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18 Cards in this Set
- Front
- Back
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A cell phone manufacturer runs an advertising campaign emphasizing the clarity of the pictures from the camera in the phone. This
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Will probably not affect the consumer's perceived value
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Comparing the Use Value (UV) and the Economic Value (EV)
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EV<UV
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Exchange value is
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The same as Economic Value
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Steel belted radial tires replaced older tires that had a road life roughly half that of the steel belted ones. As a result consumers did not have to replace tires as often and tire replacement shops saw a decline in the frequency of consumers visiting their stores, in turn cutting into their revenues. This is an example of
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Positive differentiation value to end users
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In calculating economic value
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The differences among consumers in the economic value
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reference values
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A. Is the same as outside option
B. Depends on the most suitable substitute 25% C. Varies across consumers D. Requires managerial judgment to assess |
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In practice economic value
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May be zero for uninformed consumers
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economic value
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Is detemined by the extent of consumer benefits
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Comparing Economic Value (EV) and Willingness to Pay (WTP)
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EV + Gap = WTP
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Raising switching costs
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Allows firms to charge higher prices
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Surplus Value
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is perceived value less perceived price
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According to the Value Equivalence concept some consumers choose a higher priced product because
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they prefer the benefits offered by it
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As gas prices rise, the position of small cars on the VEL
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would move below the line
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The three steps in arriving at economic value consist of determining
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customer economics, differentiation value and value drivers
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The customer production process includes
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product acquisition, use and disposal
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The key value driver in a new video game is
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benefit of entertainment
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In quantifying value drivers we must ask
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how the product affects the consumer's production process
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A key point to keep in mind when caculating the differentiation value is
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the concept of incremental analysis
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