quiz 1 457
The method a company uses to grow its business is largely dependent on:
- Company's financial situation - Competition - Governmental regulation
Product - what is the product ?
- core benefit: : What is the consumer really seeking? What is the problem that needs to be solved? - Actual product: brand name, features, quality level, packaging, design - Augmented product: delivery and credit, after-sale service, installation, warranty
strategies for challengers against market leaders: flanking attack how
-Value added customer service or distribution -Advantage for secondary market
strategies for challengers against market leaders (market expansion): encirclement how
-customization -address unique needs of each segments -Should surround leader's brand with a variety of offerings aimed at several peripheral segments -Makes the most sense when the market is fragments into many different applications segments or geographical regions with somewhat unique needs or tastes
strong brand equity
-it allows a company to charge a price minimum - it drives customer preferences - it increases customer loyalty
Consumer Decision Making Process
1. problem recognition 2. information search 3. alternative evaluation 4. purchase decision 5. post purchase behavior
strategies for challengers against market leaders: frontal attack goal
Challenge leader
Marketing Tactics: 4 Ps
Product Price Place Promotion
target market selection: concentrated
a marketing strategy in which a company focuses on one specific target market group for most or all of its marketing initiatives
Innovators
adopt something simply because it is new. They love exploring for the sake of exploring and are willing to take risks, even if those risks result in failure. - these are influencers, people with followings, journalists - 2.5% of population
the goal of penetration pricing
capture high market share
strategies for challengers against market leaders (confrontation): leapfrog use
change the game
attribute
characteristic , average cost, height, etc
levels
choices within an attribute such a price
Consumer Decision Making Process: cultural influences
culture subculture social class
promotions: advertising
cumulative effect, used for building brand awareness. TV, radio, newspaper, magazine, digital
In the SWOT analysis, O & T are
external and uncontrollable opportunities and threats
True/False: social media is the most effective way to reach a target audience
false
Consumer Decision Making Process: social influences
groups/ social networks family roles and status
supply chain management
includes suppliers, manufacturers, and retailers involved in distributing the product to the end customer. Supply chains encompass all businesses that interact with a specific product, including those that provide parts to the manufacturer.
strategies for challengers against market leaders (market expansion): encirclement goal
targeting several smaller untapped or underdeveloped segments in the market simultaneously
importance score
the larger the more influential attirbutes
true/false: personal selling is widely used in B2B markets
true
how does product life cycle help marketers make decisions?
use as a factor in deciding when it is appropriate to increase advertising, reduce prices, expand to new markets, or redesign packaging. help inform: -pricing -promotion -cost-cutting
Prestige Pricing Strategy
when retailers charge higher-than-average prices for merchandise and target customers who are seeking status and high quality
product differentiation
why you should choose our product over others
place: what are some regional influences on location?
- Weather - demographic - psychographic characteristics of the population base
demographic segmentation
- age -life-cycle stage - gender -income -occupation -education -religion -ethnicity -generation
laggards
- are slow to adopt and only do so when forced to because others have already adopted. - 16% of population
place
- City - Population growth or decline - region - Secondary and neighborhood business districts -Shopping malls and centers -Mixed use developments - Free-standing locations - Positional qualities within an area - corner location, opportunity for interception of customers on their way to other stores
how the flow of manufacturing costs work
- The flow of manufacturing costs involves using materials and labor to create a finished product for sale. - Implementing a supply chain management system can simplify and reduce the cost of the manufacturing process, especially for manufacturers with multiple parts. -A clothing manufacturer starts by bringing in raw materials like fabric, zippers, and other components necessary for clothing production. -The manufacturer incurs labor costs to operate machinery and perform other tasks using these materials. - Once the items are finished, they are packaged and stored until they are sold to customers.
product life cycle - decline stage
- as other companies emulate its success, the product may lose market share and begin its decline. - Product sales begin to drop due to market saturation and alternative products - Should a product be entirely retired, the company will stop generating support for it and will entirely phase out marketing endeavors. -company may choose to re-enter the product life cycle by introducing the revamp product to the market.
stages among new adopters of products
- awareness -interest - evaluation -trial -adoption
strategies for market leaders: fortress
- build a fortress capable of repelling attacks by current or future competitors
2 key pillars of competitive advantage
- cost leadership - product differentiation
the choice of channel management should be based on the
- effectiveness at reaching target market - relationship with channel members -competitors choice of channel members
what does the term "brand extension" refer to?
- extending an existing brand to a new product category
product life cycle - introduction stage
- first time customers are introduced to the new product. -A company must generally includes a substantial investment in advertising and a marketing campaign - promotional pricing may be low to drive customer engagement, and the sales strategy is still being evaluated. - may be little to no competition
strategies for market leaders
- fortress (defense position) - flanker -confrontation - market expansion
market segmentation
- geographic - demographic - psychographic - behavioral
growth strategy: Product Development
- get into new market
strategies for market leaders: market expansion goal
Use superior resources to compete in multiple segments
Channel Management
the process of deciding how to get goods into customer's hands
Rate of Adoption of Products
- innovators - early adoptors - early majority - late majority - laggards
growth strategies
- market penetration - market development - product development -diversification
product life cycle - maturity stage
- most profitable stage - market saturated with the product, -competition now at its highest - profit margins starting to shrink - a company may begin deciding how to innovate its product or introduce new ways to capture a larger market presence
when should a company consider repositioning its offering ?
- new target segments -new competitors -new segment needs
consider when looking at target market:
- size - profitability (how good does the customer want the quality to be/ how much we should spend on creation, how much we should advertise) - homogeneity (characteristics of group such as income) - reachable (how can you reach them?) (kids can be reached through parents, tv, youtube)
psychographic segmentation
- social class -lifestyle -personality
in a product life cycle:
- some products make never go through a growth or maturity phase - a declining market can be profitable
how do market leaders use the fortress strategy
-Modify and improve product -Reduce cost -Advertising & promotion to stimulate demand for brand, encourage repeat purchases
Limitations of PLC
-doesn't pertain to every industry -prospective planned obsolescence.; When a product enters the maturity stage, a company may be tempted to begin planning its replacement. -For producers who tend to introduce new products every few years, this may lead to product waste and inefficient use of product development resources.
3 requirements of core competencies
1. provide access to a wide variety of markets 2. contribute to the benefits of the product as perceived by the customers 3. hard for competitors to imitate
3 pillars of marketing strategy
1. segmentation 2. targeting 3. positioning
target market selection: - niche
A niche market is a specialized, smaller market of the target market. Example: If you are selling pet food, people who own pets are your target market
place: Shopping malls
Anchors and restaurants often drive customers to the mall. Many retailers benefit from the traffic generated by the anchors.
strategies for challengers against market leaders: flanking attack use
Appropriate when: -the market can be broken into two or more large segments -leader and/or other major competitors hold a strong position in the primary segment -no existing brand fully satisfies the needs of customers in at least one other segment
strategies for market leaders: confrontation use
Beat the competitor head-on
strategies for market leaders: confrontation goal
Defend against attacker
strategies for market leaders: flanker goal
Defend against attacker
strategies for challengers against market leaders: frontal attack how
Differentiate Added value of commercial team
the positioning statement
Format: To (target segment and need) our (brand) is (concept) that (point of difference). always starts with the customer and why they should buy product or service
strategies for challengers against market leaders: frontal attack use
Have sustainable competitive advantage
price: price-skimming
Initially set price high (making money off profit margin - how much is costs to make vs selling) - Intended to help cover R & D and launch costs - Projects a premium image - Can build up a reserve for the time when competition enters market - May or may not lower price later
strategies for market leaders: market expansion how
Line extensions New brands Alternative products Consider geography→ distribution and channels must be superior
strategies for market leaders: fortress goal
Maintain share
what marketing communication tool is used to build a long-term image for a brand
advertising
Consumer Decision Making Process: personal influences
age and life-cycle stages occupation economic situation lifestyle personality and self-concept
strategies for challengers against market leaders (confrontation): leapfrog goal
beat leader with market innovation
a niche strategy
is concentration strategy
place: Secondary and neighborhood business districts
secondary would be downtowns of suburbs like Bethesda or Silver Spring
the width of a product mix refers to
the number of different product lines carried by a company
target market selection
- undifferentiated (targets everyone) - differentiated (target) - concentrated - niche(localized)
core competencies
-5/6 things that a company does better than others - bind existing businesses together - help create new lines of business
product life cycle - growth stage
-If the product is successful, it then moves to the growth stage -This is characterized by growing demand, an increase in production, and expansion in its availability. -A company may still choose to invest heavily in advertising if the product faces heavy competition; but it will be geared more toward differentiating product from others than introducing - A company may also refine its product by improving functionality based on customer feedback. - increased sales and higher revenue. - As competition begins to offer rival products, competition increases, potentially forcing the company to decrease prices and experience lower margins
Marketing Myopia
-focusing only on selling product and services rather than seeing the big picture of what students really want - organizations only focusing on what they currently do, making them blind to the future and capitalizing on growth opportunities - to avoid this leaders should understand their business - the goal isnt to sell things but to satisfy customers because products can easily be replaced by competitive alternatives
geographic segmentation
-nations -regions -states -counties -cities -neighborhoods -population density (urban, suburban, rural) -climate
strategies for challengers against market leaders (confrontation): leapfog how
-new, superior technology -game-changing innovation - NOT a viable approach for all challengers -Challenger must have a technology superior to that of established competitors as well as the product and process engineering capability to turn that technology into an appealing product -Challenger must have marketing resources to effectively promote its new products AND convince customers already committed to an earlier version of the product that there are benefits to justify the cost of switching
understanding core competencies can
-prevent companies from making outsourcing mistakes - help create sustainable competitive advantage
strategies for market leaders: confrontation how
Meet or beat the competitor's attractive features Add-ons better than price reductions
strategies for market leaders: flanker use
Offer a second product to compete against challenger
strategies for market leaders: flanker how
Offer second product with comparable price point to challenger Substantive differentiation from lead product Advertising to stimulate primary demand
strategies for challengers against market leaders: flanking attack goal
Penetrate at point of weakness
ideal lifes-cycle of a Strategic Business Unit (SBU) based on the BCG model
Question mark Star Cash Cow Dog
price: Price Penetration (making money off volume)
Set price low in order to capture market share and realize the advantages of: - Economies of scale - Dominating the market and discouraging competitors from entering
segmenting, targeting, positioning
Strategy is ALL about the CUSTOMER. 1. Understand the consumer decision making process and influences on it. How do they make a decision? 2. Identify and apply market segmentation approaches. Can we put potential customers into "buckets" based on some observable factors? 3. Build on your understanding of marketing strategy to identify suitable targets for the marketing mix Write positioning statement consistent with a firm's marketing strategy How do we craft our tactics (next class) to meet the needs of these potential customers?
growth strategies: diversification
The method a company uses to expand its business is largely contingent upon its financial situation, the competition and even government regulation. Some common growth strategies in business include market penetration, market expansion, product expansion, diversification and acquisition. ; bring in new market
growth strategy: Market Development.
The next business growth strategy is targeting new markets with an existing product. - marketing to the existing customers
product life cycle management
The process of strategizing ways to continuously support and maintain a product
place: mixed use developments
There is exponential growth in this option now as city planners and developers look for ways to reduce urban sprawl. People work and live in these areas and retailers are often found on the ground floor—providing necessary goods and services.
growth strategy: market penetration
This is the least risky of business growth strategies but also has the lowest opportunity for growth. - loyalty programs are good for this; marketed to existing customers
promotions: sales promotion
Used to generate immediate action by the consumer - coupons, premiums, sweepstakes, contests, sales, bundling of products
strategies for market leaders: market expansion use
Wear-down the competition
fortress use
When current and potential customers have relatively homogeneous needs and desire AND firm's offering already enjoys a high level of awareness and preference in mass market
free-standing
allows for drive-thru windows and parking lots but require extra effort on the customer to frequent the location.
early adopters
are opinion leaders who quickly adopt new ideas to maintain their reputation as being ahead of the curve. - 13.5% of population - in these other categories, advertising will be focus on product differentiation and diversification to keep shelf space and then it will focus on brand loyalty
early majority & late majority
are the critical mass that ensures adoption. The early majority prioritizes productivity and practical benefits over coolness or reputation. The late majority expects extensive help and support before committing. - 34% of population equaling 68% of population
which segmentation is most important
behavioral segmentation is more important/ more powerful than demographic ex: umd knows if you go to games, library, interests, etc
promotions
companies want you to have their app to collect your data - location, web browsing history to tailor marketing appropriately
promotions: make sure all integrated marketing communications are
consistent, cohesive
prestige pricing is most attractive to which diffuser group ?
innovators
in which 2 stages are a lot of money being spent of advertising to drive awareness?
innovators & early adopters
four stages in a product's life cycle
introduction, growth, maturity, decline
promotions: public relations
long term strategy. May result in publicity. Used to build brand personality
place: Neighborhood business districts
meant to serve a neighborhood. Can be a strip center. Service retailers often locate in this area as customer is an important part of the service offering and must be present for the service to be created...haircuts, nail salons, etc.
to be useful, market segments should be
measurable, substantial, accessible, differentiable, and actionable
Consumer Decision Making Process: psychological influences
motivation perception learning beliefs and attitudes
how a product's penetration rate is calculated
number of consumers who own the product/ total reference population
target market selection: differentiated
occurs when a company creates campaigns that appeal to two or more different target audiences, demographics, or marketing segments. By targeting multiple well-defined customer profiles, a brand can build its customer base, master its niche, and begin to organically build brand awareness.
target market selection: undifferentiated
occurs when a company creates one campaign for its entire audience, with all segments seeing the same message.
A flanker brand is
often a lower-quality product designed to appeal to a low-price segment to protect the leader's primary brand from direct price competition
product life cycle
refers to the length of time from when a product is introduced to consumers into the market until it's removed from the shelves.
business logistics management
refers to the production and distribution process within the company.
a segmentation strategy is effective if provided
segments are substantial (large and profitable enough to serve)
conjoint analysis
technique used to develop an understanding of the attributes that guide consumer preferences by having consumers compare product preferences across varying levels of evaluative criteria and expected utility -use secondary data or conduct survey or interviews to understand preferences
end result of a successful positioning strategy
the creation of a customer-focused value proposition, a cogent reason why the target market should buy the product/service
the degree to which existing competitors control the distribution channels is an indicator of
the height of the barriers to entry
the greater the price elasticity, the greater
the sales volume growth with 1% price reduction
strategies for challengers against market leaders (market expansion): encirclement use
viable when segments are underserved