Upgrade to remove ads
Only $35.99/year

MKT 480 - Test 2

Terms in this set (29)

Brand Positioning
What defines who the business is in the mind of consumers. Your business's positioning must be different (from competition) and relevant (to consumers).
5 types of positioning strategies
Value positioning strategies:
-product differentiation= high product performance
-service differentiation= one of a kind service quality
-brand differentiation= brand reputation (trust/quality/reliability)
Cost positioning strategies:
-Low-price position
-Lower ownership costs (Honda saves in long run due to gas mileage and less repairs)
Branding benefits
benefits of the product is in the name - easily remembered/recognized - more trusted, thus chosen more often.
Naming strategies
-Founder brand names- wal-mart= sam walton; Levi's= Levi Strauss
-Functional brand names- Duracell= long lasting
-Invented brand names- Kleenex
-Experiential brand names- Big Bertha= Powerful, long drives; Land Rover= exploration
-Evocative brand names- apple= friendly, easy to use; victoria's secret= sexual, seductive.
Product line characteristics
-width: the number of different product lines the company carries
-length: the number of items within a product line
-Depth: the number of QUALITY versions offered of each product in the line.
Product line decisions
-Line extension: extending an existing brand name to new forms, colors, sizes, ingredients, or flavors within a product category at THE SAME PRICE POINT. (new flavor of chips)
-Brand extension - width: extending an existing brand name to new product categories.
-Line stretching: vertical, depth, downward (lower prices) to cater to lower-end segments, upward to add prestige to existing products- cater to premium segments, ex. iPhone 5c and 5s (same product, different prices), either of these can be a bad choice if there's not sufficient demand
-Multibrands
-Cobranding
Cost-based
starts with cost and desired margin and is marked up along the channel to a customer selling price of $940 (sadly, this is done all to ofter)
Market-based
price is set based on competitive advantage and value ($1000) and discounts and costs deducted to arrive at a company margin.
Market skimming price
setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price
Market penetration price
setting a low price for a new product to attract a large number of buyers and a large market share. Use: when market is highly price sensitive so a low price produces more growth.
price elasticity
When the percent change in volume is greater than the percent change in price, we have an elastic price
-if % change in volume < % change in price + inelastic price/segment
ex. 10% change in volume/-3.9% decrease in price = -2.55 price elasticity. meaning for every dollar you decrease the price, the volume will increase by 2.55.
-0 to -0.99= inelastic
--1.01 and larger= elastic
Price elasticity and profit impact
If price is elastic we have to be careful in how we change our prices, for a change in price could dramatically impact volume of sales. If price is inelastic, then we won't have price sensitive customers where a change in price won't dramatically change the volume of sales.
-inelastic prices: a lower price will result in lower sales revenue and lower profits when inelastic
-elastic prices: predicting what will happen in an elastic market is a little more tricky. Use more caution when lowering prices when prices are elastic. If percent margins are low, a lower price will increase sales but often result in lower profits.
Number of levels - channels
-range from two levels (direct, manufacturer to consumer) to five levels or more. number of alternative is based on the nature and size of the market. Ownership flow is what determines the levels in the channel. Intensity dimension (intensive, selective, exclusive) number of intermediaries (many, few, one) Retailers: a business whose sales come primarily from selling to end users. Wholesaler: a business whose sales come primarily from selling to businesses. Specialty stores: narrow product line breadth with deep assortments. Department stores: wide variety of product lines, currently being "squeezed" from both the top and the bottom and from e-com. supermarkets: self-service, mostly food and household items.
Adding channel members (intermediaries)
are necessary when: -there's a large distance between the manufacturer and its market
-the market size is large, making it harder to serve many individual customers directly
-unit value is small. the smaller the unit value of a product, the longer the channel should be.
Channel structure should be short
using fewest intermediaries as possible when:
-large bulk and weight: structure needs to be short
-perishable products need a channel that has rapid delivery
-custom-made products w/ no standardization are sold directly
-technical products will be sold directly
-new products need short channel
(it kinda appears that as you add channel members, value is added, and marketing ROI increases. direct - 146%, mixed - 353%, indirect - 415%
Functions wholesalers perform
selling and promoting, buying and assortment building, bulk-breaking, warehousing, transportation, financing, risk-bearing.
Variables affecting channel structure
market variables, product variables, company variables
Market variables
location and distance from producer. The larger the distance between the manufacturer and its market, the higher the probability for the use of intermediary. If the market size is larger more likely is the use of an intermediary as it is harder to serve many individual customers directly.
product variables
bulk and weight (channel structure need to be short/less use of intermediary) perishability (channel structure should be designed for rapid delivery from producers to consumers) Unit value (less the unit value of a product, the longer the channel should be) degree of standardization (custom-made products with no standardization are sold directly, no intermediary) technical vs non-technical (technical products will be sold directly as need to sell the complexity attached to it) newness (at introductory stage, a new product needs short market channel to increase acceptance)
company variables
financial capacity- the greater the capital, the lower the dependence of intermediaries (becomes an ROI game). managerial expertise- intermediaries are necessary when managerial experience is lacking. objectives and strategies- marketing and objectives may limit use of intermediaries.
horizontal marketing systems
two or more companies at one level join together to follow a new marketing opportunity
multichannel distribution system
a single firm sets up two or more marketing channels to reach one or more customer segments. Each new channel expands sales and marketing coverage (internet-direct route and retailer route) harder to control; can generate conflicts.
Channel conflict types
-role incongruities: when the nature of who-does-what is disputed
-perceptual differences
-communication difficulties
Push strategy
producer sells product to retailers/wholesalers, who then sell to consumers. ex. retailer/wholesaler/intermediary markets to consumers
Pull strategy
producer sells to consumers to generate demand for their product(s). Consumers demand for producer's product increases at retailer/wholesaler level, which then increases demand for producers to produce more product to meet increased demand. ex. producer markets to consumers.
Message reinforcement strategies
-distributed - pulsing - messages are posted/boosted equally consistently throughout the year.
-concentrated - heavy-up - messages are posted/ boosted once a year at a very heavy rate. ex. advertising for an annual event.
advertising carryover effect
as the time after the advertising effort increases, the advertising impact decreases by 0.5", where n is number periods after advertising effort.
Defensive strategies
overall, defensive strategies focus on profit maximization
-reduce-focus: perhaps most efficient defensive strategy
-monetizing: manage market position for maximum cash flow with limited marketing resources (cut expenses including marketing)
-harvesting: slower than divesting: transform the elasticity of our product by continually raising the price: completely get ride of price sensitive customers: would perhaps lead to identifying a profitable premium niche of customers.
-divestment: quick exit: basically scrap product.
Entering new markets
a company would enter a new market if 1) current market is dying or 2) see opportunity in new market.
-establish and related: easiest; ex. coke entering energy drink market.
- established but unrelated: reduces dependency on current market company is operating in: diversifies product offering/portfolio. to do this strategy should either cobranded, open a joint venture, or acquire a company in this unrelated market.
-unestablished but related: riskier strategy: we think this market exists, but are not sure: we think there is demand for this new offering, but are not sure. But if we do find/strike gold, then we have many benefits, such as being first movers to a completely new market, which provides a lot of opportunity.
-Unestablished and unrelated: by far the RISKIEST and least common. ex. new york times launching a line of snooty oxygen bars.
Other sets by this creator