Exams Flashcards
Benefits and disadvantages of standardising marketing strategy
- Synergies
- anticipation of customer needs
- limited flexibility
Benefits and cons of differentiating marketing strategy
benefit: Meeting specific local market needs
con: high marketing costs
Hofstede’s cultural dimensions
- Power distance
- Uncertainty avoidance
- Individualism
- Masculinity
- Long-termism
Reasons products fail
- Market/marketing failure
Small market, no clear product definition, poor positioning (not sufficiently differentiated),
misunderstanding of customer needs, “product does not meet needs” - Financial failure
Too highly priced,low return on investment - Timing failure
Too early, too late in the market - Technical failure
Product did not work - Organisational failure
Poor fit with organization’s culture, organizational change needed - Environmental failure Governmentregulations,macroeconomicfactors
Which timing strategies for international market entry do you know?
- Waterfall (one market after the other)
2. Sprinkler (all markets at the same time)
What are the advantages of waterfall strategy for market entry?
- Requires lower investments than sprinkler (launch in all countries at same time requires high investments in manufacturing, inventory etc.)
- Revenues from an early market can be used for investment in a subsequent market
What are the advantages of Sprinkler strategy?
- Maximizing revenues by fully exploiting economies of scale and experience in R&D
- If competition is a threat, sprinkler strategy may pre- empt competitive moves (maximising market share)
Definition of brand
A brand is a “name, term, design, symbol, or any other feature that identifies one seller’s good or service as
distinct from those of other sellers.”
Benefits of brands to customers
- Point of reference – comfort, familiarity, confidence in decision
- Simplifying gathering of information and information processing (low-effort decision rule)
- Quality signal and reduction of risk
- Establishment of self-portrayal (expression of taste, group affiliation or social status)
- Intangible, added value to a product
Benefits of brands to intermediaries
- Reduction of own sales risks
- Image transfer (from brand
leader to intermediary) - Reduction of service activities
such as guidance for customers
Benefits of brands to company
- Differentiation from competition and signal of quality (i.e. reducing customer uncertainty)
- Formation of customer preferences and development of customer loyalty (e.g. predictable demand, brands are hard to copy)
- Creation of market entry barriers for competitors
- Establishment of price premium
- Development of a platform for launch of new products (using
established brand name) - Stronger support from supply chain
partners - Reduces costs/risks of marketing
programmes
Umbrella branding strategy advantages and disadvantages
1. Opportunity of specific positioning for product lines 2. More than one product carries marketing budget 3. New launched products benefit from good will transfer from other products 4. “Brand family” allows to build complete strategic business area
Disadvantages of umbrella branding strategy
Disadvantages:
- Core of original brand limits launching of sub- or endorsed brands
- Risk of stretching brand too much by launching products which are not within the philosophy of the original brand
- Existing brand positioning have to be considered when new product introduced
SINGLE UMBRELLA BRANDING STRATEGY benefits
- Joint investments for products
- Aiding introduction of new
products - New products benefit from the
good will transfer from the other
products - Synergies
SINGLE UMBRELLA BRANDING STRATEGY cons
- Dilution of brand positioning (e.g. clear positioning not easy, concentration of specific target groups is quite difficult)
- Risk of negative halo effects (e.g. failure with one product harms umbrella brand)
Cons of single branding
- Costs (marketing budget goes into just one product)
- Slow development of brand image
- Problem of finding new brand names
Advantages of single branding
- Targeting specific customer segments (e.g. clear positioning of one product/brand, clearly defined target group)
- Reduced cannibalization effects
Which methods exist to set communication budget?
- Heuristic
2. Analytical
Discuss five heuristic budgeting methods
- budgeting based on the previous period’s budget
- based on sales/profit
- based on available monetary funds
- based on competitive activities
- based on communication objectives.
Discuss five analytical budgeting methods
I. Advertising-Response-Function (advertising elasticity of demand)
II. CPM (costs per thousand)
What is CPM?
CPM refers to the cost or expense incurred for every thousand potential customers who view the advertisement
(Cost of using medium)/(number of people reached) * 1000
Pricing strategies
- Skimming strategy
2. Penetration strategy
What is skimming strategy
Products are sold at comparably high price during the market entry phase. The aim of the strategy is to take advantage of buyer’s willingness to pay and establish a positive quality image as a result of the high price positioning. Over the course of the life cycle of the product, prices are reduced. Helps recoup investments (e.g. R&D). Use if the product has unique features (inelastic demand).
What is penetration strategy
Use low prices to achieve a rapid diffusion and gain market share. Use if consumers are price sensitive
How to avoid price war
- Signaling and communication
- Communication of a potential competitive advantage (e.g. smaller costs)
- Communicating the risks of a price war to competitor, customers, stakeholders
- Non-price instruments
- Seeking market niches
- Price camouflage
- Keeping visible prices stable and changing non-visible elements
- Establishing a complex price structures (e.g., bundling)
Describe the three steps of a typical market segmentation process
1. Segmentation • Determination of segmentation criteria • Compile segment profiles and characteristics • Validate segments 2. Targeting • Determination of evaluation criteria • Evaluate the segments • Decide which and how many segments should be targeted 3. Positioning • Develop a deep understanding of the segments • Derive target-positioning for each segment • Develop marketing actions and instruments per segment (e.g., marketing mix)
Market attractiveness criteria
- institutional
- demand-based criteria
- competition-based criteria
- entry barrier criteria
What are competitive strategies
- Cost leadership
- Differentiation
a) superior products
b) better customer relationships
What are competitive strategies
- Cost leadership
- Differentiation
a) superior products
b) better customer relationships
Reasons for loyalty
- Psychological
- Economic
- Technical
- Contractual
How to analyse macro environment
PESTLE
Segmentation approaches
- Demographic Variables – gender, age etc.
- Behavioral Variables – consumption patterns (e.g. different types of airline traveler)
- Benefit Variables – how people assess the different benefits of a product or service
- Socioeconomic Variables – income, education etc.
- Psychographic variables – life-style, attitudes etc.
What is brand personality?
“What are my personal traits?”
How to make a brand personality
- Celebrity endorsements
- User Imagery (users doing things while using product)
- Executional Factors (how message gets across)
Product Lifecycle Model
Draw it
The life cycle model is based on the idea that products go through several cycle phases and have a
limited lifetime, each characterized by different sales and profit potentials.
Phases
- Introduction – When the product is introduced it has a lot of costs, the acceptance is not very high and people still do not know it.
- Growth – Very strong increase in sales.
- Maturity – sales go down again.
- Saturation – “the product dies out”.
- The takeoff point when the product is introduced
- The slowdown point when product reached the top
Explain product variation
Product variation refers to modification of the characteristics and features of an already existing product without changing the core function of the product.
Variations are made to a product’s:
- Aesthetic properties (colour, form)
- Physical-functional properties (material,quality)
- Symbolic properties (brand image)
Explain product differentiation and its types
Product differentiation
1. Product differentiation refers to the addition of new product variants to an already established product
2/ With product variation, the original product is modified and thus no longer present in the market
- Vertical product differentiation exists if products variants of different quality are offered at different
prices - Horizontal product differentiation exists if products variants with different functions but comparable quality and price levels are offered
Brand extension benefits
- Image familiarity between core brand and new brand (credibility)
- Brand is perceived as high quality brand
- Core brand is not a prototype of a product category
Disadvantes of brand extension
- Reduce strength of category-brand association
- Diffuse and dilute parent brand’s positioning and meaning
- Retailer resistance
- Cannibalize parent brand sales
- Extension failure can hurt parent brand image
Experience curve model
The basic idea behind this model is that the more often a task is performed, the lower the costs of performing this task become.
A primary reason for the potential cost reduction implied by this models is learning effects: the principle of the learning curve is based on the idea that companies can successively gather experience (measured by the accumulated volume) when producing and marketing a product. This then leads to a reduction of costs and/or increases in productivity.
BCG found that with each doubling of the accumulated volume of a product over time, a reduction of value- added costs of 20 to 30 per cent could be realized. (Ford Model T is a good example of it)
Limitations of experience model
- Focuses only on one variable: costs
2. Require of a consistent product identity over time.
Conjoint analysis
Basic idea
1. Breaking down the overall product into separate parts/attributes
2. Each attribute can be broken down into several levels
3. Higher utility: Stronger the consumer’s preference for the level of the attribute.
4. Relative importance of each attribute: the difference between the highest and lowest utility level for
that attribute. Greater the difference, the more important the attribute
Most customer-appealing product is not always the most profitable one to bring to market.
Lead user analysis
- Lead users face needs that will be general in a marketplace – but face them months or years before the bulk of that marketplace encounters them. (e.g. Google glass, experimental users)
- Lead users expect to benefit significantly by obtaining a solution to those needs.
- Lead users often innovate to solve own needs at private expenses.
