Author: Anonymous

Word bank: affects, approximately, consumers, constant, damage, eventually, image, innovation, level, major, previously, primarily, promote, reduce, resources, role, skyrocket, surplusBusinesses use social media to _____ new products to a large audience quickly.

Word bank: affects, approximately, consumers, constant, damage, eventually, image, innovation, level, major, previously, primarily, promote, reduce, resources, role, skyrocket, surplusA company’s _____ is important because consumers often buy products that match their identity.

Local businesses have an important _____ in supporting their communities.

Marketing and Consumer Behavior 1 Why do people buy the things they buy? This is one of the most important questions in business. Companies spend a lot of time and money trying to understand consumer behavior, the study of how and why people make buying decisions. When a business understands its consumers, it can create better products, set better prices, and advertise more effectively. Today, new technology has given companies more tools than ever to study and influence consumer behavior. 2 For most of the twentieth century, businesses primarily used television, radio, and magazines to advertise their products. However, this has changed dramatically in the last twenty years. Companies now spend a huge amount of money on digital advertising, ads that appear on websites, social media, and apps. Global spending on digital advertising has skyrocketed since 2015 (see Figure A). One reason for this significant increase is that digital ads can target a specific audience. For example, a company that sells running shoes can show its ads only to people who have recently searched for sports equipment online. Figure A: Global Digital Advertising Spending, 2015–2023 (in billions of U.S. dollars) Year Spending ($ billions) 2015 170 2017 245 2019 330 2021 460 2023 680 Source: Author (data for classroom use) 3 Another major change in consumer behavior is the role of online reviews. In the past, people often asked friends or family for advice before buying a product. Today, many consumers read reviews from strangers online before they make a purchase. A recent survey asked online shoppers what influences their decision to buy a product (see Figure B). The results show that consumers trust the opinions of other customers more than they trust a company’s own advertisements. This has created a new challenge for businesses: they cannot completely control their public image. If a company sells a product that does not work well, customers will write negative reviews, and this can seriously damage the company’s reputation. Figure B: What Influences Online Shoppers’ Purchase Decisions (percent of respondents) Factor Percent Online reviews from other customers 64% Price 58% Brand name or image 52% Recommendations from friends or family 45% Advertisements 30% Source: Author (data for classroom use) 4 Because image is so important, many companies work hard to create an emotional connection with their consumers. Instead of simply describing what a product does, advertisements often tell a story or connect the product to a feeling, such as happiness, success, or belonging. For example, a sportswear company might promote a new shoe not by explaining its materials, but by showing an athlete overcoming a difficult challenge. Businesses believe that consumers do not just buy products. They buy an image and an identity. This kind of marketing can create strong brand loyalty, which means customers continue to buy from the same company for years. 5 Prices also affect consumer behavior in interesting ways. Many stores use a strategy called “charm pricing.” Instead of pricing a product at $10.00, a store will price it at $9.99. Research shows that consumers perceive $9.99 as significantly cheaper than $10.00, even though the actual difference is only one cent. This is because people tend to focus on the first number they see. Stores also use sales and discounts to create a sense of urgency. When a sign says an offer will end soon, consumers are more likely to make a fast decision instead of thinking carefully about whether they need the product. 6 These new tools have made marketing more effective, but they have also raised concerns. Some critics argue that companies collect too much personal information about consumers in order to target ads. When a person searches for a product online, ads for that product may follow them across the internet for days or weeks. This constant advertising can feel like an invasion of privacy. Others worry that emotional marketing and charm pricing manipulate consumers into buying things they do not truly need. Businesses, however, argue that they are simply giving consumers the information and products they want. As technology continues to develop, the relationship between businesses and consumers will likely continue to change. What is one concern that critics have about digital marketing, according to paragraph 6?

Marketing and Consumer Behavior 1 Why do people buy the things they buy? This is one of the most important questions in business. Companies spend a lot of time and money trying to understand consumer behavior, the study of how and why people make buying decisions. When a business understands its consumers, it can create better products, set better prices, and advertise more effectively. Today, new technology has given companies more tools than ever to study and influence consumer behavior. 2 For most of the twentieth century, businesses primarily used television, radio, and magazines to advertise their products. However, this has changed dramatically in the last twenty years. Companies now spend a huge amount of money on digital advertising, ads that appear on websites, social media, and apps. Global spending on digital advertising has skyrocketed since 2015 (see Figure A). One reason for this significant increase is that digital ads can target a specific audience. For example, a company that sells running shoes can show its ads only to people who have recently searched for sports equipment online. Figure A: Global Digital Advertising Spending, 2015–2023 (in billions of U.S. dollars) Year Spending ($ billions) 2015 170 2017 245 2019 330 2021 460 2023 680 Source: Author (data for classroom use) 3 Another major change in consumer behavior is the role of online reviews. In the past, people often asked friends or family for advice before buying a product. Today, many consumers read reviews from strangers online before they make a purchase. A recent survey asked online shoppers what influences their decision to buy a product (see Figure B). The results show that consumers trust the opinions of other customers more than they trust a company’s own advertisements. This has created a new challenge for businesses: they cannot completely control their public image. If a company sells a product that does not work well, customers will write negative reviews, and this can seriously damage the company’s reputation. Figure B: What Influences Online Shoppers’ Purchase Decisions (percent of respondents) Factor Percent Online reviews from other customers 64% Price 58% Brand name or image 52% Recommendations from friends or family 45% Advertisements 30% Source: Author (data for classroom use) 4 Because image is so important, many companies work hard to create an emotional connection with their consumers. Instead of simply describing what a product does, advertisements often tell a story or connect the product to a feeling, such as happiness, success, or belonging. For example, a sportswear company might promote a new shoe not by explaining its materials, but by showing an athlete overcoming a difficult challenge. Businesses believe that consumers do not just buy products. They buy an image and an identity. This kind of marketing can create strong brand loyalty, which means customers continue to buy from the same company for years. 5 Prices also affect consumer behavior in interesting ways. Many stores use a strategy called “charm pricing.” Instead of pricing a product at $10.00, a store will price it at $9.99. Research shows that consumers perceive $9.99 as significantly cheaper than $10.00, even though the actual difference is only one cent. This is because people tend to focus on the first number they see. Stores also use sales and discounts to create a sense of urgency. When a sign says an offer will end soon, consumers are more likely to make a fast decision instead of thinking carefully about whether they need the product. 6 These new tools have made marketing more effective, but they have also raised concerns. Some critics argue that companies collect too much personal information about consumers in order to target ads. When a person searches for a product online, ads for that product may follow them across the internet for days or weeks. This constant advertising can feel like an invasion of privacy. Others worry that emotional marketing and charm pricing manipulate consumers into buying things they do not truly need. Businesses, however, argue that they are simply giving consumers the information and products they want. As technology continues to develop, the relationship between businesses and consumers will likely continue to change. According to paragraph 6, how do businesses respond to critics who worry about marketing tactics?

According to Figure B, which factor influences the fewest online shoppers?

Word bank: affects, approximately, consumers, constant, damage, eventually, image, innovation, level, major, previously, primarily, promote, reduce, resources, role, skyrocket, surplusA _____ change in shopping habits happened when people began using smartphones to compare prices while in stores.

Word bank: affects, approximately, consumers, constant, damage, eventually, image, innovation, level, major, previously, primarily, promote, reduce, resources, role, skyrocket, surplusSales of the new phone _____ after a popular celebrity was seen using it.

Social media has had a _____ effect on how businesses advertise their products.

Marketing and Consumer Behavior 1 Why do people buy the things they buy? This is one of the most important questions in business. Companies spend a lot of time and money trying to understand consumer behavior, the study of how and why people make buying decisions. When a business understands its consumers, it can create better products, set better prices, and advertise more effectively. Today, new technology has given companies more tools than ever to study and influence consumer behavior. 2 For most of the twentieth century, businesses primarily used television, radio, and magazines to advertise their products. However, this has changed dramatically in the last twenty years. Companies now spend a huge amount of money on digital advertising, ads that appear on websites, social media, and apps. Global spending on digital advertising has skyrocketed since 2015 (see Figure A). One reason for this significant increase is that digital ads can target a specific audience. For example, a company that sells running shoes can show its ads only to people who have recently searched for sports equipment online. Figure A: Global Digital Advertising Spending, 2015–2023 (in billions of U.S. dollars) Year Spending ($ billions) 2015 170 2017 245 2019 330 2021 460 2023 680 Source: Author (data for classroom use) 3 Another major change in consumer behavior is the role of online reviews. In the past, people often asked friends or family for advice before buying a product. Today, many consumers read reviews from strangers online before they make a purchase. A recent survey asked online shoppers what influences their decision to buy a product (see Figure B). The results show that consumers trust the opinions of other customers more than they trust a company’s own advertisements. This has created a new challenge for businesses: they cannot completely control their public image. If a company sells a product that does not work well, customers will write negative reviews, and this can seriously damage the company’s reputation. Figure B: What Influences Online Shoppers’ Purchase Decisions (percent of respondents) Factor Percent Online reviews from other customers 64% Price 58% Brand name or image 52% Recommendations from friends or family 45% Advertisements 30% Source: Author (data for classroom use) 4 Because image is so important, many companies work hard to create an emotional connection with their consumers. Instead of simply describing what a product does, advertisements often tell a story or connect the product to a feeling, such as happiness, success, or belonging. For example, a sportswear company might promote a new shoe not by explaining its materials, but by showing an athlete overcoming a difficult challenge. Businesses believe that consumers do not just buy products. They buy an image and an identity. This kind of marketing can create strong brand loyalty, which means customers continue to buy from the same company for years. 5 Prices also affect consumer behavior in interesting ways. Many stores use a strategy called “charm pricing.” Instead of pricing a product at $10.00, a store will price it at $9.99. Research shows that consumers perceive $9.99 as significantly cheaper than $10.00, even though the actual difference is only one cent. This is because people tend to focus on the first number they see. Stores also use sales and discounts to create a sense of urgency. When a sign says an offer will end soon, consumers are more likely to make a fast decision instead of thinking carefully about whether they need the product. 6 These new tools have made marketing more effective, but they have also raised concerns. Some critics argue that companies collect too much personal information about consumers in order to target ads. When a person searches for a product online, ads for that product may follow them across the internet for days or weeks. This constant advertising can feel like an invasion of privacy. Others worry that emotional marketing and charm pricing manipulate consumers into buying things they do not truly need. Businesses, however, argue that they are simply giving consumers the information and products they want. As technology continues to develop, the relationship between businesses and consumers will likely continue to change. According to paragraph 4, why do companies connect their products to emotions like happiness or success?