Deck 52: Concerns over Sustainability Result in Social Media Disaster for Nestlé

Question 1

The idea that "it's too good to be true" did not stop people from buying.Consumers will always choose the lowest price.

Answer 1

False
The information effect of price was surely overridden by savvy customers who for the most part took a chance-like a lottery ticket-on seeing what benefit came from the mistake.

Question 2

In many marketing textbooks,including this one,there is the principle that if a retailer sets the price too low,it will frustrate sales based on __________.The write-off of $1.6 million in merchandise proves otherwise given the context.
a.customer satisfaction
b.consumer law
c.the price-is-right notion
d.perceived reasonable value
e.none of the above

Answer 2

D
In this case,the idea of "reasonable price" meaning "perceived reasonable value" is trumped by the human nature.

Question 3

By rewarding consumers who took advantage of the pricing mistake,what factor of human behavior did Tony Hsieh encourage about the shopping experience at 6pm.com? What made a mistake a promotion?

A) feelings of entitlement
B) the hedonistic effect
C) a sense of fair play
D) the allocative effect
E) all of the above

Answer 3

B
6pm.com is designed to be a fun shopping experience.So,Hsieh actually used the accidentally low purchase prices of the merchandise into a hedonistic consumption event that intensifies 6pm.com's reputation as a fun place to shop,to reward yourself.

Question 4

What really pays for the losses absorbed by 6pm.com?

A) Amazon.com
B) Amazon shareholders
C) 6pm.com
D) 6pm.com vendors
E) none of the above

Question 5

Retailers contribute to the "door-buster" and "entitlement" behavior of customers when pricing mistakes are made.

Question 6

What would be the retailing principle that compelled Tony Hsieh to ship merchandise that was grotesquely underpriced when he could have just cancelled the orders?

A) every online sale is a legal sale, a contract between consumer and retailer
B) customer satisfaction
C) it would have cost more to settle in court
D) the dollar amount lost is only retail, not wholesale
E) the loss would be made up in future sales

Question 7

Choose the most plausible reason that marketing manager might rationalize giving away $1.6 million in merchandise?

A) Ultimately, long-term profit goals had to be considered, not a short-term loss.
B) It is still the right thing to do and no point second guessing Tony Hsieh.
C) The company seeks only a satisfactory profit motive.
D) People need a break from the recession.
E) So consumers did not feel like they were paying a penalty.

Question 8

Amazon.com did not want to set the public relations precedent set by Tony Hsieh.

Question 9

If one were to pick an explanation from economics for why 6pm.com customers took advantage of the programming error that priced every piece of merchandise at $49.95,it was to __________.

A) avoid the sacrifice effect of price
B) experience the pleasure of "cheating back" a large corporation
C) see if the company would eat the loss
D) join a class action suit
E) all of the above