Marketing Quiz 1 Class 1-6 + Guest Lecture

Marketing Quiz 1 Class 1-6 + Guest Lecture Birds of a Feather Flock Together - Marketing Quiz 1 Opposites don't attract Information Motivation Incentives - Marketing Quiz 1 Information Motivation Incentives Humans are - Marketing Quiz 1 Cognitive Misers - Stingy, Lazy/Effortless Cold - but also hot Egocentric - selfish Social Highly influenced by our environments Impacting Users - Marketing Quiz 1 Impacting users, customers, public: Learn, Build, Test Impacting Organizations: Think, Apply Julia O'Brien - Marketing Quiz 1 Guest Speaker Synchrony - Marketing Quiz 1 doing things together at same time is important for a meaningful experience Ex. used for exercise GL 3 C's - Marketing Quiz 1 Company - what you do best Customer - what people want most? Competition - what they struggle at Background 4 P's - Marketing Quiz 1 Product - create value Promotion - communicate value (advertising/sales/social/PR) Place - deliver value (distribution) Price - capture value Strategic Decisions STP - Marketing Quiz 1 Segmentation Targeting Positioning Used to identify and evaluate opportunities for increasing sales and profits Tactical Marketing Management - Marketing Quiz 1 Designing marketing programs that are: • Create value for customers and ... • Provide a sustainable differential advantage over competitors and... • Are a good fit with the company's competencies Break-even analysis formula - Marketing Quiz 1 Fixed Costs/Per Unit Contribution to Fixed Costs (Price-Variable Costs) Profit = (P-VC) Q-FC • Set profit = 0 • Q = FC/ (P-VC) =FC/Contribution • Any fixed expense to numerator, variable expense to denominator Economic Value-in-use - Marketing Quiz 1 Consumer Surplus Margin Cost of Production Annual cost of incumbent =200 (rings) x 6 changes/year x $5/O-ring = $6,000 Versus =200 (rings) x 3 changes/year x $???/O-ring = VIU of $10/Oring Use costs = (Annual) • Purchase cost + Fabrication cost + Finishing cost + Inventory cost + Maintenance/Service cost Scrap adjustment + Level-of-requirement adjustment + Changeover cost + Risk premium + other Purchase Funnel - Marketing Quiz 1 • Awareness - brands generate awareness (almost definitional) • Interest - brand associations include brand/product knowledge • Desire - brand associations include and create emotional responses • Action - brand acts as a simplifier during purchase • Satisfaction - brand loyalty and satisfaction can create a positive feedback loop Brand Assessment - Marketing Quiz 1 Take a customer perspective on the effects of brand equity • Perceptual map • Brand Identity: Awareness • Salience = Awareness of brand and elements (e.g., logo) • Breadth in terms of linkages to categories and situations • Brand Meaning: Specific Associations • Brand performance = beliefs about meeting functional needs • Brand imagery = beliefs about relevance to psychological and social needs (e.g., associations re: users, situations, personality, and history • Brand Responses: What customers think and feel as a result of the brand • Brand Judgments (e.g., quality, trustworthiness, worthiness of consideration) • Brand Feelings (e.g., excitement, reassurance / trust, social approval) • Brand Relationships: Psychological bond creating behavioral results from loyalty to engagement Brand Equity - Marketing Quiz 1 • is multi-dimensional (usually awareness and a variety of associations) • Has different roles at different stages of the purchase funnel • Is valuable to because it changes customer behavior (creates pull) • Adds efficiency in the marketing mix Awareness and Associations • Brand associations have an important, pervasive influence • That can be valuable and automatic • Consistency in marketing implementation builds brand equity Brand Association - Marketing Quiz 1 • Consistency is key (strengthens associations) • Consumers resolve confusion by ignoring the brand, or worse (e.g., assuming low credibility) • Brand associations create expectations • This process leads to satisfaction if expectations are met • But, broken promises, even implicit ones, create dissatisfaction Demand Analysis - Marketing Quiz 1 Would the sale happen without the marketing action? YES (Secondary demand strategies): Take customers / share from competitors Ex. target price for brand switching NO (Primary demand strategies): Bring a new customer into the available market Ex. demographic or geographic market dev Increase usage by customers currently in the market Ex. customer support or reminders for usage Primary Demand Strategies - Marketing Quiz 1 Require capabilities and resources (marketing advantage) • do not necessarily require competitive differentiation • EX: new ride share customer New customers • or, new/increased use from current customers Work together with secondary e.g., Disruptors shift plan from primary to secondary demand as competition enters Secondary Demand Strategies - Marketing Quiz 1 Require capabilities and resources (marketing advantage) • Do require competitive differentiation • EX: Lyft/VRBO Uber/Airbnb Aim to create company sales that would otherwise be competitor sales Work together with primary e.g., Disruptors shift plan from primary to secondary demand as competition enters Cannibalization - Marketing Quiz 1 • Analyze dynamics across firm offerings • Worry about cannibalization most when customers might "trade-down" to lower-margin (often cheaper) offerings; iPad Mac • Resale, refurbished items often act to cannibalize (e.g., older gen iPhones) • Some "customer lifetime value" (CLV) strategies aim to motivate trading up to higher contribution margin offerings over time (e.g., Chase mortgages; Apple Watch) Purchase Funnel - Marketing Quiz 1 • Awareness - do I know about it? • Interest - do I judge it as worth serious thought? • Desire - do I want to do it? • Action - do I actually do it? • Satisfaction - would I do it again (or recommend it)? Is the customer aware of the brand? Is the customer willing to consider it? Does the customer like it best? Can the customer find and afford it? Purchase Brand Is the customer happy about purchasing? If no purchase competing product Multiple probabilities to reach conversion rate Purchase Funnel Calculations - Marketing Quiz 1 p (sale) = p (aware) * p (interest/consideration) * p (preference) * p (action) •p (repeat customer) = p (sale) * p (satisfaction) % Aware % Consideration Set % Preference % Market Share % Return/complain or Recommend Competitive Dynamics - Marketing Quiz 1 •to whom are you losing? In what segment? • EX: Unaware are buying Competitor X (low expertise customers?) • EX: Those who prefer you, but buy Competitor Y (lower price? financing? Convenience?) •Different types of marketing advantages create vulnerabilities at different funnel stages • Excellence in communicating value often results in high awareness • Excellence in tailoring value to customer often results in high preference Purchase Funnel Summary - Marketing Quiz 1 • Purchase funnels help whenever firm goals involve customer influence • Model of customer decision processes (customer journey) • Determine important metrics Funnels foster an analytical approach to customer decisions • Encourages firms to explicitly model customer behavior -- sales • Provide rigor and a shared basis for discussions of customer • Helps organize multiple tools for customer influence Marketing Math Recap - Marketing Quiz 1 BEA: What is the bottom line not to lose money? • Markup/margin: Connects retail/wholesale prices and cost • Cannibalization: New product impacts incumbents' profit • Sensitivity Analysis: How reliable your assumptions are • Economic Value Calculation: how to do we split value with customers Value Proposition - Marketing Quiz 1 Net Value to Target Market = Benefits to Target Market - Cost to Market PharmaSim: Company and Competitor - Marketing Quiz 1 Basic Question • How should we measure the performance of a company---ours or our competitors'? • Standard answer—by its financial measures, e.g. profit, ROI, etc. •Is there another set of metrics? • Internal measures of marketing performance • External measures of market/customer performance