MKTG 490 Markstrat quiz

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Cognitive development, component benchmarking

2 models of brand equity

Growth stage

2nd stage of lifestyle perspective

semantic, multidimensional, conjoint

3 studies that provide information on how to reposition a brand

customers, brands, products

3 things to prioritize when facing trade offs

company dashboard, financial report, production report, r&d report, decision review, feedback

6 components of company results

acquisition cost for customer in $

AC

Net earnings

CAM - market research studies - R&D - interests paid - ECP

Contribution after marketing (CAM)

CBM - advertising media - advertising research - commercial team costs (your decisions).

Competitive Advertising

Competitive advertising budgets are given by firm, by brand and by consumer segment. The breakdown by brand and consumer segment is also provided. All brands marketed in the current period are included in the study. See Figure 30 for an extract of this study.

Available since

Completed projects only. This is the period when the project was completed.

acquisition, expansion, retention, contagion

Customer management decisions (AERC)

Exceptional cost or profit (ECP)

Exceptional items such as brand withdrawal costs.

shoppers

Good product knowledge through extensive product comparison. • Demand high quality-price ratio • Quite price-sensitive.

acquisition funnel stats

How many prospects • Cost per prospect • Quality score of each prospect • What percent convert to paying customers • What is cost of conversion • What efforts can help get us prospects • What efforts can help convert prospects • What is the cost & ROM on these efforts?

Interests paid

Interest paid on loans granted in previous periods.

data research and analysis, STP, Marketing mix

Markstrat components

professionals

Personal and professional usage • Look for high quality, high-performance and easy-to-use products • Can afford expensive products

Additional graphs

The charts and graphs listed above are given in the main report of the study

Financial report

This report provides you with revenues, costs and profit information at the company, market and brand levels.

pressure & disruption

competitors react

Market research studies

costs of the market studies purchased during the period (your decision).

income split

estimates the present value of firm's income attributable to brand; but uses reported earnings, which can be manipulated

discount rate as %

i

minimum base cost

is the cost below which it is impossible to manufacture the future product without taking productivity gains into account.

sonite

product category o

Market Forecast

provides estimates of the expected market size in one period and in five periods.

goals

quantifiable objectives for a given period

purchase intentions - market shares

sales lost

Commercial Team experiment

set up by increasing the size of the commercial team in each channel in a selected regional market

brand contribution

the amount of contribution, or revenue minus all expenses

knowledge

the extent the customers are familiar with the brand

esteem

the regard customers have for the brand's quality, leadership, and reliability

customers, company, competitors

3 C's of data research and analysis

potential sales, existing inventory, production flexibility

3 aspects of estimating manufacturing need

Intelligence generation, Intelligence dissemination, Responsiveness

3 components market orientation measures

market and competitive news, company and competitive results, market research studies

3 components of annual report

brand awareness, purchase intentions, and market share

3 data sections of the consumer survey

specialty stores, mass merchandisers, online stores

3 distribution channels

price premium, income split, royalty relief

3 estimation of brand equity

utility, brand, service relationship

3 levels of value to customer

return on investment, return on assets, customer portfolio value

3 strategy or goal level control loop metrics

customer, company, strategy/goal

3 types of control loop metrics

followers, early adopters, innovators

3 vodite segments

Maturity-saturation stage

3rd stage of lifestyle perspective, Dog eat Dog: Few new buyers or applications, offering become standardized, market consolidates, aggressive pricing - Marketing tactics: cross sell, lower costs, reimagine & leverage for next evolution (ipod to iphone to ipad) - Goals: increased frequency of usage, find new growth path

product, place, promotion, pricing

4 P's of marketing mix

relative advantage, competition, dynamics, uncertainty

4 components of strategy

customers are different, customer change, competitors react, resources are limited

4 fundamental problems

knowledge, relevance, esteem, differentiation

4 pillars of component benchmarking

relationships, response, meaning, identify

4 stages of brand development

identity, meaning, response, relationship

4 stages of cognitive devlopment

introduction, growth, maturity-saturation, decline

4 stages of lifestyle perspective

Decline stage

4th stage of lifestyle perspective

issue, SWOT, Goals, tactics, metrics

5 aspects of planning control loop of marketing strategy planning process

market, performance, benchmarking, brand charts

5 categories of graphs

Market share, Sales growth, Net contribution, Cumulative net contribution, R & D investments

5 optimization aspects of Markstrat

sell out, disruptive innovation, market shifts, competition, manage products not customers

5 reasons companies die young

explorers, professionals, shoppers, high earners, savers

5 sonite segments

number of features, design, battery life, display size, processing power, base cost

6 attributes of sonite products

resolution, energy efficiency, carbon footprint, connectivity, number of apps, base cost

6 features of Vodite product

awareness, word of mouth, satisfaction, retention, share-of-wallet, customer lifetime value

6 types of customer level control loop metrics

price, production, advertising, commercial team, order marketing research, perceptual advertising

6 types of decisions

Customer lifetime value/CLV

A form of customer-centric accounting where firm's value is the sum of cash flows accrued over each customer's "lifetime" Captures "true" contribution by accounting for: Customer heterogeneity and dynamic effects (varies by individual (segment) and discounts future profits) Tensions and tradeoffs among AER strategies (does acquisition tactic lead to retention failures?)

Brand maps

Additional charts and graphs are available in the study. Brand maps provide a graphical representation of ideal values and brand perceptions on two dimensions at a time. Five maps are provided in the study.

lifestyle perspective

Approximation of Customer Dynamics • Assumes that customers evolve with products & industries in a sequential set of "stages" • Applies a standard set of marketing tactics at each stage

equity

Assets - Liabilities=

m(r/(1+i-r))-AC

CLV formula

Importance of characteristics

Finally, respondents are asked to rate the importance of each characteristic in their purchasing decision

explorers

Highly interested in Sonite product • Demand high performance products • Quite price sensitive

Inventory costs

Inventory holding cost + Inventory disposal loss

Inventory disposal loss

Loss incurred when selling inventory to a trading company because of a product upgrade or brand withdrawal. Units in inventory x Unit transfer cost x Inventory disposal cost in % (given in the market news report).

revenues

Number of units sold x Average selling price. The selling price is equal to the retail price (your decision) minus the distributors' margin.

Cost of goods sold (COGS)

Number of units sold x Unit transfer cost. The transfer cost is equal to the base cost of the underlying R&D project minus the productivity gains.

customer centric firm

Organizational alignment to the customer. Empathy for the customer drives organizational design. Input: specific customers' needs Define the firm from the customers' point of view Action: orients all decisions to unifying central purpose Vision/mission Structure Culture Metrics How might CC factor into HR? Output: customer satisfaction, service quality, loyalty, NPS

Ideal values

Respondents are also asked to indicate their preferred (also called "Ideal") value on each scale. The reported results are summarized in a table such as the one in Figure 26, using the mean value for each segment.

Brand perceptions

Respondents are asked to rate each brand on a scale from 1 to 7 according to the way they perceive the brand

Contribution before marketing (CBM)

Revenues - COGS - inventory costs

sustainable competitive advantage

SCA

supply side/ inherent value

Similar to economies of scale (e.g., pre internet newspaper) but for supply networks • The more exclusive suppliers to one host, fixed costs and production costs fall, suppliers cant leave, "host" benefits • Netflix and AirBnB

Physical Characteristics

The physical characteristics of the future product. This data is given in the relevant units for each characteristic, e.g. gigaflops for processing power or kilograms for carbon footprint.

Perceptual Maps

The study gives the minimum number of dimensions that are sufficient to provide a good fit to the data

Ideal value evolution

The study monitors the evolution of consumer needs over time. The preferred values on each scale over the past 3 years are recorded and displayed in a table for each consumer segment,

Industry Information

This is a short report showing the evolution of economic variables such as inflation rate and GNP growth rate, and providing the cost for the next period of items such as market research studies, commercial people, holding units in inventory or the disposal of inventory units in the case of a product withdrawal or upgrade. All cost calculations are done for you by the simulation. So you should not need to look at the report in detail.

Platform of brand

This is the name of the brand that is based on this project. This column is void for projects that are not yet or no longer in use.

Decision Review

This report recalls the decisions that your team made at the beginning of the current period: brand management, commercial team management, R&D projects and the market research studies purchased

Estimated Communication Dimensions and Message Quality

This section provides an estimate of the dimensions that have been used by all brands in their communication, as well as an estimate of the message quality. Higher message qualities are obtained with higher advertising research budgets.

Research & Development Report

This set of reports provides information on all R&D projects launched in the previous periods.

Competitive Commercial Team

This study estimates the size of competitive commercial teams by firm, brand and channel, and how the teams are allocated to brands and channels

Inventory holding costs

Units in inventory x Unit transfer cost x Inventory holding cost in % (given in the market news report).

Influence of Product Characteristics on Perceptual Dimensions

We will see in the chapter Positioning and Research & Development that the MDS study is useful in positioning brands. This is why it is important to relate the three dimensions identified by the MDS study to the most important physical characteristics of the category. An indication of the influence of product characteristics on perceptual dimensions is provided in a table such as the one in Figure 29

margin stats

What is average revenue per user • What is average cost to serve • How consistent is our margin across our entire customer portfolio • Should we segment by: • product lines • how long they have been a customer • cost to serve • needs or demographics • How can we expand average revenue? • How can we decrease cost to serve? • What is cost and ROM of efforts to change these? • Does change hurt acquisition or retention efforts?

retention stats

What percent of cohort is retained each year • Is this percent stable • Does it change over time (year 1 vs year 3) • Is it consistent across Customer types (should we track by segment) • Are there any particular "triggers" that increase or decrease defection likelihood? • How can we increase retention rate? • What is cost and ROM of these efforts? • Do these efforts add to cost to serve or impact acquisition success

demand side/value from other users

With each new user, all existing users benefit • Telegraph Facebook.

market orientation

a measurable company wide competency of staying on top of the ongoing changes in the marketplace

Conjoint Analysis

a statistical technique used to calculate the value - also called utility - attached by consumers to varying levels of physical characteristics and/or price.

Consumer Survey

a survey questionnaire administered to 3,000 individuals during the simulated period

planning, implementing, controlling

alternative marketing strategy planning process

Points of difference

are the attributes that make your brand unique. It is your competitive advantage. It is what your brand slogan should reflect.

points of parity

are those elements that are considered mandatory for a brand to be considered a legitimate competitor in its specific category

15 years

average lifespan of company

Consumer Panel

based on a sample group of over 500 consumers whose buying behavior is believed to be representative of the entire market

royalty relief

based on hypothetical cost of licensing the brand or revenue share from selling through another company's salesforce (e.g., IBM & Box). Estimated from similar arrangements.

Research & Development

budgets allocated to R&D projects during the period (your decision).

micro change

change in desires, needs and uses

size, cost

commercial team decisions

share price, tobin's Q

company level control loop metrics

price premium

compares branded vs. unbranded products to determine increases (or decreases) in customer willingness to pay

Industry Benchmarking

compiles general information from annual reports about each of the Markstrat competitors

segmentation analysis

consists of dividing the market into groups of customers where Customers within group have very similar needs Customers across groups have different needs

macro change

culture & politics

dynamics

customer change

heterogeneity

difference in customers

tactics

executable behaviors that facilitate goal acheivement

introduction stage

first stage of lifestyle perspective, Trial & learn. Exhilarating or exhausting - Marketing tactics: - Stimulate trial: advertising, samples, PR - Educational onboarding: co-learning, adapting, and fixing - Goal: Find narrow target "product-market-fit" and perfect for target

GE/McKinsey/BCG matrix

has 2 axis', segment attractiveness, and brand/product relative strength, with 4 different categories based on their position on the axis'

Stars

high segment attractiveness, high relative strength, must grow

must upgrade or liquidate

high segment attractiveness, low product strenghts

required budget

is the budget required to finish the project, i.e. the additional budget that must be invested to ensure that the project will be completed in the following period. You may attempt to finish the project with a lower budget but its successful completion is not guaranteed

current base cost

is the one that you entered in the R&D decision form when specifying the project

cumulative budget

is the total budget that has been allocated to this project over time

dogs

low relative strength and low segment attractiveness, must retire

cash cows

low segment attractiveness, high relative strength, must hold

margin=(revenue-costs to serve)

m

return on marketing

outcome/cost

Distribution KPIs

part of the scorecard, Overall distribution coverage; distribution costs, in million dollars and in percentage of revenues; estimates of lost sales due to insufficient commercial efforts.

R&D KPIs

part of the scorecard, R&D expenses, in total and in each market; number of completed R&D projects, in total and in each market.

Marketing KPIs

part of the scorecard, Total market share, in volume and value; market share in each market; number of marketed brands, in total and in each market; number of brands leading in a segment

Financial KPIs

part of the scorecard, Total revenues; revenues in each market; revenues from new brands (other than your two initial brands); Total contribution after marketing (CAM); CAM generated by each market; CAM generated by new brands; net contribution, in million dollars and in percentage of revenues.

Production KPIs

part of the scorecard, Volume sold; volume produced; units in inventory; inventory costs; estimates of lost sales due to production shortage.

vodite

product category e

Multidimensional scaling of brand similarities and preferences

provides a joint space configuration obtained with non-metric multidimensional scaling.

Distribution Panel

provides continuous tracking of product sales to consumers based on information gathered at the retail point-of-sale

Semantic scales

provides data based on a semantic differential questionnaire administered to 600 individuals

Competitive Advertising and Commercial Team Estimates

provides estimates of the advertising and commercial budgets spent by the companies in each market during the simulated period.

Market & Competitive News

provides general and financial data on the industry, on the competing firms and on marketed brands. This is publicly held information; i.e. all competing firms have access to the same documents. The news consists of three or four sections, depending on the availability of Vodite brands.

Industry Dashboard

provides you with a one page summary of key performance indicators at firm and brand levels such as stock market data, retails sales and market shares in value and volume, revenues and contribution. The layout will vary over time, especially when the first Vodite brands are put on the market

company dashboard

provides you with a one page summary of the key performance indicators of your firm and your brands such as stock market data, market shares in value and volume, revenues and contribution. The layout will vary over time, especially when you introduce your first Vodite brands

Production Report

provides you with information on the number of units produced, the number of units in inventory and on production costs for each of the brands marketed in the period.

Market report

provides you with the market shares (in units and in dollar value), the volume sold and the retail sales of all marketed brands (Sonites or Vodites). Volume and retail sales are given for the current period, and the variation with the previous period is provided as well. Newly launched or upgraded brands are flagged. The physical characteristics, base cost and price of all marketed brands are given as well. Again, newly launched or upgraded brands are flagged.

retention rate as a %

r

opportunity cost

resources are limited

Advertising experiment

s conducted by increasing advertising budgets in a selected regional market. The results of the study are used to project the level of awareness and the market share that would have been achieved nationwide by each brand with the same increase in advertising and if competitive actions had remained unchanged.

Utility charts

show the utilities attached to four arbitrary levels in each dimension included in the study

Scorecard

shows the evolution of key performance indicators of your company in Finance, Marketing, Production, Distribution and R&D

Relative importance of price and physical characteristics

shows the relative importance of price and the three physical characteristics that are perceived as most important in the market

relevance

the extent to which customers find the brand to be relevant to their unique needs

differentiation

the extent to which the brand is seen as distinct


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