Ivan runs an electronics store specializing in digital cameras. He has been in business long enough to realize that most consumers of pointand-shoot cameras are mainly concerned about two attributes: size and zoom. Suppose that camera sizes can be classified as small, medium, and large and that zooms come in three ranges, 15x, 30x and 40x. The smaller the camera and the greater the zoom, the better the camera is. Ivan further realizes that most people do not have much use for an 40x zoom, and hence want either an 15x or a 30x zoom. As a result, he does not carry cameras with 40x zoom. A couple of months ago he bought a large stock of digital camera ABC, a medium-sized camera with 30x optical zoom, which he thought looked very cool and would sell very well. Today, however, he has received news that Panasonic is improving its models and they will be releasing a new camera that will make digital camera ABC obsolete. Desperate to sell the cameras he has in stock before the new model comes out, Ivan hires two economists to advise him: Anna and Botond.
(a) Botond believes that preferences are context-independent. What advice might he give to increase sales of digital camera ABC?
(b) Anna believes the context can influence preferences. Based on the context effects part of the course, identify two pieces of advice Anna might give to increase sales of the digital camera ABC.
(c) After presenting the empirical evidence on context effects, Anna finally convinces Iv´an and Botond that to increase sales of digital camera ABC they must think about what other cameras to offer for sale. Carried away by the enthusiasm inherent to new knowledge, Botond proposes another strategy: that Ivan should offer for sale lots of the types of cameras you have identified in part (b). Would this strategy work? Explain carefully.
(d) Anna also presents Ivan and Botond evidence on the effects of anchors on consumers’ willingness to pay for items. In light of such research, propose at least one other marketing strategy to increase the sales of digital camera ABC.
a. Botond might have given advice to ivan to increase the sale throughadvertising the qualitiles of this camara which makes it better than the new versio which is comming out As his studies belive that prefrences are context independent so therefore there is no need to adopt any other stretegy in hurry which may turn ivan in to loss.
b. Two adive anna might give to ivanin this regard is that he can give some special discount offer on that or he may sale it through internet marketing companies like amezon at lesser prices as he belives that individual preference are influenced.
c. Botond may offer other different stretegy to ivan regarding the product differenciation features of monopolistic competition. Where profit may be discrimanated on the basis of price discrimination or product differenciation. He can also suggest to concentrate on target based coustmer who prefers such types of camaras.
d. Ivan may suggest rigerious marketing through popular figures preoper advertisement of the product. offering different kinds of discounts. easy loan schems. Less instalment scheme, Free gift offer etc.
Ivan runs an electronics store specializing in digital cameras. He has been in business long enough...
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