Marketing Flashcards

Four Conditions that Guarantee Business Cycle: boom to bust

• The belief that growth is assured by an expanding and more affluent population

• The belief that there is no competitive substitution for industry’s major product

• too much faith in mass production and in production and in the advantages of rapidly declining unit costs as output rises

• preoccupation with a product that lends itself to carefully controlled scientific experimentation, improvement, and manufacturing cost reduction

shadow of obsolescence

When an industry is within a growth phase, there seems to be no substitute for it, but when an industry is growing, it is growing at the expense of another - zero-sum game, but with products

the belief there is no competitive substitution for the industry’s major product

there is always competition, a false illusion of indispensability - oil companies thought they had no competition until gasoline emerged as a consumer forward product, no guarantee against a product’s obsolescence, even if it is as generic as oil

the belief that growth is assured by an expanding and more affluent population (population myth)

harmful to believe that as the population rises, demand for your product will rise, if there is no innovation within industry it is not safe to assume demand will increase

too much faith in mass production and in the advantages of rapidly declining unit costs as output rises

dangerous for a growth company to focus more on mass production than marketing, firms should be “marketing-minded” and create value-satisfying goods and services that consumers actually want to buy, sellers should take cues from buyers so that the product becomes a consequence of marketing effort not vice versa

creative destruction

don’t focus on the product, focus on the experience

product provincialism

the dangers of narrow minded focus on producing specific goods, rather than satisfying customer needs

dangers of R&D

marketing should not be treated as a residual activity, market becomes a step-child in this scenario and is neglected, focus on experimentation and study leads to forgetting realities of the market

Elements of Value

• functional

• emotional

• life changing

• social impact

When combined optimally, they increase customer loyalty and revenue growth

functional element of value

help consumers interact with the outer world, saves time, avoids hassle, reduces effort, simplifies/reduces risk, organizes, integrates, connects, reduces costs, quality, variety, sensory appeal, informs, makes money

emotional element of value

reduces anxiety, rewards person, nostalgia, design/aesthetic, badge of value, wellness, therapeutic value, fun/entertainment, attractiveness, provides access

life changing element of value

inward - provides hope, self-actualization, motivation, heirloom, affiliation/belonging

social impact element of value

self-transcendence

companies should improve value in 3 areas

• new product design

• pricing

• customer segmentation

patterns of value

• Some elements matter more than others - perceived quality is most important

• Consumers perceive digital firms as offering more value

• brick and mortar businesses can still win on certain elements - omnichannel retailers (emotional and life-changing elements)

value in use

the extent to which we achieve our goals through using a product or service

experience quality

customer’s perception from the holistic brand encounter of the brand’s contribution to the value-in-use they seek

myths about customer experience

• Experience is only about entertainment (it has 3 layers: product, service, environment)

• Differentiation occurs by creating great experiences, which may be quite unrelated to the product or service sold

• We need to optimize satisfaction scores with every aspect of the experience

case study of the advantages of designing customer experiences with value-in-use in mind

London Symphony Orchestra - the scope for differentiation within the London orchestra was in the outer layer of the environment

case study for how to change your experience to increase value-in-use

lucozade - changed from recovery drink to energy drink

case study how to segment by value-in-use

iphone - some people want iphone to take pictures, some for computer chip nerd reasons lol - marketed differently to different consumers

the outdated funnel metaphor

consumers start at the wide end of the tunnel, many brands and narrow them up as they make a final choice

the new consumer journey

Consumers add and subtract brands from a group under consideration during an extended evaluation phase

todays decision journey

1. consider

2. evaluate

3. buy

4. enjoy, advocate, bond

C.E.B.E.A.B. - considering everything Bob eats, apples bewilder

three new roles

1. the orchestrator

2. publisher and content supply chain manager

3. marketplace intelligence leader

two important aspects of competitive positioning

1. understanding the frame of reference within which their brand’s work

2. addressing the features that brands have in common with competitors - points of parity

frame of reference

defines a specific market segment, category, or competitive space in which a brand competes

brand performance association

relate the ways in which a product or service attempts to meet consumers’ functional needs

1. does the product benefit from consumption?

2. is the brand reliable, durable and how good is the serviceability?

3. service effectiveness, efficiency, and empathy; speed and courtesy of the service

4. style and design

5. value and price

brand imagery associations

When you are making a choice based on experience, such as where to get a haircut or eat dinner, established by depicting who uses the brand and under what circumstances

consumer insight associations

shows consumers insights into problems, used when a brand’s performance and imagery don’t differ much from the competition, ex. ad for jeans recognizes the struggle of getting jeans to fit right

desirability

a point of difference must be perceived by the brand’s audience as both relevant and believable

deliverability

point of difference need to meet three deliverability criteria:

1. Creating a point of difference must be feasible. you can’t have impossible promises

2. Positioning on a particular benefit must be profitable. you can’t bleed money

3. positioning must be preemptive, definable and difficult to attack

sequencing

the timing at which information is introduced to consumers: establish it tastes good before you say its healthy

leveraging an unconnected attribute

ex. getting an influencer to promote products

brand extension

launching a new product or service under an existing brand name

fit-as-similarity (traditional)

similarity between the parent brand extension category and the dominant product brand extension literature

• High similarity: Colgate → mouthwash

• Low similarity: Harley Davidson → wine coolers

fit-as-relevance (association relevance)

whether parent brand associations provide relevant benefits in the extension category - even dissimilar categories can ‘fit’ if association transfer

• Caterpillar → boots

• Coca-Cola → lip balm

service brand associations

carry transcending service attributes, outcome quality, interaction quality, and service environment quality, dimensions: reliability, responsiveness, assurance, empathy, tangibles

why are services different

• evaluated on global service quality, which is abstract and transferable

• not tied to specific product attributes - Vodafone extension into banking, travel, insurance, streaming

• Associations are geared more towards experience than product

steps to launching a brand

1. decide if brand is extension or a new brand

   1. almost always preferable to have extension rather than new

   2. leverage existing brand - halo effect

   3. ex. apple ipod - halo effect because people like apple already

   4. when company lacks existing brand extensions that fit - create new company - ex. pantene under procter and gamble or lexus under toyota

2. brand positioning: frame of reference, points of parity and difference

   1. the way the company intends on being perceived in market

   2. brand image is how consumers see the brand

   3. must have:

      1. clear frame of refernce

      2. points of parity

      3. points of difference

3. build brand awareness: perceptual prominence and perceptual difference

   1. perceptual prominence is staying at top of consumers mind - easily noticed and recalled by consumers

   2. perceptually different from pioneer, instead of merely imitating it

two aspects of packaging

1. out-intermediate-inner

   1. outer - box it comes in

   2. intermediate - bottle, the holder, etc.

   3. inner - shape, color, form of product

2. purchase-consumption layer

   1. store etc.

sensory marketing

marketing that engages consumers’ senses, perception, judgement, and behavior

types of sensory marketing

• color engagement

• olfactory cues

• haptic engagement

• auditory engagement

perception

what drives consumer behavior

grounded cognition theory

thought is rooted in bodily/sensory experience, not purely abstract

types of touch

• instrumental (touch for function/purchase reasons)

• autotelic (touch for pleasure/emotional reasons)

law of contagion

proximity not just contact changes perception of items

smell findings

• flat forgetting curve (-60-75% after 1 year, picture recognition drops to 58% after 4 months)

• autobiographical memory (evoke more detailed memories than other scences)

• ambient scent (increases brand recall)

• product scent (scented v unscented pencil sales)

• scent & pictures (superadditive effect on verbal recalls)

congruent scent theory

enhance consumer behavior, memory, and satisfaction when they align with brand image, product, or environmental context - boosts information processing fluency and more positive product evaluations and higher purchase intent

sound features

• sound symbolism (word sounds shape perception)

• language (english in ads = modernity, native=closeness/in-group)

• music in ads (affects mood and involvement)

• ambient music (slower music, slower shopping, more purchases)

• voice (low-pitched, authoritative, faster - more competent)

highly susceptible to external influences

• color

• brand name

• ingredient disclosure

• ad copy

• ‘healthy’ framing

• cognitive load

grounded cognition

Cognition is not purely abstract. It is grounded in bodily states, situated actions, and mental simulation

grounded emotion

Emotion is physically embodied - blocking smile muscles reduces the ability to recognize joy/sadness

sensory metaphors

Physical and social warmth share a neural substrate (insula): fishy smells trigger suspicion

areas that need further study (Krishna)

• interaction of senses (cross-modal effects)

• sensory dominance and conflict

• sensory overload

• sensory imagery and sensory load

• grounded emotion

• a-modal information affecting perception

• individual differences in need for sensory input

7 myths about maximizing brand community value for a firm

1. a brand community is marketing community is a myth. In reality, a brand community is a business community

2. a brand community exists to serve the business. in reality, brand community exists to serve the people in it

3. build the brand and the community will follow. in reality, engineer the community and the brand will be strong

4. brand communities should be love-fests for faithful brand advocates. In reality, smart companies embrace conflicts that make communities thrive

5. opinion leaders build strong communities. In reality, communities are strongest when everyone plays a role

6. online social networks are the key to community strategy. In reality, online networks are just one tool, not a community strategy

7. successful brand communities are tightly managed and controlled. In reality, they are controlled of and by the people, communities defy managerial control.

script

a set of expected behaviors in a particular social setting - management reinforce

traditional view of how brand community practices create value

firms create value and consumer consumes

revised view of how brand community practices create value

value in co-created within brand communities via practices (not just individuals)

• shares, repeated activities (‘practices’) within brand

Service-Dominant (S-D) Logic:

consumers act as:

operant resources - active contributors

operand resources - inputs into value creation

anatomy of a practice

1. procedures - rules, instructions

2. understandings - tacit skills, know-how

3. engagements - emotional commitments and purpose

12 value-creating practices

1. social-networking (homogeneity, emotional ties)

   1. welcoming - integrating newcomers

   2. empathizing - emotional/functional support

   3. governing - enforcing norms

2. impression management (external focus)

   1. evangelizing - promoting the brand to outsiders

   2. justifying - rationalizing brand devotion

3. community engagement (heterogeneity, status)

   1. staking - defining roles/identity

   2. milestoning - celebrating key events

   3. badging - symbolic markers of status

   4. documenting - narrating brand journey

4. brand use (product-focused)

   1. grooming - maintaining optimal use

   2. customizing - modifying the product

   3. commoditizing - regulating marketplace behavior

how practices create value for consumers

• social value - belonging, identity

• functional value - improved product use (tips, modifications)

• cultural capital - status & expertise from participation

how practices create value for firms

• increased brand equity

• stronger customer engagement

• expanded community

• higher switching costs

intrathematic

within same category - welcoming, empathizing, governing

interthematic

across categories - evangelzing, welcoming, engagement

key outcomes of practices

• cultural capital

• shared repertoire

• consumption opportunities

• indicator of community strength

brand community

group organized around a brand with shared rituals & responsibility

practice

routinized behavior combining procedures, understanding, egagements

relative advantage

The degree to which an innovation is perceived as better than the idea it supersedes by a particular group of users

compatibility with existing values and practices

The degree to which an innovation is perceived as being consistent with the values, past experiences, and needs of potential adopters

simplicity and ease of use

How easily the product can be used before purchase, or tested on a limited basis, less uncertainty - faster adoption,

observable results

visible outcomes help with uncertainty and stimulate peer discussion

how much for the five attributes determine variation in adoption rates

49-87%

use of reinvention

innovations must continuously evolve to meet the needs of increasingly demanding/risk-averse adopters - make users into partners of a continuous process of redevelopment

adoption

managing risk and uncertainty, only trusted pers who have successfully adopted can provide credible reassurance

innovators (2.5%)

Visionary, creative, obsessive about new ideas. Seem idealistic to the majority but essential for kick-starting change. Work with them: become their first followers; invite them as project partners.

early adopters (13.5%)

seek strategic advantage, trend-conscious, socially respected. Their buzz determines an innovation’s success; they also act as a test bed for reinvention. Work with them: support trials, reward egos with media coverage, recruit as peer educators.

early majority (34%)

pragmatists. Won’t act without solid proof. Want simplicity, low-cost, minimum disruption, and mainstream endorsement (“plug-and-play”, value for money). Work with them: mainstream advertising, credible endorsements, reduce cost/complexity

late majority (34%)

Conservative, risk-averse. Primary driver is fear of not fitting in. Influenced by laggards’ fear. Work with them: promote social norms, emphasize risk of being left behind, address laggard criticisms.

Laggards (16%)

Resist to the end; perceive high risk. May actually raise valid concerns worth addressing. Work with them: maximize personal control and familiarity; show other laggards who’ve successfully adopted

user segments chart

Subcultures

incubate new ideologies and practices

amplified substructures

social media has expanded and democratized subcultures that used to only exist physically

art worlds

break new ground in entertainment

turbocharged art worlds

artists gather in inspired collaborative competition

mindshare branding

treats the brand as a set of psychological associations. Benefits emotions and personality

purpose branding

brand espouses values or ideas that customers share

Cultural branding

a strategic approach that aligns a brand's identity and messaging with the deeply held values, traditions, and ideologies of a target culture to build intense loyalty and relevance

12 social media brand behaviors

1. Look for coupons/discounts

2. Actively search brand info

3. Get brand info from others

4. Directly communicate with brand

5. Engage with brand interactive content

6. Make positive comments

7. Make negative comments

8. Display own brand experiences

9. Joint brand discussions/threads

10. Visit brand fan pages

11. Follow brand news/updates

12. Share brand info

four underlying motivators for brand engagement

1. Brand tacit engagement - private non-visible behavior (functional, experiential, symbolic)

2. Brand exhibiting - public, identity-signaling behavior (symbolic, self-presentation, image-related utility)

3. Brand patronizing - critical or corrective behavior (functional, symbolic)

4. Brand deal seeking - searching for discounts/coupons (functional, symbolic)

6 consumer segments

1. Content seekers (13.6%) - secret affair - private - information driven

2. Observers (20.9%) - buddies - weak sporadic relationship

3. Deal hunters (16.5%) - transactional, price-driven

4. Hardcore fans (13%) - best friends - deep emotional bond

5. Posers (22%) - attention seekers - public self-presenting

6. Patronizers (13.9%) - master-slave - expect responsiveness, complain often

management strategy for fans & posers

encourage UGC, advocacy

management strategy for content seekers

provide rich info & updates

management strategy for observers

maintain engaging, low-effort content

management strategy for deal hunters

tactical promotions

management strategy for patronizers

Monitor complaints, prevent crises (word-of-mouth issues)

pricing unique feature

To double profits, price only needs to increase 9.1%, is the highest-leverage tool available

what matters when it comes to price

relative price, not absolute price - comparing price to that of competitors

Cost-plus pricing

Adding additional costs to the consumer for additional perceived goods or services