Marketing Midterm

strategy

-What (objectives to be accomplished) -Where (on which resources and product-markets to focus) -How (on which resources and activities to allocate to each product market to meet environmental opportunities and threats to gain a competitive advantage) -performing different activities from rivals or performing the same activities in different ways

cost oriented setting price approach

-cost-plus method- the price can be determined by adding a standard markup to the cost of the product -rate of return pricing- bring the cost of capital to calculation of a price

Price setting

1. Set strategic pricing objective 2. Estimate demand and perceived value 3. Estimate our cost and analyze competitors cost and prices

positioning analysis process

1. identify relevant set of competitive products serving a target market 2. identify the set of determinant attributes 3. collect information from a sample of customers 4. determine customers most preferred combination of attributes 5. examine the fit between preferences of customers and position of brand 6. write positioning statement or value proposition

4 P's

Product, Price, Place, Promotion

STP

Segmentation, Targeting, Positioning

sustainable competitive advantage

a competitive advantage which is easy to preserve and hard to mimic for competitors -major issue in a business strategy -takes a long time to develop and hard to acquire

harvesting

attempts to maximize short term profits before demand for the product disappears -applicable to products at the end of their lifecycle

physical positioning

based on objective characteristics of product

perceptual positioning

based on perceptual attributes -consumer oriented

4 C's

company, context, competitors, customers

market

consists of individuals and organizations that are interested and willing to buy a good or service to obtain benefits that will satisfy a particular need or want and who have the resources to engage in such a transaction

best way to "cross the chasm"

focus on one segment (also called the beachhead segment) and try dominating that segment by offering a "whole product" (a complete solution)

the "chasm" in the adoption of innovative products

having saturated the "visionary" market, trying to get pragmatists to buy

first step in product positioning process

identify relevant set of competitive products

differential pricing or discriminatory pricing

occurs when a firm sells a product or service at two or more prices not determined by proportional differences in cost -includes time pricing, location pricing, customer segment pricing

operational effectiveness

performing similar activities better than rivals perform them

competitor oriented setting price approach

price should be reasonable given the competition

customer oriented setting price approach

pricing is to capture the value perceived by the customer

retailer brands or private labels

produced by a company to be offered under distributor or retailer

individual branding

requires the company to provide each product or product line with a distinctive name -ex: Coca-Cola which also owns Minute Maid and PowerAge

skimming price policy

setting the price very high and appealing to only the least price-sensitive segment of potential customers -not applicable in a highly competitive environment -use when barriers block immediate entry by potential competitors

market segmentation

the process of dividing a market into meaningful, relatively similar, and identifiable segments or groups -have homogenous needs, wants and sought after benefits -who the customers are (demographical), where they are (geographical), how they behave

Porter's Five Forces

threat of entry, threat of substitute, supplier power, buyer power, and competitive rivalry

cobranding

uses multiple names for similar products ex: Ford Explorer Eddie Bauer edition

family branding

uses the same brand name to cover a group of products or product lines -ex: Kellogg's Raisin Brain and Kellogg's Rice Krispies -use when advertising economies of scale exist and brand has high perceived quality -imposes greatest risk to brand equity

positioning strategy

when a company is attempting to differentiate its products to distinguish them from competitors products

price elastic

when a small increase in price leads to a relatively large drop in the quantity demanded

penetration price objective

when the market is in the introductory or growth stage, the firm is an early entrant, target customers are sensitive to price, and the firm is pursuing a low cost business unit strategy