M.C.

R Motorcycle Accessories

Behavioral Economics: Assignment

Group: J
Prum Cheanarith
Sieng Menghong
Choun Sereyratanak

Date of Submission:
Behavioral Economics

Table of Contents

Introduction 3

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Behavioral Economics

The Venture 3
Marketing Mix 4
Product 4
Price 5
Promotion 5
Place 5
Process 5
People 6
Physical Evidence 6
Partnership 6
The Business Results 6
Application Behavioral Economics Principles 8
Social Norm 8
Framing and Range Effect 8
Temporal Discount 9
Conclusions 9

1. Introduction

Some time ago, it has been raised that everybody on earth has a unique appearance,
and manner; whether there are millions of people around the world. Interestingly, they

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have just been aware of the differences of how each person made a decision on the
same subject. As the result, the majority of people turn out with an unalike decision. By
this reason, understanding why people make the decision they do is the core goal of
the new field of behavioral economics. Having a study course with theory in the
textbook is inadequate to go through the processing of human decision unless there is
a practise to the real world for the understanding of its working. There are various
means to study the behaviour economics which could be conducted in a business
venture to influence the consumer action, especially when they made purchasing
decisions.

This study report aims to give an insight into behavioral economics, point out the key
principle by applying the theoretical concept to the physical experiment with our small
business “M.C.R Motorcycle Accessories”, and provide a useful assertion to other
students.

2. The Venture

In order to run our business successfully in the way of effective and efficient marketing,
we do follow a framing method in the lecture which is called “Value Framing”. The main
aim is to provide the best quality of modified accessories items on motorcycles and to
complete the demand for customers’ desires.

According to the current demand from teenagers who want to modify their motorcycles,
we came up with an idea of creating this interesting business. As a team member
among three of us, also teenagers, we do love modifying our motorcycles to look more
modern and create new styles on a motorcycle. Moreover, to create this business, we
found a budget of $70 per member and the total budget is $210. We divided these
amounts in order to maximize our profits as we can sell a lot of accessories and share
profits effectively.

In fact, this business idea was founded in the early of August. We have researched so
much information on the internet and also received support from one of our team

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members’ brother who has his own motorcycle accessories shop located in Phnom
Penh. As a result, this process allowed us to achieve our goal to run this business and
come up with various items to perform.

Furthermore, our main target is to maintain a good relationship with customers by

giving them the best quality products and making them believe in our business
operations. We do treat customers as a king because only customers can maximize
our incomes and profits for the business operations. In our business strategy, we have
learned many things from the lecture in the class and some new ideas from the
internet. The business has two options for customers to purchase the items they like
through the Facebook page or Physical store. Unfortunately, due to a rise in cases of
pandemics in Phnom Penh, we mostly sell items on Facebook to provide safety and
healthiness for our customers. We have separated each member to maintain the
responsibilities on the business performance. M.C.R Motorcycle Accessories will try
our best to compete with other stores around Phnom Penh to maximize our revenue
and to satisfy our customers as well.

3. Marketing Mix

❖ Product

Our products emphasize the item modification of motorcycles for all its aspects
such as seat, spark advance, headlight, foot rest, tail and stop light, and other
items. All of the items are supplied by one of our team member’s brother, who
has been operating this business for many years. Currently, our demand is
reasonably expected to be this small business level.

❖ Price

The selling price of our products are bargaining, compared to other competitors
(By observing other online pages). Generally, we set the profit margin around
10-15% depending on the sort of items and its demand, like some items that are

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fragile and relatively large will be charged higher because there will impact the
high risk of damage or faulty products during the distribution process. The price
will be variable due to the fluctuation of exchange rates, inflation rate, and
distribution cost.

❖ Promotion

The discount event is always conducted on the particular national day like Pun
Phumben, happy khmer new year, and water festival. It will promote purchasing
items from M.C.R Motorcycle Accessories between 5-10% off until the end of
event day.

❖ Place

It operates both as an online shop and also a physical shop. You can find it out
on Sok Hok Street Or search in Facebook as M.C.R Motorcycle Accessories.
Due to pandemic COVID-19, we would like to recommend the customer order
from that facebook page because it is convenient and avoids affecting the virus.

❖ Process

For the online process, the customer just directly messages to the M.C.R
Motorcycle Accessories page, then, our team member will respond immediately.
Consequently it requires the customer pay in advance after that we will deliver
the goods to the address pin. There are many methods for cash payment, the
customer can pay through ABA account as well as ACLEDA Bank Plc. or
transfer money via WING, True money, and E-money. Every transaction will be
recorded on the ledger book.

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❖ People

This business can go ahead because of our three members only and we are
accountable equally for controlling social network account like posting the
picture of items, respondent to incoming messages from clients. For specific
areas for individual tasks, Mr. Menghong is good at creating video and context;
whilst Mr. Ratanak has a good concept in designing the poster, and Mr. Narith is
responsible for marketing research to estimate the popular products.

❖ Physical Evidence

The manual receipt will attach with the goods delivered to the customer. Prior to
being sent to the customer, it has been recorded on the Google Spreadsheet
properly and promptly.

https://web.facebook.com/MCR-Motorcycle-Accessories-104759084918251

❖ Partnership

In Cambodia, there are available delivery companies at any time such as VET,
J&T and for the local area in Phnom Penh; we will take the goods especially to
the client . Therefore, it is not our concern regarding the distribution of goods to
the customers. Furthermore, We can deliver goods to all 25 provinces
municipalities with a high responsibility and on a timely basis.

4. The Business Results

During the first week of our business's operation, we offered a "temporal discount."
Customers who spent more than $35 in our store earned a 10% discount. Throughout
this time, we've received a significant number of purchase orders from clients via social
media sites. Customers like the discount theme, therefore the majority of orders are for
big numbers. We got a total of 6 orders during the first week, resulting in a gross profit
of $134 and a net profit of $35. As we marketed our items, we were eventually able to

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obtain orders from new consumers after the first week.We received two additional
purchase orders from our friends in the final week of our sales, resulting in a gross
profit of $267 and a net profit of $72 for the two-week period.

As a consequence, it appears that 'temporal discount' works well in our firm, allowing
us to raise sales and profit proportionately more than during a typical sales week.

Table 1: Sales Records in $ USD Values

Purchase Name of Total Total Total

Date Cost/Unit Price/Unit
Number Product Units Cost Price
Mini Driving
#1 2
9/28/2021 Light 15 30 20 40
Light Switches 2
#2 3
plots 8 24 13 39
#3 HJG 60W Lens 1 45 45 55 55
Light Switches 3
#4 1
10/05/21 plots 12 12 18 18
#5 Seat Cover 1 5 5 7 7
#6 Moly 10W-40 1 9 9 11 11
Mini Driving
#7 1
10/06/21 Light 15 15 20 20
Mini Driving
#8 1
Light 15 15 20 20
Light Switches 2
#9 1
10/7/21 plots 8 8 13 13
#10 Moly 10W-40 1 9 9 11 11
Mini Driving
#11 1
10/08/21 Light 15 15 20 20
Light Switches 2
#12 1
plots 8 8 13 13
Total 15 195 267

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5. Application Behavioral Economics Principles

❖ Social Norm

The main successful objective of our business is to focus on “Social Norm” which is a
big factor to understand about customers, social concepts, and demanding from the
customers. Since there are many teenagers in Phnom Penh, they prefer to modify their
motorcycles to be more stylish and including our team members are loving modification
though. So we decided to choose this business model as a main topic for the business
research and assignment. During this pandemic, there is still high demand for
accessories by selling online and physically depending on each customer’s desire.
Moreover, we do think that this business will succeed in the way we are approaching
our customers because the market demand is always high.

❖ Framing and Range Effect

Framing effects arise when people make different choices based on how a decision
problem is presented or interpreted. According to this principle, we can assume that
customers have different choices to choose their own favorite shop and to get the best
accessories for their motorcycle. Therefore, we decided to do some research on the
internet about other competitors and strategies to attract customers. Thus, we only
chose necessary items which are most popular in the market nowadays to provide for
customers and maximize our revenue as well, especially, to avoid from unsold
inventory in a stock.

On the other hand, Range Effect is also an important factor to include in our business
performance because prices are needed to be considered to sell in the market. In case
we sell our items expensively, customers will find another shop to purchase. As a
result, we set the average prices for them which are reasonable to purchase.

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❖ Temporal Discount

In fact, there are so many holidays in Cambodia. Our business decided to set a
discount event for our customers in order to let them know our new business and to
attract more customers as well. During this Pchum Ben day, we did sell many items
because prices of items are quite low enough for them to buy and necessary for
everyday livelihoods.

6. Conclusions

Without practice in the actual world, a study course with theory in the textbook is
insufficient to go through the processing of human choice. There are several methods
for studying behavior economics that may be used in a commercial endeavor to affect
customer behavior. The objective of the emerging subject of behavioral economics is to
figure out why people make the decisions they do.

This research report seeks to present an overview of behavioral economics, highlight

the essential principle by applying the theoretical idea to a practical experiment using
our small firm "M.C.R Motorcycle Accessories," and make a helpful claim to aid other
students in understanding the subject.