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Marketing & Sales Flashcards

1
Q

Price differentiation

A
  • charges different customer segments altered prices for the same offering (different segments with different WTP)
  • segments must be separated
  • fencing: controlling access to segments (e.g. Student ID), urgency (flight booking for business and private travellers), versioning, different languages

Segments

  • individual price maximised: each customer willing to pay their individual amx. price
  • self-organizing: customer decide which segment they belong to (quality based or quantity based)
  • customer criteria-based: customer naturally belongs to special segment due to individual characteristics (sex, age…)
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2
Q

Bundling

A

join offerings together to sell them as a single unit

+ decreasing price elasticity: combine high and low elasticity
+ single prices can be concealed
+ price increase can be concealed

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3
Q

Penetration

A

Product introduction in new markets where initially prices are low to attract customers and gain market share in short time

  • high price sensitivity, WTP = low
  • strong competition: low prices as entry barriers
  • scale economies can be created
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4
Q

Skimming

A

Product introduction in new market where prices are high: after high price segment is satisfied, reduce prices and address next segment

  • high prices don’t attract competitors
  • sales volume inelastic
  • decreasing marginal costs due to experience when prices drop
  • high perceived customer value
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5
Q

Low pricing

A

Products: focus on basic function, limited portfolio
Price: stable and low, simple pricing, no discounts
Customer: WTP = low, highly price sensitive, low loyalty
Distribution: few channels, low-cost locations
Communication: price is key, low-cost channels (social media)

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6
Q

Premium pricing

A

Product: excellent quality, brand and innovation important, portfolio with added value (services)
Price: stable and high, occasional special offers, simple pricing
Customer: WTP = high, high loyalty, less price sensitive
Distribution: selected channels (exclusive stores)
Communication: quality and value, channels represent value

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7
Q

Medium pricing

A

Product: medium quality, medium price, good functionality, differentiated
Price: stable, special offers important to create demand, complex pricing (bundling)
Customer: WTP = medium, low loyalty, high price sensitivity
Distribution: many different channels
Communication: high efforts, quality over price

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8
Q

Cost oriented pricing

A

Costs are basis (fixed and variable)

  • mark up
  • mark down
  • traget ROI
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9
Q

Competition oriented pricing

A

Competition as price leaders/followers

  • going rate pricing
  • auction-type pricing
  • predatory pricing
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10
Q

Market oriented pricing

A

Perceived value determines price

  • TCO Total cost of ownership
  • Yield and Revenue Management
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11
Q

Price elasticity

A

In % = change in until/change in price

E>1: elastic demand, units change more than price
E<1: inelastic demand, units change less than price
E=0: some products bought at any price

Low elasticity is preferred: flexible prices, easier demand forecasting

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12
Q

Price and Volume effect

A

Price effect: loss of revenue due to price decrease
Volume effect: increase in units sold due to price decrease

Volume >Price –> higher total revenue (elastic demand)
Price > Volume –> lower total revenue (inelastic demand)

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13
Q

Optimal price

A

Profit and contribution margin achieve maximum considering change in demand (due to volume effect)
Optimal price = (max. price + VC)/2

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14
Q

Price & Demand

A
  1. each price leads to different level of demand and supply
  2. intensity of demand reaction after price change can vary
  3. Price and units sold impact profit
  4. delay reaction between change demand and change in supply (hog cycle)
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15
Q

Gossen’s law of diminishing marginal utility

A

WTP decreases with each unit consumed (the more units consumed, the less is the marginal utility for an additional unit)

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16
Q

Price Management Process

A
  1. Understand environment, market, competiton
  2. determine company and pricing objectives
  3. estimate demand, supply and price
  4. decide on pricing method
  5. select pricing strategy
  6. fix the final price
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17
Q

Customer perceived value

A

True value: customer has all information (= cost of next best alternative + performance differential)
Perceived value: customer doesn’t have all information
WTP: max. price a customer is willing to pay for an offering (different customers have different willingness to pay)

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18
Q

Discounts

A

Channel, Strategic, Promotional, Tactic, Cash, Rebates

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19
Q

What is a price

A

Compensation given in return for certain amount of goods/sevices
Measured in monetary units
represent value

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20
Q

Product differentiation

A 
Form & Features
Quality
Design & Style
Services
Packaging
Labelling
Warranty & Guarantee
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21
Q

Value layers

A

Core/generic offer
Expected offer
Augmented offer
Potential offer

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22
Q

Classification of market offerings

A

Materiality: tangible, intangible
Durability: durable, non-durable, perishable
Substitute or complement
B2B (industrial products) or B2C (convenience products)

23
Q

Market offering

A

anything offered on a market, delivers desired value and satisfies needs, intangible and tangible elements, consists of set of attributes

24
Q

Marketing

A

Process by which company created value for customers and build strong relationships to capture value from customers in return

25
Strategic Fit
3 pillars Market needs and conditions Organizational Resources Marketing strategy
26
Marketing Principles
1. Focus on the customer 2. Only compete in market where you can establish a competitive advantage 3. Customers don’t buy products, they buy benefits 4. Marketing is too important to leave it to a marketing department 5. Markets are heterogeneous 6. Markets and customers constantly change
27
Value delivery sequence
Choose value Deliver Value Communicate value
28
Marketing approaches
Product push: develop product with competencies & resources and push it to market (high risk of failure) Customer lead: develop product they need (blind focus, easily copied by competitors) Resource-based: considers internal capabilities and customer need --> product fits both
29
Kano-Model
Expected needs - must requirements, dissatisfies (cause dissatisfaction if not existent) Normal needs - should requirements, satisfiers (satisfied/dissatisfied depending on existence/absence) Exiting needs - can, delight’s (no dissatisfaction, but increased purchase likelihood if existent)
30
Who is the customer
Initiator, Influencer, Decider, Purchased, User/Consumer
31
Understanding customers
``` Who is involved in buying Where do they buy When do they buy Why do they buy What are choice criteria How do they use ```
32
Factors influencing buying behaviour
Cultural: values, perceptions, preferences, nationalities, religions, racial groups, social class Social: reference groups, family Psychological: Maslow’s hierarchy of needs
33
Negatively originated purchase motives
Problem removal Problem avoidance Incomplete satisfaction Normal depletion
34
Positively originated purchasing motives
Sensory gratification Intellectual stimulation or mastery Social approval
35
Brand related buyer groups
``` Brand loyal favourable brand switchers other brand switchers other brand loyals new category users ```
36
Competitor analysis
Direct vs indirect Threat of entrants or substitutes --> Industry competition --> strategic groups
37
Components of competitor analysis
Competitors current and future objectives + current strategy + resource profile = predict competitors future strategy
38
Market segmentation
dividing market into smaller segments with distinct characteristics, needs and wants that require distinct market offerings - demographic - psychographic - behavioral
39
Market attractively criteria
Customer criteria: number of customers, demand consistency, bargaining power Competition criteria: kind and amount of competiton Economic criteria: exit and entry barriers, investments... Environmental: regualtions, social acceptance
40
Positioning
psychological impression left by company, product or service in the minds of its market partners (how market partners perceive own performance compared to competitors)
41
Competitive advantage
Contribution to create value for customers Uniqueness to the firm Inimitability for competitors
42
Creating competitive advantage
Differentiation in terms of: product, distribution, promotion, price, brand
43
Cross price elasticity
= change in units/change in price of competition E>1 --> substitutes: price decreases, units decrease E<1 --> complements: price decreases, units increase E0= --> independent
44
Product lifecycle
Market offerings have limited that that follows a certain pattern --> different challenges and strategies for each phase Introduction, Growth, Maturity, Decline Example: Pricing strategy: penetration/skimmin --> reduce to gain market share --> match or beat competition --> reduce price further Marketing emphasis: create product awareness --> establish high market share --> generate profit --> minimise marketing expenses
45
Types of customer
Innovators Early adopters Middle/late majority Laggards
46
Exit scenarios
- Differentiation of products and stead innovation - Reverse positioning: stripping down products to core functions and look for new ways to differentiate - Breakaway positioning: move to another product category by changing customer perception (e.g.: swat watch - more than one watch)
47
innovation
= any good, service or idea someone perceived as new Invention: creation of new idea/concept Innovation: turning a new concept into commercial success or widespread use
48
Incremental innovation
Gradual, continuous improvements on existing products - no change of core functions - no new markets - attract new customers with higher value or lower prices or both
49
Sustaining Innovation
Significant improve that aims to sustain position in existing market (e.g. Römerquelle added flavours to mineral water) - improve performance (not functions) of existing product - increasingly high profits in long run - attract higher paying customers or offer value at lower prices
50
Disruptive innovation
new products or services that disrupt existing market (e.g.: touchscreen on phone) - new solution making offerings more affordable - initial lower performance improves over time - small segment in the beginning - success needs time
51
Radical innovation
Technological breakthrough transforming industries, creating new markets - significant resistance in the beginning - e.g.: internet, electricity, airplanes
52
Requirements for success
Openness to new ideas and failures, unique and superior market offering, speed (so competitors can’t catch up)...
53
Failing...
``` Market: too small and immature No demand Time: too early or late Technical failures No innovative, open-minded cultures Financials: low ROI, no profit ```
54
Innovation process
1. Generating ideas 2. Screening ideas 3. Business analysis 4. Development of product 5. Testing product 6. Commercializing product

Integrative Revision (11 decks)

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