131 Marketing Final Exam Review
131 Marketing Final Exam Review
131 Marketing Final Exam Review
Four Cs
1.
2.
3.
4.
1.
2.
3.
4.
Product
Price
Place
Promotion
Customer Solution
Customer Cost
Convenience
Communication
Geographic
Economic (ex. population income levels, level of economic development)
Political and Legal (ex. government type/stability, receptivity to foreign firms, bureaucracy)
Culture (ex. languages, religions, customs, values)
Inter-market segmentation: similar needs / buying behaviours, though located in diff. countries
Requirements for Effective Segmentation
1.
2.
3.
4.
Measurable in size, purchasing power, etc. ex. no way to identify / target left-handed
Accessible must be able to reach ex. group may shop or live in certain areas
Substantial large enough to be profitable
Differentiable respond differently to marketing mix / strategies
5. Actionable ex. small airline seven market segments, but staff too small to develop
separate marketing program for each one
Evaluating Segments
1. Size & Growth
Largest segment not always most attractive (lack resources to serve, competitive)
2. Structural Attractiveness
Aggressiveness / number of competitors
Bargaining power of buyers + suppliers ex. buyer with strong bargaining power
try to force price down, demand more services, set competitors against another
3. Company Objectives and Resources
Target Market Strategies
1.
2.
3.
4.
Company Resources
Product Variability (ex. grapefruit vs. cameras or cars)
Product Life-cycle Stage (ex. introduction launch one version first, mature differentiate)
Market Variability (ex. buyer have same tastes? React same way to marketing?)
Competitors Marketing Strategy (ex. bad if undifferentiated in differentiated market)
4. Psychological
1. Motivation
Needs become motive when sufficiently pressing / must seek satisfaction
1. Freud people unconscious to real psychological forces shaping behaviour
2. Maslows hierarchy of needs
1. Physiological: hunger, thirst
2. Safety: security, protection
3. Social: love, belonging
4. Esteem: recognition, status
5. Self-actualization: self-development, realization
*** Critics ex. buy $400 jean instead of paying rent
2. Perception
Selective attention: tendency to screen out information
Selective distortion: interpret information in way that supports existing beliefs
Selective retention: remember good point about favoured brand, forget good
point about competing brand
3. Learning
Changes in behaviour arising from experience
Drive: strong internal stimulus that calls for action
Drive become motives when directed at particular stimulus object
Cues: minor stimuli when, where, how person responds
ex. hearing about sale
Build demand by associating product with strong drives, use motivating cues,
and provide positive reinforcement
Awareness
Interest
Evaluation
Trial
Adoption
Business Markets
Market Structure and Demand
More complex
More formalized
Buyer and seller are more dependent on each other
Quantitative Analysis
1. Market Share: percent of total market the product controls measures market dominance
Limitation Not all brands sold at same price
Step-Down Approach Ex. given sales and total CANADIAN market, need find
market share of price sensitive segment in Toronto
Explore
Describe
Establish Causality
Create Normative Implications
Idea Generation
Idea Screening
Concept Development and Testing detailed version of idea, prototype
Marketing Strategy Development 3 parts:
a. Defines target market, planned value proposition, sales, market share, profit goals
b. Planned price distribution and marketing budget
c. Planned long-run sales, profit goals, marketing mix strategy
5.
6.
7.
8.
Business Analysis sale, cost, profit projections fit with company objectives?
Product Development
Test Marketing
Commercialization full scale introduction of new product to market
Product Development
Introduction
Growth
Maturity
Decline
Product class or product form can have long life cycles, but specific brands shorter
Style once invented, passes in and out of vogue
Fashion currently accepted / popular style
Fad temporary periods of unusually high sales and immediate product popularity
Product and Service Decisions
Marketers make decisions at three levels:
1. Individual Product and Service Decisions
a. Product attributes quality, features, style, design
Quality Consider both level (performance) + consistency (conformance)
Style appearance of product
Design usefulness
b. Branding
c. Packaging (protects, increases shelf life, informs, differentiate, promote)
d. Labelling
e. Product Support Services
2. Product lines
a. Product line length
Influenced by company objectives and resources
Ex. Upselling BMW from 3-series to 5 and 7 series models
Ex. Cross-selling HP sells printers and cartridges
Ex. Protect against economic swings cover different price points
Line Filling: adding more products within present price range
Line Stretching: adding more products higher or lower than existing price
3. Product Portfolio (Product Mix)
All product lines and items
a. Width: number of different product lines
b. Length: number of items within product lines
c. Depth: number of versions offered of each product in the line
d. Consistency: how closely related product lines are (ex. same distribution channel?)
Characteristics of a Service
1.
2.
3.
4.
Intangibility
Inseparability produced and consumed at same time, cant be separated from providers
Variability quality may vary depending on who when where why how
Perishability
Internal service quality (ex. quality work environment, superior selection and training)
Satisfied and productive service employees (more loyal, hard-working)
Greater service value (effective + efficient customer value creation and delivery)
Satisfied and loyal customers (who remain loyal, repeat purchase, refer others)
Healthy service profits and growth
Interactive Marketing: training employees in fine art of interacting with customers to satisfy
3 Major Marketing Tasks
1. Service differentiation
2. Service Quality
3. Service Productivity be careful not to give up too much quality
Begins with trust build trust with potential advocates by nurturing their opinions
Starts close to home brands must start by creating advocates in world around them
Make customers and employees part of the brand story (ex. Zappos)
Deliver an experience that gets them talking loyalty is not enough (ex. pc vs. mac users)
Outperform where they care the most understand and solve problems
Brand Characteristics
1. Personality (ex. Google doodle innovative and creative personality)
2. Status do not confuse with popularity or value, rather high status brands are exclusive
3. Value (brand equity) dollar amount attributed to value of brand
Brand Strength
Young & Rubicams Brand Asset Valuator measures brand strength:
1.
2.
3.
4.
Brand Management
Brand Development
1. Line Extension: new forms, colours, sizes, ingredients, or flavours of existing product
Low cost, low-risk way to introduce new products
Or want to meet consumer desires for variety
WARNING: overextended brand can lose specific meaning (ex. 7 Jeep models)
Best when take sales from competing brands, not cannibalizing companys own
2. Brand Extension: use successful brand to launch new product
Ex. Mr. Clean household cleaner Magic Eraser (cleaning pads), Magic Reach
3. Multi-brands: same manufacturer produces many brands in same product category
Ex. P&G sells 5 brands of shampoo Pantene, Head & Shoulders, Aussie, Herbal
Essences, and Infusium 23)
Major drawback each brand might obtain small market share, not very profitable,
but company spreads resources over many, instead of building few highly profitable
4. New brands: replace existing brand name or when entering new product category
Ex. Sobeys FreshCo. high quality, low price, with focus on multicultural foods
Brand Communications
Touchpoints: Any / all points of contact consumer has with brand (ex. word of mouth, website)
Branded Entertainment: usually video, created with co-operation / financial support of marketer
Ex. Lady Gagas Telephone music video heavy product placements
Still too limited Value delivery network: made of company, suppliers, distributors and
ultimately customers who partner to improve performance of entire system
Marketing Channels
Set of interdependent organizations that help make product or service available for use
Role of Intermediaries:
1. Logistics
2. Customer Contact
3. Collect and Disseminate Info
4. Promotion
5. Financial and Risk-Taking
Often involve long-term commitments must design with future selling enviro. in mind
3. Payment flow
4. Information flow
5. Promotion flow
People and companies interact to accomplish individual, company, and channel goals
Success of individual dealers depend how well entire marketing channel competes
Channel Conflict
Disagreement among marketing channel members on goals, roles, rewards
Channel members tend to act on own short-run interests
1. Can occur on same level of channel ex. Honda dealer complain other dealers steal
sales by pricing low or advertising outside assigned territories
2. Can occur between different levels ex. Goodyear with its independent dealer channel
when began selling through mass-merchant retailers
Marketing Systems
Conventional Distribution System: independent producers, wholesalers, and retailers
Separate business, maximize own profits, even at expense of profits for whole system
Lacked leadership and power result in conflict and poor performance
Horizontal Marketing System: two or more companies at one level join together
Ex. Tim Hortons express version of their stores at Esso gas stations
Multichannel Distribution Systems (Hybrid Marketing Channel)
Single firm sets up two or more marketing channels to reach one or more segments
Target different customer segments
May generate conflict or cannibalization
Cross-channel Integration
Ex. browse catalogue, purchase online, return in-store
Vertical Marketing Systems: producers, wholesalers, and retailers act as unified system
One member owns others, has contracts, or so much power that all co-operate
Three Types of VMS:
1. Corporate VMS: successive stages of production / distribution under single ownership
Ex. eyewear maker Luxottica produces licensed Dolce & Gabbana, Prada,
Versace, etc. own and sell through LensCrafters and Sunglasses Hut
2. Contractual: independent firms at different levels of production / distribution join
together through contracts
More economies or sales impact
3. Administered: leadership through size and power of one or few dominant members
Ex. P&G, Kraft, etc. can obtain strong co-operation from resellers
Ex. Large retailers, like Wal-Mart, can exert influence on manufacturers
Economic conditions
Ex. down economy use shorter channels to reduce price Some cases, may
want to compete in or near competitor products
Retailing
All activities involved in selling goods / services directly to final consumers
Retailer: sales come primarily from retailing
Types of Retailers
Classified by:
1. Amount of Service
1. Self-service (ex. fast-moving convenience goods)
2. Limited-service (ex. Home Depot more sales assistance, customers need info)
3. Full service (ex. Tiffany high-end specialty stores, more service = more cost)
2. Product Line
1. Specialty stores narrow product line, deep assortment within those lines
Category killers: very large specialty stores, carry thousands of product in
particular category (ex. Home Depot and Best Buy)
2. Department stores wide variety of product lines
3. Convenience Stores small stores, limited line high-turnover convenience goods
4. Superstores larger than regular supermarkets, large assortment of routinely
purchased food, etc.
5. Service retailers hotel, bank, airline, movie theatre, restaurant
3. Relative Prices
1. Discount stores sell standard merchandise at lower price by accepting lower
margin and selling higher volume
2. Off-price retailers buy end-of-season or overstock goods at less than regular
wholesale prices (ex. Winners)
3. Factory outlets manufacturer-owned and operated (ex. Gap, Levi Strauss)
4. Warehouse clubs offer few frills, but ultralow price on select brands (ex. Costco)
4. Organization
1. Corporate Chain: two + stores / retail outlets commonly owned and controlled
Purchasing, merchandising, advertising, inventory control done centrally
2. Voluntary Chains: wholesaler-sponsored group of independent retailers common
merchandising (ex. Independent Grocers Alliance)
Product Selection
Service and Atmosphere
Price / Quality / Quantity Levels
Location
Wholesaling
All activities involved in selling goods / services to those buying for resale or business use
Functions of Wholesalers
Add value to distribution channel
More local contact provide market information, sales and promotions
Save customers money by buying in carload lots and breaking bulk
Provide warehousing (storage) function
Absorb risk by taking title, bear cost of theft, damage, spoilage, and obsolescence
Closer to customers provide transportation and delivery
Financing and management services
Types of Wholesalers
1. Merchant: independently owned businesses, take title to merchandise they handle
Full-service: carry stock, maintain sales force to make deliveries, provide financing
Limited-service: offer fewer services to suppliers and customers
Drop shippers: dont carry inventory or handle product on receiving
order, select manufacturer who ships merchandise directly to customer
Assumes title and risk from time order is accepted to delivery
Operate in bulk industries (ex. coal, lumber, heavy equipment)
Rack jobbers: send delivery trucks to stores, set up displays, price goods,
keep them fresh, and keep inventory records
Serve grocery and drug retailers
Retain title to goods and bill retailer only for goods sold
2. Brokers and Agents: do not take title to goods, perform only few function
Specialize by product line or customer type
Broker: bring buyer and seller together, assist in negotiation
Does not take title or assume risk
Does not carry inventory
Does not get involved in financing
Agent: represents buyers or sellers on more permanent basis
Manufacturers agents: represent two or more manufactures of complementary
lines, operate under formal written agreement with each
Used in apparel, furniture, electrical goods
Hired by small manufacturers who cant afford own sales force or large
manufactures to open new territories
Companies can gain comp. adv. by improving logistics better service or lower prices
Improved logistics can yield cost savings
Explosion in product variety has created need for improved logistics management
Integrated Logistics and Supply Chain Management: emphasize teamwork (inside company
and among marketing channels) to max. performance of entire distribution system
Third-Party logistics (3PL): independent logistics provider, performs functions required to get
product to market
more efficient, cost savings
free company to focus on core business
help to expand global market coverage with their contacts
Advertising
1. Set Advertising Objectives
Specific communication task with specific target audience, during specific time
Purpose can be:
1. Inform use when introduce new product, communicate / demonstrate
2. Persuade build selective demand (convince better than competitors)
Comparative (attack) advertising direct or indirect comparison
3. Remind mature product, maintain relationship
Goal not always immediate sale Can be to build long-term relationship
2. Set Advertising Budget
1. Affordable Method: set at level management thinks company can afford
Often used by small businesses
Ignores effects of advertising on sales
Places promotion last among spending priorities (even if it is critical)
Leads to uncertain annual promotion budget difficult to plan long-term
Message Strategy
Meaningful Identify Benefits
Believable
Distinctive Differentiate from competitors
ACM Model:
Get Attention
Achieve Comprehension
Be Memorable
Media Decisions
1. Decide Reach, Frequency, Impact
4.
4. Evaluate Effectiveness
Public Relations
Functions
1.
2.
3.
4.
5.
6.
Press Relations or Press Agency creating / placing newsworthy info in new media
Product Publicity
Public Affairs building / maintaining national or local community relations
Lobbying
Investor Relations
Development use relation with donor or non-profit org. gain financial / volunteer support
Use news, special events (ex. press conference, grand opening), speeches, written
material (ex. annual reports, brochures), audiovisual (ex. online videos), corporate identity
materials (ex. logos, stationery, signs), public service activities
Buzz marketing use social media, consumers themselves spread info about product
Crisis communications can be seen as opportunity
Sales force represents the company to customers, and customers to the company
Must Coordinate Marketing and Sales
Marketers blame sales force for poor execution of otherwise great strategy
Sales team blames marketers for being out of touch with customers
Sales Promotion
Consumer (Consumer Promotions)
Objective increase short-term sales
Avoid quick fix, price-only promotions build brand equity (ex. loyalty programs)
Develop relationship ex. Chevrolet promotion tie brand to hockey in consumer minds
If used long-term, customers may get used to effect, and wait for promotions
Too much promotion can damage brand image (ex. Starbucks premium coffee)
1.
2.
3.
4.
5.
6.
7.
8.
Samples most effective, but expense; can be combined into sample packs
Coupons narrow targeting; increase in mobile coupons
Rebates cash refunds; retailers can feature lower price than manufacturers can
Price Packs two for one, or two related products banded together
Premiums goods offered free or low cost (ex. McDonalds Happy Meal toys)
Point of Purchase displays and demonstrations
Contests and Sweepstakes
Event Marketing - ex. Comiccon
Objective: get retailers to carry more or new inventory, promote products, shelf space
Can use many consumer promotion tools, as well as:
1. Discount off list price on each case purchased during particular time
2. Allowance some amount off per case in return for agreement to feature products
3. Free Goods if buy certain quantity or feature certain flavour/size
4. Push money cash or gifts to dealers to push manufacturers goods
5. Specialty Advertising Items that carry company name (ex. pens, calendars, t-shirt)
Business Customers (Business Promotions)
Conventions and Trade Shows
Sales Contests ex. trips, cash prizes, gifts for high sales performance
Developing the Sales Promotion Program
1.
2.
3.
4.
5.
Pricing Strategies
1. Good-value Pricing offering just right combo of quality and service at fair price
Redesign existing brand to offer more quality, or same quality for less
Ex. car company offer small, inexpensive models
1. Everyday Low Pricing (EDLP): charge constant low price, no discount
2. High-Low Pricing: charge high on everyday basis, run frequent promotion
2. Value-added Pricing
Add features to differentiate and support higher prices (instead of price-cutting)
Ex. Stag Umbrella add funky designs / colors
2. Cost-Based Pricing
Company designs product set price that covers cost + target profit convince
worth
Sellers more certain about costs than demand
Ignore demand and competition
3. Competition-Based Pricing
Set price based on competitors strategies, prices, costs, and market offering
Ex. Market dominated by large, low-price competitors company target un-served
market niche value-added products at higher price
2. Government
3. Social Concerns
New-Product Pricing
Market Skimming Pricing: high price for new product skim max. revenues layer by layer
from segments willing to pay high price, as lower price fewer, but more profitable sales
Ex. iPhone intial price $599 drop price $399 drop price again $199
Market Penetration Pricing: set low initial price to penetrate market, attract large market share
Product Mix Pricing
1. Product Line Pricing: set price steps between various products in product line
Ex. basic, standard, platinum versions of software
2. Optional Product Pricing: offering accessory products sold with main product
Ex. Refrigerators come with optional ice makers
3. Captive Product Pricing: pricing products that must be used with main product
Ex. Razor blade cartridges, video games, printer ink cartridges
4. By-Product Pricing: pricing low-value by-products to get rid of them
Ex. wood chips paper, shavings, bark turned to wood pellets
5. Product Bundle Pricing: combo
Ex. Bath & Body Works three for one
Price Adjustments
Loss-leader strategy: popular item priced below cost to attract customers to buy other items
1. Discount and Allowance Pricing
Trade-in allowances: turning in old item when buying new (Ex. cars, video games)
Promotional allowances: reward dealers for participating in advertising / sales support
2. Segmented Pricing
1. Customer-segment Pricing: diff customer pay diff. price for same product / service
Ex. museums charge diff. admission for students vs. seniors
2. Product -form Pricing: diff. versions of product priced differently, but no diff. in cost
Ex. Bottled mineral water cost $1.29, but can of spray at salon cost $11.39
3. Location-Based Pricing: diff. price for diff. location
Ex. theatres vary seat prices b/c audience preferences for certain locations
4. Time-Based Pricing: varies by season, month, day
Ex. Theatres charge matinee pricing during daytime
3. Psychological Pricing
Consumers perceive higher-priced products have higher quality
Ex. $100 perfume vs. $20
Reference prices: prices buyers carry in minds
Ex. Shelve store brand bran flakes next to Kelloggs Raisin Bran
Odd pricing and number effects ex. pricing something $7.99 vs. $8
4. Promotional Pricing
Temporary price product below list price (sometimes below cost) to increase short-run sale
FOB-Origin Pricing: customers pay for shipping from factory to customer location
Fair, but high-cost to distant customers
Zone Pricing: set up two or more zones, all customers within zone pay single total price
Distant zone = high pricen for students vs. seniors
6. Dynamic Pricing
Internet consumers setting market price, can haggle price
7. International Pricing
Additional cost of product modification, shipping and insurance, import tariffs and taxes
Price Changes
Allow price breaks for one-shot deals (ex. store-opening specials, stock clearance)
Laws prohibit retail (or resale) price maintenance
Deceptive pricing:
Bait and switch cannot advertise at low price, carry limited stock, then say they are
out of the product to entice consumers to switch to higher priced item (rain checks)
Seller stating price saving not actually available to customer
Seller sets artificially high regular prices, then announces sale
Scanner Fraud & Price Confusion (must charge lesser when not labelled properly)