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