Consumer Emotions and Price Elasticity

Using a core product or service at your company, address each of the following points:

• Assess your product/service in terms of price elasticity of demand:
  • Is it elastic or inelastic?
  • Support your answer with a clear rationale

• Describe the consumer’s emotional experience when using your product/service:
  • What emotion does this product/service elicit from its users?
  • What recommendations do you have for evaluating and improving its emotional impact?

• In the article The Last Mile, Soman argues leaders do not focus enough on where consumer decisions actually get made:
  • What does the customer experience look like?
  • What recommendations do you have for evaluating and improving the customer experience?

  peer #1

• Describe the consumer’s emotional experience when using your product/service:
  • What emotion does this product/service elicit from its users?
    • The majority of our customers are very grateful and satisfied with the level of services provided. They are satisfied because more often than not, they come to us after suffering a severe life-changing medical event. This makes them vulnerable and anxious. As we begin to provide assistance and help them through their recovery they begin to gain an appreciation for what we are doing for them. This leads to their satisfaction. However, there are times where our customers do not leave satisfied no matter what we try to do or offer them.
  • What recommendations do you have for evaluating and improving its emotional impact?
    • In developing an emotional strategy for our program it will be important to understand a customer’s emotional state at the time of accessing our services. Once we assess the emotions they are going through then we can develop a plan that will meet their needs. We also need to demonstrate to the customers that we share the same values and commitment as they do (Straker & Wrigley, 2016).
• In the article The Last Mile, Soman argues leaders do not focus enough on where consumer decisions actually get made:
  • What does the customer experience look like?
    • Our customer experience is based on our ability to respond to them immediately following a crisis situation. It is shortly after a severe injury or illness that our customers feel lost, alone and confused about their futures and what will happen to their families and vice versa, the family is worried about what will happen to their loved one. Our customers decision is made at this point and as an organization, we must be aware that what we do and how we do it will set the tone.
  • What recommendations do you have for evaluating and improving the customer experience?
    • I would apply Soman’s (2015) principles of the last mile as it applies to our program
      • We will focus on our tactics, meaning how do we initially engage our customers during times of crisis.
      • We will focus on when to engage. If we engage too soon they may reject us or not be ready and if we engage too late they may not need or wants us to be there and may even wonder we weren’t their sooner.
      • We could review our enrollment process and our client initial assessments

Reference:

1. Kenton, W. (2020, January 29). Price Elasticity of Demand. Retrieved February 18, 2020, from https://www.investopedia.com/terms/p/priceelasticity.asp
2. Straker, K., & Wrigley, C. (2016, March 14). Designing an emotional strategy: Strengthening digital channel engagements. Retrieved February 18, 2020, from https://www.sciencedirect.com/science/article/pii/S0007681316000112
3. Soman, D. (2015). The Last Mile Using Behavioral Insights to Create Value. Rotman Management .

peer #2

Consumer Emotions and Price Elasticity

Using a core product or service at your company, address each of the following points:

• Assess your product/service in terms of price elasticity of demand:
• Is it elastic or inelastic?

Wells Fargo Home Mortgage demand is affected by two price elastic variables, housing cost and interest rate. As the price of homes goes up, demand is reduced as less households can afford the higher cost. Interest rates have the exact same effect on affordability. As the interest rate (price of money) goes up, consumers can get less house for the same payment. If both of these variables go up at the same time (inflation and increased rates) it has a major impact on the housing market and on the entire economy. Interest rate also creates a high elasticity of demand when considering a rate/term refinance. When rates go down even slightly, the demand curve follows closely. As an example, let’s say that a segment of consumers are currently at 5%, and they feel that if they can improve their interest rate by 1% it would be worth the cost and effort to refinance. If rates are currently at 4.25% they choose not to act, however, if rates improve to 4%, this entire segment would now feel that the utility was worth the effort, and overall demand for mortgages would rise.

• Describe the consumer’s emotional experience when using your product/service:
• What emotion does this product/service elicit from its users?

Purchasing a home is a very stressful and emotional experience. It is often the biggest financial decision in the consumer’s life. Homeownership gives the consumer a sense of pride, as they are providing a basic need for their family.

• What recommendations do you have for evaluating and improving its emotional impact?

In the article, Designing an emotional strategy, it explained that in every encounter there’s an opportunity to meet a need and make an emotional connection with the customer. The article went on to state that every engagement with the customer results in an experience, and whether positive or negative, it will impact and influence attitude and behavior. Based on this I would recommend to the company, and to each Home Mortgage Consultant that they remind themselves of the impact they have on the customer every single time they interact with them prior to, during and after the transaction.

• In the article The Last Mile, Soman argues leaders do not focus enough on where consumer decisions actually get made:
• What does the customer experience look like?

A great customer experience begins with informed choice. All companies have similar product offerings, and differing means of presenting these products and choices to the customer. While price will always factor into the decision to act, it is not always the determining factor on who they choose to do business with. Studies show that in the mortgage process the following factors determine whether or not the customer had a great experience.

• • • Did the loan close on the date expected?
    • Did the HMC clearly explain the loan options?
    • Were there smooth transitions throughout the process?
    • Did the HMC accurately estimate the process length?
    • Did they have to provide documents more than once?
    • Were they provided regular updates on progress?

If the answer is yes to all of these, the customer had a great experience.

• What recommendations do you have for evaluating and improving the customer experience?

Digitization will play a key role in improving the experience of today’s consumer. The online mortgage application is the last mile, making it easier to start the process, and more convenient throughout. Wells Fargo will be successful in improving the experience if they can properly blend technology with local caring Consultants that provide the relationship driven service that consumers are looking for. The consumer expects a large lender to have digital capabilities to streamline the process, however they are best served by a trusted consultant that they can trust to help them understand and navigate a very complicated and stressful process.

Sources

1. Straker, K., & Wrigley, C. (2016, March 14). Designing an emotional strategy: Strengthening digital channel engagements. Retrieved February 18, 2020, from https://www.sciencedirect.com/science/article/pii/S0007681316000112

2. Soman, D. (2015). The Last Mile Using Behavioral Insights to Create Value. Rotman Management .