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MBA > MKTG 579 > Flashcards

MKTG 579 Flashcards

1
Q

NPD

A

New Product Development

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2
Q

Basic New Product Process

A
  1. Opportunity Identification and Selection
  2. Concept Generation
  3. concept/project evaluation
  4. Development (incl. both technical and market tests)
  5. Launch
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3
Q

How to Increase Chance of NPD Success

A
  1. A market research program

2. An integrated approach

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4
Q

Qualitative Research Programs

A

Depth interviews, focus groups, expert judgement, case studies, projective methods, beta tests

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5
Q

Quantitative Research Programs

A

Standard surveys, concept tests, perceptual maps, conjoint analysis, product use test

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6
Q

QFD

A

Quality Function Deployment. Also referred to as the House of Quality. An example of an integrated approach.

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7
Q

Diffusion of Innovation (Pattern of Adoption)

A
  1. Innovators (2.5%)
  2. Early Adopters (13.5%)
  3. Early Majority (34%)
  4. Later Majority (34%)
    5 Laggards (16%)
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8
Q

The S-Curve for Diffusion

A
  1. Lag Phase
  2. Take-Off
  3. Saturation Point
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9
Q

Factors Affecting Diffusion Rate

A

Product-Related

  1. High relative advantage over existing products
  2. Can be tried on a limited basis
  3. Benefits and usage are observable
  4. High degree of compatibility with existing approaches
  5. Low complexity

Market-Related

  1. Type of innovation adoption decision (does it involve switching from familiar way of doing things?)
  2. Communication channels used
  3. Nature of “links” among market participants
  4. Nature and effect of promotional efforts
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10
Q

Key Drivers of Diffussion

A
  1. Relative Advantage - superiority over the product it is trying to replace (Ex: X-Ray)
  2. Trial-ability - if new product performs successfully in testing by non-experts.
  3. Observability-The degree of difficulty in discovering or describing the tangible and intangible benefits of the new product
  4. Compatibility-if the new product complies with the original object’s functionality, user values, needs, and past experience.
  5. Complexity-When the product’s features, if many and varied, diminish the users understanding of, or increase the difficulty in, using a new product.
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11
Q

Prospect Theory

A

A concept developed to explain a person’s response to changes in monetary and non-monetary wealth. It is based on how people perceive the value they may be getting. What drives behavior are these psychological reactions to gains and losses, and not the objective gains and losses themselves.

Rules

  1. Individuals are sensitive to gains and losses
  2. Reference points matter - what is a persons status quo
  3. Decreasing marginal sensitivity - people feel the gain/loss less after time
  4. Aversion to losses - people could be more sensitive to the loss compared to the gain
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12
Q

Endowment Effect

A

People value items in their possession (or part of their endowment) more than they value items not in their possession.

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13
Q

Applying to Innovation Adoptions

A

Consumers will evaluate what they are “giving up” vs what they are “getting.”

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14
Q

Innovator Biases

A
  1. Self-Selection
  2. A clash in perspectives
  3. The curse of knowledge
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15
Q

Demand Forecasting Methods

A
  1. Judgmental: chain ratios
  2. Market and product analysis (Surveys, market test, Bass model)
  3. Regression analysis (linking market/product/consumer factors to sales)
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16
Q

Forecasting: Bottom Line

A

Forecasting is as much about judgment as it is about data and science. Always perform sensitivity analysis.

“Forecasts are nothing. Forecasting is everything.” - the process is important

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17
Q

(WK2) R Square

A

The higher the R Square the better your model is for the data.

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18
Q

(WK2) Significance F

A

This tells us about the overall model fit. Is this model sufficiently good? A value lower than 5% is good. A higher than 5% “P” value means they were insignificant in the regression forecasting.

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19
Q

(WK2) Data Collection

A
  1. Primary data: Surveys, often based on recall and estimations.
  2. Secondary, Internal: transaction record, sales invoice. External: commercial dataset, firm filing reports, government data, online open-access data, etc.
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20
Q

(WK2) Using the Bass Model

A

Purpose: to model the diffusion pattern of new products and innovation

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21
Q

(WK2) What can the Bass Model be used to predict

A
  1. Annual sales
  2. The time of sales peak
  3. Sales a peak period
  4. Market size
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22
Q

(WK2) 3 Parameters of the Bass Model

A
  1. P: Coefficient of innovation (degree of innovation)
  2. Q: Coefficient of imitation (degree of imitation)
  3. M: Market Size (number of people that could become adopters of the product)
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23
Q

(WK2) Important Note about Bass Model

A

The Bass model is about the diffusion of the product category, not individual brands or firms.

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24
Q

(WK2) Bass Model Equation

A

Sales at time t:
S(t) = pm + (q-p) N(t-1) - (q/m)Nt-1)^2

Sales peak at time t:
t = (p+q) In(q/p)

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25
Q

(WK2) What drives “P”

A

P: “innovation” people who adopt independently of others

  1. Firm promotion (advertising)
  2. Media coverage
  3. Risk associated with adoption
  4. Advantage over existing products
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26
Q

(WK2) What drives “Q”

A

Q: “imitation” people who adopt as a result of others adopting

  1. Observation
  2. Word-of-mouth
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27
Q

(WK3) Ingredients of Creativity

A

Creativity (grow, the process of growth)

  1. Imagination
  2. Inspiration
  3. Envision
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28
Q

(WK3) 5 Skills that Foster Creativity

A
  1. Observing
  2. Questioning
  3. Experimenting
  4. Networking
  5. Associating

Innovators DNA article

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29
Q

(WK3) Is Creativity Learned?

A

1/3 of the ability to think creatively comes from genetics.

2/3 comes from learning.

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30
Q

(WK3) Observing

A
  • Carefully, intentionally, and consistently
  • Look out for behavior details - especially of customers
  • Never take things for granted
  • Take notes
  • Ask questions
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31
Q

(WK3) Questioning

A
  1. It gives you some time to think about the observation or the puzzle. It allows you to think deeper.
  2. Questioning often generates greater interest and enthusiasm. And being enthusiastic makes you more successful.
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32
Q

(WK3) How to Question

A
  • Ask why, why not, and what if?
  • Why do they do that?
  • Why isn’t there a way we can do this more easily?
  • Constraints often stimulate creative thinking. For example, what if the supply of this material runs out? Don’t take the impossible for granted.
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33
Q

(WK3) Experimenting

A
  • Actively try out new ideas
  • Formats of experimenting
    • Physical tinkering
    • Creating prototypes
    • Launching pilots
    • Intellectual exploration
    • Engagement in new surroundings
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34
Q

(WK3) Associating

A

Connecting the Dots

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35
Q

(WK3) Networking

A

Most important ideas emerged during regular lab meeting, where a dozen or so researchers gather and informally present and discuss their latest work.

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36
Q

Adjacent Possible

A

(Stuart Kaufmann)

The boundaries grow as one explores the boundaries. You open one door and behind that door are 4 more doors to explore.

37
Q

(WK3) What can Individuals do to build creative moments?

A

(Steven Johnson)

  • Go for a walk
  • Read - Bill Gates (annual reading vacation)
38
Q

(WK3) Build Daily Habits for Creativity

A
  1. Intentionally and consistently observe.
  2. Take notes!
  3. Be curious, keep asking “why”, “why not”, “what if”
  4. Actively experiment and be forgiving on mistakes
  5. Take international trips!
  6. Go for a walk.
  7. Take reading vacations.
39
Q

What Is a Business Model?

A

“A business model defines how an organization interacts with its environment to define a unique strategy, attract the resources and build the capabilities required to execute the strategy, and create value for all stakeholders.” (Applegate, 2008)

40
Q

Business Model vs. Strategy

A

“An organizations business model is a reflection of its strategy. A business model reflects a strategy for the firm, but not necessarily its entire strategy.” (Eisenmann, 2012)

So, a business model can be regarded as a specific way to carry out a strategy.

41
Q

Why has the number of business models increased?

A
  1. Technological advancement: things like internet and mobile technology increased opportunities.
  2. Private capital: A large infusion helped spur new and innovative business models.
  3. Globalization: facilitated the transfer of business models across geographic boundaries.
42
Q

What Questions does a Business Model Answer?

A

Answers the fundamental questions:

  1. Who is the customer?
  2. What does the customer value?
  3. What is our plan?
  4. How do we make money in this business?
43
Q

What Does a Business Model Do?

A

As a process: forces managers and entrepreneurs to think rigorously about their business and business plan.

As an action or function: focuses attention on how the key elements of the system “fit into a working whole.”

44
Q

Elements of Business Model

A
  1. Customer value proposition
  2. Revenue model
  3. Cost drivers
  4. Investment size
45
Q

Customer Value Proposition

A

A value proposition is an offer to target customers in which they will receive more than what they give up in adopting the product or service. Always define value from the customer’s viewpoint.

46
Q

Revenue Model

A

Five broad types companies can use to generate revenue

  1. Subscription/membership
  2. Volume or unit-based
  3. Advertising-based
  4. Licensing & syndication
  5. Transaction fee
47
Q

Cost Drivers

A

Is the business model’s cost primarily based on fixed, semi-fixed (eg., payroll), variable, or non-recurring cost (e.g., investments such as purchasing a building or major equipment.).

What are the largest cost centers for the business model?

Does each cost center deliver a strategic cost advantage?

48
Q

Investment Size

A

The capital needed to move the business forward.

49
Q

Two Basic Types of Innovations

A
  1. Sustaining: focus on incremental improvement to current products or technologies which can be sold for higher price to existing customers.
  2. Disruptive: focus on novel, simpler or lower-cost products or technologies to new or less attractive customers, not mainstream initially.
    (Christensen)
50
Q

Incumbents vs New Entrants

A

When firms face sustaining innovations, incumbents (well established companies) almost always win.

In disruptive circumstances, new entrants often unseat the incumbents.

51
Q

The Incumbent’s Curse (Tellis 2013)

A
  1. Success breeds complacency and a culture that embraces the status quo.
  2. Unwilling to cannibalize current successful products.
  3. Risk averse.
  4. Focus too much on the present.
  5. Pressure from the customer base.
52
Q

End-Result Metrics

A

Indicators only available once a transaction occurs. For instance, sales and profit.

53
Q

Intermediate Metrics

A

Assess Aspects of performance prior to the transaction and may provide an earlier glimpse at the success (or lack thereof) of a marketing tactic. They may also be helpful in pinpointing exactly where an unsuccessful tactic needs improvement. Since potential customers must be aware of a product before purchasing, awareness is an example of an in-process metric.

54
Q

Internal vs External Metrics

A

Internal metrics draw only on data pertaining to the firm in question or its channel members (such as return on investment -ROI).

External metrics include data from the market (e.g., brand awareness or preferences) or combine both internal and external data.

55
Q

Metrics Perspectives

A
  1. End-result
  2. Intermediate
  3. Internal
  4. External
56
Q

Goal for Metrics

A

Metrics chosen for all tactics must have alignment with strategic objectives.

57
Q

ROMI

A

Return on marketing investment

58
Q

Market Share

A

Market share is a particular company’s percentage of sales of the entire market as the company sees it. This is typically calculated either as a percentage of total market revenue (dollar share) or as a percentage of total market units (unit share).

59
Q

Customer Lifetime Value (CLV)

A

Attempts to predict the value of the future profit flows associated with an individual customer over a length of time the firm can retain the customer.

60
Q

Net Promoter Score (NPS)

A

NPS is a more recently developed metric designed to quickly measure customer loyalty by asking only one question. On a scale from 0 to 10, how likely is it that you would recommend our company to a friend or colleague?

61
Q

Promotional Metrics

A
  1. Brand awareness
  2. Brand preference
  3. Purchase intentions
  4. Brand equity
  5. Share of voice: is the portion of total advertising activity within a product category conducted by a given brand.
  6. Cost per impression (CPM)
  7. Cost per click
  8. Customer acquisition cost
62
Q

Pricing Metrics

A
  1. Percentage sales on deal - shows the portion of sales that were made while the product was priced at a lower (promotional price”
  2. Average unit retail price (AUR)
  3. Minimum advertised price (MAP) - lowest price that retailers are allowed to advertise a brand while receiving incentives from the manufacturer.
  4. Initial markup factor (IMU)
63
Q

Channel Metrics

A
  1. All commodity value (ACV): shows the breadth of distribution of a particular product in an area.
  2. Distribution percentage: the unweighted portion of all relevant retailers carrying the brand.
  3. Share of shelf: is the closely related metric that indicates the portion of shelf space in the category devoted to the brand in question.
  4. Inventory
  5. Inventory turns: measures how many times a company or unit sells its inventory over a year.
  6. Same-store sales: the percentage revenue growth/decline that stores achieve relative to their prior year.
  7. Sales per square foot
  8. Traffic: the # of people who walk into a given store
    Average basket size: the average dollar expenditure per transaction.
64
Q

Product Metrics

A
  1. Product superiority: assesses whether customers believe that a given product is both unique and of higher quality than competitors’ products.
  2. Cannibalization: the extent that a new product’s sales come at the expense of sales of existing products from the same company.
  3. Percentage of sales form new products
65
Q

Cost per Click (CPC) - Search Metric

A

This measures the cost effectiveness of an ad and is also commonly used as a way of bidding for placement in paid search.

66
Q

Clickthrough Rate (CTR) - Search Metric

A

This measures the effectiveness of an ad (or non-paid call to action message).It is the percentage measure of the number of clicked ads relative to the total number displayed. Thus, an ad that is displayed 500 times and is clicked 10 times is said to achieve a two percent CTR.

67
Q

Number of Clicks - Search Metric

A

This is a simple tally of how many times users click on an ad.

68
Q

Ad Rank - Search Metric

A

This metric determines where an ad will be positioned on search and display network pages relative to other ads. The ad with the highest ad rank appears in the first position, and so on down the page.

69
Q

Search Metrics

A

Search metrics tell a marketer how well they are managing the relationship with those looking for something on the internet.

70
Q

Display Metrics

A

Display metrics provide specific insight into the effectiveness of visual and/or interactive (also known as rich media) advertising. They usually take the form of banner, skyscraper, takeover and other types of high visual advertising.

71
Q

Cost per Action (CPA)

A

CPA is an advertising pricing model that ties the cost of an advertising campaign to a specific action. For example, a marketer would pay per person who becomes a subscriber.

72
Q

Impressions

A

The count of the number of times an advertisement appears on a page. Every time a page is visited for the first time by a new user or refreshed by the same user, a new impression of the advertisement is registered.

73
Q

Cost per Mille/Cost per Impression (CPM/CPI)

A

This is a key metric for online display advertisers that measures how much is being spent per impression. CPM (cost per thousand impressions)

74
Q

Reach

A

The number of people in a population who are exposed to an ad at least once in a set timeframe.

Formula

impressions (#)
_____________
average frequency (#)

75
Q

Effective Reach

A

The number of users who are reached at the targeted frequency level or above.

76
Q

Frequency

A

The number of times an ad is seen by those in a population exposed to an ad in a set timeframe.

Formula

Impressions (#)
____________
Reach (#)

77
Q

Gross Rating Points (GRP)

A

The sum of all rating points delivered by the media vehicle carrying an ad.

GRP = Reach x Average Frequency

78
Q

Email Open Rate

A

= Emails Opened / Emails Delivered

79
Q

Email Click Rate

A

= Emails Clicked / Emails Delivered

80
Q

Email Unsubscribes

A

= Unsubscribes / Total Subscribers

81
Q

Churn

A

Church is a measure of how many users/subscribers/customers leave a population of existing users/subscribers/customers in a given period.

Church Rate = Customers who left / Total customers

82
Q

Net Marketing Contribution (NMC)

A

A organization-level measure of the contribution by marketing to gross profit.

NMC = Gross Margin - Marketing & Sales Expenses
Gross Margin = Net Sales - Cost of sales
Marketing Return on Investment (ROI) = NMC / Marketing & Sales Expenses x 100%

83
Q

Online Marketing Metrics

A
  1. Search metrics
  2. Display metrics
  3. Email marketing metrics - open rate, click rate, unsubscribes
  4. Online commerce metrics - convert users into shoppers (churn, CLV)
  5. Social media marketing metrics - fans, likes, followers
  6. Analytics metrics - website analytics like Google Analytics (page rank, loyalty rate/bounce, total visits, new versus returning visitors, total time spent, depth of visit)
84
Q

Brand and Branding

A

Brand: a name, term, sign, symbol, or design intended to identify the goods or services of one seller and to differentiate from competition.

Includes tangible and intangible elements (consumer perception).

85
Q

Benefits (Brand + service + product) - Costs (Transaction costs + price)

A

Customer Value

86
Q

Brand Differentiation

A

A Strong Brand

  1. Enhances positive evaluations of a product’s quality
  2. Maintains a high level of product awareness
  3. Provides a consistent image or brand personality
87
Q

6 Criteria for Choosing Brand Elements

A
  1. Memorable: short names
  2. Meaningful: related to product benefits
  3. Likable: appealing
  4. Transferable: Used to name other product lines?
  5. Adaptable: Updatable
  6. Protectable: legally, competitively
88
Q

Brand Leveraging

A
  1. Line extensions
  2. Category extensions
  3. Co-branding
89
Q

How Firms Differentiate?

A
  1. Vertical differentiation: “quality”

2. Horizontal differentiation: “taste”

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