Term
|
Definition
| the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return |
|
|
Term
|
Definition
| the art and science of choosing target markets and building profitable relationships with them |
|
|
Term
|
Definition
delivering
perceived value (customer's willingness to pay for your product or service - psychological value plus economic value)
to target segments
profitably
********** |
|
|
Term
|
Definition
buy our product and you will get your moneys worth - not always created by the lowest price value
value > price |
|
|
Term
|
Definition
cognitive - reduces the need to think - perception
social - feel included, impress others
emotion - attachment, friendship, etc.
ex. nike swoosh symbol |
|
|
Term
| stated needs vs. unstated needs |
|
Definition
studies are done and can determine a stated need of customers - something they know they are missing in a product
unstated needs - they don't know they need it until you give it to them - ex. cameras on cell phones - uncovered through market research |
|
|
Term
| buyer needs or customer needs |
|
Definition
| ex. pet owners - they buy the food so companies must appeal to them not the animals, the true consumers. |
|
|
Term
|
Definition
not about the cheapest or highest quality, its about having a better price than an equal product
all part of perceived value
the reason my brand/product provides more value relative to price than any competitor
more for more, more for the same, the same for less, less for much less |
|
|
Term
| relationship between positioning and value proposition |
|
Definition
| positioning creates the value proposition |
|
|
Term
|
Definition
because different people have different needs. value proposition won't appeal to everyone
example: breakfast - who eats it? hot or cold? if cold what kind of cereal? what other kinds would you consider? |
|
|
Term
| what does the positioning statement summarize? give an example. |
|
Definition
the target customer, the category/competitors, the reason my product provides more value (benefit), the reason the customer should believe the claim
ex. To urban-dwelling, educated techno-savvy consumers [target], when you use Zipcar car-sharing service instead of owning a car [competitive frame], you save money while reducing your carbon footprint [points of difference]. |
|
|
Term
| how to create points of difference |
|
Definition
| products, services, channel, people, image, perception of price |
|
|
Term
| redefining the category can create a unique position |
|
Definition
nyquil - the first night-time cold medicine
cnn - the first 24 hour news program
mac - the first non-technical, aka fun computer |
|
|
Term
|
Definition
when a company tries to completely change their positioning
ex. chocolate milk as a post-workout drink |
|
|
Term
|
Definition
| how the products stack up next to each other |
|
|
Term
| positioning and target segment need to be chosen simultaneously |
|
Definition
| find people that want what you're positioning for |
|
|
Term
|
Definition
even if you dont eat m and ms, need the colorful ones for the holidays to decorate
starbucks - during the week to wake up, weekend to hang out
jack in the box ad - stoners want a lot of food at night |
|
|
Term
|
Definition
geography - pharmacy near old peoples home has different things than elsewhere
demographics - ads based on where you are
attitude/psychographic - zipcar - urban lifestyle
nielson finds wehre successful people are, then finds a similar zipcode elsewhere - use of geography, demographics - multi segmentation |
|
|
Term
|
Definition
benefits - if they know what they want, sign is on head
usage rate - online banking - look at ATM ussage, self-service
buyer-readiness stage - look at ads in magazines - just browsing
loyalty - apple has strong brand loyalty - buy coke when Pepsi is on sale
Occasion - time of month, etc. |
|
|
Term
|
Definition
| online ads - you visit a website, then an ad for this company/brand shows up later |
|
|
Term
|
Definition
| you visit a website, look at a product, then that product show sup in a an ad later |
|
|
Term
| criteria for useful segmentation |
|
Definition
measurable - membership in segment can be defined
differentiable - segments respond differently to difference sin marketing mix
accessible - segments are reachable - identify people and pinpoint |
|
|
Term
| characteristics of attractive target segments |
|
Definition
| large, growing, under penetrated (overall or by competitors), price insensitive, fit between corporate core competencies and customer needs (Ben and Jerrys is the green brand), High value to cost ratio (segment can be served profitably) |
|
|
Term
|
Definition
| contiuum of targeting - mass marketing -> differentiated (large segment) marketing -> concentrated (small segment) marketing -> micromarketing (each person is a segment) |
|
|
Term
|
Definition
| undifferentiated - ex. state farm insurance - if you drive a car, they target you |
|
|
Term
|
Definition
ex. p and g products
they have a shampoo for every type of person - discount, upscale, medicated, different types of hair, exclusive salon |
|
|
Term
|
Definition
ex. gerber's website
originally for parents with young children, but now pregnant to pre school age - they create needs |
|
|
Term
|
Definition
a segment of 1
ex. Yowza app - cal tell where you are and your demographics - sends you coupons - learns from what you use |
|
|
Term
|
Definition
| m(1+i)/(1+a) - acquisition cost |
|
|
Term
|
Definition
marketing program costs = breakeven consumer behavior x profit per behavior
OR
breakeven consumer behavior = marketing program costs / profit per behavior
2 steps:
what are we affecting? - what customer behavior do we hope to change?
and
what is the profitability impact of the behavior we hope to change? |
|
|
Term
| how to pick a behavior to focus on, which we want to change |
|
Definition
choose behaviors that provide some intuition about magnitude
ex. wendy's adds 400,000 customers - a little or a lot? |
|
|
Term
| what to expect when: reduce the price of the good (sale) |
|
Definition
|
|
Term
| what to expect when: run a promotional sweepstakes |
|
Definition
| more customers today, lifespan shortened |
|
|
Term
| what to expect when: recall a product |
|
Definition
| less likely to defect now and in the future - builds trust |
|
|
Term
| what to expect when: give a discount on a return visit |
|
Definition
|
|
Term
| what to expect when: increase the size of sales force |
|
Definition
| more customers in the future |
|
|
Term
| measuring customer profitability |
|
Definition
ideally measure the revenues and costs for each customer to calculate profitability
for most businesses, the variation in revenues across customers is greater than the variation in costs
decide which is more important - negligible vs. major
ex. airplane seats - difference in weight of a customer is negligible - don't make them buy another seat but big for business customers vs. tourists |
|
|
Term
| approximate customer profit |
|
Definition
customer revenue - average cost
or
customer revenue x average margin |
|
|
Term
|
Definition
| starts slow, excellerates, levels off, declines |
|
|
Term
| 4 phases of the product lifecyle |
|
Definition
| introduction, growth, maturity, decline |
|
|
Term
| durable product sales vs. frequently purchased products trials |
|
Definition
washing machine, computer - durable products, therefore measure by sale
detergent - consumable, therefore by trial |
|
|
Term
| Behavior model (bass model) |
|
Definition
|
|
Term
| adopters and non-adopters |
|
Definition
starts as all non-adaptors when the product comes out, means you haven't tried the product
market = adopters + non-adopters |
|
|
Term
| interaction between adopters and non-adopters |
|
Definition
early interactions will be between non-adopters, so imitation won't take place
intermediate interactions will be between adopter and a non-adopter
late interactions will be between adopters so imitation won't take place (important to have adopters, but not all so that people keep buying)
sales to innovators = innovation factor x non-adopters in time t |
|
|
Term
| problems with traditional survey research |
|
Definition
people can't articulate what they are thinking - language is limited
there are needs that customers don't realize they have - ie cameras on phones
people's thinking and decision making process depends on their environment
ETHNOGRAPHIC RESEARCH ADDRESSES THESE WEAKNESSES |
|
|
Term
|
Definition
blends into the environment and allows observation of customers in natural state and context
ex. purina cat cams, chsta the cheeto dressed up and watched how people reacted to the brand
useful for product innovation, (wii, book slots on treadmills, camera phones)
expensive and easily copied
pros - uncoveres unstated customer needs, best at talking to customers in proper context, generates new insights and hypotheses to test further, can produce blcokbuster products, good fro breaking into new markets
cons - expensive, hard to keep insights proprietary, cannot answer some questions (what is market potential, will a specific ad campaign be effective)
high risk, high reward |
|
|
Term
|
Definition
| phone interviews, personal interviews (on the street, etc), focus groups |
|
|
Term
|
Definition
closed-ended - easier to interpret and tabulate. useful for descriptive info
open ended - harder to interpret, but measures more closely what people think without restricting options (gets more at the why) |
|
|
Term
|
Definition
moderated discuss groups, opened ended discussion, group dynamic a double-edged sword (people might not want to share true opinions, group think can cause biases, decisions heavily influenced by group)
environment is out of the purchasing context
solutions - creating more realistic environments, one-on-one interviewing, ask questions in less direct ways |
|
|
Term
| new methods of market research |
|
Definition
word association - bmw: what do you think of __, less inhibitions
projections - make people fill in thought bubbles, they make the people think what they are thinking (also shreddies here? why?**************)
visualization - make a collage about a product
brand personification - describe the person who is the vw bug, etc. |
|
|
Term
| measuring consumer response |
|
Definition
metering - don't focus on hat they say, ask them to control a dial on how they feel
devices to measure the physical and neurological response (eye movement, facial expression, heart rate, brain waves - neuromarketing) |
|
|
Term
|
Definition
| inexpensive, very fast (results tabulated right away), can be hard to control the sample (can't see who is responding), but panels solve this problem (a group of people that will be enlisted to be the survey pool) |
|
|
Term
|
Definition
most popular kind
pros - flexible (open or closed, group or individual, online or offline, response devices), useful for fine-tuning and fleshing out hypotheses (not innovative)
cons - difficult to generate new ideas, measures what people say they do, not what they actually do (there would be less domestic abuse and people would have higher incomes) |
|
|
Term
|
Definition
ex. itunes - people who bought __ also liked ___
analyze large amounts of data searching for behavior patterns (clickstream, scanner panel, loyalty program data, transaction data)
behavioral segmentation at the individual/micro level
very quantitative
paradoxically similar to ethnographic research - both observe behavior in the real world
pros - excellent at predicting behavior, based on actual behavior in a purchasing/shopping context, bottomline impact is easily quantified (unlike survey research)
cons - doesn't explain why people behave the way they do, can seem mysterious to sales force, can require costly investments in info technology |
|
|
Term
|
Definition
best identifies causality - the fred's flowers example, j crew sweater sale/not sale
still can't answer why though
pros - only true way to identify causality, can be used in actual shopping situation - although difficult, bottomline impact is easily quantified
cons - very expensive (especially in the field), can only test so many ideas at a time, process for execution can be very slow
step 1: select test and control groups - as similar as possible
step 2: apply marketing program to test group (e.g. raise prices) - HOLD EVERYTHING ELSE CONSTANT
step 3: measure difference between test and control |
|
|
Term
|
Definition
| is a huge field, no one single method is best, it is best understood by applying many techniques, start with a clearly defined problem, match the method to the problem |
|
|
Term
match the method to the problem
generating innovative ideas
forming hypotheses
narrowing program options
testing programs
predicting program results
understanding causality |
|
Definition
generating innovative ideas - ethnographic
forming hypotheses - ethnographic and secondary
narrowing program options - focus groups and surveys
testing programs - surveys, behavioral, and experimental
predicting program results - behavioral and experimental
understanding causality - ethnographic and experimental |
|
|
Term
| consumer behavior - buyer decision process |
|
Definition
6 stages -
1. need recognition
2. information search
3. evaluation of alternatives
4. purchase intent
5. purchase decision
6. postpurchase behavior |
|
|
Term
| consumer behavior - need recognition |
|
Definition
internal stimuli (you naturally get hungry, etc.)
external stimuli - markets produce a need - sometimes from nothing (restless leg syndrome) |
|
|
Term
| consumer behavior - information search |
|
Definition
part of buyer decision process
extent to which people search depends on what they're buying
other people are the most influential source of info - so companies try to generate word of mouth (10% off for referring a friend)
hierarchy of features/needs they look for (when buying a car diff things are important to diff ppl) |
|
|
Term
| consumer behavior - information search - evaluation of alternatives |
|
Definition
| choose attributes for evaluation, form beliefs about each attribute for the brands under consideration, create overall evaluation of each alternative, choose product with highest evaluation |
|
|
Term
| consumer behavior - purchase decision |
|
Definition
purchase intention from evaluation of alternatives
attitudes of others
unexpected situational factors (lose a job, birthday present) |
|
|
Term
|
Definition
level of satisfaction
word of mouth
repeat purchases
cognitive dissonance (discomfort with the decision/ buyer's remorse) |
|
|
Term
|
Definition
most businesses do not control the entire supply chain
crucial to product quality
top 5 supplier management (apple, amazon, mcdonalds, dell, procter and gamble)
without strong supplier relationships these compnaies would not be able to achieve their positioning |
|
|
Term
| suppliers - marking activities |
|
Definition
| marketing research, advertising agencies (traditional media and social media), search engine optimization, marketing information, CRM vendors |
|
|
Term
| retailers and marketing intermediaries |
|
Definition
big retailers typically sell shelf space - slotting allowances
part of marketing efforts by consumer products companies is to pay retailers to market their products - merchandising allowance
market via influencers ************
design in-store displays
train 3rd party sales forces |
|
|
Term
|
Definition
| well off, support social causes, optimistic, feel young, high divorce rate |
|
|
Term
|
Definition
| more in debt, less concerned with philanthropy, more pessimistic, ME and family first |
|
|
Term
|
Definition
| tend to be cynical, distrust advertising, very family oriented, more interested in experiences and less interested in possessions |
|
|
Term
|
Definition
| confident, demanding and impatient, want two-way conversations, expect to change the world, more collectivist |
|
|
Term
|
Definition
| internet telecommuting is shifting population to smaller communities - if you can work anywhere, why not work somewhere small and rural? oH WAIT |
|
|
Term
| corporate social responsibility |
|
Definition
doesnt matter for evian, but big for ben and jerrys
only works if its part of the positioning |
|
|
Term
|
Definition
people balance need to belong with need for uniqueness
they want to fit in but also be their own person
i am grace, but i am a sister, i am a wash u student, i am an american, etc |
|
|
Term
| product lifestyle marketing |
|
Definition
appeals to innovators for uniqueness - apple brand people wait on line for the next new phone, though if they waited 2 months could just pick it up
also appeals to imitators, they need to assimilate (if you dont have an iphone, you dont have an iphone) |
|
|
Term
|
Definition
people would rather have $100 today than $110 a month from now
difference in time between future events appears shorter because all future events are equally salient |
|
|
Term
| implications of present bias |
|
Definition
| people lease cars, people get payday loans at astronomical rates, people rent furniture, people overuse credit cards |
|
|
Term
| use of irrelevant information in making judgements and its implications |
|
Definition
when asked how satisfied people are with their lives, they will be more positive on a sunny day than a rainy day.
people use information that they have available to make judgements even if its not relevant HOWEVER
if you ask them about the weather before about their satisfaction with life, this effect goes away
implications - fresh cookie smell at an open house make you like the house more |
|
|
Term
|
Definition
losses loom larger than gains
exceeding expectations are not a big deal, but missing expectations are an outrage
there is decreasing sensitivity as losses and gains get bigger |
|
|
Term
| implication of prospect theory |
|
Definition
saving $2 on a car doesn't matter, but the same $2 at starbucks is a huge deal
when getting people to pay for one item, combine it with others - selling socks with a suit, warranties with a TV
when stating benefits, separate them to make each one feel like a gain - but wait, theres more! |
|
|
Term
|
Definition
prospect theory leads to endowment effect
customers take possession of an item, then their reference point shifts to the right -> to give the product up now would cause a huge loss in value, so customers tend to keep and not return |
|
|
Term
| prospect theory implies endowment effect |
|
Definition
get people to try to product - test drive a car, try on clothes, let people demo equipment
money back guarentee is a good idea - exception is chronic returners
giving some people better service at the expense of others is not as good of an idea as it appears ***** |
|
|
Term
|
Definition
present value bias - time from present to a time in future feels longer than an equal time interval in the future
incorporating irrelevant info into decisions
prospect theory - losses larger than gains, decreasing sensitivity, endowment effect |
|
|
Term
| why do companies alloy complaints on their websites? |
|
Definition
| they get better information for improvements |
|
|
Term
| business to business marketing - business markets |
|
Definition
retailers and wholesalers (general mills to target)
raw materials - ex. steel to general motors
production equipments - computers, machinery, office supplies (for a university this is production)
value-added services - consulting, banking, accounting, ad agencies |
|
|
Term
| business to business marketing - consumer behavior |
|
Definition
less susceptible to psychological biases, but not immune
professional buyers, multiple people often involved, stakes are usually higher (higher prices), longer sales cycle (takes longer to make decisions with a board, etc), approval process (more rational than normal people) |
|
|
Term
|
Definition
business to business - ultimately everything is sold to consumers
fewer customers than consumer markets |
|
|
Term
| push vs. pull marketing strategies |
|
Definition
push - manufacturers push to the retailer, and will directly market to consumers "your customers will love it"
pull - manufacturers market to consumers who then pull from the retailer "do you have one?" |
|
|
Term
| business to business - demand elasticity |
|
Definition
response to price depends on importance of output - an example is the automobile industry
business demand is volatile because the variance is higher - more like economics |
|
|
Term
| business to business buyer behavior - straight rebuy |
|
Definition
a routine purchase decision such as reorder without any modification
ex. toner through an office supplier |
|
|
Term
| business to business buyer behavior - modified rebuy |
|
Definition
a purchase decision that requires some research where the buyer wants to modify the product specification, price, terms, or suppliers
ex. a change in price or service agreement |
|
|
Term
| business to business buyer behavior - new task |
|
Definition
a purchase decision that requires thorough research such as a new product.
ex. now need copy machines, research and effort, bids from different places |
|
|
Term
|
Definition
financing -> hardware -> software installation -> delivery -> delivery -> support -> replacement/disposal
ex. hp coordinated all ^^ for wells fargo. wells farger paid price premium in exchange for hp solving all their problems |
|
|
Term
consumer market vs. business market
decision processes |
|
Definition
business to consumer: need recognition -> info search -> evaluation of alternatives -> purchase decision -> postpurchase behavior
business to business: problem recognition -> general need description -> product specification -> supplier search -> proposal solicitation -> supplier selection -> order routine specification -> performance review |
|
|
Term
|
Definition
problem recognition occurs when someone in the company recognizes a problem or need
internal stimuli - need for new product or production equipment
external stimuli - idea from a trade show or advertising |
|
|
Term
|
Definition
part of the buying decision process
example - wells fargo has 600 portfolio managers across 31 states, integrated tools: trading, portfolio balancing, client ready reporting, tax lot accounting
so they bundle order across managers
needs to integrate with existing accounting and statement back end |
|
|
Term
| business to business - supplier selection |
|
Definition
| more likely to be similar to compensatory model of consumer behavior, committee process, negotiation |
|
|
Term
| business to business - oder-routine specifications |
|
Definition
| contract terms - pricing, services, contingencies, deliverables, exit clauses |
|
|
Term
| business to business - performance review |
|
Definition
monitor supplier performance, assist suppliers with word of mouth (if they are happy customers)
renegotiate contract if necessary, potentially search for new suppliers - if unhappy
much more involved than consumers - expect it to take a long time |
|
|
Term
| important to know if you are a business marketer |
|
Definition
geographic/industry culture and customs
organizational buying process
who has influence (formally and informally - might have to take the wife out shopping or something)
what is the desired outcome/endgame for each person in the buying process |
|
|
Term
|
Definition
once you have something, giving it up is harder than acquiring something new PROSPECT THEORY - the average sell offer was $2.40 and the average buy offer was $0.62
the hershey bar became your possession (you are endowed with it) so the function shifts to the right - the reference point moved to the right |
|
|
Term
|
Definition
powerful psychological tool
cognitive = memory
brands take advantage of human memory process
when people store info in memory they tend to associate new info with existing info and store info in chunks
items are logically grouped together when stored and recalled automatically upon retrieval (ex. the mistake of Mizzu with their M - looks too much like michigan which is more recognizable |
|
|
Term
|
Definition
powerful psychological tool
strong brands can transform the company's positioning into customer values and identity ex. the PF fliers shoes - they make you better
brand identification can allow customers to place themselves in an esteemed group - strong social identity - ex. iphone |
|
|
Term
|
Definition
increases with positive associations culminating in emotional attachment - develop a relationship
cognitive awareness ->increasing cognitive associations ->emotional attachment
1. presence - do you know about it?
2. relevance - does it offer me something?
3. performance - can it deliver?
4. advantage - does it offer something better?
5. bonding - nothing beats it! its MY brand |
|
|
Term
| establishing a brand relationship |
|
Definition
use the levels of brand strength steps in order
ex. apple
in 1984, their ad was about establishing itself and its positioning - presence
by 2012, their ad is more like a friendly conversation directed at loyal customers - its about a bond (bonding final step) |
|
|
Term
| how bottom line brand strength creates price premiums |
|
Definition
most people don't know the prices of what they buy (they just grab what they always do), and most don't spend more than 5 seconds looking at a display in a store
price premiums lead to shareholder value
value of google is $200 mil ->*********************
important to trademark band-aid - too common of a term to claim ***************** |
|
|
Term
|
Definition
names, logos, color, spokespeople, slogans, jingles, packaging, signage, and ad campaigns
ex. intel ads have their logo everywhere, the color blue, their slogan is "the sponsors of tomorrow," their office looked modern, and their jingle at the end is very recognizable |
|
|
Term
| how to choose brand elements |
|
Definition
memorable - the logo (apple is notable) or a jingle
meaningful - lean cuisine: it can't do anything else because the brand name connotes what it offers
likeable - the keebler elves
transferable - dove v. soft soap: dove is better, it can do anything. soft soap can only do soap. other examples: yahoo and amazon - can expand
adaptable - old spice has had same logo and jingle for 50 years also dove and betty crocker - the same for 60+ years |
|
|
Term
| managing a brand - touchpoints |
|
Definition
brand elements work together - general mills calls this asset guide
manage touchpoints - every experience a consumer has with a brand contributes to equity, consumers come to know a brand through a wide range of "touchpoints", ideally each touchpoint will reinforce the brand's position in the consumer's mind, genreal mills "campaign wall" - p&g put everything they've ever done up n the wall |
|
|
Term
| licensing and co-branding |
|
Definition
some brands develop such a deep connection that they ad credibility to other categories. these brands can be licensed or co-branded
"the official beer of the NFL"*************
hertz copied the arguing ad - borrowed miller lite's image |
|
|
Term
|
Definition
4 p's
product
price
promotion
place (distribution) |
|
|
Term
| marketing mix - product: brand architecture |
|
Definition
brand architecture:
branded house - ex. Nike. everything they make is Nike. this is efficient for both cost and time. foundation brand lends credibility in all categories (ex. Marriot hotels). more touchpoints for all products in the house.
house a brands - ex. general mills - each brand is its own. this makes for more targeting. it avoids potentially negative association with other brands in the portfolio. it allows for slight repositioning and it allows entry into lower quality positioning without ruining the better brand's name |
|
|
Term
| marketing mix - product: create points of difference (differentiation) |
|
Definition
value proposition flows from the positioning
create points of difference with services, channels, people, image, perception of price
the form (liquid vs. gel pills), a feature (does something diff - link back to what people already know first, then say it does something different ex. bayer "extra strength pain relief. twice as fast), customization (burger lets you get what you want, unlike mcdonalds), performance quality (a little bit goes a long way - porsche just $160,000 vs bugatti at $2,400,000), conformance quality (must be consistent, ex. schaeffer beer - have when youre having more than one), durability (mercedes gives you a medallion if you drive a certain amount in their car), reliability (******), style and design (pay for it looking cool), packaging (see through pump, a new container - small changes but differentiators nonetheless), warranty (jansport offers a lifetime warranty), service (ease of ordering, delivery, installation, repair, returns - Ritz Carleton has excellent service whereas Ikea sucks but is cheap) |
|
|
Term
| product line management - quality differentiation |
|
Definition
product line width addresses consumer heterogeneity in taste for a product of similar quality
ex. snapple flavors are the asme quality but different in taste
bud light and bud are the same quality as are michelob and michelob light
the quality difference between bud and michelob represent length of line (as opposed to width)
you can buy a lot of different mercedes at different price points - different quality too |
|
|
Term
| extending product length and width |
|
Definition
gains higher market share for the company, insulates sales from change in tastes and economic cnditions, cannibalizes excising products, adds to overhead costs
************* |
|
|
Term
|
Definition
prices end in 9 because people focus on the first digit and the # of digits ex. $100.51 seems like a lot more than $99.79
when the first digit is the same the comparison gets harder and the subtraction easier - you have to look harder |
|
|
Term
|
Definition
sell more
*************
people perceive "on sale" as cheaper - anchor at reg. price
people use the regular price as the reference price
in some cases, people expect sales to end and prices to go back up
works particularly well when people don't have an idea of what something should cost - mattresses are always on sale bcs people don't buy them often so they don't know what they should cost
now through sunday = timeline, high-low pricing - extremely successful
also, say buy 3 get one free is better than buy 4 at 25% off - seen as a gain (free!) instead of a recovery from a loss |
|
|
Term
|
Definition
aka optional pricing - people's tendency to focus on one thing also can lead to unbundled pricing
ex. apple - start by offering a low price (anchor price) then reduced sensitivity for more options
use prospect theory diminishing sensitivity to add features |
|
|
Term
| product line pricing - manipulate price to be high |
|
Definition
not selling many of these expensive ones anyway, so make the price crazy high to sell more of the next best
ex. mac computers - make the cost up getting more gigga bites HUGE so they are more likely to buy the one thats almost as good |
|
|
Term
| product line pricing - manipulate price to be low |
|
Definition
| if you want to sell more you can make it seem much closer in price, so sell more top of the line because of the new reference price |
|
|
Term
| price as a signal of quality |
|
Definition
when consumers are unsure about product quality, an inference is made that higher price is higher quality
its like anchoring effect for high low pricing price signals quality when objective quality is hard to determine
price should be consistent with overall positioning - price signals quality
in high low, anchor is the low price. here, price is the quality anchor |
|
|
Term
| present value bias in relation to price |
|
Definition
| quote prices in units of time - $.50 a day as opposed to $182.50 a year - unicef |
|
|
Term
| asymmetric response to price |
|
Definition
increases and decreases - people feel entitled to the current price (endowment effect), raising prices is almost like stealking something they are entitled to, decreasing prices is not as psychologically rewarding
people react badly to rising gas prices but don't care as much when they go down - they they hate the companies
so companies don't increase price, they increase size ex. hasgan dazs - its harder to see a decrease in size than in cost |
|
|
Term
| reverse psychological pricing |
|
Definition
people catch on, so companies may want to create and "I've got your back" positioning - they say they won't try to trick you ex. walmart has every-day low prices
Jos A Bank changed from high-low prices (huge sales!) to every day low price
unbundling can make people feel nickle and dimed, so bundle product warranty so that it comes with the product - lifetime guarantee (jansport) is better than buying a warrantee and bags flying free on southwest has your back |
|
|
Term
| strategic pricing: new products - price skimming |
|
Definition
set price high (iphone at $599), skim a layer by waiting until all the diehards have bought and prices slow. then lower the price (here, to $449), wait until sales slow then skim a layer until its down to $199
works well if there is high quality positioning on some dimension - more for more value proposition
no competition = brand loyalty (less effective with undercut pricing) |
|
|
Term
| strategic pricing: new products - market penetration |
|
Definition
price low initially, establish trial and brand loyalty, deters future competition, lowers costs through learning effects
market penetration can work well if people are price sensitive to begin with and then like the product so they will stay loyal even if prices rise
competitors will be shut out either by learning effects creating cost advantage or durable product market will eliminate demand remaining for competitors |
|
|
Term
| strategic pricing: general strategies |
|
Definition
| learning curve effects, captive product pricing, loss leader pricing, price discrimination, loyalty programs |
|
|
Term
| strategic pricing: general strategies - learning curve effects |
|
Definition
| every time experience double, cost per unit declines by a fixed amount. therefore, price low now to stimulate demand, gain experience and lower future costs |
|
|
Term
| strategic pricing: general strategies - captive product pricing |
|
Definition
ex. companies make a royalty on each game
for keurig, they make a royalty per cup sold |
|
|
Term
| strategic pricing: general strategies - loss leader pricing |
|
Definition
| similar to captive product pricing, draw someone into store with a really good deal, then once they are in the store, they buy other items too |
|
|
Term
| strategic pricing: general strategies - price discrimination |
|
Definition
a way of sorting customers by how sensitive they are to price - coupons and rebates offered to everyone but only some people use them.
also sort people using the product line. people that have high willingness to pay buy the top of the line, whereas people with low willingness to pay go for bargain option
quality based price discrimination works well if there is high willingness to pay, people value quality more than companies cost to make it and if there is low willingness to pay people value extra quality less than price premium |
|
|
Term
|
Definition
increased customer loyalty, lower price sensitivity, and stronger brand attitude - creates a monopoly
access to important info on consumers and consumer trends
enables behavioral segmentation - collecting data
higher average sales (due to cross-selling and up-selling opportunities)
greater ability to target special consumer segments
increased success in implementing product recalls
higher average sales
has the potential to help profile what loyal customers look like |
|
|
Term
| loyalty and reward program techniques |
|
Definition
some programs provide loyalty perks (if i am a valued HIlton guest I get a mint on my pillow) promotes retention but not usage
some programs provide rewards of free services with the company (stay 5 nights at Hilton and get one free). Customer only gets the reward if she stays loyal
loyalty programs can benefit from higher tier that customers can aspire to - implies that it may be good to set to provide vague usage targets for customers (AA Advantage Platinum - top 1% of AA flyers) tier them
exclusivity is generally a positive - even charging for reward program (e.g. Hertz Number 1 club gold) is not always a bad idea - may work with premium positioning
even mass marketers can implement repeat business loyalty (e.g. McDonald's Monopoly game)
sometimes penalties work as well as reward (cell phone contract stops you from switching) |
|
|
Term
| pricing illegal practices |
|
Definition
predatory pricing - pricing below cost to drive out competition is illegal (anti-competitive)
price fixing - talking to competitors about setting prices
illegal price discrimination - charging two different customers different prices for an item that costs the same
retail price maintenance - manufacturers may not dictate prices to retailers |
|
|
Term
|
Definition
channel decisions are about how manufacturers/producers deliver products to consumers
in stores, through a different online retailer, direct through company website |
|
|
Term
| why use distribution channels? |
|
Definition
they are economically efficient and provide valuable functions customers need and want
you can revolutionize an industry through a new channel -> amazon, netflix, dell |
|
|
Term
|
Definition
reduce the number of transactions in the distribution system
without intermediaries, the producers would need to have individual transactions with each consumer - horribly inefficient
they reduce the necessary transactions in the economy and provide valuable services to both manufacturer and consumer
ex. a supermarket |
|
|
Term
| channel intermediaries - sales and information |
|
Definition
manufacturers can get information from stores or websites
************ |
|
|
Term
| channel intermediaries - promotion |
|
Definition
| stores will often advertise for the manufacturer |
|
|
Term
| channel intermediaries - market access |
|
Definition
| crucial for impulse buys - just need to get access to the market, only sell-able through market displays |
|
|
Term
| channel intermediaries - market information |
|
Definition
ex. what products do people buy at the same time as orange juice
more data than can be organized - how people choose what flavor of cat food to buy |
|
|
Term
| channel intermediaries - warehousing |
|
Definition
| inventory function - a car company is unable to keep inventory for the whole country in one place |
|
|
Term
| channel intermediaries - bundle breaking |
|
Definition
| storing all that water is hard, so they can be bought in small quantities *********** |
|
|
Term
| channel intermediaries - information |
|
Definition
|
|
Term
|
Definition
|
|
Term
| channel intermediaries - matching |
|
Definition
| ex. trying on clothes - the salespeople can help ******** |
|
|
Term
| channel intermediaries - customer service |
|
Definition
|
|
Term
| carnival and keurig as channel relationships |
|
Definition
travel agents help people asses: an assortment of vacation options, bundle airfares and other transportation, provide info about excursions and options, match the cruise to the persons needs
keurig authorized distributors: sell keurig concept to offices, provide assortment of coffees, customer service - repair, cups, condiments, etc.
illustrate that channel choices are long term decisions - they are hard to reverse: customers will often have trouble distinguishing the manufacturer from the distributor, some people will be more loyal to the channel brand than the manufacturer brand (travel agent vs. carnival), consequently once you set up channel relationships they can be hard to reverse |
|
|
Term
|
Definition
| situations where individual channel participants are at odds with efficiency |
|
|
Term
|
Definition
who does what - sell only through retailers, your own website, both, neither etc.
ex. tic tac does not sell off their website bcs they don't want to anger their retailers
how many channels to choose - what works best for your business
ex. jelly bean uses retailers, its own website, and other candy makers sites |
|
|
Term
| key questions to ask if using mult. channels |
|
Definition
which channel performs which services?
do certain channels own specific segments?
what happens to customers that come into contact with multiple channels?
what happens if customers change segments? (like if they were elite level and now aren't)
are all the channels consistent with the brand positioning? |
|
|
Term
|
Definition
the biggest industry in the US
where most money gets spent |
|
|
Term
| creating points of difference for retailer |
|
Definition
| assortment (types of products the store is known for, selection) , decor (layout, displays, lighting, temp, sound, smells, place to hang out), services (personal shoppers, or low service but low prices), pricing (high markups and low volume, low markups high volume, consistent with overall service position, high-low pricing vs. every day low pricing) location (demographics and proximate foot traffic) |
|
|
Term
|
Definition
| variety across all products |
|
|
Term
| private label vs. brand assortment |
|
Definition
shucks brand is private label, whereas Jiffy has brand assortment
private label is more profitable for retailer than brand assortment |
|
|
Term
| how many outlets per geography can depend on network effects |
|
Definition
market share vs. outlet share
not a lot of cvs in st. louis but dense walgreens
********** |
|
|
Term
| power centers vs. lifestyle centers |
|
Definition
|
|
Term
|
Definition
some common measures of retail performance: sales per square foot, sales per facing (the thing you see, like a cookie rack), margin per square foot, margin per facing
manage retail business
understand retailer/channel motivation - eg why Hefty was kicked out of wal-mart (trash bags in facing wasn't selling enough) |
|
|
Term
|
Definition
INTEGRATED MARKETING COMMUNICATIONS
ex. general mills nature valley national parks project
consistency is key - every touchpoint needs to convey the same message
match method to objective (which are to create awareness, stimulate interest, encourage trial, and get repeat customers)
about the message: content, structure, format, media, source |
|
|
Term
| the two cardinal rules of marketing |
|
Definition
1. never assume people are like you
2. nothing kills a bad product like good marketing ex. lifesaver's pineapple soda - promoted it a lot got awareness, interest and buying but then people didn't like it- product got killed |
|
|
Term
|
Definition
explicit or implicit conclusion (dove - models image changed but very subtle: don't need to buy alternative bcs dove is real beauty - low on link)
strongest arguments first or last but last is better
reference product strengths or strengths and weaknesses (more expensive, but you're worth it - loreal; listerine tastes bad, thats how you know it works) |
|
|
Term
|
Definition
| a window to a product on a package |
|
|
Term
|
Definition
| mission, money, message, media, measurement |
|
|
