EXAM4 Study Guide

7/29/2019 EXAM4 Study Guide

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Study guide forLecture 1: Overview

*What is marketing?

*Definition of marketing

*American Marketing Association (August 2004)*"Marketing is an organizational function and a set of processes

for creating, communicating and delivering value to customersand for managing customer relationships in ways that benefitthe organization and its stakeholders."

*Three issues

*Organizational function

*Assume context of a large organization*Is this valid?

*No the marketing concept is universal*Yes, for the purposes of this class it is useful

*For the benefit of the organization*All organizations have a reason to exist

*Most businesses exist to make profits for their investors*Without profits, the business cannot continue to provide

benefits for its customers*In a not-for-profit, money is not the primary reason

*But without money, the organization will fold

*For the benefit of Stakeholders*Individuals or organizations who are affected by what the

company does and how well it performs*This is a relatively new concept

*Multiple stakeholders*Customers, suppliers, employees, labor unions

*In the long-run a business cannot succeed unless it meets

the needs of all of its stakeholders*Satisfied customers, healthy employees, a sustainable

environment, etc

*Creating and delivering value

Marketing 431 Study GuideLecture 12 Price Theory page 1

2006 Bruce Robertson


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*Needs satisfy wants rather than needs

*What is a need?*A perceived lack of something*Difference between actual state and desired state

*Some needs are stronger than others

*Wants*Culturally and socially influenced ways to satisfy needs*Starbucks anyone?

Utility

*Marketers create utility*The opposite of diminishing returns

*Textbook:*The usefulness or benefit consumers receive from aproduct

*Four kinds of utility

*Types of utility*Form*Place*Time*Posession -- Ownership*Information

*Image

Features vs. Benefits*Feature:

*An attribute of a product/offering*Producers determine features

*Benefit:*Need satisfaction*Customers determine benefits

Value*The ratio of perceived benefits to perceived price


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An Explanation*According to Bruce

*There are self-evident truths in the world*There are truths that are evident to me, but you may

take issue with*This is the gospel according to Bruce

*The point:*Marketers succeed by satisfying customer needs*Satisfaction is determined by the customer

*Stupid Customer syndrome*Our product is obviously the best, yet customers

dont buy it.*Obviously, we are dealing with stupid customers

*Manage relationships

Exchange

*There are 3 ways to satisfy a need*Make it

*Steal it

*Buy it

*An exchange happens when you buy it

*A transaction is the unit of exchange

*To be technical about it an exchange requires*2 or more parties*Voluntary participation*Each side has something of value*Means of communication

Relationships

*Transactions are not independent of each other




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*Few businesses have just one exchange with a customer*It is easier to be dishonest on a one-shot deal

*Used car anyone?*Each transaction is influenced by the history*Relationship marketing looks beyond the transaction

*Value of a customer rather than a transaction*May lose money on a transaction to maintain a profitablerelationship

Markets

*What is a Market*Short answer

*All of the potential customers for your product*In economic terms potential demand

*What is a customer?*The ultimate user of a product

*Receives benefit from product*Has the resources needed to exchange

*Ability*Time*Money

*What is a target market

*Law of large numbers

*No two people are exactly alike*Given enough people

*Subset similar to each other with respect to your product*This subset may be large enough for you to make money*This is what segmentation is all about

*A subgroup of people or organizations*Market segment

*Similar to each other*Different form everybody else

*Reachable

*Economically viable*More on this later

*The segment you choose to address*You cant please everybody*You dont have to please everybody to make a good living*More on this later


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What is the Marketing Concept?

Evolution of Marketing

*Major trends driving the evolution of marketing*Population/market size*Logistics/transportation*Technology*Communication

*4 (or more)Phases*Pre-industrial era*Production era*Sales era*Marketing era

*Customer era?

*The point*Not every market is in the Customer era

*Different countries*Different industries

*You need to understand what the market is like for you

Marketing Concept*A management orientation that focuses on identifying and

satisfying consumer needs to ensure the organizations long-term

profitability*Keys to success in the marketing era*Three fundamental principles

*Consumer orientation*Coordinated activities making the customer satisfied so the

organization is profitable*Long-term profitability

*This is not always easy to do*According to Bruce

*Perceived irrelevance of marketing

*Turf issues*Art for arts sake

What is the marketing function?

*Listen to the market




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*Environmental scanning*Market research

*Marketing information*Intelligence*Formal research

*Identify Consumer needs*Understand the consumer

*This is not easy*Business versus individuals

*Create need-satisfying offerings*You need to have the right product at the right place at the right

price with the right promotion

*Develop marketing programs

*Planning*Strategies*Product portfolio

*Implementation*Controlling

Whats the Big Deal With Marketing?

Marketing Affects Your Life*The concepts in Marketing are universal

*Two major life tasks that benefit from marketing skills

*Relationship*Career

*Getting a job*After you land a job

Marketing Affects the World You Live in

*Social structure*Shopping as a need satisfying activity*Status products*Trends

*Products inspire trends*Trends inspire products

*Entertainment*Sponsorship model*Blurring of the line between advertising and entertainment


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Study guide forLectures 2 and 3 - Consumer Behavior

What is a consumer?

*A person*Unmet needs*Purchases things for personal consumption

*Unique*No two people are alike

*From last time*Ultimate user of the product

*Receives benefit from the product*Has the resources needed for exchange

*Law of large numbers*Cant say what any individual will do*Given a large enough number we can predict what a subset

will do with respect to your product

The Consumer Buying Process

*Purchasing is problem solving

*As human beings, we always choose the best product available*Economic theory assumes rational behavior*Consumers are not rational

*Otherwise, everybody would be using Macintosh

The Consumer Buying Process

*There are 5 stages we go through in making a purchase*This applies to more than just purchasing products

*This is the way we as human beings solve problems*Decision making

*Not all people go through all five steps every time




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*Effort is a function of Involvement*Personal, social, and economic significance

*Expensive?*Serious personal consequences?*Reflect on your social image?

*May drop out of the process at any time

*High involvement*Extended Problem solving

*Lots of effort*Medium involvement

*Limited problem solving*Low involvement

*Routine problem solving*Automatic purchases

*Problem Recognition (Need recognition)

*Can be internal or external

*Can be sudden or gradual*If you lose your cell phone, you need a new one

*Now*Gradual needs are can be stimulated by a trigger

*Feel hungry when you walk past a bakery*Odor of fresh bread is a trigger

*This is what impulse advertising is all about.

*Dissatisfaction with a current product may stimulate a need*Wonderful opportunity for new products

*Just because we feel a need doesnt mean were going to makea purchase*Can drop put for any number of reasons

*How can marketers stimulate needs?

*Create dissatisfaction with current products*Fashion*Planned obsolescence

*Come up with better products


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*New and improved*Provide triggers

*Time-sensitive advertising*Point of purchase

*Identification of alternatives

*The textbook calls it information search

*This is the awareness set*You cannot purchase something unless you are aware of its

existence*How actively we look for new alternatives depends on

*How satisfied we are*The cost of acquiring new information

*Search strategies

*Internal search*Memory based

*External search*Personal sources*Public sources*Commercial sources (marketer-dominated)

*How can Marketers increase awareness?

*Point of purchase*Awareness advertising*Intrusive advertising

*Unsought products

*Evaluate alternatives

*Consideration set

*Evaluative criteria*Attribute: A quality or characteristic inherent in or ascribed

to someone or something




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*A term we use to identify features of products*Factors you use to make the decision

*Single vs multiple criteria*How are the criteria weighted*Evaluation is based on perception

*Our evaluations are biased*Cognitive miserliness

*More on this next time*Unconscious motivations*Heuristic decision making

*How can marketers help evaluate alternatives?

*Personal selling*Comparative advertising

*Establish criteria for comparison*More miles per gallon

*Reference groups*Celebrity endorsement

*Packaging

*Decision

*What is the product/service bundle that will best serve myneeds?

*Involves an evaluation of the seller as well as of the product

*Would you buy a Rolex watch at Walgreens?*How to take possession*Payment

*How can marketers help a consumer make up his/her mind?

*Convenience*No money down*Free delivery

*Create sense of urgency*Limited time offer


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*Loss aversion principle*Personal selling

*Postpurchase behavior

*Consumer satisfaction/dissatisfaction

*Buyers remorse*AKA Cognitive dissonance

*Having made our choice we face the alternatives we letget away

*Depends on*Cost of the purchase*Similarity of the alternatives

*What can marketers do about buyers remorse?*Postpurchase advertising*After-sale service

*Satisfaction survey*Relationship building

This is about where lecture 2 will finish

Factors that influence buying

*The reason marketing is so difficult is that you are only one of severalfactors that influence purchasing*And you are by no means the most important

Psychological factors




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*Motivation*In psychology we call them drives

*Two basic sources*Physiological

*Food*Psychological*Friends

*Some needs are more motivating than others*Maslows pyramid

*Point basic needs must be satisfied before higher levelneeds become motivators

Maslows Hierarchy of NeedsPhysiological

SafetyBelongingnessEgo needsSelf actualization

*People are not always consciously aware of their true motivation*Social disapproval*Self-image maintenance

*Personality

*Different people are different

*Personality traits*Innovativeness*Self-confidence*Sociability

*Myers-Briggs Typology*Extrovert-Introvert*Sensing-Intuitive

*Thinking-Feeling*Judgment-Perception

*Self concept*Actual self concept

*How you see yourself*Ideal self concept

*How you would like to see yourself


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*Consumption is an important factor*Social goods*Do people really pay $100,000 for a car because it runs

better?

*Perception

*Cognitive miserliness*People do the least amount of thinking possible to solve a

problem*Result: First acceptable solution rather than the best

solution

*Selective attention*We ignore things that are present

*Selective interpretation*Confirmation bias*We see things that arent there

*Selective retention*We remember in categories*Dissociation of object and evaluation over time*Familiarity effect

*Perceived Risk

*Hard to assess*Loss aversion principle

*Work harder to avoid losing $100 that you thought wasyours than you would to earn $100.

*Attitudes

*Learned predisposition to respond to an object or class of

objects in a consistently favorable or unfavorable way*Learned*Have an object*Have valence*Relatively stable

*Attitudes change over time*Behavioral learning




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*Experience with the product*Post purchase evaluation

*Cognitive learning*Observing others

*Have an object*You cant just have attitude

*Have valence*Cognitive and affective components*Beliefs*Either good or bad, never neutral

*Relatively stable

*Branding is based on attitude

*A brand is an attitude about a product*More on this later*Brand loyalty takes advantage of the fact that attitudes are

relatively stable over time

Social Influence

*Family

*Consumer socialization*We learn how to consume from our family

*Brand preferences by age 2*Attitudes

*The patterns we take with us for the rest of our lives arelargely in place by age 16

*Family roles in decision making*Information gatherer*Influencer*Decision maker

*Spouse-dominant

*Joint*Purchaser*User

*Culture

*A set of values, ideas and attitudes that are learned and sharedamong members of a group


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*Food preferences*Socially acceptable behavior is frequently cultural*Rituals

*Subcultures

*Subgroups with unique values, ideas, and attitudes*A way for a group of people to maintain a sense of identity

within a larger population

*According to Bruce:*We have more choice in the subcultures we adopt*This makes them important as segmentation variables

*We look for ways to affirm our membership

*Reference Groups

*An actual or imaginary individual or group that has a significanteffect on an individuals evaluations, aspirations, or behavior*Membership groups

*Conformity group identity*Aspirational groups

*Heroes role models*Dissociative groups

*Social Class

*The relatively permanent, homogeneous divisions in a societyinto which people sharing similar values, interests and behaviorcan be grouped

*Varies from culture to culture*In this country, wealth is an important criterion*In other countries ancestry is more important

*Three categories*Upper*Middle*Lower




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*Determinants*SOURCE of income*Occupation*Education

Situational factors

*Task

*Atmospherics*Physical surroundings*Social surroundings

*Temporal*Time of day

*How rushed you are

*Mood (antecedent states)*How you feel at that moment

*Rich*Happy

Information

*Social sources*Opinion leaders

*Word of mouth

*Commercial sources*Exposed to 300 ad messages/day (1972 study)*Notice about 76*React to 12

*Point it is expensive and difficult to convince people to buy yourproduct through advertising

How marketers describe consumer markets

*There 295,140,100 of them in the US (SMM 2005)*They live in 111,007,700 households*Need a way to break it down into manageable chunks

*Look for subgroups


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*Market segments*Similar to each other*Different from everybody else*Reachable

*Economically viable

*Cute names are important*i.e., baby boomers, empty nesters, Yuppies

*Subgroups described in terms of

*Geography*Urban*Rural*Suburban

*Geography is important for logistical reasons*Media Markets*Transportation

*Demographics*Age*Family life cycle*Education*Income*Ethnicity*These are the most common way of segmenting markets

*Psychographics

*How they think*Hard to reach psychographic segments

*Behavioral*What they do*Schaeffer beer the one beer to have when youre having more

than one

*Lifestyle*VALS profile

*Channel of Distribution*Original equipment (OEM) vs aftermarket*Retail vs wholesale*Online vs offline




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Study Guide forLecture 4 Business markets

What is a business consumer

*Someone who doesnt get to enjoy what they bought*Use to make other stuff*Resell to other people*Used to run the organization

*Actually, its usually another business*B2B

*Definition:Business marketing is the marketing of goods and services to

companies, governments, or not-for-profit organizations for use inthe creation of goods and services they can produce and marketto others.

*And if you thought the consumer market was big*Retail sales $4.1 trillion (Census 2005)*GDP $13.4 trillion (BEA 2006 )

*Doesnt count intermediary goods*You do the math

*Industrial firms 12,000,000*Manufacturers 350,000*Agribusiness 2,000,000*Services 7,700,000*Not for Profit 56,000

*Resellers 3,800,000*Government 88,000

Aside*According to Bruce

*There are tremendous job opportunities in the B2B sector*Every company has at least one salesperson

Characteristics of Business Markets


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NAICS

*A way of categorizing businesses by industry type*6 Digit code

*3 digit industry subsector*4 digit industry group*5 digit industry*6 digit US industry

*Why is NAICS important*Industry Sales*Employment*Number of firms*Salaries*http://www.census.gov/econ/census02/data/comparative/U

SCSA.HTM*The downside

*Only one NAICS code per company*Government data is relatively old

Market Structure

*Larger transactions*Buying authority*Competitive bids

*Fewer Customers*How many car companies are there?*Mass marketing techniques less effective*

*Buying objectives*Organizational objectives

*Maximize profits*Buying is a cost to be minimized*Our customers are indirect customers of our suppliers

*Buying criteria

*Price*Quality*Delivery*Technical capability*Warranties*Past performance*Production capacity


http://www.census.gov/econ/census02/data/comparative/USCSA.HTMhttp://www.census.gov/econ/census02/data/comparative/USCSA.HTMhttp://www.census.gov/econ/census02/data/comparative/USCSA.HTMhttp://www.census.gov/econ/census02/data/comparative/USCSA.HTM


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*Personal objectives?*Promotion*Ego*Friensdhips

*According to bruce*This is why personal selling is so important to business

markets*All things being equal, people buy from people they

like*Your job is to be liked

Demand

*The point is that B2B products are a means to an end not anend in themselves

*Demand is derived*The consumer products drive demand for components

*Intel cant sell chips without a computer to go aroundthem

*Demand for computers determines what Intel produces

*Demand is inelastic*Business products insensitive to price fluctuations

*Any one component is only a small part of what theconsumer buys*How much corn is in those corn flakes?

*8% by weight*5% of cost*Remainder is packaging and advertising

*Demand fluctuates*Acceleration principle

*Small changes in demand for the end product can makelarge changes in demand for component products

*Drivers*Capacity*Price

*When demand for computers picks up*Everybody needs chips to make computers*Intel cant make chips fast enough*The price skyrockets*Intel builds new factories


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*When demand for computers declines*Nobody orders chips*Intel has to lay off people*The price plummets

Buying center

Professional buyers

*Can you imagine shopping for a living?*Trained negotiators*Fewer products to consider*Goal is to minimize costs*Less susceptible to persuasive advertising

*Or not?

*Buying Center*The group of people in an organization who participate in the

buying process and share common goals, risks, andknowledge important to a business decision

*Cross-functional*May vary from decision to decision

*5 roles*Initiators*Users

*Influencers*Deciders*Gatekeepers*Buyers

*Buying center example*Laptop Computer*Home use*Through SFSU

Business buying process

*5-Step process the same as consumer markets*Business buying is problem solving*Dont make me go through this again!

Problem Recognition




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*Make or buy*outsourcing

Type of Decision

*Straight rebuy*Routine purchases

*If you dont have routine purchases automated,somebody else is eating your lunch

*New Task Buying*First-time or one-time purchase*Extensive problem solving

*The way to reach new task buyers is through personal

relationships. These are the deals that are made onthe golf course

*Modified Rebuy*Some reason to be dissatisfied with current solution

*This is why you keep calling on customers who arentcurrently buying from you

Information search

*Product specification*The ideal is to help your customer design the product

specification*This applies to a job search as well

*Proposals*RFP*Bidding

Evaluate Alternatives

*Buying criteria*More likely to consider non-financial costs

*ISO 9000 certification*Multiple suppliers

*Bidders list*Approved vendors

Decision


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*Single source vs. Multiple source*Production vs. outsourcing*Reciprocity*Terms

*JIT

*Financing

Post-Purchase Evaluation

*Business purchases tend to be longer term*Value chain*My customers are your customers*Relationship marketing

*Long-term cooperative relationships focused on creatingvalue for the end customer

Online Buying

*E-market places

*Auctions

*Traditional auction*Sell surplus quickly

*Reverse auction*Advantage

*Reduce cost*Disadvantage

*Minimizes relationship

Study Guide forLecture 5 Market Research I

Definitions

*Decision

*A conscious choice from among two or more alternatives*There has to be more than one option*You must take different courses of action for each alternative




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Good decision comes out the way you expected

Theres no such thing as a good decision or bad decision in business at the time you makeit! Therere only defensible decision how well you defend the decision you depend on.

SWAG decision: Scientific Wild Ass Guess

Decision: conscious choice between two or more option

*Data*A fact

*Information*A fact that is used to make a decision

*Intelligence

*Data*Raw and unadorned

*Information (e.g. Walmart)*Endowed with context and meaning*Filtered, synthesized, aggregated

*Intelligence*A full appraisal of information, past, present, options*A property of the organization

Barriers to intelligence

*Human barriers

*Ego*Inaccuracy

*Non-compliance

*Technological barriers

*Legacy systems*Information silos

*Database proliferation*Pseudo-Research


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*Data that is developed to justify a decision that has already beenmade

*CYA Cover your behind

Marketing Information

*In order to make good decisions, you need good information*GIGO

*Today, we live in a computer-mediated networked world

*We need systems to deliver*The right information*In the right form*At the right time

*Marketing Information System (MIS) WALMART, UPS

*A conceptual framework for understanding how to get goodinformation at the right time

*This is the ideal to which we aspire*Doesnt exist yet*Companies are building a competitive advantage by trying

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QUIZ!!

*4 sources of information*Internal data*Marketing intelligence*Marketing Research*Acquired Database

*Computer systems




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*A person who is making a decision

Sources of Information

*Internal Data

*Types of information*Sales data*Order data*Customer database*Customer service logs*Cost information*Scheduling

*Technology

*PC-based*LAN*Intranet

*Issues*Who owns the data

*Information silo or data silo functional silo is eachdepartment has the database to support the dept

*What form is the information

*Marketing Intelligence information that is gain in the outside

world about your company aka spying or environmentalscanning

*What is going on in the world around us*AKA Environmental scanning

*According to Bruce*The environmental scan is one place where you, as a

marketing manager, have control.*The better your environmental scan, the better your

decisions

*Typical environments*Economic*Competitive*Technological*Legal


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*Socio-cultural*Natural

*Marketing Intelligence sources:*External, usually secondary

*Industry-level statistics*Clipping services*Field reports*Syndicated reports

*Nielsen*J.D. Powers

*Market Research

*The process of defining a marketing problem andopportunity, systematically collecting and analyzing

information, and recommending actions*Custom research*Syndicated (e.g. Nelson TV ratings)*More on this next time

*Acquired databases/Internet

*Free information*Government data*www.doc.gov

*Public information*License information*Legal filings

*Free for a fee

*Proprietary information*Lexis-nexis

*Computer systems

*Network issues*Intranet*Extranet*Access points & permissions


http://www.doc.gov/http://www.doc.gov/


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*Software issues*Formatted reports*Ability to manipulate data*Maintenance

*Information for decisions

*Routine reports usually tied to a strategic plan

*Progress reports*Longer-term*Progress toward goals

*Exceptions reports*Identify problem areas

*Dailies/real-time information*Facilitate immediate response

*Data Mining

*An attempt to generate business assets from the masses ofinformation we now routinely collect

*Integrate internal information

*Include external databases*This is a hot area*The privacy issue

*Four applications

*Customer acquisition*Customer retention*Customer abandonment*Market basket analysis

*Lands End site location


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*Decision Support Systems

*The ability to base ad-hoc decisions on data

*Unanticipated decisions*One-of-a-kind decisions*Respond to situations

*Typical decision areas

*New product development*Advertising

*Focus groups*Audience tests

*Pricing

*Distribution

*Issues

*Information

*The broader the scope of information, the better*There is always a time constraint

*You cant build an MIS in response to a question*The information is there or it isnt

*Systems

*Is the information in the network*Is it current*Can it be imported into the software used to analyze

the data

*People

*Are the decision makers trained to make data-baseddecisions

*The ability to play what if games on a spreadsheetis a minimum

*Is there support for advanced analysis




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Study Guide forLecture 6 Market Research II

Market Research Process

*5 step process

*Define the problem*Develop the research plan*Collect relevant information*Develop findings*Take action

Define the problem

*Set research objectives

*Exploratory*What are the questions we should be asking

*Descriptive*Answer specific questions

*Causal*Prove it*Controlled experiment

*Identify possible marketing actions

*What is the decision being made*Who is responsible for using the results

*What are we measuring (Metric)

*What is good, what is bad*What is the population being studied

*What action will we take based on the results*Who else will be affected by the results


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*Define the problem

*Point This is the most important step. If you dont have a clearreason for doing the research, you are wasting money

Develop the research plan

*Specify constraints

*How much is the information worth*Time*Budget

*Identify information needed

*Can we measure what we need to measure (Indicators)*How accurate is the information likely to be*How difficult will it be to collect the information

*Cost benefit analysis

*Determine how to collect the data

*Concepts

*How do you ask the question

*Consumers are not good at visualizing something differentthan what they know

*You have to give them a hint

*Methods

*Three goals

*Validity*Are you measuring what you thought you measured

*Reliability*Can you repeat the measurement and get the same

result

*Representativeness*Do your findings apply to the target population*Aka Generalization




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*Sampling

*Probability sample

*Needed for representativeness*Random sample*Stratified random sample

*Non probability sample

*Leads to biased results*Convenience sample*Snowball sample

*Statistical inference

*Guesses about the population based on what you learnedfrom your sample

Collect relevant information

*Primary data

*Creating information specifically for your decision

*Advantage

*Specific to the question

*Disadvantage*Expensive*Time consuming*Prone to error

*Secondary data

*Research that already exists

*Advantage*Relatively inexpensive*Immediately available

*Disadvantage*Old data*May not address/ or be specific to your question*No control over methodology/subjects


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*Internal Inside the company, previous data kept

*External Outside the company

*Primary research techniques

*Exploratory research (qualitative)

*Observational*Scanner*Video

*Interviews*One-on-one*Focus-groups

*Case Study*Ethnography

*Descriptive research (correlation/quantitative)

*To find answers to questions*Question is specified in advance

*Generates quantitative data

*Correlation

*You can infer relationships, but cant prove cause andeffect

*i.e., violent crime and ice cream cone sales

*Cross-sectional*snapshot

*Longitudinal*Time series*Tracking

*Causal research*Attempt to show cause and effect

*Need an experiment

*Theoretical framework*Dependent variable




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*Independent variable*Control group*Probability sample

*Quasi-experiments

*Almost as good as experiments, but lack one or morerequirements

*Convenience sample*Field study (No control group)

*A cost-effective approach*Limitations need to be considered

*Data Collection methods

*Interactive data collection

*Face-to-face interviews*Telephone interviews

*Advantages*Ability to clarify questions*Follow up with specific questions

*Disadvantages

*Expensive*Consistency of interviewer

*Questionnaires

*Online surveys*Mail surveys

*Advantages*Inexpensive*Easy to tabulate

*Disadvantages*Response rates*May not capture what the person wants to say


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*Observational*actions speak louder than words

*Advantage*People dont always know why they do things

*Disadvantages*Difficult to analyze results*Expensive to collect

*Data collection techniques

*Avoid bias

*Translation*Quality of the instrument

*Single source data

*Combine scanner data with other sources to develop a betterunderstanding of how consumers shop

Develop findings

STOPED HERE TO BE CONTINUED

*Analyze and interpret the data

*How does what weve learned affect our decision

*Statistical analysis

*Descriptives*Cross-tabulation*Correlation*Regression*Advanced statistical techniques

*Understand the assumptions that went into the research

*Recommendations

*Dont read more into the data than is there




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*Prepare the research report

*Executive summary*1 page maximum

*Methodology

*Results*Analysis methods*Findings

*Limitations

*What compromises did you have to make*How might these affect the interpretation

*Conclusion

*Recommended action based on the research

Take marketing actions

*Recommendation

*Implement decision*Based on criteria established in advance

*Evaluate the results*Evaluate the decision

*Evaluate the process

Study Guide forLecture 7 Target marketing I

Segmentation


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*From lecture 1*A market is all the people who

*Benefit from your product*Have the resources needed to exchange

*Money to spend*Willingness to spend it*Authority to make the exchange

*The law of large numbers*No two people are exactly alike*Given enough people

*Subset similar enough with respect to your product*This subset may be large enough for you to make money*This is what segmentation is all about

Target market

Market segment is a potential target

*What is a segment?

*Relatively homogeneous groups of prospective buyers who aresimilar to each other in terms of their consumption behavior

*4 conditions for a segment*Similar to each other*Different from everyone else*Reachable

*Economically viable

*Why Segment?

*So you can respond more effectively to the wants of groups ofpotential buyers*And thus increase sales and profits

You cant make everybody happy so you have to segment

*Two fundamental strategies (Porter)

*Low cost producer*Differentiation

*There is only room for one low cost producer*Everyone else has to differentiate

*The point:*Unless you are the low cost producer in your industry you will

have to differentiate your product in order to succeed*This will make your product more expensive




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*By definition*Segmentation gives you a better chance of earning back the

increased cost

*Once you have identified market segments you can develop

specific product/market offerings for the segment*The four Ps*This is an example of discovering unmet needs

How to segment

Group buyers into segments

*Bases for segmentation (ways of segmentation)*Business vs. consumer

*Geographic*Demographic*Psychographic*Buying situation

Business segment*Reachable?

*Trade Publications*Sales force

*Measurable?*NAICS

*Industry data

Geographic segmentation*Why geographic

*Logistics*Regional differences

*Suntan lotion in San Francisco?*Cultural differences

*Market Areas*SMM survey of buying power

*SMAs*Media Markets*Buying Power*Product categories

*Reachable?*Local media*Regional editions of national media


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*Event marketing

Demographics

*The most common way to segment markets

*Age*Income*Ethnicity*Occupation

*Very easy to measure*Useful differences

*Age*Age groups

*Cohorts have similar experiences*Baby Boom

*Generation X*Generation Y

*Biology*Lifestage

*Family life cycle

*Ethnicity*Both race and culture play a role in consumption patterns*There is a fine line between ethnic marketing and stereotyping

*Win identify unmet needs

*Lose waste money and offend people*False assumption

*Ethnic groups are homogeneous

*African American*Quality and choice

*Hispanic*Quality and brand conscious

*Asian*Fastest growing segment

Psychographics

*Segmenting based on the social self

*Personality*Lifestyle*Values




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*VALS profile*Eight unique consumer segments

*Primary motivation*Resources

*Difficult to measure*Who is and who isnt environmentally conscious?*Reach is indirect

*Specialty Magazines*Organizations

Buying situations

*Outlet type*Benefits sought*Usage

*Awareness*Involvement

*Criteria for determining segments*Point you can use any combination of segmentation variables

to come up with a segmentation scheme that works for you*Potential for profit*Similarity within*Differences between*Response to marketing

*Difficulty of implementing segmentation

Group products into categories

*Judgment call*Does it make sense from a customers perspective

Market-product grid

*Planning tool*2x2 matrix*Market segments on one axis*Product offerings on the other axis*Indicate the potential of each cell

*Assumption*Most businesses have more than one product and more than


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one potential market segment

Targeting

*What is a target market*The segment you choose to target*Duh!

*Evaluate market segments

*What is the opportunity associated with each segment*Size/market potential*Growing/shrinking*Competitive position*Cost of reaching the segment

*Synergies*Strategic considerations*Cutting edge*Full service

*Frequently you target more than one segment*Maximize profits given the resources available

*Targeting strategy

*Book: 3 basic approaches

*One product/multiple segments*Multiple products/multiple segments*Mass customization

Undifferentiated*Mass marketing

*Concentrated

*Focus on onesegment

*Niche marketing

*Portfolio approach*Mix of segments*Always changing




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*New opportunities*Get rid of dead wood

Develop marketing programs

*You need to develop a specific marketing program for eachsegment you are targeting

*We will spend the next several weeks talking about how*The four ps

Study Guide forLecture 8 Target marketing II

Three marketing Reliable, Valid and Generalizable

Positioning

*Definition*Developing a strategy aimed at influencing how a particular

market segment perceives a good or service in comparison to thecompetition

*According to Ries and Trout

*Consumers organize products into categories in their mind. Thegoal of positioning is to be the first thing that comes to mind inthe category.

*Word association test*Cookies*Soda*Luxury Cars

*These are the products that occupy these positions in your mind

*Two approaches

*Head to head positioning*Direct competition*Same attributes

*Differentiation positioning*Different attributes than the market leader

*According to Bruce


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*It is better to be first place in a small category than second place ina larger category*America loves a winner

*Who was the second person to set foot on the moon*Who was the first woman in space

*Seven up is the largest selling caffeine-free clear soft drink*Ridiculous sports statistics

*How to you become the category leader?*The easy way

*Be there first*First name in computers?*First name in copiers?

*The hard way*Use the marketing mix to create a marketing position*Expensive

*Remember about commercial information*Hard to do

*Three step process*Figure out who you are*Figure out where you want to be*Design a plan to get from here to there

Figure out who you are

*According to Bruce:*Many companies dont know how their customers actually

perceive them*Three usual sources of information

*Sales*Feedback from people who make a living from you*Self knowledge

*Three good sources of information*Complaints*Critics*Market research




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*Internal marketing audit*SWOT analysis

*The goal is to develop an honest and balanced understanding of

who you are to your customers

Figure out where you want to be

*Identify the important attributes for a product class

*Statistical tools*Conjoint analysis*What is important to the customer

*Multidimensional scaling*Who is doing what

*Judgment

*Perceptual map

*Graphic representation position*Plot products graphically

*Identify gaps

Design a plan to get there

*What will it take to succeed in the new position*Changes to the product

*Features*Organizational resources

*To support the change*To defend the position once the change is successful

*Anticipate competitive response

*Two basic approaches*Create a new category

*In the consumers mind*The key is that you must be first in this category*Swiffer product*Leggs distribution


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*Repositioning*Against the competition*Create a new category relative to something familiar

*The Uncola

*Against yourself*Miller Lite*Prell

Forecasting

What is a forecast?

*Book*: Estimated sales of a product for a defined future period

*Bruce: A guess*The effort you put into the guess depends on:*How much is at stake*The amount of uncertainty*How the forecast will be used

*Terminology*Market size

*Dollars*Units*You need both to understand market dynamics

Example: Movie industry

*Market potential (Industry potential)*Upper limit for the market*If everybody who needed one bought one

*Sales potential*Upper limit for you*If everything went right, who much could you sell?

*Market share

*The portion of a market captured by a single entity*Usually expressed as a percent

*Market factor*Exists in a market*Is measurable*Related to demand




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*Sales Forecast

*An actionable sales estimate based on:*Sales potential*Marketing plan

*Known mitigating factors*Unknown mitigating factors things that you cannot predict

*Tennessee windage allow extra in case theres a mistake

*Over optimism human biases;*Methods

Market factor analysis

*Correlation between demand and known market factors*Advantages

*Relatively easy

*Reliable*Disadvantages

*Requires known market factor*Less useful for fashion and other volatile products

*Works well in industrial markets*OEM (Original Equipment Market)

*If you are making tires, each new car starts out with 4 tiresand a spare

*New car production schedules are market factors*Aftermarket

*Sparkplug example

Survey knowledgeable people

*Buyers intentions*Ask your customers what they plan on purchasing in the next

period*Formal methods

*Survey*Informal methods

*Canvassing

*i.e, working the crowd at conventions*Works best in business markets

*Relatively few buyers*Buyers know what they need

*Advantage*The customer is forecasting demand

*Disadvantage


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*Can be used as a negotiating tactic*Overestimate demand in order to get concession

*Assumes loyal customers

*Salesforce survey

*Similar to buyer intentions*Ask salespeople to estimate customer purchases*Advantages

*Easier to get cooperation*Front-line information

*Disadvantages*Fear of quotas*Salespeople are optimistic by nature

Statistical methods

*Trend analysis

*Future sales are projected based on previous results*Time series analysis*Cyclical adjustments

*Widely used in industries with relatively stable demand*Best for short-term predictions

*Advantage*Very easy to use

*Disadvantages

*Straight line projection fallacy*Ignores foreseeable environmental factors

*Henry Sibley High School

*Test marketing

*Introduce product on a limited scale*May be a full-blown introduction

*Complete marketing mix test*May be used to test components of the marketing mix

*Product

*Promotion

*Most useful for new or unpredictable products

*Advantages*Reliable information if done right*Ability to fix things before going into large scale production

*Disadvantages




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*Expensive*Time-consuming

*Give competitors a chance to copy you and be first tomarket

Judgment

*Direct forecast*Senior executives estimate demand

*Best used in early stages of strategic projects

*Lost horse method*Start with what you know about a historical fact*Make assumptions about what has happened since

*Advantage*Timely*Inexpensive*You have some very smart people

*Disadvantage*You are asking for opinions*Biases

Chain ratio method

*According to Bruce

*Combines the best of the other techniques*Integrates forecasting into strategic management

*Conceptually*Start with market potential*Reduce the potential with a series of facts/assumptions that

are critical to the strategic plan*You end up with an actionable estimate that takes into

account everything you know about the market

*Example Selling coffee in class

*Market potential 1000 (market factor)*x 10% attendance 100 (trend analysis)*x coffee drinkers 50 (research)*x havent already bought 15 (Judgment)*x $1.00/cup - $15*Baseline forecast - $15

*Now we play the what if games


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*How to use a sales forecast

*Recognize it is a guess*Develop multiple scenarios

*Best case*Worst case

*If you cant live with the worst case scenario, dont do it.*Most likely

*Develop contingency plans*What do you do if it works

*How to maximize profit

*What do you do if it doesnt*Diagnose problems*Minimize losses

Study Guide forLecture 8 Target marketing II

Three marketing Reliable, Valid and Generalizable

Positioning




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*Definition*Developing a strategy aimed at influencing how a particular

market segment perceives a good or service in comparison to thecompetition

*According to Ries and Trout*Consumers organize products into categories in their mind. Thegoal of positioning is to be the first thing that comes to mind inthe category.

*Word association test*Cookies*Soda*Luxury Cars

*These are the products that occupy these positions in your mind

*Two approaches

*Head to head positioning*Direct competition*Same attributes

*Differentiation positioning*Different attributes than the market leader

*According to Bruce*It is better to be first place in a small category than second place in

a larger category

*America loves a winner*Who was the second person to set foot on the moon*Who was the first woman in space

*Seven up is the largest selling caffeine-free clear soft drink*Ridiculous sports statistics

*How to you become the category leader?*The easy way

*Be there first*First name in computers?*First name in copiers?

*The hard way


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*Use the marketing mix to create a marketing position*Expensive

*Remember about commercial information*Hard to do

*Three step process*Figure out who you are*Figure out where you want to be*Design a plan to get from here to there

Figure out who you are

*According to Bruce:*Many companies dont know how their customers actually

perceive them

*Three usual sources of information*Sales*Feedback from people who make a living from you*Self knowledge

*Three good sources of information*Complaints*Critics*Market research

*Internal marketing audit

*SWOT analysis

*The goal is to develop an honest and balanced understanding ofwho you are to your customers

Figure out where you want to be

*Identify the important attributes for a product class

*Statistical tools*Conjoint analysis

*What is important to the customer*Multidimensional scaling

*Who is doing what




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*Judgment

*Perceptual map

*Graphic representation position

*Plot products graphically*Identify gaps

Design a plan to get there

*What will it take to succeed in the new position*Changes to the product

*Features*Organizational resources

*To support the change

*To defend the position once the change is successful*Anticipate competitive response

*Two basic approaches*Create a new category

*In the consumers mind*The key is that you must be first in this category*Swiffer product*Leggs distribution

*Repositioning

*Against the competition*Create a new category relative to something familiar

*The Uncola*Against yourself

*Miller Lite*Prell

Forecasting

What is a forecast?

*Book*: Estimated sales of a product for a defined future period

*Bruce: A guess*The effort you put into the guess depends on:

*How much is at stake*The amount of uncertainty*How the forecast will be used


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*Terminology*Market size

*Dollars*Units

*You need both to understand market dynamicsExample: Movie industry

*Market potential (Industry potential)*Upper limit for the market*If everybody who needed one bought one

*Sales potential*Upper limit for you*If everything went right, who much could you sell?

*Market share*The portion of a market captured by a single entity*Usually expressed as a percent

*Market factor*Exists in a market*Is measurable*Related to demand

*Sales Forecast

*An actionable sales estimate based on:*Sales potential*Marketing plan*Known mitigating factors

*Unknown mitigating factors things that you cannot predict

*Tennessee windage allow extra in case theres a mistake

*Over optimism human biases;*Methods

Market factor analysis

*Correlation between demand and known market factors*Advantages

*Relatively easy*Reliable

*Disadvantages*Requires known market factor*Less useful for fashion and other volatile products




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*Works well in industrial markets*OEM (Original Equipment Market)

*If you are making tires, each new car starts out with 4 tiresand a spare

*New car production schedules are market factors

*Aftermarket*Sparkplug example

Survey knowledgeable people

*Buyers intentions*Ask your customers what they plan on purchasing in the next

period*Formal methods

*Survey*Informal methods

*Canvassing*i.e, working the crowd at conventions

*Works best in business markets*Relatively few buyers*Buyers know what they need

*Advantage*The customer is forecasting demand

*Disadvantage*Can be used as a negotiating tactic

*Overestimate demand in order to get concession

*Assumes loyal customers

*Salesforce survey*Similar to buyer intentions

*Ask salespeople to estimate customer purchases*Advantages

*Easier to get cooperation*Front-line information

*Disadvantages*Fear of quotas*Salespeople are optimistic by nature

Statistical methods

*Trend analysis

*Future sales are projected based on previous results*Time series analysis*Cyclical adjustments


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*Widely used in industries with relatively stable demand*Best for short-term predictions

*Advantage*Very easy to use

*Disadvantages*Straight line projection fallacy*Ignores foreseeable environmental factors

*Henry Sibley High School

*Test marketing

*Introduce product on a limited scale*May be a full-blown introduction

*Complete marketing mix test*May be used to test components of the marketing mix

*Product*Promotion

*Most useful for new or unpredictable products

*Advantages*Reliable information if done right*Ability to fix things before going into large scale production

*Disadvantages*Expensive*Time-consuming

*Give competitors a chance to copy you and be first tomarket

Judgment

*Direct forecast*Senior executives estimate demand

*Best used in early stages of strategic projects

*Lost horse method

*Start with what you know about a historical fact*Make assumptions about what has happened since

*Advantage*Timely*Inexpensive*You have some very smart people

*Disadvantage




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*You are asking for opinions*Biases

Chain ratio method

*According to Bruce*Combines the best of the other techniques*Integrates forecasting into strategic management

*Conceptually*Start with market potential*Reduce the potential with a series of facts/assumptions that

are critical to the strategic plan*You end up with an actionable estimate that takes into

account everything you know about the market

*Example Selling coffee in class*Market potential 1000 (market factor)*x 10% attendance 100 (trend analysis)*x coffee drinkers 50 (research)*x havent already bought 15 (Judgment)*x $1.00/cup - $15*Baseline forecast - $15

*Now we play the what if games

*How to use a sales forecast

*Recognize it is a guess*Develop multiple scenarios

*Best case*Worst case

*If you cant live with the worst case scenario, dont do it.*Most likely

*Develop contingency plans*What do you do if it works

*How to maximize profit*What do you do if it doesnt

*Diagnose problems*Minimize losses


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Study Guide forLecture 9 Product Development

What is a Product

Definition

*Textbook*Product: A good, service or idea consisting of a bundle of

tangible and intangible attributes that satisfies consumers andis received in exchange for money or some other unit of value.

Layers of the Product




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A way of viewing the productfrom the customer perspective

*Useful in developingproducts

*Three layers

*Core benefit

*What is the need youare satisfying*A product may offer

different benefits to different people*The only benefits I care about are the ones that satisfy

my needs

*This is a basis of positioning

*Actual product

*Whats in the box*This is what we usually think of as the product

*In reality it is just a way to deliver the benefit to theconsumer

*Lots of different ways to deliver the same benefit

*Augmented product

*The actual product in the context of the marketing mix*4 ps*Add to benefits received*May or may not be bundled into the product

*Extended warranties*Carrying case

*Example cars

Taxonomies


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*How do we categorize products?

*Business Goods*Derived demand

*Consumer goods

*Will be used by consumers in its present form

Business goods

*Production goods*Raw materials*Components

*Support goods*Installations*Accessory equipment

*Supplies*Industrial services

Consumer goods

*Classified by how long they last

*Durable*Last a long time*Extensive problem solving

*Non durable*Consumed*Frequent purchases

*Classified by how they are purchased

*Convenience*Shopping*Specialty*Unsought

New product development

Need for innovation

*Marketing is a moving target*Technological change*Competition




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*Copycat products

*In order to thrive, a business must introduce successful newproducts*Profit leaders 39% of sales from new products

*Profit laggards 23% of sales from new products

Definition of new

*What is a new product

*FTC:*Significantly changed*Less than six months old

*New to the company

*Line extension*New technology*Revolutionary new product

*Consumer perspective*Continuum from small, incremental changes to radically

different products

*Continuous innovation

*Modification of an existing product

*Create distance from the competition*Positioning

*Eliminate distance from competition*Knockoffs

*Easy to do, easy to imitate*Incremental vs sustainable advantage

*Dynamically continuous innovation Coke, fairly major changebut you still understand what itz all about*New to the customer

*Same benefits, new package

*Requires consumer education*Convergence

*Coming together of two or more technologies to createsynergies

*Discontinuous innovations*New to the world*Major changes to the way we live


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*Internet

Why new products fail

*Innovation is not easy*80%* of new products fail*Good ideas dont make it to the market*Bad ideas make it to the market

*From research

*Insignificant point of difference*Incomplete market and product definition*Too little market attractiveness*Poor execution of marketing mix

*Poor product quality*Bad timing*No economical access to buyers

*Point*You cant say in advance whether or not any one of these

considerations will be fatal*Many products fail that do well against these criteria*Some products succeed that shouldnt

*However you should look at these issues before risking a lotof money

*Defensible decision

NPD Process

*Seven phases

*NPD strategy

*What role do new products have in the companys overallstrategy

*What techniques does the company use to support new productdevelopment*New product department*Cross-functional team*Product champion




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*Idea generation

*Broader is better*Customers

*Complaints

*Employees*Research*Competitors

*Screening and evaluation

*Identify feasible ideas*Develop product concepts

*Internal*External

*Business analysis

*Marketing strategy*Who is the customer

*Economic analysis*Forecast demand*Pro-forma income statement what you think your income

statement might look like

*Technical development

*Prototype*Test version of proposed product*Physical product*Simulation

*Market testing

*Advantages*Better information

*Disadvantages*Lost time*Lost money

*Commercialization

*Introduction into product mix*Rollout strategy


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*Risk management*Time to market

New product adoption

*Adoption Process*How an individual accepts a new product

*Diffusion theory*How a new product is accepted by a population

*Adoption Process*Awareness*Interest*Evaluation*Trial

*Adoption*Confirmation

*Factors that affect new product adoption*Relative advantage 4 blade razor*Compatibility*Complexity*Trialability*Observability observable difference

*Diffusion theory

*We know how new products are received by people in the marketplace

*A taxonomy in 5 stages*These stages are closely related to product life cycle

*Innovators (2.5%) of market*Bleeding edge have to have it

*Early adopters (13.5%)*Opinion leaders

*Early Majority (34%)*Up to date, but not cutting edge

*Late Majority (34%)*Dont believe advertising

*Laggards (16%) Wont buy it unless they absolutely need it




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*Who needs a color printer anyway

*Non-adopters regardless of how useful it is, they wont buy it.

Study Guide forLecture 10 Product Management

Product mix

*Assumption:*No company has only one product.*Is this true?

*Product line

*A group of products that are closely related*Satisfy a class of needs*Used together*Sold to the same customer group

*Distributed through the same outlet*Fall within a given price range

*Will vary from company to company

*Product item

*A specific product*Aka SKU stock keeping unit in UPC codes

The smallest and least common denominator is the SKU the ISPN # for example

*Product mix

*The number of product lines offered by a company*Two issues breadth (# of diff line) and depth (how many

offering or SKU you have in each line) or width and length

*Length (Depth)*The number of choices within a product category


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*Is how you target more than one segment

*Example: Coffee*Instant coffee

*Decaf coffee*Ground coffee*Whole bean coffee*Brewed coffee

*Each item satisfies a slightly different need

*Width (Breadth)*The number of product categories (lines)

*Allows you to meet other needs of your target market

*Example: Coffee*Coffee makers*Coffee mugs*Breakfast foods

*Each product line represents a need a coffee drinker may alsohave

*Cannibalization

*The loss of sales of an existing brand when a new item in a

product line is introduced*Represents overlap between target markets*Example

*Ground coffee drinkers may switch to instant coffee wheninstant coffee is introduced.

Product Life Cycle

*Concept that explains how products go through four distinct stagesfrom birth to death: introduction, growth, maturity and decline

*Aggregate demand over the lifetime of a product*Applies to generic products, or product categories rather than

individual brands

*Two curves*Sales*Profit*Shape will vary from product to product




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*Introductory stage

*Goal:*Get people to try the product

*Primary demand*Adoption process

*Issues*Cash outflow before product comes to market*Profits negative at first

*Introductory stage strategies

*Market entry*First mover

*Riskier, but gain advantage

*Second mover only when youre big (like Microsoft)*Requires strong asset base

*Pricing*Penetration pricing

*Anticipate competition pricing below market price*Skimming set prices as high as possible to get cost back

and then lower it later (electronics)*Recover development costs

*Growth stage

*Goal*Build market share*Differentiate the product

*Issues*Increasing demand and high profits encourages competitors

*These are stars and question marks in the BCG analysis*Eventually competition reduces profits

*Growth stage strategies

*Branding*Build a brand identity through advertising*Differentiate the product

*Positioning*Market develops sub segments


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*Maturity stage

*Goals*Maintain market share*Extend life of product

*Issues*Demand for the product peaks

*Late majority are buying*Weak competitors are forced out

*Maturity stage strategies

*Incremental innovation*Extend the maturity stage by adding features

*New and improved

*Repositioning*A new market for your product starts a new product life

cycle

*Increase profits by increasing efficiency*Cost cutting*Economies of scale

DEFINITION OF PROFIT = REVENUE - EXPENSES

*Decline stage

*Goals*Maximize profit

*Issues*One or two competitors left in market*Some residual demand

*Replacements*Laggards

*Decline stage strategies*Milk the product

*Cut cost*Carry product as long as it is profitable

*Exit the market*Divest*Close down




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Dimensions of the Product life cycle

*Length*Shape

*Product level

*Class*Industry life cycle

*Form*Product life cycles within the industry

Fashion

Definitions

*Style*Distinctive manner of construction or presentation

*Fashion*A style that has been adopted by a significant number of people

for a reasonably long period of time

*Style obsolescence*Superficial characteristics of the product are altered making

people feel out of date if they continue to use older products

*According to Bruce*Fashion marketing is the intentional altering of superficial

characteristics of products used by a significant number ofpeople in order to create style obsolescence

*Fashion marketing works because of two competing socialphenomenon

*We like to be part of a group*We want to be unique*Because fashions keep changing, it allows us to be different

and, at the same time, be part of the group

Fashion and the product life cycle

*Fashion products have a product life cycle of from a few months(clothing) to several years (houses)

*Fashions may come back over time


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*Products with extremely short life cycles are called fads

Fashion issues

*Forecasting

*Following trends is important*Recognize that fashions are adopted by successive groups

*Inventory management

*The key is that fashion inventory loses value over time*Too much is bad

*Too little is not as bad*Just right is very profitable

Product management

*Managing a companys products as they go through the product lifecycle

*Product manager*The person responsible

*Three approaches*Modify the product*Modify the market*Reposition

*Portfolio approach*Balance of currently profitable and potentially profitable

products in the mix

Quality

*Quality is in the eyes of the beholder

*Two issues:

*Benefits received (level of quality)*Quality is a perception issue*Stupid Customer Syndrome




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*We engineer features into products in the hope that they areperceived as benefits

*Consistency

*Can you replicate the experience*With goods, consistency is zero defects*With services, consistency is delivered through systems

*Is McDonalds number one because of the food?

Study Guide forLecture 11 Product Branding

The ABCs of branding

What is a brand

*Brand name

*Any word, device (design, sound, shape, or color), orcombination of these used to distinguish a sellers goods orservices

*Trade name*The name under which a company does business (DBA doing

business as) *E.g. Legal business name vs. face name


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*Trademark (service mark)*A legally protected brand name (cough drops... trademark)

*Types of brands*National brand

*(aka producer brand)

*Private-label brand*(aka middleman brands)

E.g. Dealer, Safeway Select, Target,

*Generic brand*(aka no brand)*In theory eliminates advertising cost*No longer in fashion

*According to Bruce

*A brand is a promise*Your brand will be successful if the promise is valuable to your

customers and if you keep your word.

*Why Brand?

*Assurance of quality for consumer

*Create competitive advantage

*Barrier to entry (e.g. ready to eat cereal)*Average of $7.5 million to introduce a new brand

How to create a brand

*Classical conditioning works over repeated exposure

*The learning that occurs when a stimulus eliciting a response ispaired with another stimulus that initially does not elicit aresponse on its own but will cause a similar response over timebecause of its association with the first stimulus

*Stimulus generalization

*Behavior caused by a reaction to one stimulus occurs in thepresence of other, similar stimuli

*Branding is classical conditioning (e.g. Pepsi and MichaelJackson)




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*You pair the trademark with the benefit*This becomes the brand promise

*Similar to positioning

*The brand becomes the category and you are the first namein it*Repetition is the key*Familiarity affect

*Characteristics of a good brand name

*Suggests a product benefit*Memorable, distinctive, positive*Fit the company/product image*No legal restrictions

*Example: Lite*Simple*Easy to pronounce*Emotional

*Conditions favorable to brandingWhen should you brand?? E.g. McDonald, Bottle

water, CEREAL!

*The product is easy to identify by brand*Quality and value are easy to maintain

*Widespread availability*Sufficient demand to support premium pricing*Economies of scale*Favorable sale locations

How to protect a brand

*Legal protection*Lanham act*Copyright protection act

*In order to claim legal protection, you have to register

*US Patent Office (www.uspto.gov)

*In order to preserve a brand name, you must defend it

*Infringement*Imitation
http://www.uspto.gov/http://www.uspto.gov/


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*Appropriation*Counterfeiting

*Common usage*Kleenex, Xerox

*Quality*Tylenol

Brand Strategies

*Family branding (multiproduct branding) Trader Joes, anythg theyput their name on is guarantee to be organic and healthy.

*One brand name for all products in the class

*Advantage: spread cost of developing brand over more products

*Line extensions and sub brands*Use name for new product items in the line

*Cherry Coke*Brand extensions

*Use name for new product lines*Starbucks ice cream

*Disadvantage*Cannibalization*Brand dilution more categories associated with the brand

and they get confused

*Individual brands (multi branding) -- Tide

*Create a unique brand for each product

*Example P&G

*Advantage: Clear brand identity, build powerhse brand

*Disadvantage: expensive, one by one from scratch

*Have several brands in the same product category




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*Good, better, best strategy*Flanker brands

*Mattress companies*Anheuser Busch*Respond to competition

*Fighting brands

*Private brands

*Issue: to whom does the customer have allegiance

*National brand MFR*Store brand retailer

*Store brands work best when the retailer is large and has abrand identity of its own

*J.C. Penney, Trader Joes

Brand Equity

*What is brand equity

*The value a brand adds to the product*Advantages

*Customer loyalty*Premium pricing

*Developed by*Advertising*Product experiences

Worlds most valuable brands

Coke, Microsoft, IBM

*Creating brand equity

*Components (Aaker)*Brand awareness

*Brand associations*Perceived quality*Brand loyalty*Other proprietary brand assets

*A brand is an attitude

*Behavioral learning


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*Experience

*Cognitive learning*Advertising*Word of mouth

*Four stages

*Create brand awareness*Advertising

*Create positive brand associations*Experience and advertising*Did you keep your promise?

*Create an emotional connection

*Cognitive and affective component of attitude*Positioning

*Create brand loyalty*Relationship marketing

*Leveraging brand equity

*Other sources of brand-related revenue

*Licensing

*Selling the right to use yourbrand name

*Co-branding*Joint venture*Ingredient branding

Warranties

*Warranty

*A statement indicating the liability of the manufacturer for productdeficiencies

*Express warranties*A written promise

*Full warranty*We cover everything




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*Limited warranties -- Automobile*What is and isnt covered*Aka the fine print

*Implied warranties*You are responsible whether or not you want to be.*Implied warranty of merchantability

*A clock should tell the time*Strict liability

*Liability without fault

To Be Continued.

Packaging

*Package*The covering or container for a product that provides productprotection, facilitates product use and storage, and suppliesimportant marketing communication

*Purpose of packaging

*Functional benefits*Protect the product*Meet intermediary needs

*Perceptual benefits*Image presentation/ perception*Heuristic*Post-purchase utility altoids, tin box can be reused even

after were finished with it...

*Communication tool*Labeling*Silent salesperson product itself, when youre in the store

and youre not sure what to get, your decision is based on

what they put on the side of the box. Esp for convenienceproducts

*Labeling*Three types of labels

*Brand label*Descriptive label*Grade label


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*Statutory labeling requirements warning labels*Inform customers*Avoid product liability

Packaging Strategies

*Product line packaging*Family packaging E.g. Campbell soup, any one of the soup is a

Campbell soup they all look the same but different flavor.

*Multiple packaging 3 pack, the bigger the package, the morestuff in it, no need to go to the store so often.*Increase sales*Convenience

*Changing the package

*Increase utility*Attract attention*new and improved

Packaging issues

*Packaging issues

*Depleting natural resources*Health hazards in packaging*Disposal of used packaging

*Deceptive packaging*Size*me too products products that look identical to the

products that youre used to buying.*Expense Cereal packaging are expensive.

Study Guide forLecture 12 Service Marketing

Why do a separate lecture

*We talked about the product/service bundle*All products have a service component

*Standard marketing principles apply*4 ps




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*However, when the product is primarily intangible, there are someunique issues

*These issues give us an opportunity to develop more focusedmarketing programs

Marketing IntangiblesWhat are intangibles? Things you cannot touch

*People*Places*Ideas*Services

Marketing People

*Issue people can be packaged

*Create a brand personality around the person*Can separate the humanity from the product

*Image is everything E.g. Jamie Lee

We dont like that people are complex; to market a person, you haveto be unidimensional, this is especially so for celebrities.

*Strategies for packaging people

*Pure selling*Package the person and find a market (E.g. Tiger Woods as agolfer)

*Product improvement*Repackage the person to (E.g. Pat Boone reposition himself

from Mr. Nice guy to heavy metal)

*Market fulfillment*Find a niche and create a personality to fill it (E.g. Taylor

Hicks from American Idol)

Marketing Places

*Strategy: Create brand personality for the place (E.g. Jamaica)

Marketing Ideas

*Two Strategies


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*Awareness Issue that ppl are not aware of

*Persuasion trying to get ppl to accept one side or another ofan issue. Example: Abortion

Trying to target ppl that are young or undecided

What is a Service

*Service: Intangible activities or benefits that an organizationprovides to consumers in exchange for money or something elseof value

You cant market effectively to ppl outside org unless ppl inside org is on board.

*Internal marketing: A service organization must have employees onboard before successful programs can be directed at customers

*Goods/services continuum

*No such thing as a pure good or a pure service

*Good dominated offering*BMW service plan*Toll free number on a can of peas

*Service dominated offering*Dental checkup

*Balanced offering*Tanning booth, Ferris wheel ride

*Classifying services

*People vs. equipment based

*People based*Unskilled*Skilled*Professional

*Equipment based*Automated




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*Unskilled operators*Skilled operators

Characteristics of services

Intangibility, Variability, Inconsistency

How do you sell a product that you cant touch, feel or smell?

*The goal is to make the product real

*Visualization (E.g. Jamaica Ad)*Create a picture in the customers mind

*Association (Beyonce and Pepsi)

*Pair the service with a tangible object, or known celebrity

*Physical representation*Productization Education (College Students)

*Documentation*Past Performance McDonalds*Capability good car repair

Variability

*Issue services are performed by people and people are notmachines

*Training

*Franchising packaging and selling the system; buying theMcDonald way of doing business.*A promise of Consistency

*Uniforms America, wearing uniform to a job. The uniform de-humanizes the employees and makes it easier for thecustomers.*Appearance of consistency Keeping consistencies in thejob, like getting the right answers from Home Depot.

Inseparability


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*The issue logistics

*Producer and consumer work together to create service*The Dolly Parton solution (her very large wig hair)

*Maximize efficiency of producer*Dentist office*Drive up window

*Disintermediation*Eliminate people from routine transactions (Routine bank

transactions from home)

*Price rationing

*Lawyers*Paralegal*Associate*Partner

Perishability

*The issue: Unused capacity for providing services is gone forever (e.g. Empty seats on airplane; once it takes off, the emptyseats gone to worst)

*Capacity management*Price rationing*Scheduling

*Reservations

*Critical for industries with high fixed costs

InseparabilityNo notes for this

Managing Services

Service Encounter

*Point of contact between the provider and the customer

*Role of provider*Initial contact

*Social dimension this is a people business




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*Environment/impression management*Direct customer through service

*Service as theater analogy service is the stage andyou need to direct the customers through.

*Make sure the customer understands her role

*Role of customer*Customer participates in service creation

*Communicate expectations*Share information

Service Quality

*What is service quality

*Service quality is exceeding expectations*delight the customer

*Three dimensions to service quality

*Search qualities

*Product characteristics the customer can examine priorto purchase

*These are attributes a customer can compare before

purchasing the service*Price*Advertising

*Can be used to encourage a customer to buy

*Experience qualities

*Product characteristics that customers can determineduring or after consumption

*Can only be assessed after the purchase*Fun*Convenient

*Play a role in loyalty and satisfaction

*Credence qualities E.g. whether the doctor interpret thex-ray correctly


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*Product characteristics that are difficult to evaluateeven after the service has been performed

*Professional services

*Certification*Franchise/brand promise

To Be Continued

*Measuring service quality

*Service quality is exceeding expectations*delight the customer

*In order to exceed customer expectations, you have to know

what they are

*Gap analysis*Research that measures the difference between a

customers expectation of a service and what reallyhappened

*Aka reality check

*Typical gaps gap analysis*Customer expectation/management perception*Management perception/written standards

*Quality standards/service delivery*Service quality standards/customer expecations*Expected service/perceived service

*Techniques*Secret shopper

*Critical incident technique*Use complaints to identify specific situations where

service can be improved*Sometimes a problem cant be solved

*The way it is handled makes a huge difference*How to say no nicely

*Wrong way your call is important to uspleasecontinue holding

*Service Failure




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*Identify service failures*1out of 10 will complain

*Resolve customer problem*Next section

*Communicate and classify*Learn from your es

*Implement changes*Build learning into service delivery

*What to do when you screw up

*Anticipate problems*What could go wrong*What will we do

*Deal with the problem promptly

*Admit the mistake

*Work with the customer to resolve the problem*The customer is not always right

*The customer is always the customer

Not-for-profit marketing

*An organization whose business purpose has been designated as inthe interest of the public good

*Preferential tax status

*The big issue in not-for-profit marketing is there are multiple

customers

*AKA Constituencies*Donors*Recipients*Each has very different needs met by the organization

*There are opportunities to gain managerial experience in Marketing


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by working in the not-for-profit sector

*Volunteering*Network*Experience

*Not for profits more likely to hire right our of college*Responsibilities increase rapidly

Study Guide forLecture 13 Price Theory

What is Price

*The element of the marketing mix that determines how muchmoney you make*Too low give money away*Too high drive customers away

Price has to be just right

*Textbook: The money or other considerations (including othergoods or services) exchanged for the ownership or use of a goodor service.*Barter: Exchanging goods and services for other goods and

services rather than for money.

*A major factor in determining value

*Value= Perceived benefitsPerceived cost (price)

*Increase value by increasing benefits or decreasing cost*Value pricing




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*Most consumers do not fully consider the non-financial costs*Transaction costs*Opportunity costs

*Price/value heuristic

*As a rule of thumb, we expect the more expensive item to bebetterE.g. BEVMO

*Positioning (e.g. Rolex watch)*Relative pricing is a signal to the market place*Inverse demand curve for luxury products

*So what should the price be?

*Its not that simple

*Depends on

*Organizational objectives*Demand*Costs*A lot of other stuff (next time)

Objectives and constrai

Documents

EXAM4 Study Guide