Marketing

Front 1

What is the marketing concept? Why is a balanced view of the marketing concept important (and what are
the ditches one might fall into if unbalanced)?

Back 1

In order for an organization to reach its long-run goals (e.g. profit and/or survival), it must determine and meet the needs/wants of its targeted customers better than the competition.

A balanced view of the marketing concept is important because customers know what they “want”, but they aren’t the best guide when fulfillment of customer need requires specialized knowledge (professional & technical). Solutions that best create customer value may not be found when limited only to ideas voiced by customers. You have to listen for needs and then use your expertise to create solutions.

Front 2

Why is it useful to define “new products” from the viewpoint of the customer? What is the appropriate way
to listen to the customer (i.e., what should we ask them when we are conducting research that is designed
to provide guidance for new product development?)

Back 2

Customers have needs and companies must provide solutions to them.
Ask customers what outcome they are trying to achieve? (e.g., bosch power saw: “why do you want the blade to direct the sawdust away from the cut line?”

Front 3

List and explain some reasons why such a high proportion of new products fail.

Back 3

No point of favorable differentiation (lack of market insight, competitive reaction)
Too little marketing support
Technical issues (infeasibility, incompatibility, overly complex)
Product champions persist in pushing doomed products to market (sunk costs fallacy, personal stakes)

Front 4

What are some of the advantages of being “first mover” in a new product category? What are some
advantages of being a second mover?

Back 4

1st Mover – Consumer awareness, head start in market share, lock-up good channel partners
2nd Mover – Learn from mistakes of pioneer, don’t incur huge costs of educating customers and channel, piggyback on technology

Front 5

5. What is disruptive innovation?

Back 5

When constant improvement leads to product overshooting the needs of the main market, the door is opened for a cheaper, less‐complex, “good‐enough”competitor (e.g. discount brokers emerged as full service firms moved upscale and PC vs minicomputers in the 1980s)

Front 6

1. Describe the four categories of consumer products (convenience, shopping, speciality, and unsought) and
discuss the insights we get about customers from each.

Back 6

Convenience – Low-priced staple goods, impulse items, and emergency (magazines, candy bars, gas milk, etc)
Shopping – PC/Laptop, DVD player, hair stylist, interview suit, mountain bike
Specialty – Specific product with unique characteristics that cause the buyer to make special effort to obtain it
Unsought Products – Products for which the consumer does not yet perceive a need or that the consumer prefers to avoid

Front 7

2. What is the general idea of the product life cyle (PLC) and what are its four stages? What insights about
competition do we get at each stage? Keys for success at each stage? What are some key factors that affect
the shape of the curve for a particular product category?

Back 7

Successful categories of products pass through four basic stages: Introduction/Growth/Maturity/Decline. Product
failures bow out earl. Applies to a product class (e.g. candy bars), not to a brand (e.g., Mounds)

• Introduction – Sales start slowly and begin to grow as people become aware. Profits are negative due to R&D and startup costs. Competition is low, but potentially increasing.

• Growth – Sales climb dramatically due to mainstream acceptance. Profits increase and become positive. Competition is low to moderate, but increases as profits attract new entrants.

• Maturity – Sales growth slows and sales level off due to saturation. Profits grow, but then level off and eventually begin cline. Competition is intense, driving prices down.

• Decline – Sales taper off, usually in a gradual manner due to advances in technology, changes in taste, substitutes, etc. Profits taper off. Competition is intense among firms that remain in the industry.

Front 8

Define product line, product mix, line extension, brand (category) extension.

Back 8

Product line –Series of related products offered by an organization
Product mix – An organization’s assorted of product lines and individual product offersin
Line extension – Introduction of new same-branded producted that is closely related to other products in an organization’s existing line (e.g. Pepsi -> Caffeine-free Pepsi)
Brand (category) extension – New same-branded products that allow for entry into a product category that you do not currently serve

Front 9

4. What insights does the marketing manager get from considering the core product, the tangible product, and
the augmented product?

Back 9

Core product – Benefits
Tangible Product – Brand name, Package, Design/Physical Characteristics
Augmented Product – Delivery, installation, credit, warranties, other services

Front 10

5. What is a “service encounter” and why is it so important? What are the key dimensions that impact
customers’ perceptions of service quality?

Back 10

When the customer and service provider come face-to-face it is the “moment of truth”. Perceptions of service quality are based on this service encounter.

The key dimensions are reliability, assurance, tangibles, empathy, and responsiveness.

Front 11

6. What are the four characteristics of services that differ from products and, thus, raise marketing implications
(intangibility, inseparability, perish ability, variability)?

Back 11

Intangibility – services cannot be seen, tasted, felt, heard, or smelled before they are purchased
Inseparability – Services can’t be separated from the service provider
Perish ability – Services can’t be stored in inventory for later sales or use (AA flight with 50 empty seats)
Variability – Service quality varies: from provider-to-provider and from time-to-time

Front 12

2. For each element of the promotion mix, identify (and justify) what you believe to be (a) the single most
important advantage and (b) the single most important disadvantage.

Back 12

Advertising – pro: low cost, con: one way communication
Sales – pro: attract attention, con: short term results
Public Relations – pro: free advertising, con: hard to measure
Direct Marketing – pro: wide audience, con: spam
Personal selling – pro: interactive, con: expensive

Front 13

3. What is “integrated marketing communication”?

Back 13

Coordination of all promotional activities to produce a unified, consistent message to customers.

Front 14

4. Why does the average sales promotion produce a sales lag at some point shortly after the promotion ends?
What has to happen for the promotion to be a long term success?

Back 14

Lag after promotion ends due to overstocking of the item at the lower cost. Promotion must obtain new and loyal users.

Front 15

5. What is the elaboration likelihood model (ELM) and why should a marketing manager care?
6. Know what is meant by the terms “push” and “pull” strategies.

Back 15

Push strategies involve aiming promotional efforts at distributors, retailers, and sales personnel to gain their cooperating in ordering, stocking, and accelerating the sales of a product.

Pull strategies involve aiming promotional efforts directly at customers to encourage them to ask the retailer for the product.

Front 16

7. What is “brand equity”? Describe the effects that consumer‐based brand equity has on a brand extension.
Can a brand extension have any impact (reciprocal spillover) on the parent brand’s equity?

Back 16

Brand equity is the added value that a brand name bestows upon a product or service, beyond the functional benefits provided. Communication advantage (customers know what brand stands for) and price premium.

Positive spillover & negative spillover. Negative can substitute (cannibalizes sales of PB, now you are supporting multiple products). Low quality BE reflects poorly on PB, damaging attitudes.

Front 17

3. What are the key distribution functions that must be fulfilled? What key question can be asked about each?

Back 17

Transportation – physically moving the product from producer to consumer
Inventory Management – breaking bulk, storing, sharing the risk (damaged, stolen, etc)
Customer Contact – Promotion/communication, order specs, pricing, consumer service, research/mkt info

Who can manage this more efficiently – intermediary or producer or consumer?

Front 18

4. What is the key difference between wholesalers and agents/brokers?

Back 18

Wholesalers: Independently owned businesses that take title (i.e., become the owners) of the merchandise that they handle (a.k.a. merchant wholesalers)
Agents/Brokers: Businesses that bring together buyers and sellers of merchandise in exchange for a commission. They do not take title.

Front 19

5. Define and discuss the implications of dual distribution, multichannel distribution (when/why is it important
and what are the risks?), and disintermediation.

Back 19

Multi-channel distribution – reaching customers through multiple types of intermediaries (e.g. electronic, discounters, specialty stores, etc) Provide incremental revenue. Risk of cannibalizing sales through electronic front. Diversification benefits.

Disintermediation – taking over a channel function that was previously handled by an intermediary (can be full or partial)

Dual distribution – Sell directly but also sell through intermediary (e.g. GE sells appliances to apartments but also at Lowes)

Front 20

6. Know the traditional labels that are applied to describe the intensity of distribution – intensive, selective,
and exclusive. Under what conditions would each be most appropriate?

Back 20

Intensive (mass marketing): convenience, exposure (e.g. Coke)
Selective (limited number of outlets): good coverage, more control (e.g. Florscheim shoes)
Exclusive: enhanced image, high price (e.g. Steinway pianos, Mercedes)

Front 21

1. Discuss why pricing is important to both customers and to marketers’ organizations.

Back 21

Pricing is a key element in total revenue and profits and customers have limited resources.

Front 22

3. What is a reference price and why is it important?

Back 22

Reference price is the price a customer expects to pay for an item. A reference point (memory or car sticker)

Front 23

4. Define and discuss skimming, competitive, and penetration pricing strategies.

Back 23

Skimming – setting a high price (maximize revenue per unit), reducing price as competition forces charge
Competitive – set price equal to competitors to switch basis of choice for customers away from price toward other attributes
Penetration – setting a low price (maximize market share), raising over time as customers become loyal and less price sensitive

Front 24

5. Be able to analyze the change in unit volume required to “break even” on a potential price change (decrease
or increase). Be able to explain (in words) your calculation and results.

Back 24

Percentage change in unit volume to break even on a price change = - (percentage price change) / (original contribution margin) + (percentage price change)

For example, if a product has a 20 percent contribution margin, a 5 percent price decrease will require a 33 percent increase in unit volume to break even:

+33 = - (-5) / (20) + (-5)

Front 25

6. How can relative economic value creation approach be used in making decisions about price?

Back 25

Focus on total benefit/cost of ownership instead of purchase price only. Use Total Lifetime Cost of purchase relative to alternatives (e.g. HE washer and dryer?)

Front 26

1. What are the four key questions that can be asked to help a firm identify opportunities for using hidden
assets to create new business opportunities?

Back 26

What are your customers’ most urgent problems and priorities?
What issues do they wrestle with every day?
What headaches “keep them awake at night”?
How do they spend their time, energy, and resources?

Front 27

2. What are hidden assets and hidden liabilities? Where do they come from? Can a new start‐up exploit
hidden assets?

Back 27

Hidden asset – Skills, abilities, or resources that you accumulate in the normal operation of business. A start up would not have hidden assets.

Front 28

3. What is a solution, why might a B2B supplier be interested in offering solutions, and what are the four
dimensions across which solutions can be offered?

Back 28

An integration of product and service that solves a complete customer problem.

• Defining a customer’s requirements;
• Developing a customized response that fulfills the customer’s requirements and integrates all of
• the necessary inputs;
• Deploying that customized, multi-faceted solution;
• Supporting the solution in the field to insure that promises to customer are fulfilled.

Front 29

4. What is a solutions platform and why is it a key to the broad scale implementation of a solutions‐based value
proposition?

Back 29

A set of components (products and services) designed to work together in any combination.

The business challenge with solutions is to be tailored to provide a unique solution to the customer while creating some commonality, volume and repeatability in the business.