Marketing Management MKTG 471
Popular in Course
Popular in Marketing
verified elite notetaker
This 20 page Study Guide was uploaded by Fredy O'Conner on Monday September 28, 2015. The Study Guide belongs to MKTG 471 at George Mason University taught by Ning Li in Fall. Since its upload, it has received 61 views. For similar materials see /class/214993/mktg-471-george-mason-university in Marketing at George Mason University.
Reviews for Marketing Management
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 09/28/15
MKTG471 Marketing Management Study Guide for Exam I This list is intended to guide you in your study for Exam 1 It does NOT mean that everything on the exam should be within the range covered on this study guide Make sure you understand how to apply the text concepts in real world marketing situations Bring scan tron sheets pencils an and Exam I format multiple choices marketing arithmetic and essays based on cases Closed book closed notes Exam length 75 minutes Please come to class 10 minutes earlier on the Exam day to make sure you have at least 75 minutes for the exam Any use of electronic devices except a simple calculator during testing times can be interpreted as a Violation of the University Honor Code These devices include cell phones electronic translators and similar devices Any student using such devices during an exam or any form of cheating during exams will result in a grade of zero for the test and will be referred to the Honor Council Consistent with University policy only provable ie documented absences due to personal ilhless or family emergency constitute acceptable bases for missing exams Preplanned weddings vacations and deep discount airfares are not acceptable absences There are no makeup tests or adjustments to satisfy the convenience of students who are enrolled in this class All students are graded with the same standard Math 39 Thoroughly understand the math session the lecture slides are at WebCT and the article Note on low tech marketing math in your XanEdu casepacket Know how to calculate variable cost fixed cost margin profit revenue and BEV Profit Sales Revenue 7 Cost Sales Revenue Sales Volume x Price Cost Variable Cost and Fixed Cost Variable Cost Variable Volume x Sales Volume Unit Margin Unit Price 7 Unit Variable Cost Margin Percentage P 7 VC P Price VC l M BEV Fixed Cost Unit Margin 39 Understand how to calculate consumer lifetime value as explained in the Starbucks case 0000000 0 session Chapter 1 2 amp3 39 Understand four marketing management philosophies production selling marketing and societal marketing Marketing Management Philosophies Production Consumers Will prefer products that are Widely available and inexpensive o Productionioriented businesses concentrate on achieving high production efficiency low cost and mass distribution I Used by developing countries that can take advantage of low labor cost which allows them to keep price down and dominate market And also when companies are trying to expand the market Selling If the consumer is left alone they Will not buy enough of the organizations product The organization must use aggressive selling and promotional efforts 0 The purpose of marketing is to sell more stuff to more people more often for more money to make more profit 0 This concept is practiced most with unsought good such as insurance encyclopedias and funeral plots 0 Firms that use this aim to sell What they make not make What the market wants 0 This concept is high risk it assumes customers WhO are coaxed into buying it Will like the product if they don t they Will return it or bad word of mouth and complaints Marketing the key to achieving organizational goals consist of the company being more effective than competitors in creating delivering and communicating superior customer value to chosen target markets 0 Customer centered sense and respond philosophy Find the right products for your customers Focuses on the need of the buyer 000 Reactive market orientation 7 understanding and meeting customers expressed needs 0 Proactive marketing orientation high level innovation possible if focus is on customers latent needs practice of researching or imagining latent needs through probe and learn process 0 Total marketing orientation practicing both reactive and proactive marketing Societal Marketing Holistic Marketing is based on the development design and implementation of marketing programs processes and activities that recognize their interdependencies everything matters o 4 components Internal marketing marketing departments senior managements other departments Integrated marketing communications products and service channels Relationship marketing customers channel partners Socially responsible marketing ethics environment legal community What are the determinants of customer value 0 internal marketing 7 employees contributing to building long term relationships with customers 0 Selecting employees with positive attitudes 0 Training motivating and empowering employees 0 Establishing standards for employee performance 0 Monitoring actions and rewarding good performance 0 Psychic test 9 energy cost 9 time cost 9 monetary cost 9 total customer value customer delivered 0 Image value 9 personnel value 9 services value 9 product value 9 total customer value 0 Custamer perceived value 7 the difference between prospective customers evaluation of all benefits and costs of an offering the perceived alternatives 0 What is relationship marketing Relationship Marketing Has the aim of building mutually satisfying long term relationships with key parties customer suppliers distributors and other marketing partners in order to earn and retain their business Builds strong economic technical and social ties among parties Key parties are customers employees marketing partners channels suppliers distributors dealers agencies Financial community shareholders investors analysts Ultimate outcome of relationship marketing is building a unique marketing network 0 Marketing network consists of the company and its supporting stakeholders with whom it has built mutually profitable business relationship The development of strong relationships requires an understanding of the capabilities and resources of different groups as well as their needs goals and desires 39 Who could be a regular business company s stakeholders Company Stakeholders Customers employees suppliers distributors retailers ad agencies university scientists investors analysts What are the four Ps in the marketing mix The Four P s of Marketing Product product variety quality design features brand name packaging sizes services warranties and returns Price list price discounts allowances payment period credit terms Promotion sales promotion advertising sales force public relations and direct marketing Place Channels coverage assortments locations inventory and transport Fours C s Customer solution Customer cost Convenience Communication 39 What are the elements in the business unit strategic planning process 0 MarketOriented strategic planning the managerial process of developing and maintaining a viable fit between the organizations objectives resources and its changing market opportunities 0 Aim afstrategic planning to shape the company s businesses products services and messages so they achieve targeted profits and growth 0 Resources and Objectives Evolving Marketing Opportunities Long run Profitability and Growth C arparate Planning Activities 0 39 Defining the corporate mission I Establish SBU s 39 Assigning resources to SBU s 39 Assessing growth opportunities Elements in the corporate strategic planning process A strategic plan guides the whole enterprise it makes decisions on the amount of resources allocated to each division as well as on which businesses to start or eliminate Planning takes place on 4 levels corporate level division level business unit level and product level 1 Defining corporate mission 2 Establishing strategic business units 3 Assigning resources to each SBU 4 Assessing growth opportunities Assessing growth involves planning new businesses downsizing or terminating older business For higher sales and profit a company can Intensive growth 0 First company figures out if it could gain market share with current customers and product by encouraging people to buy more attracting competitors customers or to convince non buyers to start Then consider weather it can develop new products for current market diversification Integrative growth growth can be achieved through backward integration acquire a supplier forward integration acquiring a distributor horizontal integration 0 acquiring a competitor Diversification growth Business Unit strategic planning 1 Business Mission Each business needs to define a specific mission with in the broader company s mission 2 SWOT analysis Strengths weaknesses opportunities and threats Consist of analysis of the internal and external environments 3 Goal formulation once the SWOT analysis is performed the firm can develop specific goals for the planning period in process Good goals must be arranged hierarchically from most important to least be stated quantitatively whenever possible be realistic be consistent 4 Strategy Formulation describes the game plan for achieving the goals Three generic strategies Overall cost leadership Differentiation Focus 5 Program formulation and implementation 6 Feedback and control 0 What question does the business mission answer 0 What is our business Who is the customer What is of value to the customer What will our business be What should our business be M issian statements provide employees with a shared sense of purpose direction and opportunity and guides geographically dispersed employees to work independently and collectively toward realizing the organizations goals OOOOO 0 Good mission statements focus on a limited number of goals stress the company s major policies and values and define the company s major competitive spheres Includes Range of INDUSTRIES in which a company will operate Range of PRODUCTS and APPLICATIONS that a company will supple Range of technological and other core COMPETENCIES that a company will master and leverage Type of MARKET or CUSTOMERS a company will serve Number of CHANNEL LEVELS VERTICAL from raw materials to final product and distribution in which a company will participate The range of REGIONS or COUNTRIES GEOGRAPHICAL in which a company operates o A company must make changes if its mission has lost credibility or no longer defines an optimal course 0 What are the characteristics of strategic business writs o It is a single business or collection of related businesses 0 It has its own set of competitors 0 It has a leader responsible for Strategic planning Profitability Efficiency Understand SWOT analysis 0 Internal Strengths and Weaknesses Each business need to evaluate its internal strengths and weaknesses in marketing finance manufacturing and organizational capabilities 0 External Opportunities and Threats Macraenviranmental farces demographic economic technological political legal and social cultural M icraenviranmental actars customers competitors distributors and suppliers Marketing apparmnity an area of buyer need and interest in which there is a high probability that the company can profitably satisfy that need 3 sources of market opportunities 1 supply something that is in short supply 2 supply an existing productservice in a new or superior way by asking consumers for suggestions problem detection method or asking consumers to imagine an ideal version of the offering ideal method or asking consumers to chart their steps in acquiring using and disposing of a product consumption chain method 3 totally new product service Marketing Opparmnity Analysis MOA determines attractiveness and success probability of each opportunity by asking 5 questions Can the benefit involves be articulated to a defined target market Can the target market be located and reached with cost effective media and trade channels does the company have access to the capabilities and resources needed to deliver the customer benefit can the company deliver the benefits better than competitors will the financial rate of return meet of exceed the company threshold for investments 39 Envirartmerttal threat challenge posed by an unfavorable external trend or development that would lead to lower sales or profit 0 Understand that a wellstated marketing objective must be realistic measurable time speci c and consistent with and indicate the organization s priorities 0 Marketing objectives must be 39 Hierarchical 39 Stated quantitatively 39 Realistic 39 Measurable 39 Time specific 39 Consistent with and indicate the organization s priorities 39 Understand three types of competitive advantages cost productservice differentiation and niche strategies 0 0 Overall cast leadership lowest production and distribution costs so that it can price lower than competitors and win a large market share Di ererttiatiart superior performance in an important customer benefit area valued by a large part of the market and cultivates strenng that will contribute to this differentiation Niche strategies facus focuses on one or more narrow market segments getting to know these segments intimately and pursuing either cost leadership or differentiation within the target segment 39 Understand the four strategic alternatives in the productmarket expansion grid 0000 Market Penetratiart existing products existing markets Market develapmertt existing products new markets Praduct develapmertt new products existing markets Diversificatiart new products new markets 39 Understand the factors in the external marketng environment social cultural economic demographic political and legal natural technological and etc 0 Demagraphic Envirartmertt marketers monitor population trends because people make up markets Interested in size and growth rate of population in different cities regions and nations age distribution and ethic mix educational levels household patterns and regional characteristics and movements 39 Worldwide population growth 39 Population age mix 39 Ethic markets Educational groups 39 Household patterns 39 Geographical shifts in population 0 Ecanamic Enviranmem available purchasing power in an economy depends on current income savings debt and credit availability Marketers must pay careful attention to trends affecting purchasing power because these can have a strong impact on business especially for companies offering products geared to high income and price sensitive customers 39 Income distribution 39 Savings debt and credit available 39 Outsourcing and free trade 0 SacialCulmral Enviranmem society shapes our beliefs values and norms People absorb a worldview that defines their relationships to themselves others organizations society nature and the universe Cultural characteristics of interest to marketers include the persistence of core cultural values the existence of subcultures and shifts of value through time 39 High persistence of core values 39 Existence of subcultures 39 Shifts of secondary cultural values through time 0 Natural Enviranmem marketers need to be aware of threats and opportunities related to four trends 39 Shortage of raw materials 39 Increased energy costs 39 Anti pollution pressures 39 Changing role of governments O Technalagical Enviranmem marketers must monitor these trends in technology the pace of change opportunities for innovation varying RampD budgets and increased regulation 39 Accelerating pace of technological change 39 Unlimited opportunities for innovation 39 Varying RampD budgets 39 Increased regulation of technological change 0 PaliticalLegal Enviranmem composed of laws government agencies and pressure groups that in uence and limit organizations and individuals Two major trends deal with 39 Increase in business legislation protect firms from unfair competition protect customers from unfair business practices protect society from unbridled business behavior 39 Growth of special interest groups consumerist movement 7 organized movement of citizens and government to strengthen the rights and powers of buyers in relation to sellers Apply to case Wetherill Associates Inc 0 Initial goals are profit and shareholder gain 0 3 other rules are legal ethical and for public good 0 Theatrically a good corp will fulfill 23 above 0 Responsibility is more than legal but is moral 0 Many things are lawful but not moral 39 Overall corp should be held to higher judgments 0 Greater than right or wrong but is it just 0 Not just meeting standards but desire to do good 0 A moral corporation freedom implies responsibility 0 Make a decisions and prepare to justify actions 0 Justify to corp and shareholders as well as consumers Chapter 4amp5 O What are the determinants of customer delivered value 0 Custamer Perceived Value CPV 7 difference between the prospective customer s evaluation of all the benefits and costs of an offering and the perceived alternatives T atal custamer value 7 perceived monetary value of the bundle of economic functional and psychological benefits customers expect from a given market offering Product value Services value Personnel value Image value Tatal custamer cast 7 the bundle of costs that customers expect to incur in evaluating obtaining using and disposing of the given marketing offering Monetary cost Time cost Energy cost Psychic cost 0 Why are companies so intent upon satisfying the customer 0 Satisfactian a function of perceived performance and expectations Customers are satisfied when their expectations are met and delighted when their expectations are exceeded Satisfied customers Exhibit more brand loyalty less price sensitive and remain loyal longer Buy more new products and upgrades Spread favorable WOM Offer feedback Reduce transaction costs Company s goal to retain customers Acquiring new customers can cost 5 times more than the cost of satisfying and retaining current customers 96 of dissatisfied customers don t complain many just stop buying 39 On average companies lose 10 of customers each year Reducing customer defection rate by 5 can increase profits by 25 to 85 Understand CRM and how to do CRM OO O O 0 Task of creating strong customer loyalty is CRM Custamer Relatianship Management CRM process of managing detailed information about individual customers and carefully managing all customer touch points to maximize customer loyalty 39 Custamer tauch paint any occasion on which a customer encounters the brand and product 7 from actual experience to personal or mass communications to casual observation CRM enables companies to provide excellent real time customer service by developing a relationship with each valued customer through the effective use of individual account information CRM is important because a major driver of company profitability is the aggregate value of the company s customer base Peppers and Rogers outline of a four step framework for one to one marketing i identify yaurpraspects and custamers 7 don t go after everyone Build maintain and mine a rich customer database with information derived from all the channels and customer touch points database marketing process of building maintaining and using customer databases and other databases products suppliers resellers for the purpose of contacting transacting and building relationships E9 di erentiate custamers in terms 0f their needs and 2 their value t0 yaur campany 7 spend proportionately more effort on the most valuable customers Calculate customer lifetime value and estimate net present value of all future profits coming from purchases margin levels and referrals less customer specific servicing costs custamer lifetime value CLV 7 subtract from the expected revenues the expected costs of attracting selling and servicing that customer applying appropriate discount rate U interact with individual custamers t0 imprave yaur knawledge abaut their individual needs and t0 build stranger relatianships 7 facilitate customercompany interaction through the company contact center and web site b custamize praducts services and messages t0 each custamer 7 formulate customized offerings that are communicated in a personalized way Understand the three major ways to enhance customer bonding adding nancial bene ts adding social bene ts and adding structural ties 0 Adding Financial Bene ts two financial benefits that help companies bond customers more closely are frequency programs and club marketing programs 39 Frequency pragrams FPs reward customers who buy frequently andor in substantial amounts Acknowledges 20 80 rule 0 Adding Sacial Bene ts individualizing and personalizing customer relationships turn customers into clients Customers may be nameless to the institution clients cannot be nameless Customers are served as part of the mass or as part of larger segments clients are served on an individual basis Customers are served by anyone who happens to be available clients are served by the professional assigned to them 0 Adding Structural Ties company may supply special equipment or computer linkages to help customers manage their order payroll inventory and so on Marketer s goal should be to increase the consumer s proclivity to repurchase the company s brand Wunderman suggests creating structural ties with the customer by 39 Creating lungterm cantacts 39 Charging less far anguing purchases 39 Turning the praduct inta a lungterm service 0 What is the 2080 rule 0 20 of a company s customers might account for 80 of its business 0 Why do marketers need to study consumer behavior 0 Cansumer Behaviar study of how individuals groups and organizations select buy use and dispose of goods services ideas or experiences to satisfy their needs and desires o Marketers gain an in depth understanding of consumers can more effectively market the right products to the right customers in the right way 0 Consumer study provides clues for developing strategies for marketing mix elements 0 What are the four major factors that influence consumer behavior 0 Cultural culture subculture social classes 0 Sacial family reference groups roles and status 0 Persanal age and life cycle stage lifestyle occupation economic factors personality 39 Lifestyle influences Multitasking Time starved convenient offerings Money constrained lower cost offerings O Psychalagical motivation perception learning beliefs and attitudes Understand the impact of working women on marketing 0 The phenomena of working women has had the greatest effect on marketing than any other social change 0 63 of all females ages 16 65 are in the workforce 0 Cost is more important to women 0 Quality is more important to men 39 Know the ve stages in consumer buying process 1 Prablem recagnitian 7 buyer recognizes a problem or need triggered by internal stimuli hunger or thirst or external stimuli seeing an ad that then becomes a drive 2 Infarmatian search I 2 levels of arousal heightened attentian person simply becomes receptive to information about a product active infarmatian search person talks with friends searches online and visits stores to learn about product 4 information sources persanal sanrces family friends neighbors l t t ial sanrces websites salespersons dealers packaging displays public sanrces mass media consumer rating organizations experiential sanrces handling examining using the product Sets of brands Tatal set brands available to customer 9 Awareness set know only subset of these brands 9 cansideratian set brands that meet initial buying criteria 9 chaice set as consumers gather info only a few brands will remain as strong contenders 3 Evaluatian afalternatives Consumer is trying to satisfy a need Consumer is looking for certain benefits from the product solution Each product is Viewed as a bundle of attributes with varying abilities for delivering the benefits to satisfy this need Evaluations often re ect beliefs and attitudes that consumers acquire through experience and learning Expectancyvalue madel of attitude formation posits that consumers evaluate products and services by combining their brand beliefs according to importance this model assumes high cansnmer invalvement 7 level of engagement and active processing a consumer undertakes in response to a marketing stimuli 4 Purchase decisian Consumer forms preferences among brands in the choice set and may also form an intention to buy the most preferred brand Two factors intervene between the purchase intention and decision 7 first is the attitudes of others second factor is unanticipated situational factors that may erupt to change the purchase intention 5 Pastpurchase behaviar Further purchase or re evaluation Cagnitive dissanance doubt that the correct purchase decision has been made The mare alternatives from which to choose the greater the doubt after a decision is made and the more important the after care by a phone call a service visit or email and I Reduce or eliminate cognitive by honest sales presentations and ad campaigns with good customer after care Apply to case Starbucks Culture Service Differentiation 2 minutes within ordering and receiving coffee Small coffee house Expansion 7 brand line extensions got 0 convenient store for starbucks packages Alternative store purchases dvds cds but retain quality service and product Chart of customer satisfaction over years of starbucks loosing profits over time why 7 people associated starbucks with making money profit found out through surveys Starbucks card 7 swipe and go Need to get back to roots of customer satisfaction in order to compete Chapter 6 0 Understand what business marketing is 0 Business market consists of all organizations that acquire goods and services used in the production of Other praducts 0r services that are sold rented or supplied to other consumers 0 Business markets are much larger than consumer markets 0 Overall business market includes profit seeking companies institutional organizations government organizations 39 What kinds of organizations does the institutional business market include 0 Schools hospitals nursing homes prisons o Institutions that provide goods and services to people in their care 0 Low budgets and captive clientele 0 Understand the difference between business and consumer markets demand volume of consumers location distribution nature of buy reciprocity promotion etc 0 Fewer and larger buyers 0 Close supplier customer relationship 7 suppliers must often customize offerings to individual business customer needs 0 Geographically concentrated buyers 7 more than half of us business buyers are concentrated in seven states NY CA PA IL OH NJ MI 7 helps to reduce selling costs 0 Derived demand 7 demand derived for consumer goods so business marketers must monitor the buying patterns of ultimate consumers O Inelastic demand 7 not much affected by price changes especially in short run because producers cannot make quick production changes 0 Professional purchasing 7 trained purchasing agents follow formal policies requirements and constraints when buying buying instruments proposals and purchase contracts 0 Multiple buying in uences 7 more people in uence business buying decisions buying committees are common in major purchases firms must send knowledgeable salespeople to deal with well trained buyers 0 Multiple sales calls 7 more people involved in the process takes multiple sales calls to win most business orders sales cycle can take years 0 Direct purchasing 7 business buyers often buy directly from manufacturers rather than through intermediaries especially items that are technically complex or expensive 0 Reciprocity 0 Leasing 39 What is a strategic alliance Understand the two modes of strategic alliances O O 0 Strategic alliances a long term cooperative partnership between two or more legally distinct organizations that intends to create a potential competitive advantage and is expected to be mutually beneficial for partners NOT a merger or an acquisition where one firm loses its distinct identity Two modes of strategic alliances 39 I Camracmal alliance does not create an independent business entity 39 Partners deal with each other according to specified contracts 39 Compared to the joint venture form it is a relatively loose relationship Partners are less involved in and less committed to the relationship Ex licensing contracts RampD contracts 2 7 Jaim venture creates an independent business entity New entity can either be newly formed or the combination of pre existing units andor divisions of the members 39 Closer relationship partners more involved and committed to relationship Why do rms form strategic alliances O O 0 Marketing alliances are formed primarily for partners to collaborate on the marketing functions 39 Developing new productsservices 39 Promoting or distributing products services 39 Market penetration or expansion Alliances could amount to over 40 of firm value within the next five years Strategic alliances help firms to 39 Exchange information transfer technology 39 Get access to complementary resources 39 Economies of scale Save costs focus on core competence Share risks Enter the global markets Apply to case Shanghai General Motors The rise of a latecomer Trying set on high market potential and profit margins production oriented GM is trying to grow in China and sell more cars there than the US Technology sharing to increase competitive edge Used Holistic supply chain 7 distribution product service Quality control process New product development Researched Chinese preferences and implemented it in their products dvd bigger back seats Sales marketing 7 e business financing and etc GM and SAIC partnership 7 GM rapid sales and escalating market share SAIC new modes of technology and able to pressure other automakers like Volkswagen hybrid Con icts of alliance 7 lawsuits on intellectual property 0 Overall effective because GM gained competitive advantage and Chinese government trust hard to do but when achieved is everything 0 Firms join hands to seek attractive resources 0 Alliances may be terminated when it no longer services purpose 0 Dependence can be a source of power for the firm that controls key resources 0 Learning alliance technology and knowledge transferred between companies 39 Initial alliance 9 pawer callisian alliance likely to be short lived Neither partner gains Pawer shift taward glabal partner 0 If you control your distribution channels you control your consumers and build relationships train sales people manage after sale service utilize the salesinventory tracking system to help monitor sales and demand better understand consumer preferences Chapter 7amp8 39 Why is market segmentation important 7 0 Market segmentatian is the first step of Target Marketing 0 It requires marketers to identify and profile distinct groups of buyers who differ in their needs and preferences 0 Sellers are going from using Mass Marketing to M icramarketing O M icramarketing consists of 4 levels segments niches local areas and individuals 0 A market segment consists of a group of customers with similar set of wants ex car buyers who want low cost transportation or buyers who want a luxurious driving experience 0 Do not confuse market segment with sectar sector example is Young middle income car buyers 0 Because wants of segment members are similar but not identical marketers should present Flexible market a eringconsists of productservice elements that all members value plus discretionary options 7 some which requires an additional charge instead of one standard offering ex airlines offer seats with beverage but charge extra for alcohol 0 Niche is more narrowly defined group of customers who seek distinctive mix of benefits this is done by dividing a market segment into subsegments 0 Customers of a Niche will pay a premium to the firm that best satisfies their needs and the niche is not likely to attract other competitors Therefore the nicher gains certain economies through specialization and the niche has size profit and growth potential 0 As marketing efficiency increases niches that were seemingly too small may become more profitable 0 Target marketing is leading to marketing programs tailored to the needs and wants of local customer group trading areas neighborhoods individual stores 0 Local marketing re ects a growing trend toward grassroots marketing concentrating on getting as close and personally relevant to individual customers as possible 0 A large part of grassroots marketing is experimental marketing which promotes an offering by connecting it with unique and interesting experiences o The idea is not to sell something but demonstrate how a brand can enrich a customer s life 0 Proponents of local marketing see national marketing as wasteful because it fails to address local needs 39 What are the bases for segmenting consumer markets 7 0 One common method of building market segments is to identify preference segments 0 Two broad groups of variables are used to segment consumer markets 0 l 7 Descriptive Characteristics 1 1 Hamageneans preferences market where all consumers have roughly the same preference Di 39used preferences consumer preferences has great variance Clustered preferences market has distinct preference clusters called natural market segments several groups of consumers who differ in preferences but share the same preference as members of the group I I 39 r 1 quot J and examines whether these customers segments exhibit different needs or product responses Geagraphic Segmentatian nations states regions countries cities neighborhoods 7 company can operate in one or few geographic areas or operate in all but pay attention to local variations Demagraphic Segmentatian age and life cycle stage life stage gender income generation social class 0 Life stage defines person s major concern going through divorce second marriage taking care of older parents deciding to buy home Psychagraphic Segmentatian psychologicalpersonality traits lifestyle values 7 science of using psychology and demographics ex VALS O 2 7 Behaviaral Characteristics responses to benefits use occasions or brands examines whether different characteristics are associated with each consumer response segment Consumers divided into groups on basis of knowledge of attitude toward use of or response to a product Decision roles are one variable 7 5 roles Initiator in uencer decider buyer user Many marketers believe that behavioral variables occasions benefits user status usage rate loyalty status buyer readiness stage and attitude are best starting points for segmentation 39 Occasians buyers divided into occasions when they develop a need and purchase or use a product Bene ts buyers classified according to benefits they seek User Status markets segmented into nonusers ex users potential users first time users and regular users of a product Usage Rate markets segmented into light medium and heavy product users Buyerreadiness stage markets segmented to people unaware of product aware informed interested desire product intend to buy Layalty stains buyers divided into four groups according to brand loyalty status 0 Hardcare layals always buy one brand 0 Spilt layals loyal to two or three brands O Shifting layals shift from one brand to another 0 Switchers no loyalty to any brand 39 Attitude enthusiastic positive indifferent negative hositle 39 What is onetoone marketing 7 O O O O O O O O O The ultimate level of segmentation 99 cc AKA segments of one customized marketing Customers are taking more individual initiative in determining what and how to buy surf web look up info evaluate offers contact suppliers users and product critics More online companies offering Chaicebaard 7 interactive online system that allows individual customers to design their own products C nstamerizatian combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the productservice offering of their choice Firm no longer needs to prior information about the customer not does it need to own manufacturing Firm provides a platform and tools and rents out to customers the means to design their own products A company is customerized when it is able to response to individual customers by customizing its products services and messages on a one to one basis This level of segmentation can be difficult for automobile industry because it can raise the cost of goods to more than the customer is willing to pay 39 What factors is brand equity positive associated with 8 O 0 Brand equity added value endowed to products and services reflected in how consumers think feel and act with respect to the brand as well as the prices market share and profitability that the brand commands for the firm Important intangible asset that has psychological and financial value to firm Perspective used to study brand equity 39 Cnstamerbased brand equity differential effect that brand knowledge has on consumer response to the marketing of that brand 0 a brand is said to have positive customer based brand equity when consumers react more favorably to a product and the way it is marketed when the brand is identified as compared to when it is not 1 7 brand equity arises from differences in consumer response 2 7 differences in response are a result of consumer s brand knawledge thoughts feelings images experiences beliefs associated with brand O 39 3 7 differential response by consumers that makes up the brand equity is re ected in perceptions preferences and behavior related to all aspects of the marketing of a brand Marketing Advantages of Strong Brands Improved perceptions of product performance Greater loyalty Less vulnerability to competitive marketing actions Less vulnerability to marketing crises Larger margins More inelastic consumer response to price increases More elastic consumer response to price decreases Greater trade cooperation and support Increased marketing communications effectiveness Possible licensing opportunities Additional brand extension opportunities 0 Brand pramise is the marketer s vision of what the brand must be and do for consumers 39 Understand the advantages and disadvantages of brand extension 8 0 Brand extensian when a firm uses an established brand to introduce a new product 0 O O 2 categories of brand extensions Brand line axtensian parent brand is used on a new product targeting new market segment within a category currently served by the parent ex new avors colors forms package sizes C ategary axtensian parent brand is used to enter a different category from that currently served by the parent brand ex swiss army watches Advantages of Brand Extension Improve the odds of new product success consumers can make inferences and form expectations with existing parent brand products Easier to convince retailers to stock and promote a brand extension potentially increased consumer demand 0 Can reduce the cost of the launch campaign 0 Can avoid difficulty and expense of coming up with a new name 0 Having brand variations within a product category consumers can switch to different product type without leaving brand family Brand extensions can provide feedback benefits 0 Can help clarify a brand s meaning and its core values or improve consumer perceptions of the credibility of the company behind the extension 0 Line extensions can renew interest and liking for the brand and benefit from the parent brand by expanding their market coverage Disadvantages of Brand Extensions 39 line extension trap 7 may cause the brand name to not be as strongly identified with any one product 39 Brand dilutian when consumers no longer associate a brand with a specific product or highly similar products and start thinking less of the brand If extensions are inappropriate consumers may question brand s integrity and competence 39 Different varieties can confuse or frustrate consumers 39 Retailers have to reject many new products because they lack shelfdisplay space 39 Potential hard to the parent brand image if extension fails Possible cannibalizing the parent brand consumers switching to the extension from existing product offerings of the parent brand Apply to case Lenovo Building a Global Brand 0 Lenovo was willing to pay a good price for the IBM PC business for 0 Instant credibility 0 Changed rank for better 0 Premium product line 0 Distribution eliminated direct sales force and changed to local distribution resulted in improved inventory returns 0 Confidence Chapter 9 0 What is product positioning What is a positioning statement 0 O O Pasitianing is the act of designing the company s offering and image to occupy a distinctive place in the target market s mind Pasitianing segmentatian di eremiatian Pasitianing statement to target group and need our brand is concept that point of difference Goal is to locate the brand in the minds of consumers to maximize the potential benefit to a firm A good brand positioning helps guide marketing strategy by clarifying the brand s essence what goals it helps the consumer achieve and how it does so in a unique way 0 What major differentiation tools do companies have product service personnel channel and image 0 Products can be differentiated through 39 Form product size shape or physical structure 39 Features can identify and select new features by researching needs and calculating customer value versus company cost for each potential feature 39 Performance quality level at which the product s primary characteristics operate Conformance quality degree to which all of the produced units are identical and meet the promised specifications Durability measure of the products expected operating life Reliability measure of the profitability that a product will not malfunction or fail Reparability ease of fixing a product Style products looks and feel to the buyer Design potent way to differentiate and position a company s product and service 0 Service differentiation 7 adding valued services and improving their quality 0 Ordering ease how easy it is for a customer to place an order Delivery how well is the offering delivered to consumer Installation especially important for customers employees to use products Customer training training the customer employees to use products Customer consulting when selling is offering data information systems and advising services that meet buyers needs Maintenance and repair what is the service program for helping customers keep products in good working order Personnel differentiation Know how to use Porter s ve forces to analyze the attractiveness of an industry Understand the four types of industry competition pure monopoly differentiated oligopoly pure competition and monopolistic competition Understand the 6 defense strategies and 5 general attack strategies Apply to cases Zara Fast Fashion focusing on the questions that we discussed in class 30 of world production of exported apparel utilize cheap labor sweatshops Strategy and control performance Total sales 7 driver of growth Vertically integrated 7 upstream suppliers and downstream buyers Shortened their design cycle Utilize design teams low failure rates Manufacturing was internal and outsources Broad and rapidly changing product lines with reasonable quality first one in Stores that highly visible and premiere big display and size of store Marketing strategy was pricing and positioning Management had a holding company and they did international franchises Competitive advantages 7 fast production ability to design and finish goods in stores within 4 to 5 weeks very quick to get designer in uence products into their stores product variation ability of zara to launch new trends designs and variation of product cost leadership fashionable quality at reasonable product based on product positioning zara is cheaper price than benneton and GAP and still being fashionable 20
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'