Exam #2 Flashcards
5 C’s of Marketing
Company
Context
Customers
Collaborators
Competitors
SWOT Analysis
An acronym describing an organization’s appraisal of its internal Strengths and Weaknesses and its external Opportunities and Threats.
Primary Research
Your own research
Secondary Research
3rd Party research, already done
Examples of Primary Research
Surveys, focus groups
Examples of Secondary Research
News articles, the internet, scientific journals
Insight
A deep truth, relevant to your brand and audience, that if solved has the power to move the customer to a desired future state
Segmentation
Grouping customers based on similar needs
Profile each segment
Targeting
Assess attractiveness of each segment
Select segments to target
Positioning
The act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market.
Stage 2 of Strategic Marketing Process
Segmentation, Targeting, Positioning
Types of Segmentation
Which is most important?
Geographic, Demographic, Psychographic, Behavioral
Psychographic is most important
Keys to a good segmentation:
ISASDA
Identifiable
Substantial
Accessible
Stable
Differentiable
Actionable
How to select your target segment:
Market Size
Expected Growth
Competitive Position
Cost of Reaching
Company Compatibility
(Size of prize, and right to win)
Position vs. Positioning
A position is how you are perceived in the minds of your prospects.
Positioning is how you wish to be percieved
Positioning Statement
A strategic document that communicates the unique value the brand offers to a particular target segment
Four components of a Positioning Statement:
- For who, for when, for where?
- Relative to whom?
- What benefit?
- Why and how? (Reasons to believe)
RTB’s vs. Benefit
Benefit is the outcome the consumer will experience, RTB’s are the services that deliver the benefit.
What tools can aid in creating a differentiated positioning?
Perceptual Maps that visualize how consumers perceive brands across key attributes
80/20 Rule
A concept that suggests 80 percent of a firm’s sales are obtained from 20 percent of its customers.
Customer Lifetime Value
Represents the financial worth of a customer to a company over the course of their relationship.
Personas
Character descriptions of a typical customer in the form of fictional character narratives, complete with images that capture the personalities, values, attitudes, beliefs, demographics, and expected interactions with a brand.
“Job To Be Done”
A fundamental problem that your target customer needs to resolve
Types of New Products and Services:
New To The World Products
New Category Products
Product Line Extensions
Product Improvements
Product Repositioning
Cost Reduction
How to Predict Success of New Products
Relative Advantage
Compatibility
Complexity
Trialability
Observability
Steps of the Stage Gate Process
Develop & Scope
Business Case
Develop
Test and Validate
Launch
Consumer Products
Products purchased by the ultimate consumer.
Business Products
Products organizations buy that assist in providing other products for resale. Also called B2B products or industrial products.
Convenience Products
Items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort.
Shopping Products
Items for which the consumer compares several alternatives on criteria such as price, quality, or style.
Specialty Products
Items that the consumer makes a special effort to search out and buy.
Unsought Products
Items that the consumer does not know about or knows about but does not initially want.
Product Item
A specific product that has a unique brand, size, or price.
Product Line
A group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range.
Product Mix
Consists of all product lines offered by an organization.
Failing Forward
The acceptance of failure as a stepping stone to future success
Three Layers of a product
Core, Augmented, Symbolic
Core Product Layer Definition and Examples
The physical anatomy of the solution that solves the basic benefit or problem that the customer is looking for. First thing that attracts a customer.
(Jeans, Apple Watch)
Augmented Product Layer Definition and Examples
Additional value that is added to the product. Creates loyalty
(Customer service, packaging, design, promotion)
Symbolic Product Layer Definition and Examples
Captures the psychological and emotional meaning of a product. Creates a relationship with the customer
(Exhilaration, pride, empowerment, safety, nostalgia)
Stages of the Product Life Cycle:
Introduction, Growth, Maturity, Decline
Options in the decline stage:
Harvesting, Deletion
Brand Management
A function of marketing that focuses on driving perceived brand value.
Brand Manager
Someone who oversees and is accountable for every aspect of the brand with a focus on driving incremental sales via brand building activities. THEY DRIVE BRAND EQUITY
Brand Equity
Customers’ subjective and intangible assessment of the brand, above and beyond its objectively perceived value
AKA How people feel about the brand
Product Class
Refers to the entire product category or industry.
Product Form
Pertains to variations of a product within the product class.
Private Branding
A branding strategy used when a company manufactures products but sells them under the brand name of a wholesaler or retailer. Also called private labeling or reseller branding.
Types of Brand Architecture:
Masterbrand, Endorsed, Individual
Masterbrand Architecture (Description, Pros, Cons)
Everything is uniform and starts with the company name
Ex. Google Maps/Drive/Photos
Incredibly Efficient
Endorsed Architecture (Description, Pros, Cons)
Slight diversity by having different titles but same main company mentioned
Ex. Different Marriott hotels
Need to add credibility, but more room to grow and can be evolutionary.
Individual Architecture (Description, Pros, Cons)
Completely different stand alone brands.
Ex. Crest, old spice, tide
Very inefficient, need a lot of money
However, lots of room to grow.
Brand Management vs. Brand Manager
Brand management is a function of marketing that focuses on driving perceived brand value
Brand manager is a mini general manager with accountability for the entire business, not just brand management.
Role of Services in the economy
Services are the largest part of the U.S. Economy
Services make up more than 45% of U.S. GDP
Products vs. Services on difficulty to evaluate
Products are easier to evaluate than services
Easy to evaluate: Clothing, Jewlery, Furniture, Houses
Difficult to evaluate: Medical diagnosis, auto repair, root canal, legal services
4 I’s of Services
Intangible
Inconsistent
Inseparable
Inventory
7 Ps of Services Marketing
Price
Product
Place
Promotion
People
Physical Environment
Process
Product vs. Service comparison in
Product
Price
Promotion
Place
Higher product control for products
More stable prices for products
More difficult to promote services
Less intermediaries in services
Price
The amount of money exchanged for products and services
Different names for price:
Rent, tuition, fee, premium, wage, salary, dues, interest
Difference between price and value
Price is what the consumer PAYS
Value is what the consumer RECEIVES
Equation for value
Value = Perceived Benefits / Price
Six Steps in Setting Price:
- Identify pricing Objectives and Constraints
- Estimate Demand & Revenue
- Determine Cost, Volume, and Profit
- Select an Approximate Price Level
- Set the price
- Make special adjustments
Price Elasticity of Demand
The percentage change in quantity demanded relative to a percentage change in price.
Pricing Objectives:
Profit
Sales Revenue
Market Share
Unit Volume
Survival
Social Responsibility
Unit Market Share Equation
Unit Brand Sales / Unit Category Sales
Dollar Market Share Equation
$ Brand Sales / $ Category Sales
Cost
The total expense incurred by a firm in producing and marketing a product.
Total Cost =
Fixed Cost + Variable Cost
Contribution Margin =
Unit Price - Unit Variable Cost
Break-Even Analysis
A technique that analyzes total revenue and total cost to determine profitability at various quantities
Break-Even Point
Shows the quantity sold need to cover costs
Break Even Point =
Fixed Cost / Contribution Margin
Common Approaches for Selecting an Approximate Price
Competition-oriented approaches
Cost-oriented approaches
Profit-oriented approaches
Demand-oriented approaches
Competition-oriented approaches for selecting approximate price:
Above, at, or below market
Customary
Loss Leader
Cost-oriented approaches for selecting approximate price:
Standard markup, cost-pus, Experience curve
Profit-oriented approaches for selecting approximate price:
Target profit, target return on sales, target return on investment
Three Demand-Oriented Pricing Approaches
Skimming, Penetration, Prestige
Skimming approach (and example companies)
High price to normal price
Ex. Apple, Tesla, pharmaceuticals
Penetration approach (and example companies)
Low price to increased price
Ex. Amazon, Netflix, Spectrum
Prestige approach (and example companies)
High price, stays high
Rolex, Louis Vuitton
Price Customization
A pricing strategy that improves price realization by varying price by type of customer
Main factors that affect value and price customization
Tastes
Nature of use
Intensity of use
Competition
Dynamic Pricing Definition and pros and cons
Setting different prices for products and services in real time in response to supply and demand conditions.
Can maximize profit for the company
However, can lose the trust of customers and make them feel used.
Standard Markup Pricing
Adding a fixed percentage to the cost of all items in a specific product class.
Cost-Plus Pricing
Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price.
Experience Curve Pricing
A method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10 percent to 30 percent each time a firm’s experience at producing and selling them doubles.
Target Profit Pricing
Setting an annual target of a specific dollar volume of profit.
Target return-on-sales pricing
Setting a price to achieve a profit that is a specified percentage of the sales volume.
Target return-on-investment pricing
Setting a price to achieve an annual target return on investment (ROI).
Customary Pricing
Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.
Above, at, or below market pricing
Setting a market price for a product or product class based on a subjective feel for the competitors’ price or market price as the benchmark.
Loss-leader pricing
Deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention to it in hopes that they will buy other products with large markups as well.
Who in the supply chain has the final say on price?
Retailers
Types of special adjustments to price:
Quantity Discounts
Seasonal Discounts
Cash Discounts
Promotional Allowances
Everyday low pricing
The practice of replacing promotional allowances with lower manufacturer list prices.
Perceptual map
a means of displaying in two dimensions the location of its own and competing products or brands in the minds of consumers.
Usage Rate
The quantity consumed or patronage (store visits) during a specific period
Product Differentiation
A marketing strategy that involves a firm using different marketing mix actions to help consumers perceive the product as being different and better than competing products is referred to as
Laggards
Category that is usually the last to adopt to a new product
Open Innovation
Practices and processes that encourage the use of external as well as internal ideas and internal as well as external collaboration when conceiving, producing, and marketing new products and services.
Brand Extension
Putting an established brand name on a new product in an unfamiliar market.
Standard Test Market
A company develops a product and then attempts to sell it through normal distribution channels in a number of test-market cities.
Controlled Test Market
Businesses create artificial test areas to conduct the product tests, generally in a lab environment
Trial
The initial purchase by a customer
Diffusion of Innovation
A product diffuses, or spreads, through the population.
Shrinkflation
Reducing the package content without changing package size and maintaining or increasing the package price.
Trading Down
Reducing a product’s number of features, quality, or price.
Trading Up
Adding value to the product (or line) through additional features or higher-quality materials.
Bundle Pricing
Marketing two or more products in a single package price.
