MKT 302 F23 Midterm

what are the ways you can get it wrong?

- attending to the wrong type of market research (coke) - focusing on internal capabilities, not consumer needs (singles) - overpromising, and reducing perceived quality (dominos) - diluting the brand (perfume by harley?) - failing to understand relevant segments (bic pens for women)

benefits to loyalty

- can be a barrier to entry for new companies - inertia: allows time to respond to competitor innovations, protections against price attacks -source of price premiums: additional amount a customer will pay for a brand in comparison with another brand offering similar benefits

Surprising dangers of false positives in a proactive retention campaign

- can disrupt habits - some customers would have continued/renewed on autopilot - the offer can prompt them to review and change their consumption habits

RFM is common, but imperfect when purchases aren't involved. why?

- interactions between customers and firms can take multiple forms - often in digital settings there may be no monetary exchange (ex: continuing to use free email or music service) -from this perspective, retention is when the customer continues to transact with the firm

some different types of "brand extensions"

- product line extensions - category extensions - introducing "branded variants"

typical reward program pattern. where do we see the most growth? what is stagnent

- stagnent in heavy buyers, most growth in light and moderate buyers

some foundational questions that marketing managers have to ask

- who are we? - what are we uniquely good at ? - what business are we in? - what are we trying to achieve?

STP

- who exactly are we talking to? - what do they currently believe - what do we want them to believe - what do we need to say and do to shift their beliefs?

defining customers

-common to base definition on purchase behavior (RFM -recency->frequency->monetary- analysis) -diff industries will have diff RFM cutoffs for defining current customers -better to combine purchase data with attitude data (reveals which profitable customers are vulnerable)

why do we see so many brand extensions?

-consumers can alleviate boredom but stay in family, - billboard effect - pricing breadth - lower cost: need to create awareness of new product, but not brand. reduced production/packaging/mkt research costs - reduce risk of product failure

Computing CLV

-margins -annual retention rate discount rate

attributes of beneficial marketing goals

-prioritized -quanitified -includes a temporal benchmark -realistic -internally consistent

"whales" in mobile gaming

0.15% of mobile gamers bring in 50% of revenue

interpretting CLV equation: 1) as m increases... 2) as r increases.... 3) as d increases...

1) CLV increases 2) CLV increases 3) CLV decreases

basic framework for organizing marketing plans

1. foundational consideration 2. acquisition and retention 3. source of volume 4. stp 5. execute

velvetta whales

10% of buyers accounted for more than 50% of profits

about ___ cheaper to satisfy/retain existing customer than acquire new customer. ____ are often cheaper than new customers as well

5x; win-backs

source of volume

Focus on stealing share or stimulating demand?

example of myopic attitude

NYT: newspaper versus information netflix: streaming service versus entertainmente

product line extensions example

OG dorito= cool ranch doritos, spicy doritos, cheeseburger flavor

the marketing mix aka the 4 Ps

Product, price, place, and promotion—the controllable set of activities that a firm uses to respond to the wants of its target markets. how exactly do we implement our strategy/articulare our positioning

Overpromising

Promising more to the audience than you can actually guarantee

Are there brands that do not have a brand architecture?

Yes, many brands only have a single product or single location ex: vespa

common loyality definition

a deeply held commitment to rebuy a product or service despite situational influences and marketing efforts having the potential to cause defection

umbrella brand

a family of products that all deliver the same higher order benefit

core competencies

a skill that we uniquely possess

source of price premiums

additional amount a customer will pay for a brand in comparison with another brand offering similar benefits

discount rate (d)

adjusts for the fact that money today is worth more than money tomorrow - $1 recieved in 10 years is worth less to me today than $1 received today

which of the following businesses is most likely to face a share of wallet problem? - motorcycle manufacturer - desk manufacturer - wedding planning business - real estate agency - airlineq

airline

core competence

an input that leads to a strategic asset which translates into a benefit for consumers

margins (m) (CLV)

annual revenue per customer -cost -usually assumed to be constant but can change over time

branded variants

another type of brand extension, involves accomodating customers with differetn WTP, often by offering a cheaper version at lower status outlets

Hormel worked with ____ to discover needs. What did they create?

anthropologists. created snackwraps because they realized that ppl need quick, ready to eat meat

What is marketing?

art and science of meeting needs profitably

equation for CLV

assuming constant annual margin (m) and annual retention rate (r) E(CLV)= m(1+d)/1 + d -r

goals can overly focus ____

attention

why are the share/size of wallet important?

both needed to determine whether barncales dont have the money to spend or are disloyal. indistinguishable based on internal data alone, but call for diff relationship mgmt strategies. infeasible to obtain transaction records from competitors but can obtain info from surveys

why would someone negatively review a product they have never purchased?

brand loyalists trying to stop dilution

Brand Architecture

branding strategy the relationships between the different brands in our portfolio

marketing theory: in the past, prioritized making sales over _______

building relationships

examples of brand extension

cadillac offering the more affordable cadillac car

How can product line extensions be used to drive engagememt

can get the public to vote ex: lays flavor challenge, m&m crunchy flavor competition

what is the harley davidson perfume an example of? why

category extension, still recognizeable diesel but not a new bike

some strategic assets are a _____ of core competencies, but some strategic assets are not. both are valueable

consequence

Where is distinct branding common?

consumer packaged goods (CPG)

What is 3M's core core competence? strategic asset? product?

core: org culture that fosters creativity and innovation strategic: portfolio of patents product: novel products

What is walmart's core core competence? strategic asset? product?

core: superior "logistics know-how" strategic asset: low costs for walmart product: low prices to customers

examples of umbrella brands?

crest (toothpaste, mouthwash) , flex seal (tape, paste, etc)

modern mindset about acquisition and retention

customer relationship management (CRM)

Determining the size of the customer base

different challenges depending on whether setting is contractual or noncontractual . (aka transactional). in contractual settings, we see the time when the customer "churns" (becomes inactive). in noncontractual settings, we cannot see this.

extending a brand can ____ the brand

dilute

which credit card ranked highest loyalty 2022

discover

overly ambitious goals can stimulate ____

dishonesty

what is the scale of common brand architecture

distinct branding -> hybrid branding -> umbrella branding

what is another way to define distinct and umbrella branding?

distinct: house of brands like p&g, unilever umbrella: a branded house like nike

brand extension

extending an existing brand name to new product categories

distinct branding

firms offer several products with distinct meaning, brand names, logos, targets, to diff audiences

umbrella brands are not very ____. damage from product failures can be quite high

flexible.

foundational considerations

goals core competence core business brand architecture

example of goals overly focusing attention

gorilla basketball game

umbrella branding: _____ efficiency/simplicity _____ flexibility

high, low

size of wallet

how much money a customer has

example of a lower level execution

how quickly should we deliver our pizzas

which car brand ranked highest loyalty 2022

hyundai

what do we mean by constant r?

if r=0.8 then after 1 year, there is an 8-% chance that the customer will still be with the company. after 10 years, there is an (.80)^10 = 10.7% chance that the customer will still be with the company

loyal customers more _____ about product offerings, prices

knowledgeable. might be more price sensitive than sporadic customers (know to wait for sale)

example of acquisition focus

kohls doing amazon returns; 30 day free trial

distinct branding: ____ efficiency/simplicity ____ flexibility

low, high

surveys reveal that consumers believe that ____ customers deserve lower prices

loyal. get angry when new customers get the perks

what unappreciated need did the NBA recognize?

made t-shirts instead of jerseys for customers that maybe didn't feel confident wearing a tank top. team had to wear them and LeBron James ripped them off during a game

loyal customers become ___ valueable over time

more

barnacles: long term customers, low profitability

need to measure size of wallet and share of wallet

does every company have a core competence?

no. some companies that have a core competence do not realize it also, or would have a hard time identifying it

how to determine how to focus acquisition and retention efforts

not an exclusive effort, try to acquire customers youll be able to retain, retain happy customers who will spread positive word of mouth

important advantage of umbrella brands

once consumers trust the brand, can extend the brand in various ways.

acquistion challenge:

overcome existing brand loyalties

example of a strategic asset that is not a consequence of core competencies

patents that google buys from IBM

What is an example of a company getting an aspect of marketing wrong?

pepsi coke challenge, singles (we were good for you then, were good for u now)

annual retention rate (r)

percent of current customers who will still be with the firm at the end of the year - how leaky is our bucket? how quickly do we lose customers?

acquisition

practice of using marketing strategies and tactics to target and attract new audiences to drive users to make purchases or sign up for a service

retention involve ____ and ____ retention campaigns

proactive, reactive

What is part of execute

product service, price, place, promotion

RFM

recency, frequency, monetary

What is STP

segment, target, position

example of retention focus

sephora beauty insider

Example of a high level strategy decision

should we change our classic formula and transform our brand

acquisition and retention

should we focus on one or the other

marketing goals: two primary purposes

simplify decision making, and performance benchmark

typically a ____ percentage of customers generate the majority of profits

small, 80/20 rule

retention

strategies and tactics you use to nurture and maintain your relationships with customers

decisions in marketing plans range from high level _____ to lower level _____

strategy, execution

category extensions example

swiss army knife making watched, outdoor clothes amazon= prime video, amazon shipping

myopic attitude

tendency to define business based on products rather than consumer benefits

what other marketing framework is there?

the 3 c's framework

share of wallet

the percentage of the customer's purchases made from a particular retailer

example of overly ambitious goals stimulating dishonesty

theranos

proactive campaigns are tricky.. why?

they involve both: false negatives and false positives false negatives: failing to identify customers who intend to leave false positives: offering incentives to stay to customers who never had any intention of leaving

diluting the brand

translating a successful brand into another category but failing. dilutes the existing identity of the established brand. ex. colgate making lasagna

example of distinct branding?

unilever (makes dove, axe, slim fast)

customer lifetime value

we want to understand how profitable each customer has been, and will be - CLV: present value of all future profits generated from a particular customer offers useful guidance: pay no more than CLV to acquire customer or avoid losing customer