Untitled Flashcards Set

Recall that the Marketing Mix is that combination of the 4 Ps – Product, Price, Place, and Promotion – that we coordinate to offer value to consumers, differentiate ourselves from competitors, and achieve our goals.

Recall that Value or Consumer Value, in the context of marketing, describes the benefits or problem-solutions that the consumer receives or experiences when they consume a product.

What is a product?

Products or “Market Offerings” are what we use to create value for the consumer.

Products or “Market Offerings” are combinations of tangible and intangible characteristics, all meant to offer or increase the benefits or problem-solutions experienced by the consumer.

Products are combinations of:

1. Goods delivered to consumers.

2. Services provided for consumers.

3. "Ideas" shared with consumers.

How can we categorize goods?

1. Durable goods --> A tangible good that survives many uses.

1. Non-durable goods --> Tangible goods normally consumed after one or a few uses.

How can we categorize services?

1. Primary/core services (ex. Hotel room/bed)

2. Supplementary services (ex. Pool, gym, breakfast service at the hotel)

Total Product Concept:

This is a way of conceptualizing a product as a multidimensional or layered thing. This means that we can see not just what a product is but, more importantly, understand what it does for consumers.

1. Core product (ex. Transportation that a car provides)

2. Actual product (ex. The actual car)

3. Augmented product (ex. Financing plans, warranty, service, etc. that come with the car)

How do we classify products?

Two product categories:

1. Consumer products

2. Business products / industrial or business goods

Consumer products

We can categorize Consumer Products based on two essential criteria: The consumer’s level of involvement with the product and the frequency with which they purchase it.

Consumer product categories:

1. Convenience goods --> Goods that consumers purchase frequently, with a minimum of effort and evaluation.

   • ex. Can of Coke

   • Packaging and branding are important due to low consumer involvement

2. Shopping goods --> Goods that the consumer compares on such bases as quality, price, suitability, and style before making a selection.

   • ex. Pair of running shoes

   • More focused distribution, higher prices

3. Specialty --> Goods that consumers will make an effort to find and purchase because the goods possess some unique or important characteristic.

   • ex. Exotic car or watch

4. Unsought goods

   • ex. Life insurance

   • Uncomfortable product that consumers don't like to think about purchasing

   • Seller must provide reasons for purchasing

An organization’s Product Mix is the total range of Product Items they offer to consumers.

A Product Line is a grouping of similar or related Product Items that might share characteristics (and thus can be grouped together) but can still differ in function, size, style or other attributes.

A product line's width is the number of lines in the product mix.  A product line's depth is the amount of items in the product line.

Industrial goods

By definition, industrial (or business) goods are products and services that have a direct or indirect role in the manufacture of other products and services.  The three categories of industrial goods are:

1. Capital Items --> Expensive goods with a long lifespan that are used in the production of another good or service.  Installations are major capital items used directly in the production of another product.  Accessory equipment refers to items that facilitate an organization's operations.

1. Parts and Materials --> Less expensive goods that directly enter a manufacturer's production process.  This category includes raw materials, processed materials, and component parts.

2. Supplies and Services --> Supplies are standardized products that are routinely purchased with a minimum of effort.  Services are pretty self explanatory.

What is a brand and why does it matter?

Brands are the combination of names, words, designs, logos, symbols, and other features that gives a product identity, connect it to the consumer, and set it apart from competing products.

But is a brand nothing more than a collection of names, symbols, and logos protected by trademarks?

Brands represent a kind of psychological contract between organization and consumer. A brand is a promise.

Brand ownership approaches:

1. Manufacturer of National Brands

2. Private-Label or Store Brands

   • Ex. Costco is a national brand, Kirkland Signature is the store brand.

   • Ex. Canadian Tire is the national brand, Motomaster and Mastercraft are the store brands

3. "No Name" or Generic Brands --> A product without a brand name or identifying features.

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1. Licensed Brands --> Occurs when a brand name or trademark is used by a license.

2. Cult Brands --> A brand that captures the imagination of a small group of devotees who then spread the word and turn the brand from a fringe product into a mainstream name.

   • Ex. Vans and Pit Viper

Brand Equity:

It is the value a consumer derives from a product over and above the value derived from its physical attributes.  From an organizational perspective though, Brand Equity measures the strength of a brand and the value it possesses for an organization.  The elements of Brand Equity are:

1. Brand awareness

   • Apple has top-of-mind awareness

2. Brand associations

   • Apple's are elegant simplicity and accessibility

3. Perceived value

   • Apple seen as the best devices we can buy

4. Brand loyalty

   • Why would anyone look anywhere else?

Commonly used branding strategies:

1. Family Branding is a strategy of using a single brand name across several related products (ex. FedEx).

2. Individual Branding or multibranding is a strategy of using unique brand names for each product a company offers in the same product category (ex. P&G).

3. Sub-Branding is a kind of hybrid branding strategy that uses both individual and family branding on a single product (ex. Kellogg's).

Another branding strategy is Co-Branding.  Co-Branding occurs when a company uses the equity in another brand name to help market its own brand-name product or service (two brand names on a product); also applies to two organizations sharing common facilities for marketing purposes (e.g., two restaurants in one location).

What is price and how can we use it?

Price is whatever thing of value we ask for in exchange for using, experiencing, or owning a product. Price is what we ask for in trade for the benefits the consumer receives from the product.

Price is a key variable in consumer purchase decisions. It can shape consumer perceptions of and their demand for a product.

However, consumers will not evaluate price across only the financial dimension, nor do they respond to it in ways that are “economically rational.”

Common Pricing Orientations:

1. Cost-Oriented

2. Competitor-Oriented

3. Consumer-Oriented

4. Profit-Oriented

Consumer-oriented pricing strategies:

1. Penetration Pricing introduces products with an initially low price point.  (ex. Netflix)

1. Price Skimming introduces products with an initially high price point.

2. Prestige Pricing involves setting a consistently higher price for a product. This is done to communicate exclusivity, quality, and status as well as generate higher revenues.

3. Odd/Even Pricing responds to consumer perceptions, setting a price slightly below an even number (e.g. $3.99).  The expectation is that consumers will perceive it as being significantly lower than that number.  While conventional and common, Odd Pricing can be seen as manipulative. Consumers will associate Even Pricing with authenticity and quality.

Competitor-oriented pricing strategies:

1. Customary Pricing involves setting a price for a product based on consumer’s collective expectation of a price point and common sense of perceived value.

2. Market Pricing involves setting a price point that is either above, at, or below the average market price or your competitors’ prices for that product.  Below Market Pricing can attract more price sensitive consumers, increase their perceptions of value, and drive higher sales.

3. Leader Pricing involves setting low prices on frequently purchased in demand items and then using aggressive promotional activity to capture consumers away from your competitors.

Why are intermediaries so important for delivering value to consumers?

The “Place” element of the Marketing Mix is about location and process and answers two key questions: “Where does the consumer find the product?” and “How does it get there?”

A Distribution Channel is the network or chain of Intermediaries that will help to move our products from the “Place of Production” to the “Place of Consumption.”

Intermediaries are those individuals or organizations who occupy our distribution channels and help us to deliver value to consumers.

Manufacturer --> Distributor --> Retailer --> Consumer

Key Functions of Intermediaries:

1. Information

2. Promotions

3. Matching

4. Risk-taking

Retailing

Retailing describes the combination of activities involved in the exchange of value at a point of purchase with the consumer who will use the product.

Categories of Retailers by form of Ownership/Control:

1. Independent retailers

2. Corporate systems/chains

3. Contractual systems

Retail Utility

Retailers are important intermediaries.  Retail Utility describes the increased value, convenience, and other additional benefits that they can provide.

Elements of Retail Utility:

1. Place utility (availability, accessibility of products)

2. Possession utility

   • Possession Utility describes all those things retailers can do to make it easier for the consumer to possess or own the product.

3. Form utility

   • Form Utility describes all the things retailers can do to ensure that the consumer can select and receive a product that satisfies them.

4. Information utility

5. Time utility (product available when the consumer wants it)

How can we communicate effectively with consumers?

Promotion

Promotion describes all those marketing communications activities that work together to offer, exchange, or otherwise share information with consumers.

To ensure we can communicate to a fragmented audience in a clutter media landscape, marketers will work to integrate their marketing communications.

Integrated Marketing Communications (IMC) is a strategy of ensuring our communications across different channels work together to deliver clear, consistent, and compelling messages.

Common Promotional Tools

Multimedia Advertising:

Advertising is a paid form of marketing communication that is delivered via a communication channel from an identifiable source to Inform, Remind, or Persuade the consumer.

Advertising messages can vary widely in content and format but should be rooted in a product/brand’s Unique Selling Proposition (USP).

Two types of advertising appeals:

1. Rational appeals

2. Emotional appeals

   • Common emotional appeals include shock appeals and sex appeals

"The Rhetorical Triangle" --> Logos (logic); Ethos (credibility); and Pathos (emotion).

Shock Appeals:

Shock Appeals will use provocative content to startle and/or offend the audience. The hope is that the surprise will capture attention and increase the effectiveness of the message.

• Study involving "use a condom" posters in waiting room before study.  Study found that shock appeal poster was the most effective, at least in the context of public health awareness.

Sex Appeals:

Sex Appeals are common in advertising.  This involves the use of sexualized content to evoke sexual thoughts, feelings, and/or arousal in a target audience under the assumption that “sex sells.”  The question must be asked though, does sex sell?  Research is mixed on this question with some suggestion that while it aids in capturing attention it distracts from the message being sent.

• A 2017 meta-analysis by Wirtz et al. found that, even if Sex Appeals captured consumer attention, they showed no significant effect on brand recognition, brand recall, or purchase intentions.

• It did show that Sexual Appeals can lead to more negative attitudes towards the brand, however.

Sales Promotions:

Sales Promotions combine short-term incentives and increased communications to generate interest or attention, stimulate desire, and encourage more immediate purchasing.  See slide 78 for a detailed chart of common promotion strategies and the pros/cons of each.

Trade Promotions (push strategies) vs. Consumer Promotions (pull strategies)

Consumer Promotions are activities that promote extra brand sales by offering the consumer an incentive over and above the product's inherent benefits.

Objectives of consumer promotions are:

1. Purchase for the first time

2. Purchase the product again

3. Purchase more of the product

Public Relations:

Public Relations (PR) describes a range of activities meant to build and maintain a positive image for a product, brand, or organization and positive perception among its stakeholders.

Public Relations (PR) will typically make use of “Earned Media” which can be harder to use and more difficult to control. So why use it?

Often these messages can reach a skeptical and “ad avoidant” consumer and are perceived as being more authentic and trustworthy by them.

Experiential Marketing:

Experiential Marketing is a strategy of connecting with your consumers via unique, interactive, and immersive “brand experiences.”  The customer must interact directly with the product.

Experiential Marketing campaigns often make use of two strategies:

1. Event Marketing --> The design and development of a live "themed" activity, occasion, display, or exhibit that promotes a product, cause, or organization.  This includes venue marketing.

   • Ex. The Sun Run, CIBC run for the cure.

   • Ex. Rogers arena (venue marketing).

   • Ambush marketing is when a non-sponsor capitalizes on the prestige and popularity of an event by giving a false impression that they are sponsors.

1. Event Sponsorship --> A situation in which a sponsor agrees to support an event financially in return for advertising privileges associated with the event.

   • Ex. Red Bull sponsoring action sports events.

While it can be taxing on time and resources to offer these experiences and success is far from certain, they are good ways to build quality impressions based on strong emotional connections between consumer and brand.