POM exam #2
When would you use "Price-Bundling" prices and what are the good and bad points?
Combine several products to get a certain price (i.e. Combo meal at McDonald's). Can promote sales of all items in the bundle, but might deter people from buying the entire bundle if the price is too high.
A Manufacturer likes setting a "Reference price" as a psychological marker. How do they use it?
Reference Price: prices that buyers carry in their minds and refer to when they look at a given product -influence reference price by selling expensive products that do not sell as well to make their less expensive products seem like a steal
In developing a "Marketing Strategy Statement, what does a developer include in their initial proposal?
The marketing strategy statement consists of three parts. The first part describes the target market; the planned value proposition; and the sales, market-share, and profit goals for the first few years.
Why must the Price Demand curve be studied before any strategy or decisions are made on price?
The price demand curve must be studied before any pricing decisions are made because there is a different amount of demand for each price level. Therefore, companies must evaluate if the extra revenue they earn per sale is greater than the number of sales they will be losing due to higher prices.
Why is the shopper at the Whole Foods store willing to use a different type of pricing philosophy at that store and what is their main criteria for shopping there?
The pricing philosophy used by the shopper at Whole Foods is that they are getting the highest quality food and are therefore willing to pay more for more value. The main criteria for shopping at Whole Foods is therefore quality (and health), as customers are willing to pay more knowing they are getting the best possible product.
How does the selling models of Volvo and Tesla threaten the existing car industry marketing channel strategy? What is the advantage and the disadvantage?
Volvo and Tesla have begun selling their cars directly online. An advantage of this is that it will boost sales. A disadvantage is that it could alienate independent dealers.
Why is a company constantly re-evaluating their channel strategy? Economics, Control and Adaptability all play a role.
Companies are constantly re-evaluating their channel strategy because external factors are constantly changing. An example is that in an economic downturn, producers want to distribute their goods in the most economical way. A company's strategy must also be feasible given its size and financial situation. Consumer demands are also changing so company's must choose a strategy that best meets their demands
Intuit's "Design for Delight" philosophy has helped their product development in what way?
- "Design for Delight" developed philosophy that says products should delight customers by providing experiences that go beyond their expectations - Starts with knowing customers better than they know themselves - Find products that will solve customers problems
How does "Behavioral Segmentation" help improve customer loyalty or "occasion" shopping on holiday's or "Benefits" segment? Why is the question, "What is a Product?" not so simple to answer?
- Behavioral Segmentation: dividing a market into segments based on consumer knowledge, attitudes, uses of a product, or responses to a product. - Benefit Segmentation: dividing the market into segments according to the different benefits that consumers seek from the product. - Marketing occasion shopping increases profits in certain parts of the year, such as Starbucks selling fall-themed beverages. - A Product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. They can be broadly defined to include services, events, persons, places, organizations, and ideas.
Give some examples of "channel conflict" and how do "power" relationships play in channel management. What is "horizontal" conflict and "vertical" conflict?
- CHANNEL CONFLICTS- disagreements among marketing channel members on goals, roles, and rewards. - HORIZONTAL CONFLICT - occurs among firms at the same level of the channel. Ex: Ford dealers competing. - VERTICAL CONFLICT - conflict between different levels of the same channel. Ex: problems between McDonald's corporate and McDonald's franchisees
What is Vertical Integration of your channels, "Corporate VMS"? Describe the issues of Direct versus Indirect channel management.
- CORPORATE VMS - integrates successive stages of production and distribution under single ownership. - VERTICAL INTEGRATION - consists of producers, wholesalers, and retailers acting as a united system. One channel member owns the others. - DIRECT CHANNEL - the company sells directly to consumers - INDIRECT CHANNELS - the company uses one or more levels of intermediaries to help bring its products to final buyers
What does it mean to "Commercialize" a product? What role does marketing play in the process?
- Commercialization is introducing a new product into the market - Marketing is revealed because it decides the timing that the product will be released as well as where it will be released
What is the difference between types of Consumer products - Convenience, Shopping, Specialty or Unsought - and their Pricing and Promotion?
- Consumer Product: a product bought by final consumers for personal consumption - Convenience Product: a consumer product that customers usually buy frequently, immediately, and with minimal comparison/buying effort >Price: low >Promotion: mass promotion by producer -Shopping product: a consumer product that the customer, in the process of selecting and purchasing, usually compares on such attributes as suitability, quality, price, and style >Price: higher price >Promotion: advertising and personal selling by both the producer and resellers -Specialty Products: a consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort >Price: high price >Promotion: more carefully targeted promotion by both the producer and reseller- Unsought Product: a consumer product that the consumer either does not know about or knows about but does not normally consider buying >Price: varies >Promotion: aggressive advertising and personal selling by the producer and resellers
What is the difference of the three levels of Products - Core, Actual or Augmented? Give an example by using Apple iPad.
- Core: customer value; at the most basic level, the company asks, "What is the customer really buying"; the problem-solving benefits or services - Apple iPad ex: people who buy it are buying entertainment, self-expression, productivity, and connectivity; a mobile and personal window to the world - Actual: brand name, features, quality level, packaging, design>Apple iPad ex: all features have been carefully combined to deliver the core customer value of staying connected - Augmented: delivery and credit, product support, warranty, after-sale services>Apple iPad ex: provides consumers with a complete connectivity solution; give customers warranties, quick repair services, and info sites to visit; Apple apps
How does "Crowd Sourcing" help in new product development?
- Crowd sourcing is inviting broad communities of people —customers, employees, independent scientists and researchers, and even the public at large — into the new product innovation process. - Tapping into a breadth of sources —both inside an outside the company —can produce unexpected and powerful new ideas
What is the difference between passing along discounts or rewarding allowances?
- Discount=Price reduction to those who pay their bills promptly; decrease to those who buy in high quantities; seasonal discount to those who buy a product out of season - Allowance=Price reduction for bringing in an old product, "trading-up"
Describe the difference between an exclusive, selective or intensive distributor.
- EXCLUSIVE - giving a limited number of dealers the exclusive right to distribute the company's products in their territories. - SELECTIVE - the use of more than one but fewer than all of the intermediaries that are willing to carry the company's products. - INTENSIVE - stocking the product in as many outlets as possible
What are the different considerations when one changes, increase or decreases prices from the customer? From the competition?
- From the Customer: though this often coincides with lowered sales, price increases make their products seem more exclusive/premium from the buyers p.o.v. Price cuts make the products seem as though they have lost quality and brands image may be tarnished -From Competition: interprets price cuts as the company trying to grab a larger market share, that it's doing poorly/trying to boost sales, or that they are trying to cause entire industry to cut prices.
How are "shipping costs" used in geographic pricing as a tactic to pass along price discounts or increases? Example might be FOB-origin pricing, Uniform-delivered pricing, zone pricing, basing-point pricing or freight-absorption pricing.
- Geographic Pricing: setting prices for customers located in different parts of the country or world -use geographic and shipping costs to pass along price discounts and increased by charging all customers shipping fees regardless of their proximity to the factory or the weight of there packages. -Examples are all just different versions of how to do this
How was GoPro successful when they redefined their products with experiences?
- GoPro knew its users don't just want to take videos, but lathery they want to tell stories and share emotions/moments in their lives. -GoPro helps capture/share their lives' most meaningful experiences with others and celebrate them together-created an emotional connection, which further leads to greater brand loyalty -Created four essential steps to story telling: (1)Capture (2)Creation (3)Broadcast (4)Recognition -Ex: Capture side: many attachments, camera types, product, etc. Creation side, GoPro offers customers free GoPro Studio software for professional quality. Broadcast side, users can share their content via FB, twitter, insta, etc. Recognition side, video can get likes, favorites, etc
Why was Alphabet formed by Google to help their new product develop management?
- Google has innovated into so many diverse new ventures recently that they created a broader organization — a parent holding company called Alphabet—to contain them all. - Alphabet provides an independent home for the company's more far-reaching collection of project and businesses
Google Moonshot has a development process that is unique? Describe the process.
- Google's innovation machine has long been renowned for "moonshots" —futuristic, breathtakingly idealistic log shots that, if successful, will profoundly change how people live. - To foster moonshots, google created Google X, a secretive innovation lab and kind of nerd heaven charged with developing things that seem audacious even for google -The lab is an incubator for earth-shaking project that may or may not pay for themselves in the long run - "Anything which is huge problem for society, we'll sign up for"
When a company adopts "High/ Low" pricing (JC Penney) and battles against EDLP pricing (Walmart) how do they compete?
- Hi-low price: High-low pricing (or hi-low pricing) is a type of pricing strategy adopted by companies, usually small- and medium-sized retail firms, where a firm charges a high price for an item and later sells it to customers by giving discounts or through clearance sales. -Everyday low price (EDLP) is a pricing strategy promising consumers a low price without the need to wait for sale price events or comparison shopping.
As with the case of Samsung, many companies develop an IOT strategy? What is IOT and what effect will it have on the economy?
- IOT= "Internet of Things" which is a global environment where everything —from home electronics and appliances to automobiles, buildings and even clothing — will be connected digitally to everything else - IOT provides fertile territory for future innovation and growth
Apple Pay is a potential disinter-mediator? How are they offering change?
- It is a digital wallet that contains all credit card and other payment forms info. -This means people will be able to ditch their thick wallets when going out. -It means that consumers are less likely to forget their wallets/money at home because most already bring their phone with them everywhere. - Apple Pay makes its consumers' lives easier
New Product Pricing is very tricky. When a company practices "market - skimming" what are they doing? An aggressive approach to eliminate competition is "Market-penetration pricing". What is the goal and objective of this strategy?
- Market skimming pricing is the practice of setting a high price for a new product to skim maximum layer by layer from the segments willing to pay the high price, the company makes fewer but more profitable sales. - Company's product and image must be good; competitors should not be able to enter the market and underprice stocks easily
The "New Product Screening" process says one should ask three questions - R, W, W. This stands for - Is it real? Can we win? Is it worth doing? What does this mean?
- New product screening is when you screen new product ideas to spot good ones and dorp poor ones as soon as possible. - R-W-W are: "Real, Win, Worth-Doing"• Is there a real need for the product, and will customers buy it? Is there a clear product concept, and will such a product satisfy the market? - Does the product offer a sustainable competitive advantage? Does the company have the resources to make such a product a success? - Does the product fit the company's overall growth strategy? Does it offer sufficient profit potential?
What are the many definitions of a "New Product" and why must a branding and marketing program be developed for each?
- New products are original products, product improvements, product modifications, and new brands that the firm develops through its own product development. - They bring new solutions and a variety to customer's lives, and they are a key source of growth for companies - Many companies rely on new products for the majority of their growth - Must have effective branding and marketing because 60% of all new consumer packaged products introduced by established companies fail; 2/3 of new product concepts are never even launched.
What are some of the reasons that carrying a weak product in decline can hurt the company and be very costly?
- Not only are they costly but they also can waste too much of management's time - It often requires frequent price and inventory adjustments - It requires, advertising and sales-force attention that might be better used to make "heathy" products more profitable - Keeping weak products delays the search for replacements, creates a lopsided product mix, hurts current profits, and weakens the company's foothold on the future.
What is Omni-channel retailing? Why is it so important in today's environment for survival?
- Omni-Channel Retailing is integrating all available shopping channels and devices into a seamless customer shopping experience -Important because it allows consumers to buy wherever and whenever it is most convenient for them to. In turn, their experience is bettered and their loyalty to the retailer increases -Also important because physical brick and mortar stores are often going out of business so they need a new channel to sell products
What is the PLC - Product Life Cycle and why is it important to understand?
- Product Life Cycle is the course of a product's sales and profits over its lifetime - Marketers can apply the product life-cycle concept as a useful framework for describing how products and markets work and it can help marketers develop good marketing strategies for the different life-cycle stages
What is the difference between product idea, product concept and a product image?
- Product idea: an idea for a possible product that the company can see itself offering to the market - Product concept: a detailed version of the idea stated in meaningful consumer terms - Product Image: The way consumers perceive an actual or potential product
Psychological pricing is used when a store practices "even / odd pricing". What do they do?
- Psychological Pricing: pricing that considers the psychology of prices and not simply the economics; the price is used to say something abut the product -This method involves setting a price in odd numbers (just under round even numbers) such as $49.95 instead of $50.00
What is the purpose and use of a Brand Logo and why are some companies doing "makeovers"?
- Purpose and Use: identifies the product or brand, describes several things about the product, and promotes the brand and engage consumers -Makeovers: companies are doing makeovers because they are evolving their brands/products to the point where their products are no longer reflected in their old logos (ex: Gap)
How can a company make a lot of money even in the Maturity stage of a product?
- Sales will peak at this point - The product will be established and have a stable market share - Competitors will have entered the market in order to take advantage of potential profits. - As more firms enter the market it will become saturated, forcing some businesses out of the market, as too many firms will be competing for customers. - During this stage extension strategies may be used in order to extend the life of the product.
Why is "internal marketing" so important in the "services" business?
- Service: an activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything -Internal Marketing: orienting and motivating customer-contact employees and supporting service employees to work as a team to provide customer satisfaction - important because it gets everyone in the organization to be customer centered by preceding external marketing
Organizational marketing programs are conducted by many companies to enhance their corporate image and their brand. What is "Social Marketing" and how does it help a company?
- Social Marketing: the use of traditional business marketing concepts and tools to encourage behaviors that will create individual and societal well being - Helps a company because it shows consumers that they care about more than just gains or losses. Consumers respect company more and thus have more loyalty for them
Style, fashion, fad... how does time differ for each?
- Style: a basic and distinctive mode of expression - Fashion: a currently accepted or popular style in a given field - Fad: A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity
Mattel has been extremely successful managing the Product Life Cycle of the Barbie Doll? Describe what they have done and implemented and why is it so important for their survival.
- The company launched an Entrepreneur Barbie line. This Barbie featured her own smart phone and LinkedIn profile. She was also interactive and was able to be connected to Wi-Fi -The company launched this product in efforts to stay relevant in a world now fully integrated in technology and media -Mattel also attempted to launch a new Barbie campaign called "Unapologetic" with the slogan "If you can dream it, you can be it." -Vital for their survival because the Barbie has been around since 1950, which means its lifecycle could be coming to an end if they do not continue to evolve Barbie with the times -Also have more competition so need to give Barbie competitive edge
What decisions must be made in the Growth Stage of the PLC to extend the life of a product?
- The firm tries to improve product quality and add new product features and models - It enters new market segments and new distribution channels - It shifts some advertising from building product awareness to building product conviction and purchase and it lowers prices at the right time to attract more buyers.
Why are international prices hard to determine and what are the factors that go into setting them?
- They are hard to determine because they price a company should charge for its product sin different countries depends on many factors including: economic condition, competitive situations, laws and regulations, and the nature of wholesaling/retailing systems -Factors: costs, customer perceptions and preferences, targeting middle class
Zappos successfully re-thought the "Telesales" model and adopted the "Deliver Happiness" theme to their clients. What was their secret of success in this new model?
- They see any customer contact as an opportunity to increase the customer's life time value by up to six times that of a regular customer. Because of this, they will help their customers with anything, even if it is not related to their business. -Zappos is concerned with taking care of customers, not just giving them a product. -Unlike other companies, Zappo's wants to find employees that are naturally inclined to work in the customer's best interest. -They want to "deliver WOW through service."
Idea Generation is the life-blood of New Product Development and internal sources, external ideas, Crowd-Sourcing are all methods for new products to be introduced. How did Under Armour get new ideas from their "Future Show" method? How does Bose do it?
- Under Armour sponsors an annual crowdsourcing competition called the Future Show Innovation Challenge, in which it invites outside innovators to pitch new product ideas in a splashy, Shark Tank-like reality TV setting. - Winner earns $50,000 and a contract to work with UA to help develop the winning products. - Bose is a company that's first goal is research and development and second goal is making quality products. The founder of Bose was a scientist and so is always looking for new ways to improve and build upon the models.
How is a brands' value determined and why is it important? What is brand equity?
-Brand Value: the total financial value of the brand >determined by brand equity which is measured along four consumer perception dimensions: differentiation (what makes the brand stand out), relevance (how consumer feels to meets their needs), knowledge (how much consumers know about the brand), and esteem (how highly consumers regard and respect the brand) >used as a competitive advantage and to build customer equity -Brand Equity: the differential effect that knowing the brand name has on customer response to the product or its marketing
Why would someone want to "Co-Brand" their product and what are the potential problems?
-Co-branding: the practice of using the established brand names of two different companies on the same product -Someone may want to co-brand because combined brands create broader consumer appeal and greater brand equity; complementary strengths of two brands; allows company to expand its existing brand into a new category with more ease -Potential problems include relationships involve complex legal contracts and licenses; must carefully coordinate advertising, sales promotion, and other marketing efforts; requires each party to trust the other to take good care of its brand
Describe the four Brand Development Strategies - Line extensions, Brand extensions, multi-brand and new branding - and when you would use each?
-Line Extensions: extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an existing product category >company might introduce line extensions as a low-cost, low-risk way to introduce new products; might want to meet consumer desires for variety, use excess capacity, or command more shelf space from resellers -Brand Extensions: extending an existing brand name to new product categories >create immediate new-product familiarity and acceptance at lower development costs -Multibranding: marketing many different brands in a given product category >offers a way to establish different features that appeal to different customer segments, lock up more reseller shelf space, and capture a larger market share -New Branding: creating a new brand name entirely for new product lines >used when company enters a new product category for which none of its current brand names is appropriate
There are many challenging decisions involving brands - positioning, name selection, sponsorship and development. Give examples of each these decisions.
-Positioning: attributes, benefits, beliefs/values > Whirlpool positions major home appliance products on attributes such as quality, selection, style, and innovative feature; benefits such as taking the hastle out of cooking and cleaning, better energy savings, or more stylish kitchens; beliefs/values such as "Every Day Care" campaign based on warm warm emotions of taking care of people you love with their appliances -Name Selection: selection, protection >Kleenex chose a name that is simple and makes intuitive sense (Clean-Ex). They then build a brand name that eventually became identified with the product category. To protect their brand from being erased by generic use of their name, Kleenex uses a registered trademark symbol after its name along with the words "Brand Tissue." -Sponsorship: manufacturer's brand, private brand, licensing, cobranding >Kellog sells its output under their own name (Kellogg's frosted flakes); Kroger have private brands it only sells in its stores (Heritage Farm, Simple Truth); Disney lines the rights to sell merchandise featuring its characters such as princesses, and heroes; Taco Belle and Doritos came out with the Doritos Locos Tacos -Development: line extensions, brand extensions, multi brands, new brands >Doritos has over 20 different types of chips/flavors; Vick's came out with NyQuil and ZzzQuil; PepsiCo markets at least 8 brands (Pepsi, Sierra Mist, Mountain Dew, Manzanita Sol, IZZIE, Tropicana Twister, Mug toot beer); Toyota created the Lexus brand aimed at luxury car consumers and the Scion brand targeted millennial consumers
Explain the five decisions on has to make about individual product marketing - Product Attribute, Branding, Packaging, Labeling/ logos and Product Support services?
-Product Attribute: developing a product or service involves defining the benefits it will offer such as quality, features, and style/design >Product Quality: the characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs; two dimensions are level and consistency >Product Features: a competitive tool for differentiating the company's product; need to assess the value of each potential feature >Product Style and Design: style is simply the appearance of the product; design goes to to the very heart of a product and begins with observing customers, understanding their needs, and shaping their product-use experience -Branding: a name, term, sign, symbol, or design, or combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors. > helps consumers identify products, represent product quality and consistency, provide sellers advantages, and it is the basis on which the whole story can be built about a product's special qualities-Packaging: the activities of designing and producing the container or wrapper for a product > creates immediate brand recognition and boost sales -Labeling/Logos: label identifies the product or brand, describes several things about the product, and promotes the brand and engage costumers >companies must take care when changing brand symbols because customers may react strongly to change -Product Support Services: important part of customer's overall brand experience > need to send out surveys to assess value; use mix of phone, email, online, social media, mobile, and interactive voice and data technologies to provide support services
What are the Pros and Cons of having your brand become "generic" like Kleenex or Band-Aid?
-Pros: generates great brand recognition; gives company competitive edge -Cons: may threaten company's rights to the name by making it too generic; may erase all of the company's hard work over the years
What is the purpose of the "low-price fighter brand"? How are "store brands" used to serve this function?
-Purpose of Low Price Fighter Brand: to add a lower-price item to the line or create a operate low-price brand in response to competitors price changes in order to compete -Store Brands are used to serve this function by giving low price fighter brand credibility it needs to be competitive in the industry
Describe the seven different types of Retail Store models and what they focus on as their business models? (Specialty, Department, Supermarket, Convenience, Discount, Off-price and Superstore).
-Specialty- offers specific products with expert knowledge about the specific product. -Department- the most complex offering a wide range of products and can appear as a collection of smaller retail stores managed by one company. The department store retailers offer products at various pricing levels. This type of retailer adds high levels of customer service by adding convenience. -Supermarket-Supermarkets have significant buying power and therefore often retail goods at low prices. Usually offer food and drink but have recently diversified (home, electrical, fashion, etc) -Convenience- Located in residential areas this type of retailer offers a limited range of products at premium prices due to the added value of convenience -Discount- This type of retailer offers a variety of discounted products. They offer low prices on less fashionable branded products from a range of suppliers. (Think TJ-maxx, etc) -Off-price- retailers who provide high quality goods at cheap prices. They usually sell second-hand goods, off-the-season items etc. -Superstore- Offer a wide variety of all types of products at low prices to get everything you need from one store.
What is the value of the "Lexus Covenant" for communicating with their customers?
-it represents the company's vow to make the finest cars ever built, to value the customers as important individuals, and to treat each customer as we would a guest in our home -when car does need servicing, Lexus goes out of its way to make it easy and painless
What are the four service characteristics that a company needs to know when designing a Marketing campaign?
1)Service Intangibility: services cannot be seen, tasted, felt, heard, or smelled before they are bought 2)Service Inseparability: services are produced and consumed at the same time and cannot be separated from their providers 3)Service Variability: the quality of services may vary greatly depending on who provides them and when, where, and how they are provided 4)Service Perishability: services cannot be stored for later sale or use
Why is the choice of marketing channels critical in maintaining your brand image / essence?
A company's channel decisions directly affect every other marketing decision. Pricing depends on whether the company works with discount chains or high-quality specialty stores. The firm's sales force decisions depend on how much persuasion and support its channel partners need.
What is a Marketing Channel? Give some examples of types of channels used by markets.
A marketing channel is a distribution channel that is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user. Some examples are Enterprise that revolutionized the car-rental business by having off-airport rental offices, Apple started selling music for the iPod via the internet on iTunes. FedEx in the express package delivery. Amazon.com selling everything with no physical stores.
What is a "customer value delivery network" and how do marketing channels play a key role in satisfying consumer needs?
A network composed of the company, suppliers, distributers, and customers who partner with each other to improve the performance of the entire system in delivering customer value. A marketing channel is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer.
Apple Computer gets a strong premium price for their product and rarely discounts. Their competitors like Xiaomi have created a cheaper alternative for their phone. How should Apple counter this type of competition?
Apple counters this type of competition by focusing on the user experience. While companies may produce similar products that cost a lot less, consumers aren't paying for the physical product, but instead for the better quality and simplicity that Apple provides. By doing so, Apple can afford to price their goods at a premium.
Describe the current strategies of Amazon and Walmart in their current Price War for Online Supremacy? What approach and competitive strategy are each one using?
Both are competing with each other from a low-pricing strategy standpoint. Amazon is ahead because of their online interface that is more friendly to online consumers. Their distribution networks are more efficient and they offer a wider variety of products. Walmart is able to use the pluck and ship method which has the potential to provide faster delivery (even in 30 minutes). Walmart can also offer more convenient pick up and return.
What are "Target-Profit Pricing" and "Break-Even Analysis" and how do determine price?
Break Even pricing is setting price to break even on the costs of making Target Profit Pricing marketing a product or setting price to make a target return
Printer Manufacturers, Amazon Kindle and shaving companies often use "captive" pricing to make profits. How does it work?
Captive pricing is setting a price for something that must be used with the main product (i.e. razor blades, printer ink). Set high mark-ups on the supplies, but keep main product low. Amazon makes Kindles cheap so they make money off of people buying stuff on the Kindle, not with the actual technology. 77% of Keurig sales come from single serve cups, not the actual coffee maker. Two part pricing=Fixed fee (The Keurig)+Variable use fee (individual cups)
How does a company nurture and develop a community of "Early Adopters" for their product?
Companies nurture and develop early adopters by producing basic versions of the product and promoting it to the group of consumers most ready to buy, known as "early adopters." Companies should choose launch strategies that are consistent with the intended product positioning and spend lots on promotion in order to entice consumers to try/buy the product
Marketers roles in New Product Development might include testing by the consumer of new products. What advantage does involvement by the marketer have for the Process?
Companies that directly engage their customers in the new product innovation process had twice the return on assets and triple the growth in operating income of firms that did not. Thus, customer involvement has a positive effect on the new product development process and product success.
How does a franchise represent a marketing channel for a company and what is good and bad about it as a way of doing business? What is the difference between manufactured- sponsored retailer, wholesalers and service-firm-sponsored retailers?
Companies that set up distribution channels through contracts with franchisees, they cannot readily replace these channels with company-owned stores or internet sites if the conditions change. Management needs to design its channels carefully, paying attention to today's selling environment and tomorrow's too.
Why is "Competition-based pricing" method often preferred by the sales function? What are the pros and cons?
Competition based pricing is preferred by the sales function as it is a good measure of how much value customers perceive in your product compared to that of one's competitors. It is also a good means by which to measure competition in one's industry. Unfortunately, this can also be used as a means by which to exterminate competition by pricing at margins that smaller companies cannot compete with
Customer "value-based pricing" is best determined in what whom and how?
Customer value based pricing involves setting price based on buyer's perception of value rather than on seller's cost. This means that the marketer cannot design a product and marketing program and then set the price. The price must instead be determined with all other marketing mix variables before the program is set
"Disintermediation" is the constant concern of players in the marketing channel? When does it occur and give some examples of how companies fight it.
Disintermediation occurs when product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones. To fight it, companies must continue to innovate to avoid being swept aside.
Pharma pricing model is often criticized. What are the two sides of the argument for why Pharma prices are set the way they are? What is Predatory Pricing? Price fixing?
Drug companies are promoting and pricing products beyond the reach of many people who ned them. They are increasing the prices at a drastic rate, much more than inflation, and often household can not afford the treatment. One example was that an AID's medication was increased from $13.50 per pill to $750 per pill when it only costs about $1 to make it. The company perspective is that the high cost of drugs is justified due to the high expenses that these companies infer. In order to put a drug on the market, years of research and develop needs to occur which is extremely costly. In addition, even if a drug does make it to the market, about 70% of them never generate enough revenue to recover the cost of development. Predatory pricing (also undercutting) is a risky and dubious pricing strategy where a product or service is set at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. Theoretically if competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. Price fixing is when all company's agree to keep a product around the same price.
What is "Dynamic pricing" and how does Amazon implement it?
Dynamic pricing is the idea of continuously adjusting prices to meet the needs of people in different areas/situations. Amazon used DP on Thanksgiving day to meet the prices of retailers like Best Buy. They constantly match prices to their competitors.
Logistics Information Management is critical to making a large enterprise run efficiently. What is ERP - Enterprise Resource Planning and how does it help a company replenish their products?
ERP is the integrated management of core business processes, often in real-time and mediated by software and technology.ERP systems track business resources—cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll.
Why is your channel strategy so important in developing an International marketing program?
Each country has its own unique distribution system that has evolved over time and changes very slowly. These channel systems can vary widely from country to country. Thus, global marketers must adapt their channel strategies to the existing structures within each country.
Gavina Coffee uses 11 different types of channels to help them grow. What are the variety that they use in the 20 states they sell their products?
Gavina uses a couple of different channels to sell their coffee. The company uses retailers, wholesale stores, food suppliers, and even small shops to sell its coffee. These different channels have allowed it to reach different markets. Gavin's largest channel is McDonald's.
How does Home Depot partner with their suppliers on shared projects and add value?
Home Depot allows key suppliers to use its stores as a testing ground for new merchandising programs. The suppliers spend time at Home Depot stores watching how their product sell and how customers relate to it. They then create programs specially tailored to Home Depot and its customers.
How is your Brand effected - If you are using a "prestige product" strategy? If you are use "comparison" pricing strategy? If you use a "technical or innovation selling" strategy?
If you use prestige product, you are seen as the highest-quality producer in the industry. You are able to charge more for your products and you become a status symbol. If you use comparison pricing, you compare your low prices to competitors. You are seen as the cheapest producer and your products are affordable for everyone. If you use innovation selling, you are seen as the most innovative producer. Your products are on the cutting-edge in technological advancement.
Airbnb has a successful business model that use all four characteristics of service. What do they do to make sure they are in tune with their target market?
In the beginning, Airbnb primarily served budget-minded customers with prices for listings lower than those of comparable hotel rooms. Recently, they've switched to offering unique and authentic experiences to customers who want to see the world from the perspective of the locals. To do this, Airbnb focuses on its hosts. It treats its hosts as active participants in the business and influences them to follow certain guidelines. Because of this, hosts develop a sense of ownership and devotion and they strive to give the guests a great experience.
JC Penney made a major mistake in changing their price philosophy. What did they do?
JC Penny took away their circular ads in newspapers and coupon systems that allowed customers to hunt for deals. Since coupons were such an enormous part of their brand image for such a long time, they lost customers who no longer wanted to shop at JC Penny. Customers didn't care much about the everyday low prices, they just wanted their coupons back.
Lululemon Stores takes prestige pricing to the limits. What do they do to get value and such high price products?
Lululemon focused on creating high-quality clothing. They used really nice and expensive fabric in manufacturing their clothing. They also focused on using innovative fabrics and creating a unique style. Lululemon also built itself into a status symbol. Women who wear it want to be seen as spiritual, healthy, very flexible, and for whom money is no object.
Who within an organization should set price? Product Developers, Finance, Sale, Marketing?
Management must decide who within an organization. Depending on the industry, it might make more sense for a variety of positions to determine price. In large companies pricing is typically handled by divisional or product managers. In industrial markets, salespeople my be allowed to negotiate with customers within certain set price ranges. Even so, top management sets the pricing objective and policies, and it often approves the prices propose by lower level management or salespeople. Other companies have pricing departments which help set the price of products
In "The Old Rules of Marketing Are Dead" the author said "channels choice can make you or break you". Why is that true?
Marketers must know their audience as well as they know their brand and then identify and effectively exploit the channels that are used by and important to these target audiences. The channels chosen should strengthen, not weaken, a brand's positioning.
Netflix is seen as a disrupter because they have not been afraid of "disintermediating" many companies business models and roles in the marketing chain. They believe in "disintermediating" themselves. What does that mean?
Netflix is already one of the most innovative companies in the world. They are on the cutting edge and leading the industry. Rather than be content though, Netflix continues to innovate. They strive to displace their current business model
How does New Balance shoes track their product requirements for their stores and what advantages does it provide?
New Balance tracks what kind of shoes are selling the best. New Balance then focuses their efforts on producing more of these and ensuring that their stores always have them in stock. This tracking allows New Balance to know what kind of shoes are the most popular. They can then focus on making and selling those shoes and not waste time and resources on less popular shoe-types.
How does one practice Cost-Based Pricing and what is the advantage and disadvantage of this method? What is Cost-Plus method of pricing?
One practices cost based pricing by setting prices based on the costs of producing, distributing and selling the product plus a fair rate of return for effort and risk. Advantages are that one can work to be a low cost provider and focus on selling more or keep costs high and use this as justification for charging more. The disadvantage of this model is that it does not focus on adding value to the consumer experience, which can be dangerous. Cost-Plus pricing is a method by which the price is determined by adding a standard markup for profit to the cost of the product.
How is a "Price" created for each product and how is it validated by the marketplace?
Price is created for each product based on the amount of value a customer is willing to give up (in terms of $) in order to obtain the value found in the product. Thus, if the price is less than or equal to the value that a customer perceives in a product, said customer will buy the product. This is how price is validated by the marketplace
Price is one of the biggest headaches for Executive management but also the biggest opportunity to improve profitability. Why do executives not want to deal with it?
Pricing is difficult, because one has to balance between charging too low a price (and unnecessarily forfeiting portions of one's margin) versus charging too high a price and loosing market share/customers
A "Promotional Price" is set but there are often restrictions on them... what are they?
Promotional Pricing: temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales -Restrictions: special-event only sales, limited time offers, must pay in cash, etc
How does "RFID" technology make an integrated logistics management supply system simpler and inventory management more accurate?
RFID is a technology where small transmitter chips are embedded in or placed on products and packaging. It allows companies to know exactly where a product is located physically within the supply chain.
How did the Ritchie Brothers establish price for their used Machinery and what did they do to increase that price? What is the advantage for the Seller when they use "auction-pricing"
Ritchie Brothers uses an auction system by which they let customers bid on a piece of equipment on certain auction days. They let customers compete with one another to increase the price. The advantage of this system is that the seller is getting the most that any customer is willing to pay for an item.
Segmented pricing" is used to pass along lower prices by segment, geography, demographic, age group or sex. Is this fair and why do they do it?
Segmented pricing is when companies sell the products at different prices. For example, state universities charge higher rates for out-of-state students. Price demands might be different in different areas. Women might be willing to pay more for shampoo, even though the ingredients are the same as men's shampoo.
How does a consumer use "Showrooming" to get the best price? Why do retailers hate the practice?
Showrooming: the practice of checking out merchandise in stores, then buying it online
International product and service Introduction must consider several critical issues. Name several issues and what the risks when introducing those products in other countries or regions.
Some of the problems facing International Product and Service Introduction including first determining which products they want to introduce to international markets. They must also determine how much they want to standardize their product. They must also adapt to foreign currencies and cultural differences.
The airline industry pricing practices and the Spirit Airline strategy has many interesting rules? Describe Spirit Airlines pricing practices, like "ala carte" or auction-based pricing. What is the pros and cons? Why consumers like or dislike their methods?
Spirit practices extreme good-value pricing, by which they charge extra for everything from a bottle of water to a pillow or blanket. They do not pride themselves on customer service but instead on the money they save customers. They also offer auction seating with no set prices on some flights
Describe how good Supply chain management systems work to deliver marketing value for the consumer?
Supply chain management is the managing of upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers.
Taco Bell uses price as a weapon to compete. What is their method and how does target marketing contribute to their strategy of what to charge?
Taco Bell uses the customer value-based pricing strategy in order to sell a lot of items for a low price. Since customers see this low price, they are more prone to buying items from Taco Bell, as they feel they are getting a good deal on the meal. Taco Bell understands that it is competing for customers in a market that is looking for good value when it comes to price. They try to cater to this by offering their products at values which will match customers' perceived value.
How does Amazon and P&G work together in their Vendor-flex program.
The Vendor-flex program means that Amazon and P&G co-locate "in the same tent." Amazon reduces the costs of storing bulky items in its own distribution centers. P&G saves money by cutting out the costs of transporting goods to Amazons's fulfillment centers.
Important decisions must be made by a company at each step of the PLC. In the introduction stage, why must a toy maker look at in the current product line when introducing new products?
The current toy market is declining, and the toy maker Mattel is finding this out the hard way. Brands such as Barbie, Hot Wheels, Fisher-Price and American Girl are having stagnant growth in comparison to the more innovative brands under other companies.
Laws prohibit "retail price maintenance" - where a manufacturer requires a dealer price a product at a certain level, creating MSRP. What is MSRP and what is Price Discrimination with channels?
The manufacturer's suggested retail price (MSRP) is the amount of money the producer of a product recommends the product be sold for in retail stores
What process did Sara Lee use in developing the "Soft and Smooth" White Bread?
They used test marketing (the state of new product development in which the product and its proposed marketing program are tested in realistic market settings) to determine that people are interested in consuming more wheat bread since it is healthier than white bread, however, still wanted the similar taste and texture as the while bread.
What is Third-Party logistics (3PL) and why have these companies mushroomed over the past 20 years?
Third-party logistics providers are independent logistics providers that perform any or all of the functions required to get a client's product to market. They've mushroomed because many companies hate doing logistics "grunt work." (bundling, loading, unloading, sorting, storing, etc.)
Trader Joe's has a new Pricing Mix and marketing strategy that changes the nature of pricing decisions. How do they price? Good-Value or value-added pricing?
Trader Joe's practices good-value pricing, as it cuts most amenities to the bare bones. Instead, it focuses on saving consumers money on higher quality products by cutting down on amenities like large parking spaces and lots of brand options.
Why is the question, "What is a Product?" not so simple to answer?
because products include more than tangible objects; they include services, events, persons, places, organizations and ideas, or a mix of all of these things.
Define what is the "Product Mix" or sometimes called "Product Portfolio Mix".
the set of all product lines and items that a particular seller offers for sale