Reading Notes Flashcards
New Product Development: Managers Reject Ideas Customers Want
The customers wanted the most creative ideas, the team found, but not the ideas that people in the firm thought would be most profitable or feasible
New Product Development: I Think of My Failures as a Gift
We learn more from failure than we do from success
5 fundamental root causes for failure:
- The absence of a winning strategy for the combination
- Not integrating quickly or well
- Expecting synergies that don’t materialize
- Cultures that aren’t compatible
- Leadership that wouldn’t play together in the same sandbox
Service Marketing: A Practical Guide to Combining Products and Services
Two underlying characteristics determine how customers will value and use an offering:
Complementarity
Degree to which value to the customer increases when product and service are used together
Ex: iPod and iTunes
Independence
Products and services that are highly independent are usually sold separately
Service Marketing: A Practical Guide to Combining Products and Services PART 2?
Hybrid offerings
Hybrid offerings: flexible bundle
Best suited to complex products and services that address thorny customer problems
Hybrid offerings: Peace-of-Mind Bundle
Appeals to customers looking for the assurance that they are getting a complete, best-of-breed offering
Low complementarity, high independence between product and service is combatted by strong product brand
Hybrid offerings: Multibenefit bundle
Product and service are inseparable
High complementarity and dependence
Benefit to the customer comes from offerings added to the basic one
Hybrid offerings: One-stop bundle
Customers are attracted by reliability of service and shopping convenience
In evaluating options of hybrid offerings, companies should keep in mind 4 rules
Rule 1: Look for points of differentiation in product and service markets
Rule 2: Scope the service and scale the product
Rule 3: Assess the revenue and profit potentials of various hybrids
Rule 4: Invest in the brand
Promotion: Creativity in Advertising: When it Works and When it Doesn’t
Creative messages get more attention and bring positive attitudes to the product, but only some influence purchase behavior
Promotion: Creativity in Advertising: When it Works and When it Doesn’t
TORRENCE TEST OF CREATIVE THINKING
Fluency: number of relevant ideas proposed in response to a given question
Originality: how uncommon or unique the responses are
Elaboration: amount of detail in a given response
Abstractness: degree to which a slogan or a word moves beyond being a label for something concrete
Resistance to premature closure: measures the ability to consider a variety of factors when processing information
Promotion: Creativity in Advertising: When it Works and When it Doesn’t
BUSINESS DEFINITION OF CREATIVITY
Originality: rare or surprising, moves away from the obvious
Flexibility: smoothly links the product to a range of different uses or ideas
Elaboration: extend simple ideas with unexpected and intricate details
Synthesis: blending or connecting normally unrelated objects or ideas
Artistic value: aesthetically appealing verbal, visual, or sound elements
Elaboration most impactful, synthesis least
Companies don’t know this and use originality and artistic value most
Ad Placement & Effectiveness: Madison Avenue goes to the movies to keep Oscar viewers from skipping ads
Companies who had ads in the Oscar’s broadcast related them to movies because people watching the Oscars obviously have an interest in movies and want more of the same
Goal is to keep viewer’s attention
Ad Placement & Effectiveness: Ads that don’t overstep
Marketers’ access to consumer digital data revolutionized their marketing abilities
But, too much personal data use causes consumer backlash
People are usually okay with sharing info to someone themselves, but third-party sharing makes them uncomfortable
Consumers must feel a sense of trust, control, and justification for why their info is being shared
Price: How to stop customers from fixating on price
In mature markets, heavy competition has a commoditizing effect
Commoditization = diminishing differences among offerings
Customers only focus on price when faced with many options
Close link between pricing and customer attention
4 pricing strategies
Pricing strategy #1
Use price structure to clarify your advantage
Goodyear prices their tires based on how many miles they’ll last
Norwich Union competes price-wise on the personal relevance to customers for the value it provides
Pricing strategy #2
Willfully overprice to stimulate curiosity
Customers feel more passionate about products they spend extra money on because of the luxury benefits
Price range above WTP that makes customers ask “Do I need this benefit?”
KONE, an elevator company, introduced MonoSpace, an expensive elevator, in addition to their competitively priced elevators
Pricing strategy #3
Partition prices to highlight overlooked benefits
Breaking a price into its component charges
People chose a more expensive flight when they saw the price partitioned (“itemized”)
Customers see a real benefit they would have otherwise overlooked
Pricing strategy #4
Equalize price points to crystallize personal relevance
Uniform pricing for every song on iTunes caused people to buy more music and think about the benefit of iTunes’s huge selection
Price: How online shopping makes suckers of us all
Online prices are always toggling
Left-digit bias works well in grocery stores and for smaller purchases
Ex: Overstock sold a cheap patio furniture set to a man for $499
Prices aren’t set anymore– they change frequently
The Boomerang app is meant to manage consumers’ perceptions of an acceptable price
Place: Selling on TikTok and Taobao: The growing power of online video platforms
Livestream commerce always has an audience and builds community
Companies using this have 5 main objectives:
Generate immediate sales
Reach new consumer segments
Introduce new products
Educate consumers
Create buzz
Ethical Concerns: Marketing in the age of resistance
Consumers want to see authenticity and action from brands in regard to political and social issues
Brands must:
Get outsider perspective to maintain thoughtfulness and sincerity
Listen, process, and validate consumer concerns and feedback
Apologize without excuses
Show action and effort to change after apology
Managerial & Consumer Biases: Nudge your customers toward better choices
Defaults simplify decision-making, enhance customer satisfaction, and drive profitable purchases
Managerial & Consumer Biases: Nudge your customers toward better choices MASS DEFAULTS
Begign default: company’s best guess
Random default: customers are randomly assigned to one of several default configurations
Hidden options: presented as customer’s only choice because alternative options are hard to find
Managerial & Consumer Biases: Nudge your customers toward better choices PERSONALIZED DEFAULTS
Smart defaults: apply to individual customers in a way that is likely to be ideal to them– they use data, so customers can opt-out
Persistent defaults: a customer’s past choices are the best predictors of their future choices– customer preferences can change, so companies should make opting out easy and transparent
Adaptive defaults: they update themselves based on real-time decisions that customers are making
Spreading & Sharing Information: Want your ads to go viral? Activate these emotions
The more an experience provokes activating emotions, the more likely people are to share it (BUT people don’t like to share sadness)
In terms of marketing, people feeling good about your brand isn’t enough– you need to fire them up
