Product & Brand Final Exam - Fall 2020

Innovation

A new device or method that provides better solutions that meet new requirements, unmet needs, and/or existing market needs (Dimensions: Offerings, platform, solutions, customers, customer experience, value capture, processes, organization, supply chain, presence, networking, brand)

A-T-A-R Model

A new product adoption framework to forecast market share for frequently purchased products (Awareness, Trial, Availability, Repeat). Follows from a hierarchy of effects framework: become aware -> try it -> buy it if I can find it, or is it distributed -> if satisfied, then adopt. Breaks a complex task into component parts, which can be measured separately and have their own marketing plan components.

Ethnographic Observation

A qualitative method where researchers observe and/or interact with a study's participants in their real-life environment. Useful for tracing complex activities and processes, understanding low involvement activities like routine shopping, and detecting new fashions and trends. Look for non-standard uses, customization, intangible attributes, and unarticulated needs. (observational study)

Customer Experience Mapping

A qualitative research technique where the analyst traces the customer's experience/buying cycle with a product or service all the way from need recognition to post-purchase, with special attention to the emotional highs and lows. The goal is to identify 'pain points' and spark innovations that can reduce the low points and maintain or increase the high points.

A/B Testing

A randomized group of experiments used to collect data and compare performance among two options studied (A and B). A might be the currently used version (control), while B is modified in some respect (treatment). Need for control, randomization, and measurement. A/B testing is commonly used in digital marketing to test elements such as copy text, layouts, images, and colors.

Disruptive Innovation

A scenario where a large incumbent firm evolves to emphasize serving higher-end customers by adding more features, allowing a new entrant to enter with a more basic version targeted at value-seeking customers

Vertical Product Differentiation

All consumers agree on which good is of higher quality, but consumers have different willingness to pay for features. Induces segmentation and price discrimination.

Bass Diffusion Model

Describes new product adoption (durables or technology goods) by presenting a rationale of how current adopters and potential adopters of a new product interact. Main premise is that adopters can be classified as innovators or as imitators and the speed and timing of adoption depends on their degree of innovativeness and the degree of imitation among adopters. m = market potential, p = coefficient of innovation (adoption due to person's propensity to adopt on their own), q = coefficient of imitation (imitation effect caused by contagion and word of mouth)

Delight Attributes

No one notices if they are missing, but they drive satisfaction if present (1 of the 2 satisfaction drivers)

Off-Invoice Trade Promotions

Offer a temporary price reduction (TPR) to retailers for a short duration with no limits on purchase quantity - incentive applies to units purchased by the retailer. Retailers trade-off costs of carrying excess inventory against gain from lower purchase price.

Behavioral Re-targeting

Online advertising is targeted to consumers based on their previous internet actions, in situations where these actions did not result in a a sale or conversion. An example is tagging an online user who visits a brand's website (which is taken to mean they have some engagement with the brand), and then serving the brand's ads more frequently to that user as they browse the Internet.

Line Extension

Uses a current brand name to enter a new segment in the existing product class, for example, with new varieties, new flavors, or new sizes; Parent brand is used to brand a new product that targets a new market segment within a product category currently served by the parent (Type of brand extension)

Creative Brief

Outlines instructions to a creative team, who is often from an outside agency. Has 3 components: 1. consumer insights, 2. communications strategy, 3. execution. Good briefs show discontent with the status quo and a vision of being better off through the brand.

Pre- and post-promotion dips

When frequently purchased goods sales increase above their "normal" level during a promotion period is usually preceded and followed by periods where sales are below their normal level. Reasons include consumer anticipating the promotion (pre-) and stockpiling (post-). On average about 2/3 of the sales increase during a promotion period are incremental after netting out the effects of the pre- and post-promotion dips.

Scan-Back Trade Promotions

Pay for performance, reimburse retailers based on units sold during promotion period. Compensation is based on units sold by the retailer. Removes the incentive to forward buy and to divert and requires an accurate monitoring system. Generates higher retail sales through lower retail prices.

Customer Benefit Ladder

Probing questions to move from attributes to underlying values; aka "The Five Why's" to get from attribute to functional consequence to personal value level (depth interview)

4 levels of competition

Product form, product category, generic category, budget competition

Segmentation Step 2

Profile each group/segment using variables that can help you "find" the segment (can be demographics)

Lifestyle Marketing

Promotional activity shaped around the interests, attitudes, opinions, and way of life of consumers. It is a way to segment a market. Works best when companies can connect with how their potential customers live. Devise a strategy to seamlessly fit in with the consumers' way of life. Developed to support the beliefs and core values of consumers.

Google Trends

Relative frequency of google search terms; relative intensity over time of various topics consumers are seeking information about. Can be useful for understanding macro or aggregate trends in consumer needs.

Consumption Expandability Effect (household inventory)

Size of per-unit discount should be great if people consume more when they have more on hand. Accounts for inventory effect on consumer behavior.

Stock-out Cost Effect

Size of per-unit discount should be lower if the economic or psychological costs of stock-outs are high. Less price sensitize when stock-out costs are higher.

Media Strategy

Media planning and buying frequency, impressions (from Targeting on the marketing strategy side)

Table stacks

Mess-ups hurt, but improvements do little (1 of the 2 satisfaction drivers)

Marketing Mix

Mix of controllable marketing variables (tactics) available to managers

Cluster Analysis

Technique for grouping objects (usually customers in marketing applications) such that the objects are relatively homogeneous within a group, and the groups are heterogeneous with respect to each other. A common use is in segmentation studies where we want to group together customer with similar needs.

Conjoint Analysis

Technique for inferring a customer's preferences from choices or rating of products; decomposes preferences into utilities associated with each attribute or feature for an individual customer. Key applications are understanding how customers tradeoff attributes; market share forecasting; and determining attribute importance. Uses include measuring, analyzing, and predicting customers' responses to new products or new features of existing products, measuring brand equity, and measuring price sensitivity.

Net Promoter Score (NPS)

The basic idea is that a firm's/brand's best customers act as evangelists and promote it to others. These actions are countered by detractors, a group that accounts for most of the negative word-of-mouth comments. Customers are asked, "How likely is it that you would recommend [Firm X, or Product Y] to a friend or colleague?", typically on an 11-point scale. NPS (a single number) = % of Promoters (9s and 10s) less % of Detractors (0 through 6s).

Customer Lifetime Value (CLV)

The discounted sum of all future customer revenue streams minus product and servicing costs and re-marketing costs. Useful for getting firms to think of customers as assets and for instilling a more long-term (versus short-term transactional) perspective.

Natural Experiment

The experimental conditions (i.e., units which receive treatment) are determined by nature or other factors outside the control of the experimenter. There is no random assignment to a treatment group; these are not controlled experiments.

4 Generic Paths to Disruption

1. Eliminate unneeded attributes, 2. Rationalize over-engineered attributes, 3. Do better on existing attributes, 4. Add new attributes

3 ways to grow sales

1. Grow market as a whole (attract new users to the category), 2. Steal market share from competitors, 3. Increase repurchases from existing customers

3 Important Questions

1. What are you selling?, 2. Who are your customers?, 3. Why should they buy?

"What we should do..." questions

4 P's

Identity brand

A brand that derives most of its value from what it symbolizes and how it helps consumers present their identities. Repositioning an identity brand is difficult because its consumers rely on it to present their identities to others.

3-Circle Analysis

A competitive marketing strategy for a specific customer segment and competitor - use in between segmentation and positioning in STP

Blue Ocean Strategy

A firm-level strategy that seeks to break out and create a new market that is not so competitive as a crowded existing market (Red Ocean is the more difficult task of competing in an existing, increasingly competitive market)

Chain-Ratio Method

A forecasting (or market sizing) method where a base number (e.g., # of potential customers; # of households) is multiplied by a chain of related percentages and/or rates. The idea is to break a complex problem into pieces; Use to estimate trial & repeat volumes (2 equations)

Product/Brand Positioning Map

A graphical depiction, usually on 2-D, of the similarity of a set of products/brands. A pair of products/brands that are more similar are located closer to each other compared to a pair of products that are less similar. Created directly through managerial judgment or indirectly using MDS. Called a joint-space map when it includes both products/brands and customer preferences.

Market Segmentation

A group of consumers that have a similar profile, a common set of needs, that will respond in a similar manner to any marketing actions I take. Use to improve the return on $$ spent on sales, marketing, and other functions.

Product Line

A group of products that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same channels, or fall within a given price range. Length = number of products within a line, Depth = number of variants within a line.

Pull Strategy

A manufacturer relies mainly on product advertising or consumer sales promotions.

Cross-Tabular Analysis

A method of segmentation, find a descriptor that helps pursue a desired behavior segment (ex: descriptor x behavior). Useful for categorical analyses

Flanker

A new brand introduced into the market by a company that already has an established brand in the same product category. The new brand is designed to compete in the category without damaging the existing item's market share by targeting a different group of consumers.

Value Proposition

A statement of value customers get from your product of service (Ex: <Target segment> customer will prefer to buy our product because we offer <value - benefits, costs, risks>)

Mind Map

A tool to help with creative thinking that visually depicts what is going on in your head

Innovation Radar

A tool to help you think broadly about ways to innovate. Innovate by changing any of what is offered, who the customer is, how you sell to customers, and where to sell to customers

Place

Access to market

Sponsored (or paid) search

Advertisers specify keywords they wish to target and the maximum prices they are willing to pay. Sponsored search ads are listed in special sections near algorithmic results; advertiser pays of a user clicks on the ad. Issues include poor targeting; cannibalization (user would normally click on algorithmic link); overly aggressive bidding relative to margins on the product.

Promotion

Advertising, trade promotions, customer promotions, etc.

Value-oriented pricing

Aligning price with value delivered. Price is set primarily on the perceived value to the customer. Rather than on other approaches to pricing such as the actual cost of the product, the market price, competitors' prices, or the historical price. This supports a market-oriented business model. It is a function of true economic value (TEV), perceived value (PV), and cost of goods sold (COGS).

Multidimensional Scaling (MDS)

An exploratory method to deduce indirectly the dimensions a customer uses to evaluate alternatives. An indirect approach is helpful in cases where the attributes may be unknown and customers are unable or unwilling to represent their reasons accurately.

Lead Users

Are ahead of the adoption curve and have greater product expertise (observational study)

Bases of Segmentation (vs Segment Descriptors)

Bases of segmentation are the 'true' underlying reasons for segments such as benefits sought or decision processes. Because these are often difficult to observe, a second step is employed to profile the resulting segments using more easily observed variables to assist in finding and reaching the segments.

Paid Media

Brand pays to leverage a channel such as display ads, paid search, or sponsorships

Product / Service

Brand, package, color, logo, size, form, quantity, etc.

Horizontal Extension

Brand-bundling and Brand-bridging; Combining elements across different brand hierarchies

Net Marketing Contribution

Calculation that determines whether a company's current marketing strategy is enough to cover the costs associated with marketing and sales. Equation = Market demand x Market share x (Revenue per customer - Variable cost per customer) - Marketing expenses

Key Value Categories (KVC's)

Categories that consumers use to form an overall impression about the price competitiveness of a retailer

Owned Media

Channel a brand controls such as a website, blog, twitter account, etc.

Earned Media

Consumer becomes the channel such as word of mouth, buzz, and viral.

Inventory Effect

Consumption rate increases with the amount of inventory held

5 C's

Context, Customer, Company, Competition, Collaborators

Creative Strategy

Copy and message (from Positioning on the marketing strategy side)

Jobs to be Done

Decomposes a "job" into job tasks to understand importance and satisfaction

Marketing Decision-Making Process

Define the market (outside-in, customer-oriented), analyze, strategize, execute

Deal Clinchers

Determinant needs (vs. Table stakes, which are minimum standard)

Category Extension

Enter a different product category than that served by the parent (Type of brand extension)

Factorial Experiment (or Multi-variate Experiment)

Evaluate the combined effect to two or more experimental factors when used simultaneously. Full factorial designs evaluate every level of one factor at all levels of all other factors; fractional factorial designs reduce the number of treatments needed by say allowing only main effects (i.e., no interaction effects) for the experimental factors to be considered.

Horizontal Product Differentiation

Goods are the same price, but some consumers prefer one variant over the other (Ex: tomato sauce). Caters to heterogeneous preferences.

Segmentation Step 1

Group customers into homogeneous groups based on wants, needs, and decision processes (hard to observe)

Brand Development Index (BDI)

Index of brand sales to category sales, could be by territory/region. Help allocate resources to the right markets.

Brand

Intangible asset to the firm

Waterfall Pricing

Larger sizes should have a lower per-unit price than smaller sizes. Rationale includes perceived fairness; and load up pantries (household inventory) to lock out competitors.

Slotting Allowances

Lump-sum, upfront transfer payments from manufacturer to retailer when the manufacturer launches a new product.

Multiple Correspondence Analysis

MDS method used when the input data is dichotomous (Ex: Y/N)

Brand Equity

Marketing effects or outcomes that accrue to a product with its brand name compared to those that would accrue if the same product did not have the brand name. Its significance relates to helping firms more formally value the brand as an important intangible asset. Also, comes from its identity meanings: culturally shared stories, images, or associations, which help users of the brand present who they are to others

Brand Extension

Occurs when a firm uses an established brand name to enter a new market

4 P's

Product, Promotion, Place, Price

Essence of Marketing

Recognizing and capitalizing on customer differences

Marketing Mix Model (or Market Response Model)

Relates some measure of marketing performance such as sales or marketing share to marketing mix variables. The purpose includes understanding the relative effect of each variables and assisting with resource allocation across marketing mix elements.

STP

Segmentation, targeting, positioning

Hierarchy of Effects

Stepwise process where a consumer moves from unaware -> aware -> knowledgeable -> interested -> trial -> repeat. We can measure each stage and the root cause of a low value at a given stage is linked to marketing actions (e.g., high interest, but low purchase, likely means a distribution issue).

Push Strategy

Strategies aimed at getting products into the dealer pipeline by offering inducements to dealers, retailers, salespeople (e.g., distribution allowances). A push strategy is appropriate when brand loyalty is low, brand choice is made in the store, the product is an impulse purchase, and the product's benefits are understood.

SWOT

Strengths, weaknesses, opportunities, threats

Vertical Extension

Super-branding and sub-branding; Adding new elements to an existing brand hierarchy

Brand Positioning

Target + Frame of Reference + Points of Differentiation + Reasons to Believe

Positioning Statement

To [target group, users, needs], [brand name] is the brand of [competitive framework] that [point of differentiation benefit] because [reasons to believe]

House of Quality

Tool to translate the voice of the customer into the voice of the engineer

Brand Building

Understand and leverage your brand assets (identity, positioning, execution)

"Analyze this..." questions

Use 5 C's or SWOT

Hierarchy of needs

Use to identify competitors: 1. Form, 2. Gender, 3. Brand, 4. Type, 5. Scent, 6. Size

QALY

Used to assist in making resource allocations among patient groups (not individuals); QALY=f(length of life, quality of life or health state). One QALY is equal to 1 year of life in perfect health.

Price

What you give up

Sub-brand

When a main brand creates a subsidiary or secondary brand. This new brand's attributes are distinct, yet related to the main brand. Sub-brands often have their own brand standards, logo, color treatment, etc. while some sub-brands reflect the same identity as the parent brand. (Ex: Apple iPad)

Share of Voice

Your brand expenditures / (Your brand expenditures + all competitors' brand expenditures)

S-shaped response functions

S-shaped with an intercept above zero to account for awareness created through means other than just advertising. The initial flat part captures the threshold effect, then we have increasing returns. The relationship then ultimately exhibits decreasing returns as it gets harder and harder to find potential customers who are unaware. Implications are that it supports resource allocation decisions.