Marketing Exam 2

Brand

A name, term, sign, symbol, or design that identifies the maker of a product

Branding

Creating meaningful differences between products

Brand Equity

The positive differential effect that knowing the brand name has on a customer response to the product

Brand Value

The total financial value of the brand

Three major brand strategy decisions

Brand name selection - selection an protection

Brand sponsorship - manufacturer, private brand, licensed brand, co-brand
Brand development - line/brand extensions, multi brands, new brands

Licensed branding

One firm allows another to use its brand names/IP in exchange for a fee by contract

Co-branding

When two established brand names of different companies are used on the same product for superior market value

Brand development strategies

Line Extension - use brand for new product within existing product categories

Brand Extension - current brand name to new or modified product in a new category

Multi brands - introduce many different brand names in an existing product category

New Brands - use a new brand name because no current brand name is important

New Product Development

1. Idea generation - sources of new product ideas

2. Concept testing - presented to and evaluated by a group of target customers

3. Product Development - Alpha testing evaluates within the firm, beta testing uses potential customers

4. Market test - premarket predicts adoption and potential demand, test marketing evaluates actual sales and effectiveness using pilot

Diffusion of innovation

Innovators - venturesome, risk taking, highly knowledgeable through multi info sources

Early adopters - not as risk taking but opinion leaders that value social acceptance

Early majority - deliberate and cautious, spend more time in decision

Late majority - skeptical, peers are primary sources, below average social status

Laggards - traditional, fear of debt with neighbors/friends as information sources

Product Life Cycle

Describes stages a new product/category goes through (introduction, growth, maturity, decline)

Integrated Marketing Communications

Promotion dimension of 4 Ps, combining communication disciplines to provide clarity, consistency, and maximum communication impact

The communication process

1. Sender

2. Encoding - transmitter encodes

3. Message - communications channel (media)

4. Decoding

5. Receiver

*Remember feedback and noise from environment

Marketing communications influence

Cognitive stage (think), affective stage (feel), behavioral stage (do)

AIDA Model

Awareness - gain attention of the consumer

Interest - increase interest to further investigate product with persuasion

Desire - I like it to I want it, building emotional preference

Action - Ultimate goal of IMC, physical action and behavioral change

AIDA best for/limitations

Best for - high involvement and high differentiation products

Limitations - customers don’t always follow a linear path

Communication Channels in IMC

1. Advertising

2. Sales promotion

3. Online marketing

4. Personal selling

5. Direct marketing

6. Public relations

Push vs Pull Marketing

Push - targets the retail wholesale salespeople in order to get product out

Pull - targets customers in order to pull them into the stores

ATL vs BTL Marketing

Above the line - broad reach to build brand awareness, but hard to measure impact

Below the line - targeted, personal communication thats response driven and conversion focused

Media Types

Paid - firm controlled, paid advertising and influencer partnerships

Earned - consumer controlled and other controlled, public relations

Owned - firm controlled, web properties, brand social channels, email lists

Methods Measuring Success

Click through rate - number who clicked ad/ number who saw ad

Conversion rate - number who took desired action/ number who saw ad

Return on marketing investment - g(ross margin - marketing expenditure)/ marketing expenditure

What is a price

The sum of all the values that customers exchange for the benefits of having or using the product/service

Objective price

Not always the most important, instead its how the price is perceived

Reference prices

internal - a remembered price from experience or memory

external - a visible comparison

The five C’s of pricing

1. Company objectives

2. Customers

3. Costs

4. Competition

5. Channel members

Pricing strategy

Profit oriented - maximize profits

Sales oriented - focus on increasing sales or market share, even at expense of per unit cost

Competitor oriented - compare prices relatively to those of competitors

Customer oriented - pricing strategy based on customer value

Price elasticity of demand

inelastic - demand changes only a little when price changes (|e| < 1)

elastic - demand changes a lot when price changes (|e| > 1)

PED equation

%change in quantity/ %change in price

What makes demand more or less elastic

Income effect - lower income can increase price sensitivity

Substitution effect - more close substitute = more elastic demand

Cross price elasticity - demand can also be affected by prices of substitutes/complements

Related goods

Substitute - any alternative product that can replace another

Complement - a product that is used together with another

Cross price elasticity of demand

%change in quantity of good A/ %change in price of good B (negative complement, positive substitute)

Cost-plus pricing

Choose price based on cost and desired profitability (can be inefficient)

Pricing channel members

Manufacturers/suppliers - want higher prices to protect margin

Retailers - want lower prices to drive sales and traffic

Value based pricing

Starts with consumer and their willingness to pay

Everyday low pricing vs High/Low pricing

EDLP - a constant low price typically between competitors sale and normal
H/L - involves promotions of sales, when prices are significantly decreased

Price skimming

Sell at a high price that innovators and early adopters are willing to pay and then reduce to hit next target segment

Price penetration

Initial prices set relatively low to penetrate the market and quickly develop sales

Segmentation-based pricing

observable - different prices based on characteristics (age, location, time)

Self selection - structure that leads customers to price themselves (tiers, quantity discount)

Three product mix pricing strategies

Optional product pricing - accessory add on to the main product

Captive product pricing - required add-on used with the main product

Bundle pricing - several products sold together at a discount

Psychological pricing

Pricing that considers the psychology behind how consumers evaluate price and value