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pioneering advantage

"It's better to be first than it is to be better." Consumer expectations are usually shaped by the first encountered brand.

non-traditional forms of communication

"interactive" TV product placements - program (characters, plot), video games internet advertising mobile/cell phone buzz marketing

the maturity problem

"topple rate" - percentage of top brands falling off of the top list in a certain time span. recently topple rate has increased from 15 to 47% in a given industry. one possibility: limiting growth!

loyalty myths

#1 goal should be customer loyalty, firms emphasize retention over acquisition, companies should strive to make all customers loyal, higher loyalty = higher market shares, costs more to acquire than to retain

price elasticity

% change in quantity demanded / % change in price

hierarchy of effects model

-cognitive: awareness, knowledge -affective: liking, preference, conviction -conative: purchase

2 main things that the online world changes

1. can target people more sharply. aka people you want to see an ad will see it. 2. internet allows more specific positioning maps --> more natural reactions --> cheaper and easier to execute

buzz marketing 8 success factors

1. choose a buzz-worthy product 2. choose a buzz-prone target segment 3. identify trendsetters 4. lure trendsetters with coveted items in short supply 5. allow the buzz to occur (time) 6. control the buzz 7. image matters, more so in "placebo" categories 8. go mainstream without overtly marketing this segment

steps for determine customer lifetime value

1. determine gross margin 1a. determine revenue 2a. determine costs (cost of goods sold, shipping, etc.) 2. determine acquisition costs 3. break-even analysis (optional) - how many years/transactions to break even? 4. probability of cash flow on future years 5. discount cash flows in the future

steps of conjoint analysis

1. figure out attributes and attribute levels 2. create product profiles 3. reduce large designs 4. administer surveys 5. model ratings to yield "utility scores" 6. end result: insights for product design

how to measure EVC

1. identify lifecycle 2. identify cost elements 3. identify total lifestyle costs 4. determine equivalent units of comparison product 5. repeat steps 2&3 for comparison product

Rogers 5 Factors that affect the mainstream market for product diffusion

1. relative advantage - extent to which NP performs better than existing product it is replacing 2. compatibility - extent to which NP is compatible with existing norms 3. complexity - extent to which NP's benefits are easy to get an understand (from the user's perspective) 4. trial-ability - extent to which NP can be tried out in a risk-free manner 5. observability - extent to which observer easily understands benefits (from nonuser perspective)

positioning methods

1. select target segment 2. determine relevant competition offerings 3. determine potential differentiator - dimensions

overview of position methods

1. select target segment 2. determine relevant competitive offerings 3. determine potential differentiator - dimensions 4. select sample of customers in target segment and get ratings on selected dimensions 5. "view" the results (perceptual maps) 6. relate to preference, choice, or market share (preference maps) 7. develop positions statement and associated strategies

2 main consumer insight (pricing) ERRORS

1. signal side-effect neglect (focus too much on one signal so overlook others 2. signal sensitivity neglect - acknowledge both signals, but neglect differential/relative sensitivity of GO vs. STOP signals

behavioral audit

22 specific bullet points known to affect consumer decision making process. "audit" by going through and assessing which ones you are at risk for.

80/20 rule

80% of sales come from 20% of customers

conjoint analysis

A survey based statistical technique used in market research that helps determine how people value different attributes (feature, function, benefits) that make up an individual product or service.

AIDA framework

AWARENESS, INTEREST, DESIRE, ACTION. describes the steps or stages that occur from the time when a consumer first becomes aware of a product or brand through to when the consumer trials a product or makes a purchase decision.

important things for survey design

KISS (keep it short and simple), variety of questions, introductory message with what it's about, split into sections according to themes and most important, include don't know or N/A answers, don't ask Qs that you have the answer to, capture basic demographic info

consumer value maps

Perdue example - multiply across to determine total attitude for each feature. useful for predicting relative market shares.

media strategy 2 main issues

WHERE: selecting the medium. (efficiency, contextual fit) WHEN/HOW OFTEN: scheduling. (duplication vs. wear out, time of day/week/year)

marketing strategy main questions

WHO are you selling to? (target) WHAT are you selling? (absolute utility) WHY should they buy it from you? (relative utility, reason to believe) HOW will you sell it to them profitably? (execution: when, where, other marketing strategies)

ad response functions

a model of how people respond to different doses of advertising. above a certain point, extra doses of advertising produce diminishing returns

components of acquiring a customer

advertising per gross ad, sales commission paid per subscriber, handset subsidy provided to the customer

persuasion (promotion)

advertising, PR, direct marketing, personal selling

what goes in to determine how much we need to spend?

affordability, % of expected sales, competitive parity, objective & task, experimentation, quantity modeling (Regression and other economic approaches)

thin-slicing framework

allows your unconscious to take care of all the minor mental details in your life, while leaving you to concentrate on the main problem at hand. demonstrates that the unconscious is able to recognize patterns even if we don't recognize that pattern.

what goes into distribution decisions?

anticipate the margin economics, anticipate competitors' reactions, anticipate channel members' reactions, anticipate your own capabilities

asset (brand equity)

asset: brand equity is a set of brand assets linked to a brand, it's name and symbol, that add/subtract to the value of the product or service

what determines if a new product will work

attractive generally (concept testing, chain ratio concept), attractive specifically (conjoint analysis), how and when will it get there (trajectory, bass diffusion model, marketing)

how to select a target market

base on a weighted index comprising: market opportunity for profit (size, growth rate) competitive intensity (competitors' strength, underserved needs) company fit (objectives, customer base, resources)

problems with EVC...

based on life cycle cost (difficult to figure), customer differences (prefer short life and low price), convince customers (pay now, gain later!), functional & psychological benefits ignored

creative decision filters

brand filters, communication filters, campaign filters

major objectives of communication

build awareness, create associations, develop motivation to act --> build brand equity (long term), increase purchase intentions (short term)

purchase decision : step 4 of consumer purchase decision process

buying value. which alternative to choose from the consideration set? when? compensatory models are used (e.g. Fishbein's multi-attribute model).

positioning strategies

by attributes, by benefit, by price/quality, by use/occasion, by product user, with respect to product class, with respect to competitor, by emotion, by preemption

two main aspects of the maturity problem

challenges of managing customer satisfaction, challenges of managing brand success

unitary elastic demand

change in price produces = change in demand

internet advertising pros

cheaper: banner ads, digitized video clips, flash techs. tv shows on the internet targeted, measurable, & interactive where consumers socialize: social media

campaign evaluation

communication effects: is ad communicating well? sales effects: is ad increasing sales?

2 main problems with distribution decisions

coordination problems - inventory incentive problems - price vs. volume

acquisition costs

cost associated with convincing a customer to buy your product/service

price fairness

cost-based vs. demand-based (price discrimination), cost of raw materials vs. other costs (R&D, patent), demand a priori vs. demand, demand for nonessentials vs. demand for essentials, demand-based pricing vs. supply-restriction

pricing objectives different approaches

cost-oriented approaches (standard markup) profit-oriented approaches (target profit) competition-oriented approaches (above/at/below) demand-oriented approaches (start with what consumer is willing to pay)

target market selection

create an index - weights for each criterion, rate each segment on each criterion, combine (i.e. weights x ratings)

incentives (promotion)

creating values: discounts, rebates, coupons, price bundling, loyalty programs, placement

bases for segmentation

customer characteristics: geographic, demographic, socioeconomic, psychographic. buying situations: benefits sought, usage, awareness and intentions, behavior (involvement)

3 C's

customer, company, competition

who you can target

customers, influencers, channels partners

targeting

deciding which segment you are gonna tailor your product to

cohorts

defined by shared experiences (i.e. wwII, baby boomers, generation X/Y/Z)

gross margins

difference between revenue and cost of goods sold divided by revenue

bass diffusion model

differential equation that describes the process of how new products get adopted in a population. what is the fraction of individuals who have adopted a certain action over time t.

Young & Rubicam's Brand Asset Valuator (BAV)

differentiation/relevance/esteem/knowledge v brand strength/brand stature

traditional forms of communication

direct mail (especially detail), outdoor advertising, in-store marketing

active loyalty

do not consider other brands

campaign filters

effective EXTENSION of campaign equity?

types of products that are more buzz-prone

exciting, innovative, involve a personal experience, complex, expensive, visible

causal market research

experiments

types of research methods

exploratory, descriptive, causal

characteristics of good pricing plan

fairness, simplicity, affordability, transparency, flexibility, max revenue

exploratory market research

focus groups/depth interviews, projective techniques, observation.

the chasm (adoption process)

from version 2. breaks up the early market and the late market. sales get stuck there, and it is unclear if they will change. derives from people-centered problems (lack of mixing between groups) and Rogers' 5 factors

things to ask about in a survey

general attitudes, trade-directed actives and retailer satisfaction, other marketing activities, does satisfaction lead to goodwill and custom?, demographics

exploratory market research key takeaways

gives you initial insights, but can't base final course of action on qualitative alone (e.g. focus groups.) shield against hypothesis guessing (people question why they're being asked something) - mask your hypothesis with neutral concepts. use "between-subjects" design.

prospect theory value function

graph of gains versus losses on x-axis and +/- value on y-axis. plot reference point and then can determine the value of loss/gain.

chain ratio method

helps you forecast how much money you need to spend to meet your marketing needs. works by multiplying a base number of chain related percentages. only an estimate of your market potential.

Interbrand's S-Curve Method

higher strength of brand, the lower the risk, the higher the brand discount rate = ability of the brand to generate future demand and reduce financial risk

net promoter scores

how many people promote the company, i.e. are likely to recommend it to someone else

marketing framework three main steps

identify market opportunities (3 C's), set strategy (STP), formulate marketing program (4+ P's)

image (brand equity)

image: customer-based brand equity which is the differential effect of brand knowledge on consumer response to the marketing of the brand

two types of promotions

incentives (creating values), persuasion (communicating value)

industry responses to trends in media

increased coordination, increased spending in some traditional forms of communication, increased spending in non-traditional forms of communication

internal causes of reference price

influenced by decision maker. experience (last price you paid), knowledge (price often charged), price expectations (inflation), price "fairness"

5 parts of the adoption process (version 1)

innovators, early adopters, early majority, late majority, laggards

where seeking value comes from during stage 2 of consumer purchase decision process

internal search. external search - personal: friends, family (most influential source.) commercial: advertising, salespeople (most frequent source). public: mass media consumer-rating groups. experiential: handling, examining, using the product.)

brand filters

is the framing of the BRAND BENEFITS compelling? is expression of BRAND SYMBOLISM apt? will the ad RESONATE with the target culture?

characteristics of good segmentation

large enough (i.e. make business sense), use observable characteristics (something concrete/observable), distinctive, stable

problems in wording questions

leading questions, ambiguous questions, unanswerable questions, two questions in one, non exhaustive questions (lack other options like "where do you live?" without apartment option), non mutually exclusive answers (check your age with 20-40 and 40+ both as options).

consumer purchase decision process: MODEL 2

less structured than other model, includes loyalty loop where trigger can lead straight to moment of purchase.

information search: stage 2 of consumer purchase decision process

long list stage - seeking value. suggests criterion for purchase (e.g. all related attributes). yields possible alternatives (e.g. a long list of brands), develops value perceptions.

prospect theory

losses feel larger than gains - price increase worse than quantity decrease

new media effects

market, mission, message, media, money, measurement

why the stages of the post-purchase decision process matter

marketing actions vary depending on which stage the problem lies - corrective actions.

model of consumer behavior

marketing and other stimuli --> buyer's black box (product choice, brand choice, dealer choice) --> buyer's response (purchase timing, purchase amount)

the influence of marketing

marketing can entirely change the fact of similar products (e.g. toyota vs. chevy, vodka, handwashing)

4 main influences on decision process

marketing mix influence, sociocultural influence, situational influences, psychological influences

Economic Value to the Customer (EVC)

maximum price a customer is willing to pay, based on total life cost, compared to an existing or competitive products

3 basic types of survey questions

multiple choice, numeric open ended, verbatim open ended

psychological influences on decision process

needs and motives. freud: individuals not conscious of their motives, driven by unconscious. Maslow: hierarchy of needs.

net promoter score

net promoter score (NPS) = %promoters = %detractors

consideration set stage vs. final choice stage problem

often pay less attention to specific attribute during final choice stage. tell yourself unconsciously that you already considered that attribute, so you make choice based on another.

positioning

once you have decided on a target segment, how are you going to position your product to make it appealing?

passive loyalty

open to both that brand and trying new other brands

brand cannibalization

opening stores near each other such that one destroys the other. must be wary of this when expanding/increasing foot print

demographic segmentation problem & solution

people from same demographics may exhibit very different preferences, or people from diff ones may exhibit very similar preferences. solution: add psychographic segments like values, personality, lifestyle --> cohorts > age

prospect theory example - rebates vs. discounts

people happier with rebates - seen as "bonus gain" instead of discount being seen as less of a loss

problem recognition: stage 1 of consumer purchase decision process

perceiving a need. the consumer perceives a difference between their ideal and actual situations. the difference is big enough to trigger a decision. self-generated OR prompted by marketing stimuli.

customer lifetime value

prediction of the net profit attributed to the entire future relationship with a customer

EVC is helpful for...

pricing (price expectations), segmentation, new product introduction

consumer purchase decision process 5 main steps

problem recognition, information search, alternative evaluation, purchase decision, post purchase behavior

three methods of product placement

product used by cast, product integrated into plot, product associated with character

4 P's

product, price, promotion, place

3 important factors of experiments

random sampling, random assignment, control all other (potentially causal) factors

behavioral pricing strategies

reducing pain of payment (mode of payment, odd-even prices, round vs. precise payments), highlighting benefits maximization (discounts vs rebates, shifting the "reference point"), the role of "fairness"

advantages of conjoint analysis

reveals what the people want. most widely-used pre-launch product design and forecasting tool. useful for any context where decision makers choose among options by considering values on different attributes.

broad trends in media

rising prices of TV ads, measurement issues, loss of control by network/TV, growing audience cynicism

STP

segmentation, targeting, positioning

segmentation

separating prospective buyers into groups such that, within a group: similarity is high, similarity between groups is low, needs are common, responses to marketing action are similar

evaluation of alternatives: stage 3 of consumer purchase decision process

short list stage - assessing value. the evaluation criterion is formed (i.e. what attributes to use). usually non-compensatory methods are used (good rating on one thing doesn't make up for bad on another.) "quick and dirty" cut-off values.

communication filters

simple, engaging, and original/creative? INTEGRATES the product into story?

inelastic demand

small change in price leads to smaller change in demand

elastic demand

small change in price produces a large change in demand

situational influences on decision process

social surroundings (number of people, kind of people, etc) and physical surroundings (ex: airport layout based off of traffic flow)

reference price

standard of comparison against which an observed price is compared

chain ratio method steps

start with market potential for product. reduce estimate based on assumptions in the market plan. result is a forecast tied to. marketing plan - each step gives a metric to evaluate plan, opportunity for contingency planning.

descriptive market research

surveys

6 parts of adoption process (version 2)

technological enthusiasts, visionaries, CHASM, pragmatists, conservatives, skeptics

marketing definition

the activity, set of institutions, processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large

Fishbein's Multi-Attribute Model

the attitude about your product = the perception that your brand possesses about the attribute multiplied by the importance of each attribute. used for purchase decisions, compensatory.

brand equity definition

the commercial value that derives from consumer perception of the brand name of a particular product or service, rather than from the product or service itself.

break-even rate of cannibalization (BERC)

the percentage of the sales volume of the new offering that could come from the existing offering without incurring a loss

customer lifetime value forumla

the total revenue you can expect to get from each customer is your average order value divided by one minus the repeat purchase rate. also = lifetime value of new customers lifetime value of existing customers - lifetime value of lost customers.

what bass model says

there is a pool of M potential adopters. some of them adopt on their own (innovators) with probability P. others are imitators, and their adoption depends on imitation rate (Q) multiplied by how many people (N) already using the product

GO signal

thought/feeling/subconscious response that creates an approach tendency and energizes the buyers towards the product (i.e. design, packing, brand name)

STOP signal

thought/feeling/subconscious response that creates avoidance tendency that inhibits considerations/purchase (i.e. risk, uncertainty, guilt)

position statement

to customers who are (target summary), our products offer (state what the product does from the consumers' point of view), relative to (competitive alternatives), because (reason to believe)

perceptual maps uses

understanding the market structure - holes in the product space, competition vulnerabilities, do we have desired position? perceptions of a new product concept, direct R&D to satisfy cutlers better.

what can customer lifetime value be used for

understanding value of customers, learning about patterns of customer behaviors, basis for "firing" customers, basis for "rewarding" customers, identify cross-selling opportunities, quantify impact of marketing actions

post-purchase behavior: stage 5 of consumer purchase decision process

value in consumption or use. cognitive dissonance: a function of expectations and experience. post-purchase communications (ads, follow-up surveys, etc.) trying to lock-in customers in terms of loyalty.

buzz marketing

viral marketing technique that is focused on maximizing the word-of-mouth potential of a particular campaign or product, whether that is through conversations among consumers' family and friends or larger scale discussions on social media platforms

open source branding

when a brand is embedded in a cultural conversation such that consumers gain an equal, if not greater, says that marketers in what brand looks like and how it behaves

types of product insights from conjoint analysis

within-attribute comparisons, across-attribute comparisons, utility of a product, stimulate market shares (vs. competitors)