Marketing week 5

Question 1

Why does KitKat offer different flavors?

Answer 1

To attract different customer segments. Some people want variety and specialized flavors, so offering more options increases willingness to buy.
👉 Analogy: Like Netflix offering many genres — if it only had one type of show, fewer people would subscribe.

Question 2

Why can Doritos run ads without showing their logo?

Answer 2

Because they’ve invested millions into building strong brand associations. Consumers instantly recognize the brand from the style, colors, or tone.
👉 Analogy: Like hearing a famous singer’s voice — you know who it is without needing to see their face.

Question 3

Why is predicting product success so difficult?

Answer 3

Because even experts often get it wrong — the future market and consumer preferences are uncertain.

Question 3

What levers can marketers pull to influence demand?

Answer 3

Product (quality, design, packaging, warranties)

Price (discounts, payment terms)

Promotion (ads, sales force)

Place (availability, channels)

Question 4

What are the 4 stages of the Product Life Cycle?

Answer 4

Introduction

Growth

Maturity

Decline

Question 5

What happens in the Introduction stage?

Answer 5

Sales grow slowly.

Profits are nonexistent or negative.

Competition is light.

Goal: Gain trial from early adopters.

Heavy focus on quality control.

Question 6

What happens in the Growth stage?

Answer 6

Rapid market acceptance.

Substantial profit growth.

Competitors enter aggressively (can help grow market).

Need improvements and variations as segments emerge. (“Need improvements and variations” means companies can’t just sell the exact same product forever. They often have to:

Improve quality (make the product more reliable or efficient).

Add new features (something competitors don’t have).

Offer variations (different sizes, flavors, designs, or versions for different customer segments).)

💡 Analogy: Like a teenager — growing fast, attracting attention, and facing rivals.

Question 7

What happens in the Maturity stage?

Answer 7

Sales growth slows down (market is saturated).

Profits stabilize or decline (due to competition).

Need innovation/new platforms to sustain growth.
💡 Analogy: Like adulthood — stable, but requires new projects to stay exciting.

Question 8

What happens in the Decline stage?

Answer 8

Sales and profits decline.

Focus shifts to profit, not market share.

Marketing budgets are reduced.
💡 Analogy: Like old age — conserve energy, focus on essentials, less investment.

Question 9

What are search attributes?

Answer 9

Features you can check before buying (e.g., price, fuel economy, color).
💡 Analogy: Like reading the back of a cereal box before putting it in your cart — you already know sugar content and price before tasting.

Question 10

What are experience attributes?

Answer 10

Features you can only judge after buying/using the product (e.g., taste of food, friendliness of hotel staff).
💡 Analogy: Like going to a restaurant — you can’t know if the staff is nice or the vibe is good until you actually dine there.

Question 11

What are credence attributes?

Answer 11

Qualities you can’t easily verify, even after consumption. You have to trust the producer (e.g., organic origin, sustainability, medical safety).
💡 Analogy: Like taking vitamins — you can’t directly see if they’re improving your health, you trust the brand or certification.

Question 12

How do companies make experience and credence attributes more tangible?

Answer 12

Experience → free samples, perfume ads, hotel rankings.

Credence → pricing strategy (higher price signals higher quality), branding, advertising.
💡 Analogy: For perfume, you need to smell it (sample); for organic food, you rely on the “organic” label even if you can’t test it yourself.

Question 13

How does the Gore-Tex example show credence attributes?

Answer 13

Even if Decathlon and Gore-Tex shoes both claim to be waterproof, many people trust Gore-Tex more because of the brand reputation. The waterproof quality can’t be easily checked in the store, so consumers rely on the brand as proof.
💡 Analogy: It’s like choosing medicine from a well-known brand over the cheaper generic — you believe the branded one is safer, even if the ingredients are identical.

Question 14

Why do people buy Tylenol instead of the cheaper generic if they are chemically the same?

Answer 14

Both have the same search attributes (ingredients, packaging info) and the same experience attributes (they work the same way). But consumers often trust Tylenol more because of credence attributes — the belief that it’s produced with more care or higher quality.
💡 Analogy: It’s like two identical cakes, but one is from a famous bakery. People pay more for the bakery’s cake because they trust the brand, not because the cake is different.

Question 15

What is the “Beer on the Beach” experiment (Thaler)?

Answer 15

Consumers were willing to pay more for the same beer when it came from a fancy resort compared to a run-down market, even though the consumption experience was identical.
👉 Analogy: Same bottle of water costs more at an airport than a supermarket — context changes WTP.

Question 16

Why is the beer experiment interesting for marketing?

Answer 16

It shows that prices don’t just depend on the product — they depend on what people expect it should cost in that context.

Question 17

What is willingness to pay (WTP)?

Answer 17

It’s the maximum price a customer is ready to pay. WTP depends not only on the product’s value, but also on what the customer thinks it should cost.
👉 Like a pair of Nike sneakers — if you expect them to cost €120, you’ll resist paying €250 even if you like them.

Question 18

What are the three types of surplus in marketing?

Answer 18

Unrealized surplus: the product is worth more than people think (hidden value).

Consumer surplus: the “extra happiness” a customer gets when they pay less than what they were willing to pay.

Producer surplus: the profit a company makes after covering costs.
👉 Imagine baking cookies: if you sell for €2 (cost €1), that €1 is producer surplus. If the buyer was ready to pay €3 but only paid €2, their €1 happiness is consumer surplus. If the cookie is actually worth €5 but nobody realizes, that’s unrealized surplus.

Question 19

What is producer surplus?

Answer 19

It’s the profit a company earns: price paid – cost of making it (UVC).
👉 If it costs €2 to make lemonade and you sell it for €3, your producer surplus is €1.

Question 20

What is consumer surplus?

Answer 20

It’s the extra benefit the customer feels: willingness to pay – price paid.
👉 If you were ready to pay €10 for concert tickets but only paid €7, you got €3 of “bonus value.”

Question 21

What is unrealized surplus?

Answer 21

It’s the gap between the true value of the product and what people think it’s worth.
👉 Like buying an old painting at a flea market for €20 that’s actually worth €1,000 — the hidden €980 is unrealized surplus.

Question 22

What is value creation in marketing?

Answer 22

Value creation is when a company makes customers believe the product is more valuable by showing how it meets their needs. This increases willingness to pay (WTP).
👉 Like Apple convincing people an iPhone isn’t just a phone but a “lifestyle” — so people happily pay more.

Question 23

Why is unrealized surplus not always available to exploit?

Answer 23

Sometimes, there’s no hidden value beyond what consumers already see — so companies can’t increase price further by marketing alone.
👉 Like a basic bottle of water: people already know exactly what it’s worth, no matter how much you market it.

Question 24

How can a company increase producer surplus?

Answer 24

Lower costs → cheaper ingredients, production efficiency. Raise price → customers pay more (reduces their consumer surplus). Increase perceived value → better marketing so people think it’s worth more. 👉 Like a coffee shop: buy cheaper beans, charge more per cup, or convince people it’s “premium Italian coffee.”