Exam 2 Flashcards
Sections 3 & 4
What is a product?
A product is a bundle of benefits
What are the product levels?
Core products, actual products, and augmented products
Core products
primary product or service that a company offers to customers
Actual products
the physical, tangible product that a customer receives,
Augmented products
a product that has been enhanced with additional features, services, or benefits beyond its basic functionality
What are the four categories of benefits?
(from top to bottom) social impact, life changing, emotional, and functional
How does the pyramid of benefits relate to Maslow’s hierarchy
Mundane benefits are located at the top and the bottom benefits are the easiest to fill. The top then becomes superior to the bottom.
What category of the pyramids must be filled first.
Functional benefits, as both start at the bottom and work upward
Ideal range of provided benefits
4-11… any more could overwhelm the consumer and cause dissatisfaction
What does bad customer service (over phones) do to the benefits?
Minimizes the benefits… outsourcing customer service could cause a decrease in quality
What is feature fatigue?
Too many features can set consumers up for dissatisfaction because they a) don’t know how to use them or b) feel bad for not being able to use all of them
What are services
intangible products that are offered to help satisfy needs or wants
Why can we think of products and services as continuum?
Continuum because most products on the market fall somewhere between a good and a service
Why is the US a service based economy?
Products can be made into services, and products that did not exist can be turned into services. Service also creates jobs, and new products are more likely to be a service than a good.
How are services different from goods?
Services are not tangible goods, but they can still provide perceived benefits. Goods have higher quality and satisfaction on average than services. Its hard to create a service that continuously operates at the same level.
How do the service characteristics affect marketing?
Intangibility: services cannot be touched, so it relies on brand image and conveying good messages about the product
Variability: Due to the human element, quality is not perfectly consistent
Inseparability: As services are often produced and consumed simultaneously, the customer interaction with the service provider is crucial
Perishability: Services cannot be stored and must be consumed as they are produced
Does employee satisfaction relate to customer satisfaction for all products? Why or why not?
In terms of companies with no contact with customers, it doesn’t matter what the employee thinks. But when companies have even minimal contact with customers, it does affect the customer experience.
5 stages of product lifecycle
In order: development, introduction, growth, maturity, decline
What are the characteristics of each stage in terms of sales, profits, competitors, and marketing?
development sinks money into the product as the company attempts to bring it to market, introduction is when the product makes it to market and continues to sink funds into it, growth shows a tremendous increase in sales and profitability begins to level off, maturity shows the plateau of popularity and perhaps a decrease in sales, decline is when the product begins to fall off and sales decline
What are the typical PLCs for styles, fashions, and fads
Styles tend to have long and stable PLCs with gradual changes. Fashions have steeper rises and falls with distinct peaks. Fads experience a very rapid rise and fall, making them the shortest PLC of the 3.
what is the diffusion of innovation
How new ideas, behaviors and products spread throughout a population
What are the adopter categories?
In order from left to right: innovators (2-3%), early adopters (15%), early majority (35%), late majority(35%), and laggards(12%)
How can we characterize the adopters by category?
Innovators
early adopters
early majority
late majority
laggards
Why do early adopters and innovators adopt early?
Bc they are young with more money and wish to have the social standing
What happens if EA&I cannot adopt early?
They take their money somewhere else
What are the roles of experts and consumers over the NPD process?
experts primarily contribute their technical knowledge to design and refine product concepts, while consumers provide crucial feedback on needs, wants, and potential market acceptance
What kind of innovation is a consumer likely to come up with?
A consumer is most likely to come up with an incremental innovation, which is a small improvement or adaptation to an existing product or service
What are consumers better at than experts?
identifying and articulating their specific needs, preferences, and pain points related to a product or service
Who makes the innovations that lead to discontinuous new products?
startups, entrepreneurs, or smaller companies outside of the established market leaders who are more willing to take risks and explore new ideas
What are the 3 reasons that people can create discontinuous products.
Address an entirely new market need or pain point that existing products don’t solve, 2. Leverage a breakthrough technology that fundamentally changes how a problem is tackled, and 3. Create a significantly different user experience by introducing a radically new concept
Given the above and in consideration of 5-hour energy, why is someone who developed a discontinuous innovation unlikely to do it again?
such innovations carry a high level of risk and uncertainty, often requiring substantial investments and significant market disruption
Why is pricing so important?
Price has the greatest potential to impact profitability
What are the influences on pricing?
Customer perception, internal costs, market characteristics (price sensitivity), and competition.
fixed costs
expenses that remain constant no matter production amount
variable costs
expenses that fluctuate based on production level
total revenue
selling price x # of units
profit
total sales less total costs
markup
it represents the amount added to cover operational expenses and generate profit
skimming
high initial price that gets gradually lowered
penetration pricing
low initial price to gain market share
EDLP
A company consistently charges low prices for products over a long period of time
high-low pricing
running frequent promotions off of a high price
loss-leader pricing
sells below market to stimulate profitable sales
What is a demand curve
Demand curves show how much of a product is demanded at different price points. Typically an inverse relationship
Elasticity
The responsiveness of demand as it relates to changes in price
Elasticity formula
% change in quantity demanded / % change in price
What does marketing do to a product’s price elasticity?
Good marketing should make prices less elastic, as they strive to create a stronger sense of value within the product, stronger differentiation and stronger brand loyalty.
What are the factors that affect price elasticity?
if there are lots of substitutes, then it becomes more elastic (you have options) if your product is a necessity, people will pay no matter what (less elastic)
What is price discrimination?
Charging different customers different prices at the same time
What is the purpose of price discrimination?
Selling to different customers at different price points based on the maximum they are willing to pay at the moment and in their position in the market
is price discrimination legal
It is generally lawful as long as the purpose is to cater to different buyers, or respond to competitor behavior
What are price fixing and bait and switch?
Fraudulent procedure where prices are advertised as super low but the seller has no intent of actually selling at that price
Who are superconsumers? Are they price sensitive or insensitive?
Subset of heavy users that are highly involved with a category or brand, and they are not price sensitive. (inelastic)
Are there super consumers for any product
yes they do exist and they’re price insensitive
What is value-based and cost-based pricing?
Setting the price based on what customers are willing to pay, often offering multiple versions of a similar product. (Spotify subscription) Cost based on the other hand is setting prices strictly based on margins and costs, (hospitals)
How does value-based pricing help with price discrimination?
Value based pricing allows businesses to cater to different customers with different market positions based on their perceived value
What is dynamic pricing?
Change prices to charge customers exactly what they want to pay at the moment (airline tickets)
Why must firms be careful dynamic pricing?
Could have unfair perception on the customers end
What are the four determinants of unfairness perceptions
excessive profit perception, immorality, inability to understand company motive, reputation
What is pay what you want pricing?
Letting customers pay exactly what they want to pay based on what they feel the product is worth
What industries does pay what you want work in?
movies and coffee
How does a reference price affect PWYW
We have a price that we think is fair, and we go off that
What happens when you pair CSR with PWYW?
In the case of the amusement park, when the PWYW was paired with a charitable donation, they saw a massive increase in revenue. PWYW seems dangerous because people enjoy paying less, but knowledge of a reference price can greatly influence how much people are willing to pay.
Advertising
Sales promotion
Public relations
direct marketing
personal selling
IMC
Integrated Marketing Communication: ways to combine types of marketing to work better together
Hierarchy of effects model
Awareness
knowledge
liking
preferences
promotion must combine them to get a response from the customer
What are the methods of promotion budgeting?
Instinct, percent of sales, competitive response, objective & task
Types of sales promotions
Coupons, premiums, bonus packs, sampling, sweepstakes, price-off deals, sponsorships
2 goals of sales promotions
Short term: behavior response
Long term: brand loyalty
How to the goals of sales promotions conflict with each other?
Crazy good deals can potentially undermine brand loyalty. The deals were so outrageous that people only think the brand is valuable during the sales promotion.
Can the goals of sales promotions work well together?
If implemented together and done well, they have potential to induce excitement in the moment and long-term brand loyalty
What are 2 things that advertising does?
Builds brand awareness and helps to drive the purchase decision process
How does Sergio Zyman contrast with the book?
Types of advertising execution styles
make on cheat sheet
Reach VS Frequency
Reach: the % of the target audience that gets exposed to an ad
Frequency: The # of times a target audience is exposed to an ad
Relationship between reach and frequency
Typically inversely related, because large amounts of reach can often result in low frequency, or underexposure
gross impression calculation
cheat sheet
average frequency calculation
cheat sheet
GRP calculation
CPM
Cost per thousand
(cost of ad / audience size) x 1000
Is Superbowl advertising worth it?
Yes, despite high upfront cost, lots of people see the ad which lowers the CPM
What is advertising waste coverage?
People who are not in your market are seeing your ad. Or people in the target audience are over/underexposed to the ad
Do the majority of marketing communication attempts fail or not?
What are three simple questions for effective media selection
Stereotype vs reality of selling
Stereotype is that salespeople are slimy, they constantly push things on you and might try and sell you something you don’t need. Sales positions have boundaries, they vary highly from day to day and can be quantified in terms of performance.
Intuitive VS Deliberate judgements
Intuitive are quick snap judgements while deliberate take more time to listen and understand. As the salesperson, understanding the customer is crucial so you can best suit them. Hopefully, the salesman can do both types of thinking, as they can work together very well
What is the biggest mistake beginning salespeople do>
Failing to close the sale, for fear of burning a bridge.
Offering a direct closing statement is crucial
What is adaptive selling?
sales approach that involves customizing the sales process to the needs of each individual customer
What is the sales funnel? What does the funnel say about the ratio of prospects to sales calls a salesperson should have?
A sales funnel is a visual representation of the journey a potential customer takes from initial awareness of a product or service to making a purchase
a much higher ratio of initial prospects to qualified sales calls due to natural attrition at each stage of the funnel
Sales VS Service
Sales is focusing more on building new relationships and introducing customers to a market while service is focusing on managing existing relationships with customers.
How does salary versus commission / incentives affect employee behavior? What is the best structure?
if you can implement some form of commission style pay, it does incentivize people to work harder and perform well when money is on the line
the best has proven to be base salary with incentives on top of that
types of direct marketing
Direct mail, telemarketing, catalogs, email, phones, and coupons.
Why was direct marketing spending on the decline?
The world has been becoming more digital and relying less on physical forms of communication from companies
Why is catalog usage increasing?
People appreciate being able to directly interact with a company and it can help push them toward online selling and closer to the company… nostalgia, new ways of displaying them
What is permission marketing?
Companies asking for consent to receive personalized relevant messages that are tailored to them.
Inbound VS Outbound marketing
Inbound marketing helps to identify customer like & pain points, which can be tailored to to drag customers closer to the company, while Outbound marketing pushes messages outward in front of customers to see who bites.
Why are companies moving to digital marketing?
In general, the cost to influence people on social media is extremely cheap
Approximate CPM of social media
$8.50 CPM
Average Superbowl CPM?
$59 CPM
What is the obsession with targeting the young generation with marketing?
Both early adopters and innovators are generally in the younger demographic and are openly acceptive of new ideas and the transition to digitalization. Companies also want the younger generation before they develop brand loyalty because they are easily susceptible to change.
How is privacy related to digital marketing?
Lots of digital marketing relies on data from other websites to directly target customers based on previous interest.
customer centric
focuses on meeting the needs of each individual customer
data driven
using collected data to accurately target customers
collaboration
open communication between departments to address customer needs
agility
being able to quickly adapt tot market trends
transparency
providing clear and honest information to consumers
What are customer connections and how does connection differ in the digital realm compared to traditional media?
The accumulation of meaningful interaction between people and brands and people interact with brands. Instead of the marketer speaking to 3 people directly, the 3 people form a web with the marketer and everyone becomes connected.
How do customer connections create the opportunity for sharing?
fostering a sense of community where customers feel comfortable exchanging experiences, insights, and feedback with each other and the brand
Stepps
cheat sheet
framework for brand community development
cheat sheet
components of customer connections
cheat sheet
External vs Internal customer connections
external: seek products/services that meet or exceed expectations
internal: customers depend on the quality of products to perform tasks effectively
Why is TikTok so appealing
it has the highest rate of engagement
six principles of marketing through social media
what does good social media marketing require?
fast content and response, flattening, the organization and stripping layers of quality control
What is a brand?
the name or symbol (i.e., brand marks) that identifies a specific business’s product or service
what is branding?
the process of endowing products with the power of a brand
what is brand equity
the financial value of a brand
brand mark
the actual symbols associated with a brand
brand equity vs customer based brand equity
differential response that consumers have when considering brands… Clorox vs generic bleach
What can a powerful brand do?
it can alter peoples opinions solely based on the name
how do we create a powerful brand
we establish good brand awareness and brand image, then just stay consistent
what is brand awareness and why does it matter
The extent a market knows or recognizes a brand, brand awareness itself can build brand equity
why did X downloads drop after the rebrand?
The app lost its brand awareness and image, people were searching for twitter not X, still having brand issues one year later
What is brand image
The collection of associations, thoughts, and feeling that are evoked when exposed to a brand, KEY IS CONSISTENCY
what can brand image focus on?
images that people associate with the brand?
doppelganger brand image
A doppelgänger brand image is a parody logo or narrative intended to highlight ethical issues regarding the product advertised.
What does Barnes & Noble tell us about branding?
sometimes altering the brand to give it a localized feel can be beneficial, but is often risky
Brand extension and co branding
Brand extension: placing a brand name on multiple products (Reese’s ice cream and peanut butter)
Co-brands: allow one branded product to feature another brand as a component part of ingredient (Reese’s ice cream with Breyers)
what determines if brand extensions work?
connection, strength of brand, and # of existing successful extensions
