HOMEWORK HELP | What factors contained in Chapter 10 might be used to explain this phenomenon?

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Case Study 1

Finland, like the United States, is a wealthy country. Its economy is open—providing consumers a wide variety of choices when it comes to consumer products. What sets Finland apart, though, is that the country keeps very detailed records about its citizens—including everything from the ages, sex, and incomes of people living in the same household, the amount they spend annually on commuting, and vehicle purchases.

Consider this: Researchers have determined that when a Finnish household buys a new car, the odds that one of that household’s nearest 10 neighbors will purchase the same brand of vehicle during the next week and a half increases by 86 percent!

Question 1:

What factors contained in Chapter 10 might be used to explain this phenomenon?

Case Study 2

Costco Wholesale, the warehouse membership outlet, is the fifth largest retailer in the United States. Founded in Seattle in 1983, and merged with Price Club in 1993, the company now runs 457 stores. While most of its locations are in the United States, the company operates outlets in Canada, the United Kingdom, Taiwan, South Korea, and Japan. Its two largest competitors are Sam’s Club (owned by Wal-Mart) and BJ’s Wholesale Club (started by Zayre’s).

Because it is a membership club, the 44.6 million Costco consumers each pay $45 a year, and small businesses pay $100 annually. Each location stocks approximately 4,000 types of items, but only a few brands or versions of each. For example, Costco may stock only four brands of toothpaste, while a typical Wal-Mart may carry 60 brands and sizes of toothpaste, and over 100,000 different types of items.

Costco attempts to keep prices low, to make it impossible for another retailer to offer the same merchandise for less. Their cardinal rule is that no branded item can be marked up more than 14 percent, and no private-label item by more than 15 percent. As a comparison, supermarkets often use a 25 percent markup, and department stores typically mark up merchandise by 50 percent or more.

Question 2:

From what you already know about Costco (if you are already a Costco customer), and/or from what you can gather from the company’s Web site (www.costco.com), what social classes in America would you consider to be Costco customers?