Strategic Marketing II Flashcards
Product innovation
- Market novelty
- Imitation
Characteristics of Market Novelties in Product Innovation
- First-of-its-Kind – These innovations introduce something completely new, not just an improvement on existing products
- High Uncertainty – Since they are new to the market, customer acceptance and demand are often uncertain
- Competitive Advantage – Companies that bring market novelties can establish themselves as industry leaders or pioneers
- Potential for High Risk & High Reward – Market novelties require significant investment in R&D but can lead to substantial financial success if widely adopted
- Technological or Conceptual Breakthroughs – They often involve scientific discoveries, advanced engineering, or novel business models
Product Innovations: Imitations
- Not First-to-Market – The product is introduced after a similar version already exists
- Improved or Differentiated Features – Often, imitations include enhancements such as better quality, lower price, or additional functionalities
- Lower Risk – Since an existing market already exists for the product, the uncertainty around customer demand is reduced
- Cost Efficiency – R&D costs are typically lower because companies build upon existing knowledge rather than inventing from scratch
- Faster Market Entry – Businesses can launch imitation innovations quicker since they do not need to establish entirely new customer behaviors
Product maintenance
- Preservation
- expansion
Preservation of existing
product potentials
- Revitalization
- Variation
- Bundling
- Multiplication
Revitalization
improving or updating an existing product to maintain or regain market relevance (e.g., rebranding, updating packaging, minor feature upgrades).
Variation
Introducing new versions of an existing product to cater to different consumer preferences (e.g., different flavors, colors, or limited-edition releases)
Bundling
Combining multiple products into a single package to increase perceived value (e.g., software suites, meal deals, or skincare sets)
Multiplication
Expanding a product line by launching multiple variations or formats of a successful product (e.g., a soft drink brand introducing different sizes or sugar-free versions)
ROMI: Return on Marketing Investment
Incremental Revenue - Marketing Costs / Marketing Costs x 100
Incremental Revenue
The additional revenue generated as a result of the marketing campaign
Marketing Costs
Total costs associated with the campaign, including ad spend, personnel, and other related expenses
Interpretation of ROMI
A ROMI of 100% means the company earned $1 in profit for every $1 spent on marketing. Higher ROMI values indicate more efficient campaigns
Segmentation
Market segmentation is the process of dividing a broad consumer or business market into smaller, more defined groups based on shared characteristics. This helps businesses target specific customer needs more effectively instead of using a one-size-fits-all approach
Brand positioning: definition
is the act of designing the company’s offer and image so that it occupies a distinct and valued place in the target customer’s minds
Brand positioning: analyse
- The brand’s frame of reference / points of parity
- The brand’s target audience
- The brand’s points of differences. (Why should
consumers buy it?)
Positioning a product in consumers’ minds requires skill
- Assimilation to the Market (Points of Parity, POP)
- Differentiation from Competitors (Points of Difference, POD)
We know from consumer research that consumers need to be able..
to correctly classify the product
Points of Parity
are the shared attributes or benefits that a brand must have to be considered a legitimate competitor in its industry. These are the basic expectations that customers have when comparing different brands
Points of Difference (PODs)
are the unique attributes or benefits that set a brand apart from its competitors. These are the reasons why customers choose one brand over another
1. Desirable (Customers must find it valuable and relevant)
2. Deliverable (The company must be able to provide it consistently)
3. Differentiating (It must be distinct from competitors’ offerings)
–> All successful brands have PODs
