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Marketing Strategy Midterm

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Marketing Strategy formation
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overall long-term goals, customer selection and value creation
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Marketing Planning
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formation of shorter-term plans to pursue long-term goals outlined during Marketing Strategy Formation stage
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Programming, allocation, and budgeting
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short-term strategy to distribute resources effectively in pursuit of marketing strategy/marketing plan
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Implementation
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executing tactics in pursuit of strategy developed over the prior three steps
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Monitoring and auditing
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evaluating the results of marketing tactics
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Analysis and Research
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gathering all necessary data needed to redesign marketing strategies or tactics
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Steps of forming a Marketing Strategy
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Marketing planning, programming, allocation and budgeting, implementation, monitoring and auditing, and analysis and research, all steps interact and rely on other steps
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Marketing Strategy formation process
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the process of forming and executing a marketing strategy involves analyzing the market, making decisions on your aspiration and actions/tactics, and evaluating the results
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5Cs analysis
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gathering of relevant information that is used in all future marketing decisions, need to continuously update their understanding of the 5Cs, always start with customer
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Customer analysis
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Determine who our customers or potential customers are, evaluate all potentially relevant aspects of consumer behavior in the market
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Decision-Making Unit
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who actually makes the decision, can be anything from a single customer to a huge group of complicated relationships, need to create value for the decision-making unit
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Types of Decision-making units
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initiators, gatekeepers, deciders, influencers, purchasers, users; one person can be more than one type
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Initiators
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begin the search for new products
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Gatekeepers
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experts that control access to information
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Decider
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actually make the purchasing choice
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Influencers
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serve to influence and modify the process by which deciders make decisions
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Purchasers
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purchase the product
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Users
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consume the product
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Company analysis
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the core competency of the company
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Core competency
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significantly contributes to the creation of customer value, difficult for competitors to imitate, from company’s perspective
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Collaborator analysis
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analyze the incentives, strategies, and goals of all potential collaborators which can be any company that helps the firm operate
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Competitor analysis
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assessing the threat posed by competitors
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Competitors and collaborators
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can often be the same company, sometimes direct competitors can be forced by an outside force to collaborate
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Context Analysis
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the firm can’t control all factors that impact sales like culture, legal issues, regulations, social norms, etc.
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The 5Cs
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Customer, Company, Collaborators, Competitors, Context
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Aspiration
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decision about the firm’s general goals given analysis of the market, STP
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STP
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Segmentation, Targeting, and Positioning
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Segmentation
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divide the market into groups for which value is more homogeneous
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Targeting
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choose the segment of segments to serve, market in which the firm can generate the most profits, based on either providing additional value and on the size of the potential segment
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Positioning
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place the product/brand/firm to serve the targeted segment
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Positioning Statement
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specify the target customer as defined by segmentation, the wants of that customer, the product type and category from the customer’s perspective, and the key benefit to be provided to the target customer
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Marketing Mix 4Ps
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Price, Product, Promotion, Place,
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Marketing Mix
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deciding on marketing actions, important that each tactic pursues strategic goals and is based on analysis and aspirational goals, have to consider tactics from a unified perspective
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Outcomes of marketing strategy
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depends on goals, usually in form of profit or improving customer lifetime value
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Customer Value
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basis of all marketing strategies, purpose of firm is to provide and collect value from customer
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Value Proposition
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foundation of any good business, total set of benefits offered to customers, viewed very expansively, from customer’s perspective, don’t need to be entirely unique, should tie into core competency
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Types of customer value
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social, functional, experiential, and economic
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Functional Value
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Value provided by the actual functioning of the product, can be a bundle of different attributes
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Conjoint Analysis
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marketing research technique meant to find the importance of an attribute by making customers tradeoff between attributes
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Thresholds
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attribute needs to reach a threshold level, often apply when functioning requires a basic level or performance
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Economic Value
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Ability to provide a benefit for a lower cost than alternatives, need to provide some other benefit (usually fuctional), secondary form of value
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Poverty Trap
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often costs money upfront to save money, difficult to obtain this capital
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Value is Heterogeneous
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customers vary, often substantially, in their value for a product, might pay for itself for one person, but not another, have to consider the distribution and not just the average when determining customer value for your product
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Experiential value
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difficult to quantify, often emotionally driven, includes branding and design
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Branding
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signals of quality, status, image, consistency, signals of placement, and often a signal to others
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Brand Equity
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amount of value of a brand to the firm, often recorded at the firm level
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Design
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aesthetically pleasing, can be delivered directly, also can work with social value (conversation pieces)
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Customer Service
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Great customer service can deliver value even in the face of terrible experiences
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front-line employees
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those immediately responsible for a quality experience are often the lowest paid, least experienced, and least trained
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Automation of service
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many younger people prefer technology to interactions with people
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Emotional benefits
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makes you feel like a better person, think that you are supporting your area, University, etc.
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Social Value
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gain value as others buy a product or observe you purchasing a product, seek confirmation that we are right and that product is high quality
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Platform markets
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two-sided markets, market becomes more valuable as the other set of customers adopt, indirect network effects, increasingly important in the entertainment industry
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Social Capital
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can enhance reputation through online communication, also gain social capital through the purchase and display of certain products
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Social relationships
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can become closer to others through online or offline communication, simply improving social relationships can be a form of value, facebook and twitter
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Educating customers of value
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value is often not readily apparent to customers, requires substantial education through promotion and other marketing tactics
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Benefits of Segmentation
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provide more value, few firms can serve entire market and provide sufficient value compared to more niche firm, higher prices, lower costs with promotion and distribution expenses
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Segmentation benefits to company
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identification of unfulfilled needs, better product design, more targeted promotions, increased customer satisfaction
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Segmentation Benefits to the customer
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convenience and time savings, tailored products and services, relevant offers, personalized experience
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characteristics of a good segment
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identifiable, substantial
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Identifiable segment
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need to be able to identify the differences between groups, technology helps to increase personal data and more segmented media
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Substantial segment
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can vary by product by fixed cost, profit margin, or volume per purchaser
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Stable segment
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segment must remain for a long enough period, look at product lifecycle
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Accessible segments
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have to be able to reach the intended segment, better if they can be reached without reaching many people not in the segment
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Actionable segments
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need to be able to target the segment and position the product for segmentation to be worth it
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Common segmentation variables
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geographic, demographic, psychographic, behavioral, benefits sought
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Different sizes of a target market
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mass marketing, large segments, niche marketing, one-to-one size
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Mass marketing
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targeting all (or nearly all) potential customers
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Segment Marketing
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relatively limited segmentation, might sell to a mass market in a few locations, divide the market into a very limited number of segments, often does not require market leadership to gain profitability
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Niche Marketing
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identifying and serving one or more small segments, often requires becoming a leader in the segment, divides very large categories into a very small market with a specific specialization
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One-to-one marketing
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product is produced for one customer, mass customization- providing a set of option for a customer to create a unique product
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Steps of Target market selection
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5Cs analysis, determine which segment we can profitably serve, segment characteristics, competition, and company fit
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Targeting over time
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start with mass production, mass marketing, standardized products, low customer involvement, and one-way broadcasted brand communications, then make technological innovations, and then more niche and one-to-one marketing, two-way media, and more customer involvement
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Product
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the means by which firms directly provide value to customers, should be strategically determined, can be a product, service or combination
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Product portfolio
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all products released by the firm, should be some strategic fit between products
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Product Breadth
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number of product lines offered by the firm
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History of product breadth
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post WWII there were a lot companies with large breadths with many division that were weakly related so that is one line failed, others were there to support the company, this fell out in the 1980s when a theory suggested that firms should be strategically focused on core competencies rather than developing financial strength
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Product line depth
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number of products in one product line, may compete with multiple offerings per product line, usually higher or lower quality/price offerings
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Customer Heterogeneity
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high amounts of customer heterogeneity push you towards expanded product lines
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How to effectively target and position each segment
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identify segment, reach the segment, and position the product to serve that market
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Product line decisions and competition
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go head-to-head with new competitors, preempt potential entrants into your product-level, change customer perceptions of the product-level, could grow the entire category
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Cannibalization
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added a new product but then taking sales from an existing product
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Cluttered product lines
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lines with many products and limited differentiation, a lot of cannibalization
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Brand Equity and product lines
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moving down the product line often hurts brand equity, customers association our brand with lower quality/cost products, and moving up in the product line can cause the brand name to become less clear and can be difficult when the brand is associated with a lower quality product
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Collaborator impact on product line expansion
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could raise costs for collaborators, additional shelf space, need to develop support for new product, some extensions occur for improved collaborator relationships, exclusive products with certain retailers
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Additional fixed costs with product line expansion
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R&D, manufacturing costs, advertising, etc., high fixed costs will serve as a disincentive to product line depth extensions
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Product design
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design product to deliver value to customers, products should be considered from the perspective of the overall offering
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Levels of product value delivery
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generic -> Expected -> augmented -> potential
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Types of new products
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incremental changes to existing products, existing product line expansion, new product to the firm, new-to-world product
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Products as bundles
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viewing a product as a set of attributes, create the product that best delivers value to targeted customers
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Product lifecycles
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strategically important to consider where in the product’s lifecylce a product currently is and the nature of the product lifecycle, sales of products change overtime, durable products change less
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Product Lifecyle Stages
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Introduction, growth, maturity, decline
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Introduction stage
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early adopters, technology seeking-customers (value from trying new tech), get social value from owning it first
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Growth Stage
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technology-friendly but technology is a means to an end, often preceded by a “chasm” or a “saddle” in sales
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Maturity
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Need a well-proven value proposition, some disincentive to adopt
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Decline
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customers that switch as a last resort for older products, high disutility for technology
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Hierarchy of effects
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unaware -> awareness -> knowledge -> liking -> preference -> conviction -> purchase
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Cognitive steps of hierarchy of effects
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unaware, aware, and knowledge
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Affective steps of hierarchy of effects
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liking and conviction
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Behavior step of hierarchy of effects
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purchase
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Customer funnel
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awareness, consideration, conversion, loyalty, advocacy
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Category need
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convince customers that they need to purchase in the category, product provides value
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Brand awareness
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buyer’s ability to recognize the brand within a category
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Brand attitude
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effectiveness, and what does the brand say about me?
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Determining brand attitude
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better attitude from direct communication of information and signaling quality by being able to advertise, more ads leads to higher perceived quality
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Purchase intention/facilitation
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provide incentive to overcome final hurdle to purchase; price promotions, free trials, direct appeals
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Loyalty and advocacy
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service provided by sales staff, providing information on better solutions for customer problems
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Media planning
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be established to meet strategic goals, looking for return on investment, need to first decide what the goal of the communications should be, use promotional mix to help provide value
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Advertising
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non-personal messages passed through some form of media
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Pros of advertising
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message control, ability to target customers, audience data, and relatively rich content possibilities
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Cons of advertising
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expensive, non-personal, message clutter, and personal knowledge is heavily activated
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Sales promotion
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typically short-term promotions to encourage purchases or channel adoption, often meant to encourage trial by new customers or improve relations with collaborators, can serve to price segment
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Pros of sales promotion
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improve sales immediately, encourage first-time trial, lower risk to new adopters, improve relationships with collaborators
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Cons of sales promotion
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can hurt the brand, customers and intermediaries begin to expect lower prices, can significantly harm short-term profitabilitiy
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Personal selling
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one-to-one or one-to-many communication
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Pros of personal selling
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direct and immediate contact allows for modification and personalization, high understanding of nuances of customer needs
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Cons of personal selling
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very high cost per customer, potential for inconsistent, messages, often requires building sales-customer relationship
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Publicity
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nonpaid media-oriented content designed to place the firm or its offering in a more positive light
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Pros of Publicity
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very low (often no) cost, high credibility, high word-of-mouth potential, low persuasion knowledge activation
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Cons of Publicity
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low message control and personalization, lower ability to target specific customers then paid promotion
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Public/Investor Relations
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development of goodwill with investors or other (non-media) influentials, not typically intended for customers directly, spillover effects
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Pros of Public/Investor Relations
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low cost, impact could potentially be substantial, a positive statement from one influential source can cause major impacts
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Cons of Public/Investor Relations
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often does not directly tie into sales, sometimes difficult to assess or control
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Direct Marketing
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Customized communication designed to directly sell to customers, can occur through a variety of channels, often called “database marketing” due to the use of customer data in targeting message recipients
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Pros of Direct Marketing
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can be easily combined with other promotional methods, allows for many customized segments
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Cons of Direct Marketing
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some methods are not highly thought of by customers, can be expensive to collect and maintain sufficient data
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Events and Sponsorship
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supporting causes, sports teams, events, charities, etc. that customers support, often includes associated advertising
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Pros of events and sponsorship
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great for awareness, can improve company image, shows customers that you share the same values
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Cons of events and sponshorship
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expensive, risk due to lack of control, shallow messaging
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Product Placements/Branded Entertainment
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Placing a product in some other form of entertainment
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Pros of product placements
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low cost per impression by paid promotion standards, lower persuasion knowledge activation, lower regulations than advertising
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Cons of product placements
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limited exposure time, customers may not notice the message, limited control over the message
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Point of Purchase/Packaging
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In-store media (including media found on packaging)
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Pros of point of purchase/packaging
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very salient at the time of purchase, often appreciated by collaborators
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cons of point of purchase/packaging
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customers can tend to pay less attention (filter out) persistent point-of-purchase advertising or attention-grabbing packaging
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Word of mouth
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advice from customers or other influentials to other (potential) customers
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Pros of word of mouth
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credibility developed from existing trust, spread information between customers is typically (although not always) no cost
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Cons of word of mouth
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can be difficult to identify influentials, limited control, negative word of mouth can be exceptionally harmful
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Push marketing
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demand comes from intermediaries to the manufacturer who makes the product, gives them to the intermediaries and then to the end users
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Pull marketing
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demand comes from the manufacturers to the end users who want the product and ask for it from the intermediaries who get it from the manufacturers
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Impact of internet on marketing
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not really additional element of promotional mix, new outlet for each of the other elements
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Factors that influence the promotion mix
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product factors, demand and supply factors, customer factors, budget factors, marketing mix
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Product factors that influence promotion mix
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some products lend themselves to certain forms of promotion, different products and different positions in the product or customer lifecycle result in varying effectiveness
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Demand and Supply factors that influence promotion mix
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some demand is exceptionally elastic or inelastic, different promotions needed for each, competition often changes both the amount and type of promotion that is needed
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Customer factors that influence promotion mix
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concentration of customers, how well customers can be segmented and targeted, how customers behave and who they are
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Budget Factors that influence promotion mix
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financial resources available, seasonality
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Marketing mix factors that influence promotion mix
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promotion needs to align with other marketing mix factors
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Traditional way to measure promotion effects
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sales response models, advertising occurs and then a change in sales, either static or dynamic
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Modern promotion environment
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many different forms of promotion, each have unique effects from unaware to purchase through many different forms of promotions
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Types of attribution models
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last channel gets credit, first channel gets credit, all channels get equal credit, or all channels get partial credit