MKT 320f Exam #2
hard power
-also known as legitimate power -unique product/technology or brand vs market access and intelligence -product or brand is perceived to be special in the marketplace -have good market access (access to a lot of customers) -also have intelligence (market data) -for example, if you are Apple you have a unique product, technology, and brand so they have hard power because of their arrangements with stores that sell for them vs Amazon or walmart that have lots of customers therefore lots of access to customer data
soft power
-also known as social power -trust and commitment -hard power is more important initially but over time soft power is more important -soft does not mean weak - it means some skill sets we show up with but some we get over time -strengthened over time through relationship building
dual distribution
-an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product -while one producer may go right to the consumer, another may go to a retailer who then goes to the consumer
product line extension
-another way of saying "deepen" the product line -definition: adding additional products to an existing product line in order to compete more broadly in the industry -offering more variety to reach more customers
value positioning
-l'oreal cosmetics → because you're worth it -michelin tires → because so much is riding on your tires
horizontal conflict
-occurs among firms at the same level of the channel -pretty normal because it's just competition -example: 2 car dealerships
vertical conflict
-occurs between different levels of the same channel -important to avoid because everyone in the channel has to work together -example: black & decker and home depot
benefits of product mix breadth
-offset risk -leverage key asset -tap into complementary offerings (things that go together across product lines)
segmentation overview
-once we have a soldi SWOT analysis, we can segment the marketplace -this is all about grouping customers and profiling them into similar segments (STP): -segmentation → group customers based on similar needs and profile each segment -targeting → assess attractiveness of each segment and select segments to target -positioning → define value proposition for target segments and develop an action plan -we can decide which segments are most attractive to us and position ourselves to work on the 4 P's
undifferentiated market
-one big market (mass market) and develop one marketing mix -advantages: potential savings on production/marketing costs -disadvantages: unimaginative product offerings and susceptible to competition
benefit positioning
-pampers diapers → our softest diaper ever wraps your baby in comfort and protection -oral-b toothbrushes → bends and adjusts with the contours of your teeth to remove more plaque
inseparable services
-part of the quality of the service is how well the provider did in giving the service -service is inseparable from the service itself and the service provider -example: when I go to a restaurant, the server needs to be there for me to get my food and I need to be there sitting in the booth (2 way streak)
providing contact efficiency (marketing channel benefit)
-producers have to have connections to customers -makes an assortment of goods available in 1 location -reduces # of transactions for manufacturers -convenient for consumers and manufacturers
value/supply chain
-production costs, location, time, control -value chain: the set of decisions we focus on in order to get our products/services effectively and competitively out to our customers -every entity/actions that helps us go from raw materials to the end customer (whether that's an individual or organization) -every entity in supply chain needs to create value for customers or others in the supply chain -for services, it is where we start and how we get to the end customer as well
family life cycle
-puts together several factors for dimensions for segmenting consumer markets -typically includes age, marital status, kids and kids ages -when you put all of these together, knowing where they are in the family life cycle can help determine where to target
temporal discrepancy
-situation that occurs when a product is produced but a customer is not ready to buy it -typically occurs with seasonal items (example: Christmas items being put on display too early) -what does the producer do if they finish the Christmas items in January? Sell to a retailer like Walmart to get it taken off their hands → this helps solve temporal discrepancy, so producers can work on other things throughout the year
jobber/brokers
-specialized sales agents hired by the supplier or manufacturer that focus on a particular customer segment -typically do not take physical control of the products or services they sell and are compensated through commissions or fees
product lifecycle
-stages are introduction, growth, maturity, and decline -introduction includes innovators and early adopters buying the product or service -as the curve becomes steeper, it is because growth is driven by early majority (mass markets) -it is still growing as late majority comes into play -the hump at the top is where the laggards fall -decline is when people are leaving the marketplace and no longer buying the product -the curve represents revenue -we start with negative profitability because we spend money to make the product and have to break even
SWOT analysis
-strengths, weaknesses, opportunities, threats -want to mitigate ourselves from threats -strengths and weaknesses are internal -threats and opportunities are external
the concept of customer-based brand equity
-the value created by the brand comes directly from the response of the customers -there is a perceived or actual difference -customers are aware of the brand and the difference -customers respond positively to the brand marketing
RFM metrics
-these help us understand the what RECENCY -the freshness of customer activity -ex: the time since last activity FREQUENCY -the frequency of customer -ex: the total number of recorded transactions MONETARY -the willingness to spend -ex: the total transaction value
intangible services
-things you can't physically touch, makes it difficult when shopping for it -example: progressive insurance - tries to make something that is not tangible more tangible by showing how customer oriented they are
perishable (inventory) services
-think about fruit (and how it perishes/goes bad) -what's even more perishable is services: you are a hair stylist who is renting a chair from a salon (paying the salon to use it) -all the time slots you have for someone to come in and get their hair cut is INVENTORY -if no one comes in during the 12-1 slot and the time passes, that is inventory that you will never be able to sell (it's gone forever, highly perishable) -however, if no one bought an orange from 12-1, someone could still buy it from 1-2 -but with the appointment, no one can get it again, it cannot be put into inventory -the same goes for a plane that has an extra seat but when the plane takes off, that seat is gone for good and cannot be sold
new product development process
-use this to make sure products are market ready and will be successful in the marketplace -the first and most important step is new product strategy (what role does it play in the overall portfolio?) -we need a good idea from idea generation before idea screening -in the shape of a funnel because we start with way more ideas than actually go into the marketplace -you have to finish the first stage to go to the 2nd, 2nd to go to the 3rd, so on and so on... (stage-gate model)
ansoff strategic opportunity matrix
-vertical axis → markets = groups of customers (stay in existing markets or enter new ones?) -horizontal axis → products = products and services (stay with existing products/services or launch new ones?) 1. product development strategy → developing new products or services for existing customer groups 2. market penetration strategy → within existing markets, just wanting the same customers to buy more products and services (penetrating further into EXISTING markets) 3. market development strategies → going after new markets with existing products (develop new customer groups as customers) 4. diversification strategy → new customers AND new products (completely new and diversified in the market portfolio) -which of these 4 is the lowest risk and which is the highest risk? -lowest risk = doing what we already know how to do (market penetration strategy → existing market, existing product) -highest risk = diversification strategy (going after new products and customer groups) -however, more risk more reward -more potential for completely new revenue from new groups -other 2 boxes have a medium amount of risk
why segment?
benefits to the organization: -identification of unfulfilled needs -better product design -more targeted promotions -increased customer satisfaction benefits to the customer: -convenience/time saving -tailored products and services -relevant offers -personalized experience -we never have unlimited resources or unlimited customers -but we want to use the resources we do have to drive revenue and profit growth for the organization -when we group people/businesses into groups or segments, we can better understand their needs
brand vs A brand
brand: name, term, sign, symbol, design, or a combination of them (brand elements) intended to identify the goods and or services of one seller or group of sellers and differentiate them from those of competition a brand: that which creates a certain amount of awareness, reputation, prominence, or loyalty - including the sensory, emotional, rational, and cultural images that you associate with a company or a product
types of consumer products
convenience product → a relatively inexpensive item that merits little shopping effort (for example, when ever you go to CVS you get gum) shopping product → a product that requires comparison shopping, because it is usually more expensive and found in fewer stores (most of the products we buy on a regular basis, spend a little more effort on it and a little more money) day to day clothes, etc. specialty product → a particular item for which consumers search extensively and are reluctant to accept substitutes (we don't settle on these, for example furniture items) unsought product → a product unknown to the potential bury or a known product that the buyer does not actively seek (examples are funeral services and insurance, we don't want to think about buying those items but we do seek them out when we need them)
brand hierarchy levels
corporate brand --> family brand --> individual brand --> modifier: item or model example: coca-cola doesn't just sell soft drinks
difference between criteria and dimensions for segmentation
criteria: we put a segment together, how do we know it's good enough? dimensions: dimensions on which we can build segments (how do we actually put people into segments)
5 C's
customer, company, context, collaborators, competitors
3 C's of brand positioning
consumer analysis -relevant -resonant -realistic competitive analysis -distinctive -defensible -durable company analysis -feasible -favorable -faithful note: consumer analysis (make sure positioning means something to their needs), competitive analysis (needs to be different from competition and defensible so competition cannot copy it), and company analysis (need to be able to deliver on this promise and be willing to back it up)
overcoming discrepancies (marketing channel benefit)
includes discrepancy of quantity, discrepancy of assortment, temporal discrepancy, and spatial discrepancy
target market strategies
undifferentiated, multi-segment, concentrated, and mass customization
perceptual map
visual method of understanding your brand's positioning, relative to customers, along factors that are important to a particular customer segment
channel alternatives
ways of getting from the supplier to the end customer: 1. distributor/wholesaler: supplier sells products to distributor who then sells it to retailer who then sells it to the end customer 2. jobber/broker: variation of ^, once again goes to retailer then end customer -both 1 and 2 then lead to a retailer 3. retailer: bypass the 1st two steps and goes directly from retailer to end customer 4. supplier's own sales and distribution: no retailer, just going directly to end customer through our own sales and distribution efforts
margin and makeup (EQUATIONS)
% margin = $ margin / selling price $ margin = selling price - unit cost (COGS) unit cost = COGS (cost of goods sold) % mark up = $ margin / unit cost IN EXAMPLE: -the percent of margin is what each channel member gets -manufacturer gets 25%, distributor gets 18%, and retailer gets 14% -price increases for the customer each time so that each person in the process can get paid -each channel member wants the highest amount they can get
3 disciplines of channel stewardship
(1) mapping the industry channels: -take a look at us as the supplier and customers we're trying to reach and ask what are the different alternatives available for us to use? (2) building/updating the channel value chain: -have to make sure it is staying competitive and efficient and creating value for customers and for us as manufacturers and suppliers (3) aligning and influencing the channel system: -managing power and growing our power in the channel
types of products
(can be either, but the difference is who uses them and how they are used) business product → a product used to manufacture other goods or services, to facilitate and organization's operations, or to resell to other consumers consumer product → a product bought to satisfy an individual's personal needs or wants
direct v indirect factors (in regards to getting to the customer)
(direct steps skip all channel parts) 1. size and distribution of end customers -indirect: many and dispersed -direct: few and concentrated 2. nature of the product or service -indirect: simpler -direct: complex 3. role and position of the product in the end customer's purchasing basket -indirect: needs to be bundled; financing -direct: fewer requirements 4. nature of the producer firm -indirect: less established; less credibility -direct: more established; more credibility 5. relative size of the producer firm -indirect: larger, relative to intermediaries -direct: smaller, relative to intermediaries 6. business strategy of the producer firm -indirect: various strategic options -direct: various strategic options -a pro to going directly to the customer is we don't have to spend time or money in the channel system -also becomes more meaningful to the customer and paints a good picture of the brand in their mind -a con is that it may be more time consuming
indicators of service quality
(do not need to memorize this list) reliability: -the ability to perform the service right for the first time responsiveness: -the ability to provide prompt service assurance: -the knowledge and courtesy of employees empathy: -caring, individualized attention to customers tangibles: -the physical evidence of service
product structure
(from the outside in) potential augmented expected generic generic product → combination of elements required to participate in the market (minimum viable product, what is the CORE set of elements required to be sold in the marketplace) -speaker example: needs to have a functioning speaker expected product → generic product + minimum the customer expects from a product in the category (what we expect from the product in the category, not required but over time customers have come to expect it) -speaker example: should be able to play from multiple music streaming services (spotify, apple music, etc.) -also should be able to answer some basic questions (do math problems, ask what the weather is, etc.) -what is generic becomes expected over time augmented product → goes beyond expected product to include unexpected value-enhancing elements -speaker example: amazon says they are the best at ordering items -if you use amazon to order stuff, Alexa can help track products -apples version, however, would be to connect more easily to other products in the Apple ecosystem potential product → extension to the augmented product that includes "everything that might be done to attract and hold customers" (goes beyond what most people might conceive of as possible) -everything else the product does to add value -each customer/segment looks for and gets value from different things -speaker example: apple ipad has a box at the top of the screen where the calendar, news, weather and featured photo are shown each day (not asking it to do this, but it adds value)
mckinsey segmenting example
-healthcare industry -goal was for treatment centers/pharmacies to better treat the needs of these patients -the point here is that they all have different needs and organizations could do a better job responding in a more targeted way to each of these segments -patients and organizations both benefit from this
channel conflict
-a clash of goals and methods between distribution channel members -there is always some degree of this conflict, even in the best partner memberships conflicts may occur if channel members: -have conflicting goals -fail to fulfill expectations of other channel members -have ideological differences -have different perceptions of reality
roles of offerings in the portfolio (what we need to create a balanced portfolio)
-a diversified set of investments helps build overall portfolio -they all work together to balance each other out and create a healthy balance -a product or service can play multiple of these roles -when we develop a product or service it is important to know what role it plays relative to the other products or services in the portfolio -drive revenue (primary objective of marketing) -drive unit sales -drive margin/profit -drive economies of scale or shared costs -drive price perception -drive quality perception -drive brand perception -reflect brand history/legacy -attract/retain segment(s) -defense/offense against competitors -push customers to higher margin items -build-out ecosystem -communicate/achieve strategic goals
selective (level of distribution)
-a form of distribution achieved by screening dealers to eliminate all but a few in any single area -everything in the middle, not just one outlet or super expensive, but also not trying to have mass appeal -want it in a few places, "select retail outlets" -most car brands are selective (specifically there are lots of Ford dealerships but you can't just buy a Ford anywhere) -also brands that we can find at Macy's or other big stores, such as Ralph Lauren -shopping and some specialty goods -SEVERAL, selected intermediaries
intensive (level of distribution)
-a form of distribution aimed at having a product available in every outlet -packaged goods at grocery stores, gum, mint, sodas, etc. can get at drug stores, gas station, and more -producer is trying to sell them at any possible outlet that they can -we expect these to be inexpensive because they are available anywhere -basic things like socks and underwear -convenience goods -achieve mass market selling -MANY intermediaries
exclusive (level of distribution)
-a form of distribution that established one or a few dealers within a given area -producer only wants to sell to one retailer in a specific area -designer brands -specialty goods and industrial equipment -ONE intermediary
perceptual mapping
-a means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers' minds -there is a unique map for each segment; what factors are important to which segment?
marketing channels
-a set of interdependent organizations that facilitate the transfer of ownership as products move from the producer to business user or consumer (the customer) -when looking at the value chain, the marketing channel is everything from the factory all the way out to the end customer -everything behind the producer (the truck) is the supplier network -supplier network is the back half of the chain, marketing channel is the front half of the chain that gets it out to the customer -producer/manufacturer is right in the middle
positioning statement
-a strategic document that communicates the unique value the brand would offer to a particular target market segment -trying to distill the brand's value proposition into a compelling answer to the question of "why should I buy?" -lots of time goes into crafting it -includes the unique selling proposition
unique selling proposition
-a type of value claim that offers a prospective customer a specific, unique and superior reason to purchase a product -what makes us special for the target customers we are going after?
benefits of product line depth
-advertising economies -package uniformity (all packages look similar) -standardized components -efficient sales and distribution -equivalent quality
heterogenous (inconsistent) services
-because services need both the provider and the one getting the service, there is a natural heterogeneity (or inconsistency) -example: when I go into the coffee shop an order a beverage but don't communicate best what I want, the person making the drink could make it differently -some companies make it part of their brand to make service consistent, these days starbucks has created this consistency so that you know how to order your drink exactly how you want it and the baristas know how to make it exactly
geodemographic segmentation
-blend of geographic, demographic, AND lifestyle segmentation factors -refers to segmenting potential customers into neighborhood lifestyle categories (we tend to live near people like us who have similar needs)
brand equity component parts
-brand awareness -perceived quality -brand associations -brand loyalty -other brand assets (ex: patents, trademarks)
categories of adopters (the chasm)
-the right side of the chasm has a need for value -the early majority really isn't that convinced by early adopters, but more by other early majority so they can see others like them getting value -so, we need to identify the early majority customers who are in the most need of getting value
porter's generic strategies
-cost leadership, differentiation, cost focus, and differentiation focus -at the organization level (BCG was at the product level) -how can we understand which strategies companies pursue will be successful? -horizontal axis is advantage, vertical axis is target scope 3 possible successful strategies (we can plot these on a matrix and include a 4th that is NOT successful): 1. cost leadership strategy (top left) → low COST strategy (not low price) meaning we are looking from inside the organization and want to keep the cost as low as possible, an outcome can be low prices for customers relative to competing companies -the money spent/invested will actually lower the cost over time -low margins, low profit for product or service, for this to be successful it has to be done on a broad scale, big market 2. focus strategy (differentiation) → bottom right, goal is to create uniqueness in the marketplace -invest resources in making sure product is as unique as possible -market with very specialized needs and produce products or services that serve that specialized needs -done on a small and narrow scale -also called a NICHE strategy 3. differentiation strategy (top right) → unique product but on a big, broad scale -what often happens is someone starts out with a focus strategy serving a small market and as they are successful they grow into more unique products and do it on a bigger scale of a marketplace -apple is an example of this ^ -the one not successful: focus strategy (low cost) → low cost and narrow market strategy -not a good idea
specialization and division of labor (marketing channel benefit)
-creates greater efficiency -provides lower costs -achieves economies of scale -aids producers who lack resources to market directly (for example, Apple can reach individual consumers directly) -builds good relationships with customers -in other words, I, as a supplier, can focus on what I do best, which is making products or services available at all, while other organizations can manage everything that comes along with selling
customer-based brand equity as a "bridge"
-customer based brand equity represents the "added value" endowed to a product as a result of past investments in the marketing of a brand -customer based brand equity provides direction and focus to future marketing activities -coca cola example → coca cola marketers have spent years creating all we know of coca cola built up today, that which then serves as a BRIDGE to what coca cola customers (us) will do with the company going forward -if coca cola manages it well (because of everything they have done so far), they have lots of opportunities to grow that brand in the future which is worth a lot of value for the organization because of guaranteed stream of revenues coming in
determinants of customer-based brand equity
-customer is AWARE of and FAMILIAR with the brand -customer holds some STRONG, FAVORABLE, and UNIQUE brand associations in memory -essentially is just brand value that is created by the customers response
mass customization (one to one) market
-customize marketing mix for individual customers -advantages: tailored exactly to customers' needs -disadvantages: high costs
feature positioning
-dove soap → contains moisturizing cream -organic valley milk → produced by family farmers without antibiotics, synthetic hormones, or pesticides
arm's length distribution network
-each entity is INDEPENDENTLY owned -most common in a capitalist economy -means that yes, we negotiate and cooperate in the channel, but we stay at arms length: we don't have any exclusivity arrangements -supplier, distributor, and retailer are all separately owned by different individuals or corporations -called a multi brand distributor and a multi brand retailer because they work with many suppliers -higher coverage because you can sell to more retailers or distributors -most intensive fully INDIRECT channel structure (example is Apple when they have Best -buy or Target selling their products) -low control -potentially lower cost -potentially higher coverage (as a supplier I can sell to more retailers and distributors)
pre-purchase evaluation differences
-easier to evaluate things high in search properties (clothing, jewelry, furniture, houses, automobiles) -difficult to evaluate things high in credence properties (hard to accept something as true) such as TV repair, legal services, root canal, auto repair, medical diagnosis) -in the middle are things high in experience properties (restaurant meals, vacation, haircuts, child care)
what is a product? (or offering)
-everything, both favorable and unfavorable, that a person receives in an exchange -tangible good -service -idea
discrepancy of assortment
-example: target -the lack of all the items a customer needs to receive full satisfaction from a product or products -another example: if I want to buy storage items for my closet, I want to look at an assortment of them and may buy a lot at one time -may be manufactured by different producers -if I go to to the container store, I am going to see a broad assortment from many different producers
boston consulting group matrix
-horizontal axis → how much are we getting from our customers relative to what our competitors are getting from their customers (determines relative market share) -vertical axis → how fast is that group of customers growing in terms of how much they spend on products and services (market growth rate) -star products → top left, high growth rate market and high market share -cash cow → low market growth rate and high relative market share (called this because we are not going to invest a ton of resources into product because the market is not growing as fast as other markets we want to pursue) -product is producing cash as a cow would produce milk -we can then use that cash to fund other products in the portfolio -cash cow products can fund the marketing and investing needed for star products -question mark → top right, in the high growth rate marketplace, but not high market share yet which is why it is questionable if they will be able to perform well -these are okay as long as there is a plan or strategy to move them over to the star category -dogs → low market share and low growth rate (least popular, not doing well, market isn't growing) -want to phase these out of portfolio unless they are serving some other function -so that we can focus time and money on the other 3 categories of the BCG matrix portfolio
hierarchy of effects
-how products will be adopted in the marketplace -reference to the song "I see it, I like it, I want it, I got it" UNAWARE (stage 0) advertising and sampling (leads to aware) AWARE (stage 1) product concept, advertising weight/persuasion, level of distribution, and price (leads to trial) TRIAL (stage 2) product quality (leads to repeat) REPEAT (stage 3)
categories of new products
-improvements or revisions to previous products (apple behaves as if these are new products when really they are revisions) -product line additions -new product lines -new-to-the-world
reebok market product grid
-includes primary and secondary segments -old market product grid, but a good visual -PYRAMID OF INFLUENCE → top of pyramid is primary market we want to serve with all of our marketing influence because the top is the group that influences the other layers (other layers are secondary)
the goods-services continuum
-salt (bottom left) is a product with no service associated -teaching (top right) is a full service and very little tangible comes out of it -fast food restaurant is right in the middle (for example chick fil a, tangible food but also intangible service has a big meaning)
multi-segment market
-select 2 or more segments and develop distinct marketing mixes for each -advantages: greater financial success, economics of sale, and defensive -disadvantages: high costs, cannibalization
concentrated (niche) market
-select one segment for targeting market efforts -advantages: concentration of resources, better met needs, and stronger positioning -disadvantages: segments can be too small, large competitors may be more effective
distributor/wholesaler
-sells products to retailers or business end users -own and take physical control of inventory -also promote the products or services and arrange for financing, ordering and payment with their customers
franchised distribution network
-sits in between arms length and integrated -typically it involves a supplier who has set up an exclusive arrangement with the distributor, but the supplier doesn't own the distributor but they have an exclusive contract with the distributor -franchised retail outlet is independently owned -McDonald's is an example, there are independent distributors that work with them and help get all the product out to the individually owned McDonald's franchise outlets -these outlets can call themselves McDonald's even though they aren't because of the exclusive contract -good because it provides a guaranteed profit base and each location acts in the specific way said to by McDonald's
six segments of millennials (not sure if we need to know)
-study done by boston consulting group 1. hip-ennials: They believe that they can have an impact on the world and make it better. They are aware of what's going on globally, give to charity, and search for information regularly. Although they read social media content, they do not produce it. 2. millennial moms: They enjoy traveling, getting in shape, and treating their "children" as they were treated (pampered). They are confident, very family oriented, and proficient in technology. They participate in social networks online and are very attached to their peer groups. 3. anti-millennials: They care mostly about their businesses and their families, in contravention of the Millennial "norms." They do not buy green products like most Millennials do. They seek comfort instead of change, whereas most Millennials embrace different activities to make life more interesting. 4. gadget gurus: They are always looking for the next big gadgets, usually from Apple, and will stand in line to get them first. They are highly egotistical, wired, free spirited, and laid back. They often create content online and tweet continuously. Gadget Gurus are male dominated and single because they live in their own world. 5. clean and green millennials: They take care of themselves and support others. They are driven by social causes, ecological issues, philanthropy, and positive outlooks on life. 6. old-school millennials: They did not adopt many of the typical Millennial rituals, like updating their Facebook pages during meals. They would rather meet people in person than online or through text, and read books instead of blogs. They are independent and self-directed, whereas most Millennials wants mentors and constant feedback from their managers.
integrated distribution network
-supplier is a company that also owns the distribution center and the retail outlets -all 3 boxes are owned by the same organization -fully DIRECT channel structure (example is Apple when they sell in their own stores) -one of the biggest monopolies in the world (Exotica) is a corporation that owns the manufacturing of eyeglasses and sunglasses and work with a number of clothing/fragrance brands to produce sunglasses on their behalf (Prada for example) -exotica is the manufacturer who owns the distribution centers and the retail outlets -they own a number of retail outlets that go by different names (ex: sunglass hut) -sometimes they have the same outlets in the same mall -very integrated, one of the largest eyeglass companies in the world -gives us high control (because you own it all, therefore you control it all) -higher cost (because you are doing all of the functions) -potentially lower coverage (because you are doing it all you won't be able to send it out to other retailers, therefore there is potentially lower coverage)
brand positioning
-the art of staking out a particular piece of mental real estate for a brand in the customer's mind by crafting and communicating a differential positioning statement -what we are trying to be to the customers we're trying to serve
the concept of brand equity
-the brand can grow and create value for the company -brand equity is defined in terms of the marketing effects uniquely attributable to the brand -different outcomes result in the marketing of a product or service because of its brand name, as compared to the same product or service that does not have that brand name -the brand equity concept stresses the importance of the brand in marketing strategies and its integration into all aspects of the organization
channel stewardship
-the construction and continual guidance and management of a set of channel tasks or functions that mirrors the needs of the company's customers as closely as possible -a way that every supplier and manufacturer should think about in regards to creating and managing a channel -how the channel is designed AND managed with intention and strategy
discrepancy of quantity
-the difference between the amount of product produced and the amount an end user wants to buy -seller wants to sell a lot of products but customers usually only want to buy one at a time
spatial discrepancy
-the difference between the location of a producer and the location of widely scattered markets -can be as simple as having a manufacturing facility in Ohio but my customers are spread across the US -don't want to wait for people to show up at the door in Ohio, and we don't want to go there as customers, so as a customer I want to shop near my home or online, and as a manufacturer I want to produce wherever it is most convenient and then get my products out
brand equity
-the differential effect that knowing the brand name has on customer response to the product or its marketing -equity is a fancy word for VALUE -where do we get this value? value of the brand helps drive value into the organization
inventory carrying costs
-the expense of maintaining inventories -for example: amusement parks sell pases because people can come during off times -also, airlines offer deals to try and fill up planes and manage the inventory closely
positioning
-the place a product occupies in a consumer's mind relative to competing products or brands -"with the goal of developing a specific mix (4 P's) to influence potential customers' overall perception of the brand, product line, or organization in general
strategic channel alliance
-the products of one organization are distributed through the marketing channels of another starbucks & pepsico example: -while starbucks has their cafés, they also sell stuff in grocery stores such as the bottled frappuccinos (these are very different to make than making an actual frappuccino in the store) -starbucks didn't know how to do that at first so they turned to peppsico for a strategic channel alliance -starbucks leverages the channel of pepsico strategically pepsico has excess capacity in their bottling facilities and helps Starbucks -this arrangement was called the North American Coffee Partnership and it helped Starbucks get their products out to retailers -over time, starbucks saw how much money pepsico was making from their help and decided they could do it all themselves so they broke the contract -now starbucks goes directly to the customers
4 forces affecting channel strategy
1. customer wants and needs→ they want an easy/not crowded place to go shopping, a company they can trust, maybe they want to stay at home and have the product come to them 2. channel capabilities and costs → looking at transactional logistical and facilitating functions and see what each channel member is able to do and what will be best for our needs 3. channel power and influence → who has the power and influence to determine how the channel will go 4. competitive postures and actions → how easy is anything I do in the channel to be copied by competitors
positioning statement formula
4 essential components: 1. for whom, for when, for where? -segment - what we know about them 2. what value? -consider economic, functional, experiential, and/or social 3. why and how? -PROOF of the value; why is it believable 4. relative to whom? -competition set; category
target market selection
COMPETITION -competitors' strengths -competitive intensity -competitors' resources SEGMENT CHARACTERISTICS -segment size -growth rate -profitability COMPANY FIT -objectives -competencies -resources
salience (bottom level of brand resonance pyramid)
IDENTITY -another word for awareness -when we are achieving salience, we are planting a memory node (it is now in your brain, moves from the awareness set into the considerations set) -what it is, brand name, category education depth of brand awareness -ease of recognition and recalling of brand -strength and clarity of category membership breadth of brand awareness -range of purchase consideration -range of consumption consideration
resonance - laddering up
TOP value positioning benefit positioning feature positioning BOTTOM -over time, companies and brands LADDER UP their positioning -feature positioning isn't reliable over time, so they ladder up to benefit positioning (yes, we have this feature, but we also give you this benefit better than others) -the next level up is value positioning (these are great products and provide great benefit and you are WORTH it) -more of a human value standpoint
basis for segmentation (from harvard business reading)
WHY → why do customers make the decisions they do? -needs, preferences, decision process WHAT → what have the customers done? -usage, loyalty, profitability -IMPORTANT TO REMEMBER: all about what customers do relative to buying these products or services, what do their purchase habits look like? WHO → who are the customers? -demographics, media habits, lifestyle
criteria for segmentation
a good segment is one that is reasonable for us to target, and this is the criteria --> IDENTIFIABLE & MEASURABLE: -segments must be identifiable and their size measurable SUSTAINABLE: -segment must be large enough to warrant a special marketing mix ACCESSIBLE: -members of targeted segments must be reachable with marketing mix STABLE: -segments must be stable over a long enough period of time that any marketing effort would be successful DIFFERENTIABLE: -customers in a segment should have similar needs, and these needs should differ from the needs of customers in other segments ACTIONABLE: -organization should be able to create products and marketing programs for attracting and serving customers in the identified segment
why do brands matter?
for consumers: -reduce risk (perceived risk) -ease identification of product or source -assign responsibility to product maker Signal level of quality -create relationship with product maker -reduce search cost - if you already have a few brands in mind it reduces the effort when searching for something (especially with a new product/product category) -serves as an internal or external symbolic device (if I like and connect to this brand it makes me feel more like the person I want to be) for companies: -identify products to ease handling and tracing -legally protect unique features -position product within competitive markets provide competitive advantage -establish longer-term relationships with customers -(less important): -enjoy greater brand loyalty, usage, and affinity -increase marketing communication effectiveness -receive greater trade cooperation and support -yield licensing opportunities -support brand extensions -command larger price premiums
dimensions for segmenting consumer markets
geographics: -country, region, city, urban/rural, climate demographics: -age, income, gender, generation, marital status, family size, occupation, education, ethnicity, religion psychographics: -lifestyle, personality, activities, interests, opinions behavioral: -usage rate, loyalty, product knowledge, involvement, purchase occasion, buying state benefits sought: -convenience, value (value people are trying to get when they purchase the product/service), safety, status -benefits sought is the best option because we understand the need and can build and communicate perfectly from knowing how they perceive value -however, geography and demographics are the easiest to find out about people so we use those the most often (and they can lead to finding out about benefits sought which makes them useful to create segments - cheapest and easiest ways)
categories of adopters (relates to the PEOPLE who might buy the offerings)
innovators (2.5%) -venturesome/interested in new ideas -people who are ready and interested in adopting new innovations -they really want the newest/latest thing in the category -it takes innovators to adopt/sway the next category: early adopters early adopters (13.5%) -convey ideas of innovations to others -greatest degree of opinion leadership -have stronger connections into the early majority early majority (34%) -deliberate -adopt new innovations just before the average member of a system -convinced by early adopters -convincing late majority late majority (34%) -skeptical -adopt new ideas just after the average member of a system laggards (16%) -traditional -suspicious of innovations -last to adopt an innovation -not opinion leaders -diffusion goes from left to right in each section -time is more focused on innovators, early adopters, early majority, and late majority and NOT laggards
how do services differ from goods?
intangible, inseparable, heterogeneous (inconsistent), and perishable (inventory)
channel structure
integrated distribution network: supplier company-owned distribution center company-owned retail outlets (high control, potentially higher cost, and potentially lower coverage) franchised distribution network: supplier distributor (exclusive to company) independently owned but franchised retail outlet arm's length distribution network: supplier multibrand distributor multi brand retailer (low control, potentially lower cost, and potentially higher coverage)
levels of distribution intensity
intensive, selective, exclusive ask yourself: -how many places do we want to sell our product? -do we want customers to encounter our product everywhere or in just a few places? -what are we trying to convey in terms of the product we are selling? Do we want to convey that it is an inexpensive value option for customers? Or that it is prestigious and high quality?
market segmentation
market → heterogeneous set of people or organizations with needs or wants and the ability and willingness to buy (all of the people we're serving that have needs and wants relative to the product we are selling) -never the whole world/country -hopefully the market is pretty large market segment → a more homogeneous subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs -subgroups of the market market segmentation → the process of dividing a market into meaningful, relatively similar, identifiable segments or groups -the process of segmenting the market -we want the deepest understanding of these people as possible
performance & imagery (3rd level of brand resonance pyramid)
meaning: what are you? brand performance → features and benefits -primary characteristics and supplementary features -product reliability, durability, and serviceability -service effectiveness, efficiency, and empathy -style and design -price brand imagery → personality -user profiles -purchase and usage situations -personality and values -history, heritage, and experiences associative network memory model → "mental maps" -performance and imagery set of associations -building off the initial node, connecting new things with things already in our brain
product mix breadth and product line depth
product mix breadth/width → the variety and number of product lines an organization offers -diversifies risk -capitalizes on established reputations -establish relationships between product lines (groups of products), if any product line depth → the number of product items in a product line -attracts buyers with different preferences -increases sales/profits by further market segmentation -capitalizes on economies of scale -evens out seasonal sales patterns -product mix is made from a number of product lines -stock keeping unit is an individual characteristic of a product (example how one of the drills has a storage feature, the drill itself is a product item)
product items, lines, and mixes (and stock keeping unit)
product mix: all products that an organization sells product line: a group of closely-related product items product item: a specific version of a product that can be designated as a distinct offering among an organization's products stock keeping unit: a specific unit of inventory that is carried as a separate, identifiable unit note: -product mix and product line are perceived as closely related by the customer -product item is a specific version of a product -stock keeping unit (counting inventory) if we have a product item
products v brands
product → anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want brand → the "stuff" that adds other dimensions to a product that differentiate it in some way from other products designed to satisfy the same need example → mac n cheese: the basic product is the food itself, but the brand is kraft (many people say kraft is the best mac n cheese brand)
4 P's
product, price, promotion, place
resonance (top level of brand resonance pyramid)
relationships, what about you AND me? behavioral loyalty -frequency and amount of repeat purchases (subway example) attitudinal attachment (went to subway a lot out of convenience but it wasn't his favorite) -LOVE brand (favorite possessions, "a little pleasure") -proud of brand sense of community -kinship -affiliation active engagement -seek information -koin club -visit websites, chat rooms, etc.
factors affecting rate of adoption (in regards to offerings: products/services)
remember: CTACO complexity -how complex is it from the customer's point of view -as a customer, how much do I have to learn from this product/service to use it correctly and get value from it -example: setting up a TV is more complex than expected trialability -the degree to which/how much I can try this item out before I buy it -is the customer able to try it out/experience it before buying it? -example: picking up something in a store gives you more trialability than test driving a car a few blocks before purchasing relative advantage -if I were to buy this product/service, what is the advantage I would get from this relative to either what I have now or other options compatibility -the degree to which this product/service connects with my current ecosystem -example: new apple products connect with other products you already have, but an LG TV will have lower compatibility with the other products in the house observability -the degree to which I can observe other customers like me getting value from the product -for a car, if you see the car on the road or have friends with the same car, it has lots of observability -however, things in a home are harder to observe
disintermediation
removing a channel or intermediary
judgements & feelings (2nd level of brand resonance pyramid)
response: what about you? consumer judgements → how is it different from others? -brand quality (value and satisfaction) -brand credibility (expertise, trustworthiness, likability) -brand superiority (differentiation) consumer feelings → how relevant to my life? -brand consideration (relevance) -feelings (fun, exciting, security, social approval, self-respect)
difference between retailers, distributors/wholesalers, and jobbers/brokers
retailers, distributors, and wholesalers take title to goods and jobbers/brokers do not: -the difference here is that when retailers and distributors and wholesalers get the product, they take ownership of it before selling it off -the downside of taking this ownership is that you now have a liability -if you can't sell it you can't give it back (stuck with inventory) -also, if it is kept in a warehouse that floods or catches fire, that is your loss -jobbers and brokers don't take on this risk, but they also don't ever have the actual product on hand jobbers and brokers get a cut when they sell to the customer (percentage fee of transaction size): -helps to think of this like a real estate broker -they get a cut of the overall transaction
channel intermediaries
retailers: take title to goods distributors/wholesalers: take title to goods jobbers/brokers: do NOT take title to goods
organizational buyer characteristics
satisficers → business customers who place an order with the first familiar supplier to satisfy product and delivery requirements (people who "settle") optimizers → business customers who consider numerous suppliers, both familiar and unfamiliar, solicit bids, and study all proposals carefully before selecting one (people who want to "optimize" their purchase)
retailer
sells products to end customers, usually individuals through a variety of formats, including department stores, mass merchandisers, super centers, convenience stores, discount stores, online, catalog, warehouse clubs, and drug stores
marketing channel benefits
specialization and division of labor overcoming discrepancies providing contact efficiency
brand resonance pyramid
steps to creating brand loyalty salience, performance, imagery, judgements, feelings, resonance
partnering
the joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage
planned obsolescence
the practice of modifying products so those that have already been sold become obsolete before they actually need replacement
diffusion (of offerings in the marketplace)
the process by which the adoption of an innovation spreads (the rate at which products will be adopted across the marketplace)
channel functions performed by intermediaries
transactional functions: -contacting/promotion -negotiating -risk taking logistical functions: -physically distributing -storing -sorting facilitating functions: -researching -financing