Alex Kaufman has owned his jewelry store for five years. He has a number of products that have sold well and others that stay on the shelves until he runs a major sale with price cuts that cause him to lose money. He is very interested in his watch sales. He has noticed that Seiko watches sell well during most economic periods but decline in sales during a major economic boom period. By comparison, his Rolex watches tend to sell well (albeit in low numbers) during all economic cycles. He has also noticed that the perception of quality of Seiko does not seem to change even with major quality improvements such as improve movements, crystals and more fashionable bands. Whereas, Rolex seems to be perceived well even though the product has changed little in the last five years.

He is also intrigued by the buying decisions of his customers. For inexpensive jewelry items, individuals seem to make the decision and for more expensive items there is more of a family influence. The wife seems particularly influential in the buying decision of most jewelry. Alex also notices that in-store ads with famous people wearing jewelry have more of an effect than unknown models wearing the same products. When Alex asks how patrons have learned about the products most buyers say they do not remember or cite a movie where a star was wearing a particular watch or ring.

Alex has a policy of giving a lifetime warranty on most high ticket items. He has found that if he sends the warranty in the mail a few weeks after the purchase he gets fewer returns.

These issues have perplexed Alex and he has decided to hire you do some market research to find the answer to the following questions:

1. What impact if any does motivation theory have regarding the sales of Seiko and Rolex watches?

2. How is perception involved in buying decisions in the second paragraph?

3. What phenomenon would explain the return behavior regarding warranties?