Consumer Behaviour Final Exam Q1)

Consumer Behaviour Final Exam

Q1) In 2007 Rocky Mountain Bicycles signed on as the bike sponsor for the Tran Rockies Challenge. (http://www.bikes.com/news/articles.aspx?lang=en&id=199) (Rocky Mountain Bicycles replaced the former sponsor DeVinci Bicycles from Quebec. Why do the TransRockies Challenge organizers seek sponsors like Rocky Mountain Bicycles? Why does Rocky Mountain Bicycles sponsor events like the TransRockies Challenge? Logo source: http://www.transrockies.com

Rocky Mountain Bicycles' interest in sponsoring the TransRockies Challenge is to actively promote their bicycles, accessories and also underscore their brand as being road-tested and sturdy, reliable and trustworthy enough for such an ardous offroad bicycle. TransRockies Challenge's managers and organizers are looking for entrants for their race, and also funds for underwriting the cost of the event. In exchange for being listed as a sponsor, Rocky Mountain Bicycles will need to pay a fee that will help to pay the cost of event, and in exchange get significant branding opportunities on the events' website, in addition to all materials produced. TransRockies Challenge also looks to create credibility for itself in the biking community by partnering with Rocky Mountain Bicycles as well. The reasons for TransRockies Challenge and Rocky Mountain Bicycles creating a series of reciprocal opportunities for each other is to create the foundation of a successful business development and branding partnership. Each of these organizations benefit from each others' influence in the off-road biking industry and both will benefit in the short- and long-run from partnering with one another for the event.

Q2) Apple, and its products evoke unmatched positive reactions from hardcore fans? One, Nick Haley, went so far as to create his own ad for the iPod Touch. (http://www.youtube.com/watch?v=KKQUZPqDZb0) Apple was so impressed that the company's advertising agency contacted Nick to do a more polished version of the ad. (http://www.youtube.com/watch?v=dIttOsrKdBE&feature=related) What can other companies do to try and create this sort of intense bond with their consumers? What risks are there in such a strategy?

Apple's reputation for having the most devoted and loyal customers emanates from the company's ability to sustain the message of its brand as supporting creativity, nonconformity and individual independence. As a result there are millions of very loyal Apple customers globally, many of which create their own versions of advertisements as the video Nick Haley created shows. The Apple customer base has also been called the "cult of Apple" for their extreme level of dedication and loyalty to the brand. Apple has been very successful in getting its customers to make identification with their brand part of their customers' way of defining themselves. When consumers identify so strongly with a brand, they inevitably start to produce their own creative content to illustrate their enthusiasm and loyalty while at the same time celebrating the brand's meaning to them. The risks in creating customers who are so cultish in their dedication and adoration of a brand is that it can be alienating to new customers trying to be won over. This is certainly the case with the challenges Apple has had moving into the enterprise computing markets where IBM PC and compatible PCs and their published standards make enterprise integration of these systems much easier than with Apple. A large part of the branding challenge for Apple is to attract new customers without alienating the devout followers of the brand. The greatest risk of all is not being able to attract new customers by relying on the brand to purely support and reinforce extreme loyalty on the part of long-time customers.

Q3) Concern about the environment is not new. From the 1962 publishing of Rachel Carson's book "Silent Spring" to Al Gore's crusade against global warming, there has been strong interest in the issues raised by environmentalists. While virtually all energy conservation measures will pay for themselves, often over a very short period of time, many consumers take a short term approach and fail to invest in these technologies. Some governments have offered financial incentives for consumers to "do the right thing" and install more energy efficient appliances etc. Why do consumers, and organizations, need incentives to put actions in place that will save them money, and help "save the planet"?

There are many factors as to why consumers fail to act rationally and save both the planet's limited resources in addition to gaining financial savings for themselves, and several of them are discussed in this paper. First, loyalty to brands and the trust inherent in that loyalty are not easily displaced, even with financial incentives associated with them. This is the primary reason why getting consumer sot change from one brand to another is so difficult. Changing from one form of transportation to another, even with incentives, is difficult for most people to transition to, as the brand and the habit of how it is consumed are not easily broken. There's also the issue of cognitive dissonance immediately after trying a new brand, or in the case of environment, any new approach to any part of a persons' life will need to be proven just as good or better in terms of quality, reliability and trust compared to the previous habit. Take for example the use of energy-efficient light bulbs in a home. These bulbs are more expensive yet in the pong-run save thousands of hours of electricity and can also drop the monthly electricity bill of the consumers choosing to use them. Yet, they are new, and in the minds of many consumers, unproven, and lack trust on the part of consumers limits their adoption. As a result, they may be used once and if they are marginal in performance or not to the expectations to consumers, they will be not used again, regardless of the environmental and ecological implications. The aspect of materialism also influences the consumption patterns of consumers, and while it is increasingly obvious that driving a large Sports Utility Vehicle (SUV) like a Cadillac Escalade will cost more than $150 per fill-up when gas is $3.50 a gallon, consumers continue to purchase them, mainly to make a statement of their wealth (or lack of it after purchasing one of these). Despite the many incentives of driving more fuel efficient cars that include the obvious economics of spending less on gas, and in many countries preferential traffic lanes (as in California hybrid vehicles can use the High Occupancy Vehicle lanes), and even tax breaks, people resist downsizing their vehicles when it makes clear economic sense to do so. There are many other reasons for consumers not embracing change, yet the bottom line is that between loyalty, what purchasing products think people say about who they are, and trust in brands all conspire to make changing consumer behaviour to support a more environmentally friendly lifestyle all the more difficult.

Q4) People working in service industry jobs feel underpaid and unappreciated. They get all of the blame when things behind the scenes go wrong and none of the thanks when they go right. This example from some rather angry Qantas passenger (See below.) is one of the more recent examples. Why are so many consumers so grumpy? What can retailers, and other service providers do to help keep their customers happy?

Consumers are dissatisfied with the level of service they are receiving because the majority of companies hire customer service representatives that want a job yet don't want to necessarily work in customer-facing roles. There is a major mismatch in many peoples' backgrounds and interests relative to the responsibilities they perform in their jobs. The second factor is that the majority of companies don't offer a training program to help customer service representatives to become more effective in managing customer complaints and delivering exceptional customer service. Thirdly, many company's cultures see service as a necessary evil, and this attitude inevitably percolates down to service workers on the front line with customers, who see their jobs as dead-end, not really important in the companies they work for. Fourth, there has been a continual erosion in the quality of customer service for all these factors and the fact that exceptional service is rarely if ever rewarded in many companies, so it doesn't happen. Taking all the above factors into account, it's easy to see why customers are so irritable and grumpy. They have been increasingly been treated as the least important aspect of a company's operations. Retailers and any other type of company that has regular contact with consumers needs to first create a culture that celebrates excellent service. The reward systems in Marriott Corporation for example actively encourage employees to step up and deliver exceptional service, as does the culture of Nordstrom's Department Stores located throughout the Pacific Northwest and western United States. It is common for a Nordstrom's employee to go to extraordinary lengths to delight a customer. There also needs to be a more intelligent approach to assigning workers to customer- facing service and support jobs. Personality tests and personal aptitude assessment tests should be given to employees before they are placed in these roles. Companies who want to continually improve their customer service processes also need to concentrate on what their customers think and need to engage in regular service benchmarking. The use of customer satisfaction surveys is critical in this regard. If Qantas, if they had taken this approach, would have seen how many customers they were losing to competitors in Melbourne, and further, would have found how many Qantas customers has permanently defected to another airline for all their travel needs within and outside of Australia as a result. Ultimately poor customer service causes more than disgruntled customers; it causes lost sales and lost customers not easily won back. Q5) Larger consumers, especially in North America are putting a heavy (pardon the pun) burden on private and public infrastructure. Health authorities in Australia have ordered new ambulances to handle patients up to 500 kilograms, the "It's a Small World" ride at Disneyland is closing for renovations as today's park patrons are so heavy that they are swamping the boats. (The ride was built in 1961 when the average man in the United States weighed 80 kilograms and the average woman weighed 62 kilograms.) Now some airlines, faced with record high fuel costs, are threatening impose a "fat tax". Is this an appropriate course of action? Would you support it? Why or why not?

As the price of oil continues to escalate with a corresponding increase in jet fuel costs, there needs to be considerations regarding the costs of operating passenger jets by any airline. Jet fuel costs in fact are the deciding factor for nearly every airline, no matter how large or small, of whether they will be profitable or not. The long-standing rules regarding excess baggage, with higher costs for items over 100 lbs for most airlines has been a long-standing practice as well, never fluctuating in response to fuel cost increases or decreases. In the case of baggage and cargo, airlines would be smart to first start with price increases on these classes of services than immediately passing the increases in fuel costs immediately onto customers. Starting with increasing the baggage and cargo prices is fair to everyone, because not everyone needs to bring these items, they choose to, yet for many people, their jobs require them to be in geographically distributed regions quickly over a short period of time. For many people jet travel is the only means by which they can efficiently do their jobs. Consider the role of the travelling sales executive, support technicians, and others who service a widely distributed geographic region and it's clear that immediately passing on the price increase on fuel costs to obese and overweight travellers can impact a person's ability to earn their livelihood. In addition, increasing the costs to obese or fat passengers could also be considered discriminatory and illegal as a result. Above all the decision to choose a "fat tax" is a terrible decision from a customer relation standpoint as well. While a extremely obsess who physically need two seat should purchase them, charging people more based on their weight above some pre-ordained and most likely arbitrary standard set by an airline is unethical and wrong. Start by increasing the costs of checked baggage that is over weight limits and preserve relationships with customers in the process. I wouldn't support a fat tax because it is discriminatory and susceptible to being arbitrary used by airlines as well.

Mini-Case (50 Marks) - 3 - 5 Page

A) What is the "tipping point" (http://www.gladwell.com/tippingpoint/index.html) for plagiarism? What will it take for students to obey the rules? Why do some students think that the plagiarism rules are not important enough to follow?