MKTG 3665 exam 2
creating brand awareness
build your own website display advertising email marketing SEO/paid search
commitment
engagement level 4 repeated purchases; blogging about the brand; organizing brand communities; participating in brand events metrics: # of high level memberships; # of regular buyers; # of content distributors
logic behind freemium prices
free features: attract new users without expending resources on costly ad campaigns or traditional sales forces monthly subscription fees: generate sustainable source of revenue key to success: trivial marginal cost to serve an additional customer; free users can be attracted to upgrade to subscription accounts
online distribution
greater convenience: the consumer can shop from home death of distance: location is irrelevant time compression: available 24/7
ebay's social product strategy
group gifts online application gift organizer can pool funds among the recipients facebook friends to buy gifts help people purchase better targeted and more expensive gifts benefit customers by strengthening relationship with gift recipient & other gift givers benefits firm by increasing sales
challenges with omni-channel retailing
hard to determine what products sold in store, online, or in catalogs pricing discrepancies promotional offerings cross-channel support
scale effect
high demand products are sold more efficiently by one large reseller than by many small sellers ex. amazon act as a reseller for high-demand products, but as multi-sided platform for long tail products
online challenges to house of brands
hinders cross selling opportunities content fatigue reduces likelihood of frequent customer visits
URL choices branded house
homepage as an umbrella ex. virgin.com/books virgin.com/travel
impediments to direct price discrimination
it is not easy to observe customer's willingness to pay customers have incentive to conceal his willingness to pay different prices to different people can create opportunities for arbitrage social media leads to greater price transparency
uprising of mobile shopping
provides more opportunities for personalized pricing more customer data is collected through mobile devices customers check prices more often, provide more data to evaluate consumer value real time physical location information
Web 2.0
public networks self-forming, focused public forums and groups external wikis and blogs, facebook, linkedin, twitter, portals
Yelp's social product strategy
reviews by educated group of volunteers in their 20's and 30's elite squad that gives access to exclusive events benefits customers by meeting other interesting and young reviews (establish relationships) benefits firm by reducing cost of generating good quality review
customer value based pricing
use data on perceived customer value of the product needs, perception of value, price elasticity, willingness to pay most preferred pricing approach advantage: direct link to needs of customer disadvantage: data on customer preferences hard to find/interpret & may lead to relatively high prices
enterprise 2.0
use of social software platforms within companies or between companies and their partners or customers aims to help employees, customers, and suppliers collaborate, share, and organize information via Web 2.0 technologies expertise location, corporate blogging, corporate wikis, internal community platforms, idea generation/ideation
competition based pricing
uses data on competitive price levels or on anticipated or observed actions of actual or potential competitors as a primary source to determine appropriate price levels advantage: competitive situation taken into account disadvantage: aspected related to demand are ignored and strong competitive focus in setting prices can exacerbate the risk of price war
new product ideas or better product ideas
what are the biggest two benefits of using social media in the development process?
transparent collaborative adaptive cosmetic
what are the four faces of mass customization
online retailing
what intensifies price wars?
smartphones
what is the most common starting place for online activities? 65% of people start here
price was better online
what is the number one reason consumers engage in showrooming?
price
what is the only marketing mix element that generates revenues? all of the other elements entail costs
freemium challenges
what should be free? do customers fully understand the premium offer? what is your target conversion rate? are you prepared for the conversion life cycle? are users becoming evangelists?
digital technology
what threatens bundling strategy?
mobile apps
who has the advantage mobile apps or mobile browsers when it comes to how shoppers select and purchase items?
beta release
wider public sample at lower price for free
buyer and seller experiences
with the reseller model, one side does not need to deal with multiple agents reseller can have better control over quality and service zappos shifted from multisided platform to reseller airbnb as a platform uses a feedback system
American Express social product strategy
OPEN credit cards, targeting smal business owners set up member only social network that allows users to post profiles, list services and freely connect for business benefit customers by establishing/strengthening relationship with businesses benefit firm by reducing customer churn and increased willingness to pay for the car
true
true or false: retailers across the U.S are closing due to growing e-commerce penetration
alpha release
trusted lead users such as company employees
direct online selling
understand their markets due to direct connection to consumers consumers gain greater information about the products through direct connect to the manufacturers no physical sales channel and low overhead costs suitable for niche product manufacturers with specialized products and limited marketing budget ex. Rad Power bike
enterprise 2.0 examples
LinkedIn for product requirements and created a group to talk to 1800 customers social media to gather ideas for product improvements and new product development and tracking buzz for our products before launch social co-creation process with consumers for innovating new products
online challenges to branded house
complicates content choice potential navigation problems difficult to measure advertising effectiveness per individual brand
showrooming
consumers often come to a store only to see what a product looks like, and then buy the product elsewhere
success factor of sharing economy
develop culture of trust smooth transaction process constant engagement of users
omni channel retailing
different consumer shopping needs are best met though different channels desire for information = direct online information desire for touch and try on = offline retailer
e-tailing business models
direct online selling by manufacturers click and mortar stores online marketplace
ideal funnel for new products
dual goals: identifying unmet needs & weeding out costly ideas early in process few ideas make it through and the process can be costly
online marketplace
e-sellers have higher capital and operating costs, higher revenues, and lower percentage margin ex. Zappos multisided platform takes cut from each transaction, low operating costs and high margin ex. Ebay, wayfair
conversion life cycle
early adopters are usually less price sensitive and more likely to upgrade over time conversion rates typically dip as the user base expands to include people who are more price sensitive solutions: after initial sources of freemium models, firms can convert to free time limited trials or eliminating free offerings; keep increasing the value of your premium services
branding advantages to branded house
efficient use of resources lower cost of product introductions, brand extensions focus on key users
mass customization
enables a customer to decide the exact specification of a product or services at or after the time of purchase and have that product or service supplied to them at a price close to that for an ordinary mass produced alternative manufacturers customize products for consumers to satisfy their needs consumers customize to satisfy their own needs
observing
engagement level 1 aware of the brand hearing about the brand via WOM, social/traditional media; visit the firm's website but doesn't provide contact information website traffic, media impressions
following
engagement level 2 paying attention to the brand subscribing to an email distribution list, newsletter or RSS feed metrics: email subscribers, RSS subscribers, Twitter followers, Facebook fans
endorsing
engagement level 3 trust the brand and willing to endorse follow brand's social media accounts, forwarding emails, low-level membership metrics: # of low level members; public endorsers, attendees of a brand event blurry lines between level 2 & 3 with twitter and facebook
building brand in the digital world
establish brand identity create brand meaning (image) eliciting brand response (brand value) forging customer brand relationships (community)
Rad Power bike
example of direct online selling relied on direct-to-consumer sale and WOM widely considered the largest e-bike seller in the U.S
Nordstrom
example of omni-channel retailing showcases pinned items in the store
combat showrooming
expand in store offering with live services such as training Ex. Apple stores provide free service with their Genius Bar make your shop a social place where consumers congregate and interact around your products ex. Lion Brand Yarn has a studio to showcase high end offerings, provide classes, and build community provide immersive shopping experience ex. Disney stores are divided into themed areas help consumers save (price comparison tool)
collaborative customization
firm conducting a dialogue with individual customers to help them articulate their needs, identify the precise offering that fulfills those needs and to make customized products for them online platforms help reduce the cost of consumer manufacturer communiation
adaptive customization
firm offer one standard but customizable, product that is designed so that users can alter it themselves product features can be individually configured ex. soda machine at movie theaters
transparent customization
firm provide individual customers with unique goods or services without letting them know explicitly that those products or services have been customized for them consumers needs are predictable or can easily be deduced and when customers don't want their requirements repeated ex. ChemStation custom formulates mixtures of soap which goes into a standard tank on customers premises after independently analyzing needs
online advantages to house of brands
focused content simplified imagery better measurement of brand specific campaigns
target conversion rate
1% may be too low: you may be providing too much for free or you may not be communicating the benefits of upgrading well 50% may be too high: your free product may not be attractive to acquire new users most have between 2-5%: if you're targeting a small market, you should aim for a higher rate
consumer decision journey
1. consumer considers initial set of brands based on exposure and perception to touch points 2. active evaluation (add or subtract brands - info gathering & shopping) 3. moment of purchase 4. postpurchase experience (build expectations to inform next decision) trigger & loyalty loop
top online category purchasing
1. fashion 61% 2. travel 59% 3. books & music 49% 4. IT & mobile 47% 5. Event tickets 45%
Bed Bath & Beyond and PetSmart
What two retailers are at the highest risk index for showrooming?
freemium pricing
free + premium users get basic features at no cost and can access richer functionality for a subscription fee often with 30 day free trials, monthly subscription fee, incentives for referral dominant pricing models for digital products and services, particularly startups ex. LinkedIn, Hulu, Dropbox
are users becoming evangelists
a free user is typically worth 15% to 25% as much as a premium user creating significant value from referrals firms can increase value of a free user by carefully managing referral incentives and communications
tail
a part of the new marketplace graph books so niche that they could not profitably be sold in a book store
head
a part of the new new marketplace graph the hits
personalized pricing
a seller decides a product's price for an individual type of direct price discrimination uses user location, IP addresses, web visits, past purchases, customer's volunteered data AI technologies to analyze information on previous purchases and predict future purchases prevalent in travel industry costly to implement, reduce consumer trust, cause legal issues
example of competition based pricing
children's tablet LeapPad1 Explorer Walmart appeared to be purposely undercutting Amazon before thanksgiving amazon offered the tablet for $59.99 and on Monday Walkmart priced it for $59.97 sunday after thanksgiving amazon priced the tablet at $69.99 and walmart followed at $69.97
click and mortar stores
company sells in multiple marketing channels simultaneously (both physical and online stores) often brick-and-mortars moved to the online world ex. walmart sometimes pure-players expanded on physical storefronts ex. warby parker
cost based pricing
accounting data influences this pricing decision with the objective of getting a certain return on investment or a certain markup on costs advantage: data need to set price are usually easy to find disadvantage: aspects related to demand and competition are ignored
Jordan's Furniture
achieves some of the highest furniture sales productivity in the country by using themed streets in its store ex. mardi gras, laser light show, water show, trapeze school, city of jellybeans
information utility
availability for information about product features and benefits
branding advantages to house of brands
avoids confusion dominance in product category reduces channel conflict
long tail strategy
can be successful online 30-40% of Amazon's book sales are on books that are not in a brick and mortar store benefits both sellers and buyers sellers not constrained by the size of local demand and no inventory cost for digital goods buyers save search costs (online items can be easily found/recommended) and tend to be more loyal
direct price discrimination
charging different prices based on observable characteristics of customers ex. age, gender
indirect price discrimination
charging different prices to induce customers' different behaviors which reflect their different unobservable characteristics ex. coupon, quantity discount
social product strategy
motivates customer to conduct activities that benefit consumers themselves by establishing or strengthening social relationships and benefit firms by reducing cost or increasing sales of the product or service
house of brands
multibrand companies must decide whether each brand stands alone or is linked by the common firm emphasizes product-specific marketing with few ties to other company brands
branded house
multibrand companies must decide whether each brand stands alone or is linked by the common firm treats all products as integrated brand
advantages to indirect price discrimination
not necessary to observe consumer characteristics arbitrage is prevented by the design of pricing scheme ex. coupon, quantity discount
price wars
online retailers can collect information about competitors sophisticated online retailers set algorithms to change prices in response to competitors
bundling pricing
packaging two or more products to gain a pricing advantage not a price discrimination tool conditions necessary: heterogeneous customers, price discrimination is impossible, demands must be negatively correlated
enterprise 2.0
partner/supplier collaboration internal teaching & collaboration secure collaboration portals and technologies to support "communities of practice" internal wikis and blogs, video conferencing/web cams, shared workspace, applications like sharepoint 2010
sharing economy
people rent beds, cars, boats, and other assets directly from each other coordinated via the internet platform serves as intermediary
platfom
plays key role brings together owners and seekers and facilitates all processes between them the business doesn't possess any of the assets on offer the great trust shift from institutions to individuals ex. Airbnb doesn't own a single room and Zipcar doesn't own a single car
price discrimination
practice of charging different consumers different prices for the same good direct & indirect
dynamic pricing
price differently overtime based on complicated algorithms type of indirect price discrimination can be costly to implement
smart pricing
pricing from airbnb free for all hosts property specific web-embedded feature that hosts can turn on or off based on machine learning algorithm let hosts set prices to automatically go up or down based on changes in the demand for similar listsings
how to align marketing efforts with consumer decision journey
prioritize objectives and spending by being specific about the touch points used to influence consumers tailor messaged by addressing weaknesses at specific points invest in consumer driven marketing via websites about products, programs to foster WOM, and systems that customize advertising
form utility
processed/prepared in proper condition and/or ready to use
benefits of mass customization
product distinction: a standard product becomes a specialized solution low cost access to luxury and status of personalized services survival through differentiation increased customer loyalty
place utility
product or services availability in locations convenient to customers
time utility
product/service availability when desired by customers
true
true or false: online user platforms help improve consumer capability to customize
mobile shoppers
shy away from buying big ticket items such as sofas, preferring larger photos, expanded reviews and product descriptions, price comparisons available on desktop computer
aggregation effect
some products and services have higher value to buyers when bought together than when purchased separately from independent sellers reseller can take bundling or loss-leader strategy ex. intellectual ventures succeed as patent reseller "patent portfolio"
cosmetic customization
standard product is presented differently to different customers rather than being customized or customizable, the standard offering is packaged especially for each customer ex. customers name may be placed on each item
Henkel's crowdsourcing campaign
started a design contest for the label of its dish soap brand, Pril consumers submitted more than 50,000 designs via online platform, discussed and rated them slogan: "tastes as good as roast chicken" was a frontrunner
passive loyalists
stay with brand without being committed to it open to messages from competitors who give them reason to switch
active loyalists
stick with the product and recommend it
mobile buyers
tend to make smaller purchases in short bursts throughout the day on their phones "snacking"
online advantages of branded house
traffic steered to single page authority status of site through shared in bound links easier user tracking
true
true or false: internet retailers should focus on customer intervention
true
true or false: mobile facilitates omni-channel retailing
false (rise)
true or false: mobile shopping is on the decline
