MKT 302 Midterm

1. simplify search decisions 2. directly enhance value of product 3. elicit emotions

3 main functions that brands serve

1. people outside of the category 2. out customers 3. multi-brand customers 4. competitor's customers ex. with McDonald's 1. people who do not eat fast food 2. people who eat at McDonald's but not at other fast food restaurants 3. people who eat fast food at McDonald's and at other franchises 4. people who eat fast food, but not at McDonald's

4 types of consumers

Age is a better predictor because it is a narrower value, if you predict based on generation you will get a much wider variety within pool (which you don't want)

According to our "Labels like 'Millennial'..." reading, what is a better predictor of preferences: your age or your generational cohort (i.e., whether you're a Baby Boomer, Gen Xer, etc)?

-ex. free 30 day trial but customer does not renew after -may not have money to pay for upgraded version

Acquisition graphs (company profit y axis, time x axis) point negative on y axis (negative profit for company, but no time passed)

-showing that loyal customers become more valuable over time -maybe spent a lot of money to get users at first, but overtime you are less susceptible to go to other companies after a significant period of time

Acquisition graphs (company profit y axis, time x axis) line, starting from negative on y axis, crosses x axis

-one time buyer- where someone spends a lot of money but did not go back to buy more -could have been a very specialized product that they come in to get

Acquisition graphs (company profit y axis, time x axis) point positive on y axis (high profit for company, but no time passed)

attract new brand users (already in category)

Acquisition/Steal Share

attract new category users

Acquisition/Stimulate Demand

-surveys reveal that consumers believe loyal customers deserve lower prices (and get upset when new customers get perks) -loyal customers=more knowledgeable about price offerings, price -might be more price-sensitive than sporadic customers

Are there factors that can weaken the relationship between loyalty and profitability?

CLV= customer lifetime value -determining what a reasonable acquisition cost is -the more we are discounting future dollars the lower CLV will be - Constant "R"= customer base decaying at constant rate, losing x amount of the customer base each year E(CLV)= m(1+d)/(1+d-r) -as m increases...CLV goes up -as r increases...CLV goes up -as d increases...CLV goes down

CLV computation

No, because there is no control variable, problem that there is only no button, needs to also be randomized

Change color of our "Sign Up Now" button from red to blue and see how that influences the number of people who click on it. -is this an experiment?

Yes; from marketing researcher perspective

Could you argue that the implicit association test and brain imaging (for example fMRI) are trying to solve similar problems (at least from the perspective of marketing researchers)?

No; testers were only given a sip of Pepsi, not an entire can -because Pepsi is sweeter than Coke, from the sip test, consumers preferred Pepsi -after finishing a whole can, however, consumers prefer Coke

Does the Pepsi Challenge reflect a normal consumption experience? Why or why not?

retention (there is no one to retain because they are new)

If a company is new, what kind of strategy will not work

small sample of students (in a large sample, would be likely that males would be taller on average)

Imagine that you ask students to self-report their height. When are you most likely to find that female students, on average, report greater height than male students?

pull- trying to spark interest in music based television that wasn't already there to begin with

In the early days of MTV, when it wasn't carried by many cable providers, MTV would run commercials on other networks featuring musicians who urged viewers to Call your cable operator and say, "I want my MTV!" Would these commercials be considered an example of push marketing or an example of pull marketing?

tag-lines; tag-lines, slogans, jingles= what we see in commercials= basically an entertaining way of sending across the consumer proposition

Keep in mind the distinction between consumer propositions and tag-lines. Which are we more likely to see in commercials?

mutually exclusive and collectively exhaustive -segments should be sufficiently different from one another so that they do not overlap ex. age can be a MECE segment (you can only be one age) -political party affiliation= NOT MECE segment (can be at varying point on political spectrum)

MECE segments

- showing progress as a visual ex. showing coffee cup filling up as you get closer to goal, having punches get farther apart the closer you get to the goal, having coloring on card turn from red to green

Psychologists routinely find that the closer people are to their goal, the more quickly they work to accomplish the goal. How can this insight help us design reward program punch cards (e.g., buy X units to get 1 unit free)?

recency-frequency-monetary -when was the last time they bought from us, how frequently do they buy from us, how much do they spend with us -a way that companies try to define current customers

RFM

increase consumption among multi-brand users

Retention/Steal Share

increase consumption among current users

Retention/Stimulate Demand

True- consumers could still use the encouragement to become a customer at a company whether they are on the fence about buying (mildly positive) or initially not planning to buy at all (explicitly negative)

The 5-box positioning statement isn't only relevant when current beliefs are explicitly negative. If current beliefs are only mildly positive, we might want to "fire up the base," and try to extract even more profit from current customers.

False- can use multiple axes-can be in a web, what percent is dedicated to each component represents how much that component matters to consumers ex. fashion designers-rankin status of brand and how conspicuous the use of the logo on the brand was -can be more than two components

True or False: A perceptual map must feature only two axes (an x-axis and y-axis).

True, they are the leader of the category, so they would be motivated to expand the category

True or False: Day Inside would be most motivated to expand the camping category.

True- they are the leader in outdoor camping (night outside is their competitor, but they are smaller)

True or False: Day Outside would be most motivated to expand the outdoor camping category.

False; sales people more interested in getting the sale, marketers want to maintain brand/price consistency more

True or False: Given that salespeople work on commission, they are generally more motivated to maintain high prices than are marketers.

false-marketing efforts= cut when product is in decline stage

True or False: Marketing efforts for a product intensify once it enters the Decline stage.

False; distinct= degree to which the brand stands out from others, central= how representative brands are -can fall into mainstream category and be central but not distinct

True or False: When a brand is considered "central," it must also be considered "distinctive."

False; frequency matters- ex. flossing/teeth brushing example

True or False: When measuring behavioral frequency using a multiple-choice question (with response options, for example, that include once a month, once a year, etc.), the choices listed cannot influence the average frequency that participants report.

True

True or False: according to Millward-Brown ad pre-testing technique, highly persuasive ads do not necessarily produce good short-term sales

generally able to change behaviors easier than beliefs ex. people order healthier when they order in advance (change their behavior) ex. belief perseverance -participant given list of real and fake brand tag lines, asked to guess which were real and which were fake (half get positive feedback and half get negative feedback)- everyone then told feedback=false -held beliefs= difficult to change even when you provide evidence that belief is false (once you know something hard to un-know)

What is generally considered to be larger: the number of people whose beliefs the marketer can change or the number of people whose behavior the marketer can change?

-joint involvement in product development from product planning, setting sales target, assessing customer needs, advertising -create system that tracks and manages joint activities for sales and marketing -basically just making process more integrated between the two groups

What kinds of practices can be put in place to reduce conflict between salespeople and marketers?

if you are reaching 100% market share you are probably spread too thin- better to focus energy into a few segments than to try to tackle the entire market and spread your efforts across different categories

When competition is present (i.e., outside of a monopoly context), why is reaching 100% market share not optimal?

light buyer: reward program might influence light buyers to become heavy buyers -likely won't change the habits of heavy buyer who are already consistently buying product

When introducing a rewards program, are you generally more likely to influence buying behavior of heavy buyers or light buyers

commonly happens in a heterogeneous population of consumers that have their own distinctive retention rates ex. a show where there are different levels of commitment/following among audiences -die hard fans will stay with the show regardless-based on this observation, you as a company can fool yourself into thinking that you are getting high retention rates when really it is just diehard buyers boosting sales

Where are you more likely to observe survivor bias: in a highly heterogeneous population or in a highly homogeneous population?

Whole foods- customers may be more inclined to buy "health food"- taking note of ingredients more closely

Where are you more likely to see ingredient branding: Whole Foods or Kroger?

Saks Fifth Avenue- more subtle branding on expensive goods

Where are you most likely to find "dog whistle fashion": JC Penney, Saks Fifth Avenue, or PetSmart?

FUD= fear, uncertainty and doubt -political campaign commercial= more likely to capitalize on this than paper towel commercial because people will have more emotions/anxieties tied to politics than paper towels

Which type of ad is more likely to capitalize on the FUD factor: a political campaign commercial or a paper towel commercial?

Day inside does not have multi brand users, so they have no one to steal from

Why can't Day Inside pursue a Retention/Steal Share strategy? (You won't need to remember the particulars of this example, of course. But you should be able to think through similar problems.)

too many categories within demographic of say, age -within 18-24 age range -at same time can also be too restricted- if you are only targeting teens, could be missing an entire group of potential customers to target

Why does segmenting on demographic variables potentially limit growth?

effectiveness will vary depending on how flexible usage rates are -if usage is inflexible, price promotions just encourage people to stockpile ex. Bacon, potato chips, soda, yogurt (can accelerate usage rates with these goods) versus toilet paper, detergent, paper towels (harder to accelerate usage rate for these goods-goods that you use at a normal rate when you need them)

accelerating usage through price promotions

Brand A: three customers try and all highlight the same attribute of the brand Brand B: three customers try and all highlight different attributes of the brand **brand A= stronger because brand is more distinct/focuses on specific element

assessing high brand equity example testing between Brand A and Brand B

-some product attributes naturally depend on attributes of its user/environment -attribute dependency template involves creating new dependencies between product attributes and attributes of its user or environment ex. card for newborn will tend to be blue for boys and pink for girls

attribute dependency

1. search attributes 2. experience attributes 3. credence attributes

broad classes of product attributes

about the perspective from which brand is making decisions -is the brand making decisions tied to or separate from parent brand (decision-making independence) Ex. is Axe boy spray branding as Axe or as a Unilever brand? (Axe branding as Axe=more independent vs. Axe branding under Unilever brand name=more tied to parent brand)

can a distinct branding approach make it difficult to precisely identify a "fundamental entity"?

parent brand (Swiss Army) creates a series of new types of products (clothing, catches, water bottles) -no longer just knives

category extension

-ignore information that challenges a belief that you like -engage with belief and give it greater scrutiny

confirmation bias

-determines importance of different attributes to different segments of consumers -relative importance of product attributes is better measured when attributes are considered jointly then separately -forces consumers to make realistic tradeoffs ex. TV shopping - which factor do customers care most about? (price, screen quality, brand etc.)

conjoint analysis

desired beliefs

consumer propositions do not always lead to...

core competence= skill/ability, unique within category, skillset that sets us apart from competitors **not clear that all businesses have one core business: -understanding how broad our set of competitors really is -who are we truly competing with ex. Netflix is not only competing with Hulu and HBO, but also with other relaxation activities-how do you spend your free time? -broader than the tv entertainment category

core business vs core competence

-leads to sustainable competitive advantage -an input, not an output -generates strategic assets, which in turn generate benefits for consumers (products)

core competence

correlation: movement in one variable is related to movement in another variable causation: movement in one variable produces movement in another variable

correlation vs causality

-cannot be evaluated, even after consumption ex. health benefits of food -so how to convince customers? 1. set high price to signal high quality 2. advertise well

credence attributes

present value of all future profits generated from a particular customer -function of several components 1. margins (m): annual revenue-operating expenses 2. annual retention rate (r): percent of current customers who will still be with the firm at end of year -discount rate (d):

customer lifetime value

1. product: change quality, design, packaging, sizes, warranties, return policy 2. price: change list price, discounts, repayment period, financing terms 3.promotion: change size of sales force, advertising campaign 4. place: change where we're available, number of intermediaries

different ways we can articulate/reinforce our positioning

can take different forms: 1. physical division: a product is cut along a physical line ex. innovating by cutting glasses in half and letting buyer re-attach them 2. preserving division (divide product into smaller pieces, where each piece still possesses all the characteristics of the whole) ex. coke cans that come together in plastic binding

division

No, but they should - core competence is basically what sets them apart from their competitor (specific skill that is difficult for competitors to imitate)

do all companies have a core competence?

YES: brands matter far less than they used to thanks to online reviews -ex. Roku initially an unknown brand-people were inclined to trust it based on the high rating that product had on amazon But, they are still relevant because online reviewers are usually people that are really passionate about the product or really against the product- not getting perspective of average consumer

do brands still matter when consumers have easy access to huge amounts of product reviews?

generally invisible to us as consumers -would have been a big success but marketing team pulled the plug too soon

drop errors

-can only be evaluated after consumption ex. noisiness of a restaurant, friendliness of hotel staff, free samples are a way that companies make experience attributes more tangible

experience attributes

failing to identify customers who intended to leave

false negative

offering incentives to stay (or renew, upgrade) to customers who never had any intention of leaving dangers: -can disrupt habits -some customers would have continued/renewed on autopilot -the offer (ex. update at a steep discount) can prompt them to review and change their consumption habits (could prompt a customer to change consumption habits in a way that does not benefit us

false positives and dangers

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

fundamental entity

products that go to market that should have been stopped along the way- a false positive

go errors

-companies have many competencies (skills) -core competence= skill that is difficult for competitors to imitate -technological components can be imitated -but core competence also includes intangible components (implicit learning, organizational coordination, corporate culture)

identifying/cultivating core competence

age. -more specific than generation -generational labels (ex. millennial, baby boomer)= not very predictive

is it better to segment by generation or age?

No, it is not explicitly targeting women (though it is implicitly targeting them)- it thinks that there may be a market for pink goods for women

is the pink tax is not illegal?

If a commercial repeats a product name repeatedly to raise awareness (e.g., HeadOn), we can confidently infer that the company's marketing objective is acquisition. However, based on this information alone, we can't confidently infer the company's source of volume. We'd need to know more about the commercial, brand, and/or category.

making inferences about company marketing objective and source of volume

a nearsighted focus of selling products and services rather than seeing the big picture of what consumers really want

marketing myopia

duplicating a component but giving it a slightly different function ex. changing a colored pen to a multicolored pen- adding cartridges but they do slightly different things (provide different colors)

multiplication

packaging must achieve several objectives -identify the brand -convey descriptive and persuasive information -facilitate product transportation and protection -aid product consumption

packaging as the fifth "P"

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 ex. in quick-service food category, Subway's POD=healthiness -strong brands can have multiple points of difference.

points of difference

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

points of parity

-self fulfilling prophecy: if you think you are entering decline, you pull your marketing budget and bring on the sales decline that you were anticipating

product life cycle criticism

-sales and profits decline -focus turns to profits rather than sales or share -reduce marketing budget ex. Gillette specialty razor products- milk all the money out as possible-won't waste advertisement money on them but will continue to put on shelf until there are no more loyalists

product life cycle: decline stage

-period of rapid market acceptance or substantial profit improvement -competitors enter aggressively -may aid in growing the market -improvements may be necessary to respond to competitors -variations may be necessary as segments are discovered

product life cycle: growth stage

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

product life cycle: introduction stage

-slowdown in sales growth because 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 ex. Tide exciting growth by introducing tide stick and tide hanger (new platforms)

product life cycle: maturity stage

parent brand (Doritos nacho) creates a series of sub-brands (cool ranch, spicy etc.) -same type of product, just different flavors

product line extension

-manufacturers use 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 ex. intriguing commercials

pull marketing

-use sales force and trade promotion money to induce intermediaries to carry, promote and sell the product to end users -appropriate wen there is low brand loyalty in category and brand choice is made in store *for customers already interested in product who need to be pushed just a bit further ex. bold, loud displays in store

push marketing

-can be evaluated prior to consumption ex. price, MPG, product appearance -ex. Meijer commercial with girl eating spinach (spinach price=better even though the experience of eating spinach is just as bad either way)

search attributes

a group of consumers sharing at least one characteristic that should increase their responsiveness to marketing effort

segment

-counterintuitive way to develop new products idea: what happens if we remove components that seem desirable or even indispensable ex. cake baking Betty Crocker- taking egg out of product

subtraction

assigning a new task to an existing element of the product or its environment ex. car rear defroster -for a long time cars had rear window defroster and antenna -engineers then found a way to make defroster a radio antenna as well

task unification/replacement

adding incentive to get people to buy product ex. encouraging flu shots by providing free cookie after you get shot -needs to be both persuasive and help with awareness and memorability

temptation bundling

1. frontal attack - head on attack of fundamental aspects of leader (ex. Pepsi tastes better than Coke) -challengers need high resources 2. flank attack -attack a leader's weak points, blind spots -ex. attack an area where leader is geographically weak -ex. attack a segment that has been neglected by leader

two ways that non-leaders can steal share

1. product line extensions 2. category extensions 3. introducing "branded variants"

types of brand extensions

No; smokers general would not be vulnerable audiences vulnerable audiences= people who cannot process the information that they are given (ex. uneducated smokers specifically/people with mental impairment would be vulnerable audience)

vulnerability in marketing: would smokers be vulnerable target audiences?

- prioritized ex. an ultimate goal (maximize net income) driven by a series of smaller behavioral goals (increase # of first time buyers, switchers) -quantified (when possible) -includes a temporal benchmark -realistic -internally consistent (don't want goals to conflict with each other)

what are some attributes of beneficial goals?

-it is easy to see through and be limited by tunnel vision without knowing it -can miss things that we are not expecting to see

what can the "monkey business" (basketball passing) demonstration teach us about goal pursuit?

-company may have initially spent a lot of money to get users at first, but overtime customers are less susceptible to go to other companies after a significant period of time

what factors increase or explain profitability of loyal customers?

ex. LockTight is not leader in superglue industry, Gorilla Glue is -if LockTight creates an add that brings their sales up temporarily, Gorilla Glue sales also rise -when non-leader promotes category, leader benefits the most **how LockTight add could be more successful: should have pointed out why LockTight is better than Gorilla Glue

what happens when non-leaders promote the category?

Distinct branding (instead of umbrella branding) - if one product was faulty they would not want it to be associated with other product that are not faulty (it could ruin entire reputation if they use umbrella branding)

what kind of branding strategy would a pharmaceutical company prefer?

-more likely to recycle non crumpled/clean looking goods recyclable, empty packages that look messy or distorted tend to end up in garbage -need to remind people with signage that distorted packaging is still recyclable

what types of packages are more likely to be recycled?

bread loaf- doubling size (still same product, not adding anything onto the product)

what would NOT be an example of multiplication?

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

when should we segment

-profit peaks first -competition often comes into play after profits peak which can eat into profit

which peaks first sales or profit?

better to invest in a barnacle with a low share of wallet- low size of wallet= they don't have the money to spend more with us, low share means that they have the money, they are just directing their dollars elsewhere (we can steal share here)

which type of barnacle should we invest in: a barnacle with a low size of wallet or a low share of wallet?

yes, might cause you to have less overall awareness of the market because you are so focused on providing goods (not necessarily providing what consumers want) ex. decline of railroad business -railroads saw themselves in the train business, not the transportation business -narrowed focus too much and competitors were able to steal away their customers b

would marketing myopia cause you to under-estimate how many competitors you are up against?