Chapter 7 Flashcards
*A Brand
Combination of name, symbol, term or design that identifies a specific product.
- Two Parts:
1. Brand Name
2. Brand Mark
Characteristic of a Good Brand
Those that immediately come to mind when a customer has a problem to be solved or a need to be fulfilled
Steinway Piano Facts
People buy more than an instrument. They buy craftsmanship, customer service, prestige, and 160 years of history.
Firm accounts for 2% of piano sales in US and 35% of profits.
*7 Advantages to Branding
- Product Identification
- Comparison Shopping
- Shopping Efficiency
- Risk Reduction
- Product Acceptance
- Shopping Efficiency
- Enhanced Self-Image
- Enhanced Product Loyalty
- Enhanced Self-Image
5 Advantages to Selling Manufacturer Brands
- Reduced Costs
- Built-In Loyalty
- Enhanced Image
- Lower Inventory
- Less Risk
4 Advantages to Selling Private-Label Brands
- Increased Profits
- Less Competition
- Total Control
- Merchant Loyalty
Cobranding
The use of two or more brands to create distinctive products with distinctive differentiation
*Brand Licensing
*Contractual agreement between two companies where one can use the other’s brand on non-competing products in exchange for a fee.
*Brand Loyalty
*Positive attitude towards a brand that causes customers to have a preference for that brand over all competing brands
3 Degrees of Brand Loyalty
- Brand Recognition
- Brand Preference
- Brand Insistence
Brand Recognition
Customer is aware of brand and considers it as one of the evoked set
Lowest form of brand loyalty - No desire to buy exists
Brand Preference
Customer prefers one brand over a competing brand. However, in the face of lack of supply will purchase competing brand
Brand Insistence
Customer will go out of their way to find brand and will not accept a substitute.
Highest degree of brand loyalty
Why is Brand Loyalty Declining?
Increased commoditization and overuse of sales promotion
Brand Equity
The marketing and financial value associated with a brand’s position in the marketplace
*Functions of Packaging
- Protection
- Storage
- Convenience
- Labeling
Labeling Regulations
Nutritional Labeling and Education Act of 1990
- Must include nutritional information
- Set standards for “Low Fat”, “Light”, “Low Calorie”, “Reduced Cholesterol”
Food Allergy Labeling and Consumer Protection Act of 2004
1. Requires labels for peanuts, soybeans, milk, eggs, shellfish, tree nuts and wheat
Manufacturers bear full liability for content of labels
Differentiation
Creating differences between the firms products and a competitor’s. Basis in:
- Features
- Services
- Other Characteristics
*Positioning
*Creating a mental image of the product and its differentiating features in the minds of the target market
Process to Create Favorable Position
- Identify the needs, wants and preferences desired
- Evaluate the differentiation and positioning of current and potential competitors
- Compare the firm’s current position (needs, wants, preferences)
- Identify unique differentiation and positioning not currently offered by competition
- Develop a marking program
- Continually improve
Positioning Strategy Tools
Perceptual Map - customer perceptions (usually on 2-axis)
Strategy Canvas - firm’s relative position in terms of competitive factors important to target market
Illustrate voids in current mindscape
- Customers have unmet needs
- Customers have no desire for offering
Product Features
Factual descriptors of the product and its characteristics
Product Advantages
Performance characteristics that communicate how the features make the product behave,
Product Benefits
The positive outcomes or need satisfaction that is acquired from purchased products.
Keys to Positioning
Monitor
- What customers want
- The extent which customers perceive the product satisfies those wants
Signs Identifying a Need to Reposition
- Declining Sales
2. Declining Market Share
*5 Stages of Product Life Cycle
*
1. Development
2. Introduction
3. Growth
4. Maturity
5. Decline
6. Harvesting
Development Stage
- Understanding specific uses and benefits that customers seek
- Description of the product including uses and benefits
- Potential for creating a product line (synergy in sales)
- Analysis of the feasibility (anticipated sales, ROI, time to recoup investment
Percentage of New Product Failures
Over 80%
*Introduction Stage Marketing Strategy Goals
- Attracting customers
- Inducing customers to try
- Engaging in customer education
* 4. Strengthening supply chain
* 5. Building availability - Setting pricing objectives
*Failures become more expensive here due to marking and distribution costs - most of money is spent here
2 Main Priorities of Growth Stage
- Establish strong, defensible market position
2. Achieve financial objectives to repay investment and earn profit
*Growth Stage Marketing Strategy Goals
- Leverage product’s perceived differential advantages
* 2. Establish brand identity
* 3. Create unique positioning - Maintain control over product quality
- Maximize availability
- Maintain ability to deliver profits for all stakeholders
- Find balance between price/demand
- Always look out for the competition
*A shift from acquisition to retention (long-term relationships)
Growth Stage Challenges
- Maintaining key relationships
2. Pricing (entrance of competitors)
Most Expensive Stage for Marketing
Growth Stage
When does maturity stage begin?
After the shakeout occurs and the market is almost closed for all new entrants.
*General Goals of the Maturity Stage
- Generate Cash Flow
- Hold Market Share
- Steal Market Share
- Increase Share of Customer
- Generate Cash Flow
Maturity Stage Marketing Strategy Goals
- Develop new product image
- Find and attract new customers
- Discover new applications and uses of the product
- Apply new technology to the product
Firm’s Options During Decline Stage
- Attempt to postpone the decline
2. Accept the decline
Harvesting Approach
Gradual reduction in marketing expenditures to funnel increased cash flow into new product development
Product Divesting
Withdrawal of all marketing support
Sales may continue until losses are incurred
Considerations for Marketing Strategy During Decline Stage
- Market Segment Potential
- Market Position of the Product
- Firm’s Price and Cost Structure
- Rate of Market Deterioration
Individual Branding
Each product offering has a different brand name
Family Branding
The same name or part of brand name is used for every product
*Overall Marketing Goals During Product Life Cycle
*Introduction
stimulate product awareness and trial
*Growth
increase market share through new customers; discover new needs and market segments
*Maturity
maximize profit by defending market share or stealing from competitors
*Decline
reduce expenses and marketing efforts to maximize the last opportunity for profit
