MARK 460 Exam 2

Red Ocean markets

"blood in the water" -very competitive markets heavily populated with firms fighting over the same customers

profit enhancement

the benefits that drive sales growth also can enhance a firm's profitability by reducing costs or allowing the firm to charge higher prices

internal validity

the experiment is well designed and measures what it is supposed to

brand category extensions

the new offering instead moves to a completely different product category -i.e. crest makes floss, mouthwash, white strips

brand line extensions

the new offering is in the same product category but targets a different segment of customers, usually has slightly different set of attributes -i.e. crest doing cinnamon, flavored with scope, natural whitening types of toothpaste

external validity

the outcomes are generalizable beyond the experiment

complexity

degree to which an offering is perceived as relatively difficult to understand/use -education is key

trialability

degree to which an offering may be experimented with on a limited basis -i.e. free samples, demo, test drive

observability

degree to which the results of an offering are visible to others -can be negative (parking by strip club)

Cross the Chasm

firm must be prepared to sell to early majority customers by the time it runs out of early adapters

Heuristics Era

firms constantly decide how to allocate resources across different customer segments, stages, different offerings, regions, etc

Data Era

firms started using historical data that revealed the link between their past resource trade-off decision and outcomes

Classic STP

focused on red ocean strategies -known market space, competitive rules -product mature and becomes a commodity

Disruptive positioning

focuses on blue ocean strategies -market space doesn't exist -demand is created rather than fought over -hard to test, more of an art that often requires intuition

customer centricity

grants an organization deep knowledge about and commitment to its focal customers, supporting faster detection and responses to changing market conditions

Empathetic Behaviors

having a greater likelihood to be influencesd by perceptions of the seller's position -customers in a strong relationship may attribute service failures to external causes that seller cannot control

Response Model Attribution

historical data contain insightful information about whether and how much marketing resources truly increase outcomes

Relationship marketing process (RM)

identifying, developing, maintaining, and terminating relational exchanges to improve performance -produces relationship equity

offering (cont'd)

it is generally relatively easy for competitors to copy offerings, given enough time and money

brand elements

its name, symbol, package design (sleek, clunky), and any other features that serve to differentiate it

word of mouth (WOM)

likelihood that a customer comments positively about a seller to others -relational bonds, feelings of gratitude, and positive attitudes drive the motivation for WOM

Relational loyalty

likelihood that the customer provides the seller benefits in the exchange process due to their relational attitudes and ties -loyalty very determinant of firm success in competitive markets

Customer relationship management

managerially relevant, organization wide, customer-focused application of RM, uses IT to achieve objectives

Financial RM programs

provide economic benefits, in the form of special discounts, giveaways, free shipping, etc

Structural RM programs

provide investments that customers might not make themselves, such as electronic order processing interfaces

offering

purposely broad term that captures both tangible products and intangible services provided by firms

integrated marketing communications

refers to process of designing and delivering marketing messages to customers while ensuring they are relevant and consistent over time

offering equity

refers to the core value that the performance of the product or service offers the customer

brand positioning

reflects how and where the firm hopes to appear in customers' mind

brand awareness or familiarity

reflects the customer's ability to identify a brand, is indicated by the size and strength of the node for that memory

brand equity

set of assets and liabilities linked to a brand which add to or subtract from the value provided by the firm's offering -"lies in the mind of the customer" -makes it hard for firms to change or adapt brand identity

resource slack

the "potentially utliizable resources a firm possesses that it could divert or redeploy to achieve organizational goals"

Relationship Equity

the aggregation of relational assets and liabilities -has strong effect on performance outcomes

Ways Firms can Innovate

-Change what the firm offers i.e. traditional view of new product -Change who the customer is i.e. represents another route that involves innovations related to customers, experiences, etc -Changing how you sell to customers i.e. processes, organizations, and supply chains that a firm uses -Changing where to sell to customers i.e. comprises presence, networking, and brand innovations

Key Aspects of Innovation

-broader than product or tech innovation -must generate new value for customer and seller -involves change leading to differentiation and SCA

Marketing helps offering and innovation strategies by:

-helps develop innovative offerings by collection customer input and forecasting customer and market trends -responsible for launching new offering to customers to generate sales with acceptable profit levels

Benefits of Relationship Equity

-improve relationship characteristics with an exchange partner -build relationship equity -ultimately improved financial performance -Operates through: Cooperative behaviors, Relational loyalty, WOM, Empathetic behaviors

Main Street

-market growth stabilizes -focus on cross-selling and upgrading to existing customers

The Bowling Alley

-new product gains acceptance from niches and extends through common platform -each niche requires expertise in that vertical market -market coverage propagates to neighbors -focuses marketing resources

The Tornado

-period of mass-market adoption when the general marketplace switches over to the new tech -driven by application that provides compelling benefits to mass market -requires strong operational excellence to keep up with demand

Relational-based exchange

-transactional marketing emerged only w/ increase in mass production and "middle men" -early brands were all "family names"

4 Marketing principles

1. All customers differ 2. All customers change 3. All competitors react 4. All resources are limited

Key Benefits for Brand Extensions

1. accelerates new product acceptance, reduced customers' perceived risk 2. lowers the cost of new product launches 3. reduces time needed to build the new product's brand 4. increase the probability of gaining channel access by reducing perceived risk 5. helps enhance the image of the parent brand by linking it to emerging product features 6. expands size of the market that the firm can access

brand strategy involves

1. building awareness to provide an anchor point 2. building linkages to positive, unique memory nodes to establish an identity that matches target customers' needs in a cost-efficient manner

We need to balance marketing resources acrosss:

1. customer segments- targeting and positoning (STP) 2. lifecycle stages-acquisition, expansion, retention 3. customer equity and marketing mix elements- brand, offering, and relationships (BOR, 7Ps) 4. other- SCAs now and for future, product categories, R&D

Process for Managing Resource Trade-Offs

1. identify strategically relevant metrics 2. assess the relationship between metrics and marketing resources 3. assess the optimality of the resource allocation decisions 4. Finalize the resource allocation decisions 5. Integrate across different marketing activities

Most firms rely on a stage-gate development process to:

1. increase the speed of their offering development 2. enhance their likelihood of success 3. reducing development costs

-price premiums -positive attributions -cross selling and retention -Higher CLV

Both brands and relationships lead to enduring customer loyalty and:

Net-Promoter Score (NPS)

Pros: simple and good "single item" measure Cons: not very diagnostic, may not be true loyalty since no actual behaviors

True

T or F. Benefits to target customers from reward programs can be overcome/offset by damage to bystanders.

True

T or F. First mover advantage is trumped by market followers who are better.

True

T or F. Long term RM success often depends more on preventing the bad than promoting the good.

True

T or F. Offering new and innovative products tends to enhance the firms brand, even if the customers don't buy the new offering.

True

T or F. RM is more effective outside of the U.S.

True

T or F. Relationship marketing and branding often overlap.

True

T or F. The impact of "relationship" spending on sales has twice as high of an impact as advertising.

loyalty effects

a strong brand makes customers more loyal, which provides the largest barrier to competitive entry

who and what to do across portfolio of existing customers

appraoch: segment across stages (AER) decision criteria: CLV of customer personas improvements: individual customer-level analysis, HMM for dynamic segmentation

who and what to sell to potential customers

approach: segemtn and target like customers (STP) decision criteria: attractiveness and competitive strength using GE matrix improvements: smaller segments and CLV

points of parity

associations that are not necessarily unique to the brand but may be shared with other brands

points of difference

attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe they could not find the same extent with a competitive brand

Brand strategies

brand positioning brand architecture brand extensions

vertical extensions

brands to lower prices markets often undermine the image of the parent brands

relative advantage

degree to which an offering is perceived as being better than the ideas it supercedes -necessary but not sufficient i.e. new keyboard

compatibility

degree to which an offering is perceived as consistent with existing values and experiences (TiVo)

specific product characteristics

can capture 40-80% of the variation in speed with with offerings diffuse

Customer Relationship Management (CRM)

comprehensive approach for creating, maintaining, and expanding customer relationships

cooperative behaviors

coordinated, complementary actions between partners to achieve a mutual goal -creates value beyond what an individual firm could do on its own

innovation

creation of substantial new value for customers and the firm by creatively changing one or more dimensions of the business

spurious loyalty

customers buy but have ambivalent or negative feelings; at the first convenient opportunity they will switch

latent loyalty

customers express positive attitudes but fail to actually buy a firm's products. often due to lack of local purchase access or prices beyond their means

brand imaage

customers' perceptions and associations with the brand

Blue Ocean Markets

unknown, undefined market, with little to no competition

true loyalty

when both attitudinal and behavioral loyalty are high; positive feelings and actions