MAR4803 Exam 1
What are characteristics of a meaningful segment?
"For segments to be truly meaningful, the needs of customers in one segment must be distinct from those in other segments on dimensions that affect the purchase or use of a given product"
What is a brand?
A brand is a name, term, sign, symbol, or design, or a combination of them intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors
Perceptual Map
A positioning tool that visually summarizes the way customers compare brands on different dimensions.
What are four ways firms can create social value?
Network effects- the value of a product or service for a customer often increases as more customers adopt it, Preference formation- preferences are heavily influenced by peers, Social capital- impressing others, distinguishing oneself from others, outdoing others, commanding respect, Social relationships- can be strengthened when you connect people
How is market research used by companies?
New product development, Evaluation of marketing actions, Market Segmentation, Identify target markets, Brand positioning, Identifying sources of problems and opportunities
How do companies use NPS?
Use it as a training & communication tool with managers and employees 1) Make numbers transparent on a daily/weekly/quarterly basis 2) Emphasize the importance of promoters and dangers of Detractors 3) Compare region to region or branch to branch
What is experiential value?
Value derived from the experience that your customer has when using your product that helps them build a perception about your brand
Iceland Integrated Marketing Example
Volcano eruption disrupted air travel and tourism, Icelandic government and tourism organizations ran a campaign to positively showcase many unique features and experiences in Iceland "Iceland has never been more awake and there has never been a more exciting time to visit the country"
Habit
a behavioral response to a cue
What is a brand personality? How is it formed? What are the advantages to forming brand personality?
A set of human characteristics associated with a given brand (including gender, age, human personality trait, socioeconomic class, values) that differentiates brands in consumers minds. Advantages include creating a self-expressive benefit for a customer to express his or her own personality and can be the basis of a relationship between the customer and the brand.
Diversification Growth
Acquire or build (attractive) non-related businesses
Integrative Growth
Acquire related businesses
How do companies use CLTV to make decisions?
Approximate value of one customer; Keep customers who show a positive NPV for the marketing investment and drop the ones who don't, Establish customer acquisition cost limits, Allows organizations to segment its customer base, Improve customers' CLV by understanding the factors that drive CLV and find ways to influence those drivers (customer retention, customer acquisition, customer development). Helps managers make investment decisions and Provides an estimate of a firm's value
What is feature fatigue/feature bloat? How do consumers perceive feature creep (see the "Feature Fatigue" sidebar?
As more features are added to a product, its perceived capability to consumers increases but its perceived usability decreases.
Can you explain why behavioral segmentation strategies are often preferred over the other 3 strategies?
Behavioral Segmentation is often preferred because it describes consumers with respect to the product or service whereas the other strategies describe consumers independent of the product or service.
What are three ways firms can create experiential value?
Branding, Design, Customer experience
Why do companies conduct market research?
CEOs see a lack of customer insight as their biggest deficit, gaining customer insight = the most important decision-related task and "customer obsession" = most critical leadership trait
What are the key takeaways re: NPS scores?
Companies can keep customer surveys simple, The path to sustainable, profitable growth begins with creating more promoters and fewer detractors and making your net-promoter number transparent throughout your organization
How do companies choose a target segment(s)?
Companies compare and contrast each of the potential segments and then choose the segment(s) of the market the firm is best able to satisfy given its skills, resources, and capabilities.
How do companies profile target segments?
Companies profile target segments by using demographics, psychographics, and geographic information. They consider questions like: How big is the segment? How fast is it growing? Who is in the segment? Where do they shop? How do they buy? How often, how much do they buy? Who makes/influences the decision? How do they use the product?
Why do firms reposition brands?
Competitors have caught up or overtaken you (benefits, especially functional benefits), Sales/market share are stagnant or declining (Ex: Associations of Burberry in the late 1990s: "old", "traditional", "conservative", "outdated"), Repositioning can be an issue for identity brands (i.e. ones that speak to consumers on an emotional, aspirational, status, intellectual level), Provide more customized products & services or shift to a new target market.
What role do brands play for consumers? For the firm?
Consumer- Affects consumer perceptions, fulfills expectations, enhances enjoyment, takes on personal meaning, becomes part of identity, simplifies decision making, makes promises, reduces risk. Firm- creates brand identity and brand equity which adds value to their products
How do customers feel about loyalty programs vis-à-vis marketers?
Consumers believe loyalty programs are for brands to show their loyalty to consumers. Marketers think the reverse: that loyalty programs are a way for consumers to show their loyalty to brands
In the article, "Why Customer Gratitude Trumps Loyalty": What can brands do to generate loyalty?
Create emotional connections which will result in repeat purchases, Foster gratitude to drive loyal behavior (implement gratitude program), Discover and foster a shared purpose with your customers
What are fighter brands?
Created to combat and ideally eliminate low-price competitors while protecting the premium-priced brands
What are the variables that can be used for demographic segmentation? When is this a meaningful and useful segmentation strategy?
Demographic Segmentation Variables - Age and life-cycle stage, life stage, gender, income, occupation, generation, race and culture. This strategy is useful when you have an easily identifiable customer profile.
What are marketing management tasks?
Developing marketing strategies and marketing plans (LT and ST plans) Capturing market insights à through research (environment, customers, competitors) Connecting with customers (understand needs, co-creation) Building strong brands Creating & delivering value (quality design, features, packaging, image, social elements) Communicating value -- through integrated marketing
Survey research:
Directly asking people for their opinions/knowledge/preferences, etc., In person, telephone & (mostly) online - larger number of participants, Online Panels: e.g. Amazon M-Turk (pennies per person), Hopefully representative of your population of interest
What is economic value to customers? Why is the total life cycle cost important?
Economic value is when the product provides tangible monetary savings to customers either at time of purchase or over long-term use. EV considers the total cost of ownership, not just the purchase price to determine overall savings.
What are the 4 different types of customer value? Explain how Paez does - or could - implement each value type.
Economic value- product provides tangible monetary savings over long-term use (Paez- reasonably priced compared to competition), Functional value- product features and benefits of each product or service (Paez- high quality shoes), Experiential value- branding, design, and customer experience for your product (Paez- creates joy from wearing shoes and feel good about supporting underdog), Social value- social interactions with family and friends (Paez- allows you to impress others and feel connected to them)
What are the two underlying dimensions that contribute to the underdog effect?
External disadvantage (relative to larger competitors) and perceived passion and determination
What factors make a market segment attractive?
Factors that contribute to market segment attractiveness include: size, growth rate, competitive intensity, synergy with other aspects of the organization, match with the company's competencies, consistency with the firm's overall strategy and vision, etc.
What is functional value?
Functional value are either the product features or the benefits of the product that either saves time, simplifies tasks, or reduces effort for consumers
What examples of "Surprise and Delight" are discussed?
GE is pursuing this gratitude strategy. Launched a "Healthymagination" program with a shared purpose of creating better health for more people. Delivered on this shared purpose by creating an outreach program designed to create an emotional connection around health. Expressed appreciation and support by sending personalized gifts and tweeting to show appreciation and to return kindness
What is a strategic planning gap?
Gap between desire current and desired sales
What are the potential ways employees, managers, and executives manipulate NPS? And to what end?
Get better results when they explain to customers how the scoring works or tell them their compensation is connected to the result. Remind only the happiest customers to take the survey
What are the 4 potential goals of a loyalty program (as discussed during the Starbucks case discussion)?
Goal 1: Keep customers from defecting by creating barriers to exit, creating switching costs, Goal 2: Win greater share of wallet for goods and services that a customer buys from more than one seller -> encourages consolidation of purchases at one retailer, Goal 3: Prompt customers to make additional purchases, Goal 4: Yield insight into customer behavior and preferences
Intensive growth
Grow current businesses
What are some unsuccessful brand extensions and why did they fail?
Harley-davidson created wine coolers and perfume. Levi's created formal men's clothing. Campbell's entered the spaghetti-sauce market. Overextending the brand with "softer" products damage the company's loyal customer base. Unsuccessful brand associations have lack of clarity, too many values, too much wholesale and consumers cannot see a strong connection between what the brand is known for and the desired benefits of the new category.
What consumer behavior research findings did we discuss with respect to the link between a consumer's Big 5 (OCEAN) Personality dimensions and brand personality?
High in Extroversion like Exciting brands, High in Openness like Exciting brands, High in Conscientiousness like Competent brands, High in Agreeableness like Sincere brands
Integrated Marketing Communications
IMC requires not only the identification of a powerful, unifying strategy and compelling voice for your brand, but the discipline to roll it into every aspect of your organization, Consider how you can tailor your idea through different mediums while maintaining the original message, Identify the target market, Communicate the desired brand values and brand associations consistently
Why do companies grow?
Increase profits / returns for shareholders, Higher expected future sales reduces risk of a hostile takeover, Diversify portfolio to reduce risk, Achieve economies of scale (costs ↓ as production ↑), Increase market power (= barrier to entry & buying power), Manager's personal motives, Managers may want the kudos/professional advantages that come along with increasing sales/profits/running larger corporations, CEOs who pursue acquisitions increase their standing in the business community & gain outside
What are the various types of secondary research approaches? Pros and cons of each?
Information Internal to the firm: accounting records - COGS, unit sales, etc., most extensively used source, sales-call information - satisfaction, expressed needs/wants, annual surveys, External Resources available: free, publicly available: trade reports, academic papers, Harvard articles, press releases, companies' 10K financial reports, Paid-for research from companies such as Nielsen (market size, market share, average pricing on retail shelves, extent of distribution in stores...)
What are the 3 broad categories of growth strategies?
Intensive, Integrative Growth, Diversification Growth
What must marketers keep in mind when choosing brand elements?
It must be memorable, meaningful, likable, transferable, adaptable, and protectable
What strategies can companies employ to increase (perceived) functional value?
Launch a campaign to bring down ratings of competitive brands, Try to change consumers minds about the importance of various attributes, Add an entirely new attribute
Price includes
List price, Discounts, Allowances, Payment period, Credit terms
What 4 types of value do consumers provide to firms? Examples?
Loyalty value, Information value, Communication value, Monetary value
How did they dig deeper and what were the findings?
Made a scale with the three groupings (simple, easy to interpret, didn't allow grade inflation), Growth connection: how survey responses linked to customers' referral and repurchase behavior explained relative growth rates among competitors; results- net promoter figures correlated to a company's average growth rate (not for every industry tho)
What are strategies firms use for managing declining/dying brands?
Make the case, prune the portfolio, liquidate brands, grow core brands
What does marketing involve?
Marketing Mix- Product, Price, Promotion, Place
In the article, "The Dubious Management Fad Sweeping Corporate America" How has the use of NPS evolved in use and application since Fred Reichheld first introduced it to corporate America in 2003?
Now it is used to determine bonuses and as a performance indicator (Fred thinks this is bogus), Now being used by hundreds of companies and some are tweaking the scale and adding survey questions, Being used more - mentions of NPS in earnings conference calls have gone up to 155 mentions in 2018 and talked about by 50 companies, Simple to communicate to employees, provides an easy way to follow up with customers and can be used to benchmark against rivals, Companies are reporting the score in securities filings
What did you learn about segmentation from Ontela? What is cluster analysis? How should a company use personas and quantitative data to conduct segmentation analysis?
Ontela assessed attitudinal & behavioral data of a random sample of 2,000 wireless subscribers. This attitudinal & behavioral data tends to be better at revealing: If, Why, & How Much consumers buy (i.e. it helps us come closer to a true understanding of customer preferences and motivations) The attractiveness of the segment (e.g. size, price sensitivity, WTP). Segmentation data is useful when it distinguishes customer groups from one another. Demographic information tends to be better at revealing WHO is buying Media habits can tell us WHERE to target them
What do we need to understand about the Pareto principle (80-20 rule)?
Pareto principle suggests that 20% of customers provide 80% of an organization's revenue but in reality, today's customer management realities are better described as a 200-20 rule where 20% of the customers provide 200% of the firm's profits
Personas
Personas are best used to drive market research questions, and then use the data to update the personas.
What is the definition of positioning?
Positioning - the act of designing a company's offering and image to occupy a distinctive place in the minds of the target market → "mental real estate", i.e. owning a certain position in customers' minds. To position a brand is to control perceptions of it in the marketplace relative to the competition. Positioning is mostly achieved through marketing communications (especially advertising). Intended position may NOT = perceived position; Depends on WOM and each consumer's personal goals, objectives, values or usage situations.
What is a positioning statement used for? What are the elements of a positioning statement?
Positioning Statement - a more concise version of the full, detailed positioning summary. Elements of a Positioning Statement: Targeted users/need, Brand name, Frame of reference, Unique value claim: Points of Difference (PODS), Detailed reasons to believe
What is the difference between primary and secondary research?
Primary research-Customer interviews hard to set up, time consuming, More to manage - many factors to consider, Costly, e.g. focus groups pay the participants and need an experienced moderator Secondary Research- Most effective way to begin research, Usually straightforward, Builds a broad understanding, Uses less time and $$ than primary research, Narrows the scope of information you need to collect with primary research
Product Includes
Product variety, Quality, Design, Features, Brand name, Packaging, Sizes, Services, Warranties, Returns
What are the pros and cons of brand extensions?
Pros: The can become the most real and marketable assets of many firms since they can help grow the company with more guaranteed success. Cons: rip lol
What is psychographic segmentation?
Psychographic Segmentation - Using personality and demographic variables with lifestyle preferences to group customers together in a market segment. Psychographic segmentation is based on customers AIO: Activities (sports, hobbies, work), Interests (family, home, fashion, food), and Opinions (politics, business, education).
What is empathetic design?
Qualitative research that makes use of observation, particularly observations of people using a product or struggling with routine activities at home or at work. Researchers observe people using a product or in the act of routine activities at home or at work, look for "pain points" and user frustrations that might be eliminated through an innovative product or service design, also used by product developers to uncover latent needs that may be difficult for a consumer to articulate. In the simplest terms, practitioners of empathetic design "walk in the shoes" of their subjects, observing and experiencing their world in purposeful ways
What are typical, average and excellent NPS scores/ranges?
Range: -100 to +100, Typical NPS score: falls in the 10-30% range, Average: 16%, Excellent range: 50-80%
Why and how did Coloplast use sensemaking? What steps did it follow? And what did the sensemaking research reveal about its customers? How did it help inform Coloplast's product development and messaging?
Reframe the Problem, Collect the data, Look for patterns, Create the Key Insights, Build the Business Impact
Ocean Spray Integrated Marketing Example
Reintroduced the cranberry as the "surprisingly versatile little fruit that supplies modern-day benefit" Straight from the Bog Campaign
What is at the core of strong brand relationships?
Rich affective grounding reminiscent of concepts of love in the interpersonal domain, partnership expectations (like with a person)
What are the steps of the marketing research process?
Secondary research is typically conducted first, then proceed with appropriate primary research, which is more difficult
Why do segmentation and targeting matter? How do they impact the firm's marketing strategies?
Segmentation matters because it determines whom a company targets and then influences: Price, Placement, Product (more tailored, higher satisfaction), Promotion (more targeted).
What are the 5 elements of Aaker's brand personality scale?
Sincerity, excitement, competence, sophistication, ruggedness
Name a company - other than the ones discussed in class - that fits into each one of the 5 brand personality dimensions.
Sincerity-Ben and Jerrys, Excitement-GoPro, Competence-Apple, Sophistication-Audi, Ruggedness- John Deere
How does Starbucks use the 5 senses to create an experience?
Smell: coffee, Taste: coffee, Sights: green color, soothing décor, suited to community, Touch: coffee cups, cushy chairs, leather, hard tables & chairs = "work spaces", Sounds: the espresso machine, beans grinding, music (curated), the Lingo (grande, etc.)
What are the implications of each positioning strategy on potential product extensions?
Social good- broad possibilities, Lifestyle- many brand extensions for fashion market, Underdog- limited to Alpargatas, Price- viewed as knockoffs of Toms products, Authentic Alpargata- limited to Alpargata style
What are brand associations? Why are they important?
Specific beliefs that consumers attach to the product. They represent the meaning of the brand (ex. Brand names, logos, positioning, associations, personality)
Consider the underdog / small company studies we discussed in class - pick 2 of the studies and discuss their findings. When would these findings possibly be applicable to real small companies and when not?
Study 1: Assigned to brand biography conditions where Company A was either an underdog or top-dog story. Participants had more favorable evaluations of company when it had underdog story. Study 4: Determined whether results from Study 1 changed when choosing gifts or when purchasing for themselves. Participants were more likely to choose the chocolate brand with an underdog brand overall this effect was stronger when they were buying chocolate for themselves rather than as a gift.
In the article "The One Number You Need to Grow" What was the initial surprise finding?
That one question "how likely is it that you would recommend [company x] to a friend or colleague?" was best for most industries to effectively predict customer behavior (referral & purchase behavior), which could drive growth
What is the BrandDynamics Pyramid? Where do "personal brands" fit into the pyramid?
The Brand Dynamics Pyramid shows the weak to strong relationship and low to high share of category expenditure based on loyalty, brand associations, perceived quality, and brand awareness. Personal brands are the rational and emotional attachments to the brand to the exclusion of most others and sits at the top of the pyramid at "bonding"
What is social value?
The benefits we derive from our social interactions with family and friends and other people
What is the multi-attribute model? How would we use this model to predict consumers' choices?
The multi-attribute model considers the most important attributes when purchasing a product and then assigns weight based on importance for each. We can use this model to predict consumers' choices by positioning our product to accommodate their most important attribute.
What is segmentation?
The process of dividing a market into meaningful groups of customers who share a similar set of needs and wants, and respond to marketing communications in a similar way.
What is brand equity? What are its component parts?
The value-both tangible and intangible- that a brand adds to a product/service in terms of its ability to: influence perceived quality, attract new customers, achieve brand loyalty, exert trade leverage, command higher prices, and launch new products
Why do consumers create / connect with a personality so easily?
They can describe brands based on demographics, values, and psychological traits from marketing strategies like user imagery.
What are the ways Lululemon has attempted to reposition its brand? What growth strategies has it used (both in the case and post-case)?
This case illustrates the blessing and the curse of a successfully conceived and launched niche brand. Clarity of brand assets (very clear and understood positioning) but brand boundaries can become barriers to growth. To evolve strong brand perceptions and awareness, Lululemon needs to: Change perceptions of the brand as a feminine brand, Create digital and offline campaigns to promote expanded positioning, Not just yoga and athleisure, and not just women → create products appealing to men. Lululemon has started to focus on masculine technical performance fabrics (e.g. anti-stink, RuLu fabric), Mitigation of the prominence of the Lulu logo, Standalone men's shops in Toronto and NYC, which were then shut down with little fanfare, Lulu found "guests respond better to Lululemon "as a dual-gender brand"
Why do some researchers question its validity?
Two 2007 studies said NPS doesn't correlate with revenue or predict customer behavior any better than other survey-based metric. A 2015 study said the score doesn't explain the way people allocate their money. Creators of NPS haven't provided peer-reviewed research to support their original claims of a strong correlation to growth. The way NPS is calculated in which one survey metric is subtracted from another increases the margin of error and requires a larger sample size to get useful results
Sampling error
arises because the participants selected to receive the survey are not chosen from the complete enumeration of the population.
Niche Marketing
choose to serve only one segment that is most likely to connect with your business. Example: Lefty's - the Left Hand Store, serves left-handed people.
What is integrated marketing?
communicating a consistent identity (& brand associations from message to message, and medium to medium, and (more importantly) delivering consistently on that identity
Value Proposition
companies define themselves through the value they produce in consumers' lives. Consumers attach value to a product or service in proportion to its perceived ability to solve their problems or meet their needs.
Multi-Segment Marketing
covers more than one segment with a different value proposition for each segment. Example: P&G's laundry detergents - Gain for scented cleaning, Tide for tough stains, Dreft for baby clothes.
How do you calculate Net Promoter Score (NPS)?
customers "How likely is it that you would recommend [Brand X] to a friend or colleague?" NPS % = (% of people giving it a 9 or 10) - (% of people giving it 0 through 6)
Irrelevant Attributes
distinguishing characteristics of the product that provide consumers with no actual economic, functional, experiential, or social value.
Loyalty
driven by emotion, with repeat purchases = the result; deeply held commitment to rebuy a product/service in the future despite situational influences and marketing efforts having the potential to cause switching behavior
Vertical Positioning
highlights attributes that are shared among brands, but stresses a particular brand's superior performance on those attributes, using words such as smaller, faster, and cheaper to delineate a natural pecking order.
Market penetration strategy
increase current products sold in current markets promotion (highlight benefits, increase awareness, etc.), enhancing brand personality à build brand equity / loyalty, attracting competitors' customers if see weaknesses in product / marketing programs, encouraging greater consumption / more frequent purchase (re-purchase)
Horizontal Positioning
involves adding new attributes, benefits, or values to attract customers.
Promotion includes
spokespersons & the media's response to them, Sales promotion, Advertising, Sales force, Public relations, Direct marketing
Market-development strategy
new markets for current products, New groups in current market, New distribution channels, New geographic markets
Product-development strategy
new products/ product lines for current markets
Non-response error
occurs when responses from certain members of the sample are not obtained. This is a serious threat when the people who do not respond are different from those who do respond (responses are not representative of the population).
What do we learn about ethnographic research & sensemaking in "An Anthropologist Walks.."? Specifically, what other research methods did Coloplast try first?
playbook: lead-user studies, user co-creation, design-thinking workshops, NPV calculations, focus groups and large quantitative surveys.
Cluster Analysis
statistical method to group respondents together based on how similar their responses were; This analysis considers similarities in response profiles across ALL questions and the analyst did not preset a specific number of clusters → the data revealed 6 natural clusters as a best fit to the data. In the case, Exhibit 2, was based ONLY on the attitudinal /preference data - the 6 clusters (segments) that emerge are based on those 13 questions only, and the demographic and media habits questions are used separately to profile the segments
Mass Marketing
the market is greatly undifferentiated (consumer needs are very similar). Example: Walmart's strategy of "everyday low prices on a broad assortment—any time, anywhere" → every week, >60% of Americans shop at Walmart.
Shared Attributes
things that competitor's products have in common.
Unique Attributes
things that only one competitor's product has.
Place includes
wholesalers & distributors, Channels, Coverage, Assortments, Locations, Inventory, Transport