Marketing Midterm 2

Spaghetti Sauce Video - Ted Talk "Choice Happiness and Spaghetti Sauce"

mentions variety for every target market (plain spaghetti, chunky, spicy)

Market definition

a place where parties can gather to facilitate the exchange of goods and services.

Criteria for a market

1. Have a need or desire for a product
2. Have an ability to purchase
3. Be willing to use buying power to purchase
4. Have authority to buy

Bases for segmentation

What and how we buy:
1. Usage rates
2. Benefits sought
3. Loyalty
4. Price sensitivity

Who we are:
1. Demographics
2. Geography
3. Psychographics

Targets criteria for target markets

-Reachable
-Substantial
-Responsive
-Identifiable and Measurable

Segmentation strategies

Undifferentiated, Differentiated, Concentrated, and Micromarketing

Undifferentiated

approach that views the market as one big market with no individual segments and uses one marketing mix

Undifferentiated adv and dis

Advantages:
-Potential savings on production and marketing costs
Disadvantages:
-Unimaginative product offerings
-Company more susceptible to competition

Differentiated definition

chooses 2 or more well defined market segments and develops a distinct marketing mix for each

Differentiated disadvantages

Adv:
-Unique products
-Reduced price competition
Dis:
-Production costs
-Cannibalization

Concentrated definition

used to select one segment of a market for targeting toward, called niche strategy

Concentrated dis and adv

Advantages:
-Strong positioning
-Concentration of resources
Disadvantages:
-Segments too small, or changing
-Large competitors may market to niche segment

Micromarketing definition

tailors a product or service to suit an individual customer's wants or needs.

Positioning definition

Defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing product

Repositioning definition

Changing established brands because of changing demographics, declining sales, and changes in social environment

Cannibalization

The negative impact on a firm's sales, profits, or market share when one product competes closely with a similar product offered by the same company

The impact with line extensions

increases the product lines depth

Size of overall market formula

market+projected growth rate

Share formula

total sales of company/ total sales of the market

Cannibalization formula

estimate of new net business-current product

Information Reduces Risk because

1. Improves the quality of decision making
2. Helps trace problems
3. Keeps focus on existing customers
4. Understand the marketplace/competitive intelligence
5. Alerts marketers to important trends
6. Gauge the value of goods and services, and the level of customer satisfaction

Crest White Strips key takeaways

1. New unique product
2. Expensive, showed class (celebrities were endorsing)
3. Most effective product on yellow or stained teeth

Decision Support Systems

for ongoing operations and intelligence, tied to sales data and environmental factors (generally internal secondary data).

Data Warehouses

A large computer file containing data including sales transactions, customer relationship management (CRM) systems, websites, social media, blogs, locational devices, and wearables

Data mining

Statistical tools used to uncover previously unknown patterns or relationships among variables stored in the big data databases.

Benchmarking/Trend research

Repeated at intervals. Includes awareness, service perception, share data, attitudes, needs, category data (may be syndicated, secondary)

Task oriented research

Addressing specific decisions, includes new products, geographic expansion, advertising effectiveness (generally primary data)

Secondary data pros and cons

Pros:
1. Saves time and money if on target
2. Aids in determining direction for primary data collection
3. Pinpoints the kinds of people to approach
4. Serves as a basis of comparison for other data
5. Good source for industry/category information
6. Internet has made it readily accessible and searchable
Cons:
1. May not be on target with the research problem
2. Quality, timeliness and accuracy of data may pose a problem
3. May not give adequate detailed information
4. Not proprietary

Primary Data pros

Pros:
1. Answers a specific research question
2. Data are current
3. Source of data is known
4. Secrecy can be maintained

Syndicated Secondary Data Sources

Data available for a fee from commercial research firms such as Information Resources Inc. (IRI), NPD Group, and Nielsen.

Nike Shin Guard Video

He observes shin guards that are used and are being developed, and gets feedback from players depending on the style of player

CLV Videos

Netflix approximates the amount of money you'll spend on their service, to know the value of each customer to guide the budget on customer acquisition and retention. Does this through tracking each customer and how often they cancel their subscription.

Qualitative research

Tells how people feel and their emotional side
1. Observation
2. In depth interviews
3. Focus groups
4. Social media

Quantitative Research

Tells how people feel through mathematical research tools
1. Experiments
2. Survey
3. Scanner
4. Panel

Survey

Most popular technique for gathering primary data, in which a researcher interacts with people to obtain facts, opinions, and attitudes
1. On-line surveys
2. Executive Interviews
3. Focus Groups
4. In-Home Interviews
5. Mall Intercept Interviews
6. Telephone Surveys
7. Mail Surveys

Observational research

A research method that relies on four types of observation
1. people watching people
2. people watching an activity
3. machines watching people
4. machines watching an activity

Experiments

Gather primary data
Variables
1. Products
2. Price
3. Package design
4. Shelf space
5. Advertising theme and expenditures

Customer Relationship Management

A business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm's most valued customers

Customer Lifetime Value CLV formula

spend per visit (1- cost of goods sold) x visits per year/ # of years

Convenience products

Products or services for which the consumer is not willing to spend any effort to evaluate prior to purchase (milk)

Shopping products

Products or services for which consumers will spend time comparing alternatives (apparel, fragrances, and appliances)

Specialty products

Products or services toward which the customer shows a strong preference and for which they will expend considerable effort to search for the best suppliers (engagement ring)

Unsought products

Products or services consumers either do not normally think of buying or do not know about (life insurance)

Product Line

Group of associated items, such as those that consumers use together or think of as part of a group of similar products (apple phone types)

Product mix

The complete set of all products offered by a firm. (apple phones, airpods, I pads etc.)

Line extensions

Utilize family branding, compete more broadly in category, risk of brand dilution and cannibalization
Brand extension = new line
Line extension = new product in line
Breadth (# of lines, x value) Depth (# of products in line, y value)

Benefits of branding to consumer, and marketer

Benefits:
1.Facilitates purchase
• provides assurance
• risk reduction
2.Self-expression, status
3.Differentiates the product
• Reduces price competition
• Dilutes commoditization
4.Creates Loyalty, doubling down
5.Family branding
• Speeds introductions
• Improves marketing efficiency
6.Brand Equity
• Awareness
• Perceived Value

Family branding

A firm's own corporate name used to brand its product lines and products; many products in the same group with the same brand (Sodas)

Individual branding

The use of individual brand names for each of a firm's products (Coca cola, coke, diet coke etc.)

Private label brands

Brands developed and marketed by a retailer and available only from that retailer (Cat and Jack only at Target)

Mfg brands

Communicating with or selling to consumers through wireless handheld devices such as cellular telephones

Product modifications

1. Change in one or more characteristics of the product
2. Elimination of the original product from the product line
3. Usually an upgrade.

Coke video

Blind taste test showed people preferred Pepsi over Coke, changes recipe

Labeling

Shows consumers what's in contents
Persuasive
1. Reinforces Brand
2. Focuses on promotional theme
Informational
1. Helps make proper
2. selections
3. Lowers cognitive
4. dissonance
5. Legal requirements (FDA)

Packaging

contains info about positioning and segmenting
1. Contain and Protect
2. Promote, Features, Benefits, Brand Markings
3. Facilitate Storage, Use, and Convenience
4. Facilitate Recycling, Sustainability Concerns Growing

Warranty

A confirmation of the quality or performance of a good or service

Express warranty

A written guarantee

Implied warranty

An unwritten guarantee that the good or service is fit for the purpose for which it was sold

Ritz chips video

Kraft expanded brand by making chips

Nike Product development video

Product team is made of product developer, product marketing, and product designer. The product and demand creation process has 3 steps.
1. Product creation and demand creation
2. Goes from design centers to development centers, to production facilities, to global markets
3. Special makeups, quick strike, replenishment, internet customized product

Google Rapid Prototyping video

Google starts with low fidelity prototyping options such as sketching and paper prototyping, goes to digital prototyping, and native prototyping

Diffusion of Innovation

The process by which the adoption of an innovation spreads.
How Fast Do Ideas Spread?
1. Relative Advantage
2. Complexity
3. Compatibility
4. Observability
5. Easy to try?

Innovators

Buyers, representing approximately 2.5 percent of the population, who want to be the first to have the new product or service

Early adopters

The second group of consumers in the diffusion of innovation model, after innovators, to use a product or service innovation represent about 13.5 percent of the population. They generally don't like to take as much risk as innovators but instead wait and purchase the product after careful review

Early majority

A group of consumers in the diffusion of innovation model that represents approximately 34 percent of the population; members don't like to take much risk and therefore tend to wait until bugs are worked out of a particular product or service; few new products and services can be profitable until this large group buys them

Late majority

The last group of buyers to enter a new product market, representing approximately 34% of the population; when they do, the product has achieved its full market potential

Laggards

Consumers, representing approximately 16 percent of the population, who like to avoid change and rely on traditional products until they are no longer available. Sometimes laggards never adopt a product or service

Trialability

Easiness to try

Differential advantage

unique features, benefits or characteristics of a firm or a business which sets it apart from its competitors for its target market

Complexity

Hardness to try

Observability

Easiness or difficulty to observe

Product Life Cycle (PLC)

Defines the stages that new products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning.

Product Life Cycle stages

introduction, growth, maturity, decline

Introduction stage

Stage of the product life cycle when innovators start buying the product. Rapid growth in industry sales and increases in both the number of competitors and the number of available product versions. Firms attempt to reach new customers by studying their preferences and producing different product variations to help them segment the market more precisely

Growth stage

Stage of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge in the product category.

Maturity stage

Stage of the product life cycle when industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them.

Decline stage

Stage of the product life cycle when sales decline and the product eventually exits the market. Minimize efforts, don't make any new products

Developing new products stages

1. Idea generation
2. Concept testing
3. Product development
4. Market testing
5. Product launch
6. Evaluation of results

Controlled test market

Online or limited retailer outlet test, small production runs, less expense and risk experiment.

Simulated test market

an experiment in which a sample of consumers has an opportunity to select products and provide feedback in a mock environment.

Standard test market

offering a new product through normal distribution channels with introductory marketing in a limited area

Intangibility

Cannot be touched, tasted, or seen like a pure product can.

Inseparability

Produced and consumed at the same time; consumer takes part in consumption

Inconsistency

Services depend on their employees for quality which makes consistency difficult to achieve

Perishability

Cannot be stored for use in the future, challenging to synchronize supply and demand

Why are services experiencing rapid growth?

Due to technology
1. Information, music, media
2. Price/category are aggregators
3. Apps facilitate retail, entertain, add convenience
4. Tangible goods sellers adding more services
5. Rapid growth in collaborative consumption model

"How Things Work" video about UBER

Uber is an innovative online product that is convenient and improves peoples safety (drunk driving)

Nature and growth of Collaborative Consumption Services

Nature:
1. Disruptor
2. Technology, geodata and trust enabled
3. Utilizes spare assets, provides income, reduces overall expense
Growth
1. Started in economic downturn of 2008

Service Gaps Model:

A managerial tool designed to encourage the systematic examination of all aspects of the service delivery process and prescribe the steps needed to develop an optimal service strategy.

Knowledge Gap

The difference between customers' expectations and the firm's perception of those expectations.

Standards Gap:

The difference between the firm's perceptions of customers' expectations and the service standards it sets.

Delivery Gap

The difference between the firm's service standards and the actual service it provides to customers.

Communication Gap

The difference between the actual service provided to customers and the service that the firm's promotion program promises.

Dimensions of Service Quality:

Customers' perceptions of how well a service meets or exceeds their expectations.

Responsiveness

The willingness to help customers and provide prompt service

Tangibles

The appearance of physical facilities, equipment, personnel, and communication materials

Assurance

The knowledge of and courtesy by employees and their ability to convey and trust and confidence

Reliability

The ability to perform the service dependably and accurately

Empathy

The caring, individualized attention provides to customers

Core Services

The core set of benefits and solutions delivered to customer