Marketing Study Guide Test 2

Question 1

What is the definition of Marketing?

Answer 1

the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large

Question 2

What is the main concept of marketing?

Answer 2

entails processes that focus on delivering value and benefits to customers, not just selling goods and services.

Question 3

What does marketing help create?

Answer 3

Value

Question 4

Define and describe the exchange that takes place when sellers and buyers meet

Answer 4

• At least two parties
• Each party has something of value (to the other party)
• Each party can communicate and deliver value
• Each party is free to accept or reject the exchange offer
• Each party wants to deal with the other party
• Exchange may not take place even if conditions are met
• An agreement must be reached
• Marketing occurs even if exchange does not take place

Question 5

Define each of the 4 P’s of marketing. Provide an example of each.

Answer 5

• Product: two types
o Goods: items that you can physically touch (beverages, food, toys)
o Services: intangible benefits, may include the experience (tickets to a game)
• Price: everything the buyer gives up – including money, time, energy – in exchange for the product
• Place: getting the product to the right customer; supply chain management
• Promotion: communicating a product’s value to customers (advertisements on racecars, Facebook pages)

Question 6

B2B Marketing transaction?

Answer 6

business-to-business (manufacturer to retailer)

Question 7

B2C Marketing transaction?

Answer 7

business-to-consumer (retailer to customer)

Question 8

What is the definition of value?

Answer 8

The relationship of benefits to costs, what the consumer gets for what they give

Question 9

Difference between transactional and relational customer relationships

Answer 9

• Transactional: each transaction is a separate event, prior knowledge is not important (McDonalds)
• Relational: buyers and sellers establish long-term relationship (5-star hotel)

Question 10

What does CRM stand for and how is it useful?

Answer 10

Customer Relationship Management; database used to gather and track customer data points

Question 11

What is the definition of marketing strategy?

Answer 11

A firm’s target market, marketing mix, and the method of obtaining a sustainable competitive advantage

Question 12

What is a sustainable competitive advantage?

Answer 12

Something that a company can persistently do better than its competitors

Question 13

List 3 macro strategies for developing customer value

Answer 13

Operational excellence, customer intimacy and product leadership

Question 14

Operational excellence

Answer 14

involves a firm’s focus on efficient operations and excellent supply chain management
o Performance is “good enough”
o To lower costs (monetary, acquisition, maintenance, and supply chain costs)
o To increase convenience
o To obtain reliability
o To become easy to use
o Tradeoffs: Lower performance, lower customization, lower level of service

Question 15

Customer Intimacy

Answer 15

involves a focus on retaining loyal customers and excellent customer service
o	Performance is “just right”
o	High level of customization
o	High levels of service
o	Offers a complete solution
o	Access to a wide selection
o	Feeling of an “experience”
o	Tradeoffs: high costs, somewhat lower performance

Question 16

Product leadership

Answer 16

involves a focus on achieving high-quality products
o Performance is “never good enough”
o Access to high performance (more features/functionality, latest technologies, complexity)
o Linked with aesthetics and style
o Portray sophistication
o Tradeoffs: higher costs, lower customization

Question 17

Three phases of the marketing plan. List and define

Answer 17

o Planning Phase: define the mission and vision of the business, evaluate the situation both inside and outside of the organization
o Implementation Phase: identify and evaluate different opportunities, using: segmentation, targeting, positioning, and the 4 P’s
o Control Phase: evaluating the performance of the marketing strategy using marketing metrics

Question 18

What is a mission statement? Why is it important for a company to develop one?

Answer 18

A broad description of a firm’s objectives and the scope of activities it plans to undertake
o What type of business are we in?
o What do we need to do to accomplish our goals and objectives?

Question 19

List and define each of the components of a SWOT analysis. Which are inward focused? Outward focused?

Answer 19

• Strengths: (Internal/Inward Focused) what your firm does well
• Weaknesses: (Internal/Inward Focused) where you are vulnerable, what you don’t do well
• Opportunities: (External/Outward Focused) possibilities not yet realized
• Threats: (External/Outward Focused) things you can’t control, but must be aware of

Question 20

List and define each of the categories of the BCG product portfolio analysis.

Answer 20

• Stars: occur in high-growth markets and are high market share products; often require heavy resource investment; as market growth slows, stars become cash cows
• Cash Cows: occur in low-growth markets but are high market share products; have excess resources that can be spun off to other products
• Question Marks: appear in high-growth markets but have relatively low market shares, require significant efforts to maintain and increase market share; do you increase investment, or move onto something else?
• Dogs: are in low-growth markets and have relatively low market shares; may generate enough resources to sustain themselves, but should be phased out as they will never become ‘stars’

Question 21

List and define the 4 growth strategies

Answer 21

• Market Penetration Strategy: employs the existing marketing mix and focuses the firm’s efforts on existing customers
• Market Development Strategy: employs the existing marketing offering to reach new market segments
• Product Development Strategy: offering a new product or service to a firm’s current target market
• Diversification strategy: a firm introduces a new product or service to a market segment that it does not currently serve

Question 22

List, define and provide an example of the 4 E’s in social media

Answer 22

• Excite: offer must be relevant to its targeted customer; relevancy can be achieved by providing personalized offers (customers who bought this item also bought, frequently bought together)
• Educate: sells the product’s value proposition and offered benefits; explains why the customer should want to purchase/use the product, how it can offer more value than competing products. (Starbucks app highlights the importance of convenience – you don’t need to carry cash, you can earn rewards, and you can find new Starbucks locations)
• Experience: provide information about a firm’s goods and services; simulating real experiences; Mini Cooper allows you to design your car without entering the dealership by selecting details and then request financing and a test drive
• Engage: the previous 3 E’s go into engage; action, loyalty, and commitment; positively engaged consumers lead to more profitability (20-40% more purchases); engagement can also backfire

Question 23

Examples of regional culture

Answer 23

Skiing, snowmobiling, sailing, golf, soda vs. pop, pizza vs. pie

Question 24

Define and provide examples of demographics

Answer 24

The characteristics of human populations and segments, especially those used to identify consumer markets
• E.g.: age, gender, race, income, education, location, “You are where you live”

Question 25

List and discuss the four main generational cohorts we discussed in class. What are characteristics of each?

Answer 25

Generational Cohort: a group of people of the same generation, have similar purchase behaviors because they have shared experiences and are in the same stages of life
• Gen Y: (1977-2000) 60 million Americans; also called “millennials”; tech savvy – internet, cell phones, social media; multitasking experts; expect easy access to virtually everything, prompting one observer to refer to them as the ‘entitled generation’; are incredibly proficient at tasks that overwhelm other generations; internet, cell phones, Facebook, IM, texting, tweeting, 9-11, internet bubble, housing bubble, the Great Recession, Google, Apple, YouTube, BRICs and the changing face of global competition
• Gen X: (1965-1976) 41 million Americans; they are unlikely to enjoy greater economic prosperity than their parents; population less than boomers and Gen Y, but possess spending power: delaying marriage, delaying purchase of first home; cynical, demand convenience; knowledgeable about products (less likely to trust salespeople or ad claims), more risk averse; MTV, Atari, Nintendo, Cable TV, Gulf War I, The Simpsons, Star Wars, Michael Jackson (“Thriller”), Challenger disaster
• Baby Boomers: (1946-1964) 78 million American’s born between 1946-1964 (post WW2); individualistic, self-reliant, obsession with maintaining their youth; entering their retirement years during one of the worst economic recessions in recent history; spending patterns shifting away from luxury items; lack of savings – working well beyond retirement age, reverse mortgages, becoming caregivers
• Seniors: (Before 1946) America’s fastest growing group, currently 39 million seniors in the US; tends to complain, needs special attention, and takes time browsing before purchasing, they have the time to shop and money to spend; tech averse, made in the USA, blue chip brand names, high quality, convenience, some internet use, fear of online security
• Gen Z: (2001-2014) digital natives, video games, affinity for brands (the book is rather sparse on this generation)

Question 26

Define need recognition, functional needs, and psychological needs. How can a product fulfill both functional and psychological needs?

Answer 26

• Need Recognition: the beginning of the consumer decision process; occurs when consumers recognize they have an unsatisfied need and want to go from a “needy” state to a desired state
• Functional Needs: pertain to the performance of a product or service
• Psychological Needs: pertain to the personal gratification consumers associate with a product or service
• If the functional need is good it can satisfy the psychological needs to if it gratifies them

Question 27

Internal vs external search for information

Answer 27

Internal Search for Information: the buyer examines their own memory and knowledge about the product or service, gathered through past experiences; past experiences (good and bad)
External Search for Information: the buyer seeks information outside their personal knowledge base to help make the buying decisions; consumer reports, friends, and family

Question 28

Define universal set, retrieval set, and evoked set

Answer 28

• Universal Set: include all possible choices for a product category
• Retrieval Set: those brands that can be readily brought forth from memory (a subset of the universal set)
• Evoked Set: compromises the alternative brands that the consumer states they would actually consider when making a purchase decision

Question 29

Define and provide an example of compensatory decision rules and non-compensatory decision rules

Answer 29

• Compensatory Decision Rules: the consumer trades off one characteristic against another – good characteristics compensate for bad characteristics
• Non-compensatory Decision Rules: selecting a product or service on the basis of one characteristic or one subset of characteristics, regardless of the values of other attributes; if a product/service lacks a certain characteristic, it is removed from the decision set

Question 30

Define and provide an example of decision heuristics.

Answer 30

• Mental shortcuts that help a consumer narrow down choices (price difference, brand, product presentation)

Question 31

What are three things that a company can do to deliver post-purchase customer satisfaction?

Answer 31

• Build realistic expectations
• Demonstrate correct product use
• Stand behind the products – money-back guarantees, warranties
• Encourage customer feedback, use to improve future products and experience
• Thank your customers

Question 32

Define cognitive dissonance. Provide an example of cognitive dissonance.

Answer 32

• An uncomfortable state produced by an inconsistency between beliefs and behaviors that in turn evokes a motivation to reduce the dissonance; aka buyer’s remorse
• E.g. product doesn’t work the same way its advertised so buyer feels mislead and doesn’t trust the brand anymore

Question 33

What are three things that a customer can do to relieve cognitive dissonance?

Answer 33

• Take back the item
• Only focus on the good qualities of the decision
• Seek positive feedback to justify your purchase
• Seek negative information about the products you did not select

Question 34

What are three things that a company can do to increase customer loyalty?

Answer 34

• Building a long-term relationship
• Discount/Loyalty cards
• Consistent employee contact
• Special hours/coupons for loyal customers
• Build positive word of mouth (WOM)

Question 35

Define situational factors and provide three examples of how firms might use situational factors to increase consumer spending.

Answer 35

• Situational Factors: factors specific to the situation that override or influence shopping decisions
o Giving samples to make the consumer hungry while shopping
o Promotions
o In-store demonstration
o Salespeople
o Crowding
o Packaging

Question 36

Define globalization in a business context

Answer 36

• The process by which goods, services, capital, people, information, and ideas flow across national borders

Question 37

What are three major economic factors that marketers use to assess global markets?

Answer 37

GDP, PPP and per capita income

Question 38

Trade deficit vs trade surplus

Answer 38

Trade Deficit: the country imports more than it exports

Trade Surplus: the country exports more than it imports

Question 39

What is GDP and why can it be an important metric for firms when considering global expansion?

Answer 39

Gross domestic product; the market value of the goods and services produced by a country in a year. It is important for global expansion of a firm because it can help decide where and where not to produce or deliver

Question 40

What is per capita income and why can it be an important metric for firms when considering global expansion?

Answer 40

the overall income of a population divided by the number of people included in the population. It can be useful in deciding where people might buy their products or need their products and where they can pay less for inputs

Question 41

What is the Big Mac index and why is it useful for companies?

Answer 41

Local currency under/over valuation against the dollar as a percentage

Question 42

Tariffs

Answer 42

a tax levied on a good imported into a country

o meant to make imported goods more expensive and less competitive with domestic products

Question 43

Dumping

Answer 43

when a foreign producer sells its offering in a foreign market at a price less than its production costs to gain market share

Question 44

Quotas

Answer 44

designate the maximum quantity of a product that may be brought into a country during a specific time period
o Products and services (in terms of visas)

Question 45

Boycott

Answer 45

a group’s refusal to deal commercially with an organization to protect against its policies

Question 46

Trade agreements/trading blocks

Answer 46

an intergovernmental agreement designed to manage and promote (or discourage) trade activities for a specific region

Question 47

List and define each of Hofstede’s cultural dimensions.

Answer 47

• Dimensions along which cultural values could be analyzed
Power Distance: willingness to accept social inequality as natural
o “The dimension deals with the fact that all individuals in societies are not equal – it expresses the attitude of the culture towards these inequalities amongst us.”
Uncertainty Avoidance: the extent to which the society relies on orderliness, consistency, structure, and formalized procedures of daily life
o “It has to do with the way that a society deals with the fact that the future can never be known: should we try to control the future or just let it happen?”
Individualism: perceived obligation to and dependence on groups
o “It has to do with whether people’s self-image is defined in terms of “I” or “we”.”
Masculinity: the extent to which dominant values are male oriented. Lower = men and women are treated equally, higher = male dominated positions of power
o “A high score (masculine) on this dimension indicates that the society will be driven by competition, achievement and success, with success being defined by the “winner” or “best-in-the-field.”
o “A feminine society is one where quality of life is the sign of success and standing out from the crowd is not admirable.”
Time orientation: short- versus long-term orientation. A country that tends to have a long-term orientation values long-term commitments and is willing to accept a longer time horizon for something to occur
o “Closely related to the teachings of Confucius and can be interpreted as dealing with society’s search for virtue, the extent to which a society shows a pragmatic future-oriented perspective rather than a conventional historical short-term point of view.”

Question 48

What are the five global entry strategies we discussed in class? Which are risky, which are not risky? What are some qualities of each strategy?

Answer 48

Exporting (low risk, low control): producing goods in one country and selling them in another
o Less costly
o Example: A firm receives orders from another country
Franchising (low-moderate risk, low-moderate control): a contractual agreement between the firm (the franchisor) and another firm or individual (the franchisee). Allows the franchisee to operate a business using the name and business format of the franchisor.
Strategic Alliance (moderate risk, moderate control): collaborative relationships between independent firms – they do not invest in one another
o Volkswagen and Suzuki – VW to the Asian market
o Cisco and Tata Consulting – expertise in the US and India
Joint Venture (moderate-high risk, moderate-high control): when a firm entering a new market pools its resources with those of a local firm to form a new company in which ownership, control, and profits are shared
Direct investment (high risk, high control): requires a firm to maintain 100 percent ownership of its plants, operation facilities, and offices in a foreign country, often though the formation of wholly owned subsidiaries

Question 49

Three global product or service sales strategies

Answer 49

• Sell the same product or service in both home and foreign markets
• Sell a product or service similar to the one sold in the home market to the foreign market
• Sell totally new products or services

Question 50

List and define the components of STP

Answer 50

• Segmentation – “the who (will you target)”
• Targeting – “the how (will you target them)”
• Positioning – “the where (in the consumer’s mind)”

Question 51

What are the five steps of the STP process?

Answer 51

• 1. Establish Overall Strategy: Derived from mission statement, SWOT, strategy map position
o Coca Cola’s objective is to increase sales in a mature industry
• Weakness: lack of successful product lines in emerging markets
• Identifying emerging markets leads to opportunities
• 2. Segmentation Methods: Separate the market into segments
o Find groups that are similar and dissimilar
o Example: carbonated beverage market
• Caffeinated
• Decaffeinated
• Regular (with sugar)
• Diet
• Cola
• Non-cola
o Each segment represents the benefits that consumers derive from the products
• 3. Evaluate Segment Attractiveness
• 4. Select Target Market
• 5. Identify and Develop Positioning Strategy

Question 52

Define and provide an example of each of these methods for describing market segments: geographic, demographic, psychographic, geodemographic, benefits, behavioral.

Answer 52

Geographic: organizes customers into groups on the basis of where they live
o Region (northeast, southeast)
o Areas within a region (urban, suburban, rural, state, city, zip code)
Demographic: group consumers according to easily measured, objective characteristics such as age, gender, income, and education
o Kellogg’s cereal
• Cocoa Krispies and Froot Loops = children
• Special K and All-Bran = adults
Psychographic: separates consumers by how they describe themselves; how people self-select based on the characteristics of how they choose to occupy their time (behavior) and what underlying psychological reasons determine those choices.
o A person has a strong need for inclusion or belonging
o A person considers themselves an innovator in a product category
o A person “marches to the beat of their own drummer”, and does not seek out approval of others
o Self-values: are goals for life, overriding desires that drive how a person wants to live their lives
o Self-respect, self-fulfillment
o Self-concept: the image people ideally have of themselves
o “Marketers market self-concept through communications that show their products being used by groups of laughing people who are having a good time”
o Lifestyles: the way we live, how we live our lives to achieve goals
o VALS: Value and Lifestyle Survey; most widely used psychographic tool
o Customers are classified into eight segments based on answers to a questionnaire
Geodemographic: uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers
o “Birds of a feather flock together”
o PRIZM (Potential Rating Index by Zip Market) by Nielsen Claritas
o Tapestry by ESRI
o PRIZM – 66 geodemographic segments or neighborhoods, sorted on 60 characteristics
Benefit: groups consumers on the basis of the benefits they derive from products or services
o Dividing the market into segments whose needs and wants are best satisfied by the product benefits
o Starwood (hotel and leisure):
• W Hotel: world class restaurants, bars and lounges, sparsely furnished rooms
• Element: appeals to clients requiring extended stay accommodations
Behavioral: divides customers into groups based on how they use the product or service
o Occasion segmentation: based on when a product is purchased or consumed

Question 53

What is ‘VALS’ and why is it useful for marketers?

Answer 53

• “Value and Lifestyle Survey”; the most widely used psychographic tool that classifies customers into eight segments based on answers to a questionnaire; 41 questions, four choices per question - mostly disagree, somewhat disagree, somewhat agree, mostly agree
• Vertical dimension: level of resources, including income, education, health, energy level, and degree of innovativeness
o Upper segments have more resources and are more innovative than the lower segments
• Horizontal dimensions: shows the segments’ primary psychological motivation for buying
• Internal motivations: three primary motivations of US consumers are ideals, achievement, and self-expression
o Ideals: guided by knowledge and principles
o Achievement: look for products and services that demonstrate success to their peers
o Self-expression: desire social or physical activity, variety, and risk
• Predictive abilities using VALS are better than using demographic variables (the “why” versus the “what”)
o Example: two consumers who match on many demographic variables – age, gender, income, education, zip code but not in risk tolerance
• Limitations: expensive and time consuming

Question 54

List and define the five terms that marketers use to determine whether a segment is attractive to pursue.

Answer 54

• Identifiable: firms must be able to identify who is within their market to be able to design products or services to meet their needs
• Substantial: once you’ve identified potential target markets, determine if the market is large enough and has enough buying power to generate sufficient profits or be able to support the marketing mix activities
• Reachable: can the market be reached/accessed? The consumer must know that the product or service exists, understand what it can do for them, and recognize how to buy it
• Responsive: the customers in the segment must react similarly and positively to the firm’s offering
• Profitable: focus assessment on the potential profitability of each segment, both current and future

Question 55

List, define, and provide an example of each of the four targeting strategies we discussed in class.

Answer 55

• Undifferentiated targeting strategy: or mass marketing: used when everyone might be considered a potential user of its product; focuses on the similarities in needs of the customers as opposed to the differences
o If the product or service is perceived to provide similar benefits to most customers, there is little need to develop separate strategies for different groups
o Examples: basic commodities (salt, sugar), gasoline, paper clips, pens
• Differentiated targeting strategy: target several market segments with a different offering for each
o Used because it helps firms obtain a bigger share of the market and increase the market for their products overall, also minimizes risk
• Concentrated targeting strategy: used when an organization selects a single, primary target market and focuses all its energies on providing a product to fit that market’s needs; Niche marketing, entrepreneurial start-ups
o Example: Newton Running (concentrated on specific running style) vs. Nike (differentiated targeting strategy, with shoes in multiple segments)
• Micromarketing: when a firm tailors a product or service to suit an individual customer’s wants or needs
o Also called one-on-one marketing
o Using the internet allows customers to pick and choose features
o Examples:
• Amazon.com (using cookies to recommend products)
• Dell (each computer can be custom-made to some extent)
• Build-a-bear (allows children to create unique teddy bears)
• M&M (design M&Ms with custom phrases)

Question 56

How does each of the following assist marketers in positioning their products: value proposition, salient attributes, symbols?

Answer 56

• Value proposition: the unique value that a product or service provides to its customers, and how it is better than and different from those of competitors
• Salient attributes: focus on attributes most important to the customer (e.g., Volvo means safety)
• Symbols: represent the brands

Question 57

Define perceptual maps and ideal points.

Answer 57

• Perceptual map: displays, in two or more dimensions, the position of products or brands in the consumer’s mind
• Ideal points: a specific spot on the perceptual map that shows where the customer’s ideal product would lie on the map

Question 58

Five steps of the marketing research process

Answer 58

• 1. Defining the objectives and research needs
• 2. Designing the research
• 3. Data collection process
• 4. Analyzing data and developing insights
• 5. Action plan and implementation

Question 59

Define and provide an example of each of the following: secondary data, primary data, syndicated data, scanner data, and panel data.

Answer 59

• Secondary data: information that has been collected prior to the start of the research project
o Examples include: ACNielsen panel data, US Census data, data gathered by information brokers
• Primary data: data collected to address specific research needs
o Examples: focus groups, in-depth interviews, surveys
• Syndicated data: available for a fee from commercial research firms such as SymphonyIRI Group, the National Purchase Diary panel, and ACNielsen
• Scanner data: used in quantitative research obtained from scanner readings of UPC labels at check-out counters
o Purchases at a grocery store/supercenter are rung up using scanner symbols, data acquired by commercial research firms, data used to help consumer packaged goods firms (e.g., Kellogg’s, Pepsi, Kraft)
• Panel data: information collected from a group of consumers, organized into panels, over time
o Often includes purchase records, responses to surveys

Question 60

Why is data mining useful for companies?

Answer 60

• Data mining: uses statistical tools to uncover previously unknown patterns in the data or relationships among variables
• Allows for the company to see how different promotions, product placements effect the consumer

Question 61

How are qualitative and quantitative research similar? Different? What are some examples of each method?

Answer 61

• Qualitative deals with different qualities of product preferences, while quantitative deals with numbers
• Similar in how they are done and have data collection research
• Qualitative uses observation, in-depth interviews, focus groups, and social media to data collect
• Quantitative uses experiments, surveys, scanners, and panels to data collect

Question 62

Provide three advantages and disadvantages to secondary and primary data

Answer 62

Secondary Data
o Examples: Census data, sales invoices, internet information, journal articles, etc.
o Advantages: saves time in collecting data because they are readily available; free or inexpensive (except for syndicated data)
o Disadvantages: May not be precisely relevant to information needs; information may not be timely; sources may not be original, and therefore usefulness is an issue; methodologies for collecting data may not be appropriate; data sources may be biased
Primary Data
o Examples: Observed consumer behavior; focus group interviews; surveys; experiments
o Advantages: Specific to the immediate data needs and topic at hand; offers behavioral insights generally not available from secondary research
o Disadvantages: costly; time consuming; requires more sophisticated training and experience to design, study, and collect data

Question 63

Provide a brief explanation of the Milgram experiment and the Stanford prison experiment.

Answer 63

• Milgram Experiment: justification for acts of genocide offered by those accused at WWII criminal trials, examined if people would obey when told to cause harm to others, dealt with giving shocks from 15V-450V
• Stanford Prison Experiment: had people selected as prisoners and guards and stuck them in a prison and examined what happened
o Within hours some guards began harassing prisoners in a brutal and sadistic manner
o Conclusion: people will readily conform to the social roles they are expected to play

Question 64

How does the value proposition change when marketing new products? Existing products?

Answer 64

Find

Question 65

What are associated services and how can they help a firm’s value proposition?

Answer 65

• include the nonphysical aspects of the product, such as product warranties, financing, product support, and after-sale service
• gives the consumer greater incentive to purchase a product; reduces the chance of buyer’s remorse

Question 66

List, define, and provide examples of specialty products/services, shopping products/services, convenience products/services, and unsought products/services.

Answer 66

• Specialty products/services: products or services: products or services toward which customers show such a strong preference that they will expend considerable effort to search for the best suppliers
o Examples: legal or medical professionals, luxury cars, real estate transactions
• Shopping products/services: products or services for which consumers will spend a fair amount of time comparing alternatives
o Internet searching, store to store shopping, meeting with salespeople – but a quicker decision time than for specialty products/services
o Examples: furniture, apparel, appliances, travel alternatives
• Convenience products/services: products or services for which the consumer is not willing to spend any effort to evaluate prior to purchase
o Examples: commodities – beverages, bread, soap, candy
• Unsought products/services: products consumers either do not normally think of buying or do not know about
o Products require more marketing efforts, various forms of promotion
o Examples: any newly introduced product, especially if it is a new product category
• iPhones
• GPS
• Click-and-mortar stores

Question 67

Define and provide an example of a firm’s product mix and product lines.

Answer 67

• Product mix: the complete set of all products offered by a firm
• Product lines: groups of associated items that consumers tend to use together or think of as part of a group of similar products
• Product mix encompasses all the product lines. Examples of product lines are ready to eat cereal, cookies and crackers, toaster pastries, and organic and frozen for Kellogg’s
• Product mix: College of Business Administration, Diederich College of Communication, Klingler College of Arts and Sciences
• Product lines:
o Business: Accounting, Finance, HR Management, IT Management, Marketing, Supply Chain/Operations Management
o Communication: Advertising, Digital Media, Journalism, Media Studies
o Arts and Sciences: Biology, Chemistry, English, Theology

Question 68

Define and describe breadth and depth? How do firms decide to increase or decrease breadth and depth?

Answer 68

• Breadth: represents a count of the number of product lines offered by a firm (think columns)
• Depth: the number of products within a product line (think rows)
• Depends on…
o Industry-level factors (what is everyone doing?)
o Firm-level factors (can we do it?)
o Consumer-level factors (if we do it, will they buy it?)

Question 69

How is branding to inform different from branding to differentiate?

Answer 69

• Branding to inform – successful foreign brands seek to build brand recognition
• Branding to differentiate – how do beverage companies separate themselves?

Question 70

What are the six brand elements we discussed in class?

Answer 70

Brand name, domain (website) name, logos and symbols, characters, slogans, jingles/sounds

Question 71

Six positive things brands can do for a company

Answer 71

• Brands facilitate purchases
o Easily recognized by consumers
o Signify quality, familiarity, etc.
o Brands enable customers to differentiate one firm or product from another
• Brands establish loyalty
o Consumers develop trust with a brand over time
o Ideally, develop a strong affinity for a brand
o Brands can represent a person’s identity
• Brands protect from competition and price competition
o Established brands mean loyalty, customers less price sensitive
o Brands as a status symbol
• Brands can reduce marketing costs
o The brand sells itself
o Companies can devote more marketing dollars to promoting new products, rather than to informing consumers about unfamiliar products
• Brands are assets
o Legal protection through trademarks and copyrights
o Tiffany & Co.’s brand includes the ‘blue box’
• Brands impact market value
o Affect the company’s bottom line

Question 72

Define and provide an example of a licensed brand.

Answer 72

• a contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated fee
• Angry Birds using Star Wars in its game

Question 73

List one pro and one con for a brand that takes on the name of a product category.

Answer 73

• Pro:
• Con: Not ideal, as the individual brand loses its value – ‘Get me a band-aid’ does not mean ‘Get me a Band-Aid brand adhesive strip’

Question 74

What are brand associations and brand loyalty and how can they help a firm?

Answer 74

• Brand associations: reflect the mental links that consumers make between a brand and its key product attributes, such as a logo, slogan, or famous personality
o Toyota Prius = economical
o BMW, Audi = performance, luxury
o Nike = Michael Jordan
• Brand loyalty: when a consumer buys the same brand’s product or service repeatedly over time rather than buy from multiple suppliers within the same category
o Develops positive word-of-mouth

Question 75

What is a manufacturer brand? Provide an example of a manufacturer brand.

Answer 75

• Manufacturer brands: also called national brands, are owned and managed by the manufacturer
• The manufacturer develops merchandise, produces it, and invests in marketing
o Proctor and Gamble US-based advertising budget: $2.2 billion

Question 76

List, define, and provide an example for each of the four categories of private brands we discussed in class.

Answer 76

• Premium brands: offer the consumer a private label that is comparable to, or even superior to, a manufacturer’s brand quality (Kroger’s Private Selection, President’s Choice)
• Generic brands: target a price-sensitive segment by offering a no-frills product at a discount price
o Not as popular as other private-label categories, as consumers need at least some measure of quality
• Copycat brands: imitate the manufacturer’s brand in appearance and packaging, generally are perceived as lower quality, and are offered at lower prices
• Exclusive co-brands: a brand that is developed by a national brand manufacturer, often in conjunction with a retailer, and is sold exclusively by the retailer
• Family brands: a firm uses its own corporate name to brand all its product lines and products; the individual brands benefit from the overall brand awareness associated with the family name
o Kellogg’s

Question 77

What is an exclusive co-brand and how can it help a retailer?

Answer 77

• A brand that is developed by a national brand manufacturer, often in conjunction with a retailer, and is sold exclusively by the retailer
• It can give them an advantage if a brand is well-known and popular as they are the only ones who can sell that product

Question 78

We discussed two ways that firms name their brands. List, define, and provide an example of each.

Answer 78

Find

Question 79

What is a brand extension? A line extension?

Answer 79

• Brand extension: using the same brand name in a different product line, an increase in the product mix’s breadth
o Colgate: toothpaste, toothbrushes, dental floss
o Halo effect
• Line extension: the use of the same brand name within the same product line, which increases the product line’s depth

Question 80

What is brand dilution, and what are three ways that a company can prevent dilution?

Answer 80

• Brand dilution: occurs when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold
o Cheetos Lip Balm; Lifesavers Soda; Colgate Kitchen Entrees
• How to prevent negative consequences:
o Evaluate the fit between the product class of the core brand and that of the extension (will consumer be confused, or does the extension “make sense”)
o Evaluate customer perceptions of the attributes of the core brand and seek out similar attributes for the extension (e.g., reliability, high performance)
o Refrain from extending the brand name to too many products and product categories (brand fatigue)
o Consider whether the brand extension will be distanced from the core brand – if the firm wants to use some but not all of the brand associations (Marriott – budget hotels, mid-range hotels, luxury hotels; luxury doesn’t use Marriott name)

Question 81

What is one pro and one con of a co-branding agreement?

Answer 81

• Co-branding: the practice of marketing two or more brands together, on the same package, promotion, or store
• Pro: Links from quality brand can enhance less well-known brand (e.g., halo effect)
• Con: If one of the brands suffers, the other brand could be dragged down with it

Question 82

What are three key roles of product packaging?

Answer 82

• Attracts consumers’ attention
• Enables products to stand out from their competitors
• Offers a promotional tool (e.g., “New”, “Improved”, “Fat-free”)
• Allows the same product to appeal to different markets with different sizes
• The packaging itself can become a marketing tool (e.g., made from recycled materials, saving cereal box tops)

Question 83

Define innovation. What are the two end points of the innovation continuum (list and define)?

Answer 83

• Innovation: the process by which ideas get transformed into new offerings, including products, services, processes, and branding concepts that will help firms grow
• Slightly Repositioned: products that are slightly altered
• New-to-the-world: Products that are completely new

Question 84

List, define, and draw a graph of each of the categories of the diffusion of innovation.

Answer 84

• Innovators: buyers who want to be the first on the block to have the new product or service
• Early adopters: not as risky as innovators, but wait and purchase the product after careful review (don’t just buy based on the “name”)
• Early majority: members of this group don’t take much risk, wait until the bugs are worked out of a product or service
• Late majority: the last group of buyers to enter a new product market; at this point, the product has achieved its full market potential
• Laggards: consumers who avoid change and rely on traditional products until they are no longer available

Question 85

Define the product life cycle. List, define, and draw a graph of each of the categories of the product life cycle curve.

Answer 85

• Product life cycle: defines the stages that products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning
o Not every product follows the same life cycle curve
• Introduction stage: usually starts with a single firm, innovators are the ones to try the new offering
• Growth stage: marked by a growing number of product adopters, rapid growth in industry sales, and increases in both the number of competitors and the number of available product versions
• Maturity stage: characterized by the adoption of the product by the late majority, intense competition for market share among firms
o Marketing costs increase as firms defend market share against competitors
o Price competition increases, profit margins erode
• Decline stage: firms either position themselves as niche products (for diehard consumers) or exit the market