MKTG 317 Final Exam
Price wars
A prisoners dilemma/game theory End up worse off long run because you all lower your price
Organizational (business) Buying Process
1. organizational need 2. vendor analysis 3. purchase activities 4. post-purchase evaluation
Price legality and ethics
Bait and switch Deceptive Price fixing Predatory Resale price maintenance (controlling retail price)
Understanding the consumer
Watch them talk to them model them (economic or psychological)
Consumer Decision Process
1. Problem recognition 2. Information search 3. Evaluate alternatives 4. Purchase decision 5. Post-purchase behaviour All steps are influenced by the individual characteristics
The marketing research process
A Scientific paradigm 1. Determine the research problem Identification (logical assertion of your reality) 2. Develop the research design Operationalization (information definition) 3. Execute the research design Data collection (observation and communication) Data analysis (transformation and summarization) 4. Conclusion Application (marketing strategy)
Economics (product)
A bundle of utilities of which physical characteristics, labeling, and packaging are an integral part
Expectancy disconfirmation
A cognitive theory to explain post-purchase behavior (cognitive dissonance). "A failed prophesy"
SWOT
A discussion about a business at a point in time. Strengths and weaknesses = internal, about the specific case an product Opportunities and threats = external - don't mention the company/product !! Think of PESTE, the INDUSTRY, only use common knowledge
Branding
A name, term, symbol or design (or a combination) that identifies the maker of markerter of a product. A concept with an existance and personality NOT a logo, corporate identity system, or product
Product/market assessment
A formal framework for identifying and framing organizational growth opportunities. 1. Market penetration: Current product/service portfolio and current buyers (own & competitors) 2. Product/market development: New product/service portfolio and/or new market segment 3. Value proposition
Brand Equity
A set of assets (and liabilities) linked to a brands name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm or a firm's customers Associated with: Brand awareness Brand association Brand loyalty
Cojoint Analysis (Value based pricing approaches)
A simultaneous evaluation of attributes and attribute levels. Calculate part-worth utilities to estimate how much of one attribute a consumer will give up for more of another Higher utility = good Utility of a bundle = Sum of component utilities
Marketing Research
Acquiring and analyzing information to reduce uncertainty in marketing decision making
Lifetime customer value (value of relationships 6items) (ABRCRP)
Acquisition cost: Incremental cost of attaining a new customer Base profit: Profit margin earned from an average customer Revenue growth: Increase in total purchases over time Cost savings: Service costs to retain a customer Referrals: Apostles Price premium: Price insensitivity
Business Marketing
Activities in which products and services are sold for any use other than personal selling.
Communications Mix
Advertising: PAID promo Sales promotion: Short term incentives Public relations: favourable company image for the entire market Personal Selling: sales and relationships Direct marketing: carefully targeted consumers Other: non specific
Market Segmentation
Aggregating prospective buyers into distinct groups that: Have similar wants/needs Will respond similarly to marketing action Need to do it to find homogeneous groups in a hetero market. and to align the market mix with consumer decisions.
Product portfolio (mix)
All products available from a seller Product mix width - # product lines Product mix length - # products in a line Product mix depth - # variations of each product Product mix consistency - similarity in use and dist channels
Augmented-based positioning
An observable point of difference that customers value and for which they will be willing to pay more ex, warranty, customer service, reputation
Competition based pricing
Based on factors in the external environment Penentration - price as low as possible to increase market share Parity/status quo - price same as competition Skimming - price higher than comp
Value-based pricing
Based on perception of value. Value = f (price, attributes, benefits, alternatives) Value > price > cost
Demographic segment
Based on states of being. Age, marital status, income, gender, occupation, family life cycle, and education. Address 5 of them
Price/quality relationship (Psychology of price)
Asymmertic can lead to higher demand. Makes price is a proxy of quality. Price thresholds and even/odd
More for same/less $$ (Value based positioning)
Attack competitors by having upscale products as a lower price
Technographics (Psychographic)
Attitude to technology. Mouse Potatoes (preference for online entertainment) vs. Couch Potatoes (preference for traditional media)
Communications objectives
Aware Inform Trial Loyalty
Alternative evaluation (3. evaluate alternatives in consumer decision process)
Benefit: Functional, experiential and symbolic Situational influence: Body-Environmental, time poverty(pressure), task importance, and monetary mood Personal influence: Self concept and brand personality Psychological: Beliefs and attitudes, and learning Perception: Process by which people select, organize and interpret information. Subliminal, risk and selective
Price Tactics
Bundling/unbundling Product line pricing Loss leader pricing (below cost) Captive product pricing (printers and ink) Differential pricing
Specialty good
Brand preference and loyalty, little comparison, special purchase effort, low price sensitivity Exclusive distribution, high price, targeted promotion
Break-even market share (%)
Breakeven units / total market units
Buyer response levels (communications)(consumer behaviour in customer response model)
Cognitive - Thinking about the product/decision Affective - Development of attitudes and preferences Conative - intended behaviours toward actually getting/using the product If above are met then you can get them to buy/become a loyal buyer
Customer response model
Cognitive = Awareness and knowledge Affective = Liking and preferences Conative = Conviction and purchase/prescribe
3. Evaluate alternatives
Combine info about attributes, products and benefits to form an overall evaluation. Don't buy products, buy benefits! Uses attribute and alternative evaluation
Stimulus inputs
Commercial environment (stimuli) Social environment (class, culture, organization) Situational characteristics (time, finances) Pavlos dog: bell = food then bell = salivate
Business communication
Communication: A systematic process by which individuals interact through symbols to create and interpret meaning Verbal, text, gestures/body movement Oral communication: A COMBO of verbal content, body language and tone to accomplish a specific objective To inform, persuade and demonstrate
3C's
Company, Customer and Competitor
Value in use
Comparison of value relative to competitors
Attribute evaluation (3. evaluate alternatives)
Compensatory: Weighted average of ALL attributes Lexicographic: Best on most IMPORTANT attribute Conjunctive: Meet the criteria on ALL attributes Disjunctive: Meet the criteria on at LEAST one attribute Heuristic: Mental shortcuts to form judgments and make decisions
Product Classification
Convenience Shopping Specialty Unsought
Indirect Channels (CACC)
Conventional - separate businesses Administered - cooperating because of a high power channel member Contractual - formal procedures Corporate - high degree or vertical integration
Integrated marketing communications
Coordinating the communications mix to assure the consistency of messages at every company-customer contact point.
Product levels
Core product - benefits. The underlying product value. Be 'cheesy' ie "To feel clean and put together" Tangible product - brand, features, design, quality. The main selling features Augmented product - warranty, customer service, support. The value-added.
Positioning strategies
Cost leadership Differentiation from competitors Attribute based Augmented based Perception based Value based
Price promotions
Coupons Rebates Premiums
Product Development
Creating a new offering in an existing market Product innovation, Product augmentation and, Product line extension Strategies Develop significant point of difference Leverage brand equity
Relationship marketing
Creating long-term links with customers, employees and partners to increase loyalty and customer retention Relational concepts CRM: Customer relationship management (loyalty and reward) More than data mining SRM: Supplier relationship management (joint ventures, alliances) More than integrated systems SCM: Supply chain management (end-to-end coordination) More than purchasing management
Channel selection factors
Customer characteristics Competitive advantage Brand position Production augmentation Economics
Market-oriented mission statement
Defines the business in terms of satisfying basic customer needs General - Provides the boundaries for the type of business and how the business is run Describes the major business thrust, customer orientation, and business philosophy. • Why do you exist? • Who is your customer? • What does your customer value? • What is / will be / should be our business? ex To sustain responsible commercial success as a global marketing company of branded apparel.
Brand Loyalty (equity)
Degree that a customer holds a positive attitude towards a brand. Contributors: habit and emotions Detractors: parity and competitors
Product life cycle levels
Demand Technology Product Form
Individual characteristics
Demographics Psychographics Personal environment (friends and family)
Diversification
Develop new product offerings in markets not currently being served by the organization Product innovation/augmentation Unique geographic/demographic profile Strategies Line extensions Multiproduct or private label branding Market-bearing price Alternative distribution channels
Communications Plan
Developing, implementing and controlling the firms communication activities Process: (4M's) Market Mission Message Media
Types of channels
Direct: no intermediaries Indirect: has intermediaries
Getting brand to market
Distribution channel Intermediaries
Psychographic segment
Dividing a market based on social class, lifestyle and personality traits "What are they like" 3-5 sentences, gets into more detail. how they behave, their interests, opinions and activities
Porter Curve
Either positioned as cost leadership or actual/perceived differentiation
Channel Intensity
Exclusive Selective Intensive
Mission (communications plan)
Establish communication goals. Buyer response levels: Cognitive Affective Conative
Service products
Example bank loan or home security, they are primarily intangible
Communication Methods (develop research design)
Exploratory -Small sample studies for discovery of ideas and insights Executive interviews, focus groups Qualitative analysis Descriptive -Larger sample studies to describe the characteristics of a population Survey research Quantitative analysis Causal -An investigation to identify cause-effect relationships Field experiments Quantitative analysis Pro - versatile Con - subjective and random error
Choosing a targeting strategy
External evaluation (market and competitors) Internal evaluation (product and resources) Social responsibility (kidvertising)
Dove
Extremely competitive market Unilever wanted to reposition the brand to make Dove a beauty bar "self esteem project" = social marketing
Marketing Objectives
Follow from the mission statement. •Corporate: ROI, earnings and stock price •Business Unit / Division - growth rate, profitability •Marketing: Product category and brand •Products Category - sales market share, product quality, unit margin •Brand - awareness, loyalty, satisfaction
Convenience good
Frequent purchase, little comparison or shopping effort Wide distribution, low price, mass promotion
Segmentation Basis
Geographic Demographic Psychographic Behavioural
Behavioural segmentation
How do they respond? Ex useage, occasion, loyalty, and sought benefits The most detailed and best segment Talk about - benefits sought (WHY are they using it) and useage base (frequency of use)
Target Market development
Identify customer needs problems (what the sales person does) Marketing coordination (sales person) Relationship development: Transactional, Functional, Strategic
Expectancy confirmation
If performance = perceived same as expectations
2. Information search
If routinized behaviour then you probably already have the information Info sources: Experiential, commercial and social (networks) The evoked set
Oral presentations
Impromptu Extemporaneous Scripted
Experience curve
Improvements in efficiency over time
Selective (Channel Intensity)
Inclusion of select intermediaries, but fewer than all dealers who may be willing to represent the brand Higher involvement shopping goods Pro - increased market coverage; high degree of control Con - Outsource service component to intermediaries
2. Develop the research design
Information sources = Existing + primary Existing = literature review and secondary data (stats canada or internal company docs) Primary = observation and communication Qualitative or quantitative
Market Penetration
Increasing market share in an existing market for an existing product. Increase present buyers' consumption rates Stimulate product adoption among potential customers Strategies Lower price of product offering Expand distribution to provide wider coverage of the existing market Improve quality Head-to-head promotion
Mirco market (Targeting strategies)
Individual/local. Mass customization (NikeID)
Inbound communication
Information to address opportunities / threats Microenvironment: Unserved markets, market growth, Changes in customers wants and needs, decision making process, motivation, involvement, competitor's strategy Macroenvironment: New technology, cultural shifts, legislative change, increased foreign investment Problem: Rarely passive and requires scientific foundation to ensure accuracy and generalizability
Structural influence (all business first 5 consumer) (IIDBUAG)
Initiator Influencer Decider Buyer User Approver Gatekeeper
Diffusion of innovation (adoption stages) (IEELL)
Innovators Early Adopters Early Majority Late majority Laggards
Attributes of services
Intangibility Inseparability Inventory (perishability) Inconsistency (variability)
Market Development
Introducing an existing product to a currently unserved market Different geographic region Alternate demographic profile Strategies Minor modification of existing product offering Alternate distribution outlets Unique communication campaigns Switching promotions
Product life cycle Stages
Introduction Growth Maturity Decline
Shopping good
Less frequent purchase, high shopping effort Selective distribution & communication, higher price
Exclusive (Channel Intensity)
Limited number of dealers with exclusive rights to represent the brand Major shopping goods, specialty goods, luxury items Pro - maximum control over market; aggressive intermediaries; high brand loyalty Con - "eggs in one basket'; limited to high price/low volume products
Brand development
Line extensions Brand extensions
Economic Model (consumer decision making)
Logical and prudent decisions based on choices that result in the most optimal level of benefit or utility "The Rational individual" Assumptions: utility max, budget constraint, ability to compare bundles, and perfect information
Business Segmentation (untheoritical)
Macro: Characteristics of the buying organization and of the buying situation (easier) Micro: Characteristics of the decision-making units
1. Determine/Define the research problem
Marketing problem =Strategy based (target market and marketing mix) Research problem = Information based. restate the marketing problem in info terms Research objective =A statement describing the purpose and scope of the study
Intensive (Channel Intensity)
Mass distribution via multiple entities Convenience and low involvement shopping goods Pro - Increased sales; wider recognition; captures impulse buyers Con - Typically low price/low margin/high turns; limited control
Targeting strategies (markets)
Mass market Differentiated market Concentrated market Mirco market
Segment requirements
Measurable Meaningful Marketable
Less for much less $$ (Value based positioning)
Meeting consumer's lower performance or quality requirements at a much lower $$$
Environmental Assessment
Microenvironment: 3Cs - company, customer, competitor; Cooperative - suppliers, distributers, partners Macroenvironment: Political/legal, technological, economic socio/demographic, environmental/natural Societal - public interest, social responsibility Competitive forces: Supply-based competition and demand based competition (brand and product)
Brand Awareness (equity)
Most basic element in the choice set. Necessary but not enough alone for brand equity
Brand sponsorship
National (manufacturer's) brand Created and owned by resellers (house brand) Cobrand
Product Hierarchy
Need family - underlines the existence of a product category Product Class - macro view of a group of products that meet a general need differently (ex cars vs scooters) Product form - Closely related because similar function Brand - distinct unit within product form
High involvement (business)
New task buying Modified rebuy
Concentrated market (Targeting strategies)
Niche. Focus effort on a unique segment. (head and shoulders - dandruff)
Observation Methods (develop research design)
Overt -An investigation of behavior where the respondents are AWARE of the task and the researcher is known E.g., "think aloud" protocols Covert -A study where the participants are UNAWARE that their behavior is being observed and / or recorded E.g., mystery shopping Participative -A study where the researcher INTERACTS with the respondents and manipulates the environment as the study progresses E.g., ethnography, netnography Con - don't know the motive Pro - objective and current behaviour
Displaying brand
Packaging as a container (physical and disclosure) Packaging as a brand strategy (exposure and position) Sustainable packaging
Perception based positioning
Perceptual differences are created when actual differences are small, hard to achieve, difficult to sustain, or difficulty to verify
Positive disconfirmation
Performance is above expectations emotional satisfaction occurs
Brand Characteristics
Personality (sum of attributes and emotions) Status (level of social regard)
Brand positioning
Positioning brands in the mind of the target market based on attributes, benefits or beliefs and values Attribute Value Application User class Alternative product class Competitior
Attribute-based positioning
Positioning on unique or superior attributes relative to a competing product Generates customer value on critical product ________
Differential Pricing (Pricing Tactics)
Price discrimination (seniors discount) Second-market discounting (generic or foreign) Periodic discounting
Value based pricing approaches
Price sensitivity analysis Conjoint analysis
Reference price (Psychology of price)
Price standard. Sticker shock when the price is higher than reference Reference shift: Long term promo & Future price
Marketing commuications
Process of interacting in the market to engage customers and communicate customer value Information: for inclusion in awareness set Persuasion: To advance into consideration/decision/choice Reminder: to reinforce decision/choice
Channel lengths
Producer Agent/brookers Wholesalers Retailers Consumers (Direct - retailer channel - whole saler - agent)
Four Ps + one P
Product Price Promotion Place + People
Evaluation of quality
Product - performance and conformance Service - measurement against performance
Business markets
Production - aftermarket (original equipment manufacturers) Resellers - industrial suppliers and value added distributors Consumption - governments and institutions
Sales promotions
Short term purchase incentive. Action focused Marketing event Intended to have direct impact Influences end consumers and channel members
Unsought good
Purchase when necessary, little product awareness or knowledge Aggressive selling, distribution and communication varies
Selling process
Qualifying and screening Research Introduction (relationship marketing) Communication (move to action) Clarification Closing (ASK for business) Follow-up
Negative disconfirmation
Quality falls below expectations emotional dissatisfaction results
Psychology of price
Reference price Price/quality
Brand representation
Registered trademarks - words/phrase/symbol - logo -icons/mascots
Transmission model
Relationships among factors that influence effectiveness and impact of communication Noise - inhibits encoding, transmission and decoding
Methodology - qualitative (develop research design )
Research that relates to concepts, opinions, values and behaviors of people in social contexts; Data characterized as textual, visual or oral; focus on meaningful characterizations, interpretations and expressive descriptions Ex: Interviews, focus groups, observation, and word association
Methodology - quantitative (develop research design)
Research that relates to empirical assessments that involve numerical measurements. Data characterized by assigning numbers in an ordered and meaningful way. Ex: Structured observation, Secondary data, Questionnaires
Selling Situations
Response - customer initiated Ordertaking Trade - Ordertaking and Merchandising Missionary - direct to decision maker Technical - tech consultant for complex product Creative -understand customer needs and create/maintain relationships
Break-even analysis
Revenue and cost relationship. Contribution per unit = selling price - VC Break even units = Fixed costs / unit CM Breakeven marketshare (%) = Breakeven units/ Total market sales
5. Post-purchase behaviour (analysis)
Satisfaction: happy or remorse Loyalty: functional (repeat purchase) and emotional (attitude to the product) Expectancy disconfirmation
Differentiated market (Targeting strategies)
Segmented. Unique product offering for each of several segments. (cars)
Value Proposition
Set of benefits or values that you can deliver to customers to satisfy their needs Perceived value = benefits - perceived cost to receive & A concise statement summarizing the target market, the product/brand, competitors and the competitive difference.
Cost-based pricing
Setting price based on the costs of producing/distributing/selling + a fair rate or return - Cost-plus (markup) use in growth stage - Target return (breakeven) Ignores value perception and demand curve. sellers care more about costs than demand
Business Market characteristics
Short distribution channels Unique marketing strategies Derived demand Emphasis on personal/direct selling Strong buyer-seller relationships
Other communication activities (non specific)
Sponsored events Brand placement Viral marketing Buzz marketing
Theory of Buyer behaviour
Stimulus inputs Individual characteristics
3. Execution of data collection (execute research design)
Survey responses: Open-ended and Closed-ended questions Sampling: probability and non probability Data Analysis: Qualitative and quantitative
Brand Association (equity)
Subjective thoughts and images of a brand. ex attributes, benefits, favourability and uniqueness
Brand name
Suggests product benefits Distinctive and positive Fits the company and product image Simple yet creative Easy to: pronounce, recognize and remember
Message strategies
Symmetry: Asymmetrical (only the good) Symmetrical (good and bad) Directionality: One way vs two way & Synchronous vs asynchronous Promotion: Push (intermediaries market) vs Pull (direct marketing)
Product - service continuum
Tangible dominant Tangible with services Hybird (co dominant) Service with tangibles Service dominant
Service delivery dimensions
Tangibles Reliability Responsiveness Assurance Empathy Perceived service is an evaluation of the determinants of service quality
Market (communications plan)
Target Market - buyers, users and influencers Non target audience - investors, regulators, channel members, and employees
Communication evaluation
Target market Objective (awareness, inform, trial, loyalty) Strategy (symmetry, directionality, push/pull) Delivery (rational vs emotional) Tonality (humor, drama, romance, fear)
Markup formula
The % of COST that is added to determine selling price Markup % = (selling price - unit costs) / unit costs Selling price = (1+ markup) X unit cost
Margin formula
The % of SELLING PRICE that is unit profit Margin (%) = (selling price - unit costs) / Selling price Selling price = Unit costs / (1-margin)
Economies of scale
The ability to allocate fixed costs over larger sales
Value based positioning
The full mix of benefits upon which the product/brand is differentiated and positioned Product = a bundle of benefits Value = benefits at a given price
1. Problem recognition
The difference with an actual state and a desired state. Triggered by an internal/external stimuli. Seeking a solution Level of involvement (low - high) depends on personal importance and social risks.
Product positioning
The place an offering occupies in consumers' minds on important attributes relative to competitive offerings. Head-to-head or Differentiation
Psychological model
The stimulus -> response model External influences -> decision process -> purchase/post purchase behaviour
Positioning Map
To create one you have to understand perceptions of customers. To determine a brands position and consumer perceptions need to obtain: - evaluations of important attributes - judgements of competing brands on the attributes - ratings for an ideal brands attributes
The evoked set (information search)
Total: All products capable of meeting wants and needs Awareness: Awareness of potential sufficing products/ brands Consideration: Set of brands considered as possible solutions to existing problem. Excludes unacceptable and overlooked product solutions Decision: Set of competing brands with significant overlap in salient attributes Choice: Brand choice to address the problem The number of products that you are aware of should increase during information search
Media Types
Traditional: broadcast, print and direct contact Emerging: digital, mobile, social
Required channel functions
Transactional Logistics Facilitating
Mass market (Targeting strategies)
Undifferentiated common products and commodities (sugar)
Price threshold
Upper threshold where price exceeds perceived value Lower threshold where low price reduces demand
More for more $$ (Value based positioning)
Upscale products at a high price
Price sensitivity analysis (Value based pricing approaches)
Used to determine a range of acceptable prices 1. price too low - no value 2. priced as a bargain 3. priced a bit expensive but still gonna buy it 4. too expensive to buy
Geographic segment
Where they are. Global: Canada (east or west etc) Domestic: Urban, innercity, rural etc Use both global and domestic in answer
Services
activities by sellers and others that accompany the sale of a product and that aid in its exchange or its utilization
Same for less $$ (Value based positioning)
category killers. Offer same brands for less money
low involvement (Business)
straight rebuy routinized reordering
