marketing terms

Channel of distribution

The system of organizations and activities through which a product or service travels from producer to end customer

Mark-ups

Amount added to the cost of a product in order to cover indirect costs and provide a profit

Paid media

Media I pay to put my advertisement into

• Banners, ads, television

• Reaches a broad audience, but it is expensive and competitive

Earned media

Presence spread by third parties

• PR/News stories

• Credible, culturally relevant, but harder to control/plan the message

Owned media

Presence on media vesicles owned by marketer

• Corporate/product websites, social media feeds

• Message control, lack of competition, but marketer must drive traffic often through paid media

Implied mark-up formula

[(Selling price - Cost)/Cost] * 100

Private branding

Using companies own name on third party product

• E.g. Walmart labeling Sam’s cola as Walmart brand

Generic branding

Consumer products that are sold without a famous name or heavy advertising

Manufacturer branding

Product sold under name of company which makes it

Multibranding

One company has distinct names for it’s products, and often consumers don’t know it is linked to a main company

• E.g. Volkswagon marketing Audi and Lamborghini

Multiproduct branding

Company uses single common brand name to umbrella a group of related products

Showrooming

Trying a product at a brick-and-mortar store, then buying online, sometimes from another company

Private branding

Which are value and cost pricing strategies?

Cost and demand based strategies

Because they align with production realities and external market forces

What are psychological pricing strategies?

Prestige and odd-even strategies

Because they manipulate customer perception to drive action, increase sales velocity, and elevate brand status

What are tactical pricing strategies?

Dynamic, loss leaders, and bundling

Because they are aggressive maneuvers to rapidly capture market share

Qualities of direct distribution of product

Greater control, lower cost, internet-enabled, direct customer contact

Qualities of indirect distribution of product

Dealer can bundle product, store loyalty, lower investment, bulk-breaking

Qualities of primary research

Research you do yourself to fill holes of secondary research

• Customizable, proprietary, slow, expensive

• Focus groups, ethnographic studies

• Answers specific questions

Qualities of secondary research

Research gathered from insight from things which already exist

• Reliable, cheap, smart fast

• Competitors also have access to this information

Quantitative research

Close ended questions, statistically valid, numerical

• Surveys via mail, in-person

• Good for assessing problems and judging progress

Qualitative research

Open ended responses, not statistically valid, can be inspiring and directional for a company

• Can inform development

• In depth, fast, not projectable

• Interviews via in-person, focus groups

What is a brand?

Brand goes beyond the logo, but is the associations and images connected to a name

Brand management

Effort to make sure associations match your marketing strategy

Positioning

Combined perception the market has of a particular company or product in relation to their perceptions of the competitors

Product lifecycle (4 stages)

1. Introduction

2. Growth

3. Maturity

4. Sales decline

Market introduction stage

Idea is born. There are limited sales, early adopters, few competitors, lots of money spent on the prototype and building the idea out, so spending tends to exceed revenue

Market growth stage

Product takes off, dramatic sales increase, profit goes up, competitors pile in, advertising costs increase

Market maturity stage

Branding is key

Buying and replenishing product, sales plateau, profit declines slightly due to competitors amount

Sales decline stage

Shakeout, product has run it’s course, competitors die or get bought up

Sometimes products live forever, and scarcity of good can drive the prices higher due to limitedness

How does technology affect the market?

Information flows more freely and more rapidly

Competitors are quicker to react

Consumer choices expand

Product lifecycles shorten

Supply chain functions better

Design thinking

Solving complex problems by being consumer/human-focused, identifying the potential solutions as quickly as possible

Attitudinal Differentiation

Brand or product understands something about the audience’s attitudes that reflects them better than competitors

(e.g. Just do it - Nike)

Product differentiation

Brand or product works better than competitors due to some important attribute

(e.g. Quicker picker upper - Bounty)

Distributor (wholesaler)

An intermediary that buys and takes possession of inventory
in bulk and resells it, typically also providing logistics,
credit, and assortment.

Agent (broker)

An intermediary that arranges sales on commission without taking ownership of the goods

Retailer

A business that sells to end consumers, in any format: stores, websites, catalogs, clubs, and beyond

Margin

Profit as a percentage of selling price. Contrast with markup, profit as a percentage of cost

B2B and B2C

Business-to-business and business-to-consumer selling, respectively

Channel stewardship

The ongoing practice of designing, managing, and continuously evolving a channel system so it keeps serving customer needs while rewarding the partners who create value

Channel steward

The party, often but not always the producer, that takes responsibility for the health and direction of the whole channel system

Direct-to-consumer (DTC)

A model in which a brand sells straight to end customers,
historically through its own digital channels, owning the full customer relationship

Coverage intensity

How broadly a product is distributed, from intensive (everywhere) through selective (chosen dealers) to exclusive (one per territory)

Vertically integrated channel

A system in which the producer owns its distribution and
retail operations

Arm’s-length channel

A system of independent, multibrand intermediaries connected
to the producer only by ordinary commercial transactions.

Franchising

A hybrid structure in which independently owned outlets operate under the brand owner’s contractual rules and standards

Hard power

Channel influence derived from control of something the other party needs: a demanded brand or technology, or access to customers

Soft power

Channel influence derived from trust (confidence built on the relationship’s history) and commitment (willingness to invest in its future).

Channel conflict

Friction between channel members, vertically between levels or horizontally among intermediaries, most often triggered by price differences and free-riding on others’ services.

Omnichannel

A coordinated multichannel approach in which the customer experiences one consistent brand across every touchpoint

Showrooming

Customer behavior of using one channel’s costly services
(demonstration, advice) and then purchasing through a cheaper channel

Situation analysis

The systematic assessment of the internal and external environments a business faces, conducted before strategy is set

5 C’s analysis

A scanning framework covering Customers, Context, Company, Collaborators/complementers, and Competitors

Consumer decision process

The five-stage model of buying: problem recognition,
information search, evaluation of alternatives, purchase decision, and post-purchase evaluation.

Business model

The fundamental logic of what a company does and how it makes money

Competitive advantage

Something a firm does that customers value and competitors
cannot match; sustainable when it is likely to persist

Core competencies

The distinctive capabilities a firm performs especially well, forming the foundation for its strategy

Entry and exit barriers

The costs of getting into or out of an industry; high entry and
low exit barriers make an industry most attractive to incumbents.

Substitutes

Different products that satisfy the same underlying need, capping prices across the industry

Buyer and supplier power

The bargaining leverage held by those who purchase from
you (including intermediaries) and those who provide your inputs (including labor).

SWOT analysis

A prioritized synthesis of internal Strengths and Weaknesses and external Opportunities and Threats, built from the underlying analyses

Required vs. distinctive competencies

Capabilities every industry player must have versus capabilities that set a firm apart; weaknesses in each demand different responses

Vertical channel conflict

Conflict between firms at different levels of distribution

Horizontal channel conflict

Conflict between firms at the same level of distribution

Skimming

Start high, lower price over time

Penetration

Start low, build trial and market stakes

Cost-based

Price from cost plus target margin

Demand-based

Price from what customers will pay

Prestige

Use price to signal quality

Odd-even

Use prices like $13.99 instead of $14.00

Loss leader

Price one item low to pull customers in (e.g. razor and razor blades)

Bundling

Pair items to increase ticket size and perceived value (e.g. “Bundle home and auto with state farm” – would actually be greater than what you’d pay separately)

Dynamic pricing

Changing pricing based on demand

What are the 4 P’s?

1. Price

2. Product

3. Promotion

4. Place

What does Price refer to as one of the P’s?

Creating a pricing strategy, determining how the value should be divided between customer and producer, marketing boosts perceived value

What does Product refer to as one of the P’s?

Developing and managing products which meet consumer needs

What does Place refer to as one of the P’s?

How do I as a business get my product to you?

What does Promotion refer to as one of the P’s?

Use of multiple communication channels to reach business goals

What are the 5 C’s in situation analysis?

Customer

Context

Company

Collaborators/Complementors

Competitors

What are customers in situation analysis?

Customers buy for the value of the product, or what it represents

What are complementors in situation analysis?

Complementors are firms which benefit when you sell, because each one’s product makes the other’s more valuable

What are collaborators in situation analysis?

Outside parties which help you create and sell (e.g. suppliers, channel members)

What is context in situation analysis?

The demographic, economy, sociocultural factors, politics, technology, and natural environment (e.g. constraints, supply chain)

What are competitors in situation analysis?

Firms fighting for the same customers

Insight

Gained by analyzing data and information to understand context of a particular situation and draw conclusions

What are Porter’s Five Forces?

1. Rivalry among competitors

2. Threat of new entrants

3. Threat of substitutes

4. Bargaining power of buyers

5. Bargaining power of suppliers

What is the purpose of Porter’s Five Forces?

Business strategy framework which helps companies analyze the industry’s structure to determine it’s competitive intensity, profitability, and long-term attractiveness