MGMT 324 - Final Exam

4 P's

Product, Price, Place, Promotion

Product

Anything we can offer to a market for attention, use, or consumption that might satisfy a need or want (ie. physical food, service, retail outlet, person, organization, place, or idea)

Product Benefit

Includes

Core Benefit: products purpose

Basic Benefit: features, packaging, brand name, etc.

Augmented Benefit: warranty, install, etc.

Consumer Surplus

CS=Benefit-Price-Risk-Search(Use) Cost

Product Decision

The decision a customer makes on the brand, type, model, etc., to buy.how to improve the benefit component of Consumer Surplus

Brand

Dimensions that differentiate a product in some way from other products designed to satisfy the same need, a product with a unique identity

Tangible Product Features

Color, size, weight, packing, physicalityHelps consumers perceive differences in brands

Intangible Product Features

Recipe, scent, ReputationHelps consumers perceive differences in brands

Value of Branding

facilitate purchasing, establish loyalty, protect from competition, reduce marketing costs, are assets, impact market value

Perceptual Product Map

This two dimension plot allows firms to understand where their products reside in the minds of consumers relative to their competitors along the dimensions that are most important to consumers

Types of Brands

Store Brands pr Private Labels, Unbranded

store brands(private label brands)

brands that the retailer both produces and distributes (also called private-label brands)

Unbranded

Lacks evidence or identification of a specific associated brand, minimal design, no logo, avoidance of extra costs in production

User-Generated Content

the various forms of online media content that are publicly available and created by users (ex. lays make your own flavor, make your own commercial)Can backfire through hijacking or memeification

Social Media

A source of direct contact with customers, two way interaction that increases transparency, high customer engagement that can lead to increases in brand loyalty

Product Positioning

the place a product occupies in consumers' minds based on important attributes relative to competitive productsForm segments, who is in each segment (consumer and competitors), and choose target segments based on 3C's and 4P's

Determining a Frame of Reference

- Establish ideal points of parity and points of difference associations with regard to competition- Use Desirability Criteria and Deliverability Criteria

Points of Parity

attributes or benefits not necessarily unique to the brand but may in fact be shared with other brands (ex. Brands being "good enough" to be in the conversation)

Points of Difference

attributes or benefits that consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand (differentiating you brand to be perceived as the top competitor)

Desirability Criteria

a consideration for the consumer in establishing POPs and PODs

has to be personally relevant, distinct and superior, believable and credible

Deliverability Criteria

a consideration for the company in establishing POPs and PODs

has to be feasible, profitable, preemptive, defensible, and difficult to attack

Heart of Marketing Strategy

The act of designing the company's offering so that it occupies a distinct and valued place in the target customers' minds.

4 Main Segments of Customers

Using Toothpaste as an example:1. Sensory: product design (ex. flavor)2. Sociables: social benefit of product (Ex. white teeth)3. Worriers: personal product benefit (ex. Prevent cavities)4. Independent: cost conscious (ex. low price)

Market Research

The activity of gathering information about consumers' needs and preferences.Types: Focus Groups, Conjoin Analysis, Test Marketing, Crowdsourcing (knowingly and unknowingly)

Focus Groups

a group of people who are asked about their attitude towards a product, service, advertisement or new style of packaging. This study is qualitative and understands peoples perceptions about a product

Conjoint Analysis

technique used to develop an understanding of the attributes that guide consumer preferences by having consumers compare product preferences across varying levels of evaluative criteria and expected utilityMeasures the utility of each product attribute, typically done with a survey

Test Marketing

the limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation. Typically introduced in a subsection of a larger market

Crowdsourcing

inviting broad communities of people - customers, employees, and the public at large - into the new product innovation process, examples:Knowingly Sourcing: asking customers for flavor suggestionsUnknowingly Sourcing: Coca Cola FreeStyle Machine

Product Life Cycle

Introduction, Growth, Maturity, Decline

Introduction

First stage in the product life cycle: Low sales, high costs, negative profitsConsumer: the innovatorCompetition: None

Growth

Second stage in the product life cycle: rapidly rising sales, average costs, rising profitsConsumer: Early AdopterCompetition: Few

Maturity

Third stage in the product life cycle: peak sales, low costs, declining profitsConsumer: MajorityCompetition: Start to Decline

Decline

Fourth and final stage in the product life cycle: declining sales, low costs, declining profitsConsumer: LaggardsCompetition: Declining

Bass Diffusion Model

model that predicts adoption and spread of a new product (durable good)

main idea is that there are 2 sources of sales, from innovators and from imitators

Bass Diffusion Formula

Q[t] = (p+(q*(N[t-1])/M))*(M-N[t-1])

Relationship Marketing

Marketing strategies transcending the actual product or service to create stronger bonds with consumers and maximize brand resonance (Mass Customization, After marketing, Loyalty Programs)

Mass Customization

built to order products that fit the customers' needs exactlyReduces inventory, saves warehouse space, no leftover merchandise, longer lead time

Aftermarketing

focuses on product experience encouraging consumption(ex. User Manuals, satisfaction surveys, complementary goods, etc.)

Loyalty Programs

reward customers based on their spendingIdentify, Maintain, and Increase Yield from the firms "best" customers through long-term, interactive, value-added relationshipsCreates a switching cost for customers

Tying

When the buyer of the main product or tying good, must buy one or more complementary goods or tied goods, exclusively from the same supplier (ex. Nespresso)Through Contract or Compatibility

Tying Goods

Main products, typically durable, that must be bought with other products of lesser value, typically non-durable goods

Bundling

Pricing based on grouping two or more products together and pricing them as a unit

Pure Component

No bundle is offered, and individual products are only priced and sold separately

Pure Bundling

Only a bundle of products is offered, and consumers cannot buy products individually

Mixed Bundling

Consumers can buy both bundles and individual products based off of their needs and perceived benefits of the products

Promotion

Present information to consumers(raising awareness), increase demand(generate sales), differentiate the product, and building brand loyalty or create brand equity

Advertising

any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor

Public Relations

non personal indirectly paid presentation of a product, service or business unit

Personal Selling(Salesforce)

Oral presentation in a conversation with one or more prospective purchasers for the purpose of making a sale

Sales Promotion

marketing activities - other than personal selling, advertising, and public relations - that stimulate consumer buying and dealer effectiveness

Analyzing Promotion

This is done by analyzing the 5 M's and subsequently the AIDA framework

5 M's

Mission --\> AIDA FrameworkMoneyMessageMediaMeasurement

AIDA Framework

Awareness, Interest, Desire, Action

Awareness

the promotion relevant to your target market and able to grab their attentionWho is viewing the promotion?What problems do they have related to this product?What solutions does the product offer?Is the promotion framed in a way to grab their attention?

Interest

Now that the target is aware of the promotion, can you hold their interest?Provide information or persuade the target via an interesting promotionInform, Entertain, and Educate

Desire

A deeper connection with the product by highlighting the method it solves the target's problemIt is important to tap into the target's emotion to move them from interest to desire

Action

A clear "Call to Action" which varies based on the promotional tool and product"Buy this Product" "Call for more info" "Watch this video" etcAnticipate and eliminate risks people may have from acting

Message

What is being conveyed by promotional material, will fall into 1 of 7 categories

Objective 1

Promote Brand RecallEx. repetitive ads or catchy slogans

Objective 2

Link key attributes to the brand nameEx. unique selling proposition, what makes your product unique or stand out

Objective 3

Persuade the CustomerEx. Comparison Ads, Testimonial Ads, Info Based, Demonstration

Objective 4

Affective Association (linking a feeling to a brand)Ex. feel good, humor, or sexual appeal

Media(advertising)

various methods for communicating information

Informative Advertising

To inform consumers of a product or build primary demand for a product

Prankvertising

use real people in staged environments to get their real reaction to events related to your brand/product, hoping for viral video

Persuasive Advertising

is important with increased competition to build selective demand

Comparison Advertising

Type of advertisement that compares one brand to another

Reminder Advertising

communication used to remind consumers of a product or to prompt repurchases, especially for products that have gained market acceptance and are in the maturity stage of their life cycle

Outdoor Advertising

billboards and other forms of public advertising, such as on buses or taxis

Product Placement

inclusion of a product in nontraditional situations, such as in a scene in a movie or television program

Guerilla Marketing

marketing activity in which a firm "ambushes" consumers with promotional content in places they are not expecting to encounter this kind of activity, low cost adsEx. Oreo on elevator thingMost Successful: Blair Witch Trial missing persons campaign

Stealth Marketing

guerrilla marketing tactic in which consumers do not realize that they are being targeted for a marketing message, typically using paid actors

Influencers(spokespeople)

Individuals with a platform to promote a product to an already developed segment

Viral Marketing

A method of building brand awareness by leveraging social media, follow the STEPPS list

STEPPS

social currencytriggersemotionpublicpractical valuestories

Social Currency

sharing things can increase a persons status or value

Triggers

people share things that are on their mind, seen as interesting and innovative

Emotion

The promotion has an emotion attached to it (fear, humor, joy, etc)

Public

Easy to relate to through personal experience

Practical Value

news you can use

Stories

Information is covered in "idle chit chat"

Sales Promotions

Induces trial in a potential customers, capitalize on price sensitivity create buzz about brand, and renew interest (ex. Hoover was offering flights to Paris for those who bought a vacuum)

Personal Selling

Baristas, retail, door to door"Push" strategy to force demand of product from the customer

Crisis Management

the process of managing a company's reputation when some negative event threatens the organization's image (ex. Tylenol poisoning incident)

Measurement

Types include: Reach, Frequency, Gross Rating Points, Target Rating Points, Cost Per Thousand, Cost Per Point, Vehicle Rating

Pricing

the methodology of determining what a company will receive in exchange for its products or service, the only 4P directly linked to revenue generation/profts

Profit

Quantity sold*(Price-Unit Variable Cost) - Fixed Costs

Consumer Surplus Formula

Benefit - Price - Risk - Search/Use Costs

Psychology of Pricing

when consumers evaluate goods they do not necessarily follow all economic assumptions leading to mental accounting, constructed preferences, differences in price perceptions

Price-Quality Inferences

in the absence of other information, the customer will directly link the price of the product to the quality of itEx. adoption rate of animals --\> low price led to increased returns

Reference Prices

how much you believe is a fair price for a product or service, used by discount stores

Comparative Pricing

pricing your product according to that of your competitors

Framing Prices

how prices are presented can affect what we choose to purchase (ex. Price was $100 now only $89!)

Charm Pricing

The magic of prices that end in 9 or .99

Wal-Mart Pricing

use prices to match strategy, constant cost savings, Everyday low prices

Power of Free

We tend to choose a "free" option even when it is clearly inferior to other options, ex. more expensive but has free shipping or free returns

Pay What You Want

Product price chosen by customers, leads to less free riding, and opens the market up to those who were not before accessed yet maintains those who are willing to pay a premium

Company Based Pricing

Cost Plus Pricing, Return Pricing, Prestige Pricing, Value Pricing

Cost Plus Pricing

adding a standard markup to the cost of the product

Return Pricing

Similar to cost plus, instead using ROI of consumers