2 uses of mktg research
1) Diagnostic - evaluate current offerings
2) opportunity analysis - forward looking
2) opportunity analysis - forward looking
2. promotion budget
10% of soap
only 1.2% of computers
Varies on product. Strategically, spend as much as your competitors (parity)
only 1.2% of computers
Varies on product. Strategically, spend as much as your competitors (parity)
4Ps
Product
Price
Place
Promotion
- Used tactically as a part of a strategy, not strategy itself.
Price
Place
Promotion
- Used tactically as a part of a strategy, not strategy itself.
customer lifetime value
value of the entire stream of purchases that a customer would make over their lifetime.
CLV = [unit contr * units purchased a year for 1 customer]* years as customer
- variable costs already accounted for; this is purely profit
CLV = [unit contr * units purchased a year for 1 customer]* years as customer
- variable costs already accounted for; this is purely profit
deontological theory
Regardless of consequences, determine based on what is the most significant obligation. Doesn't consider context, just action itself.
"deon" = duty
If the act were okay universally, would it be okay?
"deon" = duty
If the act were okay universally, would it be okay?
Lifebuoy
Unileve sales stagnating. Health care crisis.
- Collaborate with government and NGO to raise awareness of soap-use, change association from soap-beauty to soap-hygiene.
- Target families.
- Reformulate to carry antibacterial.
- Two-person teams go to villages and schools.
Opportunities at "the bottom of the pyramid"
- Collaborate with government and NGO to raise awareness of soap-use, change association from soap-beauty to soap-hygiene.
- Target families.
- Reformulate to carry antibacterial.
- Two-person teams go to villages and schools.
Opportunities at "the bottom of the pyramid"
customer service level
Distributors need to get products where they're needed when they're needed.
Lost sales add up fast!
Tradeoff between faster/more expensive delivery and more interested customers, or TOO expensive.
Lost sales add up fast!
Tradeoff between faster/more expensive delivery and more interested customers, or TOO expensive.
skim/penetrate later trends
Skim: starts out as high price, low promotion. Will lower price and increase promotion to beat out new competitors.
Penetrate: starts out low price, high promotion. Will decrease promotion b/c most customers already attained, end introductory prices and raise them (less coupons).
Final, sustainable positions: LOW, LOW for basic commodities. HIGH, HIGH for luxury items.
Penetrate: starts out low price, high promotion. Will decrease promotion b/c most customers already attained, end introductory prices and raise them (less coupons).
Final, sustainable positions: LOW, LOW for basic commodities. HIGH, HIGH for luxury items.
brand personality
Goes beyond brand image: personifies it.
(Think Apple/PC)
In five determined dimensions:
- sincerity
- excitement
- competence
- sophistication
- ruggedness
(Think Apple/PC)
In five determined dimensions:
- sincerity
- excitement
- competence
- sophistication
- ruggedness
caveat emptor
"buyer beware"; now there are Consumer Bill of Rights.
economic system
a way to distribute scarce resources
ethical issues with 4Ps
product: shoddy or unsafe, planned obsoleteness, knockoffs, environmentally unsafe
pricing: excessive markups
promotion: deceptive claims
place: high costs of distribution
pricing: excessive markups
promotion: deceptive claims
place: high costs of distribution
discrepency of assortment
producers normally specialize into one product (e.g. golf balls), whereas a customer wants a variety of golf items. Distributors need to adjust for this.
straight rebuy
routine repurchase
desirable: ideal market exposure
makes product just available widely enough for target customers, but no more
mktg department era
all mktg activities under one department to improve short-run policy planning and integrate firm activities
generic versus product market
generic: "entertainment seeking" very general, might choose various products to satisfy this need
product: TVs, cruise lines
product: TVs, cruise lines
corporate channel system
corporate ownership down the entire line (complete ownership)
blue ocean strategy
Blue ocean is an area with no competitors.
- might be an opportunity, OR an area with no consumers.
- might be an opportunity, OR an area with no consumers.
multiple buying influence
multiple people have an influence on a purchase decision in a company
how to segment
- cluster analysis
- factor analysis
- factor analysis
Cumberland
Had these awesome metal cushion pads that would save a ton of time (in rentals, plus changing pad time), use fewer, and more efficient. Heated up less too, drove more feet.
- Both test companies had high interested in CMI pads.
- How to distribute and what to price at? Small pads $2 to $5. CMI worth hundreds, but huge price jump.
- Distribute when rental companies, or outlet shops?
- Value pricing: to customer, worth $800 to $1200 a piece.
- Both test companies had high interested in CMI pads.
- How to distribute and what to price at? Small pads $2 to $5. CMI worth hundreds, but huge price jump.
- Distribute when rental companies, or outlet shops?
- Value pricing: to customer, worth $800 to $1200 a piece.
customer acquisition costs
cost of acquiring one customer (through direct mail, samples, discounts)
mktg strategy vs. mktg plan
plan has time-related details; strategy is over arching and describes a marketing mix (big picture of what firm will do in a market)
4. evaluation
Look at awareness, purchase intention, perceptions.
- Gets cut the most often by small budget companies.
- Gets cut the most often by small budget companies.
brand relationships
Consumers have a contract with a brand. They buy, expect value and what they see the brand as standing for. Brand gets their loyalty.
perceptual map
- mapping of two factors and where customers perceive a product on those factors
- caveat: an empty area could be an opportunity to enter, but *must check there are customers there to begin with*
- caveat: an empty area could be an opportunity to enter, but *must check there are customers there to begin with*
commodity
Refers to any product that is essentially undifferentiated. This means that there is no difference in the product regardless of which company you buy from. Milk is generally said to be a commodity.
Problem: when your comp is asked to supply a private label, run the risk of commoditizing it b/c you're supplying the exact same product.
Problem: when your comp is asked to supply a private label, run the risk of commoditizing it b/c you're supplying the exact same product.
3a. message
Use a creative strategy to appeal.
- try to differentiate product/brand and how it is remembered.
- draw on emotions: sex, fear, humor
- simplistic emotions are best, not too extreme
- try to differentiate product/brand and how it is remembered.
- draw on emotions: sex, fear, humor
- simplistic emotions are best, not too extreme
advantage of private label (umbrella brand)
- Reinforcement of store name throughout store (CVS, CVS, CVS...)
- Retailer absorbs mktg and inventory investments. (Heightens margin, but also a risk)
- Distribution and shelf placement guaranteed! (Best place to put to the right of eye-level)
- Retailer absorbs mktg and inventory investments. (Heightens margin, but also a risk)
- Distribution and shelf placement guaranteed! (Best place to put to the right of eye-level)
customer value
the difference between the benefits a customer sees, and the costs of obtaining those benefits
(how much the customer values an offering?)
(how much the customer values an offering?)
plc: introduction
- Mostly market pioneers. Risky and costly.
- Little competition.
- Often unprofitable (need to be the first one to promote this new product)
- Aimed towards early adopters: often highly innovative customers who keep up with new tech
- Intro strategies: skim or penetrate
- Little competition.
- Often unprofitable (need to be the first one to promote this new product)
- Aimed towards early adopters: often highly innovative customers who keep up with new tech
- Intro strategies: skim or penetrate
direct vs. indirect elicitation
direct: ask them directly, Q&A
indirect: infer their desires from past behavior
* Direct elicitation are not always useful. Customers may not know what they want, or what they want (coupled together) is not feasible.
indirect: infer their desires from past behavior
* Direct elicitation are not always useful. Customers may not know what they want, or what they want (coupled together) is not feasible.
regrouping (4)
1. accumulating - collecting products from many small producers (gathering coffee, bringing together Dutch art)
2. bulk breaking
3. sorting - separate products into grades, each of which goes for a different market.
4. assorting - gathering together a variety of products that one segment might want (trucks and trailors and fertilizer and seed)
2. bulk breaking
3. sorting - separate products into grades, each of which goes for a different market.
4. assorting - gathering together a variety of products that one segment might want (trucks and trailors and fertilizer and seed)
strengths & weaknesses of private brands
1. Can create impression of wide selection by having more brands.
2. Replace second or third leading brands in shelf space.
3. Exclusive distribution: repeat customers.
4. Can go outside your "inference realm" with a named brand.
BUT
1. People may not associate brand's quality with your store necessarily.
2. No existing brand equity (costly to start up)
3. scale: need to have enough brands to make worthwhile to put people into it
2. Replace second or third leading brands in shelf space.
3. Exclusive distribution: repeat customers.
4. Can go outside your "inference realm" with a named brand.
BUT
1. People may not associate brand's quality with your store necessarily.
2. No existing brand equity (costly to start up)
3. scale: need to have enough brands to make worthwhile to put people into it
variable costs
Costs that vary directly with the number of units being produced.
Ex: materials, sometimes labor if by unit.
Ex: materials, sometimes labor if by unit.
brand image
Can be built by identificational markers of the product (e.g. bottle shape, or text fontface), associations with the actual product (high quality, refreshing), gender (Dove vs. Zest), age, social class, place.
direct marketing
sell directly to individual customers
- online
- catalogs
- web site orders
- b2b
- online
- catalogs
- web site orders
- b2b
requisition
a request to buy something
% premium
Also the "percent markup."
% premium = (sale price/ variable cost)-1
E.g. We're selling the product at 125% of the cost to make. We've marked up by 25%.
% premium = (sale price/ variable cost)-1
E.g. We're selling the product at 125% of the cost to make. We've marked up by 25%.
positioning
influences how segment perceives a product in comparison to the competition.
Your mktg mix much make your product fit better than competitor's.
Your mktg mix much make your product fit better than competitor's.
social marketing
programs seeking to increase acceptability of a social idea, cause or practice
ex. drunk driving awareness, seat belts, voting, pollution
ex. drunk driving awareness, seat belts, voting, pollution
swot
Strengths, weaknesses, opportunities, threats.
guerilla marketing
Deliver mktg where we're not expecting it = more likely to pay attention.
- effective for a few uses, then gets old
- effective for a few uses, then gets old
retail outlets
ex: Nike stores, Apple stores
Don't always make $$ (exception, Apple), but a giant advertising billboard.
Don't always make $$ (exception, Apple), but a giant advertising billboard.
channel based
often for raw materials, base price on where distributed and how far to reach desired channels
market potential
what a WHOLE market segment might buy
umbrella brand
- Carries store name. (Staples)
financing
providing the necessary cash and credit to do complete the mktg process
ex: Airlines
Safety is number 1 important attribute.
However, it's not a differentiator because perceive all airlines as safe. So secondary factors like schedule/price are greatly important.
However, it's not a differentiator because perceive all airlines as safe. So secondary factors like schedule/price are greatly important.
branded variants
Asking retailers to make an exclusive version for your store.
(extra tracks on CDs for Target)
(extra tracks on CDs for Target)
freight forwarders
combine small shipments into more economical shipping quantities.
channel conflict: horizontal
Multiple outlets on the same level (like selling through grocery, versus warehouse/clubhouse.) Problem with maintaining business & margins.
brand: emotional effect
Often brands play among psychological factors.
ex: "X" targets more young men.
Diapers imply love/hugs: "Luvs", "Huggies", "Pampers" (nothing like "Absorbency Master")
ex: "X" targets more young men.
Diapers imply love/hugs: "Luvs", "Huggies", "Pampers" (nothing like "Absorbency Master")
2. estimating demand
- see demand curve: find the right price point at which people buy in enough amount @ certain price (maximize revenues)
- inverse luxury goods curve: too low, or too high, sales drop - "sweet spot"
- see elasticity
- inverse luxury goods curve: too low, or too high, sales drop - "sweet spot"
- see elasticity
personal selling
- Sales force are in direct, face-to-face contact with customer (e.g. b2b)
- high cost
- slow, ineffective to reach large number of individual customers. Must ensure sales force maintain company aims.
- builds stronger, more personal relationships with customers
- high cost
- slow, ineffective to reach large number of individual customers. Must ensure sales force maintain company aims.
- builds stronger, more personal relationships with customers
brand equity
- "value" or worth of a brand
- the value of the brand name often exceeds the value of actual "objects" that a company owns (hard assets)
- makes a HUGE difference in willingness to pay
ex: coca cola, one of the biggest brands. Microsoft wants to buy Yahoo for the brand, not the servers or anything.
ex: people willing to pay 2x (over generic?) for their preferred brand of peanut butter or beer. If think they are getting preferred brand, actual fMRI show that emotional centers in brain are being activated.
- the value of the brand name often exceeds the value of actual "objects" that a company owns (hard assets)
- makes a HUGE difference in willingness to pay
ex: coca cola, one of the biggest brands. Microsoft wants to buy Yahoo for the brand, not the servers or anything.
ex: people willing to pay 2x (over generic?) for their preferred brand of peanut butter or beer. If think they are getting preferred brand, actual fMRI show that emotional centers in brain are being activated.
role of distribution intermediary
Instead of three companies each having three customer contacts, each company has ONE intermediary who knows the three customers. One both ends, have to deal with fewer links and the intermediary handles them all. Pares down from 81 mil to 100,000 links.
double marginization
Concept that at each level of supply chain, a margin is added on. Leads to higher end prices and lower gains at each level. (Private brands try to avoid this)
qualifying dimensions vs. determining dimensions
qualifying: needs to have money, need for a car, license (but these don't determine what kind of car gets bought)
determining: safety, speed
determining: safety, speed
targeting
Consider:
- segment size
- segment growth
- segment value
- stability
- easy of entry
- ability to reach and serve segment
- competitors that might be/want to enter segment
PLC: if skimming, highly segmented. If penetrating, then more broad segments.
- segment size
- segment growth
- segment value
- stability
- easy of entry
- ability to reach and serve segment
- competitors that might be/want to enter segment
PLC: if skimming, highly segmented. If penetrating, then more broad segments.
product placement
Showing brands in movies, TV shows, and video games. (Paid endorsement)
break-even volume
The number of units required to break even.
BEV = fixed costs/ unit contribution.
Useful in deciding new investments. It'll take up x units in order to break even of the fixed costs it takes to make them.
BEV = fixed costs/ unit contribution.
Useful in deciding new investments. It'll take up x units in order to break even of the fixed costs it takes to make them.
breakthrough opportunities
opportunities that are hard for competitors to copy and "share on the wealth"
fixed cost
A cost that doesn't vary by the number of units being produced.
Ex: cost of machinery, fixed labor costs, advertising.
Ex: cost of machinery, fixed labor costs, advertising.
price-lining
Having similar products at various price points. (With small variation in design)
ex: Cuisinart, Whirlpool, KitchenAid
ex: Cuisinart, Whirlpool, KitchenAid
customer retention cost
cost of retaining one loyal customer (loyalty programs, discounts)
intensive coverage
- distribution through as many reasonable outlets as possible
- low selling effort
- easy to stock
- low selling effort
- easy to stock
Fixing a well-created product
1) availability good? (right distribution, enough units)
2) awareness high? (relative advertising)
3) perceptions good? (might be good on main important attributes, but not on the ones that matter)*
4) history? (past history of company)
5) is competition outdoing us? (market is always *relative*)
2) awareness high? (relative advertising)
3) perceptions good? (might be good on main important attributes, but not on the ones that matter)*
4) history? (past history of company)
5) is competition outdoing us? (market is always *relative*)
validity vs. fidelity
Actual factual quality of data, versus the intent or image given off by presentation of facts.
Government seems to care more about latter; "paternalistic."
Government seems to care more about latter; "paternalistic."
disintermediation
Cut out intermediaries (but still need their function)
- e-commerce (cuts out some of the wholesaler/retailer part: self sale on own website)
- channel commerce
radiohead offers direct download.
Many stores are being disintermediated.
- e-commerce (cuts out some of the wholesaler/retailer part: self sale on own website)
- channel commerce
radiohead offers direct download.
Many stores are being disintermediated.
inferior goods strategy
Provide generics, lesser quality AND lower price.
- The bad quality gets people. Out of favor now.
- The bad quality gets people. Out of favor now.
exclusive brand
A private, store-created label (not the store name) for ONE type of product.
- Creates feel that it's a real brand, exclusive to store, sometimes partner with celebrities
- Creates feel that it's a real brand, exclusive to store, sometimes partner with celebrities
promotional cues
stores put extreme discount on items, but expecting to make sales because you buy other stuff as well
ex: grocery (limit 1 on good deals), you buy other stuff too
ex: grocery (limit 1 on good deals), you buy other stuff too
channel
A path that takes the product from producer to end user.
Goal: efficiency
Goal: efficiency
unit contribution
actual amount you're making on one unit.
REVENUE-VARIABLE COST.
(e.g. sell for $6, cost us $4, unit cont = $2)
REVENUE-VARIABLE COST.
(e.g. sell for $6, cost us $4, unit cont = $2)
factor analysis
- takes many variables and boils them down into main groups
"sporty" group, "fun to drive" group, "appeals to women" group
"sporty" group, "fun to drive" group, "appeals to women" group
four "fit" tests for brand
- fits target market (age/gender)
- highlights product benefits (e.g. FedEx and fast)
- culture (where sold, ex. Chevy Nova sounds like "no-go" in Spanish)
- legal (can only have one trademark within a product category, like Apple Records and Apple Computer)
- highlights product benefits (e.g. FedEx and fast)
- culture (where sold, ex. Chevy Nova sounds like "no-go" in Spanish)
- legal (can only have one trademark within a product category, like Apple Records and Apple Computer)
innovation
the development and spread of new ideas, goods and services
packaging
ex. Coca Cola bottle, Tiffany's box
Iconic, as important as the brand logo.
- Colors play a part: blue seems sleek, snappy, clean, crisp and cold. Glass seems more high end, important.
- Quantity: 6pack versus "high quality" single unit items.
Iconic, as important as the brand logo.
- Colors play a part: blue seems sleek, snappy, clean, crisp and cold. Glass seems more high end, important.
- Quantity: 6pack versus "high quality" single unit items.
cluster analysis
- attempts to maximize the ratio: between group variance/within group variance
(??)
(??)
micro segmentation
- Narrow down segments into 1 person: customized for every individual. (ex. Amazon)
AirMount
Tried to skim it to offices.
- Should have penetrated at low price.
- Easy to understand/use.
- Captive pricing with the tool + sheets.
- Should have penetrated at low price.
- Easy to understand/use.
- Captive pricing with the tool + sheets.
evolution of mktg (4)
1. product oriented: build it and they'll come.
2. sales oriented: advertise to make them want it
3. consumer oriented: research and make what they want
4. customer relationship management: maintain an ongoing relationship with the customer, extract lifetime value
2. sales oriented: advertise to make them want it
3. consumer oriented: research and make what they want
4. customer relationship management: maintain an ongoing relationship with the customer, extract lifetime value
advertising cycle
1. Objectives
2. Budget
3. Message & Media
4. Evaluation
2. Budget
3. Message & Media
4. Evaluation
4. pricing environment
Look at context:
- inflation/recession
- competition: monopoly? many other companies?
- channel concerns (collaborators, shipping costs)
- consumer trends
- gov't concerns (laws)
- inflation/recession
- competition: monopoly? many other companies?
- channel concerns (collaborators, shipping costs)
- consumer trends
- gov't concerns (laws)
commercial product placement
ex: Google pays to be announced at the end of other companie's commercials
ethics
subset of values concerned with ends or principles of conduct (not religion, laws, or society).
selective coverage
- through multiple but not all reasonable outlets
- less retail loyalty; but allows company to limit price competition
- most popular, ability to avoid working with those wholesalers who make small orders, demand too much service, poor credit, don't do satisfactory job
- less retail loyalty; but allows company to limit price competition
- most popular, ability to avoid working with those wholesalers who make small orders, demand too much service, poor credit, don't do satisfactory job
"Me Too" strategy
Generic-like, but mimics leading brand in packaging AND quality. (CVS)
- Often equally as effective, but at a much lower price. Often supplied by the same provider, except they're forced into it by retail power.
- Often equally as effective, but at a much lower price. Often supplied by the same provider, except they're forced into it by retail power.
introduction strategies
- trial sales lead to repeat sales (cheaper to keep repeat than to attain)
- skim
- penetrate
- skim
- penetrate
management contracting
You provide only the management skills, others do the production and distribution.
mktg program
Multiple marketing plans, into one whole program.
heuristics for product selection
"Rules of thumb" people use to choose what to buy.
- price (high vs. low, may believe price correlates with quality)
- habit (stick with something they're familiar with)
- normative (do what others do, go with the #1 brand that more people use)
- more is better (more features, size for value, etc.)
- price (high vs. low, may believe price correlates with quality)
- habit (stick with something they're familiar with)
- normative (do what others do, go with the #1 brand that more people use)
- more is better (more features, size for value, etc.)
consumer protection groups
Consumer Bill of Rights
Federal Trade Commission
FDA
Federal Communications Commission
CPSC (Consumer Product Safety)
Federal Trade Commission
FDA
Federal Communications Commission
CPSC (Consumer Product Safety)
group brand
Not a store name, by across a variety of products. (President's Choice)
cannibalization
introduction of a new product that steals market share or profit from OWN firm's existing product, rather than a competitor's
joint venturing
domestic firm partners with foreign firm
tests for brand name
say
spell
read
remember
spell
read
remember
product life cycle stages (5)
1. product development
2. introduction
3. growth
4. maturity
5. decline
2. introduction
3. growth
4. maturity
5. decline
disruptive pricing effect
Lowers prices 15% across the board to cause trouble for local businesses. (Could be clarified as predatory pricing?)
waterways, pipelines
cheapest, important for nonperishable heavy materials; limited by frozen (weather)
loyalist buyers
Have some sort of emotional attachment to a brand. Less likely to switch brands. Very good lifetime value.
metric
A way to measure something.
customer-centric model
Target is surrounded by the 4Ps (mktg mix); everything optimized to meet the customer's wants and needs.
3b. the media
"vehicle" to getting message across
- used to be newspapers, magazines, etc.
- Now, more various ways to reach people.
Everybody spending a ton; need to "cut through clutter"
- used to be newspapers, magazines, etc.
- Now, more various ways to reach people.
Everybody spending a ton; need to "cut through clutter"
Walmart philosophy
Tight control of distribution channels; uses a lot of "just in time" distribution to avoid warehousing and high degree of automation.
- Squeeze highest margin from distributors (else we won't sell your product).
- Bad for Hersheys, diapers (hersheys sells 30% of product at Walmart)
- Squeeze highest margin from distributors (else we won't sell your product).
- Bad for Hersheys, diapers (hersheys sells 30% of product at Walmart)
Place Example Companies
IKEA - cut out intermediaries.
Walmart - power of retailer.
Walmart - power of retailer.
CRM & Segmenting
customer relationship management
- by microsegmenting, really identifies the wants and needs of (almost) each individual customer to build lifetime value
- identify the group/person, differentiate, interact and customize
ex: Harrahs - tracks where, when, what they gamble on and provides appropriate bonuses
Amazon - tracks browsing history and offers suggestions
- by microsegmenting, really identifies the wants and needs of (almost) each individual customer to build lifetime value
- identify the group/person, differentiate, interact and customize
ex: Harrahs - tracks where, when, what they gamble on and provides appropriate bonuses
Amazon - tracks browsing history and offers suggestions
egoism
maximize self interest
Tesco
Refocus on employees, and on consumers.
"The Tesco Way"
Expand into other markets (local leadership), internet delivery (eliminate warehouses, use stores efficiently), "just in time" deliveries.
Steering wheel.
"The Tesco Way"
Expand into other markets (local leadership), internet delivery (eliminate warehouses, use stores efficiently), "just in time" deliveries.
Steering wheel.
80/20
80% of purchases come from 20% of people.
(ex: ~75% of beer consumed by 25% of people who drink beer)
(ex: ~75% of beer consumed by 25% of people who drink beer)
evaluation of alternatives
- Can use multi-attribute model to determine how to better serve customers.
- High effort vs. low effort.
- High effort vs. low effort.
sunk costs
Unrecoverable past expenditures.
Ex: R&D, already spent. Shouldn't be factored into the decision, since there is no way to get it back.
Ex: R&D, already spent. Shouldn't be factored into the decision, since there is no way to get it back.
reference prices
- Consumers have ideal base price they are willing to pay.
ex: Taco Bell too expensive, re-priced based on reference prices.
ex: Taco Bell too expensive, re-priced based on reference prices.
plc: decline
- sales and profits decreasing
- no new customers, more competitors dropping out
- often caused by replacement technology (e.g. CDs to mp3s)
- use one of four basic strategies
- no new customers, more competitors dropping out
- often caused by replacement technology (e.g. CDs to mp3s)
- use one of four basic strategies
multichannel distribution
use of several competing channels to reach end users (sell to retain chains, and also smaller individual stores)
macro-mktg
directs flow of goods and services that matches the objectives of society
5Cs
1. company: strengths, weaknesses, location, employees
2. customers: who, what they want, current satisfaction
3. competitors: leader? their strengths & weaknesses
4. collaborators: who can we partner up with to make up for our S/Ws?
5. context: recession, expansion, legal context, etc. (especially relevant with internt'l markets)
STRATEGIC.
2. customers: who, what they want, current satisfaction
3. competitors: leader? their strengths & weaknesses
4. collaborators: who can we partner up with to make up for our S/Ws?
5. context: recession, expansion, legal context, etc. (especially relevant with internt'l markets)
STRATEGIC.
customer acquisition distribution
Bell curve distribution; similar to diseases, ideas.
factor method
A way to forecast sales by basing it on factors.
(ex: car sales will drop because the FACTOR of recession means less money)
(ex: car sales will drop because the FACTOR of recession means less money)
Visa & Mastercard
Mastercard was ahead; Visa had better acceptability but acceptability was not a big factor for customers.
Changed mktg strategy to boost "more widely accepted" model -> as a result, increased importance of acceptability, and made ppl thing Visa was doing better in acceptability.
Able to succeed by bettering self against American Express (limited acceptability) and not really going against Mastercard.
Changed mktg strategy to boost "more widely accepted" model -> as a result, increased importance of acceptability, and made ppl thing Visa was doing better in acceptability.
Able to succeed by bettering self against American Express (limited acceptability) and not really going against Mastercard.
stategy for declining industries
JIT
"just in time"
Coke re-formula
- despite blind taste tests showing new formula better
- Customers feel betrayed when changed formula in 1985; "hoarded" coke
- shows human-brand relationship: all determined by the BRAND
- Customers feel betrayed when changed formula in 1985; "hoarded" coke
- shows human-brand relationship: all determined by the BRAND
customer equity
expected earnings stream of a firm's current and prospective customers over a period of time
rule utiliatarian
Greatest good: looks @ overarching rules. (Not case by case.)
segmenting: geography
:: Geographical
- region, city size, density, climate, zip code (readily available, and ppl actually tend to be homogeneous in one zip code)
(Walmart picks large towns, non-city regions)
- region, city size, density, climate, zip code (readily available, and ppl actually tend to be homogeneous in one zip code)
(Walmart picks large towns, non-city regions)
post purchase decisions
- satisfaction or dissatisfaction: very important
- repeat business is core of making profit
- costs less to keep a customer than to make a new one
- "level" of satisfaction is very subjective, can be based off of performance, value
- repeat business is core of making profit
- costs less to keep a customer than to make a new one
- "level" of satisfaction is very subjective, can be based off of performance, value
piggyback service
Loading truck trailers onto railcars.
utilitarian thoery
Does the greatest good for the most number of people. Looks mainly at the outcome, not the context.
dynamic pricing
e.g. Google Adwords
How much are YOU willing to pay?
How much are YOU willing to pay?
licensing
selling the right to use a process, trademark, patent or other right by another company
trend extension
extending the trends of the past
traditional channel system
channel members don't work together; competition and variety of goals
ethnography
form of research involving fieldwork.
Actually become the customer, or work in a field where can observe and work with subjects directly.
Actually become the customer, or work in a field where can observe and work with subjects directly.
other segmenting demographics
- sociocultural (culture, relgion, social class, family life cycle)
- situation of use or purchase (time, objective, location, end user versus buyer)
- benefit (what are they trying to get out of your product)
- situation of use or purchase (time, objective, location, end user versus buyer)
- benefit (what are they trying to get out of your product)
new-task buying
purchase of a new need, requires more thinking and setting up routine
psychographics
"lifestyle analysis"
reciprocity
If you buy from me, I'll buy from you.
mktg in india
Attractive because: growing wealth, large population, trend towards urbanization BUT most people still in rural villages.
- Growth in IT revolution.
- Media grey/dark problem: difficult to reach some areas because no media at all.
- account for gov't ownership laws, must have local expertise!
- Understanding customers: they learn the "parent brand" not the child brands, prefer smaller packaging (price more important than size/value)
Action: set up internet stands, send representatives, local advertising, Hindustan Unilever uses "cycle boys" to load up with Nestle products
- Growth in IT revolution.
- Media grey/dark problem: difficult to reach some areas because no media at all.
- account for gov't ownership laws, must have local expertise!
- Understanding customers: they learn the "parent brand" not the child brands, prefer smaller packaging (price more important than size/value)
Action: set up internet stands, send representatives, local advertising, Hindustan Unilever uses "cycle boys" to load up with Nestle products
purchase decision cycle (4)
1. use heuristics to determine choice
2. actually buying it
3. using the product
4. outcome: reinforces or doesn't reinforce brand
The last step (positive or negative reinforcement) alters the heuristic used to determine, whether that choice tactic is a good one.
(ex. I used "want to try smthg new" as a choice tactic, it paid off so I'll consider that again OR it failed, I will never try smthg new again.)
2. actually buying it
3. using the product
4. outcome: reinforces or doesn't reinforce brand
The last step (positive or negative reinforcement) alters the heuristic used to determine, whether that choice tactic is a good one.
(ex. I used "want to try smthg new" as a choice tactic, it paid off so I'll consider that again OR it failed, I will never try smthg new again.)
6. pricing tactics
(see various tactics)
-
-
promotion irony
word of mouth (and public relations) are most influential in advertising, but the least controllable
old way: mass marketing
- same product for everyone
- same mktg mix
- advantage: efficiency (only have to do things one way)
- same mktg mix
- advantage: efficiency (only have to do things one way)
steps to pricing (6)
1. develop pricing objectives
2. estimate demand
3. determine costs
4. evaluate the pricing environment
5. choose a pricing strategy
6. choose pricing tactics
2. estimate demand
3. determine costs
4. evaluate the pricing environment
5. choose a pricing strategy
6. choose pricing tactics
horizontal arrangement legality
Horizontal arrangements among competing retailers to limit sales by customer territory is illegal.
Biopure
- Skim or penetrate? (Skim)
- Understand PLC
- Launch Hemopure first (would cause pricing problems) or Oxyglobin first? (still pending)
- advantages: disease-free, can be stored for much longer, could help critical trauma patients, universal blood type
- few competitors
- How to price it? Calculate the total market value. Costs to produce, ship, margin desired.
- Understand PLC
- Launch Hemopure first (would cause pricing problems) or Oxyglobin first? (still pending)
- advantages: disease-free, can be stored for much longer, could help critical trauma patients, universal blood type
- few competitors
- How to price it? Calculate the total market value. Costs to produce, ship, margin desired.
various plc shapes
brand recognition
When recognize a brand, have a relationship with it.
Can be positive (Oh, I know this brand. it's great!) or negative (Oh, I know this brand. I don't use it.)
Two way risk: once recognized, have opinions about it.
Can be positive (Oh, I know this brand. it's great!) or negative (Oh, I know this brand. I don't use it.)
Two way risk: once recognized, have opinions about it.
marketing mix
A blend of 4Ps to tactically achieve a goal.
habitual buyers
Buy a brand out of habit. Can be more easily swayed to change. (Strategic because will then continue to buy that brand; build lifetime value.)
decline strategies (4)
1. withdraw/divest (leave market)
2. harvest (reduce investments, let sales go on)
3. niche (resegment to focus on whoever is still buying them)
4. market leadership (reinvigorate product into new markets)
- can also introduce variations (cherry coke), new uses (baking soda), new markets (overseas, DIY), product variations (jello to puddings)
2. harvest (reduce investments, let sales go on)
3. niche (resegment to focus on whoever is still buying them)
4. market leadership (reinvigorate product into new markets)
- can also introduce variations (cherry coke), new uses (baking soda), new markets (overseas, DIY), product variations (jello to puddings)
high vs low effort decisions
High: high price item, very important, expensive, think a lot more about it and consider options carefully.
Low: cheap item, not a huge difference between brands, does not require as more consideration.
Low: cheap item, not a huge difference between brands, does not require as more consideration.
plc curve: sales & profits
plc applies to..?
For an entire *industry* or *product category*, not a brand.
ex. cd players, mp3 players (not just iPod)
ex. cd players, mp3 players (not just iPod)
internal vs. external validity
In experimental studies, we control the factors and conditions. There is internal validity in that we can be sure there is a cause & effect relationship.
However, because it is controlled, it may not mimic real life situations and we lose external validity. Unrealisitic results.
However, because it is controlled, it may not mimic real life situations and we lose external validity. Unrealisitic results.
Starbucks
Should they spend $40 million on training?
- Losing sight of the consumer. Attempting to grow business too much.
- Mktg math: numbers show that if you can convert just 2% of each store's customers (with so many stores and so many high purchases from repeat), can justify costs.
- Losing sight of the consumer. Attempting to grow business too much.
- Mktg math: numbers show that if you can convert just 2% of each store's customers (with so many stores and so many high purchases from repeat), can justify costs.
CPM
Cost to reach each 1000 people.
sales forecast
an estimate of how much an industry or firm hopes to sell to a market segment (usually lower than what they forecast)
Apple & Starbucks
Changing music industry. Now downloading, word of mouth, alternative media (mySpace) and not CDs, radios, etc.
iTunes huge: allows people to "cherry pick," less revenue for labels b/c Apple has same price on songs.
Joined with Starbucks for own record label.
Both very consumer-centric, whereas record labels are attacking illegal downloaders (not very customer-centric).
iTunes huge: allows people to "cherry pick," less revenue for labels b/c Apple has same price on songs.
Joined with Starbucks for own record label.
Both very consumer-centric, whereas record labels are attacking illegal downloaders (not very customer-centric).
payment pricing
Give price in payment amounts, not full price. (e.g. cars)
marketing
attempting to anticipate customer or client needs and direct the flow of goods from producer to customer to client
business objects vs. ethical action
Businesses want:
- efficiency, high returns (ROI), maximum shareholder profit
These values don't always align with:
- upholding company values, social responsibility
- efficiency, high returns (ROI), maximum shareholder profit
These values don't always align with:
- upholding company values, social responsibility
market positioning
- develop a mktg mix to place product in desired position for the target segment
distribution studies
studies where product is available, where it is being purchased
reverse channels
ways to receive back products consumers don't want (recalls)
ethical mktg examples
cigarette ads: targetting kids?
violent toys/games
tainting "word of mouth" with buzz-agent programs
violent toys/games
tainting "word of mouth" with buzz-agent programs
segmenting: demographics
- age, eduction, cohort ("a generation"), occupation, sex, marital status, income
entering PLC market
Your product may not follow curve, because you're entering the market mid-curve.
(ex. entering @ maturity phase will result in different profits than entering in growth phase)
(ex. entering @ maturity phase will result in different profits than entering in growth phase)
media trends
tv - falling
radio - stable
magazine - stable
internet - shooting up
newspaper - dropping slightly
radio - stable
magazine - stable
internet - shooting up
newspaper - dropping slightly
plc: growth
- rapid increase in sales
- many entrant competitors
- many new customers (intro companies can reap repeat sales from early adopters)
- gains in profitability
- increasing product differentiation due to competitors
- many entrant competitors
- many new customers (intro companies can reap repeat sales from early adopters)
- gains in profitability
- increasing product differentiation due to competitors
channel conflict: vertical
producer: wants to sell most of own goods
wholesaler: wants to sell most of goods
retailer: wants to sell at the highest margin
^ Varying goals.
wholesaler: wants to sell most of goods
retailer: wants to sell at the highest margin
^ Varying goals.
indirect marketing
goes through a set of intermediaries (dealers, distributors, agents)
wholly owned subsidiary
a separate firm owned by a parent company
forecasts
forecasts market, segment growth and value
time-length of PLC phases
Can vary. For example, refrigerators and microwaves have very long maturity phase.
segmenting: psychographic
- "lifestyle", such as outdoorsy, couch potatoes, city people, young urbanites
Whole Foods philosophy
- positioned away from Walmart
- educated, affluent, liberal
- "Declaration of Interdependence" where offer higher margins than Walmart, which squeezes large supply and low margins (WF better suited for small organic famers)
- atmosphere, unique assortement and higher prices yield a $700 sq/ft margin.
- advantageous store-only private brands
- educated, affluent, liberal
- "Declaration of Interdependence" where offer higher margins than Walmart, which squeezes large supply and low margins (WF better suited for small organic famers)
- atmosphere, unique assortement and higher prices yield a $700 sq/ft margin.
- advantageous store-only private brands
critera for good segmentation
- homogeneous within (should have similar qualities on attributes you choose)
- heterogeneous between (different segments should be different on your attributes)
- substantial (big enough to be worthwhile)
- operational (accessible, identifiable)
- stable (if it takes 10 years to manufacture, group may no longer exist)
- heterogeneous between (different segments should be different on your attributes)
- substantial (big enough to be worthwhile)
- operational (accessible, identifiable)
- stable (if it takes 10 years to manufacture, group may no longer exist)
0 sum market
"a full pie" - If you gain one dollar, someone else loses it. There is no new wealth to be created.
private/public warehouses
private: leased by companies, expensive, for regular use
public: temporary, no regular need for space, (ex: seasonal businesses)
public: temporary, no regular need for space, (ex: seasonal businesses)
breaking bulk
Sell large amount to a distributor (not end user, b/c end user doesn't need that much), so the distributor can break into smaller chunks and sell it where it needs to go.
new way: segmentation
- divide market into subsets of consumers with common needs and characteristics
- select one or more of them to target
- position w/ unique mktg mix
- select one or more of them to target
- position w/ unique mktg mix
discrepency of quantity
different between quantity that producer comfortably produces, and quantity that final users want (tires)
elasticity
- elastic products are those in which a change in price causes change in qty. demanded (luxury goods, flexible, substitutes available)
- inelastic goods are often staples or necessities: a drastic change in price does not change demand (gas, medications)
E = %change in demand/% change in price
- inelastic goods are often staples or necessities: a drastic change in price does not change demand (gas, medications)
E = %change in demand/% change in price
bundling
Putting together related products:
- introduce to new products
- charge more
- perceived "more value"
- introduce to new products
- charge more
- perceived "more value"
corporate vertical mktg system
Combines stages of production under one management. E.g. own the fabric, design, manufacturer and retail outlets for a clothing comp.
- Advantage: control every stage, can often maintain margins
- Disadvantage: inefficient if need to produce high scales, expensive to expand, may still not unify goals across channels, reduces flexibility (you now have hard assets)
- Advantage: control every stage, can often maintain margins
- Disadvantage: inefficient if need to produce high scales, expensive to expand, may still not unify goals across channels, reduces flexibility (you now have hard assets)
price-quality inferences
higher price = higher quality
public relations
Good communication with ALL public (customers, stockholders, gov't, suppliers)
- can't always control media's message, or interest in your deeds
ex: Dove Campaign for Real Beauty. Created a lot of positive free press.
- can't always control media's message, or interest in your deeds
ex: Dove Campaign for Real Beauty. Created a lot of positive free press.
consumer decision making process (5)
1. recognize need
2. information search
3. evaluate alternatives
4. decision to pruchase
5. postpurchase behavior (extremely important, links back to all others in cycle)
2. information search
3. evaluate alternatives
4. decision to pruchase
5. postpurchase behavior (extremely important, links back to all others in cycle)
extensive, limited, routinized problem solving
extensive: high purchase effort
low: some effort, but not a lot
routinized: habitual, no effort involved
low: some effort, but not a lot
routinized: habitual, no effort involved
consumer studies
Figures out intent, awareness, etc.
Aqualisa
- New shower for the UK: eliminates old problems of rusty, bulky showers, better pressure and temperature control
- A more expensive model though.
- Plumbers are the "go to" person, hesitant to try a new shower. "one time converts" - could generate end user interest.
- Sales force limited, tied up on current customers. Costly to generate new sales.
- Could also target develops, but lag time.
- Best: plumbers. The go-to person for almost all installations. Hub and spoke model?
- DIY markets also there.
- A more expensive model though.
- Plumbers are the "go to" person, hesitant to try a new shower. "one time converts" - could generate end user interest.
- Sales force limited, tied up on current customers. Costly to generate new sales.
- Could also target develops, but lag time.
- Best: plumbers. The go-to person for almost all installations. Hub and spoke model?
- DIY markets also there.
modified rebuy
review some of the rebuy order to optimize
retail price
What the consumer pays.
profit impact
profit impact = (unit cont. * # of units sold) - fixed costs
Essentially, how much we made from selling units (after var. costs removed), minus the extra fixed costs.
Essentially, how much we made from selling units (after var. costs removed), minus the extra fixed costs.
Hybrid Cars
Aren't chosen for their price, rather people buy for psychological and emotional reasons (status symbol)
containerization
grouping individual items into an economical shipping quantity and packaging
total cost approach
identifying ALL costs of every alternative; ex: vegetable company; more costly airshipping but less spoilage
mktg company era
whole company guided by marketing concept; creation of long range plans
IMC
integrated marketing communications
- Try to integrate sales promotions, personal selling, public relations and word of mouth
- Try to integrate sales promotions, personal selling, public relations and word of mouth
market development
increase sales by selling present products in new markets
pull
Get grassroots customers excited, who then demand retailers and wholesalers to get it. Requires higher spending to get consumers into it.
1. pricing objectives
- gain sales/market share (not necessarily profit)
- profit (ex. Steinway's priced for profit, not mkt share)
- competitive effect (disrupt competition by price slashing)
- gain customer satisfaction
- enhance image (high price = high quality)
- profit (ex. Steinway's priced for profit, not mkt share)
- competitive effect (disrupt competition by price slashing)
- gain customer satisfaction
- enhance image (high price = high quality)
distribution trends
Growth in direct mktg.
**Downstream power shift** retailers now have a ton of power.
**Downstream power shift** retailers now have a ton of power.
calculating value of a brand
Subtract real estate, inventory. Coke = $65B, Microsoft/IBM = $57-8B.
Value of a brand is measured by willing to pay x amount more than generic, or how willing to go out of way to find branded.
Value of a brand is measured by willing to pay x amount more than generic, or how willing to go out of way to find branded.
PD concept
physical distribution system says that whole channel system should be coordinated
GRP
gross ratings points: % of target audience reached
e.g. Ad shown 5 times, reaches 50% audience each time has 5*50% = 250 GRP.
e.g. Ad shown 5 times, reaches 50% audience each time has 5*50% = 250 GRP.
multi-attribute model
The attitude towards a brand is the weighted sum of:
(importance of an attribute)*(brand's performance in that attribute)
(importance of an attribute)*(brand's performance in that attribute)
% of selling that is advertising
Averages out to 5-7%. (Varies based on item)
administered VMS
"detroit model"
Tightly clustered and controlled suppliers. (You have strong influence and virtually tell them what to do in order to get you as a customer, but you don't actually own them.)
- Basically run, but not own.
Tightly clustered and controlled suppliers. (You have strong influence and virtually tell them what to do in order to get you as a customer, but you don't actually own them.)
- Basically run, but not own.
factors for skim v. penetrate
- perceived relative advantage (if very apparent, penetrate)
- compatability w/ existing practices (if new/radical, skim)
- complexity (complex: skim)
- ability to try innovation (hard to get done: skim)
- observability of benefits (very apparent: penetrate)
- limitations of company's ability to cover costs of skimming or penetrating
- compatability w/ existing practices (if new/radical, skim)
- complexity (complex: skim)
- ability to try innovation (hard to get done: skim)
- observability of benefits (very apparent: penetrate)
- limitations of company's ability to cover costs of skimming or penetrating
physical distribution/logistics
the transporting, storing, and handling of goods
divest
total withdrawal from marketing expenses
advertainment
Program is built around a sponsor; e.g. TV shows (Apprentice, American Idol).
Major differentiator: sponsor comes first, THEN show story is built around it.
Major differentiator: sponsor comes first, THEN show story is built around it.
information search
- internal searches: come from memory, short list of brands that could satisfy need, VERY HIGH CHANGE that final purchase will be from initial consideration set.
So, companies try very hard to make sure brand is well-known and in mind. Build high awareness.
- external search: word of mouth/ ask other people/ look it up on web or in stores
So, companies try very hard to make sure brand is well-known and in mind. Build high awareness.
- external search: word of mouth/ ask other people/ look it up on web or in stores
recognition of needs
- Needs are driven by a discrepancy between current state and desired state.
ex. hungry, want food. in school studying, want a good job and happy family.
- Products take a consumer from one state to another.
- Needs can be utiliarian (useful) or psychological (nice car for self esteem)
- mktg pushes the "ideal state" away from current state in order to get people to want smthg.
ex. hungry, want food. in school studying, want a good job and happy family.
- Products take a consumer from one state to another.
- Needs can be utiliarian (useful) or psychological (nice car for self esteem)
- mktg pushes the "ideal state" away from current state in order to get people to want smthg.
customer satisfaction
extend to which a company fulfills a consumer's needs and desires
multinational corporations
firms that have a direct investment in several countries
Li & Fung
- "sourcing" - you supply idea, they "get it done"
- "own nothing" model: they just join together parts of the chain, but don't actually do anything. (management-like)
- their value: knowledge and access to collaborators
- delivering "store ready" if possible
- "own nothing" model: they just join together parts of the chain, but don't actually do anything. (management-like)
- their value: knowledge and access to collaborators
- delivering "store ready" if possible
administered channel system
informally agree to work together. Can appoint a manager to oversee.
managing expectations
- Don't overpromise, overdeliver. (e.g. shipping with Amazon. Tell will take longer, deliver faster for higher satisfaction.)
private labels
Stores create own brands.
e.g. Trader Joe's
e.g. Trader Joe's
"the soft"
The value between cost of factory product and final retailing price. (Essentially, all the potential profit that can be gained.)
Intermediaries (Li & Fung) try to snap up as much of this as possible.
Intermediaries (Li & Fung) try to snap up as much of this as possible.
basic needs (4)
1. esteem - feel good about self
2. control - bring about own outcomes
3. belonging - connect w/ other people, social acceptance
4. meaningfulness - do things that will last, be significant
mktg plays on these: e.g. you can't control your weight due to genes/ fast food but we can help you control it! You don't have control over earthquakes, but insurance can help you feel more in control of it.
2. control - bring about own outcomes
3. belonging - connect w/ other people, social acceptance
4. meaningfulness - do things that will last, be significant
mktg plays on these: e.g. you can't control your weight due to genes/ fast food but we can help you control it! You don't have control over earthquakes, but insurance can help you feel more in control of it.
exclusive coverage
- through a single middleman/retailer
- high influence on final sale price/style
- high margins
- limited reach
- selection of only one middleman in each geographic area, usually involves an agreement
- high influence on final sale price/style
- high margins
- limited reach
- selection of only one middleman in each geographic area, usually involves an agreement
captive pricing
camera and film, razors and blade
opinion leader
Forward thinking, knowledgable people who influence decisions on a product category. (word of mouth)
segmenter vs. combiner
Safer to be segmenter.
Can't combine too much.
Can't combine too much.
push
Push products through distribution channels. Get wholesalers into it, who get retailers into it, who try and push it to the customers.
quantifying satisfaction
Satisfaction or dissatisfaction ONLY occurs when there is a difference between expectations and actual performance.
e.g. Expected really great meal at Le Bec Fin, only moderate. Expected really lousy @ Philly Diner, wasn't too bad.
e.g. Expected really great meal at Le Bec Fin, only moderate. Expected really lousy @ Philly Diner, wasn't too bad.
stp
segmenting, targeting, positioning
correlational studies
Correlation expressed as value between -1 and 1.
-1: negative correlation. (the higher the age, the less technology they use)
0: no correlation (height & music downloads)
1: positive correlation (the higher the income, the higher the spending on apparel)
** Does not imply causation**
-1: negative correlation. (the higher the age, the less technology they use)
0: no correlation (height & music downloads)
1: positive correlation (the higher the income, the higher the spending on apparel)
** Does not imply causation**
intermediary
specializes in functions aside from production
economies of scale
as you produce more a product, the cost to make each one goes down
mktg concept
an organization goal is to satisfy customers - at a profit
target marketing
- develop measures to choose which segments are the most attractive (easy to reach, most numerous)
Black and Decker
- Brand name being squandered due to poor product color choice, having different (confusing) lines
- Esp. because catering to proud people, who put lot of thought into products used for their job
- Consumer, Professional-Tradesmen, Professional-Industrial segments
- strength in consumer brand detracts from tradesmen segment
- strong product
- rebrand as "DeWalt" which has better rep
- Esp. because catering to proud people, who put lot of thought into products used for their job
- Consumer, Professional-Tradesmen, Professional-Industrial segments
- strength in consumer brand detracts from tradesmen segment
- strong product
- rebrand as "DeWalt" which has better rep
CMO
chief marketing officer; over 50% of the fortune 1000 companies have CMO positions
plc: maturity
- intense competition on all 4 Ps
- clear segmentation: experience buyers, slowdown in customer acquisition, no technological breakthroughs
- repeat sales are key now
- squeeze out profits through: niche branding, small differentiations (size, color), cost cutting
- clear segmentation: experience buyers, slowdown in customer acquisition, no technological breakthroughs
- repeat sales are key now
- squeeze out profits through: niche branding, small differentiations (size, color), cost cutting
brands & inferences
People have a perceived idea about brand. Should *extend* or build upon that idea.
ex: Arm & Hammer: inference (cleans, deodorizes), extend brand to toothpaste, cat litter
ex: Arm & Hammer: inference (cleans, deodorizes), extend brand to toothpaste, cat litter
market share
market share = our sales/ total market sales.
Can be in volume (# of units), or value (% of dollar sales).
Can be in volume (# of units), or value (% of dollar sales).
3. determining costs
(see mktg math)
qualitative research
- depth interviews
- focus groups
- ask about brands and metaphoric meanings (ZMET)
ex: Cheerios and family
- focus groups
- ask about brands and metaphoric meanings (ZMET)
ex: Cheerios and family
market segmentation
identifying bases to divide up the market
- develop profiles for each segment
- develop profiles for each segment
act utiliarianism
Greatest good for most people, on a case by case basis.
5. pricing strategies
- cost-plus: determine your costs, set a margin for your profit (not always most strategic)
- competition-based: going rate, same as similar products
- price leadership: "undercut leader", leads to price war, not always feasible for small companies
- target-cost: pick price, design around that target price by reverse engineering it (needs time)
- yield management: things that are time based like plane seats; save quantity and price according to necessity at a given time
- value-based: EVC economic value to customer (usefulness)
- EDLP
- skim/penetrate/trial prices
- competition-based: going rate, same as similar products
- price leadership: "undercut leader", leads to price war, not always feasible for small companies
- target-cost: pick price, design around that target price by reverse engineering it (needs time)
- yield management: things that are time based like plane seats; save quantity and price according to necessity at a given time
- value-based: EVC economic value to customer (usefulness)
- EDLP
- skim/penetrate/trial prices
ethical exchange
Both the buyer AND seller should be better off after transaction.
evolution of retailing
General stores, department stores, supermarkets, catalogs/showrooms, warehouses, home shopping, e-commerce and finally m-commerce.
CRM
customer relationship management.
maintain relationship w/ customer, "dialogue, not monologue"
- individualized needs, figure out who buys what and when, "learn the customer"
maintain relationship w/ customer, "dialogue, not monologue"
- individualized needs, figure out who buys what and when, "learn the customer"
contractual channel system
Agree to work together under contract.
competitor intelligence
studies where your product is in comparison to competitors (where on perceptual map, how they are doing financially)
% of cost that is distribution
30-50% of costs are distribution.
Least flexible to change. Could take years to modify. (e.g. contracts betw. dealers and manufacturers)
Least flexible to change. Could take years to modify. (e.g. contracts betw. dealers and manufacturers)
segmentation benefits
- allows established companies to expand into new (sub)markets (ex: Gap into Old Navy, Banana Republic)
- allows new companies to find niche (ex: Snapple teas, fruit drinks)
- identify SPECIFIC needs and wants of groups (ex: ethnic groups have different hair product needs)
- reposition existing products (ex: gaming systems from kids to YA/brain age)
- determine appropriate media; can better communicate to audience
- allows new companies to find niche (ex: Snapple teas, fruit drinks)
- identify SPECIFIC needs and wants of groups (ex: ethnic groups have different hair product needs)
- reposition existing products (ex: gaming systems from kids to YA/brain age)
- determine appropriate media; can better communicate to audience
correlational vs. experimental studies
Correlational: looks for association between variables.
Experimental: tries to determine cause and effect, more controlled.
Experimental: tries to determine cause and effect, more controlled.
research criteria (4)
1) needs to be current data (segments move, preferences change)
2) needs to have validity (something can be reliable in that the same result keeps on coming up, but it's not valid b/c might be measuring wrong thing in the first place!)
3) reliable (consistent)
4) representative of the market
2) needs to have validity (something can be reliable in that the same result keeps on coming up, but it's not valid b/c might be measuring wrong thing in the first place!)
3) reliable (consistent)
4) representative of the market
two part pricing
set-up fee, and then monthly fee
conjoint analysis
- Analyzes relative importance of an attribute by forcing tradeoffs.
Would you rather have this or that?
Possibilites of one attribute on x, preference on y.
Would you rather have this or that?
Possibilites of one attribute on x, preference on y.
Torro Snowblower
- Importance of inferences. Named product "snowpup", didn't work. Renamed to "Snowmaster" and dominated market.
contract manufacturing
Turn production to foreign companies while you maintain the distribution, product design, etc. (rest of mktg process)
skim vs. penetrate
SKIM: high price, low promotion, selective place
- for complex, riskier, education-necessary products
PENETRATE: low price, high promotion, high variety of place
- easy to use, "small leap", understandable products
- for complex, riskier, education-necessary products
PENETRATE: low price, high promotion, high variety of place
- easy to use, "small leap", understandable products
intermediaries (4)
1. agents/brokers: negotiate sales between two companies (never actually takes the goods)
2. wholesaler: takes good and resells
3. retailers: sell to end users
4. facilitators: FedEx, UPS, never own the goods but plays a role in transporting them
2. wholesaler: takes good and resells
3. retailers: sell to end users
4. facilitators: FedEx, UPS, never own the goods but plays a role in transporting them
opportunity cost
Value of the next best choice that you're giving up. Doing this "cost" me x dollars, which was the value of the next best opportunity.
DON'T include opportunity costs when assessing profitability, unless it's certain you would have gained it.
DON'T include opportunity costs when assessing profitability, unless it's certain you would have gained it.
why retailers want to be brands
1. Greater profit opportunity
2. Provide a unique offering, and only at their store
3. Allows you to bargain w/ nat'l suppliers (I'm putting my __ on the shelf, less room for you.)
4. Reduces more players in the game, which lowers your margin.
2. Provide a unique offering, and only at their store
3. Allows you to bargain w/ nat'l suppliers (I'm putting my __ on the shelf, less room for you.)
4. Reduces more players in the game, which lowers your margin.
% margin
The margin is 1-(var. cost/price per unit).
E.g. The variable cost of us to make one is 40% of the final selling price. Our margin is 60%. (Of the final selling price, 60% of it is our profit.)
E.g. The variable cost of us to make one is 40% of the final selling price. Our margin is 60%. (Of the final selling price, 60% of it is our profit.)
penetrate
- "Big Bang", mass market from the beginning
- maximize number of early adopters
- requires more starting resources
- target to everyone at a low price
- maximize number of early adopters
- requires more starting resources
- target to everyone at a low price
word of mouth
- create a buzz, viral mktg
- most influential
- general, norm way of making a decision
- most influential
- general, norm way of making a decision
1. promotion objectives
Vary based on PLC. A new product, might be to try to inform, create awareness and persuade to try. A mature product, may be "reminder" of brand.
odd-even pricing
odd: ends in cents (infers that its cheaper)
even: ends in whole dollars (infer that it's higher quality, more expensive)
even: ends in whole dollars (infer that it's higher quality, more expensive)
skimming
- start slow, then grow
- extract maximum value from group that already wants product the most (minimal attainment costs)
- can make the most profit at the beginning
- early adopters can then educate others, "trickle down"
- HIGH STARTING PRICE
- extract maximum value from group that already wants product the most (minimal attainment costs)
- can make the most profit at the beginning
- early adopters can then educate others, "trickle down"
- HIGH STARTING PRICE
depreciation
accounting for a large fixed cost over time.
divide total cost by the number of years it should be depreciated across.
divide total cost by the number of years it should be depreciated across.
e-commerce pricing
opens to a wider audience, especially for select luxury items in which desired customers and spread about geographically
single, multiple or combined target market approach
1. single: one target
2. multiple: several targets, treat separately.
3. combined: mix multiple into one broad mktg strategy
2. multiple: several targets, treat separately.
3. combined: mix multiple into one broad mktg strategy
process (5)
1. define the problem
2. analyze the situation
3. gather problem-specific data
4. interpret data
5. create a solution
2. analyze the situation
3. gather problem-specific data
4. interpret data
5. create a solution