Term
| What can help firms analyze and design businesses and products to achieve objectives, such as enhanced profits, sales or share? |
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Definition
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Term
• High growth, Low Market Share
• Objective: Develop Opportunities
• Be critical of prospects; specialize in strengths; shore up weaknesses
(Growth Share Matrix) |
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Definition
| Question Mark/Problem Child |
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Term
• High growth, High Market Share
• Objective: Invest for growth
• Penetrate Market, expand geographically, aggressive growth and promotion
(Growth Share Matrix) |
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Definition
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Term
• Low growth, High Market Share
• Objective: Maintain market position
• Differentiate, promote brand if possible, stabilize price
(Growth Share Matrix) |
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Definition
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Term
• Low growth, Low Market Share
• Objective: Maintain but monitor carefully to decide if kill off
• Reduce costs, improve productivity, live with declining sales
(Growth Share Matrix) |
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Definition
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Term
| Marketing Strategies of Growth Share Matrix |
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Definition
• Build Strategy: improve market position for Question Marks and Stars (Cow’s don’t need building)
• Hold Strategy: remain with current position for Cows. Hold on to them as they are making money |
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Term
| Financing Strategies of Growth Share Matrix |
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Definition
• Harvest Strategy: milk the strong term cash and profits to help businesses and products in Question Marks and Dog areas. For mature products that remain profitable but offer little potential growth
• Disinvest Strategy: get out of the business or stop marketing the product; for Dogs and weak Question Marks |
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Term
Product Market Expansion Grid
- Existing Product, Existing Market |
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Definition
o Market Penetration
• Increase the frequency of use among existing customers using existing products (Think Same Same)
• How? Using Promotion (Ex: One-A-Day Vitamins & Listerine)
• How? Find New Uses for the Product (Ex: Aspirin as a preventer of heart attacks)
• Cash Cows/Hold Strategy |
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Term
Product Market Expansion Grid
- Existing Products/New Markets |
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Definition
o Market Development
• Find new customers in new markets (Think New Customers, Same Products)
• How? Increase Distribution of Products (Ex: Krispy Kreme in Asia)
• How? Use Promotion to build demand among previously non-targeted customers
• Stars/Build Strategy |
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Term
Product Market Expansion Grid
- New Products/Existing Markets |
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Definition
o Product Development
• Develop new products for existing customers (Think New Products, Same Customers)
• How? Develop new solutions for customers (Ex: Apple, Ben & Jerry’s)
• Stars/Build Strategy |
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Term
Product Market Expansion Grid
- New Products/New Markets |
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Definition
o Diversification
• Develop new products for new customers (Think New New)
• Question Marks (high risk) |
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Term
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Definition
Core
Actual
Augmented
Desired |
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Term
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Definition
Actual benefits received by customers
• Ex: an automobile transports people from point A to point B
• Ex: a watch tells time very accurately |
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Term
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Definition
The quality level, features, design, packaging, and brand name of the product
• Ex: I-Pad is a highly featured computer for personal and business use; Apple, the manufacturer of the I-Pad, is a premier brand known for developing practical innovations
• Ex: Rolex watch is a high-quality, jeweled, timepiece made by Swiss craftspeople |
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Term
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Definition
Delivery and credit, warranty, and after-sale service associated with the product
• Ex: Volvo and Rolex offer excellent warranties and BMW offers after-sale service
• Ex: Nordstrom’s, a high-end retailer, offers a very gracious return policy when customers can demonstrate proof of purchase and product failure |
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Term
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Definition
| The product that consumers really want or think they want |
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Term
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Definition
Continuous
Dramatically Continuous
Discontinuous |
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Term
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Definition
Low degree of new consumer learning
• Ex: new flavors, packaging and colors
• Marketing emphasis: Build customer awareness using same distribution channels
• Most popular due to low risk |
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Term
| Dramatically Continuous Innovation |
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Definition
Medium degree of new consumer learning
• Disrupts customer’s routine
• Ex: electric toothbrushes, DVDs
• Marketing emphasis: Promote point of difference between old and new |
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Term
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Definition
High degree of new consumer learning
• Requires new learning and consumption patterns by customers
• Ex: airplane, car, tv, gps, PCs, smartphones
• Marketing emphasis: Educate customers using promotion, personal selling and trial
• Highest risk/highest return |
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Term
| Why is Innovation important to firms? |
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Definition
• More sales/revenue
• Higher prices for new products
• Build or maintain CA
• Build employee morale |
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Term
| Why is innovation difficult? |
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Definition
• 8 out of 10 new products fail because…
- Lack of CA
- Don’t understand customer’s needs/mismatch of new product and needs
- Too little market attractiveness
- Poor execution of the marketing mix |
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Term
| New Product Development Process Steps |
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Definition
1. Idea Generation
2. Idea Screening
3. Concept Development and Testing
4. A Rough Marketing Strategy is developed and described
5. Development
6. Test Marketing
7. Commercialization |
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Term
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Definition
Many good ideas come for consumers
• However in marketing research, firms make the mistake of centering questions around products and not consumer needs
• Leads to incremental solutions vs. innovative breakthroughs |
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Term
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Definition
Separate ideas that have merit from those that do not
• Firms use expected financials, competitive reactions, ability to manage the new product over time
• Ex: Frito-Lay experimented with 50 different shapes before deciding on shape of Sun Chips |
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Term
| Concept Development and Testing |
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Definition
The measurement of consumer attitudes and perceptions relevant to the product; focus groups are given a description of the product and their attitudes and perceptions are assessed
• As the time and money spend in predevelopment stages increase, the probability of new product success increases |
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Term
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Definition
Developed and Described
• Target market: who is most likely to buy the product/service
• Price, distribution, promotion and the marketing budget
• Planned sales and profit figures are announced and marketing mix strategy is illustrated |
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Term
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Definition
A physical product now exists - now results can be analyzed by the company
• Tests, revisions and refinements occur before the product is actually market-tested |
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Term
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Definition
Process of selecting a specific geographical area considered to be generalizable to the product’s overall target market
• Have consumers evaluate and buy w/o knowing they are participating in a test market
• Companies who skip this stage run a huge risk of failure |
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Term
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Definition
Last step
• 3 remaining P’s need to be developed (price, place, promotion)
• New products:
- 3000 raw ideas → 300 left after screening → 9 become significant projects → 1.7 are commercially launched → 1 is commercially successful |
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Term
| Keys to successful segmentation |
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Definition
o PROFITABLE
o IDENTIFIABLE
o DISTINCTIVE
o STABLE
o ACTIONABLE
o EXHAUSTIVE |
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Term
| Which areas can segmentation increase effectiveness? |
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Definition
o Promotion, such as media advertising to avoid wasting money on unprofitable segments
o Product Development: P&G have identified nine laundry detergent segments and have developed products to meet each segment’s needs
o Pricing: USAir charges business travelers $571 to fly to Newark, NJ and vacationers $189 |
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Term
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Definition
1: Define the Market
2: Use Variables to Divide Market into Segments
3: Select Segments to Target: apply criteria to select segments to be targeted
4: Use 4Ps to Position and Build Performance |
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Term
| Firms produce only one product or product line and market it in the same manner to all consumers. This approach does not use the segmentation process |
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Definition
| Undifferentiated Marketing/Mass Marketing |
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Term
| 4 Types of Segmentation Strategies |
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Definition
Undifferentiated/Mass Marketing
Differentiated Marketing
Concentrated/Niche Marketing
Customized Marketing |
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Term
| Strategy where numerous products are offered to different segments through differential use of the 4Ps |
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Definition
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Term
| Strategy most often used by small firms that directs the firm’s efforts toward serving a very small segment |
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Definition
| Concentrated or Niche Marketing |
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Term
| Extreme version of differentiated marketing as the company strives to meet the needs of very small segments by customizing their offering to fit the customers’ needs; also called one-to-one marketing |
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Definition
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Term
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Definition
Divide a population into groups based on purchase frequency and usage level
o Current users
- Brand: secure
- Competitors: steal
o Nonusers
- Point of entry: active
- Category build: passive
o Brand representation in a segment: want to be over 100, means that your brand represents more of the market than the other brand
o Examples:
- Blue-collar males consume most of the beer in the US and drink with others as much as five times a week
- Lower income consumers tend to be more brand loyal to “name brands” than higher income consumers
- Middle-aged women consume 5x as many vitamins as younger women |
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Term
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Definition
Geography
Demographic
Pscyhographic or Lifestyle
Usage
Needs |
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Term
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Definition
• Left side of the triangle between Category (top) and Brand A (left corner)
• Goal accomplished by using the product |
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Term
| How can a FOR be established? |
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Definition
• Statement
• Points of Parity
• Exemplar
• Reason to Believe
3 Ways to Frame FOR:
1. Desire FOR That Offers Largest Consumption Opportunity
2. Desire FOR That Allows for Strong POD
3. FOR Should Be Clear to Consumer |
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Term
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Definition
• Bottom side of the triangle between Brand A and Brand B (right corner)
- Why you should choose brand A vs. brand B |
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Term
| 4A model of consumer awareness to purchase |
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Definition
o Aware
o Attitude
o Act
o Act Again |
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Term
| 5 Different scenarios of the 4A customer awareness |
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Definition
• Case 1: 30% → 25% → 23% → 20%
- Advertising Media (not aware enough)
• Case 2: 80% → 25% → 23% → 20%
- Advertising Message (Message not received by consumers well)
• Case 3: 80% → 45% → 23% → 20%
- Distribution/Price
• Case 4: 80% → 45% → 38% → 30%
- Niche
• Case 5: 80% → 10% → 35% → 8%
- Product/Target/Promotion |
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Term
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Definition
o Attention: Does the ad capture attention?
o Distinction: Is the execution unique?
o Positioning: Appropriate category? Strong benefit?
o Linkage: Brand linked to ad? Benefit linked to brand?
o Amplification: Are the consumer’s thoughts favorable?
o Net Equity: Is the ad consistent with equity of brand? |
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Term
| Stalemate and how to avoid one |
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Definition
The idea of competing w/o attacking each other
o When benefits are imitable and media spend comparable
o Diversify benefits
o Diversify targets
o Stick to your equity
o Ex: Starbucks and Dunkin Donuts
- Starbucks is known for better taste and destination
- DD is known for speed and price |
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Term
| How to win a positioning battle over time |
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Definition
• Competitive positioning
• Sustaining a position with modern instantiation
• Sustaining a position with personality
• Sustaining a position with laddering
• Sustaining a position with similar execution |
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Term
| 2 ways to sustain a brand position |
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Definition
o Sustaining through Ritual
- Ex: Guinness (slow pour)
o Sustaining a Position: Two Routes
- Strategic: what is said
• Implementation: FOR, POD, Laddering, Personality
o Laddering: Emotion → Function → Attribute
- Tactical: how it is said
• Implementation: Style, Variety, Creative Strategy (humor) |
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Term
| Cons of using spokespeople |
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Definition
1) Die (Marlboro man)
2) Destroy (Vick)
3) Distractions (William Shatner/Tiger Woods)
4) Defect (Tiger Woods)
5) Dilute (Woods/Bird/Jordan)
6) Dominate (Bird) |
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Term
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Definition
Positive Affect via Simple Association
Reinforce Benefit or Aspirations
Enhance Memory |
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Term
| 4 Ways of selecting media placement |
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Definition
o Matching: message to your target
o Monopoly: dominate advertising; increase signal to noise ratio
o Moment: reach decisional customers; increase likelihood of acting
o Mindset: create shared interest; build affinity w/ customer |
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Term
| What factors tends to increase the Ad/Sales ratio? |
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Definition
• Product is premium-priced relative to category
• Firm has a high CM per $ of sales
• Firm has a relatively small share of the market
• A large contribution of the firm’s sales come from new products
• Firm addresses transformational buying motives |
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Term
| Factors driving the elasticity of demand |
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Definition
o Brand: the power of brand equity
o Product availability (mismatch demand and supply; limited edition)
o Presence of substitutes vs. no substitutes
o Individual difference (e.g. personal importance) |
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Term
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Definition
Using of temporary price reductions that are heavily advertised; one type of promo pricing is loss leaders or products sold at below cost
• Why do firms offer price promotions?
o Increase demand for products
o Drive traffic to stores
o Manager believes demand to be elastic |
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Term
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Definition
In response to promotion-oriented marketing used by many firms, some companies are using this
• Why do firms engage in this pricing strategy?
o Easy to manage and inexpensive
o Effective when customers are price sensitive |
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Term
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Definition
| Tradition drives the pricing as customers expect certain prices for certain products (ex: newspapers, soft drinks, candy, hamburgers) |
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Term
| 2 types of Psychological pricing |
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Definition
• Price Quality Relationships: when there is a positive relationship between price and perceived quality in the absence of other product cues (ex: Wine)
• Odd Pricing: the belief that certain prices carry information above and beyond the price itself and that some prices are more appealing than others |
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Term
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Definition
The amount added to the cost of the product to yield a price; think of markup as the firm’s profit
• Advantages:
o Easy, consistent across products, aids in cost recovery and builds margins, avoids illegality
• Disadvantages:
o Ignores buyer price sensitivity
o Ignores the competition
o Ignore value of product to consumer
o May lead to over/underpricing |
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Term
| Competition-Oriented Pricing Adv. and Disadv. |
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Definition
• Advantages: easy; seen as helping the product be competitive, enhancing sales and share
• Disadvantages:
- Competition’s prices may be suboptimal
- Can ignite price wars and margin erosion
- Ignores cost considerations |
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Term
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Definition
Uses the value customers gain from using the product to set prices
• Products/services with high perceived value should receive higher prices than products/services with lower value
• Advantages: customer-oriented as prices are influenced by the product’s competitive advantages or disadvantages and buyer price sensitivity; designed to build profitability
• Disadvantages: hard to perform; prices are often driven down if price sensitive segments are large; prices derived may not reflect management priors or desires |
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Term
| Skimming Pricing Strategy (New Product) |
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Definition
Uses a high price to skim profits from the market
• Works with little competition
• Advantages: easy; prices allow margin capture; can be effective when paired with an innovative product; aids in cost recovery
• Disadvantages: may lead to over-pricing; ignores buyer price sensitivity; makes firms vulnerable to lower priced entrants; can retard product trial and adoption if price is too high |
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Term
| Penetration Pricing (New Product) |
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Definition
Uses a low price to maximize sales, share and profit
• Works with high competition
• Advantages: easy; seen as helping product be competitive because price setters perceive markets to be elastic; builds sales and shares
• Disadvantages: price is the focus and not the product’s attributes; can ignite price wars and margin erosion; few degrees of pricing freedom (tough to raise prices) |
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Term
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Definition
Factors to analyze when setting a price for an offering
1. Customer Willingness to Pay
2. Competitor Prices
3. Company Goals and Cost Structure
4. Collaborator Prices and Margins
5. Overall Economic, Regulatory, and Technological Context |
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Term
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Definition
The company’s overarching goal in marketing is to optimize 3 types of value
1. Customer value
2. Company value
3. Collaborator value |
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Term
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Definition
To achieve a sustainable competitive advantage, a manager should evaluate the following 3 key factors:
1. Company
2. Customers
3. Competition |
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Term
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Definition
The process by which a company creates value can be broken down into 5 activities:
● Setting a goal
● Developing a strategy
● Designing the tactics
● Defining the implementation plan
● Identifying controls |
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Term
| 2 Aspects of setting a goal (GSTIC) |
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Definition
a. Identifying the Focus- Identifies the criterion for a company’s success (Net income, profit margins, sales revenues, and market share)
b. Defining Specific Performance Benchmarks- Define the quantitative (specific milestones to be ahieved) and temporal aspects of a goal (time frame for achieving) |
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Term
| 5-C framework of identifying a target market |
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Definition
○ Customers whose needs the offering aims to fulfill
- Involves 2 decisions:
- Selecting which customers to serve
- Identifying actionable strategies to reach them (strategic targeting)
○ Company (particular business unit) managing the offering
○ Collaborators working with the company on the offering
○ Competitors with offerings that target the same customers
○ Overall context (aspects of the environment) in which the company operates |
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Term
| 2 aspects of developing a strategy (GSTIC) |
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Definition
1. Identify the Target market
- 5-C framework
2. Develop the Offering’s Value proposition
● Complemented by the development of a positioning strategy that singles out the most important aspects of the offering’s value proposition |
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Term
| 7 Different Tactics of the Marketing mix (GSTIC) |
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Definition
a. Product - Reflects its key characteristics (change of ownership)
b. Service - Reflects its functional characteristics (customers obtain the right to use the service for a period of time)
c. Brand - Aims to create a set of unique associations that enrich the offering’s value beyond product and service benefits
d. Price - The amount of money the company charges its customers and collaborators for the benefits provided by its offering
e. Incentives - Tools used to selectively enhance the value of the offering for its customers, collaborators, and/or employees
d. Communication - Informs current and potential buyers about the offering
e. Distribution - Refers to the channel through which customers receive the offering |
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Term
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Definition
● Designing (product, service, brand, price, and incentives)
● Communicating (communication)
● Delivering value (distribution) |
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Term
| 3 Components of Implementation (GSTIC) |
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Definition
a. Defining the business infrastructure - Reflects the organizational structure and the relationship among relevant entities involved in creating and managing the offering
b. Designing business processes - Depict specific activities involved in designing and managing the offering
c. Setting the implementation schedule - Identifies the sequence and time frame in which individual tasks will be performed |
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Term
| 2 types of controls that help companies monitor performance (GSTIC) |
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Definition
a. Performance evaluation - Monitoring the company’s progress to ensure the company is on the right track to reach its goals and adjusting the action plan to close gaps
b. Environmental analysis - Monitoring the environment in which the company operates to ensure that the company action plan remains optimal to take advantage of new opportunities and counteract potential threats |
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Term
| 4 Components of a marketing plan |
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Definition
1. An executive summary that outlines the highlights of the marketing plan
2. Situation analysis that reviews the environment in which the company operates and identifies the target markets in which it will compete
3. An action plan that outlines the G-STIC of the offering
4. Exhibits that provide additional information about the specific aspects of the marketing plan |
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Term
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Definition
Describes the process of selecting the “ideal” customers and developing the offering’s value proposition for these customers
● The framework highlights 3 decision steps:
1. Segmentation - Dividing customers into groups with similar preferences
2. Targeting - Identifying customer segments that the company will serve with its offering
3. Positioning - Defining the key reason why customers will buy the offering |
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Term
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Definition
Identifies 4 key decisions that managers must make when designing and managing a given offering. These decisions involve:
1. The functionality and design of the company’s Product
2. The Price at which the product is offered to target customers
3. The company’s Promotion of the product to target customers
4. The retail outlets in which the company will Place the product |
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Term
| 4 P's described in terms of the marketing mix |
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Definition
● Product - product, service, brand
● Price - price
● Promotion - Incentives and communication
● Place - Distribution |
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