Marketing Quiz 2

Front 1

Which segmentation variables most directly affect buying behavior?

Back 1

The strongest predictors of buying behavior are intention to buy, then attitudes and beliefs (think of the multi-attribute attitude model).

Front 2

Which segmentation variables have the most distant association with ultimate buying behavior?

Back 2

Demographics such as age, family life cycle, gender, income, etc. are not strong drivers of buying behavior, but they can be predictors at times.

Front 3

Why do marketers include demographics when profiling customer segments, even though they may have a weak influence on buying behavior?

Back 3

While demographics may not be strong drivers for buying behavior, they are a good indicator for a person's ability to buy (income) and may help to predict if this person is a potential buyer.
Demographic variables are popular with marketers because they are often associated with a customer's wants and needs, additionally, they are easy to measure. Marketers often list this info because it helps to estimate the size of the market and which media source to use to reach them.

Front 4

What are some examples of psychographic segmentation variables?

Back 4

Buyers are divided into segments on the basis of psychological and/or personality traits, lifestyles, and values. Examples: VALS, LOHAS, PRIZM (measures attitudes, interests, opinions, values, wants, and needs)

Front 5

When are psychographic segmentation variables useful?

Back 5

Psychographic segmentation is useful when marketers are looking at different cultures. Sometimes demographic information is not enough and marketers need to know what motivates a person to buy and what their resources are.

Front 6

What is LOHAS?

Back 6

Lifestyle of Healthy and Sustainability - The Natural Marketing Institute (NMI) is fervently observing and analyzing the LOHAS market to develop strategic solutions within this new world of ethical consumerism.

Front 7

How do marketers use the LOHAS customer profiles?

Back 7

The LOHAS customer is the leading-edge portion of the population that is attracted by their belief systems and values and who make their purchase decisions with those criteria in mind. LOHAS consumers are also used as predictors of upcoming trends, as they are very early adopters of many attitudinal and behavioral dynamics.

Front 8

What is VALS?

Back 8

VALS is a classification system based on psychographic measurements. It signifies values and lifestyles, classifying adults into 8 primary groups based on responses to a questionnaire with demographic and attitudinal questions. The main dimensions are customer motivation and consumer resources.

Front 9

How do marketers use the VALS customer profiles?

Back 9

Marketers use the segments for marketing planning. Based on the available resources of a consumer and their motivation (ideals, achievement, self-expression), marketers can understand why types of products will do well for the firm.

Front 10

What is PRIZM?

Back 10

When marketers are looking to segment by region, they will find PRIZM very helpful. Marketers may use this when looking to open a new store location or testing out a new market to make sure people are willing and able to buy.

Front 11

Explain the value of a customer profile or persona to marketers. How can customer profiles or personas be of use to other parts of the organization outside of marketing?

Back 11

A customer profile or persona is a complete, detailed description of a customer who is a prototypical representation of a customer segment. It is useful to other parts of the organization because describing a real person is much easier for everyone in the organization to identify with - helps when creating new products, advertisements, etc.

Front 12

What are some examples of behavioral segmentation variables? Explain how they can be useful.

Back 12

Examples: user status (current, potential, former user), usage status (heavy v. light), readiness stage (aware, interested, uninterested, etc.), loyalty status (user, switcher, loyal, etc.)

Front 13

How can behavioral segmentation be useful?

Back 13

These variables allow marketers to identify who the heavy users will be and if they are currently using the product. Additionally, they can identify who is likely to use the product and if they will be loyal to the product and not switch to others.

Front 14

Why do companies segment and target markets?

Back 14

Segmenting: Companies use segmenting to identify and cluster customer needs and to create segment profiles or personas. People in a segmented group buy for the same reason.
Targeting: Companies use targeting to assess segment profitability and to choose target segments (based on size and growth). Companies will target only segments that prefer your value proposition over the competitors.

Front 15

What are the characteristics of an attractive target market segment?

Back 15

Measurable (size and growth), profitable, strategic fit, accessible, differentiated (can you bring something new to the market?), competitively attractive (are there too many companies in the market already?)

Front 16

What recommendations would you make to your company if you were asked how to conduct research to create in-depth customer/segment profiles?

Back 16

1. Start with the need; what do people want?
2. Then use other variables such as age, demographics, gender, etc. to begin segmenting the market.
3. Be careful not to segment too far, but offer different products for different segments.
4. Once the market is segmented and target markets are identified, customer profiles can be created.
5. Now marketers will name the people and describe everyone from their home to car, and lifestyle. Make it someone you know.

Front 17

What is meant by product positioning?

Back 17

Positioning is the place a brand occupies in the mind of the consumer relative to the competition. According to some, positioning is the most important part of marketing - "if it's not who you are, it's who you are not."

Front 18

What is a perceptual map? How is it used by marketers?

Back 18

Perceptual map: shows a brand's position relative to the competition along major attributes - survey customers to find out what they think about the market.
Used: To find out what people think of the market, if the market thinks all brands are similar (like the motorcycle example), how do you differ? The perceptual map tells marketers WHY they are different from the competition.

Front 19

What is a USP? How is it used by marketers?

Back 19

USP is the strategy statement for the brand. It doesn't change very often.
Used: It helps marketers know what they aren't targeting. It also identifies the target market, why customers need the product, how it satisfies the need, and what the competitors are doing.

Front 20

How does a USP differ from a tag line?

Back 20

A tag line communicates the USP and can change. The USP is the strategy, and doesn't change often, if ever.

Front 21

What is the two-sentence formula for a USP?

Back 21

1. The value proposition (target customers, need, product category, how the product satisfies the need).
2. Position and differentiation (talks about the competitors and why our brand is different and better).

Front 22

What is a value proposition?

Back 22

Identifies the target customers, why customers need the product, product category, how the product satisfies the need.

Front 23

What are some of the many ways that companies, or brands, can differentiate themselves?

Back 23

1. Employee differentiation - better trained, who provide superior customer service.
2. Channel differentiation - effectively design distribution so buying the product is easy, enjoyable and rewarding.
3. Image differentiation - create an image that is powerful and compelling (e.g. Marlboro's macho cowboy)
4. Services differentiation - design a better and faster delivery system that provides the most efficient solutions to customers (e.g. Zappos - fast delivery and easy returns)
*Companies want to have the competitive advantage over their competitors. They want to be able to have the best performance and track record because they can do something either their competition cannot do or they do it better.

Front 24

What are the three basic "positions" in a market?

Back 24

1. Low price, high volume, good-enough quality, value for the money.
2. High price, high quality, exclusive
3. Innovative, unique, niche market

Front 25

What are the three levels (use our class notes rather than the text) of the complete product model?

Back 25

1. Generic product
2. Design
3. Service and support

Front 26

What is included in each of the three levels?

Back 26

1. Generic product: the thing you make (the main materials)
2. Design: branding, design features, color, style, user interface, packaging, advertising, positioning, price, and quality.
3. Service and support: Installation, debugging, technical support, training and consulting, additional hardware or software, maintenance and repair, warranties and service contracts.

Front 27

Create a matrix diagram of the product life cycle (PLC) that explains the characteristics and recommended marketing strategies for each stage.

Back 27

1. On the vertical axis above the timeline, graph sales and profit.
2. On the vertical axis below the graph, list the 2 Cs and the 4 Ps. FOr each oft eh 4Ps and the 2Cs, recommend marketing strategies across each stage of the product life cycle.
See p. 317, tabe 11.2

Front 28

What are some of the criticisms of the product life cycle model?

Back 28

The product life cycle model may not be right for your brand. You can really only be sure what the cycle looks like when it's over. Many companies keep the pipeline full sot here are always products in the innovation stages. Marketers seldom know what stage their product is in. The PLC pattern is a self-fulfilling prophecy if you market to a certain stage - instead skillful marketing can lead to continued growth no matter what stage people predict the product is in.

Front 29

Does this mean you shouldn't use the PLC to guide marketing strategy?

Back 29

No, PLC is a good guide to marketing strategy and many companies adapt it to fit their products and cycles. The concept helps marketers to interpret product and market dynamics, conduct planning and control, and do forecasting.

Front 30

At what stage of the product life cycle do managers use price-skimming strategies?

Back 30

Introduction for ROI, and may maintain strategy if it is a luxury item.

Front 31

At what two stages of the product life cycle do managers rely most on sales promotions? Why?

Back 31

Introduction and maturity. During these two stages, marketers are trying to bring attention to the product to either introduce or bring new uses to market for the product as it matures.

Front 32

At what two stages fo the product life cycle are marketing managers most likely to reduce advertising and promotions expenditures? Why?

Back 32

Growth and decline. During these two stages a product will take advantage of word of mouth or in the decline will be phasing out so the company will not want to spend money on advertising.

Front 33

At what stage of the product life cycle do managers create awareness?

Back 33

Introduction - the managers are trying to build primary demand

Front 34

At what stage of the product life cycle do managers use penetration pricing strategies?

Back 34

Managers will choose this strategy when they are trying to gain market share, volume and revenue and trying to be the low cost leader (trial sizes)

Front 35

At what stage fo the product life cycle do managers emphasize price promotions and other special deals to induce brand switching? Why?

Back 35

Maturity stage. They will do this to gain more market share and sales as the product levels off in sales. They will stress brand differences, may create a new version, and find new channels to distribute the product.

Front 36

At what stage of the PLC are managers most likely to emphasize the whole product's "core" in the value proposition?

Back 36

Introduction. Want to create demand for the product itself.

Front 37

At what stage of the product life cycle are managers most likely to begin to expand the whole product to emphasize the design level?

Back 37

Growth. In the introduction they are focusing on the product itself, so to grow the brand they may add new features or start discussing all the things it can do.

Front 38

At what stage of the product life cycle are managers concerned with expanding the value proposition to encompass all levels of the whole product, but especially the service level?

Back 38

Growth and maturity. In the maturity stage managers are working to differentiate the product and show customers the benefits of choosing this brand.

Front 39

At what stage of the product life cycle do managers reduce distribution to only the most profitable channels?

Back 39

Decline. They selectively phase out the unprofitable outlets at this time.

Front 40

At what stage of the product life cycle do managers renew the brand by making it "new and improved" or "lemon-scented" or "sugar-free" or "low fat" etc...? Why?

Back 40

Maturity. They are working to encourage brand switching, they are very market driven so they cannot increase the price.

Front 41

At what stage of the product life cycle do managers face the most competition from the greatest number of competitors?

Back 41

Growth. The competition is very saturated by the maturity level, but in growth, there is a rapid increase in the competition.

Front 42

At what stage of the product life cycle do managers promote primary demand - demand for the product type or class?

Back 42

Introduction. They want to build product awareness since it is so new.

Front 43

At what stage of the product life cycle do managers promote secondary demand - demand for the brand? What forces are causing the change?

Back 43

Growth. The mass market is becoming aware of the product and massive influxes of competitors are hitting the market.

Front 44

At what stage of the product life cycle do managers face competition from fewer, but stronger and experienced, competitors?

Back 44

Maturity. The market is very saturated with various versions of the product by now.

Front 45

At what stage of the product life cycle do managers decrease the firm's investment in the brand and begin to "milk" the cash cow?

Back 45

Maturity. The market has settled on the attributes it wants and the company consolidates. There are now fewer options to personalize.

Front 46

At what stage of the product life cycle do managers modify the marketing mix to reach new users to encourage new usage or more usage of the brand?

Back 46

Growth. The early adopters are purchasing and telling the middle majority about the product so the company can take advantage of word of mouth. The distribution is expanding and prices are coming down. By the maturity stage, everyone who is going to buy has bought.

Front 47

In the adoption curve, describe the Innovators.

Back 47

(2.5%) - First to adopt, technology enthusiasts, not price sensitive, way ahead of the curve on new and innovative products.

Front 48

In the adoption curve, describe the Early Adopters

Back 48

(13.5%) - Opinion leaders, they get the buzz out about new products, less price sensitive, still ahead of the general population, adopt new technology when its benefits are proven.

Front 49

In the adoption curve, describe the Early Majority

Back 49

(34%) - Heard about the product from the early adopters, slightly ahead of the general population, adopt new technology when its benefits are proven.

Front 50

In the adoption curve, describe the Later Majority

Back 50

(34%) - Skeptical conservatives who are risk averse, technology shy, and price sensitive.

Front 51

In the adoption curve, describe the Laggards

Back 51

(16%) - At some point, this is the last person to get the product; these are typically price-sensitive people who wait until things go on sale to purchase them, or until they absolutely cannot live without the product any longer.

Front 52

Explain the adoption curve model.

Back 52

- Only includes those who actually adopt the product!
- Only reflects the first purchase
- Based primarily on word of mouth
- Early and late majority combine to form the Mass Market

Front 53

What is the major force driving adoption, according to Rogers' theory?

Back 53

Personal influence has greater significance in some situations and for some individuals than others, and it is more important in evaluation than the other stages. It has more power over late than early adopters and in risky situations.

Front 54

What does the vertical axis represent?

Back 54

Sales

Front 55

What does the horizontal axis represent?

Back 55

Lifetime of the product

Front 56

Explain the difference in target market customer profiles, category by category, in terms of the customer demographics, motivations, and typical response to innovations. (Or, more briefly, explain the "early market" versus "later market" when it comes to the diffusion of innovations)

Back 56

Early Market: The innovators and Early Adopters - want change, jump ahead of the competition, revolutionary innovation, relative advantage, complexity Ok, compatibility - who cares?, concerned mostly about the actual product, with design being secondary, and service and support almost non-existent.
Late or Mainstream Market: Early and Late Majority, Laggards - want minimal change, improve productivity, evolution, not revolution, enhance, not overthrow, smooth integration, compatibility a must, see services and support as most important, with design and the product being secondary. (Why bother marketing to the mainstream market? Because there are LOTS of them and together, they have a LOT of money!)

Front 57

What was the genesis of the "diffusion of innovation" model?

Back 57

Everett Rogers (1990) The Diffusion of Innovations - Began in the 1960s - studying hybrid seed corn in Iowa - what would make someone take the corn they have been planting for years, that they know is successful, and move to the unknown hybrid corn?

Front 58

What is the definition of "diffusion of innovation"?

Back 58

The process by which an innovation is communicated through certain channels over time among the members of a social system.

Front 59

What characteristics of a new product increase its rate of diffusion?

Back 59

1. Relative Advantage: The degree to which the innovation appears superior to existing products. The greater the perceived advantage, the faster the adoption.
2. Compatibility: The degree to which the innovation matches the values and experiences of the individuals.
3. Complexity: The degree to which the innovation is difficult to understand or use.
4. Divisibility: The degree to which the innovation can be tried on a limited basis.
5. Communicability: The degree to which the benefits of use are observable and describable to others.

Front 60

What are the 5 information-processing steps that an individual goes through when adopting a new product?

Back 60

1. Awareness: the consumer becomes aware of the innovation but lacks information about it.
2. Interest: The consumer is stimulated to seek information about the innovation.
3. Evaluation: The consumer considers whether to try the innovation.
4. Trial: The consumer tries the innovation to improve his or her estimate of its value.
5. Adoption: The consumer decides to make full and regular use of the innovation.

Front 61

What is a brand extension?

Back 61

A new product that is created under an existing brand to attempt to utilize the current brand's attractiveness.

Front 62

What are the pros of creating a brand extension?

Back 62

1. Can facilitate new-product acceptance
2. Provide positive feedback to the parent brand and company
3. Reduce launch costs
4. Reduced risk of failure - may be easier to convince retailers to stock and promote a brand extension.
5. Can help to clarify the meaning of the brand and its core values or help to improve consumer loyalty.
6. Renew interest and liking for the brand.

Front 63

What are the cons of creating a brand extension?

Back 63

1. May cause the brand name to be less strongly identifies with any one product (possibility for Brand Dilution - when consumers no longer associate a brand with a specific set of products and therefore think less of the brand).
2. Possibility of failure for the extension, which could harm the parent brand.
3. Possibility of revenues only coming from consumers switching from existing parent-brand offerings.
4. The company forgoes the opportunity to create a new brand with its own unique brand image and equity.

Front 64

What are the 8 steps in the New Product Development Process?

Back 64

1. Idea generation: is the idea worth generating?
2. Idea Screening: is the product idea compatible with company objectives, strategies, and resources?
3. Concept Development and Testing: can we find a good concept that consumers say they would try?
4. Marketing Strategy Development: can we find a cost-effective, affordable marketing strategy?
5. Business Analysis: will this product meet our profit goal?
6. Product Development: Have we got a technically and commercially sound product?
7. Market Testing: Have product sales met expectations?
8. Commercialization: Are product sales meeting expectations?

Front 65

At what stage in the New Product Development Process is it advisable to conduct consumer research?

Back 65

Any stage except for idea generation in stage 1.

Front 66

List the reasons new products fail.

Back 66

1. Ignored or misinterpreted market research
2. Overestimates of market size
3. High development costs
4. Poor design or ineffectual performance
5. Incorrect positioning, advertising, or price
6. Insufficient distribution support
7. Competitors who fight back hard
8. Competitors who fight back hard
9. Inadequate ROI or payback

Front 67

List the reasons new products succeed.

Back 67

1. Focusing on incremental innovation: Entering new markets by tweaking products for new consumers, using variations on a core product to stay one step ahead of the market, and creating interim solutions for industry-wide problems.
2. Create Disruptive Technologies: technologies that are cheaper and more likely to alter the competitive space. Established companies can be slow to react or invest in these disruptive technologies because they threaten their investment.
3. Number One Success Factor: A unique, superior product

Front 68

What is a product mix or product portfolio?

Back 68

Product mix: the set of all products and items a particular seller offers for sale. Consists of various product lines. A company's product mix has a certain width, length, depth, and consistency.

Front 69

What is a product line?

Back 69

The various products under one brand name that a company sells (e.g. Michelin has three: tires, maps, and restaurant-rating services).