Exam 2: Marketing Management

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Marketing Information System

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Consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.

-Relies on internal company records, marketing intelligence activities, and marketing research and micro-environmental.

-Need data about the market before you segment into a market.

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Measures of market demand

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-P-R-I-N-A

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Forecasting

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Total Market Potential:

(Potential Buyers) x (Average Purchase Quantity) x (Average Price)

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What is segmentation?

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Dividing target markets into groups of consumers that have similar needs and wants.

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Effective Segmentation Criteria:

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S-A-D-A-M-P

Substantial - The segments are large and profitable enough to serve.

Accessible - The segments can be effectively reached and served.

Differentiable- The segments are conceptually distinguishable and respond differently to different marketing-mix elements and programs.

Actionable - Effective programs can be formulated for attracting and serving the segments.

Measurable - The Size, purchasing power, and characteristics of the segments can be measured.

Parsimonious - choosing less variables to segment a market to be more efficient and cost-effective. (i.e. describing humans, describe them using skin color and height, rather more variables.)

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Categories of Segmentation Variables:

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Profile Based Segmentation & Value Based Segmentation.

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Profile Based Segmentation

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Dirty Ghetto People Behave have a profile (D-G-P-B)

-Demographic - Dividing market by age, gender, income,etc...

-Geographic - Divides market up into geographical units - country, region, zip, online.

-Psychographic - Stable personal traits such as personality, moral values, and lifestyle.

-Behavioral - Customer reactions to company activities.

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Value Based Segmentation

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Food Makes People of value (F-M-P)

Based on needs and benefits they seek from the company.

-Functional (quality, performance, aesthetics, reliability, durability and safety.

-Monetary (pricing, financing and promotion preferences.)

-Psychological (image and social status).

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How do we choose segmentation variables?

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S-A-D-A-M-P

Substantial - The segments are large and profitable enough to serve.

Accessible - The segments can be effectively reached and served.

Differentiable- The segments are conceptually distinguishable and respond differently to different marketing-mix elements and programs.

Actionable - Effective programs can be formulated for attracting and serving the segments.

Measurable - The Size, purchasing power, and characteristics of the segments can be measured.

Measurable - The Size, purchasing power, and characteristics of the segments can be measured.

Parsimonious - choosing less variables to segment a market to be more efficient and cost-effective. (i.e. describing humans, describe them using skin color and height, rather more variables.)

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Brand Equity

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Is the added value endowed on products and services. It may be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands.

The way customers think, feel, and act with respect to the brand.

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Customer-based brand equity

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is thus the differential effect brand knowledge has on consumer response to the marketing of that brand.

The effect brand knowledge has on the consumer response on the marketing of that brand. (i.e. if a consumer loves Coke in the past, and they can choose between coke and pepsi, they will choose coke)

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Role of brands

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-A) Learn about brands through experiences with the product.

-B) Show a certain level of quality.

-C) Provides brand loyalty and creates barriers to entry.

-D) Secures a competitive advantage.

-E) Legalities - (Trademarking) - influences customer behavior.

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Brand Building - Marketers build brand equity by creating the right brand knowledge structures with the right consumers.

-Name the three main sets of brand equity drivers.

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1. The initial choice for the brand elements or identities making up the brand. -(Brand names, URLs, logos, symbols, characters, spokespeople, slogans, eat…

2. The product and service and all accompanying marketing activities.-(Juicy Couture Sportswear - Positioned as an affordable luxury, the brand creates is distinguishable via limited distribution and risque name and rebellious attitude.

3. Other associations indirectly transferred to the brand by linking it to some other entity. (Person, place, or thing) -i.e. The brand name 42BELOW has both direct product meaning and indirect meaning related to its New Zealand origins.

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There are six criteria for choosing brand elements:

The first three are “brand building.”

-The latter three are “defensive” and help leverage and preserve brand equity against challenges.

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L-M-M-A-P-T

Likable - how aesthetically appealing is the brand element? Playful names i.e. (Flickr photo sharing, Wakoopa, Motorola’s ROKR and RAZR cell phones).

Meaningful - Is the brand element credible? Does it suggest the corresponding category? i.e. (DieHard auto batteries, Low calorie frozen entrees).

Memorable - How easily do consumers recognize the brand element?

Adaptable - How adaptable and updatable is the brand element? i.e. (The face of Betty Crocker has received more than 7 makeovers and she doesn’t seem a day over 35!

Protectable - How legally protectable is the brand element? How competitively protectable? i.e. (Names that become synonymous with product categories - kleenex, Kitty Litter, Scotch Tape, etc… should retain their trademark rights and not become generic.

Transferable - Can the brand element introduce new products in the same or different category? I.e. (initially a book seller, Amazon was smart enough not to name itself “Books R Us”).

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Brand 'Touchpoints'

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All the interactions customers have with the brand. (i.e. Starbucks has great service 'interacting baristas' - builds the brand name).

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Brand reinforcement and reinvention strategies:

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Brand Reinforcement - Marketers can reinforce brand equity by consistently conveying the brand’s meaning in terms of 1) what products it represents, what core benefits it supplies, and what needs it satisfies; and 2) how the brand makes products superior, and which strong, favorable, and unique brand associations should exist in consumers’ minds. Doesn’t necessarily change strategy. (i.e. Customers can recognize the Pepsi brand)

Reinvention/Revitalization - When there is a significant change in strategy in branding. (i.e. The 7/11 example)

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A firm has three main choices:

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1)It can develop new brand elements for the new product.

2)It can apply some of its existing brand elements.

3)It can use a combination of new and existing brand elements.

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Brand Extensions

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Brand Extensions - Using an established brand to introduce a new product, the product is called a brand extension. (Either a line extension or category extension).

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Sub Brands -

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Sub-Brands - When marketers combine a new brand with an existing one. (Hershey kisses candy, American Express Blue cards, etc…)

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Brand Extensions fall into two categories

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Line extension and category extension:

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Line Extension

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Line Extension - If the parent brand covers a new product within a product category it currently serves, such as with new flavors, forms, colors, ingredients, and package sizes.

(i.e. If Pepsi coming out with diet pepsi)

-variations in product, same market.

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Category Extensions

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Category Extensions - Using the parent brand to enter a different product category, such as Swiss Army Watches. (i.e If Pepsi were to start making juice - Pepsi Juice) -using same brand, but entering new market.

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Branded House (Brand Architecture)

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The use of an umbrella corporate or company brand name. (Fedex has the same brand on all of its services/products - i.e. FedexKinkos, Fedex Delivery, Fedex packaging, etc...)

-Advantages: Efficiency, cost effective, helps new products.

-Disadvantages: Ambiguity, Bad news affects all entities.

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House of Brands (Brand Architecture)

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The use of individual or separate family brand names. (i.e. Toyota owns Lexus and other brands, but they are all owned by Toyota) and (Rosewood Hotels’)

-Advantages: Each brand fights its own battles, Shields corporate brands

-Disadvantages: Expensive, customers may focus on product features and less on brand, difficult to align.

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Sub Brands

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Fall somewhere between house of brands and branded house depending on which component of the sub-brand receives more emphasis.

(i.e.

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Points-of-Difference (PODs)

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Stay within the product category, but still differentiate the brand.

-Are attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe that they could not find the same extent with a competitive brand. (i.e. Nike has multiple PODs - performance, innovative technology, and winning)

Three key criteria determine whether a brand association can truly function as a point-of-difference—desirability, deliverability, and differentiability. Some key considerations follow:

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Three key criteria determine whether a brand association can truly function as a point-of-difference:desirability, deliverability, and differentiability. Some key considerations follow:

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desirability, deliverability, and differentiability. Some key considerations follow:

1. Desirable to consumer - Consumers must see the brand association as personally relevant to them. (i.e. Singapore’s Westin Stamford hotel advertised they were the world’s tallest hotel - this may not be important to many tourists).

2. Deliverable by the company - The company must have to resources and commitment to create and maintain the brand association in the minds of the consumers. (i.e. General Motors has had to work to overcome public perceptions that Cadillac is not a youthful, modern brand and has done so through bold designs and contemporary images).

3. Differentiating from competitors - Consumers must see the brand association as distinctive and superior to relevant competitors. (i.e. Splenda overtook Equal and Sweet n Low to become the leader in its category in 2003 by differentiating itself on its authenticity as a product derived from sugar).

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Points of Parity (POPs):

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Characteristics your brand has that are similar to brands in the product category. Establish yours brand similar to other brands in the market.

-attribute or benefit associations that are not necessarily unique to the brand but may in fact be shared with other brands.

A) These types of associations come in two basic forms: category and competitive.

1) Category points-of-parity are associations consumers view as essential to be a legitimate and credible offering within a certain product or service category. (i.e. Consumers might not consider a travel agency truly a travel agency unless it is able to make air and hotel reservations, provide advice about leisure packages, etc…)

2) Competitive points-of-parity are associations designed to negate competitors’ points-of-difference. (i.e. Negate a perceived vulnerability of the brand as a result of its own points-of-difference.

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PODs vs. POPs Example:

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-Miller lite

-Point of difference - first lite beer, much less calories thus being less filling.

-Point of Parity - Ensured parity with competitors in heavy beer category stating that it still “tastes great.”

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Frames of Reference

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Frames of Reference - Defines which other brands a brand competes with and therefore which brands should be the focus of competitive analysis. Identifying the market from the firm’s standpoint - it makes more sense for walmart to compete with firms in their frame of reference. Firm’s have to identify their competition.

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There are two main options with multiple frames of reference:

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1) One is to first develop the best possible positioning for each type or class of competitors and then see whether there is a way to create one combined positioning robust enough to effectively address them all.

2) If competition is too diverse, however, it may be necessary to prioritize competitors and then choose the most important set of competitors to serve as the competitive frame.

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2 Other keys to keep in mind about Frames of Reference:

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-One crucial consideration is not to try to be all things to all people—that leads to lowest-common-denominator positioning which is typically ineffective.

-Finally, if there are many competitors in different categories or sub-categories, it may be useful to either develop the positioning at the categorical level for all relevant categories.

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Difference between psychographic and behavioral considerations

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Behavioral considerations is when a firm markets their product based on customers reactions to promotions, sales, etc...

Psychographic is when a firm develops marketing strategies based on a customer's actual personality and moral values.

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Chain Ratio

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Calculates market potential of a product.

(P - population) x (R - Proportion that consumes product) x (I - proportion of R that consumes specialized product) x (N - number of times product is consumed per week) x (A - average price of product)

-P-R-I-N-A

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Market Equity Index

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(Effective market share) x (effective price) x (loyalty)

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Resource Advantage Principle

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Resource Advantage Principle - (The idea of firms serving customers that they are capable of serving and ones that would respond most positively to marketing activities of the firm, and how competition evolves around this.

-Every company has its own resources and so do competitors. The company resources and customer's needs must overlap to find the companies optimal target customers. All over leftover resources is competitive wasteland.

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4 Brand Management Strategies

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1) Identify and establish position

2) Plan and implement marketing

3) Measuring and interpret performance

4) Grow and sustain value

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Market Targeting

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Once a firm has identified its market-segment opportunities, must decide which ones to target.

-to figure this out use SADAMP.