Part IV
depending on how well the ad stimulates awareness – and ultimately converts “aware” prospects to
buyers. For example, if only 50 percent of the prospects become aware, the cost per buyer is $14.59.
This poor result would make the magazine ad more cost effective (at $13.67 cost per buyer).
However, if as high as 70 percent awareness is achieved,, the cost per buyer is reduced to $10.42.
The instructor can use this question/analysis to raise issues related to the importance of having
specific objectives – and trying to determine if those objectives are being achieved. Many firms don‘t
set clearly defined objectives for their advertising – and those that do sometimes just assume that the
objectives have been achieved. Although it is often difficult to trace the effectiveness of ads all the
way to a “cost per buyer” (as is assumed in this simple example), it is possible to use research to
determine if specific intermediate objectives – such as awareness levels – have been achieved.
Chapter-by–chapter aids: Chapter 13
prices. When you check the website, there are a number of unfavorable, anonymous reviews. You also
notice that there are about 30 very upbeat reviews of the competing restaurant. Your friend wants you to
Online reviews may amplify the effects of word–of–mouth – instead of telling a few friends, an online
review may be read by hundreds or even thousands of potential customers. Word–of–mouth can have a
strong influence on consumer choice – especially for service–oriented businesses like restaurants. Yet,
unlike traditional face–to–face word–of–mouth, the online variation may be more easily manipulated. There
have been media accounts and rumors of people posting false recommendations and reviews to boost
ratings at various sites. This scenario reflects a real concern with consumer–generated media – its
A discussion of the topic could go in many different directions. While students should view the practice as
unethical, it prompts the broader question – what if the competition does it? Does this open the door for a
firm to engage in unethical practices as well? Students should recognize that this type of practice could
lead both firms down a dangerous ethical path. What would employees think about the management of
the restaurant? How might this influence their ethical behavior – for example, would it make them more
likely to steal from the restaurant?
What else could you do? Students might suggest talking to the website staff – perhaps they could find out
what types of control are in place to prevent the competing restaurant from behaving in this manner. Is it
possible to gather more proof and bring it to the attention of the review site, which may take action?
Review sites like this (see also Epinions.com, CNET.com, and Amazon.com) are usually very concerned
about companies that might try to game its rating system because if reviews at their sites lose credibility,
shoppers are less likely to visit their sites.
Part IV