Marketing 302 Midterm

ingredient branding

a type of branding in which branded materials become "component parts" of other branded products ex: "made with Techron"

augmented product

-An augmented product has been enhanced by its seller with added features or services to distinguish it from the same product offered by its competitors -Augmenting a product involves including intangible benefits or add-ons that go beyond the product itself.

FUD factor

-Fear, uncertainty, and doubt is a disinformation strategy used in sales, marketing, public relations, politics, cults, and propaganda. -FUD is generally a strategy to influence perception by disseminating negative and dubious or false information and a manifestation of the appeal to fear. e.g. 1990 pres election, Dukakis and furloughs for prisoners

RFM analysis

-Recency-Frequency-Monetary analysis -a technique readily implemented with basic reporting operations to analyze and rank customers according to their purchasing patterns. -RFM is common, but imperfect when purchase aren't involved

in general, sweet wins in small-sample taste tests

-Wine Spectator reviews all new-release wines in blind-tastings -One expert: "Blind tastings necessarily favor wines that offer immediate pleasure and gratification. Left to their undirected devices, the senses will almost always gravitate to the obvious and miss the subtle. I have fallen victim to the sweeter-is-better trap several times myself."

when we deserve that X and Y are correlated, it could be the case that...

-X causes Y -Y causes X (reverse causality) -X and Y are caused by a third factor -X and Y are related by chance (a spurious correlation)

growth stage

-a period of rapid market acceptance and substantial profit improvement -competitors enter aggressively -may aid in growing the market -improvements may be necessary to respond to competitors -variations may be called for as segments emerge

introduction stage

-a period of slow sales growth as product is introduced in the market -profits are nonexistent -competition is light -trying to gain trial by early adopters -utmost attention to quality control

reverse causality

-a situation in which the researcher believes that A results in a change in B, but B, in fact, is causing A

maturity stage

-a slowdown in sales growth because the product has achieved acceptance by most potential buyers -profits stabilize or decline because of high (but stable) competition -focus on new product platforms to re-introduce growth

temptation bundling

-adding "wants" to "shoulds" -e.g. some gyms offer an iPod shuffle loaded with popular audio books to members -can't take the shuffle home, it lives at the gym -many members are willing to pay for this, and it seems to encourage attendance

several different ways to communicate value

-advertising -promotions -public relations -direct and interactive marketing -personal selling

implicit association test (IAT)

-another way to explore associations with your brand -sort items from four categories into two categories -measure errors and reaction time (are some associations more difficult to make than others?) -measures strength of implicit associations e.g. Coke, Pepsi, pleasant, unpleasant common issues/critiques -low test-retest reliability -weak evidence of link between IAT scores and behavior -could IAT be measuring familiarity with an association (rather than endorsement of it)?

brands can directly enhance value of product

-aside from conveying info about the value of the product, the brand name can add value directly -particularly for products that can be displayed ex: Nike and Nike swoosh

task unification/replacement

-assigning a new task to an existing element of the product or its environment -e.g. Apple Watch

listening to the voice of the product

-basic idea behind the creativity templates -begin by listing the essential elements of a product -physical components and attributes (e.g. color, speed, etc.) -also identify components and attributes of the product's environment (e.g. ambient temperature, type of user, etc.) -manipulate these elements in a structured way to come up with new potential products -drawing new product ideas out of current products -tap existing skills/technology to reduce the chance of coming up with impractical ideas -products that have survived contain information about what works; what people need

factors leading to GO errors

-bonuses for successful outcomes -reluctance to admit failure (career implications) -sunk-cost bias/waste aversion -confirmation bias -a "champion" for the project who spreads their over-optimism throughout the organization

benefits of loyalty

-can be a barrier to entry -inertia: allows time to respond to competitor innovations; protection against price attacks -source of price premiums: additional amount a customer will pay for the brand in comparison with another brand offering similar benefits

search attributes

-can be evaluated prior to consumption -e.g., price, MPG, product appearance

attitudes

-can be quite predictive of behavior -e.g. desire to be wrinkle-free a better predictor of purchases of anti-wrinkle cream than age or number of wrinkles but, attitudinal data more difficult to collect -are people telling the truth? -requires more frequent measurement

experience attributes

-can only be evaluated after consumption -e.g. noisiness of a restaurant, friendliness of hotel staff -companies will often be motivated to make experience attributes more tangible -e.g. free samples

credence attributes

-cannot be evaluated, even after consumption -e.g. health benefits of food how do companies convince customers that their products possess the promised credence attributes? -can set high price to signal high quality -advertising... e.g. can of air from Paris

targeting vulnerable segments with potentially harmful products

-caution required who is viewed as vulnerable (in marketing contexts)? -people incapable of making informed decisions at the time of purchase, perhaps due to: -limited education -conditions that interfere with information processing (e.g., hearing difficulties associated with aging) -ex: Dakota cigarettes targeting young, poorly educated, blue-collar women -ex: Burger King no targeting of advertising to children under 6 (children are impressionable)

core competence

-companies have many competencies (skills) -core competence is a skill set that is difficult for competitors to imitate -leads to sustainable competitive advantage -an input, not an output -generates strategic assets, which in turn generate benefits for consumers (products) -some strategic assets are a consequence of core competencies, some are not -ideally provides access to multiple markets -requires continuous investment -ex: Walmart (superior "logistics "know-how" --> low costs for Walmart --> low prices to customers) -ex: 3M (org. culture that fosters creativity + innovation --> portfolio of patents --> novel products)

some current beliefs/feelings that we might want to address

-confusion about what category we're in (category confusion) -confusion about benefits of consumption -doubts about the quality of our goods -safety concerns -our points-of-difference aren't important

links between beliefs and behavior are not always straightfoward

-consumer propositions do not always lead to desired beliefs -we don't believe everything we hear, we counter-argue, and initial beliefs can be hard to change -e.g. I may believe exercise is a good thing, but not have the motivation to do it

three factors necessary to draw causal conclusions

-correlation necessary, but not sufficient, to draw causal conclusions 1) correlation 2) temporal antecedence (cause must precede effect) 3) no third factor driving both

correlation vs. causality

-correlation: movement in one variable is related to movement in another variable -causation: movement in one variable produces movement in another variable -correlation often misinterpreted as causality -correlation coefficient (r) quantifies extent to which two variables share a linear relationship -r ranges from -1 to +1 -two key aspects: - valence: + or - -strength: I r I

what loyalty programs can do

-create barriers to exit (a "lock-in") -e.g. offer airline miles that disappear if you leave -win greater share of wallet (consolidate purchases) -e.g. Amazon Visa offers 1 point/$1 spent but 3 points/$1 spent on Amazon -encourage purchases that wouldn't normally happen -e.g. multi-tier reward programs (e.g. silver, gold, platinum)

variables on which consumers are commonly segmented

-demographic -behavioral -attitudinal (thoughts, feelings, beliefs, desires, aspirations)

similarity between consumer proposition and desired belief

-desired belief is ideally more or less a restatement of the consumer proposition -sometimes the consumer proposition will include facts that won't be retained in the desired belief -ex: "70% of people prefer Pepsi to Coke" (consumer proposition) vs. "Pepsi tastes better than Coke" (desired belief)

conjoint analysis

-determines the importance of different attributes to different segments of consumers -relative importance of product attributes is better measured when attributes are considered jointly than separately -forces consumers to make realistic tradeoffs -one method for discovering attitudinal segments

Hitting the innovation sweet spot

-develop products far enough from existing products to attract real interest but close enough to fall within a company's existing positioning and capabilities -one commonly effective solution: "systematic incentive thinking" -this is the challenge

some options for better integration between sales and marketing

-disciplined communication -joint assignments/rotating jobs -appoint a CRO/COO -provide incentives for sales force to provide feedback

demographic variables

-ex: region, population density, climate, gender, age, income, occupation, education, "life-cycle" stage easy to fall in love with demographic data -cheap and abundant -no need to take frequent measures -the more data, the safer we feel

limitations of experiments

-expensive to run -short run experiments vs. longer term effects -infeasible or impossible for large, systemic changes -incremental improvements don't always lead to a global optimum

PRIZM (Potential Rating Index by Zip Market)

-geoclustering technique that classifies every zip code in the United States into one of 66 categories, ranging from the most affluent "Blue-Blood Estates" to the least well off "Public Assistance," developed by Claritas, Inc -takes into account location, education, affluence, family life cycle, urbanization, race/ethnicity, mobility 62 types of clusters: 1. Blue Blood Estates 7. Money and Brains 13. Gray Power 44. Shotguns & Pickups 60. Back Country Folks 62. Hard Scrabble

segmentation

-how should consumers be grouped by demographics, behavior, attitudes? -segmentation represents a compromise between mass-marketing and one-to-one marketing -we segment to increase the efficiency of our marketing efforts -target market size and probability of conversion inversely related, generally -want to find optimal balance between size and conversion % -segmentation efforts will ideally yield "mutually exclusive and collectively exhaustive" (MECE) -ex: segmenting by age would produce MECE segments, segmenting by citizenship would not companies rarely create a segment, more often they uncover one -generally don't target only one segment

experiments don't tell you everything

-if you manipulate an independent variable, what else (besides the measured dependent variable effects) will happen? -what else besides manipulating the independent variable would produce similar changes in the dependent variable? -if you want to make a change in the dependent variable happen, should you manipulate the independent variable (or something else)?

T-Mobile trash-talking strategy

-increased advertising, competitor attacks ads, point out contrast with rivals -common enemy (AT&T) brings company together -create idea of an evil force to motivate people -bad to pick on a smaller competitor

projective survey techniques

-indirect and unstructured methods of investigation which use projection of respondents for inferring about underline motives, urges or intentions which cannot be secure through direct questioning -these techniques are useful in giving respondents opportunities to express their attitudes without personal embarrassment -can help marketers better understand attitudes -e.g. "draw typical users of Pillsbury and Duncan Hines"

interbrand criteria for assessing strength of brands

-internal clarity about what the brand stands for, its target audience and positioning -internal commitment to importance of brand -customers understand what makes the brand distinctive -extent to which brand is experienced consistently across all touchpoints or formats -extent to which the brand generates positive word-of-mouth (WOM)

proactive campaigns

-involve false negatives: failing to identify customers who intend to leave -and false positives: offering incentives to stay (or renew, upgrade, etc.) to customers who never had any intention of leaving -can disrupt habits -some customers continue/renew on autopilot -the offer (e.g. upgrade at a steep discount) can prompt them to review and change their consumption habits

customers

-its common to base definition on purchase behavior -different industries will have different RFM cutoffs for defining current customers -better to combine purchase data with attitude data

accelerating usage through price promotions

-key question is how flexible usage rates are -if usage is inflexible, price promotions just encourage people to stockpile -e.g. bacon, potato chips, soda, yogurt vs. toilet paper, detergent, paper towels

test markets

-launching new product in small part(s) of the target market -helps firms rehearse marketing strategies under realistic marketing conditions -particularly useful when products have a high risk of failing or jeopardizing firm reputation e.g. new double down sandwich hazards of test marketing: -costly -hard to find perfectly representative test markets -competitors can monitor performance, disrupt

reverse causality example

-long-running claim: we marry people whose last names resemble ours (implicit egotism) -people with similar last names marry each other more often than chance would predict

multiplication

-make one or more copies of an existing product component -and the different copies serve different functions e.g. Gillette razor with multiple blades

pull marketing

-manufacturer uses advertising and other marketing communications to motivate consumers to seek out the product -appropriate when there is high brand loyalty and high involvement in category, and when consumers choose brand before going to store -stimulating needs -goal is to create loyal customers by providing marketing that showcases what they're looking for - "draw consumers to the product"

current state of marketing research + practice

-marketers are increasingly effective at predicting churn (when customers are at the highest risk of churning?) still working on ... -who to target (highest risk of churning or highest sensitivity to incentives to stay?) -when to target, and with what incentives -how to manage multiple retention campaigns -how to integrate retention programs with other marketing activities

descriptive research

-marketing research to better describe marketing problems, situations, or markets, such as the market potential for a product or the demographics and attitudes of consumers methods: -observation (and ethnography) -interviews/focus groups -surveys -projective techniques -conjoint analysis -brain imaging/physiological tracking -social media listening

causal research

-marketing research to test hypotheses about cause-and-effect relationships methods: -experiments -statistical/econometric methods -e.g. instrumental variables, diff-in-diff, natural experiments, matching, regression discontinuity

generational segmentation

-mostly nonsense -for it to be useful, segmentation scheme must: 1) explain the variance in the behavior of interest better than other variables 2) consumers within segments should be more homogenous than those across segments -most often generational label is used as a substitute for age bracket -cutoff dates are entirely arbitrary -using coarse demographic segments is unnecessary with big data -little productive value in stating that a generation's values will endure -past behavior is a far better predictor of brand preference/loyalty

hard to get loyalty programs just right

-must create incentives good enough to change behavior, but not so generous that they erode margins -most grocery store membership cards reward card ownership, not loyalty -some companies starting to reward profitability over mere volume of purchases

persuasion

-news: we invented light beer (inventors generally have high credibility) -news: we have 96 calories

how to choose the right template

-no hard and fast rules -but, if product is highly complex or if cost control is a concern, probably best to start with subtraction -attribute dependency change is most common -using >1 template can sometimes be beneficial

hybrid branding

-not fully umbrella nor distinct -ex: 3M

some products more strongly connected to their brand than others

-only some products are viewed as containing the "essence" of their brand -e.g. a Levi's garment manufactured in San Francisco is viewed as more authentic, more valuable than the same Levi's garment manufactured elsewhere

solutions are not straight-forward

-passion + resilience are needed to get the project up and running -good to assemble project teams that include non-believers, and have well-defined review process -there's a need for "exit champions": managers with temperament and credibility to question prevailing belief, demand hard data on viability, etc.

customer lifetime value (CLV)

-present value of all future profits generated from a particular customer -serves as an upper bound for WTP to acquire a new customer -a function of several components: margins (m): annual revenue - operating expenses annual retention rate (r): percent of current customers who will still be with the firm at the end of the year discount rate (d): typically around 10-16% E(CLV) = (m(1+d)) / 1+d-r

different ways we can articulate and/or reinforce our positioning

-product: change quality, design, packaging, sizes, warranties, return policy -price: change list price, discounts, repayment period, financing terms -promotion: change sizes of sales force, advertising campaign -place: change when we're available, number of intermediaries

marketers want to know if demand is really low, or if salespeople are just saying that to make "easier" sales

-requiring lobbying (i.e. presentation of convincing evidence of low demand) can make sense, despite the seemingly wasted time -if demand is not low, too costly for salespeople to collect convincing evidence of low demand --> no incentive to lobby -if demand is low, lobbying is less burdensome, leading salespeople to lobby (and marketers are happy with this)

decline stage

-sales and profits decline -focus turns to profits rather than sales or share -reduce marketing budget

measurability differences

-sales easier to measure than brand equity -sales more tangible, and can be measured sooner -marketers more likely to be cut in a downturn than salespeople

the role of internal negotiation

-sales force often lobbies internally for lower prices -most sales are exceptions that require internal negotiation between marketing and sales; these constant price negotiations waste considerable time -some companies have recommended limits (e.g. < 50% of revenue should go through this process)

segmenting on behavior

-segment based on consumers' past behaviors -but segmenting on behavior alone can also be problematic lots of instances where our purchases don't reflect our typical attitudes; for example: -gifts -using the company credit card -on a date -beginning vs. end of month

selling does not equal marketing

-selling focuses on seller needs -marketing focuses on buyer needs -goal is to design products that sell themselves -focus is more on raising awareness and making the product available than on active selling

butterflies

-short-term customers with high profitability potentially profitable but not loyal

brands serve at least three functions

-simplify search decisions -directly enhance value of the product -elicit emotions

shortcomings of PLC analyses

-some claim life-cycle patterns are too variable in shape and duration to be generalized -stages can be self-fulfilling, prophecy -easy to retrospectively assess stages, but hard to know where you are in real-time...

brands can serve as a surrogate for quality information

-some consumers find it difficult to evaluate the quality of product components

attribute dependency

-some product attributes naturally depend on attributes of its user or environment -attribute dependency template involves creating new dependencies between product attributes and attributes of its user or environment e.g. Coors Light mountains turn blue

perceptions of category membership

-sometimes attempts to steal share can create ambiguity about category membership -can create a need to reassure that the brand has the required points-of-parity

packaging

-sometimes referred to as the "fifth P" -packaging can powerfully shape perceptions of brands and products packaging must achieve several objectives: -identify the brand -convey descriptive and persuasive information -facilitate product transportation and protection -assist at-home storage -aid product consumption -can act as "five-second commercials" -recyclable, empty packages that look messy or distorted tend to end up in the garbage

steal share

-steal (loyal) customers from competitors -try to make loyalists of competitors become multi-brand -convince multi-brand users to become more loyal to us, less loyal to competitors -targeting competitors' customers -usually the strategy of choice for non-category leaders -ads that invoke a comparison with the category leader are typically intended to steal share -e.g. "we're bigger/better/faster/cheaper than..." -imitation is another way to steal share -leverage market leader's branding + awareness

decision whether to segment by needs or behaviors

-strategic/figuring things out still --> segment by needs/attitude (trying to figure out what needs your product/service could meet -identify differences in customer groups based on buying/lifestyle patterns --> behavior

common creativity template

-subtraction -multiplication -division -task unification/replacement -attribute dependency change

why the relationship between loyalty and profitability is more nuance than typically assumed

-surveys consistently reveal that consumers believe loyal customers deserve lower prices -angry when new customers get the perks -loyal customers more knowledgeable about product offerings, prices -might be more price-sensitive than sporadic customers

experiments

-the gold standard for establishing causality

segmenting on attitudes

-thoughts, feelings, beliefs, desires, aspirations -ideally these will translate to needs we can fulfill profitably -e.g. I am a very busy person --> I have a high need for convenience -e.g. It's a dangerous world --> I have a high need for safety -translation to needs is not always straightforward -e.g. I think pollution is endangering the Earth e.g. airline customer personas, adult toothpaste category -this is generally the most effective type of segmentation

push marketing

-use sales force and trade promotion money to induce intermediaries to carry, promote, and sell the product to end users -appropriate when there is low brand loyalty in category and brand choice is made in the store -strategy focused on "pushing" products to a specific audience -social media channels are considered to be "push" sources because they're great for launching new or niche products - "push the product to consumers"

surveys

-voice of consumer usually measured via surveys some best practices if you're looking for truth: -avoid ambiguity (e.g. what is your church preference?) -avoid double-barreled questions (e.g. are you satisfied with the cost and quality of this product?) -avoid confusing response options -avoid leading questions -consider the context in which you surveyed consumers caution: -people lie -people don't know why they like what they like -the questions can shape the answers

valence of positioning statements

-we've focused on positive, "promotion-focused" positioning statements -negative, "prevention-focused" positioning statements often more powerful

positioning

-what must we say to change current beliefs to desired beliefs? driving product perceptions based on the way they present their products relative to other options -involved making choices: deciding not to promote certain benefits to bring key benefits into focus -each marketer has to find an area that is not occupied in the consumer's mind and capture it -this is less relevant as consumers increasingly rely on opinions of others -user + expert reviews

when should we segment?

-when incremental value from customizing outweighs costs of developing separate offerings for each segment -when cost of customization is high (e.g. durable goods such as household appliances), companies tend to develop offerings that serve relatively large segments -when cost of customization is low (e.g. delivering online news), offerings can easily be tailored for smaller segments

bringing people into the category

-when the total market expands, the category leader usually gains the most -they're the most recognizable brand, easiest to find -category leaders will generally be most motivated to expand the category -potential unintended consequences of expanding the category e.g. "eat more chikin" helps Chic-Fil-A the most but also helps Popeyes, KFC, etc. -non-leaders' ads especially likely to help leaders when leaders are prototypical

ways to get marketing wrong

1) attending to wrong type of market research 2) focusing on internal capabilities, not consumer needs 3) overpromising (and reducing perceived quality) 4) diluting the brand

big picture framework

1) business objectives 2) marketing objectives 3) source of volume 4) segment, target, position 5) executive (product service, price, place, promotion)

the buying funnel

1) customer awareness 2) brand awareness 3) brand consideration 4) brand preference 5) purchase intention 6) purchase 7) customer loyalty 8) customer advocacy

solutions to red ocean traps

1) focus on attracting new customers 2) worry less about segmentation 3) understand that market creation is not synonymous with either technological innovation or creative destruction 4) stop focusing on premium vs. low-cost strategies

6 characteristics of useful segmentation

1) identifiable 2) substantial > potentially profitable segments 3) accessible > be able to reach via communication + dist channels 4) stable 5) differentiable 6) actionable

brand extensions

1) product line extensions 2) category extensions 3) introducing "branded variants" Why do we see so many? -pricing breadth -lower cost: need to create awareness of new product, not brand, reduced production/packaging/market research costs (about $30M to launch brand successfully; $5M for extension) -capitalize on placebo effects -risk minimization: reduce risk that the new product will fail, reduce career risk BEWARE: extending the brand can dilute the brand

two big caveats to 5-Box positioning statement

1) sometimes weak link between beliefs and behavior -supportive beliefs often a necessary, but not sufficient, precursor for behavior 2) sometimes weak link between the consumer proposition and (updated) beliefs -held beliefs difficult to change, even when you provide evidence that the belief is false -once you know something, hard to un-know it

stimulate demand

1) stimulate heightened usage among current customers 2) bring people into the category 3) stimulate increased usage (e.g. Gillette)

the new product development decision process

1. Idea generation 2. Idea screening 3. Concept development and testing 4. Marketing strategy development 5. Business analysis 6. Product development 7. Market testing 8. Commercialization

80/20 rule

80% of profit generated by 20% of customers

size of wallet

Buyer's total spending in a category

5-Box positioning statement

Current Behavior, Current Belief, Consumer Proposition, Desired Belief, Desired Behavior -size of primary target audience and positioning determined by our category + strategic quadrant

common errors in the product development process

GO errors (false positives) -products that fail to resonate with the market -there's a subset of consumers who consistently buy products that fail to resonate with the market -"harbingers of failure"--enthusiastic early adopters are not always a good sign DROP errors (false negatives) -discarding good products before they get to market

brand

brand name used as a quality proxy in the past, but now there are more sources of information (ex: reviews) to evaluate product quality -because consumers have more access to info, brands have less power than they used to -newcomers w/ no brand recognition now have lower barriers to entry

curse of knowledge

a cognitive bias that occurs when an individual, communicating with other individuals, unknowingly assumes that the others have the background to understand.

brand loyalty

a deeply held commitment to rebuy a product or service despite situational influences and marketing efforts having the potential to cause defection -Brand Keys brand loyalty measure: based on interviews with about 40K consumers, assessing their cognitive and emotional attachment to brands -acquisition challenge: overcome existing brand loyalties

umbrella brand

a family of products that all deliver the same higher-order benefit ("Branded House") -high efficiency, low flexibility -pros: once customers trust the brand, company can extend the brand in various ways ex: Crest pro health and Crest cavity protection ex: Nike

segment

a group of consumers sharing at least one characteristic that should increase their responsiveness to a marketing effort -segments should be sufficiently different from one another so that they do not overlap -and, identified segments should include all customers in a given market -of course, identifying every segment does not mean you pursue every segment

marketing myopia

a nearsighted focus on selling products and services, rather than seeing the "big picture" of what consumers really want -instead, focus on customer needs

heavy users

a product's highest-volume buyers, in traditional marketing terms -defined simply by quantity of their purchases -superconsumers are a subset of heavy users

brain imaging

a range of experimental techniques that make brain structures and brain activity visible -functional MRI -measures neural activity by tracking changes in blood oxygenation -good for measuring reactions that people might have difficulty articulating -sometimes, the brain can tell us what self-report can't -too expensive: not many can use this

upselling

a sales strategy where the organizational representative provides to customers the opportunity to purchase higher-value related products or services in place of, or along with the consumer's initial product or service selection

expected product

a set of attributes and conditions buyers normally expect when they purchase this product

dog whistle fashion

a shift toward subtle signals of group membership

marketing

a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of values with others -art and science of meeting needs profitably -identifying and meeting needs

confirmation bias

a tendency to search for information that supports our preconceptions and to ignore or distort contradictory evidence -a huge impediment to learning and belief-updating

potential product

all the possible augmentations and transformations the product or offering might undergo in the future

product

anything that can be offered to a market to satisfy a want or a need -products can address emotional needs -products are an essential brand-building tool broad definition includes... -physical goods (can be "non-durable" or "durable") -services -experiences -events -information

evolving views of sales

as customer loyalties diminish and marketing channels proliferate, sales -- once seen as a tactical adjunct to marketing -- has increased its role to become the key interaction between company and customer

random assignment

assigning participants to experimental and control conditions by chance, thus minimizing preexisting differences between those assigned to the different groups

points-of-parity

attributes or benefits that all brands within a category offer -e.g. the minimum service speed required to be considered part of the quick-food category -generally viewed as necessary but not sufficient for success

points-of-difference

attributes or benefits that consumers strongly associate with a brand, positively value, and believe they could not find to the same extent with a competitor -e.g. in quick-service food category, Subway's P-O-D has long been healthiness -strong brands can have multiple points-of-difference

division

can take different forms... -physical division (a product is cut along a physical line) e.g. magnetic glasses that break apart -preserving division (divide product into smaller pieces, where each piece still possesses all the characteristics of the whole) e.g. 6-pack of Coke e.g. 100 calorie pack of Oreos

centrality and distinctiveness

centrality = how representative brands are distinctiveness = the degree to which brands stand out from others -influence perceptions

superconsumers

combine big spending with high engagement and deep interest in new uses for a product -can find them with big data and social media -exist in most CPG businesses -not price-sensitive -b/c they're already buying your product, its easy to reach them --> increase efficiency of advertising -myth: superconsumers already buy so much -- they can't possibly buy more -they actually account for at least 3X more growth are other consumers, can offer helpful insights

product life cycles

common assumptions about products: -products have a limited life -product sales pass through distinct stages, each posing different challenges, opportunities, problems -products require different marketing, financial, manufacturing strategies in each life-cycle stage

how do we generate good ideas in the first place?

common intuition re: best sources -ask customers to generate ideas -brainstorm, "think outside the box" problems with this intuition: -flurry of brainstorming ideas often too far outside company's brand image or capabilities -sometimes customers are only capable of thinking of minor changes...

other loyalty program considerations

costs: -forgone sales due to product giveaways -administration, advertising, IT, other expenses who benefits? -frequent purchasers -are these the customers we want to offer discounts to? -difficult to reduce or restructure loyalty programs without disappointing customers -building customer databases and managing loyalty is not a big concern for everyone

red oceans

crowded market spaces where companies engage in bloody competition for market share -companies must find ways to create new markets in order to succeed in long-run (this is difficult)

3 Cs

customer, company, competition (add in "context" too)

loyalty

customers used past experience with a company as proxy -there is now more good, low-cost information people can rely on --- easier to start from scratch

determining the size of the customer base

different challenges depending on whether setting is contractual or noncontractual -in contractual settings, we observe the time at which customers become inactive ("churn") -in noncontractual settings, we do NOT observe the time at which customers become inactive

assertive slogans are more effective (and common) for hedonic products

e.g. "you must try our chocolate" > "you must open a bank account with us" -people in (+) mood use more assertive language, expect to be addressed with more assertive language -Nike: "just do it", Sprite: "obey your thirst"

independent variables

factors that we experimentally manipulate

distinct branding

firms offer several products with distinct meanings, brand names, and logos, targeted to different audiences ("House of Brands" (ex: 75% of items in grocery stores from only 10 companies; Unilever, P&G, etc.) -drawback: can lead to cannibalization of sales -low efficiency, high flexibility

marketing objective

focus on acquisition or retention?

source of volume

focus on stealing share or stimulating demand?

fundamental entity

from what perspective should the company develop its marketing strategy? -FE is the perspective from which a brand forms its marketing plan -determining the FE is relevant when there is a parent brand with sub-brands or subsidiaries

non-leaders can steal share in a variety of ways

frontal attack -head-on attack of fundamental aspects of leader (e.g. Pepsi tastes better than Coke) -challengers need high resources flank attack -attack a leader's weak points, blind spots -e.g. attack an area where leader is geographically weak -e.g. attack a segment that has been neglected by leader

personal selling

generally, face-to-face communication meant to increase the probability of purchase -natural to think about it in B2C context but also very common in B2B contexts -e.g. a manufacturer's sales representatives negotiating for shelf space at Walmart

goal-gradient hypothesis

goal pursuit intensifies the closer we get to a goal with a clearly defined end state -ex: charity states only needs $50 to reach goal (will raise more money than if states needs $200)

business objectives

goal? core competence? fundamental entity?

awareness index

how enjoyable ad is, how strongly the ad involves the viewer, how well branded it is story-telling devices hook the viewer -alliteration (counting calories, counting carbs, counting crunches) -parallel sentence structure aids comprehension ("which led to....") -shortening sentence structure quickens pace -awareness is usually more important for short-term sales

Execute

how exactly do we implement our strategy/articulate our positioning?

annual retention rate

if r = 0.8, then after 1 year, there is an 80% chance that the customer will still be with the company -aggregate retention rate can be misleading -survivor bias: aggregate retention rate increases over time, even though the underlying retention rate for each customer has not changed

sample size

in general, larger sample sizes are more likely to reveal truth about the underlying population

mental models

ingrained assumptions and theories about the way the world works -powerful determinants of choices + behaviors

typical product lifecycle (PLC)

introduction, growth, maturity, decline

subtraction

intuition is normally "more is better" -costly -can result in "feature creep": growing complexity of using the product can outweigh whatever benefits the new features offer subtraction is a particularly counterintuitive way to develop new products -what happens if we remove components that seem desirable or even indispensable? -e.g. Coke Zero (removing an ingredient: sugar) -e.g. Betty Crocker cake mix w/o egg

true friends

long-term customers with high profitability

barnacles

long-term customers with low profitability -for barnacles, we need to measure size of wallet and share of wallet

marketing vs. sales

marketing and sales both aimed at generating purchases and loyalty, but evaluated by different criteria over different time frames -"sell the price" vs. "selling through price" four different types of relationships: 1) undefined, 2) defined, 3) aligned, 4) integrated

category extensions

new product introductions outside existing categories -leverage brand to expand into different types of products ex: Swiss Army watches --> shorts

mere measurement effect

on average, people who are asked to state intentions to perform socially acceptable/desirable behaviors are subsequently more likely to engage in those behaviors than people who are not asked to state intentions -ex: voting experiment with 1984 pres election

dependent variables

perceptions, feelings, or behaviors we wish to influence

drawbacks of segmenting on demographic variables

potentially limits growth -marketers can't grow a demographic segment -but might be able to stimulate needs demographics are only noisy predictors of behavior and attitudes

blue oceans

previously unknown and uncontested market spaces with ample potential

strangers

short-term customers with low profitability

introducing branded variants

specific brand lines supplied to specific retailers or distribution channels ex: Burberry

distance between current belief and desired belief

tells us how costly it will be to move beliefs in the desired direction -sometimes, need to deal with "haters"

category

the brands with which a brand competes and which function as close substitutes -if consumers do not commonly choose between two brands, they should probably not be considered in the same category

pink tax

the extra amount that women are charged for products and services -the extra amount that women pay for everyday products like razors, shampoo, haircuts, clothes, dry cleaning, and more.

share of wallet

the percentage of the customer's purchases made from a particular retailer

product line extensions

the practice of using a current brand name to enter a new market segment in its product class -ex: Doritos, Law + Order

skeuomorphism

the process by which digital goods are made to visually resemble their physical counterparts; ex: Apple's display of digital books on a virtual wooden bookshelf

churn rate

the rate at which customers leave a product or service -Netflix: about 10% annually -Cable providers: about 30% annually

consumer proposition

the sum total of benefits which a vendor promises a customer will receive in return for the customer's associated payment -consumer propositions are not taglines -taglines are a memorable articulation of our consumer proposition -e.g. Ford has greatly improved the quality of its product line vs. have you driven a Ford lately?

goals

two primary purposes: 1) simplify decision-making 2) performance benchmark attributes of beneficial goals: -prioritized (an ultimate goal driven by a series of smaller behavioral goals) -quantified -includes a temporal benchmark -realistic -internally consistent -overly ambitious goals can stimulate dishonesty -can also overly focus attention -need to keep in mind consumers' perceptions of our goals

loss aversion

we emphasize losses more than gains

market research

what is the goal/what question do you have?

targeting

which segments do we pursue? who is in the selected segments? -often involves characterizing representative member(s) of target audience -rich description, helps illustrate needs we can satisfy e.g. "Charlie, a 50-plus male who is curious about technology but needs an unintimidating guide

STP

who exactly are we talking to? what do they currently believe? what do we want them to believe? what do we need to say to shift their beliefs?

Pepsi Challenge

• Pepsi conducted hidden-camera, blind taste tests against Coke • proved the majority of taste testers preferred Pepsi • started in 1975; "They pick Pepsi, time after time after time." • helped sales, but remained local marketing device, never made the basis of national advertising blitz • new approach- people do new things to try to get money far removed from a typical consumption experience though -we normally consume more than a sip -we normally know what we're consuming