7. From product features to firm profits (Part 1) - Toledo.pptx

# Bridging product features to firm profits This topic explores the journey from product attributes to overall company financial gains, highlighting intermediate steps like customer acquisition and satisfaction, and the influence of psychological biases. ### 1.1 The path from product features to firm profits The ultimate goal for businesses is to translate product features into firm profits. This journey is not direct and involves several crucial intermediate steps: * **Customer acquisition:** Attracting new customers to the product. * **Customer satisfaction:** Ensuring customers are pleased with their purchase and experience. * **Customer loyalty:** Encouraging repeat purchases and long-term relationships. * **Firm profits:** The ultimate financial gain realized by the company. A successful strategy requires understanding not only the product's inherent value but also how customers perceive and interpret its benefits, as well as the cognitive biases that influence their decisions. ### 1.2 Understanding customer decision-making Customers evaluate products based on multiple attributes simultaneously. This can be modeled using multi-attribute utility theory, where each attribute is assigned a weight, leading to an overall product valuation. However, human interpretation of numerical information and product benefits is often distorted. #### 1.2.1 Common cognitive biases and thinking errors Several cognitive biases and thinking errors significantly impact how consumers perceive product features and benefits, influencing their purchasing decisions. * **Framing effect:** The way information is presented can alter perception, even if the underlying facts remain the same. * **Example:** Describing ground beef as "25% fat" is perceived more negatively than describing it as "75% lean," despite representing the same product. * **The MPG illusion (Miles Per Gallon):** Consumers often misjudge the impact of fuel efficiency improvements. * **Example:** When faced with options to replace a car, people often opt for replacing a 20 MPG vehicle with a 50 MPG vehicle over replacing a 10 MPG vehicle with a 20 MPG vehicle. However, the absolute fuel savings are significantly greater when improving the efficiency of the less efficient vehicle (10 MPG to 20 MPG yields a larger percentage improvement and greater fuel savings than 20 MPG to 50 MPG). This highlights a misunderstanding of non-linear relationships. * **Misinterpreting non-linear relationships:** Consumers tend to assume linear relationships where they exist, leading to errors in judgment about quantities and benefits. * **Example (Pizza size):** A pizza with double the diameter does not contain double the amount of pizza. The area (and thus the amount of pizza) increases quadratically with the diameter. If diameter is $d$, area is proportional to $d^2$. Doubling the diameter ($2d$) results in an area proportional to $(2d)^2 = 4d^2$, meaning four times the area. * **Example (Time and speed):** Consumers often misunderstand the relationship between time savings and speed. * **Illusion of knowledge:** Individuals who strongly oppose certain concepts, like genetically modified foods (GMOs), often believe they are highly knowledgeable about the subject. However, research indicates they tend to possess less objective knowledge compared to those with more moderate views. * **Tip:** Explaining the underlying mechanisms of a concept can reduce extremist viewpoints and lead to more realistic judgments. * **Cognitive reflection:** Quick, intuitive answers are often incorrect for problems requiring deeper thought. * **Example (Bat and ball):** A bat and a ball together cost one dollar and ten cents. The bat costs one dollar more than the ball. How much does the ball cost? * Intuitive answer: Ten cents. * Correct answer: Let the cost of the ball be $b$ dollars and the cost of the bat be $t$ dollars. We have two equations: 1. $t + b = 1.10$ 2. $t = b + 1.00$ Substituting the second equation into the first: $(b + 1.00) + b = 1.10$ $2b + 1.00 = 1.10$ $2b = 0.10$ $b = 0.05$ So, the ball costs five cents ($0.05$) and the bat costs one dollar and five cents ($1.05$). * **Example (Machines and widgets):** If 5 machines take 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets? * Intuitive answer: 100 minutes. * Correct answer: If 5 machines make 5 widgets in 5 minutes, then each machine takes 5 minutes to make one widget. Therefore, 100 machines can each make one widget in 5 minutes, meaning 100 machines can make 100 widgets in 5 minutes. * **Example (Lily pads):** In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake? * Intuitive answer: 24 days. * Correct answer: Since the patch doubles in size each day, it must have covered half the lake the day before it covered the entire lake. Therefore, it takes 47 days to cover half of the lake. * **Tip:** Encouraging cognitive reflection, or deeper thinking, is crucial for accurate decision-making. #### 1.2.2 The impact of explanation on product preference The way a product's benefits are explained significantly influences consumer preference, especially for innovative or technical products. * **Example (Premium bandages):** When presented with premium bandages offering a benefit (e.g., faster healing due to bubbles in padding) compared to generic ones, consumer preference changes with the level of explanation provided about *how* the benefit is achieved. * **No mechanism explanation:** Little to no preference for the premium product. * **Shallow mechanism explanation:** Increased confidence and slight preference for the premium product. * **Intermediate mechanism explanation:** Stronger preference for the premium product. * **Detailed mechanism explanation:** Can lead to the highest preference, but only if the explanation is understandable. Overly technical or complex explanations can reduce perceived understanding and preference. * **Tip:** The optimal level of explanation balances detail with clarity to maximize consumer understanding and preference. * **Directionally consistent causal chains:** Consumers prefer products whose claimed benefits are explained through a logical, one-directional causal pathway. * **Example (Drugs):** Drug 1, which increases Enzyme A, which in turn increases Enzyme B, leading to the intended effect, is preferred over Drug 2, which increases Enzyme C, which in turn decreases Enzyme D, leading to the same intended effect. The first scenario represents a directionally consistent causal chain, which feels more intuitive and trustworthy. ### 1.3 Implications for businesses To successfully translate product features into firm profits, companies must: * Develop products with clear, demonstrable benefits. * Communicate these benefits in a way that is easily understood and logically sound to the target audience. * Acknowledge and account for how consumers actually think and make decisions, rather than relying on purely rational economic models. * Understand that customer acquisition, satisfaction, and loyalty are critical intermediaries that require effective communication and an understanding of cognitive processes. In essence, bridging product features to firm profits requires a deep understanding of consumer psychology and cognitive biases, moving beyond simply having a superior product to effectively communicating its value and influencing customer perception. --- # Understanding cognitive biases in decision-making This topic explores how various cognitive biases and thinking errors influence consumer perception and decision-making, impacting the link between product features and firm profits. ### 2.1 The customer journey and psychological influences The path from product features to firm profits involves several crucial stages: customer acquisition, customer satisfaction, customer loyalty, and repeat purchases. Psychological biases and thinking errors play a significant role in how consumers navigate these stages. ### 2.2 Multi-attribute utility Consumers often evaluate products based on multiple attributes simultaneously, such as price, quality, and speed. Each attribute is assigned a weight, contributing to an overall product valuation. However, the interpretation of numerical information is frequently distorted. The general formula for multi-attribute utility can be represented as: $$ \text{Utility of Alternative } i = \sum_{j=1}^{M} b_j \times u(x_{ji}) $$ Where: * $M$ is the number of attributes. * $b_j$ is the weight of attribute $j$. * $x_{ji}$ is the value of attribute $j$ for alternative $i$. * $u(x_{ji})$ is the utility function for attribute $j$ at value $x_{ji}$. ### 2.3 Cognitive biases and decision-making errors Several common thinking traps and biases can distort consumer judgment and decision-making: #### 2.3.1 Framing effect The way information is presented significantly influences our judgment, even if the underlying facts are the same. > **Example:** Describing ground beef as "25% fat" tends to evoke a more negative perception than describing the same product as "75% lean." #### 2.3.2 The MPG illusion Consumers often misunderstand the implications of fuel efficiency ratings, particularly the Miles Per Gallon (MPG). This bias leads to suboptimal choices regarding fuel savings and environmental impact. > **Example:** When presented with a choice to replace one car, people are more likely to opt for replacing a 20 MPG vehicle with a 50 MPG vehicle, rather than replacing a 10 MPG vehicle with a 20 MPG vehicle. However, the greatest fuel savings and reduction in carbon footprint occur when improving efficiency at the lower end of the spectrum (e.g., from 10 MPG to 20 MPG). The absolute reduction in fuel consumption is often much larger in the transition from a lower MPG to a higher MPG than in the transition between two higher MPG vehicles. #### 2.3.3 Misunderstanding non-linear relationships Consumers frequently struggle with understanding non-linear relationships, leading to errors in estimating quantities or benefits. * **Area and Volume:** For example, doubling the diameter of a pizza does not double the amount of pizza; the area (and thus the amount of pizza) increases quadratically with the diameter. $$ \text{Area} = \pi r^2 = \pi \left(\frac{d}{2}\right)^2 = \frac{\pi d^2}{4} $$ If the diameter doubles from $d$ to $2d$, the new area is $\frac{\pi (2d)^2}{4} = \frac{\pi 4d^2}{4} = 4 \times \frac{\pi d^2}{4}$, meaning the area quadruples. * **Time and Speed:** Consumers also often misinterpret the relationship between time and speed, leading to misunderstandings about time savings. #### 2.3.4 Illusion of knowledge Individuals who strongly oppose a particular subject, such as genetically modified (GM) foods, often overestimate their own knowledge about it. Objective measures typically reveal that these individuals possess less knowledge than they believe. > **Tip:** Explaining complex topics, especially those one opposes, can reduce the extremity of their views and lead to more realistic judgments. This is because the act of explanation forces a deeper consideration of the subject matter. #### 2.3.5 Cognitive reflection Quick, intuitive answers to certain problems are often incorrect. These problems are designed to test cognitive reflection, the ability to override initial intuitive responses with more deliberate, analytical thought. > **Example (Bat and Ball Problem):** A bat and a ball together cost 1 dollar and 10 cents. The bat costs 1 dollar more than the ball. How much does the ball cost? > > * Intuitive answer: 10 cents. > * Correct answer: Let $b$ be the cost of the ball and $t$ be the cost of the bat. > * $t + b = 1.10$ dollars > * $t = b + 1.00$ dollar > Substituting the second equation into the first: > $$ (b + 1.00) + b = 1.10 $$ > $$ 2b + 1.00 = 1.10 $$ > $$ 2b = 0.10 $$ > $$ b = 0.05 \text{ dollars} $$ > So, the ball costs 5 cents, and the bat costs 1 dollar and 5 cents. > **Example (Machine and Widgets Problem):** If it takes 5 machines 5 minutes to make 5 widgets, how long would it take for 100 machines to make 100 widgets? > > * Intuitive answer: 100 minutes. > * Correct answer: If 5 machines make 5 widgets in 5 minutes, then each machine makes 1 widget in 5 minutes. Therefore, 100 machines can make 100 widgets in 5 minutes. > **Example (Lily Pads Problem):** In a lake, a patch of lily pads doubles in size every day. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake? > > * Intuitive answer: 24 days. > * Correct answer: Since the patch doubles in size each day, on the day before it covers the entire lake (day 47), it must have covered half of the lake. > **Tip:** Recognizing and engaging in cognitive reflection is crucial for making sounder decisions by avoiding reliance on potentially flawed immediate intuitions. #### 2.3.6 Effect of explanation on product preference The way a product's mechanism or benefit is explained can significantly influence consumer preference. A detailed and logical explanation that aligns with the consumer's understanding can increase trust and purchase likelihood. > **Example:** Premium bandages described as having "bubbles in the padding" are more likely to be chosen when the explanation details *how* these bubbles contribute to faster healing (e.g., by increasing air circulation to kill bacteria, or by reducing contact with the wound). A detailed, mechanistic explanation leads to higher preference compared to no explanation or a shallow explanation. However, explanations that are too technical can be counterproductive if they exceed the consumer's capacity to understand. The optimal level of detail enhances understanding and preference. #### 2.3.7 Directionally consistent causal chains Consumers tend to prefer products whose proposed mechanisms of action involve a direct, consistent cause-and-effect relationship. Causal chains that involve conflicting directions (e.g., increasing one enzyme while decreasing another to achieve an effect) are perceived as less effective or reliable. > **Example:** A drug that works by "increasing Enzyme A, which in turn increases Enzyme B, leading to the intended effect" is generally preferred over a drug that works by "increasing Enzyme C, which in turn decreases Enzyme D, leading to the intended effect," because the former involves a simpler, directionally consistent causal chain. ### 2.4 Implications for businesses For businesses aiming to translate product features into profits, understanding these cognitive biases is paramount: * **Clear Benefits:** Products must have discernible advantages. * **Understandable Communication:** These advantages need to be communicated in a way that is comprehensible and logically coherent to consumers, aligning with their existing cognitive frameworks. * **Leveraging Consumer Psychology:** Effective marketing and product design acknowledge and leverage how people actually think, rather than assuming they behave according to purely rational economic models. ### 2.5 Summary of the topic To effectively translate product features into firm profits, businesses must not only develop superior products but also deeply understand how customers interpret information and navigate common cognitive biases and thinking errors. --- # The impact of explanation on product preference The way a product or its benefits are explained significantly influences consumer preference and trust, with detailed and logically structured explanations fostering greater confidence. ### 3.1 The role of explanations in consumer decision-making Explanations serve as a crucial bridge between product features and customer perception, ultimately impacting firm profits. This process involves customer acquisition, satisfaction, and loyalty, all of which can be swayed by psychological biases and cognitive errors. ### 3.2 Understanding consumer interpretation of product information Consumers often misinterpret numerical information and product benefits due to various cognitive biases. This can lead to suboptimal choices and a misunderstanding of true product value. #### 3.2.1 Framing effects The way information is presented, or "framed," can alter consumer judgment even if the underlying facts remain the same. For instance, describing ground beef as "25% fat" may be perceived more negatively than "75% lean." #### 3.2.2 The MPG illusion Consumers frequently demonstrate a flawed understanding of fuel efficiency improvements. They tend to favor larger jumps in miles per gallon (MPG) from a higher baseline (e.g., upgrading from 20 MPG to 50 MPG) over smaller, but more impactful, improvements from a lower baseline (e.g., upgrading from 10 MPG to 20 MPG). The latter actually results in greater fuel savings. #### 3.2.3 Misunderstanding of non-linear relationships Consumers often assume linear relationships where non-linear ones exist, leading to errors in estimating quantities or benefits. * **Pizza example:** Doubling the diameter of a pizza does not double its area. The area, and thus the amount of pizza, increases quadratically with the diameter. If the diameter is $d$, the area is $\frac{\pi d^2}{4}$. Doubling the diameter from $d$ to $2d$ results in an area of $\frac{\pi (2d)^2}{4} = \frac{4\pi d^2}{4}$, which is four times the original area, not double. * **Time and speed:** Similar misinterpretations occur when consumers consider time savings based on speed improvements. #### 3.2.4 The illusion of knowledge Individuals who strongly oppose a particular subject, such as genetically modified foods, often overestimate their own knowledge about it, while objective assessments reveal they possess less understanding compared to those with more moderate views. ### 3.3 Explanation reduces extremism and fosters realistic judgment Providing explanations, especially those that detail the underlying mechanisms, can temper extreme viewpoints and lead to more realistic assessments. #### 3.3.1 Cognitive reflection test (CRT) examples These tests highlight how intuitive, quick answers can be incorrect, and that deeper reflection is often necessary for accurate solutions. * **Bat and ball problem:** A bat and a ball together cost 1 dollar and 10 cents (1.10 dollars). The bat costs 1 dollar more than the ball. How much does the ball cost? * Intuitive answer: 10 cents. * Correct answer: Let the cost of the ball be $x$ dollars. Then the cost of the bat is $x+1$ dollars. Together they cost $x + (x+1) = 1.10$. This simplifies to $2x + 1 = 1.10$, so $2x = 0.10$, and $x = 0.05$ dollars, or 5 cents. * **Machine and widgets problem:** If 5 machines take 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets? * Intuitive answer: 100 minutes. * Correct answer: Each machine makes one widget in 5 minutes. Therefore, 100 machines can make 100 widgets in 5 minutes. * **Lily pads problem:** In a lake, a patch of lily pads doubles in size every day. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake? * Intuitive answer: 24 days. * Correct answer: Since the patch doubles in size each day, it will cover half the lake on the day before it covers the whole lake. Therefore, it takes 47 days. #### 3.3.2 Impact of explanation detail on product preference Studies on products like bandages with "bubble padding" demonstrate that the level of detail in an explanation significantly affects consumer preference. * **No mechanism:** Providing no explanation for the feature offers little persuasive power. * **Shallow mechanism:** A brief explanation increases consumer confidence. * **Intermediate mechanism:** A more detailed explanation further enhances trust. * **Detailed mechanism:** A comprehensive, mechanistic explanation elicits the highest level of preference and trust, provided it is understandable. > **Tip:** While detailed explanations are generally beneficial, overly technical jargon can hinder understanding and reduce preference. The optimal level of detail strikes a balance between thoroughness and clarity. #### 3.3.3 Directionally consistent causal chains Consumers tend to prefer products whose explanations follow a clear, unidirectional cause-and-effect pathway. Explanations involving contradictory causal chains (e.g., increasing one enzyme leads to a decrease in another, which then results in the intended effect) are perceived as less effective and less trustworthy than those with consistent causal links (e.g., increasing enzyme A leads to an increase in enzyme B, which leads to the intended effect). > **Example:** A drug that works via increasing enzyme A, which in turn increases enzyme B, leading to the desired outcome, will likely be preferred over a drug where increasing enzyme C leads to a decrease in enzyme D, and this indirectly achieves the outcome. ### 3.4 Implications for businesses For companies to succeed, they must not only develop high-quality products with clear benefits but also communicate these benefits in a way that is understandable and logically coherent to consumers. This involves understanding and accounting for common consumer biases and cognitive tendencies, rather than assuming purely rational decision-making. ### 3.5 Summary To effectively translate product features into firm profits, businesses must understand how customers interpret information and acknowledge the cognitive biases and thinking errors that influence their decisions. This involves crafting clear, logical explanations that resonate with consumers' actual thought processes. --- # Rational vs. behavioral decision theory This topic introduces the foundational concepts of decision theory, contrasting the rational choice model with behavioral models that account for cognitive limitations and biases. ### 4.1 Introduction to decision theory Decision theory aims to understand how individuals make choices, particularly in situations involving uncertainty and multiple attributes. It provides frameworks for analyzing decision-making processes, from identifying preferences to evaluating outcomes. ### 4.2 The rational choice model The rational choice model assumes that decision-makers are perfectly rational. This means they have stable preferences, can perfectly process information, and consistently choose the option that maximizes their expected utility. #### 4.2.1 Core assumptions of rationality * **Completeness of preferences:** Individuals can compare any two options and state a preference or indifference. * **Transitivity of preferences:** If an individual prefers A to B, and B to C, then they must prefer A to C. * **Maximization of utility:** Individuals aim to select the option that yields the highest level of satisfaction or benefit. #### 4.2.2 Multi-attribute utility theory Multi-attribute utility theory is a framework within rational choice theory used to evaluate alternatives that have multiple characteristics or attributes. The overall utility of an alternative is calculated as a weighted sum of the utilities of its individual attributes. The utility of an alternative $i$ with $M$ attributes can be expressed as: $$U(A_i) = \sum_{j=1}^{M} b_j u(x_{ji})$$ Where: * $U(A_i)$ is the utility of alternative $i$. * $b_j$ is the weight or importance assigned to attribute $j$. * $u(x_{ji})$ is the utility derived from the level of attribute $j$ in alternative $i$. **Example:** Imagine choosing between two cars. Attributes might include price, fuel efficiency, and safety rating. Each attribute would be assigned a weight based on its importance to the decision-maker, and the utility of each car would be a sum of these weighted utilities. ### 4.3 Behavioral decision theory and its critiques of rationality Behavioral decision theory challenges the strict assumptions of the rational choice model by acknowledging that human decision-making is often influenced by cognitive limitations, biases, and heuristics. #### 4.3.1 Cognitive limitations and biases Humans do not always process information perfectly and are prone to systematic errors in judgment. These deviations from rationality can lead to choices that are not utility-maximizing. #### 4.3.2 Common decision-making pitfalls and illusions * **Framing effects:** The way information is presented or "framed" can significantly influence choices, even if the underlying options are identical. * **Example:** Ground beef described as "25% fat" is perceived more negatively than the same product described as "75% lean." * **The MPG illusion:** Consumers often misinterpret improvements in fuel efficiency, leading to suboptimal choices. * **Example:** When choosing between replacing a 10 MPG vehicle with a 20 MPG vehicle, or a 20 MPG vehicle with a 50 MPG vehicle, people often prefer the latter. However, the absolute fuel savings are much greater when improving from lower MPG figures (10 to 20 MPG saves more fuel than 20 to 50 MPG over the same distance). This is because the relationship between MPG and fuel consumption is non-linear. * **Misunderstanding of non-linear relationships:** Decisions are often distorted when people fail to grasp non-linear relationships, such as those involving area or time savings. * **Example:** Doubling the diameter of a pizza does not double the amount of pizza; the area, and thus the quantity, increases quadratically. Similarly, consumers often misunderstand the relationship between speed and time savings. * **Illusion of knowledge:** Individuals who strongly oppose a certain subject (e.g., genetically modified foods) often believe they are highly knowledgeable, yet objective measures show they possess less understanding. Explaining the mechanisms behind a subject can reduce this extremity and lead to more realistic judgments. * **Cognitive reflection:** Quick, intuitive answers to problems are often incorrect. Engaging in deliberate, reflective thinking is necessary to arrive at the correct solution for certain problems. * **Example (Cognitive Reflection Test):** * A bat and a ball together cost 1 dollar and 10 cents. The bat costs 1 dollar more than the ball. How much does the ball cost? (Intuitive answer: 10 cents. Correct answer: 5 cents.) * If it takes 5 machines 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets? (Intuitive answer: 100 minutes. Correct answer: 5 minutes.) * In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake? (Intuitive answer: 24 days. Correct answer: 47 days.) * **Effect of explanation on preference:** Providing explanations, especially mechanistic ones, can significantly influence product preferences. The level of detail in the explanation matters; overly shallow or overly technical explanations may be less persuasive than a clear, intermediate-level mechanistic explanation. * **Example:** When presented with premium bandages that claim to have "bubbles in the padding," consumers are more likely to buy them if they are given a mechanistic explanation of how the bubbles promote healing (e.g., by increasing air circulation and killing bacteria). The effectiveness of the explanation increases with its detail and logical coherence. * **Directionally consistent causal chains:** People tend to prefer products or solutions that are explained by a directionally consistent causal chain (e.g., increasing X leads to increasing Y, which leads to the desired effect) over those with directionally inconsistent chains (e.g., increasing X leads to decreasing Y, which leads to the effect). #### 4.3.3 Implications for businesses Understanding these cognitive biases and decision-making tendencies is crucial for businesses. Successful products and marketing strategies: * Feature clear benefits. * Communicate these benefits in a way that is understandable and logical to consumers. * Leverage insights into how people actually think, rather than assuming pure rationality. > **Tip:** Behavioral decision theory highlights that people are not always rational calculators of utility. Recognizing cognitive biases is key to understanding real-world consumer behavior and improving decision-making in various contexts. --- ## Common mistakes to avoid - Review all topics thoroughly before exams - Pay attention to formulas and key definitions - Practice with examples provided in each section - Don't memorize without understanding the underlying concepts

| Term | Definition | |------|------------| | Multi-attribute utility | A concept where individuals evaluate products based on multiple characteristics simultaneously, assigning weights to each feature to arrive at an overall evaluation. | | Framing-effect | The phenomenon where the way information is presented or worded influences an individual's judgment or decision, even if the underlying information is the same. | | MPG illusion | A cognitive bias where people misunderstand fuel efficiency gains, often overestimating the benefit of a large increase in MPG from a high baseline while underestimating the significant savings from a smaller increase at a low baseline. | | Cognitive reflection | The process of overriding initial intuitive responses with slower, more deliberate analytical thinking to arrive at a more accurate solution, especially when faced with problems that have common intuitive but incorrect answers. | | Illusion of knowledge | A cognitive bias where individuals who strongly oppose a particular idea or product, such as genetically modified foods, tend to overestimate their own knowledge about the subject, often knowing less than those with opposing views. | | Directionally consistent causal chain | A sequence of events or actions where each step logically and consistently leads to the next in a predictable manner, which tends to increase trust and preference for a product or explanation. | | Directionally inconsistent causal chain | A sequence of events or actions where the steps do not logically flow or are contradictory, which can decrease trust and preference for a product or explanation due to confusion or a lack of perceived coherence. | | Firm profits | The financial gain realized by a company after all expenses and costs have been deducted from total revenue, representing the ultimate financial success of the business. | | Customer acquisition | The process by which a business gains new customers, often involving marketing and sales efforts to attract individuals or organizations to its products or services. | | Customer satisfaction | The degree to which a customer's expectations are met or exceeded by a product, service, or experience provided by a company. | | Customer loyalty | The tendency of a customer to repeatedly purchase from the same brand or company over time, often driven by satisfaction, trust, and positive experiences. |