Marketing Midterm 2

Blue Oceans

Unknown market space Create demand where it did not exist

Rejuvenated Brands

VW

Perceived value

a brand is the relationship between a product or service's benefits and its cost.

Push Strategy

a marketing strategy that uses aggressive personal selling and trade advertising to convince a wholesaler or a retailer to carry and sell particular merchandise

Continuous Innovation

a modification of an existing product that sets one brand apart from its competitorsno new behaviors must be learned (soup) - majority of innovations Basically, a continuous innovation has limited effect on our consumption patterns b/c it's very similar to the products that came before it. An example of this would be Progresso's new high fiber soups - no new learning required to use it. Most new products are continuous innovations.

introduction stage

a new, innovative product or service usually starts with a single firm, and innovators are the ones to try the new offering.

Innovation Traps

Great concept, fabulous design, consumer support, poor execution/costing "I can fix this" The clock is ticking Know when to be stubborn and when you are beat Don't be shy with forecasting volume and promotion Greatness takes time Greatness needs to hurry up Listen to consumers; you are not that smart Not just a pretty face (models are worth it) Obsolete yourself or someone will do it for you

The Innovator's Dilemma

A book that discusses how established companies can take advantage of disruptive technologies without hindering existing relationships with customers, partners, and stakeholders. Disk drive industry Disruptive innovations are technologically straightforward Well-known tech, unique architecture; not of interest to exist. customers Allow use in new products and applications - ex. heart monitors Tech. development was focused to sustain established trajectories Reach higher performance and higher margin - upper right quadrant Not disruptive technologies Developers and adopters of disruptive technologies were entrants Not the incumbents Entrants later find new applications, markets Lose disruptive ability Firms held captive by customers http://www.businessweek.com/chapter/christensen.htm

Branding

A brand can use: Name, logo symbols, characters, slogans, jingles and even distinctive packages. Brand Name: Most brands. Jingles: Be all you can be - Army. URLs: www.eBay.com Logos & Symbols: Nike Swoosh. Slogans Nike- Just Do It.: Characters: Quaker, KFC, McDonalds.

Packaging

Although often overlooked as a marketing tool, packaging helps determine the success of a product. The chapter covers many new packaging innovations including FlexCan, Daily Gloss, smart lids, Labatt blue, aseptic drink bottles, and snack and seal as seen in the ad above. In some instances, such as Coca-Cola or Aunt Jemima Maple Syrup, the package has become synonymous with the brand.

Evaluation of Results

Analysis of the performance of the new product and making appropriate modifications.

One of the dangers of hiring celebrities like Mel Gibson to endorse a company's products is that when they engage in embarrassing behavior, to the degree that they are associated with the company's brands, their actions hurt: brand equity. brand awareness. brand recognition. corporate brand category depth. all of the above.

Ans. A Explanation: Marketers die a painful death when they see or hear about their celebrity spokespeople engaging in activities that harm the company and the brand equity they have accumulated.

Which of the following is the correct order for the product life cycle? Introduction, Maturity, Decline, Growth Introduction, Growth, Maturity, Decline Introduction, Growth, Decline, Maturity Growth, Introduction, Maturity, Decline Decline, Growth, Introduction, Maturity

Ans. B Explanation: New products go through a four-stage process; introduction, growth, maturity, decline but the length of the product life cycle may vary greatly from industry to industry.

Valerie is involved in ___________________, taking apart a competitor's product, analyzing it, and trying to create an improved product that does not infringe on the competitor's patents. spinning reverse engineering selective dissection redistribution creative destruction

Ans. B Explanation: Reverse engineering is one source of new product ideas. Firms constantly monitor their competitors and taking apart competitors' new products is part of competitive new product development strategy.

The __________ focuses on the rate at which consumers are likely to adopt a new product or service. geographic boundary of innovation doctrine laggards to innovators movement psychological innovators syndrome diffusion of innovation theory all of the above.

Ans. D Explanation: The diffusion of innovation theory helps marketers understand the rate at which consumers are likely to adopt a new product, helps them identify potential markets for their new products, and predict sales potential.

___________ often include university laboratories, government agencies, competing firms in an industry, and non-profit organizations. Research departments Licensing agents Customer brainstorming groups Early adopter organizations R&D consortia

Ans. E Explanation: In recent years firms have increased their participation in research and development consortia which often include other firms, government researchers, and academics.

Chianti that comes in wicker-clad bottles and tortillas that come in zip lock bags are examples of brand _____________ that differentiate these companies' products from their competitors' offerings. names slogans symbols characters packaging

Ans. E Explanation: Most consumers think of brands as names, logos, symbols, characters, slogans, and jingles. Packaging is sometimes the least recognized but an effective form of branding.

Customer Input

Based on consumer needs, wants, issues, frustrations Ex. Backwards wheelbarrow As much as 85% of new business to business products come from customers Lead users modify existing products according to their own specific needs

How do brands create value for the customer and the firm? What are the components of brand equity?

Brands facilitate the consumer search process are valuable in a legal sense, can lead to lower marketing costs because the brand and its associations help sell the product and brands have real market value as a company asset. Brand awareness, perceived value, brand associations, and brand loyalty.

Why change product line depth? What is the difference between product line breadth versus depth? Why change product line breadth?

Breadth (sometimes also referred to as variety) represents the number of product lines offered by the firm; Product line depth, in contrast, is the number of categories within a product line. To capture new or evolving markets, increase sales, and compete in new venues. address changing market conditions or meet internal strategic priorities. To address changing consumer preferences or preempt competitors while boosting sales, to realign resources.

Co-branding

Co-branding benefits the participating brands by attracting the consumers of one brand to the others. Remind students of the FedEx/Kinko's example. The synergy between these two brands helped ensure a successful co-branding effort.

Brands Separation

Coke/Dasani

Informative Advertising

Communicates to create and build brand awareness Retailers aim to push the consumer through the buying cycle to final purchase Often used to inform customers about upcoming sales events or arrival of new merchandise

Reminder Advertising

Communication used to remind or prompt repurchases Occurs after the products have gained market acceptance

Factors Affecting Product Diffusion

Compatibility: the ease of sampling a new product and its benefits, the extent to which a new product is consistent with existing cultural values, customs, and practices Observability: how visible a new product and its benefits are to others who might adopt it Trialability: the ease of sampling a new product and its benefits Relative Advantage: diffusion quick bc product is better than substitutes

Determining Advertising Budget

Considerations: Objectives: awareness, loyalty, sales, etc. Role that advertising plays in their attempt to meet their overall promotional objectives Expenditures vary over the course of the Product Life Cycle Nature of the market and the product influence the size of the budget Creative vs. account perspectives and goals advertising often is the largest single expenditure in the promotional budget

Brand Equity: Brand Loyalty

Consumers are often less sensitive to price Marketing costs are much lower Firm insulated from the competition

Product Development/Market Testing

Development of prototypes and/or products. Prototype, Alpha, Beta Testing Premarket test are conducted by research firms, such as ACNielsen (BASES II). Because test marketing reveals a new product to competitors, it might be inappropriate to expose some new products this way. Think of some products that you think should not be subjected to test marketing. Why not? Answer: incremental improvements on existing products (such as a new flavor of soda), small niche products because they only appeal to small market, products that could easily be copied by competition, etc.

Idea Generation

Development of viable new market ideas Internal R&D R&D Consortia Licensing Brainstorming Competitors' Products Customer Input

Red Oceans

Established markets Boundaries and operating parameters established

Value of Branding for the Customer/Marketer

Facilitate Purchasing Establish Loyalty Protect from Competition Reduce Marketing Costs Are Assets Impact Market Value

Licensing

Firms purchase the rights to technology or ideas from other research-intensive firms University research centers also often provide such licenses

What are the steps in the new product development process? Identify different sources of new product ideas.

First, they generate ideas for the product or service. Second, firms test their concepts by either describing the idea of the new product or service to potential customers or showing them images of what the product would look like. Third, the design process entails determining what the product or service will actually include and provide. Fourth, firms test market their designs. Fifth, if everything goes well in the test market, the product is launched. Sixth, firms must evaluate the new product or service to determine its success. Internal research and development (R&D) efforts, collaborate with other firms and institutions, license technology from research-intensive firms, brainstorm, research competitors' products and services, and/or conduct consumer research;

Innovation Diffusion

For any product to succeed, must be adopted by innovators and early adopters; most of sales come from early and late majority (Laggards are the tailend) one of the assumptions behind this theory is that once a product is adopted by the categories before it, it will flow into the next category), but the majority of your sales come from the early and late majority b/c they're the majority of the population.

Product Life Cycle

Four stages that product goes through over its life: introduction, growth, maturity, and decline. the "tipping point" — the transition between introduction and growth when the product either gains market acceptance or must exit the market. The majority of new products fail at this point.

Product Launch

Full-Scale commercialization of product. Launching a new product is part art and part science. Each of these products offered unique benefits. Ask students if they feel each would be successful? Drink and Crunch is still only in limited release so its success in not yet known. Minute Maid Heart Wise was introduced in 2003 and has been extremely successful. Aquafresh Floss N'Cap has been expanded to other Aquafresh lines including whitening.

Persuasive Advertising

Generally occurs in the growth and early maturity stages of the Product Life Cycle when competition is most intense May be used to reposition an established brand in the later stage of the Product Life Cycle When a product has gained a certain level of brand awareness, firms use persuasive advertising to motivate consumers to take action.

Ratings Points

Gross ratings points (GRPs) GRP = Reach X Frequency Target ratings points (TRPs) The number of people in the primary target audience the media buy will reach The number of times they will be reached Use standards for effective advertising Ex. Barbie/toy ads - build plan to 2.5x's/kid

Brainstorming

Groups work together to generate ideas No idea can be immediately dismissed

Internal R&D

High product development costs Often the source of technological products Often the source of breakthrough products

How Firms Develop New Products

Idea Generation Concept Testing Product Development Product Launch Evaluation of Results

Steps in Planning an Ad Campaign

Identify Target Audience Set Advertising objective Determine Advertising Budget Convey the message Evaluate and Select Media Create Advertisements Assess Impact

Change Product Mix Breadth

Increase Breadth True Religion Brand Jeans now are a lifestyle brand with apparel, belts, swimwear and fragrances Decrease Breadth Due to competitive changes, TCBY is now focusing on Yogurt.

Change Product Mix Depth

Increase Depth Band-Aid now has over 40 products to heal cuts. Decrease Depth McCormick spices eliminates dozens of products each year. Sku rationalization Increase efficiency Less choice

The Appeal

Informational appeal Emotional appeal Humorous appeal Appeals depend on the target audience, chosen media, and type of product/service. Each appeal persuades in different ways. Whereas informational appeals are more cognitive and persuade using rational thought, emotional appeals persuade by triggering an emotional response rather than offering rational arguments.

What are the five groups depicted in the diffusion of innovation curve? What factors enhance the diffusion of a good or service?

Innovators, early adopters, early majority, late majority, laggards. Relative advantage, compatibility, complexity and trialability

Other examples of Disruptive Innovations ?

LCD/CRT Digital calculator/mechanical calculator LEDs/light bulbs Computer printers/offset printing Digital photography/chemical photography Video sensors/photo film Downloadable media/ CDs, DVDs, SD cards, flash Mini steel mills/vertically-integrated steel mills iTunes and iPod, iPhone, etc.

Product Labeling

Label information is determined by regulations, and labeling rules vary from country to country. Certain terms convey specific meanings, such as "natural," "organic," "made in the USA," and products must meet specific tests before placing such terms on their label.

Competitors' Products

Products with patents or other proprietary protections cannot be copied, so reverse engineered products must be substantively different from their source product.

Social Marketing

Public service advertisements are designed to raise awareness of public welfare issues and receive free airtime, as required by the FCC. Under Federal Communication Commission rules, broadcasters must devote a specific amount of free airtime to PSAs

Set Advertising Objectives

Pull/Push Strategy Inform/Persuade/Provide

What is the difference between manufacturer, private/label, and generic brands? What is co-branding? What are some advantages and disadvantages of brand extensions?

Manufacturer brands are owned and managed by the manufacturer. The manufacturer develops the merchandise, produces it to ensure consistent quality, and invests in a marketing program to establish an appealing brand image. Private-label brands are products developed by retailers. Generic brands are a type of private brand that targets a price-sensitive segment by offering a no-frills product at a discount price. Co-branding is the practice of marketing two or more brands together, on the same package or promotion. Advantages of brand extensions: Because the brand name is already well established, the firm can spend less in developing consumer brand awareness and brand associations for the new product. Second, if either the original brand or the brand extension is has strong consumer acceptance, that perception will carry over to the other product. Finally, when brand extensions are used for complementary products, a synergy exists between the two products that can increase overall sales. A disadvantages is brand dilution which occurs when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.

Mass and Niche Media

Mass media reach large anonymous audience Niche media reach a smaller more targeted audience

Evaluate and Select Media

Media planning Media Mix Media buy

maturity

Most U.S. products are in the maturity stage, which means most U.S. firms must engage in defending their market share. In the battle for soft drinks, a very mature market,, a 1% market share switch between Coke and Pepsi can account for millions of dollars in revenue

Product Depth

Number of categories within a product line

Product Breadth

Number of product lines (SKU - stock keeping unit)

New Product Introductions

Pioneers radically change competition and consumer preferences. First movers must defend market; second movers often have an advantage. Examples?

Primary vs. Selective Demand

Primary Demand Designed to generate demand for the product category or an entire industry Example: Got Milk ad campaign Selective Demand Designed to generate demand for a specific brand, firm, or item Example: Coke Ads The two are not mutually exclusive; when Coca-Cola introduced Diet Coke, it created both primary demand for diet soda and selective demand for Diet Coke.

Brand Ownership

Private-label brands , also called store brands, house brands , or own brands , are products developed by retailers. Some manufacturers prefer to make only private-label merchandise because the costs of developing and marketing a manufacturer's brand are prohibitive

Focus of Advertisements

Product-focused advertisements Institutional advertisements: advertisements designed to build goodwill or an image for an organization, rather than promote a specific good or service

Lifestyle Brands

Reflect the overall image of the consumer and lifestyle preferences. Apparel branched into perfume, home goods, as well as wholesale, licensed and private brand product. (ex. A&F, Apple, IKEA)

Strategic Stubbornness

Sam Adams Won more awards in intl. beer tasting than any other brewery in the world Koch 's quality focus - bottle fr. ea. batch, date stamps Advice: have a big idea, but start small LTD - Les Wexner Harry Potter - Rowling CNN - Ted Turner (Barbie - Ruth Handler) Sam Adams - Jim Koch POM - Lynda Resnick

TV Audience Measures

Share of Audience (w/ tv on) Program Rating (overall)

Brand Evolution

Should brands age with consumers? (ex. cosmetics, fashion - A/F)

Concept Testing

Testing the new product idea among a set of potential customers. Concept is a brief written description of the product Customers reactions determine whether or not it goes forward Triggers the marketing research process

Media mix

The combination of media to be used for a promotional campaign

Brand Equity

The differential effect that knowing the brand name has on customer response to the product or its marketing Brand equity cuts both ways; customers dislike some brands because of the firm's actions or their negative perceptions. Nike has been the target of many labor activists, which causes some consumers to refuse to purchase or wear Nike products.

Which of the following is a potential benefit of brand extension? It allows the perception of a brand with a quality image to be carried over to the new product. It lowers marketing costs. It can boost sales of the core brand. The firm can spend less on creating brand awareness and associations. all of the above.

all of the above.

Brand Licensing

an agreement whereby a company permits another organization to use its brand on other products for a licensing fee The Lacoste brand is an early example of licensing when David Lacoste, a famous tennis player known as "the alligator" licensed his name to a shirt manufacturer.

Product lines

are groups of associated items, such as items that consumers use together or think of as part of a group of similar products.

The Chasm Model

chasm between early adopters and early majority bridge gap by creating bandwagon effect so that product becomes the standard

Unique selling proposition (USP)

concept conveys core benefits to the target audience. The best USPs stand the test of time

product life cycle

defines the stages that new products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning.

Pull strategy

directing the promotional mix at ultimate consumers to encourage them to ask the retailer for a product

Brand Extension

firm can spend less on brand awareness. That the positive consumer acceptance will spread to the new product and a synergy exists between the two products.

R&D Consortia

helps explore new ideas, come from a group as a whole Lower costs and risks; firms join together Form research consortiums Benefits spread to all firms Example, pharmaceutical industry research

Geographic Coverage

invloves global, national, regional, and local advertising

Brand licensing

is a contractual agreement between firms, whereby one firm allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated fee.

Co-branding

is the practice of marketing two or more brands together, on the same package or promotion.

Innovation

is the process by which ideas are transformed into new products and services that will help firms grow.

Brand equity

is the set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service.

Pioneers or breakthroughs

new product introductions, especially new-to-the-world products that create new markets.

Brand loyalty

occurs when a consumer buys the same brand's product or service repeatedly over time rather than buy from multiple suppliers within the same category.

Brand dilution

occurs when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.

Brand Dilution

occurs when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold. Risk of extending ones brand too far is not being able to satisfy all its customers of all its brands. Ex: if a customer has a bad experience with his or her cell phone contract with Virgin Mobile, Virgin Atlantic--and the other Virgin brands--may lose a customer forever. Also if the brand extension is very similar to the core brand, it even could cause cannibalization of sales from the core brand Evaluate the fit between the product class of the core brand and the extension. Evaluate consumer perceptions of the attributes of the core brand and seek out extensions with similar attributes. Refrain from extending the brand name to too many products. Is the brand extension distanced enough from the core brand?

Dynamically Continuous Innovation

only minor changes in behavior are required for use (iPhone) a new product that only requires minor changes in behavior to use/understand it. Often these innovations incorporate a new technology and can have significant impact on our consumption patterns. An example is the iphone - when it came out, it was one of the first mp3/phone combinations. Change in consumption patterns = how you use it (flipping it to the side), downloading new apps, not carrying a phone, camera, and ipod anymore. But changes weren't THAT major - we already knew how to use all the various features - it was just new b/c they were combined into one.

Product assortment

or product mix is the complete set of all products offered by a firm.

Product mix

product assortment is the complete set of all products offered by a firm.

Within each product line, there are often multiple: product categories. primary packaging parts. product breadth. product assortment. private label brands.

product categories.

maturity stage

product life cycle is characterized by the adoption of the product by the late majority and intense competition for market share among firms.

Brand repositioning or rebranding

refers to a strategy in which marketers change a brand's focus to target new markets or realign the brand's core emphasis with changing market preferences

Brand Repositioning

refers to a strategy in which marketers change a brand's focus to target new markets or realign the brand's core emphasis with changing market preferences. Las Vegas positioning as destination - why the changes? Sin City - liquor, gambling, prostitution Family oriented, shows, entertainment other than gambling Naughty: WHIVSIV more recent - current?

brand extension

refers to the use of the same brand name for new products being introduced to the same or new markets.

brand association

reflects the mental links that consumers make between a brand and its key product attributes, such as a logo, slogan, or famous personality.

Discontinuous Innovation

requires consumer to learn entirely new consumption patterns to use product (microwave, airplane, internet, Latisse, Wii) These are things that are completely different than anything that came before it. These radically change consumer behavior. Some obvious examples are things like the airplane and telephone, but even the microwave was a discontinuous innovation. All of a sudden you could cook things in 2 minutes that used to take 20 - consumers had to learn how to cook in a microwave and to buy microwave safe dishes, microwavable foods, people even bought microwave cookbooks!

Branding Architecture

tells marketers which brand names, logos, sympbols etc apply to which new and existing bproducts

Media buy

the actual purchase of airtime of print pages (generally the largest expense in the advertising budget)

Reach and Frequency

the number of people exposed to an advertisement and the number of times they are exposed to it

Media planning

the series of decisions advertisers make regarding the selection and use of media, allowing the marketer to optimally and cost-effectively communicate the message to the target audience