Marketing Midterm #2

You should understand how the definition / view of marketing research differs in modern times from perspectives in the 1950s and 60s. See lecture slides to review.

1950s and 1960s: Marketing research was seen as the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services. This view was passive and backward-looking, with the researcher acting as a data librarian.

Modern View: The current perspective is more active and forward-looking, with the researcher acting as a problem solver. Modern marketing research focuses on proactively identifying opportunities and addressing challenges to drive strategic decision-making​

Exploratory Research:

Purpose: To gain insights and understanding when the problem is not clearly defined.

Techniques: Open-ended exploration such as focus groups, in-depth interviews, and ethnographic studies.

Best For: Generating ideas, uncovering motivations, and understanding the context of consumer behavior.

Descriptive Research:

Purpose: To describe characteristics of a population or phenomenon.

Techniques: Surveys, observational methods, and quantitative data analysis.

Best For: Providing detailed snapshots and establishing associations between variables.

Causal Research:

Purpose: To determine cause-and-effect relationships.

Techniques: Experiments where variables are manipulated and controlled.

Best For: Testing hypotheses and identifying causality between variables

Along the same lines, you should be familiar with the range of exploratory techniques that researchers can use.

overt and covert observation, indepth interviews, focus groups, projective techniques

Overt Observation

Consumers are aware they are being observed. Examples include lab studies and protocol think-alouds.

Covert Observation

Consumers are unaware of being observed. Examples include field observations and video recordings.

In-Depth Interviews (IDIs)

Detailed, qualitative interviews exploring participant thoughts and feelings.

Focus Groups

Group discussions to explore consumer perceptions and ideas.

Projective Techniques

Using ambiguous stimuli to uncover underlying motivations and unconscious needs​

Do you know what is required to make a study a true experiment / casual design?

Manipulation of Independent Variables: Directly manipulating one or more variables to observe their effect.

Random Assignment: Participants must be randomly assigned to experimental conditions to ensure equivalence.

Control of Extraneous Variables: All other variables should be controlled to isolate the effect of the manipulated variables​​.

What's the difference between a brand extension and a line extension?

Brand Extension: Extending a brand name to new product categories (e.g., Starbucks developing bottled coffee drinks).

Line Extension: Adding new varieties to an existing product line (e.g., new flavors of an existing soda brand)​

Would you be able to identify which brand personality dimensions are part of Aaker's 5?

Aaker's framework identifies five brand personality dimensions:

Sincerity: Down-to-earth, honest, wholesome, and cheerful.

Excitement: Daring, spirited, imaginative, and up-to-date.

Competence: Reliable, intelligent, and successful.

Sophistication: Upper class and charming.

Ruggedness: Outdoorsy and tough

Are you familiar with the sequence of events involved in new product development?

Idea Generation: Gathering ideas from various sources.

Idea Screening: Evaluating ideas to select the most promising.

Feature Specification: Defining the product features and specifications.

Product Development: Developing and prototyping the product.

Test Marketing: Testing the product in selected markets.

Commercialization: Launching the product to the broader market.

Evaluation: Assessing the product's performance and making necessary adjustments

In class, we talked about a variety of ways that marketers can gather and generate new product ideas. Test yourself to see if you can recall at least 4 different ways marketers can go about this.

Social Media Listening: Monitoring social media for trends and consumer feedback.

Crowdsourcing: Engaging consumers in idea generation through contests and platforms.

Focus Groups: Gathering insights directly from consumers.

SWOT Analysis: Identifying strengths, weaknesses, opportunities, and threats to find new opportunities

Types of test markets

standard, controlled, simulated

Standard Test Market:

Description: The product is launched in a limited, fully representative part of the market (cities). This area typically resembles the larger target market in demographics and other key factors.

Pros: Provides accurate and detailed data on how the product performs in a real-world setting.

Cons: Expensive and time-consuming; competitors can easily see what the company is testing.

Controlled Test Market:

Description: The product is tested in a controlled set of retail outlets that agree to carry the product for a fee. The test is closely monitored and controlled by the research firm or the company.

Pros: Faster and less expensive than standard test markets; allows for better control over the testing environment.

Cons: May not be as representative of the broader market; still visible to competitors.

Simulated Test Market (STM):

Description: Consumers are exposed to the product in a simulated shopping environment. Their purchase behavior is monitored, and follow-up interviews may be conducted.

Pros: Quick and cost-effective; keeps the test more secretive from competitors.

Cons: May not accurately reflect real-world purchasing behavior since it's conducted in an artificial environment.

Stages of product life cycle

1. Introduction

2. Growth

3. Maturity

4. Decline

What type of marketing activities are most crucial in the introduction stage of the PLC

High advertising, PR for media coverage, introductory pricing, free samples, personal selling, distribution setup

What type of marketing activities are most crucial in the growth stage of the PLC

Continued advertising, product improvements, loyalty programs, PR with success stories, broader distribution

What type of marketing activities are most crucial in the maturity stage of the PLC

Reminder advertising, targeted promotions, emphasize unique selling points, pricing strategies, distribution optimization

What type of marketing activities are most crucial in the decline stage of the PLC

Cost reduction, selective promotions, product line pruning, targeting niche markets, harvesting, decision on product future

The four categories of products

convenience, shopping, specialty, and unsought

Convenience Products

Items purchased frequently with minimal effort (e.g., snacks).

Shopping Products:

Items compared based on suitability, quality, and price (e.g., clothing).

Specialty Products:

Items with unique characteristics that consumers make special efforts to purchase (e.g., luxury cars).

Unsought Products

Items not actively sought by consumers (e.g., life insurance)​

What type of things make up the "augmented" product level?

The augmented product includes additional services and benefits that enhance the core product, such as: Customer service, Warranties, After-sales support, Online communities and social media engagement

Primary data

unique information that is collected by the researcher with the current project in mind

Secondary data

any research that was completed, within the organization or outside of the organization, for another purpose

IHUTs (In Home Usage Testing)

method of testing that enables consumers to use your product from the comfort of their own home, office, backyard, or wherever it is meant to be used. Based on their experiences, you're able to gather valuable, in-depth insights and real-time feedback you can quickly act on

Ethnography

method of collecting data that is conducted by observing people's natural behavior

A/B testing

one group of research participants, group A, is exposed to one treatment and then compared to the group B participants, who experience a different situation.

Aided/unaided awareness

Awareness in the context of marketing research is when a consumer is familiar with the product, brand, or company. Unaided awareness is when no prompts for a product, brand, or company are given (name fast food restaurants that sell chicken sandwiches). Aided awareness would be providing a list of products, brands, or companies and the respondent selects from the list (give a respondent a list of fast-food restaurants and ask them to mark all the locations with a chicken sandwich)

Re-positioning

When a company changes the status of its brand in the marketplace. This generally occurs because the brand has lost customers or is no longer financially sound

Concept test (Old spice advertising to old people to young people)

Alpha v beta testing

Alpha testing is done by testers and quality analysts inside the organization whereas Beta testing is done by real users who will be actually using the software

Product line

A product line is a set of products that are similar or complementary (Domino's sells 8 kinds of pizzas)

Product mix

A product mix contains all the products that a company sells (Dominos also has salads and drinks)

Brand equity

The additional value that a brand has over a substitute. If a consumer will pay more for one similar product over another because of the brand, that difference represents its brand equity (Tide demands a higher price because of its brand equity over other laundry brands)

Probability sample (SRS)

a sample in which everyone has a known chance of being included in the research

Stratified Random Sample

a sampling design in which the population is divided into several subpopulations, and random samples are then drawn from each stratum

Convenience Sample

a form of nonprobability sample using respondents who are convenient or readily accessible to the researcher—for example, employees, friends, or relatives

Brand extension

Products that leverage the brand name to new product categories (Starbucks developed a line of bottled coffees under its corporate brand name). A brand extension uses awareness and equity in the brand to gain instant recognition and affinity for the new product, which may increase sales rapidly. However, if the new product is inferior to the brand's known quality, the entire brand portfolio may be at risk.

"5Cs" of pricing

our costs, consumers' perceptions and willingness-to-pay, our competitors' pricing, channel member mark-ups, and compatibility with our broader marketing objectives and strategic positioning

In class, we will discuss distinctions between distributors and wholesalers. Review the more extensive services that some distributors are able to offer to manufacturers

Distributors: Provide extensive services including sales support, marketing, and after-sales services. They often have a more direct relationship with the manufacturer and can be more involved in the promotional efforts​​.

Wholesalers: Typically focus on purchasing products in bulk and selling them to retailers. They offer fewer services compared to distributors and are more focused on fulfilling retail orders

"value-added" functions that channel members are able to provide

Logistics and Distribution: Efficiently managing the storage and transportation of goods.

Marketing and Promotion: Helping to market and promote products.

Customer Service: Offering after-sales services and support.

Market Coverage: Expanding the reach of products to different markets

Understand the differences between subtypes of Vertical Marketing Systems (VMS): corporate, administered, contractual

Corporate VMS: A single company owns multiple levels of the distribution channel.

Administered VMS: Coordination is achieved through the power and influence of one dominant channel member.

Contractual VMS: Independent firms at different levels of the distribution channel work together under contractual agreements

You should know the type of distribution intensity that is appropriate for convenience, shopping, and specialty goods (links product week and channel week content)

Convenience Goods: Require intensive distribution to ensure they are available at many locations.

Shopping Goods: Use selective distribution to ensure that they are available at selected outlets.

Specialty Goods: Utilize exclusive distribution to maintain a high level of control and exclusivity​

Review the things that we should take into consideration when deciding whether to use channel partners

Cost Efficiency: Can partners provide cost benefits?

Customer Needs: Do the partners meet the service and market coverage needs of customers?

Control: Will using partners lead to a loss of control over the product and brand?

Conflict: Potential for channel conflict and how it can be managed

Fixed vs variable costs

Fixed costs are those expenses that do not change regardless of the number of units sold. variable costs do change based on the number of units produced.

Price anchoring

A frame of reference for a buyer to set an expectation of a price (Steve Jobs used this concept in his introduction of the iPad. The anchor price he quoted was $999. However, when Jobs showed the actual price, starting at $499, the buyers immediately believed, psychologically, that it was a great deal.)

Demand elasticity

Measure of the change in the quantity demanded in relation to the change in its price (Home prices are considered elastic because the price has a huge impact on the demand for new homes). Factors that influence this include substitutes, the effect of income, time, and cross-elasticity of demand

Income Effect

An increase in price indicates that the buyer will have less money left over to spend; therefore, they will choose to buy less of a product, decreasing demand.

Skimming

Price skimming is a new-product strategy in which marketers choose to initially set a high price for a product or service and lower it over time. The goal of price skimming is to attract the segment of the market that is willing to pay the highest possible price for the product. Once achieved, the price is lowered to attract another segment of the market and so on.

Penetration

The penetration pricing strategy is one in which the new product or service is set at the lowest price possible. This strategy's objective is to penetrate the market, or gain as many customers in all segments as possible from the beginning of the product life cycle.

Captive pricing

Captive product pricing uses a strategy that requires both a core product and a captive product. When you are shopping for the printer, you are likely to take into consideration the price you will have to pay for ink as well. Marketers may price the printer at a very reasonable price, knowing it will catch your attention and thus make the price of the ink seem less expensive. Captive product pricing maximizes profits by intentionally pricing both the core and captive products at a level that will increase the perceived value to consumers.

Bundle pricing

Popular pricing strategy that marketers use to promote purchasing multiple products at once (Value combo meal in drive thru)

Price discrimination

Selling goods and services at different prices to different customers based on what the seller believes it can get the customer to agree to.

Direct channel

when a manufacturer does not use intermediaries but rather involves the manufacturer distributing its market offering directly to consumers

Horizontal marketing system

a group of unrelated companies that offer products and services in a shared space. For example, J.Crew and New Balance have partnered together for the last decade to sell a unique line of New Balance-branded sneakers that can only be found on J.Crew's website.

Make sure you remember that the "promotion" piece of the Marketing Mix includes a lot more than advertising. Review the different tools we can use to communicate

Traditional & Digital Advertising: TV, radio, print, online ads.

Social Media & Mobile Engagement: Using platforms like Facebook, Instagram, and mobile apps.

Public Relations: Creating and maintaining a favorable public image.

Non-Traditional & Experiential: Guerilla marketing, brand activations, and publicity stunts.

Personal Selling: Direct interaction between a salesperson and a customer.

Direct Marketing: Methods that directly connect with customers, such as telemarketing, email marketing, and direct mail.

Sales / Price Promotions: Discounts, coupons, and special offers

Be sure you understand the logic of the purchase funnel and inverse funnel.

Purchase Funnel: Describes the stages consumers go through from awareness to purchase. Marketers adjust their tactics at each stage (e.g., informative ads for awareness, persuasive ads for consideration).

Inverse Funnel: Focuses on retaining customers and encouraging repeat purchases. Tactics may include loyalty programs and personalized marketing

Related to the last point, you should understand the different types of primary advertising objectives marketers might adopt

Informational: To inform and educate consumers about the product (e.g., new product announcements).

Persuasive: To persuade consumers to choose one brand over another (e.g., competitive ads).

Comparative: To compare a brand directly with competitors (e.g., "Get a Mac" campaign).

Reminder: To remind consumers about the brand and keep it top-of-mind (e.g., Coca-Cola ads)​

What's the difference between paid vs owned vs earned vs shared communication channels? (PESO model)

Paid Media: Advertising that you pay for (e.g., TV ads, sponsored posts).

Earned Media: Publicity gained through promotional efforts other than advertising (e.g., press coverage, organic social media mentions).

Shared Media: Content shared by consumers with each other (e.g., social media shares, retweets).

Know the different approaches that can be used to determine the promotion budget

Percentage of Sales: Setting the budget as a percentage of sales.

Competitive Parity: Matching competitors' spending.

Objective-and-Task: Defining specific objectives and estimating the cost to achieve them.

Econometric Models: Using complex models to forecast spending needs based on various factors

Traditional Advertising:

Goal: Inform or persuade.

Timing: Long-term.

Results: Indirect, slower.

Measurement: Harder to measure direct impact.

Sales Promotions:

Goal: Immediate sales boost.

Timing: Short-term.

Results: Direct, quick.

Measurement: Easier to measure direct impact (e.g., coupon redemption rates)

Review the pros/cons/risks of price promotions and discounts from lecture

Pros: Immediate sales lift, Attract new customers, Increase brand switching

Cons: Can cheapen the brand image, May increase price sensitivity, Risks starting price wars

What is outbound marketing? Inbound?

Outbound Marketing: Push strategy where the company initiates the conversation (e.g., TV ads, cold calls).

Inbound Marketing: Pull strategy where consumers find and engage with content on their own (e.g., blogs, SEO, content marketing)​

What type of marketing activities are considered "non-traditional marketing methods"?

Guerilla Marketing: Unconventional tactics to create buzz.

Experiential Marketing: Creating immersive experiences.

Ambient Marketing: Placing ads in unexpected locations.

What are some of the pros and cons of using non-traditional marketing methods?

Pros: High impact at low cost, Generates buzz and shared media, Engages consumers in memorable ways.

Cons: Less control over timing and exposure, Can be risky and harder to measure, May feel invasive to some consumers

How does paid search work, and how is that different from organic search?

Paid Search (SEM): Companies pay to have their ads displayed on search engine results pages (e.g., Google AdWords). Ads appear based on bids for keywords and only charge per click (CPC).

Organic Search (SEO): Natural rankings determined by search engine algorithms. Companies optimize their websites to appear higher in search results without paying for placement​

What types of marketing activities fall under "content marketing"?

Content Marketing involves creating and distributing valuable content to attract and retain customers. Activities include:

Blogs: Informative articles on topics relevant to the audience.

White Papers: In-depth reports on specific topics.

Explainer Videos: Videos that explain products or concepts.

Social Media Posts: Engaging content shared on social platforms.

Viral Videos: Entertaining videos designed to be widely shared

In the last class session, we will discuss three valuable roles or functions influencers can play. Know these!

Endorser: Leveraging their reputation to promote a product.

Content Creator: Producing engaging content that aligns with the brand.

Community Manager: Engaging with their audience and fostering brand loyalty

The examples we went over in class (including Old Spice, Budweiser Canada, and Burger King) were intended to help you gain a deeper understanding of how to tailor promotion strategy to different situations / needs. It's worth reviewing these examples to test your understanding and refresh your memory of why the companies made the choices that they made.

Old Spice: Used humor and engaging content to rebrand and capture a younger audience.

Budweiser Canada: Leveraged influencer marketing to reach a broader audience.

Burger King: Used smart, integrated campaigns to differentiate their brand and generate buzz​

Integrated marketing communications (IMC)

using various forms of the promotional mix to send the same message to the target audience. If a group of friends is planning to go out to dinner, as the group organizer you may find it best to text some friends and call others. The message is the same

Conversions

happen when a company turns a visitor into a customer

Public relations

any actions that help to create and maintain a favorable public image

Reach

the estimated number of potential customers you can reach with an advertising campaign

Frequency

how many times someone is exposed to an advertisement in a given time period or how many times an advertisement is shown in a time period

Impressions

quantifying how many times an advertisement appears in a medium

CPM

the cost to advertise to 1,000 people. Targetability increases the cost per thousand. Traditional media (television, radio, print, and outdoor) have a higher CPM than digital advertising.

CPC

the cost companies pay search engines for each click that a search advertisement receives.

SEO v SEM

SEO: the practice of orienting your website to rank higher on a search engine results page (SERP) so that you receive more traffic.

SEM: sponsored ads appear at the top of and on the side of search engine results pages to gain more visibility and prominence than the organic results.

Affiliate program

an affiliate earns a commission for marketing another person's or company's products.

Native advertisement

paid media designed to match the content of a media source

Behavioral retargeting

online advertising is targeted to consumers based on their previous internet behaviour.

Staged development

16-30 ideas → 8-10 developed concepts → 6-8 products in test market → 4 launched → 2 new innovations

Brand standards / style guide

Covers personality, logo usage, color palette, image style, etc. Gradual changes in logos increases consumer acceptance/recognition

Behavioral Economics

Explores psychological factors in our decision making. Consumers aren't very good at judging value, we are highly influenced by situational cues

Engagement rate:

[(# of comments + # of likes) / # of followers] / # of posts x 100

% margin

(Selling Price - Unit Cost) / Selling Price

Gross profit

Unit contribution / Sales Price x 100

Unit Contribution

Unit Selling Price - Variable cost per unit

Selling Price =

Unit cost + (% margin x SP)

Operating profit

Revenue - Variable Costs - Fixed Costs

break-even volume

fixed costs / unit contribution

Incremental BEV

additional costs/unit contribution