Week 5

1. What key messages are found on the various food packages?

Food packages will usually have some sort of tagline that makes it seem more appealing than it might actually be. Sometimes brands tend to over exaggerate to make a sale. A package of cookies may say "the best cookie you've ever had!" or a healthy drink will say "makes you healthier after one sip!" It may not be true, but it does make some people buy the product. 

2. Do the products make any nutrition claims? Explain.

There were a lot of products that claim nutritional value. There are some granola bars that focus on the 10g of fiber but try to cover up the 100g of sugar and 50g of fat. 

3. Which demographics do you think are the primary targets for the products?

These are probably targeted for people who want to be healthier but aren't quite sure what is healthy and what isn't. If someone isn't educated on products, they will see a sign that says "low fat!" and assume its healthy without checking the other facts. 

4. Which product has the most appealing package to attract consumers? Explain.

I really like the packaging for some granola bars. There is one that has a background on the box of nature scenes and it makes it look all natural and healthy. Even though it's not that healthy. Its a great way to trick customers. 

5. Which product is the most nutritious? least nutritious?

There is a new product on the shelves called kombucha which is a type of tea that is supposed to be amazing for you. It is fermented and is supposed to have many many nutritional benefits. 

There are many many many non nutritious products. Anything processed or pre-made tends to be very unhealthy. 

6. Which product is the most expensive? least expensive?

The most expensive products tend to be the organic items. Many organic items are much more expensive but do have some health benefits. 

The more unhealthy items tend to be cheaper. You can buy a bag of chips for just a couple bucks and some frozen meals are even less than that!

7. A 2-for-$5 is more effective than $2.49 each. If you have a 2-for, you will almost guarantee that every customer will buy the multiple. Why?

This makes the customer think they are getting a good deal so they tend to buy more. 

8. The most recent Florida gun shooters obtained 10 firearms. All kinds of proposals to reduce gun violence have been floated recently. One idea that has gotten the attention of economists is liability insurance. Most states require car owners to have liability insurance to cover damages their vehicles cause to others; some economists think we should require the same of gun owners.  

It is also said that insurers prefer to insure things where is no actual risk. Should gun owners have to buy liability insurance? Why?  

I think gun owners should have to do much more than what they do now but I'm not sure if this insurance will do. If someone wants to get a gun just to hurt other people, they will do that. Having to buy insurance will not change their plans if they're set on it. I'm conflicted on how things need to change but when it comes down to it, if someone wants to hurt people, they will. 

9. How do you form prospects as a consumer? Use an example to justify your answer.

As a consumer, I usually go off of past experiences or recommendations. If I use a product and love it I will be brand loyal and tell other people. I also trust other people when they tell me they love a product. If I hear good things I am very willing to try it. An example is my makeup remover wipes. My best friend uses Neutrogena, so I tried them and liked them. I've been using them ever since and I recommended them to my mom and now she uses them too. 

10. Consider two offerings given to you, A (6000, 0.45) B (3000, 0.9). Which one do you choose?  Why? 

I would chose A because I believe the amount of interest paid on each loan would be the same, but I would get a larger loan and the money would go farther. 

11. Insurance companies studied two types of insurances of deductible $500 and $1000 with premium $715 and $615 respectively, and found that only 5% chance of paying $500 in the event of claim but they chose to pay extra $100 every year for this. That being said, households are more likely to choose higher premium and lower deductible.

Please use the prospect theory to explain this phenomenon. 

I think that the reason people would rather pay a $715 premium with a $500 deductible is because of the risk of loss. According to the Prospect Theory, "people are loss averse and will feel losses to a greater magnitude than gains of an equal amount". With this insurance plan, they'd pay an extra $100 a year, but if they get in an accident, then they would only have to pay half the price for a deductible. If they paid $615 a year and had a deductible of $1000, then that is a larger loss in one quick sitting which would effect them more. 

12. Evaluation of gains and losses largely depends on a person’s mental frame and when new information is introduced to change a person’s frame their gains/losses are called framing effects. Often hamburger producers label hamburger as “80% lean” not “20% fat” because 80% lean is framed as a gain. Can you give a different application of this theory in marketing?

An example of this is when something goes on sale. It's always gonna say "20% off!" rather than "pay 80%" They want to focus on the good so they market the 20% off instead of paying the 80% of the original price. 

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