Marketing chapter 6-10 test #2 – Flashcards

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(Ch.6) Steps in designing a customer value-driven marketing strategy
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Segmentation, Targeting, Differentiation, Positioning (all create value for targeted customers)
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Segmentation
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divide the total market into smaller segments
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Targeting
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select the segment or segments to enter
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Differentiation
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differentiate the market offering to create superior customer value
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Positioning
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position the market offering in the minds of target customers
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***Segmentation Variable for Consumer Market
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Geographic, Demographic, Psychographic, Behavioral
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Geographic Examples
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Nations, regions, states, counties, cities, neighborhoods, climate
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Demographic Examples
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Age, life-cycle, gender, income, occupations, education, religion, ethnicity, generation
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Psychographic Examples
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Social class, lifestyle, personality
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Behavioral Examples
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Occasions, benefits, user status, usage rate, loyalty status
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**Geographic Segmentation
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Diving a market into different geographical units (i.e. nations, states, regions, counties, cities, neighborhoods)
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**Demographic Segmentation
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Dividing a market into segments based on variables (i.e. age, life cycle stage, gender, income, occupation, education, religion, ethnicity, and generation)
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**Psychographic Segmentation
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Marketers segment their markets using variables like these: social class, lifestyle, personality characteristics *the products people buy reflect their lifestyles
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**Two Types of Behavioral Segmentation
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Occasion segmentation and Benefit segmentation
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**Occasion Segmentation
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segments divided according to occasions when the buyers 1. get the idea to buy 2. make their purchase 3. use the purchased item
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**Benefit Segmentation
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segments divided according to the different benefits that consumers seek from the product
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**Behavioral Segmentation
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*User Status: markets can be segmented into nonusers, ex-users, potential users, first time users, and regular users *Usage rate: Markets can be segmented into light, medium, and heavy product users. *Loyalty status: Consumers can be loyal to brands, stores, and companies
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Multiple segmentation bases
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these help companies to 1. Identify smaller, better-defined target groups 2. Identify and understand key customer segments 3. Reach customers more efficiently by tailoring market offerings and messages to customers' specific needs *Segmentation systems help marketers segment people and locations into marketable groups of like-minded consumers.
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Segmenting Business Markets
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*Variables used by business marketers: 1. Operating characteristics 2. Purchasing approaches 3. Situational factors 4. Personal characteristics
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Segmenting International Markets
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Variables include 1. Geographic location 2. Economic factors 3. Political and legal factors 4. Cultural factors
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Intermarket (cross-market) segmentation
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grouping consumers with similar needs and buying behaviors irrespective of their location
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***Requirements for Effective Segmentation
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1. measurable 2. accessible 3. substantial 4. differentiable 5. actionable
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**Why Market Targeting??
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evaluates 1. segments size and growth 2. segment structural attractiveness 3. company objectives and resources
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***Market Targeting Strategies
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Undifferentiated marketing --> Differentiated marketing --> Concentrated marketing --> Micromarketing
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**Choosing a Targeting Strategy
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Factors to consider >Company resources >Product variability >Product's life-cycle stage >Market variability >Competitors' marketing strategies
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Social Responsible Target Marketing
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done to serve both the interests of the company and the interests of those targeted
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Controversy/concern of target marketing
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Vulnerable or disadvantaged consumers are targeted with controversial or potentially harmful products.
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Differentiation and Positioning
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Firms must decide which segments to target and on the value proposition
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Product position
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the way a product is defined by consumers on important attributes.
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Choosing a Differentiation and Positioning Strategy
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Identifying a set of differentiating competitive advantages --> Choosing the right competitive advantages --> Selecting an overall positioning strategy
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Competitive advantage
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an advantage over competitors gained by offering greater customer value either by: 1. Having lower prices, or 2. Providing more benefits that justify higher prices
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Choosing the right competitive advantages
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1. Developing a unique selling proposition (USP) for each brand and sticking to it 2. Positioning on more than one differentiator
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Which Differences to Promote
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1. Important 2. Distinctive 3. Superior 4. Communicable 5. Preemptive 6. Affordable 7. Profitable
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Winning Value Propositions
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* More for more * More for the same * More for less * The same for less * Less for much less
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"More for more"
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provides the most upscale product or service
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"More for the same"
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High quality at lower prices
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"More for less"
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BEST WINNING PROPOSITION
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"The same for less"
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gives a good deal
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"Less for much less"
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Meeting consumers' lower performance or quality requirements at a lower price
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Developing a Positioning Statement
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Format: To (target segment and need) our (brand) is (concept) that (point of difference)
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Positioning Statement
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summarizes company or brand positioning
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Communicating and Delivering the Chosen Position
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All the company's marketing mix efforts must support the positioning strategy. Maintain the position obtained through consistent performance and communication. The product's position should be monitored and adapted over time.
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(ch.7) **What is a product?
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anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.
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**What is a service?
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an activity, benefit, or satisfaction offered for sale; it is intangible and does not result in ownership of anything.
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Products, Services, and Experiences
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*Market offerings include both tangible goods and services. *Companies create and manage customer experiences with their brands or companies. >To differentiate their offers from that of the competitors
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**Three levels of Products
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1. Augmented Product 2. Actual Product 3. Core Product
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**Augmented Product
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is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car's manufacturer and any after-sales service. The augmented product is an important way to tailor the core or actual product to the needs of an individual customer. The features of augmented products can be converted in to benefits for individuals.
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**Actual Product
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is the tangible, physical product.
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*Product and Service Classifications
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1. Consumer Products 2. Industrial Products
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Consumer Product
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bought by final consumers for personal consumption.
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**Industrial Product
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bought by individuals and organizations for further processing or for use in conducting a business.
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Marketing Considerations
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1. customer buying behavior 2. price 3. distribution 4. promotion
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Other Market Offerings
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1. Organizations 2. Persons 3. Places 4. Ideas
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**Product and Service Decisions
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1. Individual Product Decisions 2. Product Line Decisions 3. Product Mix Decisions
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Individual Product and Service Decision
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Product attributes --> branding --> packaging --> labeling --> product support services
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**Product Line
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closely related products that have similar functions and customer groups, and are sold through similar outlets or fall within given price ranges
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**Product Line Length
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is the number of items in the product line (product line filling, product line stretching)
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**Product Mix Decisions
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Width Length Depth Consistency
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**Width
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number of different product lines the company carries
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**Length
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total number of items a company carries within its product lines
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**Depth
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number of versions offered for each product in the line
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**Consistency
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relativity of the various product lines in end use, production requirements, distribution channels, or some other aspect
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Service Characteristics
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1. Intangibility 2. Variability 3. Inseparability 4. Perishability
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Service Profit Chain
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Chain consists of 5 links: 1. Internal service quality 2. Satisfied and productive service employees 3. Greater service value 4. Satisfied and loyal customers 5. Healthy service profits and growth
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**Three Types of Services Marketing
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Interactive marketing External marketing Internal marketing
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Marketing Tasks for Service Companies
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1. Managing service differentiation 2. Managing service quality 3. Managing Service Productivity
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**Managing Service Differentiation
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Developing a differentiated offer, delivery, and image
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**Managing Service Quality
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Delivering consistently higher quality than the competitors
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**Managing Service Productivity
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*Training current employees or hiring new ones *Increasing the quantity of service by giving up some quality *Harnessing the power of technology
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**Brand Equity
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The differential effect that knowing the brand name has on customer response to the product or its marketing
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Consumer Perception Dimensions
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Differentiation Relevance Knowledge Esteem
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Brand Value
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total financial value of a brand
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Customer Equity
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value of customer relationships that the brand creates
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Major Brand Strategy Decisions
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1. Brand positioning 2. Brand name selection 3. Brand sponsorship 4. Brand development
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Brand positioning
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attributes, benefits, belief and values
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Brand name selection
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selection, protection
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Brand Sponsorship
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Manufacturer's brand Private brand Licensing Co-branding
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Brand Development
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Line extensions Brand extensions Multibrands New brands
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Brand name selection
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Desirable qualities for a brand name should be: *Based on the product's benefits and qualities *Easy to pronounce, recognize, and remember *Distinctive and extendable *Easily translated into foreign languages *Capable of registration and legal protection
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Brand positioning
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Marketers should establish a mission and vision for the brand when positioning it.
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Brand Sponsorship
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National Brand Store Brands Licensing Co-Branding
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National Brands
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Marketed under the manufacturer's own name
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Store Brands
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created and owned by reseller of a product or service
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Licensing
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use names and symbols created by other companies or well-known movie characters or celebrities for a fee
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Co-branding
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use the established brand names of two different companies on the same product
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Brand Development Strategies
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Line extension Brand extension Multibrands New brands
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How to manage brands
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Communicate the brand's positioning Manage all brand touch points Train employees to be customer centered Audit the brand's strengths and weaknesses
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(Ch. 8) **How to create successful new products
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>Understanding consumers, markets, and competitors >Developing products that deliver superior value to customers
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**How do you develop new products?
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through the firm's own research and development efforts
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**Steps in New Product Development
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Idea generation -->idea screening --> concept development and testing --> marketing strategy development -->business analysis -->product development-->test marking --> commercialization
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Internal Idea sources
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*Social networks *intrapreneurial programs
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external idea sources
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*distributers and suppliers *competitors *customers
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**crowdsourcing
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inviting broad communities of people into the new product innovation process
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Idea screening
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Screening new product ideas to spot good ones and drop poor ones as soon as possible
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How do you screen new ideas?
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>New idea write-up reviewed by a committee >R-W-W framework-Real, win, worth doing
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Product idea
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an idea for a possible product that the company can see itself offering to the market.
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product concept
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a detailed version of the new product idea stated in meaningful consumer terms.
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Product image
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the way consumers perceive an actual or potential product.
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Concept development
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Developing a new product into alternative product concepts by finding out how attractive each concept is to customers and choosing the best one
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Concept testing
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Testing new product concepts with groups of target consumers
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concept testing methods
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>Presenting the concepts to consumers symbolically or physically >Asking customers to respond by answering questions about their reactions to the concepts
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Marketing Strategy Development
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initial marketing strategy of a product
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Three parts of marketing strategy statement
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Describes the target market, planned value proposition, sales, market-share, and profit goals Determines product's planned price, distribution, and marketing budget Develops long-run sales, profit goals, and marketing mix strategy
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Business Analysis
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A review of the sales, costs, and profit projections for a new product (To find out whether these factors satisfy the company's objectives)
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**Product Development
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Developing the product concept into a physical product (To ensure that the product idea can be turned into a workable market offering)
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**test marketing
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introduces product and its proposed marketing program into realistic marketing settings, testing takes time and costs can be high, tests product and its marketing program
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Alternatives to standard test markets
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-Controlled test markets -Simulated test markets
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Reasons for using alternative test markets
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-reducing the costs -speeding up the process
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Commercialization
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introducing a new product into the market
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**Things to consider for launching a new product
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When to launch Where to launch
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**Customer-centered new product development
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focuses on finding new ways to solve customer problems and create more customer-satisfying experiences.
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**2 different types of product development
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-Team-based new product development -Systematic new product development
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**Team-based new product development
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Various company departments work together, overlapping the steps in the product development process
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**Systematic new product development
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Innovation management systems collect, review, evaluate, and manage new product ideas
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Product Decisions and Social Responsibility
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Considerations for companies -Public policy issues -Regulations regarding acquiring or dropping products -Patent protection -Product quality and safety -Product warranties
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Challenges facing international marketers
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-Finding what products and services to introduce and in which countries -Deciding on how much to standardize or adapt the products and services for world markets
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(Ch. 9) What is price??
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>Amount of money charged for a product or service >Determines a firm's market share and profitability >Produces revenue
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Customer value based pricing vs
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*Based on buyers' perceptions of value rather than on the seller's cost *Price is considered before the marketing program is set. *Types of value-based pricing: >Good-value pricing >Value-added pricing
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Value based pricing steps
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assess customer needs and value perceptions --> set target price to match customer perceived value --> determine costs that can be incurred --> design product to deliver desired value at target price
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Cost based pricing
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Based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk Types of costs: 1.Fixed costs (overhead) 2.Variable costs 3. Total costs
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Types of Cost-based pricing
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1. Cost-plus pricing (markup pricing) = adding a standard markup to the cost of the product 2. Break-even pricing (target return pricing) =setting price to break even on the costs of making and marketing a product, or setting price to make a target return
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Cost based pricing steps
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design a good product -->determine product costs--> set price based on cost -->convince buyers of products value
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Considerations affecting price decisions
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1. Internal factors >Overall marketing strategy, objectives, and mix >Organizational considerations 2.External factors >Market and demand >Economy >Impact on other parties in its environment
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organization considerations affecting price decisions
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1. Management decides who should set prices. 2.Varies depending on the size and type of company
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who sets the price for small and large companies?
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Small companies - Top management Large companies - Divisional or product managers
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Types of markets
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1. pure competition 2. monopolistic competition 3. oligopolistic competition 4. pure monopoly
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Price elasticity of demand
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Measure of the sensitivity of demand to changes in price
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Marketing Skimming vs.
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is a product pricing strategy by which a firm charges the highest initial price that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment.
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Market Penetration
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involves focusing on selling your existing products or services into your existing markets to gain a higher market share
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Competition based pricing
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Setting prices based on competitors' strategies, costs, prices, and market offerings
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Company should ask several questions to assess competitors' pricing strategies
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How does the company's market offering compare in terms of customer value? How strong are current competitors? What are their current pricing strategies?
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Discount vs
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a straight reduction in price on purchases during a stated period of time or of larger quantities EX: Cash, quantity, functional, and seasonal discounts
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Allowance
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promotional money paid to retailers for an agreement to feature the manufacturer's products in some way EX: Trade-in and promotional allowances
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Segmented pricing
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Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs
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Forms of segmented pricing
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1. Customer-segment pricing 2. Product form pricing 3. Location-based pricing 4. Time-based pricing
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psychological pricing
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Considers the psychology of prices and not simply the economics (The price says something about the product.)
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Reference prices
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Prices that buyers carry in their minds and refer to when looking at a given product
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promotional pricing
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Temporarily pricing products below the list price to increase short-run sales
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Forms of Promotional Pricing
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1. Discounts and special-event pricing 2. Limited-time offers and cash rebates 3. Low-interest financing and longer warranties 4. Free maintenance
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geographic pricing
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the practice of modifying a basic list price based on the geographical location of the buyer. It is intended to reflect the costs of shipping to different locations.
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Forms of Geographical Pricing
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1. FOB-origin pricing 2. uniform-delivered pricing 3. zone pricing 4. basing-point pricing 5. freight-absorption pricing
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dynamic pricing
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Adjusting prices continually to meet the characteristics and needs of individual customers and situations
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(Ch. 10) Supply Chain: Upstream partners
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Upstream partners supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service.
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Supply Chain: Downstream partners
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Downstream partners serve as distribution channels that link the firm and its customers
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What is marketing channels (distribution channels)?
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Interdependent organizations that help make a product or service available for use or consumption
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How does a channel add value?
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Intermediaries create greater efficiency in making goods available to target markets. Marketing intermediaries transform the assortments of products made by producers into the assortments wanted by consumers. Intermediaries bridge the major time, place, and possession gaps that separate goods and services from users.
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Various functions performed by the channel:
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1. help to complete transactions 2. help to fulfill the completed transactions
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What is the value delivery network?
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A network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value
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Number of channel levels
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A layer of intermediaries that performs work in bringing the product and its ownership closer to the final buyer 1. Direct marketing channel: No intermediary levels 2. Indirect marketing channels: One or more intermediary levels
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Types of flows that connect institutions in the channel
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1. Physical flow of products 2. Flow of ownership 3. Payment flow 4. Information flow 5. Promotion flow
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Channel behavior
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Channel conflict: Disagreements among marketing channel members on goals, roles, and rewards >Horizontal conflict occurs among firms at the same level of the channel. >Vertical conflict occurs between different levels of the same channel.
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Channel decisions
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1. Affect every other marketing decision 2. Can lead to competitive advantage 3. May involve long-term commitments to other firms
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vertical marketing systems
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(VMS) consists of producers, wholesalers, and retailers acting as a unified system.
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types of vertical marketing systems
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1. corporate 2. contractual 3. administered
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horizontal marketing systems
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Two or more companies at one level join together to follow a new marketing opportunity.
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multichannel distribution systems
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A single firm sets up two or more marketing channels to reach customer segments.
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Advantages of multichannel distribution systems
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1. Expansion of sales and marketing coverage 2. Tailor-made products and services for the specific needs of customer segments
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Disadvantages of multichannel distribution systems
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1. harder to control 2. generates conflict
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disintermediation
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Occurs when product or service producers cut out marketing channel intermediaries or when radically new types of channel intermediaries displace traditional ones
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channel design decisions
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Marketing channel design involves designing effective marketing channels by: 1. Analyzing customer needs 2. Setting channel objectives 3. Identifying major channel alternatives 4. Evaluating the alternatives
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Marketing Channel Management Responsibilities
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1. Selecting channel members 2. Managing and motivating channel members 3. Evaluating channel members
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Goals of marketing logistics
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to deliver a targeted level of customer service at the least cost
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Logistic functions
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warehousing inventory managements transportation logistics information management
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what are marketing channels?
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a set of practices or activities necessary to transfer the ownership of goods, and to move goods, from the point of production to the point of consumption and, as such, which consists of all the institutions and all the marketing activities in the marketing process.
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how channels add value
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Gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange.
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