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Marketing Management > Session 5 > Flashcards

Session 5 Flashcards

1
Q

What are the different classification dimensions for products

A
  1. Nature of customer’s buying behavior
  2. Level of involvement in purchase process
  3. Type of benefit
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2
Q

What are tangible goods?

A

Physical products

Many products have both

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3
Q

What are intangible goods?

A

Not physical products

Many products have both.

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4
Q

What is the core product?

A

Primary benefit that is actually bought by consumers

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5
Q

What is the augmented product?

A

The augmented product offers additional benefits often experiental or emotional.

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6
Q

What are convenience goods?

A

Goods that are bought often and without much deliberation. Widely available

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7
Q

What are shopping goods?

A

Takes a little more consideration and some comparison. People buy these products regularly, but not frequently.

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8
Q

What are specialty goods?

A

Goods characterized by inelastic demand and no comparison shopping. Only available in selected outlets.

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9
Q

Product mix

A

This means all the product lines

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10
Q

Product line

A

group of items serving a similar function.

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11
Q

Depth of product line

A

Number of versions of the products in the product line.

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12
Q

length of product line

A

How many products there are in the product line.

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13
Q

What is meant by consistency of a product mix

A

This refers to the degree in which product lines share the same characteristics.

e.g. Heineken only offers beer, so it is highly consistent.

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14
Q

Four basic options of increasing offerings

A
  1. Additional brand
  2. Diversification
  3. Line Extension
  4. Brand Extension.
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15
Q

Line extensions

A

Existing brands introducing new products in an existing product category

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16
Q

Brand extension

A

Existing brand introducing new products in a new product category.

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17
Q

Additional brand

A

Introducing a new brand that offers products in an existing product category

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18
Q

Diversification

A

Introducing a new brand that offers products in a new product category.

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19
Q

Life cycle costing

A

Aggregating the total costs associated with the product over time

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20
Q

Target costing

A

Consideration of production costs and costs required to remain competitive in marketplace

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21
Q

Customer costing

A

Concentrates on costs to serve each customer seperately. Provides understanding that resources are not equally spread out among customers. Aids in profitability analysis

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22
Q

What does brand valuation do?

A

Brand valuation considers the benefits of brand equity to the owner of the brand. This allows for the incorporation of future benefit projections to be taken into account.

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23
Q

What is brand equity?

A

A combination of loyalty, awareness, quality, associations of the product by customer etc.

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24
Q

Methods of brand valuation:

A
  1. Cost-based approach
  2. Market-based approach
  3. Income-based approach
  4. Formulary approach
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25
Q

What is the cost-based approach of brand valuation?

A

This is acceptable according to accounting practices, but least useful for future benefit consideration. Doesn’t take into account indirect costs

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26
Q

What is the market-based approach of brand valuation?

A

Estimation for what brand is worth in the market. This approach does consider future benefits but most brands do not have a ready market. This is useless if there are no comparable brands.

27
Q

What is the income-based approach of brand valuation?

A

This discounts future revenue. It’s more useful for internationally competing brands. Contains strategic assessment of brand and inclusion of brand extensions.

28
Q

What is the best valuation approach?

A

The formulary approach considers a wide variety of factors that influence brand valuations. As such, it is by far the most comprehensive assessment of brand value.

29
Q

What is a high-velocity environment?

A

Competitive environment in which channel design effectiveness can’t be accurately measured because the supplier-customer alignment changes too quickly.

30
Q

How should companies create channel strategy in hihg-velocity environments?

A
  1. Try out a lot of different options
  2. Analyze the few that seem most favourable
  3. Use them in your channel strategy and sell the remaining channel options
31
Q

What are the requirements of a channel strategy?

A
  1. Effectiveness: are customer needs met?
  2. Coverage: can customer value our offering?
  3. Cost-efficiency: is trade-off between effectiveness and coverage worth it through multiplier effect in increasing impact of marketing variables
  4. long-run adaptability: can channel design handle new products and services
32
Q

Important channel design principles

A
  1. Inversion: design channel backwards
  2. Channel functions should be sorted to optimize cost-efficiency
  3. Create portfolios of options from which you can learn
  4. Monitor channel performance because you can’t learn without it.
33
Q

What is omnichannel retailing?

A

Interaction between customers and retailers through numerous channels, both digital and physical

34
Q

What holds physical retailers back from adapting to digitalization and digital technology?

A
  1. Retailers created online organizations which came crashing down during dot-com bubble
  2. Physical retail systems revolve around measurements incompatible with digital retail
  3. Retailers are mistakenly focused on profit margin while they should be focused on ROIC and growth
  4. Retailers prefer gradual change over full-scale innovation
35
Q

How can omnichannel organizations be established?

A

By creating two seperate formal organizations that collaborate on key decisions.

Creation of the digital organization will require a clinical-trial-style apporach to testing the use of technology to COMPLEMENT physical shopping.

36
Q

Three kinds of surplus

A
  1. Producer surplus
  2. Consumer surplus
  3. Unrealized surplus
37
Q

What is producer surplus?

A

The difference between unit variable cost and the price paid

38
Q

What is consumer surplus?

A

The difference between the customers maximum willingness to pay (perceived value) and the price paid

39
Q

what is unrealized surplus?

A

The difference between the perceived value (max WTP) and the true value of a product

40
Q

How can companies increase producer surplus?

A
  1. Decrease unit variable cost
  2. Increase price

Best is to increase price and willingness to pay because it doesn’t cut into consumer surplus.

41
Q

What is first degree price discrimination?

A

Perfect discrimination where everyone pays their max WTP

42
Q

What is second degree price discrimination?

A

Discrimination based on something to do with product. For example, buying in bulk.

43
Q

What is third degree price discrimination?

A

Discrimination based on customer, for example classes of buyers (kids, elderly etc.)

44
Q

What is the ideal pricing strategy?

A

The ideal pricing strategy is charging every customer their WTP, requiring perfect price discrimination. Impossible

45
Q

How can price sensitivity be decreased?

A
  1. Less substitutes
  2. Small price relative to category budget (apple €1 of €1000 food budget)
  3. Part of cost is borne by a third party
  4. Prestige products
  5. Individual differences
46
Q

What are the three main pricing strategies (lecture)

A
  1. Loss leader pricing
  2. Competitive pricing
  3. Markup pricing
47
Q

What is loss leader pricing?

A

Product is priced at a loss and put in back of the store so consumer walks past all offerings, tempting consumer to buy different products

48
Q

What is competitive pricing?

A

Pricing to steal market share. This is bad marketing.

49
Q

What is markup pricing?

A

This means that the company adds a markup to the cost, ignoring perceived value and demand.

50
Q

Why is is beneficial for producers and retailers to include wholesalers in distribution channel?

A
  1. Discounts for bulk buying
  2. Reduces inventory costs for retailers and produers
  3. Wholesalers has broad reach to outlets to sell products
  4. Reduces transactions and thus costs in marketplace
51
Q

Why is it beneficial for consumers that wholesalers are included in the distribution channel?

A
  1. Reduces search time
  2. Allows the purchase of small quantities
52
Q

What is double marginalization?

A

This means that multiple parties in the distribution channel charge more to improve margins. Overall, this causes inefficiences in the market that require a significant volume increase to offset. This is unlikely due to higher price.

53
Q

What is vertical integration?

A

This means that the a corporation incorporates different elements of the distribution channel further down channel. (Manufacturer starts distributing)

Some problems often arise because these newly incorporated activities do often not align with the core competencies of the firm.

54
Q

What is horizontal integration?

A

A company acquires another company at same place in distribution channel. (Retailer acquires other retailer)

55
Q

Name the three channel characteristics.

A
  1. Depth: Extent to which company controls elements of distribution channel
  2. Breadth: how available is product
  3. Length: number of intermediaries
56
Q

What are some possible reasons for vertical integration?

A
  1. Flexibility
  2. Influence on bad business practices
  3. Opportunities for differentiation
57
Q

What should companies do instead of competitive pricing?

A
  1. Price matching instead of undercutting competition
  2. Emphasize performance risk of low-price options
  3. Offer bundles
58
Q

What is backward vertical integration?

A

Company incorporates element further up the distribution channel into it’s operation. (e.g., a manufacturer starts extracting it’s own resources)

59
Q

What are the four types of repositioning?

A
  1. Tangible
  2. Intangible
  3. Image
  4. Product
60
Q

What is image repositioning?

A

Product image is altered to counter negative perceptions about the product.

61
Q

What is product repositioning?

A

The product is changed to better suit the target market

62
Q

What is tangible repositioning?

A

The product and target market are changed.

63
Q

What is intangible repositioning?

A

The target market is changed to better suit the product.

64
Q

Problems with vertical integration?

A
  1. Reduces variety due to limited resources
  2. Less convenient because one party needs to do more work
  3. Insufficient knowledge over specialized tasks.

Marketing Management (6 decks)

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