Marketing Management exam

Question 1

Marketing Framework (explain every step)

Answer 1

Marketing Management framework consists of 3 main points. These are Marketing Analysis or called also the 3 Cs, Marketing strategy or STP, and Marketing Tactics/mix or 4Ps. Market Analysis consists of Customer, Competition, and Company Analysis. This part of the framework explains what customers want, and how the company can develop their marketing knowing their competition better and understanding their own core competencies. Then there is Marketing Strategy or STP, which is Segmentation, Targeting and positioning. This part explains what kind of customers the company wants to attract and which customers not, what are the current beliefs of the customers and how to change that. Then there is Marketing tactics or marketing mix with 4Ps, that includes Product and how company chose value, Place with the information on how companies deliver the value, Promotion with the information on how company communicate the value of the good or service, and Price with the information on how the company captures the value.

Question 2

Explain the consumer decision-making process

Answer 2

Consumer’s decision-making process consists of 4 steps, these are:
1. Need recognition
Can be triggered by 4 processes:
1) Deprivation
2) Context
3) Product
4) Direct highlighting

2. Information search

2.1) Consideration based perception
Memory based / Stimulus-based
2.2) Perception:
- Selective retention (individuals retain points in order to support attitudes)
- Selective distortion (individuals interpret things in order to support their beliefs)
- Selective attention (consumers filter out most of the information they are given)
- Basic perception (our brains compress sensory information, so that it won’t get too much information at the same time.)

3. Evaluation and choice/purchase
   - Traditional multi-attribute model (consumers evaluate products by weighting beliefs about products’ attributes according to importance)

/ The Gold standard model (giving scores to each option)

• The non-compensatory model
  (used in the initial stages, under time pressure, in the process of emotional/taboo trade-offs)
  /Context effect (by elimination)
  /The compromise effect (shows that the value of a product/service is greater when it is the middle option in a choice set)

4. Post-choice evaluation
   /How well the product satisfies the initial need?
   /Did the product also satisfy other benefits/needs/goals that came up during the decision process?
   /How did the expectation influence the post-choice evaluation?

Question 3

3. Core Competencies
   
   1. What is it
   2. Criteria for CC
   3. SBU dangers

Answer 3

1) Core competency is something that the company is very good at, that benefit customers in a huge way, and that is not easily replicated
2) - access for range of products,
- CC should be distributed, they must be unable to touch
-difficult for competitors to touch
-should make an important contribution to imitate pr replicate and reside downstream in the marketplace
3) Underinvestment in the CC; Resources can be imprisoned; Bounded innovation

Question 4

4. Reasons for failing to identify and respond to competitors

Answer 4

 Misunderstanding the challenger’s strategy;
 Unable to separate the competitor’s strategy and tactics;
 Under-react, and don’t take the threat that the competition poses seriously
 Rationalize the situation, saying it just happens to them.

Question 5

5. Analytic methods for identifying competitors

Answer 5

 Customer judgment, (companies can get this information by asking customers or observing their customers)
o Similarity and benefit rating, which can be determined through focus groups and surveys
o Consideration sets, which can be determined by asking customers whether they prefer the company’s brand or their competitors.
o Substitution by use
 Purchasing records, (in the form of analytics and data in order to identify):
o Why customers are switching from products
o The cross-elasticity of demand

Question 6

6. Types of segmentation strategies

Answer 6

1. Mass marketing strategy (efficient, not effective; no segment)
2. customized strategy (very effective, not always efficient bc it is too complex)
3. Segmentation balance (effective and efficient; allows companies to exist in the same market, by competing in different segments)

Question 7

7. Why is segmentation useful for companies?

Answer 7

 Segmentation allows for competition
 Segmentation caters different needs
 There is also an aggregation bias, it results in misleading information
 Companies only have limited resources

Example for the third: big/small trees

Question 8

8. Explain horizontal and vertical segmentation

Answer 8

Vertical: based on quality
For instance, iPhone X and iPhone SE; card subscriptions

Horizontal: based on preferences or tastes
For instance, iMac and MacBook pro; airpods pro and airpods max; sports brand offering tops and shorts for women.

Question 9

9. Explain what a long tail market is

Answer 9

It is horizontal way of segmenting and it occurs when many different products are sold in low volumes because they are needed in only situational basis.

For example: research books – book about dolphins and book about turtles; 30 different green-colour markers for artists.

Question 10

Imagine you are CMO of a large auto manufacturer. You are planning to bring a new family car to market. Describe your segmentation strategy. Make sure to include the segmentation variable(s) and clearly describe the segments that result.

Answer 10

Using the segmentation balance strategy.
Segmenting based on psychographic characteristics and demographic: Social class and family-size. Dividing family size – 2 or less; 3 and more. And dividing social class by earnings – 72 thousand $ and less; 72 thousand $ & more.

Question 11

11. Explain the segmentation trade-off

Answer 11

Demographic characteristics can be more easily observed but behavioural are the most difficult to observe and psychographic are between them both. Whilst demographic characteristics are the easiest to observe, they are not so useful as psychographic or behavioural characteristics.

The characteristics that are the most observable are the least useful. Preference, attitudes are hard to determine, but they are the most useful for positioning.

Question 12

12. Name three factors that can make a segment unattractive.

Answer 12

1) The segment already contain several strong or aggressive competitors
2) Entry barriers are low, and exit barriers are high.
3) There are many substitutes for the product.
4) Buyers possess strong/growing bargaining power, which may hinder the firm’s power to determine price/make profit.
5) Suppliers possess strong/growing bargaining power.

Question 13

13. Explain and use the IPM

Answer 13

Importance-Performance model is a tool that can help to analyse and evaluate the most attractive segment to target.

IPM looks at the benefits, importance, performance, and segment attractiveness in order to assess if a segment will become profitable

Question 14

14. Name other factors to determine segment attractiveness

Answer 14

1) Segment size
2) Segment growth
3) Seasonality
4) Cost position
5) Technology
6) Cannibalization, conflict and synergy between segments.

Question 15

15. Explain inter-segment synergies, conflict and cannibalisation

Answer 15

Inter-segment conflict happens when by targeting one group, the company might be harming their targeting of another group.

Synergies occur when the capabilities of each segment adds values to each other.

Cannibalization is caused by new products that can take away profits from your existing product within the current segment.

! The danger is that synergies can easily be transformed into cannibalization. This happened for example with airline companies like KLM Royal Dutch Airlines and Transavia.

Question 16

16. Make a 5-box positioning statement for a product of your choice

Answer 16

Almond milk is only for those who do not drink regular milk (Current belief)
When I want a milk substitute I drink almond milk (Current behavior)
Almond milk healthy substitute for Vitamin drinks (Consumer proposition)Almond drink is actually vitamin drink(desired belief)
When I want to drink something healthy and full of vitamins, I will drink almond milk. (Desired behavior)

Question 17

17. Which beliefs can be addressed by repositioning

Answer 17

The category;
the quality of good;
the main benefit.

Question 18

18. Name the four repositioning types and explain

Answer 18

1) Image repositioning: the target market and the product stay the same, whilst with tangible repositioning, they both change.
2) Product repositioning: only the product itself is altered.
3) Intangible repositioning: only market conditions change.
4) Tangible repositioning: changes both - the market and the product

Question 19

19. Name the key steps in creating a perceptual map and create one for a brand of your choice

Answer 19

The perceptual map is a useful tool for determining the position of a brand in the marketplace.

In order to create a perceptual map there are 3 steps:

1. One must identify a set of competing brands and the important features consumers think of when choosing between brands.
2. Quantitative marketing research must be conducted, where consumers score each brand on all important features
3. We can plot the outcomes by putting the brands on a two-dimensional map.

Question 20

20. Create a traditional positioning statement

Answer 20

“To (target audience), (brand) is the brand of (competitive framework) that (point of differentiation) because (reasons why). The brand character is (brand character).”

To new families who just bought a new apartment, IKEA is the brand in making furniture that is easy to transport and easy to build because they focus on accessibility and convenience of building and thus help people to save more time for other activities. With IKEA, your time and interior are essential.

Question 21

21. Explain the difference between a positioning statement and a tagline

Answer 21

Positioning statement involves target audience, main brand’s dynamic, however taglines are a memorable articulation of our positioning statement.

Question 22

22. Explain belief perseverance, curse of knowledge, provenance paradox

Answer 22

Belief perseverance states that when someone is given a complimentary belief, it is very difficult to change that, even when told the complimentary belief is false.

Curse of knowledge – makes it extremely difficult to act like you do not know something, whilst having knowledge about it.

Provenance paradox – describes the challenge for brands originating in a number of regions in the world failing to compete in the top tier market. Their origin carries a stigma which places them at an inferior position to brands that originate in supposedly more developed and reputable regions.
e.g., wine from Chile, Chocolate from Belgium etc.

Question 23

23. Explain the PLC and its stages

Answer 23

Introduction stage – the profits are negative or non-existent. Competition is light, sometimes non-existent. The product is trying to gain attraction through early adopters. Most of the investment money is spent on quality control.

Growth stage – a period of quick market acceptance and substantial profit improvement for the product. Competitors enter the market rapidly, which can aid market growth. Next to this, investment in improving the product is necessary to compete. As segments start to emerge, the product will differentiate.

Maturity stage - the sales start to slow down as the market becomes saturated, with customers returning but not really entering. Profits stabilize or decline due to greater competition, but this is not growing. There is an emphasis on creating new products or innovation in order to re-introduce growth.

Decline stage – sales and profits go down, as the focus turns to profits rather than sales or market share. Next to this, there is a great reduction in the marketing budget.

Question 24

24. Explain the three types of attributes consumers evaluate products on

Answer 24

Search attributes – can be evaluated prior to consumption and have a huge impact on decision-making

Experience attributes – are evaluated post-consumption. They are difficult to quantify, and thus companies introduce rankings and ratings to give consumers a better view.

Credence attributes – cannot be evaluated. These are things you just have to trust, you cannot prove it, but they do affect your likelihood of purchasing a product.

Question 25

25. Explain three ways a company can increase the producer surplus

Answer 25

1. By cutting production costs. (Unit Variable cost)
2. By increasing the price (price paid)
3. By increasing WTP and then increasing price (cutting into unrealised surplus)

Question 26

26. Explain the three degrees of price discrimination and why it is useful

Answer 26

1st degree price discrimination – the seller charges each buyer their maximum willingness to pay price.

2nd degree price discrimination – the seller charges less to buyers who buy in bulk.

3rd degree price discrimination – the seller charges different amount to different “classes” of buyers (often based on willingness or ability to pay)

Question 27

27. Explain the price elasticity of demand and name factors that can lead to less price sensitivity

Answer 27

1. The price elasticity is a metric of how sensitive the demand for a certain product at a given price is, which generally has a negative relation.
2. Price elasticity of demand for a good or service is highly inelastic => the demand is only slightly influenced by the price => firms can increase the price of their goods
3. A relatively inelastic product is preferred by companies.

Question 28

Less price sensitivity can be achieved when:

Answer 28

1. Buyers are less aware of substitutes
2. When comparison is not readily available
3. The purchase is small compared to buyer’s income or budget
4. When part of the cost is carried by another party
5. Prestige products
6. Individual products
7. New payment methods reduce the pain of paying, making consumers less price sensitive and spend more.

Question 29

28. Name and explain common pricing tactics

Answer 29

1) Survival: charge enough to keep the doors open, the price is just low enough to survive
2) Maximize profit: this is a relatively short-term strategy, it is the price to maximize profit made by the establishment.
3) Maximize market share: this is a long-term strategy, as it creates a positive image for the brand and is likely to result in repeat customers.

Question 30

Other pricing tactics

Answer 30

1. Loss leader pricing
   Offer a good at or below cost for a product, just to entice customers to come and shop at the store (milk example)
2. Competitive pricing
   Using the price of a product to steal market share, instead of trying to create a surplus.
   For example, a burger for 0.99 cents.
   Can lead to potential price war.
3. Markup pricing
   Adding a markup to the production costs
   Ignores current demand, perceived value, competition

Question 31

29. Explain how wholesalers add value for producers and retailers

Answer 31

1) They have sales forces that help manufacturers to reach many small business customers at low cost;
2) They hold inventories, reducing inventory costs and risks to retailers
3) Achieve savings for retail clients in buying discounted bulks and breaking them down into smaller units.

Question 32

30. Explain how intermediaries add value for consumers

Answer 32

1) They reduce the number of transactions in the marketplace
2) They add value by reducing consumers’ search time and reducing the discrepancy between the assortment of goods produced and demanded.

Question 33

31. Explain vertical integration and when it is useful

Answer 33

1) Forward vertical integration
a. Which entails incorporating distribution activities into the operations.
b. For example, if I own a coffee plantation I can buy a coffee shop and sell coffee that is made from my coffee plants
2) Backward vertical integration
a. Which entails incorporating production of supplies into the operations.
b. For example, if I own a coffee shop, I can buy a coffee plantation and then get coffee from my own coffee plantation rather than from other businesses => that would lessen my dependence on suppliers.

Vertical integration is useful to companies because they can gain power over other elements.

+ lessening the dependence on suppliers
+ Reducing prices
+ Giving more clarity to customers

Then there is also horizontal integration
Which means merging with or acquiring peers who perform similar functions.
Or buying a company that does the same as you.

Question 34

32. Name possible problems with vertical integration

Answer 34

1) It reduces variety, makes shopping less convenient
2) Manufacturers and retailers perform specialised functions with associated economies of scale

For example, Apple and chip card manufacturing scandal

Question 35

33. Name key elements of a marketing objective and give an example

Answer 35

1) Time horizon (planning period)
2) Target (who to reach)
3) Communication task (message)
4) Effect wanted (desired change)

In one year, to make 70% of Rotterdam residents who are over 50 aware that the Erasmus Medical Center offers free blood-pressure checkups.

Question 36

34. Name three possible benefits of having a clear marketing objective

Answer 36

1. It helps to determine your creative (type of media, content of communication, location)
2. Help evaluate strategy
3. Help illustrate what type of ads to create
   a. Are people aware you exist?
   b. Rationally convince people of benefits
   c. Emotionally convince people of benefits

Question 37

35. Name the three advertising objectives and give an example for when they are especially useful

Answer 37

1. Awareness
   o Capturing attention/need awareness
   o Introducing new products (early stage of LPC)
   o Example: prelaunch AD
2. Consideration
   o Not all brands are considered for purchase
    Persuade that we are better compared to competitors
   o Becomes more important as competition increases
   o Example: comparative advertising (Pepsi/Coke)
3. Remind (repeat)
   o Most important for mature products (Like Coca-Cola)

Question 38

36. Name common marketing communication goals and give an example for each of them

Answer 38

1. Achieve informational goals (ex. Increase awareness of a piece of info; drug companies)
2. Achieve image goal (ex., increase % agreement with “Brand X is contemporary”; Brad Pitt for fragrance company)
3. Achieve behavioural goal (ex., increase “retail inquiries”; MTV ad)

Question 39

37. Explain native advertising and product placement

Answer 39

Native advertising - is the use of paid ads that match the look, feel and function of the media format that they are placed in. Social media, webpages.

Question 40

38. Explain the difference between consumer neuroscience and neuromarketing

Answer 40

Consumer neuroscience is the scientific study of consumer behavior via psychophysiological and neuroscientific methods

Whilst neuromarketing is the commercial of neuroscience insights and tools to better understand consumer responses to different kinds of brand, product, and service-related communication efforts.

Question 41

What are 3 competitive strategies?

Answer 41

1) Low-cost strategy
2) Product/service differentiation strategy
3) Providing customized solution & offering services to the customer

Example for the third: car dealership – giving clients what they want – adding things to the car.

Question 42

What is Marketing Myopia?
When can it occur?
Give an example.

Answer 42

1) It occurs when company does not know the needs of the customer, does not understand potential competitors

It can occur:
1) when using wrong type of market research
2) when focusing on internal capabilities instead of customer needs
3) overpromising

Examples:
Domino’s pizza
coca cola original taste
baby food company

Question 43

Describe 4 business orientations towards marketplace

Answer 43

1) production orientation
cut costs in production process => make profit
example - burger king/ Mcdonalds

2)Product orientation
Designing a superior product in comparison to the competition
example - apple

3)Selling orientation
selling as much as possible (also using discounts or heavy advertising)
example - insurance companies

4)Marketing orientation
meet customer’s needs better than competitiors
it is a long term vision
example - Amazon; Apple; Nike

Question 44

Product vs customer-centric view
(Warner Bros example)

Answer 44

product orientation - the product definition is making movies

customer-centric view - the market definition is providing entertainment

Question 45

Market oriented company vs internally-oriented definitions

Answer 45

Market oriented - looks at customer needs, is innovative, and tries to get a competitive advantage over its competition

Example - Amazon

internally-oriented - focuses on the product and price, segments by product, and often just ignores its competitors.

Such company likes the status quo and is not at all prepared for change.

Example - IKEA; Walmart

Question 46

Stated vs Latent needs - definitions

Answer 46

Stated needs - the product/features that customers say they want

Latent needs - the product/features they actually have in mind.

Question 47

Name 3 components of consumer values and explain

Answer 47

1) economic value
measures the benefit provided by the product or service by means of units of currency.

example - car

2) Functional value
- based on the tangible benefits of the product features
- subjective

example - water

3) Experiental value

• what you feel when you use that product
• related to the psychological and emotional benefits
• talks about intangible values, like design, brand and service

Question 48

Product value types

Answer 48

1) experiental (diamonds - nice to look at)
2) social (diamonds - status)
3) functional (water is more functional than diamonds)

Question 49

how can the market segment be differentiated?

Answer 49

By Vertical and Horizontal segmentation.

vertical - based on quality
for example - cards subscriptions; iphone x and SE

horizontal - based on preferences or tastes
example - sports brand offering tops and shorts for women;
imac/macbook pro
airpods pro/airpods max

Question 50

what are the variables used for customer segmentation?

Answer 50

1) Demographic (age, gender, geographic, family-size; etc.)
2) psychographic (social class, lifestyle, personality etc.)
3) behavioural (occasions, user status, usage rate, loyalty status etc.)

Question 51

what are the 4 target marketing strategies?

Answer 51

1) undifferentiated marketing - same product ot the whole market
2) differentiated marketing - specific products are adjusted for all or some segments
3) focused marketing - single product/marketing mix for a single niche market
4) customized marketing - segmentation on an individual level

Question 52

Explain vertical and horizontal differentiation

Answer 52

Vertical differentiation - different levels of quality.
Example - zara/massimo duty/ mango

horizontal differentiation
example - different types of products in different categories
for example - bird book; elephant book etc.,
the example about tail marketing and books.

Question 53

What is the difference between push vs pull strategies?

Answer 53

push strategy - the manufacturer uses the sales team and the trade promotion budget to stimulate the intermediary to sell the product and promote it towards the final user.

pull strategy - the consuler convinces the supermarket to buy something so that the supermarket will go to the manufacturer and buy the product.