MKTG 317 Final Exam

Price wars

A prisoners dilemma/game theory End up worse off long run because you all lower your price

Organizational (business) Buying Process

1. organizational need 2. vendor analysis 3. purchase activities 4. post-purchase evaluation

Price legality and ethics

Bait and switch Deceptive Price fixing Predatory Resale price maintenance (controlling retail price)

Understanding the consumer

Watch them talk to them model them (economic or psychological)

Consumer Decision Process

1. Problem recognition 2. Information search 3. Evaluate alternatives 4. Purchase decision 5. Post-purchase behaviour All steps are influenced by the individual characteristics

The marketing research process

A Scientific paradigm 1. Determine the research problem Identification (logical assertion of your reality) 2. Develop the research design Operationalization (information definition) 3. Execute the research design Data collection (observation and communication) Data analysis (transformation and summarization) 4. Conclusion Application (marketing strategy)

Economics (product)

A bundle of utilities of which physical characteristics, labeling, and packaging are an integral part

Expectancy disconfirmation

A cognitive theory to explain post-purchase behavior (cognitive dissonance). "A failed prophesy"

SWOT

A discussion about a business at a point in time. Strengths and weaknesses = internal, about the specific case an product Opportunities and threats = external - don't mention the company/product !! Think of PESTE, the INDUSTRY, only use common knowledge

Branding

A name, term, symbol or design (or a combination) that identifies the maker of markerter of a product. A concept with an existance and personality NOT a logo, corporate identity system, or product

Product/market assessment

A formal framework for identifying and framing organizational growth opportunities. 1. Market penetration: Current product/service portfolio and current buyers (own & competitors) 2. Product/market development: New product/service portfolio and/or new market segment 3. Value proposition

Brand Equity

A set of assets (and liabilities) linked to a brands name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm or a firm's customers Associated with: Brand awareness Brand association Brand loyalty

Cojoint Analysis (Value based pricing approaches)

A simultaneous evaluation of attributes and attribute levels. Calculate part-worth utilities to estimate how much of one attribute a consumer will give up for more of another Higher utility = good Utility of a bundle = Sum of component utilities

Marketing Research

Acquiring and analyzing information to reduce uncertainty in marketing decision making

Lifetime customer value (value of relationships 6items) (ABRCRP)

Acquisition cost: Incremental cost of attaining a new customer Base profit: Profit margin earned from an average customer Revenue growth: Increase in total purchases over time Cost savings: Service costs to retain a customer Referrals: Apostles Price premium: Price insensitivity

Business Marketing

Activities in which products and services are sold for any use other than personal selling.

Communications Mix

Advertising: PAID promo Sales promotion: Short term incentives Public relations: favourable company image for the entire market Personal Selling: sales and relationships Direct marketing: carefully targeted consumers Other: non specific

Market Segmentation

Aggregating prospective buyers into distinct groups that: Have similar wants/needs Will respond similarly to marketing action Need to do it to find homogeneous groups in a hetero market. and to align the market mix with consumer decisions.

Product portfolio (mix)

All products available from a seller Product mix width - # product lines Product mix length - # products in a line Product mix depth - # variations of each product Product mix consistency - similarity in use and dist channels

Augmented-based positioning

An observable point of difference that customers value and for which they will be willing to pay more ex, warranty, customer service, reputation

Competition based pricing

Based on factors in the external environment Penentration - price as low as possible to increase market share Parity/status quo - price same as competition Skimming - price higher than comp

Value-based pricing

Based on perception of value. Value = f (price, attributes, benefits, alternatives) Value > price > cost

Demographic segment

Based on states of being. Age, marital status, income, gender, occupation, family life cycle, and education. Address 5 of them

Price/quality relationship (Psychology of price)

Asymmertic can lead to higher demand. Makes price is a proxy of quality. Price thresholds and even/odd

More for same/less $$ (Value based positioning)

Attack competitors by having upscale products as a lower price

Technographics (Psychographic)

Attitude to technology. Mouse Potatoes (preference for online entertainment) vs. Couch Potatoes (preference for traditional media)

Communications objectives

Aware Inform Trial Loyalty

Alternative evaluation (3. evaluate alternatives in consumer decision process)

Benefit: Functional, experiential and symbolic Situational influence: Body-Environmental, time poverty(pressure), task importance, and monetary mood Personal influence: Self concept and brand personality Psychological: Beliefs and attitudes, and learning Perception: Process by which people select, organize and interpret information. Subliminal, risk and selective

Price Tactics

Bundling/unbundling Product line pricing Loss leader pricing (below cost) Captive product pricing (printers and ink) Differential pricing

Specialty good

Brand preference and loyalty, little comparison, special purchase effort, low price sensitivity Exclusive distribution, high price, targeted promotion

Break-even market share (%)

Breakeven units / total market units

Buyer response levels (communications)(consumer behaviour in customer response model)

Cognitive - Thinking about the product/decision Affective - Development of attitudes and preferences Conative - intended behaviours toward actually getting/using the product If above are met then you can get them to buy/become a loyal buyer

Customer response model

Cognitive = Awareness and knowledge Affective = Liking and preferences Conative = Conviction and purchase/prescribe

3. Evaluate alternatives

Combine info about attributes, products and benefits to form an overall evaluation. Don't buy products, buy benefits! Uses attribute and alternative evaluation

Stimulus inputs

Commercial environment (stimuli) Social environment (class, culture, organization) Situational characteristics (time, finances) Pavlos dog: bell = food then bell = salivate

Business communication

Communication: A systematic process by which individuals interact through symbols to create and interpret meaning Verbal, text, gestures/body movement Oral communication: A COMBO of verbal content, body language and tone to accomplish a specific objective To inform, persuade and demonstrate

3C's

Company, Customer and Competitor

Value in use

Comparison of value relative to competitors

Attribute evaluation (3. evaluate alternatives)

Compensatory: Weighted average of ALL attributes Lexicographic: Best on most IMPORTANT attribute Conjunctive: Meet the criteria on ALL attributes Disjunctive: Meet the criteria on at LEAST one attribute Heuristic: Mental shortcuts to form judgments and make decisions

Product Classification

Convenience Shopping Specialty Unsought

Indirect Channels (CACC)

Conventional - separate businesses Administered - cooperating because of a high power channel member Contractual - formal procedures Corporate - high degree or vertical integration

Integrated marketing communications

Coordinating the communications mix to assure the consistency of messages at every company-customer contact point.

Product levels

Core product - benefits. The underlying product value. Be 'cheesy' ie "To feel clean and put together" Tangible product - brand, features, design, quality. The main selling features Augmented product - warranty, customer service, support. The value-added.

Positioning strategies

Cost leadership Differentiation from competitors Attribute based Augmented based Perception based Value based

Price promotions

Coupons Rebates Premiums

Product Development

Creating a new offering in an existing market Product innovation, Product augmentation and, Product line extension Strategies Develop significant point of difference Leverage brand equity

Relationship marketing

Creating long-term links with customers, employees and partners to increase loyalty and customer retention Relational concepts CRM: Customer relationship management (loyalty and reward) More than data mining SRM: Supplier relationship management (joint ventures, alliances) More than integrated systems SCM: Supply chain management (end-to-end coordination) More than purchasing management

Channel selection factors

Customer characteristics Competitive advantage Brand position Production augmentation Economics

Market-oriented mission statement

Defines the business in terms of satisfying basic customer needs General - Provides the boundaries for the type of business and how the business is run Describes the major business thrust, customer orientation, and business philosophy. • Why do you exist? • Who is your customer? • What does your customer value? • What is / will be / should be our business? ex To sustain responsible commercial success as a global marketing company of branded apparel.

Brand Loyalty (equity)

Degree that a customer holds a positive attitude towards a brand. Contributors: habit and emotions Detractors: parity and competitors

Product life cycle levels

Demand Technology Product Form

Individual characteristics

Demographics Psychographics Personal environment (friends and family)

Diversification

Develop new product offerings in markets not currently being served by the organization Product innovation/augmentation Unique geographic/demographic profile Strategies Line extensions Multiproduct or private label branding Market-bearing price Alternative distribution channels

Communications Plan

Developing, implementing and controlling the firms communication activities Process: (4M's) Market Mission Message Media

Types of channels

Direct: no intermediaries Indirect: has intermediaries

Getting brand to market

Distribution channel Intermediaries

Psychographic segment

Dividing a market based on social class, lifestyle and personality traits "What are they like" 3-5 sentences, gets into more detail. how they behave, their interests, opinions and activities

Porter Curve

Either positioned as cost leadership or actual/perceived differentiation

Channel Intensity

Exclusive Selective Intensive

Mission (communications plan)

Establish communication goals. Buyer response levels: Cognitive Affective Conative

Service products

Example bank loan or home security, they are primarily intangible

Communication Methods (develop research design)

Exploratory -Small sample studies for discovery of ideas and insights Executive interviews, focus groups Qualitative analysis Descriptive -Larger sample studies to describe the characteristics of a population Survey research Quantitative analysis Causal -An investigation to identify cause-effect relationships Field experiments Quantitative analysis Pro - versatile Con - subjective and random error

Choosing a targeting strategy

External evaluation (market and competitors) Internal evaluation (product and resources) Social responsibility (kidvertising)

Dove

Extremely competitive market Unilever wanted to reposition the brand to make Dove a beauty bar "self esteem project" = social marketing

Marketing Objectives

Follow from the mission statement. •Corporate: ROI, earnings and stock price •Business Unit / Division - growth rate, profitability •Marketing: Product category and brand •Products Category - sales market share, product quality, unit margin •Brand - awareness, loyalty, satisfaction

Convenience good

Frequent purchase, little comparison or shopping effort Wide distribution, low price, mass promotion

Segmentation Basis

Geographic Demographic Psychographic Behavioural

Behavioural segmentation

How do they respond? Ex useage, occasion, loyalty, and sought benefits The most detailed and best segment Talk about - benefits sought (WHY are they using it) and useage base (frequency of use)

Target Market development

Identify customer needs problems (what the sales person does) Marketing coordination (sales person) Relationship development: Transactional, Functional, Strategic

Expectancy confirmation

If performance = perceived same as expectations

2. Information search

If routinized behaviour then you probably already have the information Info sources: Experiential, commercial and social (networks) The evoked set

Oral presentations

Impromptu Extemporaneous Scripted

Experience curve

Improvements in efficiency over time

Selective (Channel Intensity)

Inclusion of select intermediaries, but fewer than all dealers who may be willing to represent the brand Higher involvement shopping goods Pro - increased market coverage; high degree of control Con - Outsource service component to intermediaries

2. Develop the research design

Information sources = Existing + primary Existing = literature review and secondary data (stats canada or internal company docs) Primary = observation and communication Qualitative or quantitative

Market Penetration

Increasing market share in an existing market for an existing product. Increase present buyers' consumption rates Stimulate product adoption among potential customers Strategies Lower price of product offering Expand distribution to provide wider coverage of the existing market Improve quality Head-to-head promotion

Mirco market (Targeting strategies)

Individual/local. Mass customization (NikeID)

Inbound communication

Information to address opportunities / threats Microenvironment: Unserved markets, market growth, Changes in customers wants and needs, decision making process, motivation, involvement, competitor's strategy Macroenvironment: New technology, cultural shifts, legislative change, increased foreign investment Problem: Rarely passive and requires scientific foundation to ensure accuracy and generalizability

Structural influence (all business first 5 consumer) (IIDBUAG)

Initiator Influencer Decider Buyer User Approver Gatekeeper

Diffusion of innovation (adoption stages) (IEELL)

Innovators Early Adopters Early Majority Late majority Laggards

Attributes of services

Intangibility Inseparability Inventory (perishability) Inconsistency (variability)

Market Development

Introducing an existing product to a currently unserved market Different geographic region Alternate demographic profile Strategies Minor modification of existing product offering Alternate distribution outlets Unique communication campaigns Switching promotions

Product life cycle Stages

Introduction Growth Maturity Decline

Shopping good

Less frequent purchase, high shopping effort Selective distribution & communication, higher price

Exclusive (Channel Intensity)

Limited number of dealers with exclusive rights to represent the brand Major shopping goods, specialty goods, luxury items Pro - maximum control over market; aggressive intermediaries; high brand loyalty Con - "eggs in one basket'; limited to high price/low volume products

Brand development

Line extensions Brand extensions

Economic Model (consumer decision making)

Logical and prudent decisions based on choices that result in the most optimal level of benefit or utility "The Rational individual" Assumptions: utility max, budget constraint, ability to compare bundles, and perfect information

Business Segmentation (untheoritical)

Macro: Characteristics of the buying organization and of the buying situation (easier) Micro: Characteristics of the decision-making units

1. Determine/Define the research problem

Marketing problem =Strategy based (target market and marketing mix) Research problem = Information based. restate the marketing problem in info terms Research objective =A statement describing the purpose and scope of the study

Intensive (Channel Intensity)

Mass distribution via multiple entities Convenience and low involvement shopping goods Pro - Increased sales; wider recognition; captures impulse buyers Con - Typically low price/low margin/high turns; limited control

Targeting strategies (markets)

Mass market Differentiated market Concentrated market Mirco market

Segment requirements

Measurable Meaningful Marketable

Less for much less $$ (Value based positioning)

Meeting consumer's lower performance or quality requirements at a much lower $$$

Environmental Assessment

Microenvironment: 3Cs - company, customer, competitor; Cooperative - suppliers, distributers, partners Macroenvironment: Political/legal, technological, economic socio/demographic, environmental/natural Societal - public interest, social responsibility Competitive forces: Supply-based competition and demand based competition (brand and product)

Brand Awareness (equity)

Most basic element in the choice set. Necessary but not enough alone for brand equity

Brand sponsorship

National (manufacturer's) brand Created and owned by resellers (house brand) Cobrand

Product Hierarchy

Need family - underlines the existence of a product category Product Class - macro view of a group of products that meet a general need differently (ex cars vs scooters) Product form - Closely related because similar function Brand - distinct unit within product form

High involvement (business)

New task buying Modified rebuy

Concentrated market (Targeting strategies)

Niche. Focus effort on a unique segment. (head and shoulders - dandruff)

Observation Methods (develop research design)

Overt -An investigation of behavior where the respondents are AWARE of the task and the researcher is known E.g., "think aloud" protocols Covert -A study where the participants are UNAWARE that their behavior is being observed and / or recorded E.g., mystery shopping Participative -A study where the researcher INTERACTS with the respondents and manipulates the environment as the study progresses E.g., ethnography, netnography Con - don't know the motive Pro - objective and current behaviour

Displaying brand

Packaging as a container (physical and disclosure) Packaging as a brand strategy (exposure and position) Sustainable packaging

Perception based positioning

Perceptual differences are created when actual differences are small, hard to achieve, difficult to sustain, or difficulty to verify

Positive disconfirmation

Performance is above expectations emotional satisfaction occurs

Brand Characteristics

Personality (sum of attributes and emotions) Status (level of social regard)

Brand positioning

Positioning brands in the mind of the target market based on attributes, benefits or beliefs and values Attribute Value Application User class Alternative product class Competitior

Attribute-based positioning

Positioning on unique or superior attributes relative to a competing product Generates customer value on critical product ________

Differential Pricing (Pricing Tactics)

Price discrimination (seniors discount) Second-market discounting (generic or foreign) Periodic discounting

Value based pricing approaches

Price sensitivity analysis Conjoint analysis

Reference price (Psychology of price)

Price standard. Sticker shock when the price is higher than reference Reference shift: Long term promo & Future price

Marketing commuications

Process of interacting in the market to engage customers and communicate customer value Information: for inclusion in awareness set Persuasion: To advance into consideration/decision/choice Reminder: to reinforce decision/choice

Channel lengths

Producer Agent/brookers Wholesalers Retailers Consumers (Direct - retailer channel - whole saler - agent)

Four Ps + one P

Product Price Promotion Place + People

Evaluation of quality

Product - performance and conformance Service - measurement against performance

Business markets

Production - aftermarket (original equipment manufacturers) Resellers - industrial suppliers and value added distributors Consumption - governments and institutions

Sales promotions

Short term purchase incentive. Action focused Marketing event Intended to have direct impact Influences end consumers and channel members

Unsought good

Purchase when necessary, little product awareness or knowledge Aggressive selling, distribution and communication varies

Selling process

Qualifying and screening Research Introduction (relationship marketing) Communication (move to action) Clarification Closing (ASK for business) Follow-up

Negative disconfirmation

Quality falls below expectations emotional dissatisfaction results

Psychology of price

Reference price Price/quality

Brand representation

Registered trademarks - words/phrase/symbol - logo -icons/mascots

Transmission model

Relationships among factors that influence effectiveness and impact of communication Noise - inhibits encoding, transmission and decoding

Methodology - qualitative (develop research design )

Research that relates to concepts, opinions, values and behaviors of people in social contexts; Data characterized as textual, visual or oral; focus on meaningful characterizations, interpretations and expressive descriptions Ex: Interviews, focus groups, observation, and word association

Methodology - quantitative (develop research design)

Research that relates to empirical assessments that involve numerical measurements. Data characterized by assigning numbers in an ordered and meaningful way. Ex: Structured observation, Secondary data, Questionnaires

Selling Situations

Response - customer initiated Ordertaking Trade - Ordertaking and Merchandising Missionary - direct to decision maker Technical - tech consultant for complex product Creative -understand customer needs and create/maintain relationships

Break-even analysis

Revenue and cost relationship. Contribution per unit = selling price - VC Break even units = Fixed costs / unit CM Breakeven marketshare (%) = Breakeven units/ Total market sales

5. Post-purchase behaviour (analysis)

Satisfaction: happy or remorse Loyalty: functional (repeat purchase) and emotional (attitude to the product) Expectancy disconfirmation

Differentiated market (Targeting strategies)

Segmented. Unique product offering for each of several segments. (cars)

Value Proposition

Set of benefits or values that you can deliver to customers to satisfy their needs Perceived value = benefits - perceived cost to receive & A concise statement summarizing the target market, the product/brand, competitors and the competitive difference.

Cost-based pricing

Setting price based on the costs of producing/distributing/selling + a fair rate or return - Cost-plus (markup) use in growth stage - Target return (breakeven) Ignores value perception and demand curve. sellers care more about costs than demand

Business Market characteristics

Short distribution channels Unique marketing strategies Derived demand Emphasis on personal/direct selling Strong buyer-seller relationships

Other communication activities (non specific)

Sponsored events Brand placement Viral marketing Buzz marketing

Theory of Buyer behaviour

Stimulus inputs Individual characteristics

3. Execution of data collection (execute research design)

Survey responses: Open-ended and Closed-ended questions Sampling: probability and non probability Data Analysis: Qualitative and quantitative

Brand Association (equity)

Subjective thoughts and images of a brand. ex attributes, benefits, favourability and uniqueness

Brand name

Suggests product benefits Distinctive and positive Fits the company and product image Simple yet creative Easy to: pronounce, recognize and remember

Message strategies

Symmetry: Asymmetrical (only the good) Symmetrical (good and bad) Directionality: One way vs two way & Synchronous vs asynchronous Promotion: Push (intermediaries market) vs Pull (direct marketing)

Product - service continuum

Tangible dominant Tangible with services Hybird (co dominant) Service with tangibles Service dominant

Service delivery dimensions

Tangibles Reliability Responsiveness Assurance Empathy Perceived service is an evaluation of the determinants of service quality

Market (communications plan)

Target Market - buyers, users and influencers Non target audience - investors, regulators, channel members, and employees

Communication evaluation

Target market Objective (awareness, inform, trial, loyalty) Strategy (symmetry, directionality, push/pull) Delivery (rational vs emotional) Tonality (humor, drama, romance, fear)

Markup formula

The % of COST that is added to determine selling price Markup % = (selling price - unit costs) / unit costs Selling price = (1+ markup) X unit cost

Margin formula

The % of SELLING PRICE that is unit profit Margin (%) = (selling price - unit costs) / Selling price Selling price = Unit costs / (1-margin)

Economies of scale

The ability to allocate fixed costs over larger sales

Value based positioning

The full mix of benefits upon which the product/brand is differentiated and positioned Product = a bundle of benefits Value = benefits at a given price

1. Problem recognition

The difference with an actual state and a desired state. Triggered by an internal/external stimuli. Seeking a solution Level of involvement (low - high) depends on personal importance and social risks.

Product positioning

The place an offering occupies in consumers' minds on important attributes relative to competitive offerings. Head-to-head or Differentiation

Psychological model

The stimulus -> response model External influences -> decision process -> purchase/post purchase behaviour

Positioning Map

To create one you have to understand perceptions of customers. To determine a brands position and consumer perceptions need to obtain: - evaluations of important attributes - judgements of competing brands on the attributes - ratings for an ideal brands attributes

The evoked set (information search)

Total: All products capable of meeting wants and needs Awareness: Awareness of potential sufficing products/ brands Consideration: Set of brands considered as possible solutions to existing problem. Excludes unacceptable and overlooked product solutions Decision: Set of competing brands with significant overlap in salient attributes Choice: Brand choice to address the problem The number of products that you are aware of should increase during information search

Media Types

Traditional: broadcast, print and direct contact Emerging: digital, mobile, social

Required channel functions

Transactional Logistics Facilitating

Mass market (Targeting strategies)

Undifferentiated common products and commodities (sugar)

Price threshold

Upper threshold where price exceeds perceived value Lower threshold where low price reduces demand

More for more $$ (Value based positioning)

Upscale products at a high price

Price sensitivity analysis (Value based pricing approaches)

Used to determine a range of acceptable prices 1. price too low - no value 2. priced as a bargain 3. priced a bit expensive but still gonna buy it 4. too expensive to buy

Geographic segment

Where they are. Global: Canada (east or west etc) Domestic: Urban, innercity, rural etc Use both global and domestic in answer

Services

activities by sellers and others that accompany the sale of a product and that aid in its exchange or its utilization

Same for less $$ (Value based positioning)

category killers. Offer same brands for less money

low involvement (Business)

straight rebuy routinized reordering