MKT 450 Test

Brand

Portfolio of qualities associated with a name, have value beyond the benefits of the product, communicate and engage with customers

Marketers control

Product shape & packaging • Logos, symbols & colors • Jingles & slogans • Spokespeople, etc.

Marketers should choose

brand names that convey brand information

Customer Benefits of Branding

company ownership, predictable quality, status symbol, increase loyalty, allow for premium prices, pursue multiple targets

Attributes are

easy to communicate and easy for competitors to copy

Benefits are

abstract; harder to create and communicate, but more meaningful

Brands Serve Social Functions

helps customers achieve ideal self, bonding

Brand Association Network

Customer satisfaction with the brand are most heavily influenced by the positivity or negativity of nearest links

Brand Personalities capture

1\. Specific information about the brand 2. Holistic perceptions about the brand

Consumers experience brands

Affectively, intellectually and behaviorally

Umbrella approach

Attaching the same brand name to products

House of brands approach

• Introducing a new brand name for every product line

Product category extensions

Increase breadth - new product line

Ingredient branding

Form of co-branding in which one company adds value to a host product

Co-branding works well when

a company is introducing a new product attribute

Self-branding

Branding own ingredient to differentiate its quality from competitors • Works better when tweaking a minor attribute

Glocalization

Different names in different countries

Interbrand

assess the value of a firm, subtract its physical and financial assets

Top Down (inside-out)

Customer feedback is sought later in the process; marketing supports product launch

Bottom Up (outside-in or co-creation)

Customer & company co-create products

The New Product Develop Process is not

linear, needs revists and changes

Idea Creation

idea generation, in-house winnowing & refinement

Concept Testing, Design & Development

obtain feedback, use focus groups, conjoint procedure, create prototype

Testing

beta trial, customer reactions, create small scale on market (not common anymore)

Simulated test markets

customers fake shop and marketers see what happens, after there is survey

Forecasting

important for budgets, sales setting goals and potential, product and logistics, market potential, purchase intentions, pricing, timing

Market introduction

low sales, promotional spending

Penetration

low price; discourages future competition

Skimming

high price; encourages future competition; recoup R&D costs

Market growth

sales and profit increase, need competitive advantage, focus on products superiority, more distribution, increase in pricing

Market maturity

sales begin to level off, profit decline, new product line, decrease in price

Market decline; sales and profits decline, may need to be divested (sell), harvested (reduce support), rejuvenate (refresh)

Discussion of innovation

Innovators (likes to try new products), Early adopters, early majority (wait for favorable experiences), late majority (wait for word of mouth), non-adopters

Used to forecast sales by

1\. Observing current sales data, fitting the model, and predicting future sales 2. Plugging in past results on similar products and predicting future sales

Innovation (P)

Likelihood of adoption due to promotion • Increase P by decreasing price earlier

Imitation (Q)

Likelihood of adoption due to word-of-mouth, increase by decreasing price later and have opinion leaders activate networks

Acceptance of new products tends to be higher when

advantage is clear, works with lifestyle, not complex, tried/sampled

Market penetration

Sell same products to current markets

Market development

Sell existing products to new markets

Product development

Sell new products to current markets

Diversification

Pursue new markets with new products

Pricing

Is influenced by company cost, competitive pricing and customers’ willingness to pay, tweaked easily, influences profitability

Supply and Demand

Demand tends to decrease as price increases

Inelastic

demand barely changes

Demand increases if

customer desire, good perceptions, bad competitors, few substitutes

Price-sensitivity is greater when

customers don't care, limited income, luxury

Low Prices

low prices, constant or fluctuating

If fixed costs are high relative to variable

maximize volume

If variable costs are high relative to variable

maximize per unit margins

Scanner data methods

Run experiments by manipulating prices in randomly selected stores and comparing sales to control groups

Price Sensitivity and Survey Methods

Conduct price studies • Surveys are identical except pricing

To maximize profits, find a price where

any further increase in price would lead to a large falloff in quantity sold

Price serves as a quality cue

higher price may be more appealing

Price discount and mood

Temporary price discounts make customers think they are smart shoppers

Mental accounting

People categorize & budget purchases • People pay less attention to future

Compromise effect

The inner/middle choice between two extremes is attractive • People assume that if a company charges more, it must be providing more

Yield Management

Using price and scheduling to manage demand • e.g., Movies during the day for less money

Two Part Pricing

Charge a fixed and variable usage fee

Introduction stage

Penetration pricing (seek market share), Skimming pricing (seek profit)

Game theory is used to

estimate likely results of price cuts and competitive response

Distribution channel

A network of firms which provides sellers a means of infusing the marketplace with their goods, and buyers a means of purchasing those goods

Channel members include

Manufacturers, wholesalers, retailers, consumers, etc

Logistics

Coordinating flow of products and information throughout channel

Channels and Supply Chains

Supply chain - Upstream partners, Channel members - Downstream partners

The “why” of channels

Effectiveness and efficiency

The “how” of channels

Designing effective and efficient channels

Intensive distribution

widely distributed, for simple, inexpensive, easily transported products

Pull strategy

promote directly to end consumers to pull through channel, Incentives are offered to consumers to pull products through the channel

Selective distribution

limited distribution, or complex and/or expensive

Push strategy

promote to distribution partners to push goods to consumer, incentives are offered to distribution partners to push products through the channel

Production Costs

Costs of producing/bringing product to market

Governance Costs

Costs involved with relational issues incurred coordinating and controlling one’s partners

Transaction value analysis • A perspective that emphasizes the benefits a company brings to its partners

Ways to resolve conflict

communication, meditation, arbitration

Vertical integration

Moving backward or forward in a channel

Forward integration

Moving forward in a distribution channel

Backward integration

Moving backward in a distribution channel

Private label benefits

negotiating power, margins, differentiate retailer

Sales Force

Utilized extensively with a push strategy • Important with undifferentiated products

Advertising

Primary means to communicate with customers

Goals of Advertising

Attention, Interest, Desire, Action

Advertising should influence

cognition, affect, behaviors

Advertising goals and product lifecycle stages

introduction, growth, maturity, decline

Cognitive ads

Engage the consumer’s brain

Noncomparative ad

One brand is mentioned and its features, attributes, image, etc. are conveyed

Comparative ad

Brand and competitive brand are mentioned

Drama ads

A problem is depicted and the brand is featured as the solution

Subliminal ads

Shown fast enough that viewers cannot point to the ad, unethical

Image ads

Are more abstract; used to convey an image • Great for positioning

Elaboration Likelihood Model

Occurs when customers are highly involved with brand and motivated to process the ad

Sleeper effect

Source conveys information, but over time consumers forget the source

Evaluating Advertising

Cognitive ads (awareness & knowledge), Mere exposure, Affective ads (image and preference)

Concept testing

Consumers’ responses to ad, brand, etc. are evaluated, Large random samples of consumers view a TV program and ads; after 30 minutes, consumers take survey

How Much to Spend

Percentage of sales, competitor’s spending, Strategic advertising goal, reach, frequency

Goal for reach

to expose as many of the target customers as possible

Media comparisons

Most expensive; yield the largest reach

Personal Selling

important for expensive, complicated products

Public relations

Convey a positive image and educate a constituency about the company

Constituencies include

Customers, suppliers, stockholders, government, employees, general community

Product placement

Products are integrated into shows