BUAD 307 Final Exam

Branding

(name, logo, symbol, etc): Creates awareness and is a way for a firm to differentiate its product offerings from those of its competitors. Strong brand is hard to copy (sustainable competitive advantage). Brand name, URLs, logos and symbols, slogans, characters, jingles are all branding Branding can be used to represent the name of a firm and its entire product assortment, one product line, single item

Laggards

16% of the market Avoid change and rely on traditional products until theyre no longer available

Late majority

34% of market, when they enter the product has achieved its full market potential These movie watchers wait until movie is on Netflix When late majority enters, sales tend to level off or may be in decline

Early majority

34% of population, crucial because few new products and services can be profitable until this group buys them If early majority group isn't large enough, product fails Differ from first two because don't like to take risks- wait until the bugs are worked out instead Experience very little risk because all the reviews are in Competitors in marketplace has reached its peak

Primary Data

Data collected to address specific research needs, original research to collect new data for specific reason Methods: observation, social media, in-depth interviews, focus group interviews, survey research, experimental research Primary data collection can be qualitative or quantitative Sample size can skew data Most important criteria for sampling is that you have a representative sample Large number Randomly selected Pros: Meets specific research need, offers behavioral insights not available from secondary research Cons: Costly, time consuming, more sophisticated training and experience to design study and collect data

When retailers accumulate merchandise from producers in large amounts and sell to consumers in smaller amounts it is considered _______ marketing.

B2C

Marketing can be performed by individuals and organizations

B2C, B2B, C2C Ex. Manufacturer makes monitors--B2B-->Retailer sells PCs and monitors--B2C-->Consumer A--C2C-->Consumer B

Which of the 4 Ps is the best and worst to achieve a sustainable competitive advantage?

Best: Product and Place Worst: Promotion and Price Price P alone doesn't work because a price is easily copied by a competitor. While low prices are good, you have to incorporate it in the product production or supply chain (like Ikea did). You can't have a product that is expensive to produce and then sell it at a low price. Promotion doesn't work long-term because once the consumer tries the product, they will realize it's not good and not buy it again.

Macroenvironmental factors (segmentation and targeting)

CDSTEP Culture:Country culture, Regional culture Demographics: Age Generational cohorts, Income, Education, Gender, Ethnicity Social trends: Health and wellness concerns, Green marketing: supply customers with environmentally friendly merchandise, Greenwashing is bad, Privacy concerns, Price sensitivity Technology advances: ! Economic situation: Rate of inflation, foreign currency exchange rates, interest rates Inflation: persistent increase in prices of goods and services. Dollar buys less than it used to Foreign currency fluctuations: euro more expensive than dollar, merchandise in europe more costly for americans but europeans get bargains on US products Interest rates: if high interest rates then consumers have incentive to save more because they earn more for loaning the bank their money Political/legal environment: !

Marketing environment analysis framework

Centerpiece always consumers Immediate environment of company, corporate partners, competition Macroenvironment various impacts of culture Macro environment: important for identifying ways to create value, important for segmentation, important for marketing mix variables -> trends and developments need to be closely monitored

Immediate environment

Company capabilities -Focus on satisfying consumer needs that match the company's core competencies (strengths) -Brand dilution Competitors -Marketers must understand their firm's competitors and strengths and weaknesses Corporate partners -Suppliers manufacturers

Gross National Income (GNI)

Consists of GDP plus the net income earned from investments abroad (minus any payments made to nonresidents who contribute to the domestic economy) US firms that invest or maintain operations abroad count income from operations in the GNI but not the GDP

Value =

Cost < Benefit

4 Macro strategies for developing a sustainable competitive advantage

Customer excellence: focuses on retaining loyal customers and excellent customer service Operational excellence: efficient operations, excellent supply chain and human resource management Product excellence: having products with high perceived value and effective branding and positioning 4Ps: product good for achieving sustainable comp advantage Locational excellence: having a good physical location and internet presence 4Ps: place good for achieving sustainable comp advantage

36. Caroline needs to find information about income and age distribution in Orange County, California. The best source of secondary research of use to Caroline is likely to be a. door-to-door surveys. b. focus group interviews. c. syndicated data. d. sales invoices at public libraries. e. U.S. Census data.

e. U.S. Census data.

Market penetration

existing product, existing market Attracting new customers to firms current target market Encourage customers to buy more on each visit Greater advertising efforts

Market development:

existing product, new market Existing product to new market whether domestic or international

Diffusion of innovation

process by which the use of an innovation- whether product, service, or process- spreads throughout a market group, over time and across various categories of adopters is diffusion of innovation. Helps marketers understand the rate at which consumers are likely to adopt a new product or service

To avoid brand dilutions:

make sure that there is a good fit that builds on core competencies and image, don't extend brand to products that are too different or to too many products

5 dimensions to help determine service quality

reliability, responsiveness, assurance, empathy and tangibles Reliability: making and keeping promises to customers Assurance: convey trust by empowering employees Tangibles: update and renovate landscape and any other tangibles Empathy: personalizing communications Responsiveness: employees hear what guests have to say and then empathize with them, apologize, take action and follow up

Product breadth

represents a count of the number of product lines offered by the firm, number of product lines

Four fundamental differences involved in services

services are intangible, inseperable, heterogeneous and perishable

Diffusion of innovation model (Bass Model)

Diffusion of innovation curve shows the number of users of an innovative product spreads through the population over a period of time following a bell shaped curve. These purchases can be divided into 5 groups: innovators, early adopters, early majority, late majority and haggards

Gross domestic product (GDP)

Most widely used metric Defined as the market value of the goods and services produced by a country in a year

Behavioral segmentation

Occasion segmentation: segmentation based on when a product or service is purchased, Men's warehouse Loyalty segmentation: investing in retention and loyalty initiatives to retain more profitable customers (loyal customers)

Concentrated Targeting Strategy

Organization selects a single, primary target market and focuses all energies on providing a product to fit that market's needs Entrepreneurial start ups use their resources efficiently here

Geographic segmentation

Organizes customers in groups based on where they live Could be grouped by country, region (northeast), or areas within a region (state, city, zip codes) Most successful for companies with products that satisfy needs that vary by region

Product development:

new product, existing market New product or service to a firm's current target market Marvel launches series on Netflix

Diversification:

new product, new market New product to a market segment not served Diversification can be related or unrelated. Related: current target market and/or marketing mix shares something in common with the new opportunity

A good brand is an asset

Perceived Value -> Brand Loyalty-> Facilitates Purchasing and protects from competition Brand Awareness: -> reduce marketing costs Associations: can help product extensions. BUT also perils: Brand dilution Brands facilitate purchases Easily recognized by consumers and signify certain quality level to help consumers make quick decisions Brands establish loyalty Brands protect from competition and price competition Brands are assets Brands affect market value RadioShack loss of brand value struggling to stay relevant led to bankruptcy

Secondary Data

Pieces of information that have been collected prior to the start of the focal research project, includes external and internal data sources, previously collected Methods: census data, sales invoices, internet information, books, journal articles, syndicated data Pros: fast and readily available, saves time in collecting data, free or inexpensive (except for syndicated data) Cons: Not specific to needs, may not be timely info, sources may not be original, data may not have been collected appropriately, sources may be biased

The Marketing Plan: 3 phases, 5 steps

Planning phase Step 1: define business mission and objectives Step 2: SWOT conduct a situation analysis Implementation phase Step 3: identify opportunities STP (segmentation, targeting, positioning) Step 4: implement marketing mix 4Ps Control phase Step 5: evaluate performance using marketing metrics

Early adopters

Second subgroup that begins to use a product or service innovation Wait and purchase product after careful review of first product reviews Semi risky, Enjoy novelty 13.5% World of mouth

STP process, 5 steps

Segmentation Step 1: establish strategy or objective Step 2: use segmentation methods -Group customers based on similar needs -Profile each segment Targeting Step 3: evaluate segment attractiveness, attractiveness determines which segment is targets Step 4: select target market Positioning Step 5: identify and develop positioning strategy

Psychographic segmentation

Self-values: one's goals for life, desires that drives how a person lives Self-concept: image people ideally have of themselves Lifestyles/activities: how we live our lives to achieve our goals

Inseparable production and consumption

Services are produced and consumed at the same time, service and consumption are inseperable Rare to have the opportunity to try before purchasing a service and a service cannot be returned

Perishable

Services cannot be stored for use in the future Cannot stockpile a gym membership When demand for and supply of service match there is no problem but this happens rarely Ski hill demand peaks on weekends Know how perishability influences stockpiling and pricing

Differentiated targeting strategy

Target several market segments with a different offering for each Helps obtain a bigger share of the market and increase the market for their products overall

Product mix

The complete set of all products and services offered by a firm is called its product mix Represents company offerings

Product lines

The product mix typically consists of various product lines Product lines are groups of associated items that consumers tend to use together or think of as part of a group of similar products or services Product lines for consumers ex. Smart cars, or mercedes benz vans

Purchasing power parity (PPP) or Big Mac Index

Theory that states that if the exchange rates of two countries are in equilibrium, a product purchased in one will cost the same in the other, if expressed in the same currency. A Big Mac from Mcdonald's costs $4.93 in the US, but $0.66 in Venezuela and $5.23 in Sweden. This shows that the Venezuelan currency is 87 percent undervalued and Swedish currency is 6 percent overvalued in comparison with the US dollar.

Economic analysis using metrics to assess global markets

Trade deficit/surplus, GDP, GNI, PPP

One metric is the relative level of imports and exports, trade deficit vs surplus

Trade deficit: the country imports more goods than it exports. Potential for greater competition at home from foreign producers Trade surplus: the country exports more than it imports, sign of greater opportunity to export products to more markets

STP Step 2: Use Segmentation Methods (segmentation)

Use a particular method or combo of methods to segment the market. Marketers use geographic, demographic, psychographic, benefits, and behavioral segmentation methods

Undifferentiated targeting strategy, or mass marketing

Used when everyone might be considered a potential user of this product Focuses on similarities in needs of the customers Not a common strategy, used for many basic commodities like sugar and salt

Brand equity

Value of the brand, set of assets and liabilities linked to the brand that add to or subtract from the value provided by the product or service. A good brand can be an asset because perceived value leads to brand loyalty which facilitates purchasing and protects from competition Brand awareness reduces marketing costs

Positioning methods

Value proposition: Value is a popular positioning method because the relationship of price to quality is among the most important considerations for consumers when making purchase decisions Salient attributes: Focusing on product attributes most important to the target market Symbols: Well-known symbols (nike swoosh, tony the tiger) are so strong and well know they create a position that distinguishes from competition Competition: Firms can position products or services against a specific competitor or specific product, Must be careful not to get a lawsuit

Micromarketing

When a firm tailors a product or service to meet an individual's need Extreme form of segmentation Firm tailors a suit

Effective promotion enhances a product or service's a. supply chain management system. b. wholesaling capabilities. c. perceived value. d. design features. e. trialability.

c. perceived value.

24. GDP is defined as a. the value of a country's exports minus its imports. b. the difference between two country's exchange rates. c. the market value of goods and services produced in a country in a year. d. national income minus national taxes. e. the gross purchasing power of domestic goods and services plus international income.

c. the market value of goods and services produced in a country in a year.

The fundamental goal of marketers when creating goods, services, or combinations of both is to

create value.

__________ involves the process of defining the marketing mix variables so that target customers have a clear, distinctive understanding of what a product does or represents in comparison with competing products. a. Targeting b. Market segmentation c. A sustainable competitive advantage d. Positioning e. A customer excellence strategy

d. Positioning

Lionel is asked to conduct an STP analysis for his firm. The first step he should perform in this analysis is to a. develop a business mission statement. b. choose the best target markets. c. reposition existing segments. d. divide the marketplace into subgroups. e. conduct a SWOT analysis.

d. divide the marketplace into subgroups.

50. During the __________ stage of the product life cycle, sales rise, profits rise rapidly, and there are a small but increasing number of competitors. a. introduction b. leveling c. maturity d. growth e. decline

d. growth

45. __________ occurs when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold. a. Corporate branding b. Brand extraction c. Brand collusion d. Brand personality destruction e. Brand dilution

e. Brand dilution

Demographic Segmentation

Age, gender, income, education, marital status Most common segmentation strategy

Sustainable competitive advantage

An advantage over the competition that is not easily copied and can be maintained over a long period of time

STP Step 1: Establish the Overall Strategy or Objectives (segmentation)

Articulate vision or objectives of the company's marketing strategy clearly so that the segmentation strategy is consistent with the firm's mission statement as well as its current situation, SWOT: Core Competencies

Determinants of Brand Equity

Brand awareness: If a consumer is not aware of a brand it will not be in the retrieval set. Kleenex v facial tissue Perceived value: Relationship between a products benefits and its costs If customers believe a less expensive brand is the same quality as a premium brand, the perceived value of the cheaper choice is high Brand associations: Brand associations reflect the mental and emotional links consumers make between a brand and its key product attributes like logo, color, slogan, famous personality Brand loyalty: Occurs when a consumer buys the same brand's product or service repeatedly over time rather than multiple suppliers in same category Consumers often less sensitive to price Marketing costs are much lower

Qualitative

Broad open ended questions to understand point of interest, informal research methods Small samples, subjective Methods: more informal...observation, in-depth interviews, focus groups, following social media sites Pro: Helps us understand WHY? Con: small sample, subjective, inferences may not be valid

Innovators

Buyers who want to be the first on the block to have the new product or service These buyers enjoy taking risks, stand in line overnight 2.5% of population Crucial to success of any new product because they help the product gain market acceptance through talking and driving WORLD OF MOUTH

Assessing global markets

Economic analysis using metrics Infrastructure and tech Government actions Sociocultural analysis

STP Step 4: Select a Target Market (targeting)

Firm assesses the attractiveness of the target market (opportunities and threats based on SWOT analysis and profitability of the segment) and its own competencies (strengths and weaknesses based on the SWOT analysis). 4 strategies: undifferentiated/mass marketing, differentiated, concentrated, micro marketing

Using Multiple Segmentation Methods

Firms often employ a combo of segmentation method, using demographics and geography to identify and target marketing communications to their customers, then using benefits or lifestyles to design the product or service and the substance of the marketing message Geodemographic segmentation uses a combination of geographic, demographic and lifestyle characteristics to classify customers

Stages of the product life cycle

Four stages: introduction, growth, maturity, and decline 1) Introduction stage Sales: low Profits: negative or low, initial losses due to high start up costs and low levels of sales revenue Consumers: innovators start buying the product Competitors: One or few, other firms soon enter the market with similar or improved products at lower prices after sensing the possibilities 2) Growth stage Sales: rising Profits: rapidly rising Consumers: Early adopters and early majority Competitors: few but increasing 3) Maturity Sales: peak Profits: peak to declining Consumers: late majority Competitors: high number of competitors and competitive products 4) Decline Sales: declining Profits: declining Consumers: haggards Competitors: low number of competitors and products

Benefits segmentation

Groups customers on the basis of the benefits they derive from products or services Convenience Economy Prestige

Growth Strategies

Market penetration: existing product, existing market -Attracting new customers to firms current target market -Encourage customers to buy more on each visit -Greater advertising efforts Market development: existing product, new market -Existing product to new market whether domestic or international Product development: new product, existing market -New product or service to a firm's current target market -Marvel launches series on Netflix Diversification: new product, new market -New product to a market segment not served -Diversification can be related or unrelated. -Related: current target market and/or marketing mix shares something in common with the new opportunity

STP Step 5: Identify and Develop positioning strategy (positioning)

Market positioning involves process of defining marketing mix variable so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products The positioning strategy can help communicate the firm or product's value proposition Value proposition communicates the customer benefits to be received from a product or service and provides reasons for wanting to purchase The best situation is that a company's product or service offering overlaps with customer needs and wants but does not overlap with competitors' offering Where customer needs overlap with firms benefits- that is value proposition

STP Step 3: Evaluate Segment Attractiveness (targeting)

Marketers must determine whether the segment is worth pursuing using several criteria: is the segment identifiable, substantial, reachable, responsive, and profitable Identifiable: Must be able to identify who is within their market to be able to design products or services to meet their needs Important to ensure segments are distinct from one another to prevent overlap which means that distinct marketing strategies arent necessary to meet segment member needs Substantial: If a market is too small or its buying power insignificant it wont generate sufficient profits or be able to support marketing mix activities Reachable: Market must be reached through persuasive communications and product distribution, or else any product or service will not have an impact Consumer must know that the product or service exists, understand what it can do for them, and know how to buy it Responsive: Customers in the segment must react similarly and positively to the firms offering Profitable: Potential profitability of each market, both current and future Key factors: market growth, market competitiveness, market access Segment profitability= (segment size x segment adoption percentage x purchase behavior x profit margin percentage)- fixed costs

Zone of tolerance

Marketing metric to evaluate how well firms perform on the five service quality dimensions is the zone of tolerance Zone of tolerance refers to area between customers' expectations for desired service and minimum level of acceptable service- the difference between what the customer really wants and what her or she will accept before going elsewhere Factors of price paid, importance and expectation influence zone of tolerance Relative importance of service dimensions when respondents allocate 100 points, the most points represent the lowest zone of tolerance Zone of tolerance is lowest for reliable service -> at the very least customers want the service adequately performed

Analyzing Sociocultural Factors

Power distance: Willingness to accept social inequality as natural Uncertainty avoidance: Extent to which society relies on orderliness, consistency, structure, formalized procedures to address situations that arise in daily life Individualism: Perceived obligation to and dependence on groups Masculinity: Extent to which dominant values are male oriented. A low masculinity ranking indicates that men and women are treated equally in all aspects in society, a higher one suggests men dominate in positions of power Time orientation: Short versus long term orientation. A country that tends to have long term orientation values long term commitments and is willing to accept a longer time horizon for say the success of a new product introduction

Marketing requires product, price, place and promotion decisions: 4 P's of the marketing mix

Product: creating value Price: Capturing value Place: delivering the value proposition Promotion: communicating the value proposition

Factors affecting product diffusion

Relative advantage: If a product is perceived to be better than substitutes, diffusion will be quick Faster, easier, more efficient Compatibility: Diffusion process may be faster or slower depending on international cultural differences Observability When products are easily observed their benefits or uses are easily communicated to others to enhance the diffusion process Even a great product might diffuse slowly if people feel uncomfortable talking about what they perceive to be involved with personal care Complexity and Trialability: Less complex products are easy to try and will diffuse more quickly

Planning phase: Steps 1 and 2 of the marketing plan

Step 1: define the business mission Mission statement Step 2: conduct situation analysis SWOT Internal environment S strengths W weaknesses External environment O opportunities T threats

Implementation phase: steps 3 and 4 marketing plan

Step 3: identify and evaluate opportunities STP (segmentation, targeting, positioning) Segmentation: Divide market into groups of customers with different needs, wants, characteristics (market segmentation) Identifying meaningful different groups of customers Targeting: Evaluate each segments attractiveness and decide which to pursue Evaluating each segment (e.g., size, profitability, reachability) and electing which segment(s) to serve Positioning: determine how to be positioned within segments. Market positioning is defining the marketing mix variables so that customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products Implementing chosen image and appeal to chosen segment Positioning is selecting marketing mix variables to reach target market Step 4: Implement marketing mix Product and value creation products Price and value capture Not too high not too low price Place and value delivery product/service accessible to consumers Promotion and value communication Communicate value proposition

Control phase: step 5 in marketing plan

Step 5: evaluate performance using marketing metrics Revenues, sales, profits, performance over time Portfolio analysis Boston Consulting Group Matrix

Quantitative

Structured responses that can be statistically tested to confirm insights and hypotheses generated from qualitative research or secondary data Measurable data, large samples, statistical tools, objective Methods: experiments, surveys, scanner and panel data Pro: large samples, statistical tools, objective Con: sometimes costly, may require expertise

Heterogeneous/Variable

Why? The more humans are needed to provide a service, the more likely that there is heterogeneity of variability in the service quality Inferior service cannot be recalled Micromarketing segmentation strategy can customize a service to meet customers' needs exactly Some tackle this issue by replacing people with machines (ATM) Human aspect introduces variability! Training, technology, incentives, empowering employees can help reduce variability

48. Whenever Donald considers upgrading his personal computer system, he consults with Jeremy, a knowledgeable friend who always has the newest technology. For Donald, Jeremy is a(n) __________ in the diffusion of innovation curve. a. innovator b. laggard c. late majority adopter d. early majority adopter e. early adopters

a. innovator

The difference between a firm's immediate marketing environment and its macroenvironment is that the macroenvironment a. is external. b. is easier to understand. c. is easier to control. d. has fewer components. e. is internal.

a. is external.

After identifying various market segments that her company could pursue, Lisa evaluated each segment's attractiveness based on size, income, and accessibility. Lisa was involved in a. target marketing. b. situation analysis. c. diversification. d. positioning. e. market penetration estimation.

a. target marketing.

18. Which of the following is the best way to build a sustainable competitive advantage using product excellence? a. being the first to offer customers desired features, even if competitors can copy them easily b. positioning the product using a clear, distinctive brand image c. having the most features on each model d. focusing on being cutting edge and continually eliminating older features that are still in use by customers e. copying the market leader's features, but at a lower cost

b. positioning the product using a clear, distinctive brand image

26. Cultural nuances, subcultures, and consumers' different views of their roles in different countries can make __________ complicated. a. purchasing power parity b. segmentation, targeting, and positioning c. trading bloc coordination d. exchange control planning e. reducing trade surpluses

b. segmentation, targeting, and positioning

Value reflects relationship of

benefits to costs, or what you get for what you give

37. Which of the following is true about quantitative research? a. It is always conducted using primary data collection. b. It revises the research objective based on data mining. c. It confirms insights and provides a basis for taking a course of action. d. It offers conclusions that are always correct. e. It includes focus group interviews.

c. It confirms insights and provides a basis for taking a course of action.

Taking steps to encourage customer loyalty is the focus of developing the macro strategy of _______ excellence. a. operational b. locational c. customer d. product e. service

c. customer

47. The rate at which consumers or a market group adopt a new product or service over time describes a. new product introduction. b. lead user dispersion. c. diffusion of innovation. d. the product life cycle. e. product development diffusion.

c. diffusion of innovation.

If a firm wants to develop a sustainable competitive advantage, it could a. begin an aggressive campaign to buy up competitors. b. copy the innovative features of other firms that are attractive to customers. c. examine its operations and customer relations to identify significant things competitors cannot easily copy. d. increase its marketing budget so that it outspends its competitors. e. arrange to meet with competitors to discuss how to avoid direct competition.

c. examine its operations and customer relations to identify significant things competitors cannot easily copy.

Intangible

cannot be touched, tasted, or seen like a pure product can Service of seeing a doctor is intangible Service that cannot be shown directly to potential customers- more difficult to promote Marketers must use symbols and images to promote and sell services

Product depth

equals the number of products within a product line, number of items in product line