too heavy and inconvenient (The Atlantic, 2012, the Surprising History of the Milk Carton). Use rectangular plastic box to package milk is more light and convenient.

However, Coca Cola always pour into the aluminum cans or round bottles. First of all, it often put on the open shelving to sell. Furthermore, the cost of open shelving is more reasonable than refrigerating cabinets. Secondly, the round package is more suitable for hand grasping. Basically, people always drink it without pouring into any cups. Hence, the package design of Coca Cola is round so that people feel comfortable when grasp it (Frank R. H., 2007, The Economic Naturalist: In Search of Explanations for Everyday Enigmas, Chapter 1, pp.13-28).

To sum up, different package between milk and Coca Cola are because of the cost effectiveness principle. Milk need to store in the refrigerating cabinets to sell and the cost of it is high, so that companies have to design it with the square box. On the contrary, Coca often put on the opening shelving and the cost of it is more reasonable than refrigerating cabinets. Therefore, the package of milk and Coca are different.

Week 7-The Use of Tobacco Advertising in Boosting Cigarette Sales

In this day and age, advertising is everywhere, such as newspaper advertising, product placement and internet advertising et al. And the aim of advertising is to stimulate sales and increase brand awareness. Moreover, consumers are subtly influenced by advertising, especially in matters of tobacco advertising. The tobacco industries make a huge profit from tobacco advertising.

Tobacco advertising has a particularly close connection to the products of cigarette. It naturally uses tobacco advertising to attract consumers’ attention to sell the cigarette when cigarette production started commercially five hundred years ago. During the last decade of the 20^th century, the trade mark of the famous cigarette’s products in the world, including Marlboro, Camel and Winston and so on, appeared in Hollywood movies (Keenan, E., 1985). Furthermore, there are many smoking scenes in most popular Hollywood movies (Eszterhas, J., 2005). Due to these smoking scenes, most teenagers and adolescences are encouraged to start smoking for the cool image of actors or actresses.

Marlboro is one of the most successful tobaccos advertising campaign in the world. To be more accurate, the brand of Marlboro has gained a huge profit from the advertising. Let’s review the old advertisement of Marlboro. On the vast western prairies, sturdy steeds are galloping on the grasslands. A western cowboy is riding a beautiful horse. Then, the camera obligingly pans his image. A heroic western cowboy takes a lit cigarette between his fingers (Old Marlboro Commercials, 2012). Next, the products of Marlboro are zoomed in the camera again, the striking design with the shape of a red V, the color of packaging between red and white and the brown filter of cigarette.

In this Marlboro advertisement, masculinity is related to smoking. What’s more, this behavior looks very cool so that people can be easily encouraged to imitate it and buy a packet of cigarettes, especially teenagers and adolescents. Also, it is interesting to note that the rank of Marlboro cigarettes’ sales volume shot to the top ten suddenly and kept this tendency, while Marlboro was being advertised on prime time. Therefore, it is clear that tobacco advertising contributes to the sales volume of cigarettes.

Even though tobacco advertising helps cigarette industries make a huge profit, it is still banned to curb the smoking behavior of young people. This is because, both non-smokers and smokers are stimulated to start smoking or smoking more after watching tobacco advertising, for the cool image in the advertising. (Tye, J. B., Warner, K. and Glantz, S. A. Winter, 1987) Due to the drawback of tobacco advertising, America banned broadcasting any tobacco advertising on Television from 1971 (Nelson, J. P., 2004). The European Union also persuaded to do the same thing in 2002, but it extended this ban to television and the internet to try and prevent teenagers’ from smoking (ASH, 2012).

To sum up, tobacco advertising helps cigarette companies make more profit. However, tobacco advertising is banned in most countries due to the fact that advertising actually promotes smoking and subsequently causes serious health problems.

Week 5-The Similar Shops with Different Profit

Recently, I have read a story about heuristic of anchor pattern and I am going to share this story with you.

There were two small stores opening for breakfast – especially eggs in the morning. Furthermore, the two shops were next to each other. Both them were seemed jam packed with customers so that these two shops did a busy trade. However, it was strange that each day the store on the left earned more money than the store on the right.

Through the comparative observation found the secret of high turnover on the left store. When customer went into the right store, a server smiled to him and gave him a bowl of porridge with enthusiasm. Also, this server asked his customer, would you like a bowl of porridge with an egg or not? In this case, people who like to eat eggs would say yes, otherwise, no. However, when customer went into the left small store, the server also welcomed it with smiling. Giving you a bowl of porridge and asking you, would you like a bowl of porridge with an egg or two eggs? In this case, people who like to eat eggs would say, two eggs, please. However, people who dislike eating eggs would say, one, please. Therefore, each day the breakfast store on the left sold eggs more than the shop on the right in this way. That is why the left breakfast earned more money than the right shop. (Dong Z.Y., 2010, Competitiveness and Adaptability in International Trade, Chapter 4)

It is a good example to use heuristic of anchor pattern into business. The server on the left shop anchored how many eggs are needed to add instead of adding an egg or not. On the left store gave consumers two choices about how many eggs needed to add. On the contrary, on the right store gave consumers two choices about adding an egg or not. Moreover, there are different results depend on different choices.

Although the clever businessman uses this method to gain more profit, consumers are suggested to shop around more via obtain more information for the best deal.

Week 4-Receiving E-mails Around 9 o’clock

I have booked promotional mailings of eBay so that I can realize that is there anything on sale. Then I can take the same products with lower-price after knowing which goods are daily deals on eBay.

Recently, I always receive eBay’s promotional mailings around 9 o’clock before I start whole day’s work. I am wondering why eBay often sends me e-mail around 9 o’clock. Are there any secrets on it？Take your time and keep reading.

Neustaedter, Brush and Smith (2005) states that people prefer to classify their e-mail before starting the work in the morning. Moreover, they would like to read it instead of putting it into dust bin. There are three reasons for it.

First of all, the odd of e-mail can be read in the morning. Neustaedter, Brush and Smith (2005) states that people prefer to classify their e-mails before starting the work in the morning, especially a man who receives more than 100 new e-mails each day. This man has a lot of work to do. Sorting the mails can help them to work more efficient. Therefore, he would like to classify his e-mails before working so that he can schedule time to make changes immediately or make the changes right away if possible after reading these e-mails.

Secondly, providing a customer with the current time and date e-mails is difficult to delete. Neustaedter, Brush and Smith (2005) also explain what emails do customs think is important and handle first. Each customs are willing spend less time on e-mails. Specifically, most of them read e-mails very quickly and delete or get rid of unimportant e-mails to save more time finding more important information. What’s more, the majority of the important e-mails are related to current time and events. It means that e-mails in the past are easily deleted. Consumers prefer to pay close attention to E-mails which connect with the current time and date due to these close to their work and life.

Thirdly, most e-mails probably lose their influence due to delaying in reviewing a message. Horvitz, Jacobs and Hovel (1999) state that delay review of messages may be result in missing important information of meetings and deadlines. For instance, a customer receives an e-mail. He just read it very quickly instead of managing it. Some goods are so attractive that stimulate him to buy it. However, his desire for these products will reduce after a meeting. Therefore, sending a e-mail to consumers and encouraging them to deal with these mails before their works in the morning probably enhance influence of e-mails.

Although consumers are easily influence on receiving e-mails in the morning, receiving e-mails at other times also have the same influence, such as after lunch, at end of workday and in the evening at home.

Week 3-The Secret of Discount for railway ticket

Two week in advance

A week in advance

Pay as you go

(The above information is from National Rail Enquiries.)

In our daily life, we could always find some interesting phenomenon. If we are going to travel around London by railway, we need to book a railway ticket in advance instead of pay as you go. It will save you money and time.

Both of them are a railway ticket from Bangor to London. The only difference is the purchasing time. The first ticket is pay as you go to London and the best fare is ￡81.70. Although it is the cheapest fare, it is still expensive. The second ticket is booked a week in advance. Compare it with the first ticket, obviously, the second ticket (￡35.50) is cheaper than the first ticket. Well, in some sense the second ticket is sold at half the price. What about the third ticket？Let’s take a look at the third ticket. The third ticket is booked two weeks in advance and the cheapest fare is ￡27.50. Compare it with the first railway ticket, it has more discount (taking around 65% off). Consumers could buy it at bargain price.

Generally speaking, railway tickets two weeks in advance will have more discounts. Tickets a week in advance also can be taken at bargain prices. Pay as you go railway tickets are very expensive than booked tickets in advance. Why are there different prices of tickets for the same place from Bangor to London?

Robert H. (2008, chapter4, pp71-92) states that consumers enjoying the qualification of discount need a certain standard. What’s more, it’s necessary for buyers making great efforts to achieve this standard. Sometimes, consumers just need to gain certain information for a standard. Then, most consumers will have discount without any extra effort.

Let’s look back to these three railway tickets. Railway Company is clear about what the empty seats mean when the train started- it will result in a loss of revenue. Therefore, these empty seats will be tried to fill by all the means, such as sales and gift cards. However, it’s unfair if the products just reduce in price for a certain buyers. What’s more, other consumers wouldn’t purchase the goods at full price while others have a discount.

For railway ticket, there is a rule for consumers- promising will travel by this train on time as soon as possible. They will have a discount if they can do that. For example, most tourists could confirm their travel arrangements and it is seldom to change. They can book tickets in advance and arrive on time. On the other hand, some business people are easy to change their travel arrangements before departing. Most of them are hard to promise they can arrive on time without any change. It’s a waste of money if ticket booked in advance but they don’t take it.

In conclusion, consumers can have discount by buying ticket in advance, but it is not suitable for all situation such as a opera ticket.

Week 2-Price Influence on Consumer Decision-Making and Choice

Price is the key element to effect consumer behavior. Nowadays, purchasers are having an increasingly choice and preferring to take a product with the reasonable price. (Markus S. 2009 PP210) They prefer to buy some products with more value.

Different buyers have different price perceptions and attitudes. Most buyers choose a product depend on money of that item. For example, Frans van Roekelen is working in a construction company. Every month he can earn approximately NLG2400 excluding taxes. He prefers to go to the beach and drink beer with his friends on Saturday morning. What’s more, he goes to a store  by foot to buy 12 bottles of beer. This store is located in a corner of two blocks. He spends NLG8.86 to take these two six-packs for his beach trip. Although this shopping trip only takes 10 minutes, he still complains about the price of that product. (Peter P., Olson C. and Grunert G., PP395)

On another Saturday, Frans desires to buy 12 bottles of beer for his beach trip again. Then he goes to a supermarket which has a discount by car. And this supermarket is located far away from six kilometers. Furthermore, there are many people so that Frans spends a little to checkout. However, he feels very well and thinks his money is saved because he just disburses NLG5.04 of two six-packs. He spends 45 minutes of this trip. (Peter P., Olson C. and Grunert G., PP395)

From the example above, we can clearly see that consumer decision and choice are influenced by the monetary price of item. Frans just compares the monetary price of beer between these two shops. If we just consider the money cost of the 12 bottles of beer, obviously, the supermarket price is more reasonable. However, if we think about other cost including the consumption of time and car, the corner shop is better. Driving to the supermarket need to consume petrol. (NLG0.40 per kilometer) Making a round trip needs 12 kilometers. NLG0.40 ×12 plus NLG5.04 equals NLG9.84. Therefore, Frans costs NLG9.84 to shop in supermarket. However, purchasing 12 bottles of beer only need NLG8.86 – slightly more reasonable than the supermarket. (Peter P., Olson C. and Grunert G., PP395)

Time is another factor need to be considered. On Saturday, Frans can earn around NLG18.50 in each hour. (Peter P., Olson C. and Grunert G., PP395) The corner store costs 10 minutes, therefore, it needs to spend NLG3.08 extra. At the same time, the supermarket consumes approximately 45 minutes, NLG18.50 × 0.75 = NLG13.88. Thus, the price of two six-packs in the supermarket is NLG13.88 +NLG9.84 = NLG23.72. However, the same things in the store are NLG3.08 + NLG8.86 = NLG11.94. (Peter P., Olson C. and Grunert G., PP395)  Obviously, the corner trip is more value by compare with the supermarket.

In conclusion, most buyers always focus on the money when they are shopping. However, the price, is not only be influenced by the monetary price of a commodity, but also influenced by time, cognitive activity, behaviour effort and value. (Peter P., Olson C. and Grunert G., PP395) Considering about these factors, the price of goods would be different. Actually, buyers always ignore these.

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