MAR 445 Quiz 1

Relationship Equity:

"switching costs" Ex. Apple to Samsung / Android - wont switch because Apply music

3 themes of brand managemet

1. Two Pillars 2. Own the market 3. It depends

What are the three consumers segments of the vodite market?

1. followers 2. early adapters 3. innovators

What are the five consumer segments of the sonite market?

1.Explorers- highly interested in sonite product, demand high performance products, quite price sensitive 2.Professionals- personal and professional usage, look for high quality, high-performance and easy-to-use products, can afford expensive products 3.Shoppers- good product knowledge through extensive product comparison, demand high quality-price ratio, quite price-sensitive 4.High earners- high income level, demand performance and convenience, purchase expensive products 5.Savers- cautious in the way the spend their money, demand cheap / low-performance, average convenience products, future growth rate could exceed forecasts

Suppose your firm currently markets two existing brands, MORE and MOTION, and the firm's R&D department has just completed a new product development under the project name, POMOM. Which of the following best describes the possible ways to utilize POMOM?

1.To launch a new brand, MOM, with the physical characteristics of POMOM. 2.To modify MORE to upgrade its physical characteristics with POMOM. 3.To launch a new brand, MOM, and modify MORE simultaneously, both based on the physical characteristics of POMOM. 4.All of the above *

You'd like to monitor how much money is being spent on research and development by your competitors. Which market research study do you need to purchase to obtain such information?

Competitive intelligence?

If you want to know the actual market share of your sonite brand in each consumer segment in Markstrat, which market study do you need to purchase?

Consumer Panel and survey

Your brand SOLID is targeting the High Earner segment but you do not know their shopping habits such as what distribution channel they prefer. What market research study do you need to order?

Consumer survey and panel

In the HBR article "Customer-Centered Brand Management", the authors suggest a list of guidelines for successful brand management (e.g., "Build brands around customer segments"). List them as many as you remember.

Customer relationships > brand decisions Build brands around customer segments- flaw of averages Measure brand equity for individuals and segments Make brands as narrow as possible Brand extensions based on customer needs Find best customer fit within brand portfolio - change brand Be willing to retire ineffective products

Three c's

Customers: characteristics Competition: environment Company: mission, strategy, brand portfolio, strengths / weaknesses, performance

What are the relationships between the sonite market and the vodite market? Are they substitutes, complements, or independents?

Independents - "vodite products will satisfy entirely different needs from that of sonite products so that demand for the two products will be completely independent. They will not be complementary in any way and there will not be any substitution from one to the other."

Between a low level of design (or display, connectivity, processing power, etc.) and a high level, which is better for consumers? Which is a better strategic choice for the brand?

It depends

Doing things right

Operational Efficiency Develop and implement a market strategy that allows the firm to own the market

In Semantic Scale study, respondents are asked to rate the importance of each characteristic of Sonite product in their purchasing decision. Although consumer segments differ on the exact importance attributed to each characteristic, they tend to agree on the ranking of the scales, i.e. their "relative" importance. Out of 6 characteristics (i.e., Features, Design, Display Size, Battery Life, Processing Power, Price), what are the top 3 most important characteristics in order?

Price, Processing Power, Design

Three determinants of profit:

Sales volume, margin, and expenditures Firm / brand profit = sales volume * margin - expenditures

You want to know how High Earners' preference for Processing Power evolve in the next period. What study above do you need to order?

Semantic Scales

Doing the right thing

Strategic effectiveness

Between the selection of a target market and designing an advertising message, which decision should be made first?

Target Market

Good, bad and ugly

The Good: owning the market The Bad: selling to the market (profitable but unsustainable) The Ugly: buying market share (unprofitable and unsustainable)

At the beginning of the period, your brand management team decided that the production volume for a brand TEMP should be 100K units. However, at the end of the period, your firm's production report indicates that 115K units of TEMP were produced. Why is there a discrepancy?

The production team can raise or lower the predicted volume by 20% to meet demand

Value Equity:

The value of a company available to owners or shareholders - tangible benefits Ex. Mobile orders

What is the difference between transfer cost and base cost?

Transfer cost: the price paid by marketing to production. It incorporates all costs associated with this high level of flexibility, including depreciation and fixed costs; transfer cost of a product is initially equal to the base cost of its base project, assuming that the first production batch is 100,000 units. Base cost: the unit cost that was decided when the project was developed by R&D; the cost at which each unit will be produced, based on an initial batch of 100,000 units.

Suppose you are a brand manager of Firm S, which sells a sonite brand, SOLID, through specialty stores, which take 40% of distribution margin. Consumers pay a retail price of $400, and the unit transfer cost is $240. What is the unit margin of SOLID for Firm S? Show your calculation.

Unit margin = selling price - transfer (unit) cost Unit margin = 400 - (240 * .6) =

In the above scenario, what should be the recommended retail price of SOLID in order to have $200 of unit margin for your firm?

Unit margin = selling price - transfer cost 200 = ( X * 0.6) - 240 440 = X * 0.6 733.33 = X

own the market

creating / maintaining profitability with customers The goal of marketing is to own the market, not just to sell the product It is the ultimate goal of marketing; create profitable long-term relationships with customers - don't just try to sell the product, focus on owning the market

Flaw of averages:

plans based on assumptions about average conditions usually go wrong To avoid this, managers should make brands as narrow as possible, find the best customer fit within the brand portfolio, and be willing to retire ineffective brands Ex. Nike sales after Colin Kaepernick ad campaign

Consumer Equity:

sum of all customer lifetime values •Lifetime loyalty / value Ex. $8 / week profit to Starbucks * 50 years = $20,000 costumer

Brand Equity:

the commercial value that derives from consumer perception of the brand name of a particular product or service, rather than from the product or service itself; the value your brand brings to your company Name / logo

Narrow branding:

will keep your brand aligned with your core business and in tune with your best customers. A brand becomes stronger when you narrow the focus. Better to target specific customer and build long-term relationships Tailor brands to specific customer segments