Exam 2

Methods of determining a products position

- Attribute based method: Ask customers to rate a firm's brand, the competitor's brands, and the "ideal" brand on a number of dimensions. - multidimensional scaling: customer-based judgments of similarity to determine a products position on a perceptual map 1. Determine the product's current position. 2. If satisfied, continue with the current strategy and value proposition. 3. If dissatisfied, the brand should be repositioned, and the value proposition may need to be modified. 4. If the product is new, ignore the second step. Step three becomes the position you are trying to establish.

must be present at the consumption of the service and cannot take the service home

- Customers

cannot be separated from its consumption by customers

- Production of a service

Heavy Users who are not price sensitive and are willing to try new offerings

- Tier 1: Platinum

heavy users, but not as profitable due to price sensitivity

- Tier 2: Gold

Spending volume and profitability do not warrant special attention

- Tier 3: Iron

- Actually cost the company money - demand more attention than is merited by their spending and often spread negative word of mouth - sometimes referred to as barnacles

- Tier 4: Lead

- obtain secondary data - obtain primary data - use information technology and data mining

- collect relevant information

- analyze the data - present the findings

- develop findings

To maximize the value of loyalty programs, data must be mined for better market segmentation, targeting, and new-product development. This is particularly a problem for supermarkets. Only a few of the chains with frequent-shopper programs have gone beyond offering discounts at the cash register to cardholders.

- insufficient analysis of the database

- make action recommendations - implement action recommendations - evaluate results

- take marketing actions

- are all frontline contact employee actions that are not seen by the customer. - These actions include non-visible interactions with the customer (e.g. a telephone call) as well as any other activity performed by frontline contact employees in order to prepare to serve customers.

Backstage/invisible contact employee actions

Consumer and firm demographics and contact names and addresses.

Basic customer descriptors.

- represent how customers have actually responded to the brand. - Sales, market share, brand loyalty, churn rates, win-loss rates, etc

Behavioral measures of brand equity

- useful for clarifying the time dimension and sequence of the tasks - quality improvement and innovation

Benefits of Service Blueprinting

1. Differentiation 2. Relevance 3. Esteem 4. Knowledge

Brands Asset Valuator (BAV) model

Heterogeneity Intangibility Perishability Inseparability

Characteristics of Services

- any recordable contact that person has had through, say, customer service. For example, any time a customer calls you with questions about your product or service, this should be noted. Similarly, sales call information would be part of this area of the CIF

Contact history.

The present value of a stream of revenue that can be produced by a customer.

Customer Lifetime Value (CLV)

- sometimes referred to as a Customer Information File (CIF)

1. Constructing a customer database

- Defining purposes and objectives helps ensure an appropriate research design. - A statement of objectives helps to define the type and level of information needed

Advantages of Setting research objectives

- The major characteristic that distinguishes a service from a good - A service is not physical and cannot be perceived by the senses - Services cannot be physically possessed

Intangibility of services

- Set research objectives - identify possible marketing actions - research objectives should be SMART - Researchers must outline success metrics and decision rules.

Define the problem

For each of the characteristics listed below, check the space on the scale that describes how you feel about Wendy's. Mark an 'X' on only one of the five spaces listed for each item listed.

Example of Semantic Differential Question

Check one box that describes your agreement or disagreement with each statement listed below.

Example of likert scale

- Customer Actions - Onstage/visible contact employee actions - Backstage/invisible contact employee actions - Support processes - Physical evidence

Five components of Service Blueprinting

promoters (9s - 10s) - Detractors (0 - 6s)

How to calculate the Net Promoter score

- The quality of being produced and consumed at the same time - Implies a shared responsibility between the customer and service provider in giving and receiving the service - Production of a service cannot be separated from its consumption by customers - Customers must be present at the consumption of the service and cannot take the service home

Inseparability of Production and Consumption

Which of the following statements is true regarding the maturity stage of the product life cycle?

Usually, competition is most intense in this phase.

- Other assets, such as patents and trademarks, are also valuable to products and services

Other brand assets

- Saves time and money if on target - Aids in determining direction for primary data collection - Pinpoints the kinds of people to approach - Serves as a basis of comparison for other data

advantages of secondary data

Service blueprinting involves noting the actions performed by customer contact employees that are not visible to the customer. These actions are referred to as

backstage contact employee actions

- Although quality associations are important, more subjective and emotional associations are also important parts of brand value. - These could include personal, emotional, and many other kinds of associations. - Taken together, these associations form a brand personality that suggests situations for which a brand is (and is not) suitable.

brand associations

- The simplest form of brand equity is familiarity. - A familiar brand gives the customer a feeling of confidence, so he or she is more likely to consider and choose it.

brand awareness

is a set of assets (and liabilities) linked to a brand's name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm or that firm's customers."

brand equity

- Transferability of associations - Complementarity of the product - Similarity of the users - Transferability of the symbol

brand extension "fit" consideraitons

- The strongest measure of a brand's value is the loyalty (repeat buying, word of mouth) it engenders in customers. - reduced marketing costs - trade leverage - attracting new customers

brand loyalty

United Airlines has many repeat-purchasing customers in the San Francisco Bay area because of its Mileage Plus frequent-flyer program. At the same time, because United is the major carrier in the region, these customers are also "hostages" and are not necessarily attitudinally loyal to the company.

confusing loyalty with repeat buying

Attributes that customers may be unable to evaluate even after purchasing and consuming a service

credence qualities

are all of the steps that customers take as part of the service delivery process

customer actions

- involves analyzing a customer information file for the best prospects to target. - People with significant statistical skills use computer software and large computer resources to troll through the CIF to find segments, purchasing patterns, trends, and other useful outputs.

data mining

- moderate size and negative growth - At some point, the market begins to decline. - Firms must decide whether to continue investing in the category or to withdraw.

decline stage

- Usually 30 minutes to 1 hour - Unstructured - Interpreted by trained researcher - Listen to words as well as "body language"

depth interviews

(score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

detractors

- specify constraints: Research budget, timeline, types of research employed - identify data needed for marketing actions - determine how to collect data - Identify Data Needed - Keep focused on questions that address the core research objectives. - Determine the best method for collecting data: Influenced by objectives and constraints, type of information needed - Develop the best method for testing: Statistical Inference

develop the research plan

Restaurant chain Chart House's program, the Aloha Club, offered free around-the-world trips to any member who ate in all 65 Chart House restaurants. Forty-one members qualified, costing the company a considerable sum of money. While the value of the program to the customer should exceed the cost of being a member, the programs should also be cost-effective.

example of making the reward too high

What things are most important to you when you decide to eat out and go to a fast-food restaurant?

example of open-ended questions

Developing a pool of concepts as candidates for new-products is the __________ stage of the new-product process.

idea generation

The fact that the services from wait staff are consumed as they are produced is known as the _____ characteristic of services.

inseparability

how the brand is represented psychologically in the minds of the consumers

intermediate measure of brand equity

- small category size - low-high growth - the growth rate and the size of the market are low; - there, is normally only one company, the pioneer of the category. - If the pioneer is successful in building demand or the category appears attractive to other companies, the sales in the category will increase, thus creating the growth stage.

introductory stage

- are all activities carried out by individuals and units within the company who are not contact employees that need to happen in order for the service to be delivered. - Individuals carrying out these activities have no interaction with the customer.

support processes

Primary and secondary

main types of data

1. Constructing a customer database. 2. Analyzing the database. 3. selecting customers to target, Based on the analysis, 4. Targeting the selected customers. 5. Develop relationship programs with the customers in the target group(s). 6. Measuring the impact of the CRM program.

major components of the CRM framework

- large size and low growth - reached when the market growth becomes flat. This is usually when competition is most intense, as some of the earlier entrants have dropped out, and the ones that are left normally have substantial resources and are attempting to steal market share from each other (e.g., Miller vs. Budweiser).

maturity phase

Behavioral measures Intermediate measures

measure of brand equity

are actions by frontline contact employees that occur as part of a face-to-face encounter.

onstage/visible contact employee actions

Patents and trademarks are valuable to products and services dimensions. Which dimension of brand equity do they fall under?

other brand assets

(score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.

passives

- A known brand often conveys an aura of quality (either good or bad). - A quality association can be of the general halo type, such as Hewlett-Packard's outstanding reputation for both its products and as a place to work. - It could also be a category-specific association, such as Gillette's reputation in razors and blades.

perceived quality

- Unused service capacity from one time period cannot be stored for future use - Service marketers have to balance supply and demand - They must plan for predictable periodic and seasonal fluctuations

perishability of services

is the tangibles that customers are exposed to that can influence their quality perceptions.

physical evidence

- Attributes, such as taste, satisfaction, or pleasure - can be assessed only during purchase and consumption of a service

experience qualities

The main variable that determines the extent to which brand equity can be transferred to the extension is called

fit

- brand loyalty - brand awareness - perceived quality - brand associations - other proprietary brand assets

five dimensions of brand equity

- Small groups - Discuss a topic in-depth - Moderators guide the discussion and report results - observed by the client via one-way mirrors - Body language and other non-verbal cues are just as important as the spoken words, perhaps more so

focus groups

- A brand's intention. - An expression of what a firm hopes its consumers will think about its brand

positioning

- Making the reward too high - Ubiquity (common) - Confusing loyalty with repeat buying - Lack of inspiration - Insufficient database analysis

potential problems with a customer loyalty program

- Data that are newly collected for the research project - facts and figures newly required collected for the project

primary data

(score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth

promoters

- Reduced information search costs. - Risk reduction. - Consumer's expectations of quality - Prestige and emotional needs. - perceived as superior to generic equivalents

reasons consumers value brands

- Open-ended question - dichotomous question - multiple/choice ordinal question - semantic differential questions

types of questions and scales used in surveys

- Tangible attributes (of a product) such as color, style, size, feel, or fit - that can be judged before the purchase of a product

search qualities

- Data that has been collected for reasons other than the specific research project at hand - Includes internal and external data - facts and figures already recorded prior to the project

secondary data

involves creating a flowchart that describes the flow of activity from the time the customer first contacts the service provider to the time the customer receives the service.

service blueprinting

- Research Budget - Timeline - Types of Research Employed

specify constraints while developing the research plan

- Introductory phase - growth stage - maturity phase - decline stage

stages of the product life cycle

There are so many programs that customers are rebelling against carrying all the cards. You should target your best customers with loyalty programs and provide a compelling reason for joining. (It is also helpful if card member CIFs can be accessed without having to present the physical card.)

ubiquity issue of loyalty programs

- Basic customer descriptors. - Purchase history. - Contact history. - Response information. - The value of the customer.

variables to track in a customer information file (CIF)

- Lack of data interpretation - Too much data / information presented - Unnecessary use of multivariate statistics - "KISS principle" (Keep it simple stupid) - Placing too much emphasis on a few key statistics - Being too "statistical" and not business-relevant enough

what to avoid when presenting your findings

- moderate size and high growth - the market grows rapidly at first and then begins to slow; - competitors enter the market.

growth stage

- Service has variations in quality - increases as labor intensiveness increases - Manufactured goods are easier to standardize - Human behavior leads to inconsistent quality - There can be wide variations in service consistency

heterogeneity

How likely is it that you would recommend [brand] to a friend or colleague?

Net Promoter Score

How relevant is the brand to the target customer?

2. Relevance: BAV

How different or unique is the brand from the competition?

1. Differentiation: of BAV

How high is the regard or value for the brand?

3. Esteem: BAV

- Tier 1: Platinum - Tier 2: Gold - Tier 3: Iron - Tier 4: Lead

4 tiers of the customer profitability pyramid

How much information does the customer have about the brand?

4. Knowledge: BAV

- Define the problem - develop the research plan - collect relevant information - develop findings - take marketing actions

5 steps of marketing research process

- have greater homogeneity - Automation reduces inconsistency

Equipment-based services

If you answered yes to question 2, how often do you eat fast food? - once a week - 2 to 3 times a month - once a month or less

Ex of Multiple Choice/Ordinal Question

Have you eaten at a fast-food restaurant in the past month? Check yes or no.

Ex. of Dichotomous Question

- This information should be as detailed as possible, including products bought, the channels utilized, and prices paid. If possible, the margin made on each purchase should be recorded as well

Purchase history.

Particularly valuable is information about how customers have responded to prior direct-marketing activities, promotional offers, or other traceable marketing activity. This provides information about potential responsiveness to such future programs.

Response information.

This number is an estimate of the monetary value of the customer to the firm.

The value of the customer

in positioning maps when ideal points are plotted with real brands, it is called

joint space

. Many programs are simply copies of other programs. To be successful, the program must have a differential advantage over competitors' programs.

lack of inspiration issue with loyalty programs