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267 Cards in this Set
- Front
- Back
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Define: Buying Center |
All those individuals and groups who participate in the purchasing and decision-making process and who share common goals and the risks arising from the decisions Ch 7: Organizational Buyer Behavior of Group Market |
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Define: Convention |
A specialty market requiring extensive meeting facilities. It is usually the annual meeting of an association and includes general sessions, committee meetings, and special-interest sessions Ch 7: Organizational Buyer Behavior of Group Market |
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Define: Corporate Meeting |
A meeting held by a corporation for its employees Ch 7: Organizational Buyer Behavior of Group Market |
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Define: Derived Demand |
Organizational demand that ultimately comes from (derives from) the demand for consumer goods (ch 7) Ch 7: Organizational Buyer Behavior of Group Market |
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General need description |
The stage in the industrial buying process in which a company describes the general characteristics (ch 7) Ch 7: Organizational Buyer Behavior of Group Market |
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Incentive travel |
A reward that participants receive for achieving or exceeding a goal Ch 7: Organizational Buyer Behavior of Group Market |
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Order-routine specification |
The stage of the industrial buying process in which a buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies, warranties, and so on. Ch 7: Organizational Buyer Behavior of Group Market |
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Organizational buying process |
The decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers Ch 7: Organizational Buyer Behavior of Group Market |
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Performance review |
The stage of an industrial buying process in which a buyer rates its satisfaction with suppliers, deciding whether to continue, modify, or drop the relationship Ch 7: Organizational Buyer Behavior of Group Market |
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Problem recognition |
The stage of the industrial buying process in which someone in a company recognizes a problem or need that can be met by acquiring a good or a service Ch 7: Organizational Buyer Behavior of Group Market |
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Product specification |
The stage of an industrial buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item Ch 7: Organizational Buyer Behavior of Group Market |
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SMERF |
SMERF stands for social, military, educational, religious, and fraternal organizations. This group of specialty markets has a common price-sensitive thread Ch 7: Organizational Buyer Behavior of Group Market |
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Supplier Search |
The stage of the industrial buying process in which a buyer tries to find the best vendor Ch 7: Organizational Buyer Behavior of Group Market |
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Supplier selection |
The stage of the industrial buying process in which a buyer receives proposals and selects a supplier or suppliers Ch 7: Organizational Buyer Behavior of Group Market |
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Who are the (6) participants in the organizational buying process? |
The "buying center", which includes:
1. Users 2. Influences 3. Deiciders 4. Approvers 5. Buyers 6. Gatekeepers Ch 7: Organizational Buyer Behavior of Group Market |
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What are some examples of environmental factors in the organizational buying process? |
* Level of primary demand * Cost of money * Supply conditions * Rate of technological change * Political and regulatory developments * Competitive developments Ch 7: Organizational Buyer Behavior of Group Market |
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What are some examples of organizational factors in the organizational buying process? |
* Objectives * Procedures * Organizational Structure * Systems Ch 7: Organizational Buyer Behavior of Group Market |
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What are some examples of interpersonal factors in the organizational buying process? |
* Authority * Empathy * Persuasiveness Ch 7: Organizational Buyer Behavior of Group Market |
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What are some examples of individual factors in the organizational buying process? |
* Age Ch 7: Organizational Buyer Behavior of Group Market |
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What are the (8) stages in the organizational buying process? (called buyphases) |
1. Problem recognition 2. General need description 3. Product specification 4. Supplier search 5. Proposal solicitations 6. Supplier selections 7. Order-Routine Specification 8. Performance Review Ch 7: Organizational Buyer Behavior of Group Market |
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What are the (4) main categories of organizational buyers? |
1. Conventions 2. Association meetings 3. Corporate meetings 4. SMERFS Ch 7: Organizational Buyer Behavior of Group Market |
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What are (4) other ways to segment organizational buyers, other than by organization |
By purpose:
1. Convention 2. conference 3. Meeting 4. Seminar Ch 7: Organizational Buyer Behavior of Group Market |
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How does the organizational buying process compare to a normal buying process? |
- Purchases involve large sums of money - Complex technical and economic considerations - Interactions among many people at all levels of the organization - Buyer and Seller are very dependent on each other
Ch 7: Organizational Buyer Behavior of Group Market |
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What does SWOT Stand for? |
Strengths Weaknesses Opportunities Threats 2/25 SWOT Analysis |
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Which 2 SWOT analysis items are strictly internal |
Strengths and Weaknesses 2/25 SWOT Analysis |
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Which 2 SWOT analysis items are strictly external? |
Opportunities and Threats 2/25 SWOT Analysis |
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How do you get the "invest" square in a SWOT analysis? |
Strengths + Opportunities 2/25 SWOT Analysis |
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How do you get the "protect" square in a SWOT analysis? |
Strengths + Threats ; how to hold your position 2/25 SWOT Analysis |
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How do you get the "adapt" square in a SWOT analysis? |
Weaknesses + Opportunities 2/25 SWOT Analysis |
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How do you get the "withdraw" square in a SWOT analysis? |
Weaknesses + Threats 2/25 SWOT Analysis |
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What are the 4 "extra" squares in a SWOT analysis? |
1. Invest 2. Protect 3. Adapt 4. Withdraw 2/25 SWOT Analysis |
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True or False: there is a difference between how individuals buy and how businesses buy? |
True: Chapter 7 - Lecture Notes |
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Example: Boeing - What is the "buying center" for Boeing? |
· Users: pilots/flight attendants
· Influencers: consumers (passengers), maintenance
· Deciders: purchasing manager, link between firm and supplier, match requested specs with delivered specs
· Approvers: CFO –minimize cost, maximize value
· Buyers: procurement committee, checks and balances
· Gatekeeper: administrative assistance (provides access to these people) Ch 7: Organizational Buyer Behavior of Group Market - Lecture
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What takes longer: Business to business buying or business to consumer buying? |
Business to business buying
Ch 7: Organizational Buyer Behavior of Group Market - Lecture |
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Case Study: Marriott Ch 7: Organizational Buyer Behavior of Group Market |
Context: Organizational Buying - Ch 7
· First Choice Plan: make Marriott the first choice for large companies
· What are suppliers saying to buyers?
· What questions are buyers asking?
· What are companies looking for?
o Flexibility and quality for the DOW traveler
o Best total value! Not the lowest price
· Group buying is very different from individual buying
· Supplier: Marriott
· Buyer: DOW companies
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What are the (4) major influences on organizational buying behavior? |
1. Environmental 2. Organizational 3. Interpersonal 4. Individual
(Ch 7 Lecture Notes/Book) |
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Case Study: Four Seasons Ch 7: Organizational Buyer Behavior of Group Market |
(Context - Ch 7 Organizational Buying)
· Attempt at targeting not end user but intermediary (channel)
· “Thank you for placing your trust in us” i.e. trusting that your clients will have a good guest experience
· “Your clients, our guests”
· They have only one tier, but do it very well – maximize their share of the top tier
· Compared to Marriott trying to have many tiers
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In regards to "problem recognition" in organizational buying behavior, what business are we in? |
i. What business are you in? The only business you can be in is providing solutions to problems
ii. You must recognize the problem
iii. Hotels should ask what the purpose of customers’ visits are Chapter 7 - Lecture Notes
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In regards to "supplier solicitation" in organizational buying behavior, true or false, all people care about is the lowest cost? |
False: 1. Supplier solicitation
i. Best value, not lowest cost!!! Chapter 7 - Lecture Notes
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Case Study: Honeywell Ch 7: Organizational Buyer Behavior of Group Market |
(Context - Ch 7 Organizational Buying Behavior)
· How is Honeywell marketing the service to private plane owners?
· They’ve taken the underutilized Google glass and proposing a solution to better manage the efficiency/service
· Proposing it to the broader market: pilots, flight attendants, maintenance
· Optimizing in-flight experience
· Creating solutions in a business to business space—helping businesses to increase efficiency
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Define: Behavioral Segementation |
Dividing a market into groups based on consumers' knowledge, attitude, use, or response to a product
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Competitive Advantage |
An advantage over competitors gained by offering consumers greater value either through lower prices or by providing more benefits that justify higher prices
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Competitors' Strategies |
When competitors use segmentation, undifferentiated marketing can be suicidal. Conversely, when competitors use undifferentiated marketing, a firm can gain an advantage by using differentiated or concentrated marketing
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Confused Positioning |
Leaving buyers with a confused image of a company
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Degree of product homogeneity |
Undifferentiated marketing is more suited for homogeneous products. Products that can vary in design, such as restaurants and hotels, are more suited to differentiation or concentration
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Demographic Segmentation |
Dividing the market into groups based on demographic variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race and nationality
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Gender segmentation |
Dividing a market on the basis of gender
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Geographic Segmentation |
Dividing a market into different geographic units such as nations, states, regions, counties, cities, or neighborhoods
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Income Segmentation |
Dividing a market into different income groups
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Market homogeneity |
If buyers have the same tastes, buy a product in the same amounts, and react the same way to marketing efforts, undifferentiated marketing is appropriate
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Market positioning |
Formulating competitive positioning for a product and a detailed marketing mix
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Market segmentation |
Dividing a market into direct groups of buyers who might require separate products or marketing mixes
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Market targeting |
Evaluating each market segment's attractiveness and selecting one or more segments to enter.
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Overpositioning |
Giving buyers a too-narrow picture of the company
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Psychographic segmentation |
Dividing a market into different groups based on social class, lifestyle, or personality characteristics
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Specific product attributes |
Price and product features can be used to position a product
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Define: Underpositioning |
Failing ever to position the company at all
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are the (3) steps in target marketing |
1. Market segmentation 2. Market targeting 3. Market positioning
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are (3) different ways to divide a market based on demographics? |
1. Income 2. Gender 3. Life-Cycle Stage / Age
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are the (3) different ways to divide a market based on psychographic characteristics? |
1. Social Class 2. Lifestyle 3. Personality (both of consumer and of company)
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are the (5) different ways to divide a market based on behavioral characteristics? |
1. Occasion segmentation 2. Benefits sought 3. User status 4. Usage rate 5. Loyalty Status
Chapter 8: Market Segmentation, Targeting, and Positioning |
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True/False: Marketers usually use more than one method of market segmentation |
True: * Usually marketers use multiple segmentation bases in an effort to identify smaller, better-defined target goups* PRIZM is a leading segmentation system Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are the (4) requirements for effective market segmentation? |
1. Measurability - Degree to which the segments size and purchasing power can be measure
2. Accessibility - Degree to which segments can be assessed and served 3. Substantiality - Degree to which segments are large or profitable enough to serve as markets 4. Actionability - Degree to which effective programs can be designed for attracting and serving segments
Chapter 8: Market Segmentation, Targeting, and Positioning |
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In evaluating market segments, what are (3) factors to look at in deciding which to target? |
* Segment size and growth
* Segment structured attractiveness * Company objectives and resources 1. Segment Size and Growth - A company must look at the expected profitability for various segments and choose one with the "right size and growth" for the company 2. Segment Structural Attractiveness - Are there many competitors? 3. Company Objectives and Resources - Does the segment fit into the company's long term objectives? Chapter 8: Market Segmentation, Targeting, and Positioning |
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What is undifferentiated marketing? |
Going after an entire market with one blanket offer ; ignoring segmentation
Mass distribution and mass advertising
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What is differentiated marketing? |
A company targets several markets and designs separate offers for each
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What is concentrated marketing? |
Instead of going after a small share of the largest market, a company goes after a large share of a smaller market
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are the (3) steps in market targeting (not to be confused with the larger "target marketing") |
1. Evaluate the market segments 2. Select market segments 3. Choose a market-coverage strategy
Chapter 8: Market Segmentation, Targeting, and Positioning |
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In the final analysis, who determines a brand's position? |
The customers
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are the (3) steps in choosing a positioning strategy? |
1. Identifying competitive advantages on which to build a position 2. Selecting the right competitive advantage 3. Effectively communicating the chosen position to the selected target market Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are the (5) ways a company can differentiate its product from competition? |
1. Physical Attribute Differentiation Differentiation that excites the customer and offers something new can lead to excellent public relations opportunities, customer loyalty, and greater profits
- By providing services that benefit its target market, a company can achieve differentiation until the service is copied by competition -Companies can gain a strong competitive advantage through hiring and retaining better people than their competitors 4. Location Differentiation - Location can provide a strong competitive advantage 5. Image Differentiation - Even when competing offers look the same, buyers may perceive a difference based on company or brand image Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are the (3) major positioning errors? |
1. Overpositioning 2. Underpositioning 3. Confused positioning
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are the (7) criteria for good differentiators? |
* Not ever difference makes a good differentiator 1. Important - How much value does it create for customers Chapter 8: Market Segmentation, Targeting, and Positioning |
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What is a market? |
A market is the set of all actual and potential buyers of a product
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are the (3) market-coverage alternatives? |
1. Undifferentiated marketing strategy 2. Differentiated marketing strategy 3. Concentrated marketing strategy
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are (4) factors companies need to consider when choosing a market-coverage strategy? |
1. Company resources 2. Degree of product homogeneity 3. Market homogeneity 4. Competitors' strategies
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What is a product's position? |
A product's positioning is the way the product is defined by consumers on important attributes - the place the product occupies in consumers' minds relative to competing products
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What are (4) positioning strategies? |
1. Specific product attributes 2. Needs products fill or benefits products offer 3. Certain classes of users 4. Against an existing competitor
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Who are the most important stakeholders? |
Customers / Stakeholders
Chapter 8: Market Segmentation, Targeting, and Positioning - Lecture Notes |
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In the lecture notes, what is the "STP Model of Marketing"?
(Hint: Similar to 3 steps of target marketing) |
STP Model of Marketing · Segmentation o Identify bases for segmenting the market o Develop profiles of resulting segments · Market Targeting o Develop measures of segment attractiveness o Select the target segments · Market Positioning o Develop positioning for each target segment
o Develop marketing mix for each target segment (4Ps) Chapter 8: Market Segmentation, Targeting, and Positioning |
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What is the difference between "marketing mix" and "market mix"? |
Remember: marketing mix is the 4Ps (product, price, place, promotion), but market mix is the different segments
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Case Study: Mean Girls [Chapter 8: Market Segmentation, Targeting, and Positioning] |
(Context: Ch 8 - Segmentation, Targeting, and Positioning)
· Market segmentation in action
· Where you sit in cafeteria depends on segment
· Must identify the subgroups of interest – which table will you sit at?
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Describe the Model of Market Segmentation |
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According to the Model of Market Segmentation, what are the (4) main ways of segmenting the market? |
Essentially, customers/consumers are in the middle with (4) major ways of segmenting the market around them:
1. Demographics/Geography - Who are the customers? Where do they live?
· These help to predict buyer behavior, but by themselves they’re weak indicators of buyer behavior
2. Lifestyles/Attitudes - What's on their minds? - · Psychographics, hobbies?
3. Media Preferences - Where can I reach them efficiently? - · Twitter, TV, Facebook, Instagram?
· This information crucial for developing communications strategy
4. Purchase Behavior - What do they buy and how? · When, what, where Chapter 8: Market Segmentation, Targeting, and Positioning
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According to the Model of Market Segmentation, when you combine demographics/geography + Lifestyles/Attitudes, what does this tell us? |
Consumer attributes
Chapter 8: Market Segmentation, Targeting, and Positioning |
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According to the Model of Market Segmentation, when you combine Lifestyles/Attitudes + Media Preferences, what does this tell us? |
Information for developing communication strategy
Chapter 8: Market Segmentation, Targeting, and Positioning |
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According to the Model of Market Segmentation, when you combine media preferences + Purchase behavior, what does this tell us? |
Consumer behavior
Chapter 8: Market Segmentation, Targeting, and Positioning |
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According to the Model of Market Segmentation, when you combine demographics/geography + Purchase behavior, what does this tell us? |
Information for estimating Market potential
Chapter 8: Market Segmentation, Targeting, and Positioning |
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What is hypersegmentation? |
Tens of thousands of segments
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Case Study: American Express Chapter 8: Market Segmentation, Targeting, and Positioning |
(Context: Ch 8 - Market segmentation, targeting and positioning)
· Divided up types of travelers
· Segmented market in new/interesting way
· Determine your own “travel sign”
· Suggested 4Ps for each segment
· New business/marketing opportunities
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How do you judge segmentation value? |
· Not all segmentation methods are equally effective, so to be useful, market segments must have the following characteristics:
o Measurability - the degree to which the segment’s size and purchasing power can be measured.
o Accessibility - the degree to which segments can be accessed and served. (by geography/media)
o Substantiality - the degree to which segments are large or profitable enough to serve as markets.
§ The potential profit margin—related to measurability
o Actionability - the degree to which effective programs can be designed for attracting and serving segments.
Chapter 8: Market Segmentation, Targeting, and Positioning |
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True/False: All segments are equally useful? |
False
· Not all segmentation methods are equally effective, so to be useful, market segments must have the following characteristics:
o Measurability - the degree to which the segment’s size and purchasing power can be measured.
o Accessibility - the degree to which segments can be accessed and served. (by geography/media)
o Substantiality - the degree to which segments are large or profitable enough to serve as markets.
§ The potential profit margin—related to measurability
o Actionability - the degree to which effective programs can be designed for attracting and serving segments. Chapter 8: Market Segmentation, Targeting, and Positioning
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Case Study: Ritz-Carlton Chapter 8: Market Segmentation, Targeting, and Positioning |
Context: Ch 8 - Segmentation, targeting and positioning
Demographic Targeting
o Target uber luxury travelers
o How do you use demographic segmentation to appeal to highest tier travelers?
o Explicitly going after the motivations of top tier customers
o “Let us stay with you”—forming one of a kind memories
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Case Study: Loews Hotels Chapter 8: Market Segmentation, Targeting, and Positioning |
Context: Ch 8 - Segmentation, Targeting, and Positioning
Psychographic (Lifestyle) Targeting
o Pet ownership: higher class people that travel with dogs
o To target pet owners, Loews focuses on being the most pet-friendly hotel
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Case Study: Dog Bakery Chapter 8: Market Segmentation, Targeting, and Positioning |
Context: Ch 8 -Segmentation, targeting, positioning
Psychographic (Lifestyle) Targeting
o Targeting dog owners
o Make gourmet dog treats
o It is an untraditional, but large market
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Case Study: Hilton Chapter 8: Market Segmentation, Targeting, and Positioning |
Context: Ch 8 - Segmentation, targeting, positioning
Geographic Targeting
o Travelers: Chinese outbound travelers
o Hilton Huanying: consistent amenities and services for Chinese travelers
o Traditional Chinese food, tea, TV channels
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Case Study: Pepsi Chapter 8: Market Segmentation, Targeting, and Positioning |
Context: Ch 8 - Segmentation, targeting, positioning
Competitive Targeting
o Pepsi vs. coke (targeting coke)
o Boy at vending machine
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Case Study: Netflix Chapter 8: Market Segmentation, Targeting, and Positioning |
Context: Ch 8 -Segmentation, targeting, positioning
Hyper Targeting
Big Data: Becoming more of a science
o Microgenres—scary cult movies of 1980s
o 76,000 different categories of microgenres
o Algorithm combining adjective descriptors (actor, stoner, etc.)
o Break down our taste into constituent parts and give suggestions
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What is "positioning"? |
· Placing a brand in that part of the market where it will have a favorable reception compared to competing products
Chapter 8: Market Segmentation, Targeting, and Positioning |
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Explain a positioning map |
The positioning map crystallizes the two most important dimensions of the market, plots competitors, and finds open categories
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Case Study: 16 Handles Chapter 8: Market Segmentation, Targeting, and Positioning |
Context: Ch 8 - Market segmentation, targeting and positioning
Positioning map spin-off
· Self service yogurt
· Used social media, reacted quickly so that the brand is a part of their life
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What do the lecture notes equate brand with? |
Brand: Your story. What do you want to come to mind when your name is heard?
Branding: how do you get the story into the customer’s head? 3/9 Guest Speaker: Landor
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Case Study: Gap 3/9 Guest Speaker: Landor |
Context: Strategy (brand?)
Gap: brand or branding problem?
· A little of both
· Brand: not a clear sense of what gap is and what gap is not
· Branding: not focused/clear, poor execution
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What is key for a powerful brand story? |
Precision
· There is less and less uniqueness in the marketplace today
· What the point of your story?
o Simple and sticky points are stronger Brand: weaker to stronger · What/how · Who you are · Why you do it · Who and why are stronger in theory because it isdifficult to hold a unique offer 3/9 Guest Speaker: Landor
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Case Study: FedEx 3/9 Guest Speaker: Landor |
Context: Strategy (Brand?)
Precision is key for a powerful brand story
· There is less and less uniqueness in the marketplace today
· What the point of your story?
o Simple and sticky points are stronger
o Fed Ex: absolute certainty
§ They stand for an offer of absolute certainty
§ Package will be delivered no matter what
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Case Study: Old Spice 3/9 Guest Speaker: Landor |
Context: Strategy/Brand?
Case Study: Old Spice
· Main point is grounded in the art of manliness
· Old Spice manbook: clear definition about what manliness is
· Ad: “smellcome to manhood”
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Case Study: Apple 3/9 Guest Speaker: Landor |
Context: Strategy/Brand?
Who you are
· Personify your brand
· Most successful brands personify brand in such a clear way that they can hire an actor to personify the brand
· Case Study: Apple
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Case Study: Go Pro 3/9 Guest Speaker: Landor |
Context: Strategy/Brand?
Why you do it
· Start inside
· The company was founding on a story/ a purpose
· Case Study: Go Pro
o Helps people share their most meaningful experiences
o The founder of the company was a skier/surfer
o Because of this the company really understands their users
o The authenticity and purpose of Go Pro will likely keep the customers even in the face of competition
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Case Study: RadioShack 3/9 Guest Speaker: Landor |
Context: Strategy/Brand?
Finally, prototype to “pressure rest” strategy
· Model it to bring it to life
· Create prototypical executions to see if story clear
· Help transition from strategy to execution
· Make sure you have executional ability to deliver
· Case Study: Radioshack
o “You want answers, we have them”
o A sort of “genius bar”
o But the problem was that the employees didn’t have training, so it ended up being just a campaign line
o No executional ability to deliver
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In branding, what is more important: agility or permanence? |
· Agility is more important than permanence
· Executing in a rapidly changing environment
· Breakthrough is more important than consistency
· Case Study: KFC
o KFC rebranded in Australia—different colors (green and yellow)
o Changed the was Aussies saw KFC
o Successful campaign 3/9 Guest Speaker: Landor
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Case Study: KFC 3/9 Guest Speaker: Landor |
Context: Strategy/Branding?
Signaling—branding
· Agility is more important than permanence
· Executing in a rapidly changing environment
· Breakthrough is more important than consistency
· Case Study: KFC
o KFC rebranded in Australia—different colors (green and yellow)
o Changed the was Aussies saw KFC
o Successful campaign
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What are the (6) steps in creating agile brand experiences? |
1. Plan: map customer experience 2. Inside out: employees are the most important touchpoints i. GE: celebrate being a geek 3. Reinvent old touchpoints i. Lego: what you can do with it – what’s in your imagination, hold Lego box up to display in stores and see what you can do with it 4. Create new touchpoints i. Ikea: how will that furniture look in your house? Put chip in catalog that allows you to see through iPhone what furniture will look like in your house ii. IBM: designed and created the experience at Lincoln Center iii. BMW: sell from the experience – test drives 5. Unlock word of mouth: give the customer something to talk about i. Create an extraordinary experience to give the customers something positive to talk about ii. Johnnie Walker House: very exclusive, must be invited to dine there, exceptional service 6. Keep it fresh i. Marks and Spencer: Give them an easy way to address closet space problem – take old clothes and swap for new clothes
ii. Coke: ID booth “show happiness” and get free coke, happy ID card in South America 3/9 Guest Speaker: Landor |
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Case Study: GE 3/9 Guest Speaker: Landor |
Context: Brand/Strategy?
"Creating agile brand experiences"
1. Inside out: employees are the most important touchpoints
i. GE: celebrate being a geek
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Case Study: Lego 3/9 Guest Speaker: Landor |
Context: Brand/Strategy?
"Creating agile brand experiences"
1. Reinvent old touchpoints
i. Lego: what you can do with it – what’s in your imagination, hold Lego box up to display in stores and see what you can do with it
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Case Study: Ikea / IBM / BMW 3/9 Guest Speaker: Landor |
Context: Brand/Strategy
"Creating agile brand experiences"
1. Create new touchpoints
i. Ikea: how will that furniture look in your house? Put chip in catalog that allows you to see through iPhone what furniture will look like in your house
ii. IBM: designed and created the experience at Lincoln Center
iii. BMW: sell from the experience – test drives
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Case Study: Johnny Walker House 3/9 Guest Speaker: Landor |
Context: Brand/Strategy
"Creating agile brand experiences"
1. Unlock word of mouth: give the customer something to talk about
i. Create an extraordinary experience to give the customers something positive to talk about
ii. Johnnie Walker House: very exclusive, must be invited to dine there, exceptional service
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Case Study: Marks and Spencer / Coke 3/9 Guest Speaker: Landor |
Context: Brand/Strategy
"Creating agile brand experiences"
1. Keep it fresh
i. Marks and Spencer: Give them an easy way to address closet space problem – take old clothes and swap for new clothes
ii. Coke: ID booth “show happiness” and get free coke, happy ID card in South America
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What is a brand audit? |
· Brand audit: determine if story on point or off point 3/9 Guest Speaker: Landor
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When I say product you say... |
Solution!
Ch 9: Designing and Managing Products |
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Define: Augmented products |
Additional consumer services and benefits built around the core and actual products * Augmented product - Additional consumer services and benefits built around the core and actual products * The 3 above products explain what the customer is getting, but not how they're getting it. The augmented product combines what is offered with how it is delivered * It is an important concept in hospitality specifically because these services require customer coproduction of the service Ch 9: Designing and Managing Products |
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Define: Aural |
The dimension of atmosphere relating to volume and pitch
Ch 9: Designing and Managing Products |
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Define: Brand |
The name, term, sign, symbol, design, or a combination of these elements that is intended to identify the goods or services of a seller and differentiate them from competitors
Ch 9: Designing and Managing Products |
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Define: Brand equity |
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 for the firm
Ch 9: Designing and Managing Products |
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Define: Branding |
The process of endowing products and services with the power of a brand. It's all about creating differences between products
Ch 9: Designing and Managing Products |
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Define: Brand Promise |
The marketer's vision of what the brand must be and do for the consumers
Ch 9: Designing and Managing Products |
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Define: Consumption Phase |
Takes place when the customer consumes the service
Ch 9: Designing and Managing Products |
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Define: Core product |
Answers the question of what the buyer is really buying. Every product is a package of problem-solving services
Ch 9: Designing and Managing Products |
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Define: Crowdsourcing |
Is an open-innovation new-product idea program
Ch 9: Designing and Managing Products |
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Define: Decline |
The period when sales fall off quickly and profits drop
Ch 9: Designing and Managing Products |
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Define: Detachment phase |
When the customer is through using the product and departs
Ch 9: Designing and Managing Products |
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Define: Drop |
The action taken toward a product that may cause harm or customer dissatisfaction
Ch 9: Designing and Managing Products |
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Define: Facilitating products |
Those services or goods that must be present for the guest to use the core product
Ch 9: Designing and Managing Products |
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Define: Growth |
The product life-cycle stage when a new product's sales start climbing quickly
Ch 9: Designing and Managing Products |
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Define: Introduction |
The product life-cycle stage when a new product is first distributed and made available for purchase
Ch 9: Designing and Managing Products |
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Define: Joining stage |
The product life-cycle stage when the customer makes the initial inquiry contact
Ch 9: Designing and Managing Products |
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Define: Maturity |
The stage in a product life cycle when sales growth slows or levels off
Ch 9: Designing and Managing Products |
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Define: Olfactory |
The dimension of atmosphere relating to scent and freshness
Ch 9: Designing and Managing Products |
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Define: Phase-out |
The ideal method of removing an unpopular or unprofitable product; it enables a product to be removed in an orderly fashion
Ch 9: Designing and Managing Products |
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Define: Product concept |
A detailed version of a product idea stated in meaningful consumer terms
Ch 9: Designing and Managing Products |
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Define: Product development |
Developing the product concept into a physical product to ensure that the product idea can be turned into a workable product
Ch 9: Designing and Managing Products |
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Define: Product idea |
Envisioning a possible product that company mangers might offer to the market
Ch 9: Designing and Managing Products |
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Define: Run-out |
Removing a product after existing stock has been depleted; used when sales for an item are low and costs exceed revenues, such as the case of a restaurant serving a crabmeat cocktale with sales of only one or two items per week Ch 9: Designing and Managing Products |
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Define: Supporting products |
Extra products offered to add value to the core product and to help differentiate it from the competition
Ch 9: Designing and Managing Products |
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Define: Tactile |
The dimension of atmosphere relating to softness, smoothness, and temperature
Ch 9: Designing and Managing Products |
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Define: Visual |
The dimension of atmosphere relating to color, brightness, size, and shape Ch 9: Designing and Managing Products |
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What is a product? |
* Product - A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, places, organizations, and ideas. Ch 9: Designing and Managing Products |
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What are the (4) product levels? |
1. The core product 2. The facilitating product 3. The supporting product 4. The augmented product
Ch 9: Designing and Managing Products |
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What's better to sell: product benefits, or product features? |
Product benefits
Ch 9: Designing and Managing Products |
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What are (5) components of the "augmented product"? |
1. Accessibility 2. Atmosphere: The physical environment 3. Customer interaction with the delivery-service system 4. Customer interaction with other customers 5. Customers as employees
Ch 9: Designing and Managing Products |
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What are the (4) ways atmosphere, as an augmented product, can affect purchase behavior? |
1. Can serve as an attention-creating medium
2. May serve as a message-creating medium 3. May serve as an effect-creating medium 4. Mood-creating medium -High-load vs. Low-load environment
Ch 9: Designing and Managing Products |
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What are the (3) stages to consumers interaction with the delivery system as an augmented product? |
1. Joining stage 2. Consumption stage 3. Detachment
Ch 9: Designing and Managing Products |
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What are the (4) ways a brand's equity can be measured? |
1. Differentiation 2. Relevance 3. Esteem 4. Knowledge
Ch 9: Designing and Managing Products |
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What is a brand portfolio? |
The set of all brands and brand particular category or market segment. Marketers often need multiple brands in order to pursue these multiple segments.
The basic principle in designing a brand portfolio is to maximize market coverage so n potential customers are being ignored, but minimize brand overlap so brands are not competing for customer approval. Ch 9: Designing and Managing Products |
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What are the (3) levels of brand positioning in order from lowest to highest? |
1. Product attributes 1. Desirable benefits 3. Beliefs and values
Ch 9: Designing and Managing Products |
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What are the (8) steps in the new-product development process |
1. Idea generation 2. Idea screening 3. Concept development and testing 4. Marketing strategy development 5. Business analysis 6. Product development 7. Market testing 8. Commercialization
Ch 9: Designing and Managing Products |
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What are the (5) product life-cycle stages? |
1. Product development 2. Introduction 3. Growth 4. Maturity 5. Decline
Ch 9: Designing and Managing Products |
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What are the (3) ways to delete a product? |
1. Phase-Out 2. Run-Out 3. Drop
Ch 9: Designing and Managing Products |
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Case Study: IDEO Ch 9: Designing and Managing Products |
Context: Ch 9 - Designing and Managing Products
· Product development firm
· Experts in process of how you design stuff
· In this innovative environment, hierarchy doesn’t work
· Brainstormingàdeep diveàencourage wild ideasàbuild on those ideas
· Focused chaos, vote on ideas
· Trial and error succeeds over the lone genius
· Must be playful to be innovative
· Fail often in order to succeed sooner
· Teamwork and focused chaos key!
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Describe the profitability of a product through its various life-cycle stages |
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Case Study: Starwood Ch 9: Designing and Managing Products |
Context: Ch 9 - Designing and Managing Products
Cycle of profitability, all products have different cycles
1. Product Development Stage
i. Case Study: Starwood
a. Created a team geared around product development (Starlab) to reinvent the travel experience
b. Rather than outsourcing product development
c. Innovation
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Case Study: Julep Ch 9: Designing and Managing Products |
Context: Ch 9 - Designing and Managing Products
1. Introduction stage
i. Make some revenue, but still losing money
ii. Case Study: Julep
a. Decided that she as the CEO would be the face of the brand
b. Her target was women of high economic status
c. Introduces her brand by inviting real women into the conversation to get feedback right away
d. Allows them react/make decisions quickly
e. TV interview is introduction of product to the marketplace
f. Co-creation: involving customers in the product development process
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Case Study: Even Ch 9: Designing and Managing Products |
Context: Ch 9 - Designing and Managing Products
1. Growth Stage
i. Most difficult to go from introduction to growth—huge challenge
ii. The game at the growth stage is very different from that of the introduction stage
iii. Case Study: Even
a. Health and spa hotel, wellness/fitness the core idea of the hotel
b. The hotel was created from the intention of wellness
c. How do you grow but make sure you’re true to your ideal?
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Case Study: Royal Caribbean Ch 9: Designing and Managing Products |
Context: Ch 9 - Designing and Managing Products
1. Maturity Stage
i. Profits even off, sales increase
ii. Story becomes much more competition centered than customer centered
iii. Case study: Royal Caribbean
a. Changing the market/brand
b. Redefine cruises—used to be thought of as leisure, eating, boring—now market it as adventurous, traveling, active etc.
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Case Study: Radio Shack Ch 9: Designing and Managing Products |
Context: Ch 9 - Designing and Managing Products
1. Decline Stage
i. Sales and profits decline
ii. Case study: RadioShack
a. “A whole new RadioShack”
b. Still very close to going out of business
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Case Study: Lego Ch 9: Designing and Managing Products |
Context: Ch 9 -Designing and Managing Products
5. Decline Stage
i. Case study: Lego
a. There are ways to revive the brand!
b. Lego movie successfully revived Lego
c. Recognized that there was enough of a following to find new ways to reach the market
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Define: Cast Members |
A term used for employees. It implies that employees are part of a team that is performing for their guests
Ch 10: Internal Marketing |
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Define: Cross-training |
Training employees to do two or more jobs within the organization
Ch 10: Internal Marketing |
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Define: Emotional labor |
The necessary involvement of the service provider's emotions in the delivery of the service
Ch 10: Internal Marketing |
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Define: Empowerment |
When a firm empowers employees, it moves the authority and responsibility to make decisions to the line employees from the supervisor
Ch 10: Internal Marketing |
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Define: Internal marketing |
Involves marketing to the firm's internal customers, its employees
Ch 10: Internal Marketing |
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Define: Moment of truth |
Occurs when an employee and a customer have contact
Ch 10: Internal Marketing |
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Define: Organizational culture |
The pattern of shared values and beliefs that gives members of an organization meaning and provides them with the rules for behavior in that organization
Ch 10: Internal Marketing |
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Define: Service Culture |
A system of values and beliefs in an organization that reinforces the idea that providing the customer with quality service is the principal concern of the business
Ch 10: Internal Marketing |
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What's the gist of internal marketing? |
* Marketing has to be embraced by all employees; it cannot be left to the marketing or sales department. It has to be carried out by all employees Ch 10: Internal Marketing |
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What are the (3) steps to the internal marketing process? |
1. Establishing a service culture 2. Develop a marketing approach to human resources management 3. Dissemination of marketing information to employees
Ch 10: Internal Marketing |
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What does "turn the organizational chart upside down" mean? |
Service organizations should create an organization that supports those employees who serve the customers
Ch 10: Internal Marketing |
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How do you create a service culture (2 explicit ways) |
1. Turn the organizational chart upside down 2. Empower and train employees to handle nonroutine transactions
(Also: * An internal marketing program requires a strong commitment from management) Ch 10: Internal Marketing |
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What are the (7) was to develop a marketing approach to human resources management? |
1. Create positions that attract good employees 2. Use hiring process that identifies/hires service-oriented employees 3. Use hiring procedures that identify those employees who are team players 4. Provide initial employee training designed to share the company's vision with the employee and supply the employee with product knowledge 5. Provide continuous employee training programs 6. Make sure employees maintain a positive attitude. Managing emotional labor helps maintain a good attitude 7. Reward and recognize customer service and satisfaction Ch 10: Internal Marketing |
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Should employees be involved in uniform selection? |
Yes. Obviously. * "I don't really like talking about my flare" * Uniforms have a lot of benefits, mostly they control behavior and focus employees on their job. Also they add convenience because customers know who employees are * Uniforms should be functional and accepted by the employees. * They should have input from the employees
Ch 10: Internal Marketing |
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Why is it important to fill employees in on current promotions and other marketing information? |
* Employees have the chance to market on behalf of the organization, but only if they have the proper information to do so Ch 10: Internal Marketing |
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How does internal marketing differ in consumer goods vs. services? |
· Consumer goods
o The nonmarketing marketing piece is small (marketing function)
o The marketing department is large
· Services
o The marketing department is small
o The marketing function is large
§ Ex: Starbucks baristas are a big part of marketing
§ EX: Hotels brief housekeeping team on the food/restaurants so they are a part of marketing too Ch 10: Internal Marketing
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Who should be a part of the marketing team? / Whose business is marketing? |
· Everyone in a company is part of the marketing team because marketing is too big to be done by a few people
· How do you make that happen? --> INTERNAL MARKETING :D
In a company, all position descriptions should include the words sales/marketing, and marketing should be incorporated into employee orientation as well
Ch 10: Internal Marketing |
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Case Study: The Cheesecake Factory Ch 10: Internal Marketing |
Context: Ch 10 - Internal Marketing
· Employees ooze hospitality
· Emphasis on hiring and developing talented employees
· Reward best staff members
· Give general managers a BMW
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Case Study: Japan Airlines Ch 10: Internal Marketing |
Context: Ch 10 - Internal Marketing
Turning the organizational structure upside down (Figure 10.2)
· To create a service-oriented organizational structure—as opposed to a conventional organizational structure
· McDonalds—only have two roles, those who serve the customers, and others who serve those that serve the customers
· Case Study: Japan Airlines
o The CEO is there for the employees to help them serve customers
o The CEO slashed his own pay before slashing the pilots pay
o Businesses who pursue money first fail
o People in corporate offices have the job of helping employees at the front line
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Why should marketing be everybody's business? (5 points) Ch 10: Internal Marketing |
· Employee attitude, appearance, and willingness to handle the guests’ requests help form a first impression of a service · Remember a 2% difference in the DNA can make the difference between a good company and a bad company · It’s hard to differentiate the tangible part of product of competing companies—product differentiation often derives from people who deliver the service · In services, most marketing is carried out by employees outside of the marketing department
· Every time a service interaction occurs, the brand is either polished or tarnished (moments of truth) |
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Case Study: Doubletree Ch 10: Internal Marketing |
Context: Ch 10 - Internal Marketing
o Banquets server greets all the customers and hugs them, wants them to feel at home
o The customers love her
o She says her job is to satisfy and bring customers back
o 5 to 1 rule: it’s a lot cheaper to retain customers than to acquire customers
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What are the (4) things marketing people do? |
· Marketing people do 4 things
o Acquisition
o Satisfaction
o Retention
o Advocacy
Ch 10: Internal Marketing
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Does it pay to really take care of your customers? Are marketing-oriented companies more successful? |
The Billion Dollar Question: does it pay to really take care of your customers?
· Are marketing-oriented companies more successful?
· YES
· 3 key elements of marketing-oriented
o Customer-oriented
o Competitor-oriented
o Interdepartmental / interfunctional coordination
§ Information must be shared to release the power of that information
· Hospitality Index
o Measure of how well a company serves its customers
o Created by Danny Meyer
o The hospitality index is a business principle
o Of all 17 companies in his original hospitality index, only 1 of them underperformed Ch 10: Internal Marketing
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What is the hospitality index? |
· Hospitality Index
o Measure of how well a company serves its customers
o Created by Danny Meyer
o The hospitality index is a business principle
o Of all 17 companies in his original hospitality index, only 1 of them underperformed Ch 10: Internal Marketing
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What was the "last point" in lecture about internal marketing? |
Last point: your ability to charge a premium is dependent on doing the other steps well—because your customers will be much less price sensitive
Ch 10: Internal Marketing |
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Define: Cost-plus pricing |
Adding a standard markup to the cost of the product
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Define: Cross-selling |
The company's other products that are sold to the guest
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Define: Discriminatory pricing |
Refers to segmentation of the market and pricing differences based on price elasticity characteristics of the segments
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Define: Fixed costs |
Costs that do not vary with the production or sales level
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Define: Going-rate pricing |
Setting price based largely on following competitors' prices rather than on company costs or demand
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Define: Price |
The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Define: Revenue Management |
Forecasting demand to optimize profit. Demand is managed by adjusting price. Fences are often built to keep all customers from taking advantage of lower prices. For example, typical fences include making a reservation at least two weeks in advance or staying over a Saturday night.
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy
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Define: Survival |
A technqiue used when a company's or business unit's sales lump, creating a loss that threatens its existence. Because the capacity of a hotel or restaurant is fixed, survival often involves cutting prices to increase demand and cash flow. This can disrupt the market until the firm goes out of business or the economy improves
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Define: Total costs |
Costs that are the sum of the fixed and variable costs for any given level of production
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Define: Upselling |
Training sales and reservation employees to offer continuously a higher-priced product that will better meet the customers' needs, rather than settling for the lower price
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Define: Value-based pricing |
Uses the buyer's perceptions of value, not the seller's cost, as the key to pricing
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Define: Variable costs |
Costs that vary directly with the level of production
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What is the only marketing mix element that represents revenue? and what do all the others represent? |
Price ; Costs
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What are (4) internal factors to consider when setting a price? |
* Internal Factors:
1. Marketing objectives
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What are (3) external factors to consider when setting a price? |
* External Factors:Nature of the market and demand
* Competition * Other environmental factors (economy, resellers, government)
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What are (5) marketing objectives when setting price? |
1. Survival 2. Current profit maximization 3. Market-share leadership 4. Product-quality leadership 5. Other objectives (stabilize market, create excitement for new product, and draw more attention)
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What sets the lower and upper limits of price? |
Lower limit - Costs
Upper limits - Demand
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Who decides whether a product's price is right? |
The customer
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What are (6) factors affecting the price-demand relationship? |
1. Unique value effect - The offering is different 2. Substitute awareness effect - Other offerings are unknown 3. Business expenditure effect - #McKway 4. End-benefit effect - Does the offering account for a large share of the total cost? 5. Total expenditure effect - How much are we spending on the cost total? 6. Price quality effect - Customers equate price with quality Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What is price-rate compression? |
When higher-priced hotels lower their rates to maintain occupancy and become direct competitors to lower-rated hotels Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What are the (4) pricing approaches |
1. Cost-based pricing 2. Break-even analysis and target profit pricing 3. Value-based pricing 4. Competition-based pricing
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What are (4) new product pricing strategies? |
1. Prestige pricing - Luxurious w/ high price 2. Market-skimming pricing - High price when demand is inelastic 3. Marketing-penetration pricing - Low price 4. Product-bundle pricing
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What are (3) price-adjustment strategies? |
1. Volume discounts 2. Discounts based on time of purchase 3. Discriminatory pricing
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What is value pricing? |
Pricing an offering below competitors permanently ; "EDLV" = Everyday low value
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What is a "tradeoff analysis"? |
* Tradeoff analysis - Researchers ask buyers how much they would pay for a hotel room with and without certain amenities. This info provides an idea of which features add more value than cost.
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What is RevPAR and RevPASH? |
RevPAR = Revenue Per Available Room
RevPASH = Revenue per Available Seat Hour
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What are product and price's "alternative" names |
Product = Solution Price = Value Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy
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What are the 5 C's of pricing? |
The five C’s of pricing · Customer: what they’ll pay, what they’ve paid in the past, what they pay to competitors, substitute goods, different segments (essentially what is the customer’s take on price?) · Competitor: what does it charge for similar/identical product? · Cost: must charge a price that covers your cost, cost-based pricing is 32% or 3x cost · Channel: Open Table costs restaurant for reservation, might have to pay concierge for referring customers to restaurant
· Compliance: where law and marketing intersect, cannot collude on pricing
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Case Study: Starbucks Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
Context: Ch 11 - Price
Talking about the 1st C of pricing: Customer
· Case Study: Starbucks o Creating a subculture, about human connection, a 3rd community (between home and work) o Globalization, Americanization o Success due to the marketing/salesmanship/hype/ showmanship o Higher prices per coffee due to health care plan for employees o Turned coffee into something mysterious o Coffee baràmarketing machine for music o 60 seconds program featured Starbucks, $2 million worth of marketing but must tell the real story! o Enabled mom and pop shops the opportunity to grow because they expanded the market far beyond Starbucks ability to meet the demand (lattes/cappuccinos etc.) o Rags to riches story of the founder, relate it to the Google love story, these are the stories that endear us to the company
o Proved you can shift the demand curve—customers willing to pay higher price for same quantity |
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What do non-price variables do to the demand curve? |
Shift it.
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What is a "reference point" |
Used in pricing with the 2nd c: competition.
You have to understand what the general market prices are
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Casestudy: Shamwow Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
Context: Ch 11 - Pricing
2nd C - Competition
· Case study: Shamwow o Price and value proposition o How are they getting value? o Example of 4 elements working together o Product—demonstration, proof of concept o Competitor—more cost effective than paper towels (price and positioning) o Solves multiple problems – car /kitchen / dog o Remember: always give away the product before giving away price! Extra towel with purchase to get people to buy, not discount o Legitimizing brand by saying beware of imitators o Who talked about product—customer testimonials
o Made in Germany |
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Case Study: Boston Restaurants Team Up Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
Context: Ch 11 - Price
3rd C - Cost
Cost · Cost of goods · Shifting the supply curve—produce same quantity for less by teaming with other restaurants to form a buying cartel · Case Study: Boston Restaurants Team Up
o More than 200 Boston-area restaurants, including popular establishments Vox Populi, the Black Rose and Beehive, have joined to form a "Dining Alliance" that will bargain with vendors for lower food prices. The eateries have negotiated 10% or more price cuts on produce, flour, milk and meats as well as some paper goods. |
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Case Study: Expedia Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
Context: Ch 11 - Price
4th C - Channel
Channel · Distribution channels: understand there’s a cost · Case Study: Expedia o Takes 20% for selling/marketing it’s rooms o Merchant model—mark up o Need to convince its partners (hotels) that the 20% you spend is worthwhile o 1. Find your place in the “store” § The customers of Expedia are price sensitive and review sensitive o 2. Capture new customers o 3. Consult with market manager § Deep market insight from demand side o 4. Yield rates aggressively across various OTA channels § Packaging/last minute demands o 5. Drive demand during peak dates § Those who left Expedia channels open during high demand made more money than those who closed Expedia channels o Key ideas § How to effectively use OTAs § In marketing of the OTA to hotels—convey a sense of value
§ Example of business-business marketing |
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Case Study: Open Table Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
Context: Ch 11 - Price
4th C - Channel
· Case Study: Open Table o Charges $1 per person for each reservation made online
o Must factor channel costs in |
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Case Study: Restaurant Week Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
Context: Ch 11 - Price
5th C - Compliance
Compliance · Cannot collude on prices · Collaborative pricing allowed! · Case study: Restaurant Week o Participating restaurants agreed on a 3 course meal for set price o Effort to bring people in that won’t come at full price
o Led to 46% increase in patronage and 39% increase in sales at the participating restaurants |
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What are (5) common pricing tactics? |
Common pricing tactics · Decoy pricing o Anchoring effect: raise prices by having more highly priced options for comparison · BOGOF o Buy one get one free, sense of urgency · Price endings o Price number conveys a positioning, .99 · Price bundling o What would you pay for bed? Jill more, Jack less o What would you pay for breakfast? Jack more, Jill less o The prices they would pay differ between Jack and Jill—bundle it into a bed and breakfast package deal to increase total revenue o Demand heterogeneity
· Price discrimination Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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What is "decoy pricing" and the "anchoring effect"? |
· Decoy pricing
o Anchoring effect: raise prices by having more highly priced options for comparison
Ch 11: Pricing Products: Pricing Considerations, Approaches and Strategy |
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Define: Administered VMS |
A vertical marketing system tha coordinates successive stages of production and distribution, not through common ownership or contractual ties, but through the size and power of one of the parties
Ch 12: Distribution Channels |
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Define: Agent |
A wholesaler who represents buyers or sellers on a more permanent basis, performs only a few functions, and does not take title to gods
Ch 12: Distribution Channels |
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Define: Alliances |
Alliances are developed to allow 2 organizations to benefit from each other's strengths Ch 12: Distribution Channels |
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Define: Broker |
A wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and asisst in negotiations Ch 12: Distribution Channels |
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Define: Channel Conflict |
Disagreement among marketing channel members on goals and roles - who should do what and for what reward
Ch 12: Distribution Channels |
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Define: Channel level |
A level of middleman that performs some work in bringing the product and its ownership closer to the final buyer
Ch 12: Distribution Channels |
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Define: Contractual VMS |
A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than they could achieve alone Ch 12: Distribution Channels |
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CorporateVMS |
A vertical marketing system that combines successive stages of production and distribution under single ownership. Channel leadership is established through common ownership
Ch 12: Distribution Channels |
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Define: Direct marketing channel |
A marketing channel that has no intermediary levels Ch 12: Distribution Channels |
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Define: Franchise |
A contractual vertical marketing system in which a channel member called a franchiser links several stages in the production distribution process
Ch 12: Distribution Channels |
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Define: Horizontal Conflict |
Conflict between 2 firms at the same level
Ch 12: Distribution Channels |
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Define: Horizontal Marketing System (HMS) |
Two or more companies at one level join to follow new marketing opportunities. Companies can combine their capital, production capabilities, or marketing resources to accomplish more than one company working alone
Ch 12: Distribution Channels |
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Define: Junket reps |
Serve the casino industry as intermediaries for premium players Ch 12: Distribution Channels |
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Define: Motivational houses |
Provide incentive travel offered to employees or distributors as a reward for their efforts
Ch 12: Distribution Channels |
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Define: Multichannel marketing distribution |
Multichannel distribution, as when a single firm sets up two or more marketing channels to reach one or more customer segments Ch 12: Distribution Channels |
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Define: Online Travel Agency (OTA) |
A travel agency that conducts busines through the Internet with no physical locations or stores
Ch 12: Distribution Channels |
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Define: Retailer |
Business whose sales come primarily from retailing
Ch 12: Distribution Channels |
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Define: Supply Chain |
Upstream and downstream partners. Upstream from the company is a set of firms that supply raw materials, components, parts, information, finances and expertise needed to create a product. Downstream marketing channel partners, such as wholesalers and retailers, form a vital connection between the firm and its customers
Ch 12: Distribution Channels |
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Define: Vertical conflict |
Conflict between different levels of the same channel
Ch 12: Distribution Channels |
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Define: Vertical marketing systems (VMS) |
Distribution channel structures in which producers, wholesalers, and retailers act as a unified system: Either one channel member owns the others, or has contracts with them, or has so much power that they all cooperate Ch 12: Distribution Channels |
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Define: Wholesaler |
Firms engaged primarily in wholesaling activity
Ch 12: Distribution Channels |
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What is a distribution channel? |
A set of independent organizations involved in the process of making a product or service available to the consumer or business user
Ch 12: Distribution Channels |
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What are the (8) functions of a distribution channel? |
1. Information - Gathering an distributing marketing research and intelligence information about the marketing environment 2. Promotion - Developing and spreading persuasive communications about an offer 3. Contact - Finding and communicating with perspective buyers 4. Matching - Shaping and fitting the offer to the buyer's needs, including such activities as manufacturing, grading, assembling, and packaging 5. Negotiation - Agreeing on price and other terms of the offer so that ownership or possession can be transferred 6. Physical distribution - Transporting and storing goods 7. Financing - Acquiring and using funds to cover the costs of channel work 8. Risk taking - Assuming financial risks such as the inability to sell inventory at full margin
Ch 12: Distribution Channels |
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What are the (4) steps in choosing a location? |
1. Understanding the marketing strategy 2. Regional analysis 3. Choosing the area within the region 4. Choosing the individual site Ch 12: Distribution Channels |
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What is the alternate name for "place"? |
Place = Accessibility!
Place—it’s really about access!
· Bringing the customer to the product or bringing the product to the customer Ch 12: Distribution Channels "Access/Place" |
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What is the "place" of Starbucks? |
Starbucks · Third place between work and home · Hired an “imagineer” to design store space · Realized some customers didn’t care about the store as a place - created the drive thru · Now Starbucks is beginning to develop delivery
· It’s about access—not so much about place Ch 12: Distribution Channels "Access/Place" |
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Why do intermediaries exist? |
Economy of Effort · The reason why intermediaries exist is because there’s friction between buyers and sellers (i.e. time, wasted resources etc.)
· When there is a third party between the manufacturer and customer—less lines (less number of contacts, more simple), less time, less resources Ch 12: Distribution Channels "Access/Place" |
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Does Apple sell directly to customers or have intermediaries? |
Both!
· Apple does both o Directly sells to customers o Also has intermediaries—Best Buy
o But Apple does not disenfranchise their intermediaries—engages in a parallel distribution Ch 12: Distribution Channels "Access/Place" |
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What are the 4 "c's" of distribution |
· Four Cs of distribution o Cost o Control o Coverage
o Comparison
Ch 12: Distribution Channels "Access/Place" |
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What are the advantages of a 3rd party distributor? |
· 3rd party distributor o Less cost (but also must factor in cost to pay distributor) o Less control o More coverage
o More comparison Ch 12: Distribution Channels "Access/Place" |
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What are the advantages of directly distributing your own goods? |
· Direct o More cost (to open stores) o Less coverage o More control o Less comparison
o Also more time consuming, more resources Ch 12: Distribution Channels "Access/Place" |
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Case Study: AirBnB Ch 12: Distribution Channels "Access/Place" |
Case Study: AirBnB · Disruptor of hotel market—distribution channel · Insights o Importance of networking—better to have 100 people that love you than a million that like you, went door to door to all their hosts and gathered feedback - Marketing primarily through word of mouth of guests / hosts o Internet was necessary for this to develop - People are sharing online - Forming online connections - Myspace / Facebook concept of community made this company possible o Untapped need: people wanted to travel for cheaper and stay longer, also meet new people and have new experiences o Empowering people to create their own industry - Sharing economy: matching someone who has something to someone who wants something - Ordinary person can create their own industry online - Trust: A total stranger can be trusted like a company—people can have a reputation o Geared to our age group o AirBnB provides assurance - Payment goes through AirBnB so incentives are aligned—hosts must hold up their end of the deal before payment goes through - Million dollar insurance plan - Reviews for both hosts and guests o Built on trust - Supplier trust and consumer trust - Supplier must trust channel to represent product well - Consumer must trust channel to provide right product/costs o The channel is key when buyers become sellers/users - AirBnB guests will host too - Also seen in Ebay o The distribution channel brings buyers and sellers together in a new, interesting way - AirBnB now has a 15-20 billion dollar valuation · How did they handle the media opportunity? o Mission: in the business of creating meaningful experiences (not selling lodging) o Using personal story—how they created company o Founders use the service too o “Million Dollar” Insurance o Three owners complement each other in the telling of the story of the business
o Are able to hit main talking points while answering the questions |
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What is a "push" distribution strategy? |
Push Strategy · Supplier goes to channel, channel pushes customers to buy o Producer marketing activities (personal selling, trade promotion) to distributor (retailers and wholesalers)
o Distributor markets to consumers (personal selling, advertising, sales promotion) |
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Case Study: Groupon Context: Ch 12 - Distribution Channels |
· Case Study: Groupon o Builds upon small businesses o Reinvent coupon turning it into digital tool for bargain deals o A way to explore new things (local businesses) o Marketing tool that gets lots of customers in the door—but hard to get those customers to come back at full price o Challenge: unclear that it is defensible—this model is very easy to replicate, have to market to beat back competition
o The businesses suffer because discounts 50% and many customers do not come back - Also example of "push" strategy |
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How is "GroupOn" different from "AirBnB"? |
· How is Groupon model different from AirBnB? Groupon main selling point: § Businesses: volume (of customers) § Customers: discount AirBnB main selling point § In the business of creating meaningful experiences § Less price focused § Stickiness to AirBnB site contributes to success – guests will continue to use AirBnB for different locations/trips § More contact between customer and seller · Now where are they at? Groupon below offering, well below valuation price
AirBnB has grown (would have 8 or 10 times what you put into it if you invested) |
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What is a "pull" distribution strategy? |
Pull Strategy · Producer markets directly to consumers · Consumer demand drives channel demand · Carnival Cruises: Carnival pulls you through the channel, “contact your local travel agent,” consumer books through travel agent
o Also has travel agents to sell directly to consumer—hedge their bets with a little push and pull promotion strategy |
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Case Study: QVC / Good House Keepin Context: Ch 12 - Distribution Channels |
Case Study: QVC / Good Housekeeping · How do you take endorsement of the third party? · In selling lotion, the combination of third party with endorsement “good housekeeping seal” made all the difference in increasing sales
· Good Housekeeping is known for being controversial—calling out dangerous / poor products in the interest of activism |
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Do the SWOT Analysis for Cambridge Beaches Resort and Spa Bermuda |
Strengths (internal) · Great location · Loyal clientele · Spacious grounds Weaknesses (internal) · Inconsistent service · Inconsistent product · Inconsistent policies Opportunities(external) · Huge family market · Growing spa market · Internet usage Threats (external) · Intensifying competition · Stagnant destination · High airline fares *For each, stick to 3 parts Invest (opportunity and strength) · Seize the internet · Develop spa suites · Create family circle Protect (threats and strengths) – howto hold your position · Own the total experience · Establish affiliation · Implement CRM (customer relationship management) Adapt (opportunities and weaknesses) · Drop age restrictions · Respond 24/7/365 · Customize packages Withdraw (threats and weaknesses) · Close old rooms · Lose LOS (length of stay) restrictions· Fire some of the marketing team Strategy can be just as much aboutwhat you’re not doing as what youare doing
2/25 SWOT Analysis |
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True/False: Strategy can be just as much about what you’re not doing as what you are doing |
True 2/25 SWOT Analysis |
