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Chapter 4
Consumer Behavior, Market Research, and Advertisement
True-False Questions
1.
Netflix implemented intelligent agents in its movie recommendation service called Cinematch to help customers select movies they would like to watch and to better manage its inventory.
Answer: True Difficulty: Medium Page Reference: 157
AACSB: Use of information technology
2.
Finding and retaining customers is a major critical success factor for most offline and online businesses.
Answer: True Difficulty: Easy Page Reference: 157
AACSB: Use of information technology
3.
One of the keys to building effective customer relationships is an understanding of intelligent agents.
Answer: False Difficulty: Medium Page Reference: 157
AACSB: Use of information technology
4.
The purpose of a consumer behavior model is to help firms understand how a consumer makes a purchasing decision to be able to influence that decision through advertising, special promotions, or other marketing method.
Answer: True Difficulty: Medium Page Reference: 157
AACSB: Use of information technology
5.
Individual buyers do most of the actual shopping in cyberspace in terms of dollar volume of sales.
Answer: False Difficulty: Medium Page Reference: 158
AACSB: Use of information technology
6.
Purchases by governments, private corporations, resellers, and other organizational buyers often are used to create other products or services by adding value to them.
Answer: True Difficulty: Easy Page Reference: 158
AACSB: Use of information technology
7.
Personal characteristics of customers, such as age and income, are independent variables, which are uncontrollable variables for EC companies .
Answer: True Difficulty: Medium Page Reference: 158
AACSB: Use of information technology
8.
Customers rarely browse online stores if they do not intend to buy.
Answer: False Difficulty: Easy Page Reference: 159
AACSB: Use of information technology
9.
According to Internet statistics, 67 percent of consumers abandoned their shopping carts because of the lack of satisfactory product information.
Answer: True Difficulty: Medium Page Reference: 159
AACSB: Use of information technology
10.
The two most cited reasons for abandoning a shopping cart and not making the purchase are shipping charges and security concerns.
Answer: False Difficulty: Hard Page Reference: 159
AACSB: Use of information technology
11.
Social factors such as customer endorsement strategies and word-of-mouth are independent variables that play an important role in EC shopping and purchases.
Answer: True Difficulty: Medium Page Reference: 159
AACSB: Use of information technology
12.
Prices, advertising, promotions, and logistics are intervening variables that can be controlled by vendors.
Answer: True Difficulty: Medium Page Reference: 159
AACSB: Use of information technology
13.
Buying decisions are the dependent variables because these decisions depend on the independent and intervening variables.
Answer: True Difficulty: Medium Page Reference: 159
AACSB: Use of information technology
14.
An objective of conducting market research is to understand the relationships between dependent and intervening variables so that vendors can make informed decisions on the intervening variables.
Answer: True Difficulty: Medium Page Reference: 159
AACSB: Use of information technology
15.
In the consumer decision-making process, the buyer is the person who ultimately makes the buying decision.
Answer: False Difficulty: Medium Page Reference: 160
AACSB: Use of information technology
16.
When Chaplin’s auto lease is about to expire, he decides it is time to buy a new car. This imbalance between a desired state and an actual state is called need identification.
Answer: True Difficulty: Medium Page Reference: 160
AACSB: Use of information technology
17.
In the decision-making process, virtual catalogs and links to external sources support the evaluation and selection phase of that process.
Answer: False Difficulty: Medium Page Reference: 161
AACSB: Use of information technology
18.
Mass marketing is an approach to marketing that treats each customer in a unique way such as fitting advertising to the customer’s profile and needs.
Answer: False Difficulty: Medium Page Reference:163
AACSB: Use of information technology
19.
Selling as many products as possible to one customer over a long period of time and across different product lines to maximize customer value is known as relationship marketing.
Answer: True Difficulty: Medium Page Reference: 163
AACSB: Use of information technology
20.
Segmentation refers to the matching of services, products, and advertising content to individuals and their preferences.
Answer: False Difficulty: Medium Page Reference: 165
AACSB: Use of information technology
21.
A user profile defines customer preferences, behaviors, and demographic traits of a particular customer.
Answer: True Difficulty: Easy Page Reference: 165
AACSB: Use of information technology
22.
A cookie is a data file that is placed on a user’s hard drive by a remote Web server only when the user’s gives full consent to collect information about the user’s activities at a site.
Answer: False Difficulty: Easy Page Reference: 165
AACSB: Use of information technology
23.
Attracting and retaining loyal customers is the most important issue for e-tailers because customer loyalty can lower marketing and advertising costs, transaction costs, customer turnover expenses, and failure costs such as warranty claims.
Answer: True Difficulty: Medium Page Reference: 167
AACSB: Use of information technology
24.
Building consumer trust in EC can be achieved through integrity, which is a user’s confidence in the ability of the online store to fulfill its promises such as a money-back guarantee.
.
Answer: True Difficulty: Medium Page Reference: 170
AACSB: Use of information technology
25.
Clickstream data provide a trail of a user’s activities in a Web site including a record of the user’s browsing patterns of every page of every Web site the user visits, how long the user remained on a page, and even the e-mail addresses of mail that the user sends and receives.
Answer: True Difficulty: Medium Page Reference: 176
AACSB: Use of information technology
Multiple Choice Questions
26.
According to the EC consumer behavior model, personal characteristics and environmental characteristics are classified as:
a. independent variables
b. dependent variables
c. intervening variables
d. decision variables
Answer: A Difficulty: Medium Page Reference: 158
AACSB: Use of information technology
27.
The major environmental variables influencing EC purchasing are:
a. price, brand, frequency of purchase, and tangibility.
b. social, cultural, community, regulatory, political, and legal.
c. age, gender, ethnicity, education, and lifestyle.
d. price, social, cultural, ethnicity, and lifestyle.
Answer: B Difficulty: Easy Page Reference: 158
AACSB: Use of information technology
28.
Pricing, technical support, and logistics support are several of the _______________ that can be controlled by EC vendors and sellers
a. independent variables
b. dependent variables
c. intervening variables
d. decision variables
Answer: C Difficulty: Medium Page Reference: 159
AACSB: Use of information technology
29.
Because online buyer’s decisions depend on numerous independent and intervening variables, decisions made by customers are classified as:
a. independent variables
b. dependent variables
c. intervening variables
d. decision variables
Answer: B Difficulty: Easy Page Reference: 159
AACSB: Use of information technology
30.
Banner advertising on Web sites helps trigger a realization that there is a gap between reality and a desired state, which occurs in the __________ stage of the EC purchase decision-making process.
a. need identification
b. information search
c. evaluation, negotiation, and selection
d. purchase, payment, and deli
Answer: A Difficulty: Medium Page Reference: 160
AACSB: Use of information technology
31.
Marketing and advertising approaches has evolved from mass marketing to market segmentation to one-to-one marketing. This evolution occurred because:
a. the marketing focus shifted from customers to products.
b. the Internet enabled companies to better communicate with customers and understand their needs and buying habits.
c. companies sought to decrease the number of marketing campaigns.
d. concerns about privacy had diminished.
Answer: B Difficulty: Easy Page Reference: 162
AACSB: Use of information technology
32.
The core of the “new marketing model” consists of:
a. four P’s—product, place, price, and promotion.
b. customer profiles.
c. online marketing channels.
d. customer relationships.
Answer: D Difficulty: Medium Page Reference: 165
AACSB: Use of information technology
33.
Personalization and user profiling strategies include each of the following EXCEPT:
a. Segmenting the market based on demographics.
b. Using questionnaires to collect information directly from the user.
c. Placing cookies on a user’s hard drive to collect information with or without the user’s knowledge.
d. Building from previous purchases or purchase patterns.
Answer: A Difficulty: Medium Page Reference: 165
AACSB: Use of information technology
34.
The two key factors limiting the use of personalization to more precisely target marketing efforts to individual customers are:
a. matching profiles with product offerings and delivering those offerings.
b. communication costs and filtering costs.
c. privacy and trust issues.
d. lack of customer loyalty and service customization costs.
Answer: C Difficulty: Hard Page Reference: 169
AACSB: Use of information technology
35.
By increasing customer loyalty, EC companies can achieve each of the following benefits EXCEPT:
a. lower marketing and advertising costs.
b. lower warranty claims costs.
c. lower transaction costs.
d. lower resistance to competitors.
Answer: D Difficulty: Easy Page Reference: 167
AACSB: Use of information technology
36.
What has been the impact of the introduction of EC on customer loyalty in general?
a. Loyalty has decreased because of customers’ ability to shop, compare, and shift vendors.
b. Loyalty has increased because of targeted relationship marketing.
c. There has been little change in loyalty because the impacts have cancelled each other out.
d. It is not known whether loyalty has increased or decreased.
Answer: A Difficulty: Medium Page Reference: 167
AACSB: Use of information technology
37.
According to research, customer satisfaction with an Internet store:
a. cannot be predicted.
b. depend on two types of factors: information quality and customer service quality.
c. drops dramatically when certain Web site features fail to perform properly, such as the content’s reliability, loading speed, or usefulness.
d. is higher for new customers than former customers.
Answer: C Difficulty: Medium Page Reference: 168
AACSB: Use of information technology
38.
Issues related to trust in EC include all of the following EXCEPT:
a. As a result of trust-transference programs through portal affiliation, seal of approval programs, online shopping communities, and customer endorsements, customers are fully confident in online purchasing transactions.
b. When parties trust each other, they have confidence that transaction partners will keep their promises. However, both parties in the transaction assume some risk.
c. Trust is particularly important in global EC transactions due to the difficulty of taking legal action in cases of a dispute or fraud..
d. If people do not trust the security of the EC infrastructure, they will not feel comfortable about using credit cards to make EC purchases.
Answer: A Difficulty: Medium Page Reference: 169
AACSB: Use of information technology
39.
Procter & Gamble (P&G) used the Internet in the new product development of Whitestrips, a teeth-brightening product. Based on this experience, P&G:
a. decided to add Internet research to its traditional marketing test model.
b. could not determine the target market segments for the Whitestrips.
c. learned that the cost of online surveys were about the same as similarly sized telephone surveys, but online surveys expedited research considerably,
d. reduced the time-to-market from concept to market launch by approximately two years.
Answer: D Difficulty: Medium Page Reference: 172
AACSB: Use of information technology
40.
All of the following are correct about market research methods EXCEPT:
a. It is important first to understand how groups of consumers are classified or segmented.
b. Markets can be segmented to increase the percentage of responses and to formulate effective marketing strategies that appeal to specific consumer groups.
c. Direct mail marketing methods are usually cost-effective.
d. Market segmentation is done with the aid of tools such as data modeling and data warehousing.
Answer: C Difficulty: Hard Page Reference: 173
AACSB: Use of information technology
41.
Social class, lifestyle, personality, and activities are descriptors used in ___________ market segmentation.
a. geographic
b. demographic
c. psychographic
d. cognitive, affective, behavioral
Answer: C Difficulty: Medium Page Reference: 173
AACSB: Use of information technology
42.
To avoid getting false information from participants of online surveys, marketers learn about customers by observing their behavior using each of the following EXCEPT:
a. Transaction logs that record user activities at a company’s Web site.
b. Cookies that allow a Web site to store data on the user’s PC.
c. Spyware that gathers user information through an Internet connection without the user’s knowledge.
d. Data mining to analyze clickstream data.
Answer: D Difficulty: Medium Page Reference: 175
AACSB: Use of information technology
43.
According to Inmon, B2C clickstream data can reveal information each of the following EXCEPT:
a. What goods the customer wanted to but could not find.
b. What goods the customer examined but did not purchase.
c. Which ads and promotions were effective and which were not.
d. Whether there are too many products for the customer to wade through.
Answer: A Difficulty: Medium Page Reference: 176
AACSB: Use of information technology
44.
Web analytics and m
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