BUAD 479 Exam 1 (Note On Marketing Strategy) – Flashcards
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5 C's of Marketing
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Customer Needs Company Skills Competition Collaborators Context
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Goal of Marketing
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Create value, "value is created by meeting customer needs, a firm needs to define itself not by the product it sells, but by the customer benefits provided"
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2 Key Questions in Market Selection / Product Positioning
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Which potential buyers should the firm attempt to serve? How much customization? i.e. at which point on the continuum from.... mass market market segments market niches individuals
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4 Types of Market Segments
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1) Demographic 2) Geographic 3) Lifestyle 4) Customer's behavior / relationship with product (i.e. user vs. non-user, loyalty, etc.)
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Define Positioning Statement
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"A statement that specifies the position the firm wishes to occupy in the target customers' mind" Answers the question "If we pursue this segment, how would we approach it and how would we want potential buyers to see us?" *Solving positioning problems allows you to solve marketing mix problems.
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The Marketing Mix: 4 P's
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Product, Price, Promotion, Place (Channels of Dist.)
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The Marketing Mix: Neil Borden's 12 activities that comprise a firm's marketing program...
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1) Merchandising - Product Planning 2) Pricing 3) Branding 4) Channels of Distribution 5) Personal Selling 6) Advertising 7) Promotions 8) Packaging 9) Display 10) Servicing 11) Physical Handling 12) Fact-Finding and Analysis - Market Research
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Product (4 P's)
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The product offering is not the thing, but rather the total package of benefits obtained by the customer.
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Product Line Breadth
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How many different lines the company offers ex: Under Armour offers a lacrosse line, a hockey line, a football line, a running line etc.
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Product Line Length
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How many items there are in a line providing coverage of different price points ex: In Under Armour's running line there are 16 different running shoes from $50 - $180. Some shoes are considered in the 'elite' segment (over $120) and some are considered in the 'intermediate' ($75-$119) and some are in the 'beginner' segment (under $75).
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Product Line Depth
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How many types of a give product ex: In Under Armour's running line there is a shoe that sells for $50 that comes in three styles or colors, etc.
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Some decisions in product line planning...
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How will this this line affect brand equity (reputation)? Will this line compliment other products? Is there an opportunity to differentiate from competitors?
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New Product Development Process (5 Steps) (Proactive Approach)
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1) Opportunity Identification - ID a customer problem which it can solve, identify a concept 2) Design 3) Testing - surveys, taste tests, this is important for the product itself but also for determining elements of the marketing mix, such as price. 4) Product Introduction - decisions on markets, "rolling out the product) 5) Life Cycle Mgmt. - continue to learn more about the customers and their reactions, the marketing environment is always changing so LCM is a dynamic process.
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Place (4 P's)
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Tasks ranging from demand generation to physical delivery of goods.
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8 Channel Functions (these are a starting place for assessing needs in a particular context)
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1) Product Information 2) Product Customization 3) Product Quality Assurance 4) Lot Size (e.g. the ability to buy in small quantities) 5) Product Assortment (refers to breadth, length and width of product lines) 6) Availability 7) After-Sale Service 8) Logistics
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Channel Design
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Involves both a length and breadth issue Direct - No 3rd party Indirect - There is a third party **Also 'Dual Distribution' exists and that is where a firm uses both forms of distribution to reach different markets.
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Channel Management
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Policies and procedures necessary for performance between parties
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2 Major Decisions in Channels are...
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Channel Design & Channel Management
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Promotion (4 P's)
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Set of ways in which to communicate with customers to foster their awareness of the product, knowledge about its feature, interest in purchasing, likelihood of trying the product and/or repeat purchasing it.
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6 M's of Promotion
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1) Market - to whom are we communicating? 2) Mission - What is the objective of the communication? 3) Message - What are the specific points to be communicated? 4) Media - Which vehicles to use? 5) Money - How much? 6) Measurement - How will impact be assessed?
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3 Major Types of Sales Promotions
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1) Consumer promotions - cents off coupon in mail 2) Trade promotions - used by manufacturer and addressed to the wholesaler or retailer (e.g. temporary off -invoice price discounts) 3) Retail promotions - Displaying brand in store, sales
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Push vs. Pull Strategy in Promotion
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Push - Focus is on inducing retailer to sell product at retail (advertisers job is to make aware of the product, but it is the closing of the deal that is left to the retailer) Pull - The end consumer develops such an insistence on the product that he or she "pulls" it through the channel of distribution, and the retailers' role is merely to make the product conveniently available.
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Price (4 P's)
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Perceived value represents the maximum price which the customer is willing to pay. (effective pricing is key) Perceived value is determined by Product, Place and Promotion.
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Skim vs. Penetration Pricing Strategy
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Skim - Focus is on those customer with high value. Basically sell something for a very high price to "skim" as much as possible off of those who are willing to pay the high price, then lower the price after a period of time to make the product affordable to the rest of the market. Penetration - Firm sets a lower price to generate lots of sales quickly. Designed to preempt competition and obtain a lot of customers early on.
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Price Customization
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Typically, different customers place different values on a product. Firms must decide whether it is worth it to charge a different price to different customers. (In some cases there are legal constraints against this) Price customization can be achieved by... Developing a product line - such as hardcover/softcover book situation, same books but one is considered 'nicer' or 'more elite' and is priced higher. Varying price based on observable buyer characteristics - ex: pay more to 'upgrade' to the better software, etc.
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5 Major Roles in Buying Situations
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1) Initiator - The individual who recognizes value in purchasing something new, initiates search for product 2) Decider - Makes the choice 3) Influencer - Has input 4) Purchaser - Consummates the transaction 5) User -Consumer the product ex: Think about when your family bought a car. Maybe you mom was the initiator, your dad was the purchaser, you (being old enough to drive it) were the influencer and both your mom and dad were the deciders.
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7 O's of Consumer Research
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Occupants constitue the market Objects is what the market buys Objectives is why the market buys Organizations are who participates in the buying Operations is how the market buys Occasion is when the market buys Outlets are where the market buys
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4 Growth Strategies
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1) Market Penetration 2) Market Development 3) Product Development 4) Diversification
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4 Market Structures
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1) Market Leader - 40% of market 2) Market Challenger - 30% 3) Market Follower - 20% 4) Market Nicher - 10%
