Session 4

Question 1

Different types of data used in market position research

Answer 1

1. Perception data
2. Preference data

Question 2

What is perception data

Answer 2

Data based on what you see, what the product of a company is perceived as by the customer.
We are more likely to assume homogeneity in responses across consumers.

Question 3

What is preference data

Answer 3

Data on what customers like.

Question 4

Two types of perceptual mapping techniques

Answer 4

1. Ratings of items on prespecified attributes
2. judgments of overall similarity of pairs of brands

Question 5

Attribute rating method

Answer 5

Rating from 1-10 for each competitor for each attribute, presented in a data matrix.

Question 6

Perceptual map of attribute rating method

Answer 6

It is important to understand that vectors pointing in the same direction are more correlated.

Question 7

Overall similarity method

Answer 7

Better for analyzing market position when attributes are difficult to articulate. Respondents could be asked for rating similarity instead.

Question 8

Three ways in which perceptual maps are used in marketing

Answer 8

1. To get better understanding of current positioning and market structure
2. To test where new product being considered for introduction would place in market
3. To provide R&D with information to satisfy consumer wants/needs better.

Question 9

Understanding market structure

Answer 9

1. Helps understanding our position
2. perceptual maps useful to opportunity identification
3. Indicate vulnerability of competitors by showing how consumers perceive them.

Question 10

Perceptions of a product concept

Answer 10

Perceptual maps can be used to test if product concept is perceived by customers the way it is intended to be. Best if testers actually use the product.

Question 11

Direction to R&D efforts to satisfy customers better

Answer 11

Requires formal representation of ideal point of a customer. If there are attributes for which more isn’t better, we want to represent these ideals.

Question 12

Four strategies to stop customers fixate on price

Answer 12

1. Use price structure to clarify advantage
2. Willfully overprice to stimulate curiosity
3. Break up prices in components to highlight overlooked benefits
4. Equalize price points to make personal relevance clear

Question 13

How to use price structure to clarify your advantage.

Answer 13

You want to change the way you set prices by pricing according to some overlooked benefit offered by your product.

Question 14

What is the 5-boxes positioning statement

Answer 14

1. Current belief –> Current behavior
2. Desired belief –> Desired behavior
3. Current belief –> consumer proposition –> desired behavior

Question 15

When is positioning important?

Answer 15

1. Consumers are confused about what category you’re in
2. Doubts about product quality
3. Main benefit isn’t important to customer

Question 16

How do you position?

Answer 16

Companies position by creating positive associations through the marketing mix.

Question 17

Steps in producing a perceptual map

Answer 17

1. Identify competing brands
2. Identify attributes that matter most
3. Research where consumer ranks each brand
4. Plot research results in perceptual map

Question 18

What is the difference between a positioning statement and a tagline

Answer 18

Positioning statement shows a strategic desicion whereas a tagline is a memorable articulation of it that the customer will easily remember

Question 19

Positioning statement

Answer 19

To (target audience), our (brand) is (the concept) that provides (what the main/dynamic variable is or does)
because (reason).
e.g., To young, active soft-drink consumers who have little time for sleep, Mountain Dew is the soft drink that
gives you more energy than any other brand because it has the highest level of caffeine.

Question 20

What is belief perseverance

Answer 20

People are unwilling to change their beliefs even if they know their beliefs are false.

Question 21

What is the curse of knowledge

Answer 21

It’s impossible to unknow something after you have known it. Can’t pretend to not know it

Question 22

What is the provenance paradox

Answer 22

Great product will get bad reviews because of negative association with provenance of origin. (bordeaux wine)

Question 23

What are the different stages in product life cycles

Answer 23

1. Introduction stage
2. Growth stage
3. Maturity stage
4. Decline stage

Question 24

Characteristics of the introduction phase

Answer 24

1. Slow sales growth, no profit
2. High-quality is required
3. Little competition
4. Focus is on getting customers

Question 25

Characteristics of the growth phase

Answer 25

1. Rapid sales growth, start of profit
2. Introduction of variations
3. Aggressive entering of competitors

Question 26

Characteristics of the maturity phase

Answer 26

1. Slow sales growth
2. Profits stabilize/decline due to high competition
3. Focus on new product platforms (launching products related to original product to boost sales and benefit from success original product)

Question 27

Characteristics of the decline phase

Answer 27

1. Sales and profits decline rapidly
2. Marketing budget is reduced
3. Companies choose for profit maximalisation (cash cow)

Question 28

How do consumers evaluate products

Answer 28

1. Search attributes
2. Experience attributes
3. Credence attributes

Question 29

What are search attributes

Answer 29

Product attributes that can be evaluated before consumption, like price, size, noise etc.

Question 30

What are experience attributes

Answer 30

Attributes that can only be evaluated after consumption (taste)

Question 31

What are credence attributes

Answer 31

Product attributes that can not be evaluated, but have to be believed (e.g. nutritional value, can’t be measured)

Question 32

How can companies promote credence attributes

Answer 32

1. High price signalling high quality
2. Advertising
3. Branding

Question 33

What is branding

Answer 33

creating positive associations to create long-lasting relationships with customers

Question 34

Effects of aggressive entering by competitors

Answer 34

1. Can aid in growing the overall market size
2. Product improvements might be necessary to be able to compete.

Question 35

What are the five pricing principles to create shared value profitably.

Answer 35

1. Focus on relationships, not transactions
2. Be proactive
3. Put a premium on flexibility
4. Promote transparency
5. Manage the market standard for fairnes

Question 36

Why should companies focus on relationships with their pricing?

Answer 36

By focusing on serving the customer needs instead of selling products, the company can create brand loyalty.

Customer first,
Think about different price tiers.

Question 37

How can companies price proactively?

Answer 37

Price according to the company’s knowledge of which customers they want to serve and how they will react to different pricing schemes.

Only bundle if it’s to customer benefit

Question 38

Why should companies put a premium on flexibility?

Answer 38

By pricing the incremental value created in each partnership, the company can create shared value.

Question 39

Why should companies promote transparency in regards to pricing?

Answer 39

By promoting transparent pricing the company builds trust with consumers, which improves relationship with customer

Question 40

Why should companies manage the market’s standard for fairness in relation to their pricing?

Answer 40

Customer satisfaction depends on their perception of market fairness. Keep your promise to your customer and they will assume the price is fair.