Extra Topics (not covered yet) Flashcards
Need-based segmentation
Segmenting based on needs can lead to higher customer acquisition costs, but also higher conversion rates & higher return on customer acquisition
- Identify need-based segments
- Identify competitive offerings
- Determine which segments to target
- Link identifiable characteristics for marketing communications and distribution
Sustainability of the value proposition (Guiding Question)
Are the key differentiation factors easily threatened by the competition?
Margin Analysis (Gross and Contribution Margin)
Margin = (P-C)/P
C :
• Variable costs C = VC -> Gross Margin
• Total costs C = VC + FC/Q -> Contribution Margin
P = C/ (1-Margin)
Profit = (P-VC)*Q – FC
Break-even Analysis
Break-even quantity: Profit = 0
Q(BE) = FC/(P-VC)
Analysis of marketing campaigns
A/B-Testing
• A = Treatment
• B = Control Group (mostly through PSAs)
- Run ad campaign
- Find “control” consumers to match treated ones
- Compare search rates across groups
=> Measure lift
=> Lift = (Search Rates (T) – Search Rates (C))/ Search Rates (C)
Activity Bias
On the day of the campaign more user in general are attracted which also means more user for a specific keyword.
It occurs when the treatment and control groups are not comparable!
3 Methods for Artificial Control
- Exact Match: find “control” with similar characteristics
- Propensity Score: find “control” by matching consumers on propensity of being exposed to ad.
- Regression Adjustment: select variables that predict unexposed users’ purchasing behaviour. Use this to predict baseline behaviour of exposed users.
Subscription pricing, loss
aversion, and defaults
• Consistent with Loss Aversion
• Payments cost consumers more when separated
=> Aggregate costs
• Gains benefit consumers more when separated
=> Separate gains
- Implement price discrimination with bundling
* Consumers who with higher monitoring costs more likely not to cancel
* Subscriptions and bundles go together - Implement defaults
* What explains willingness to be an organ donor?
Bundling
P1 P2
A 80 0
B 60 40
C 50 50
D 0 70Normal Bundling:
P1 + P2 = 70
Mixed Bundling:
P 1 = 80
P 2 = 70
P 1+2 = 100 (access to full WTP for consumer B & C)
=> Highest Profit!
Value function of prospect theory
• Consumers have expectations, and all business make promises (positioning)
• Consumers suffer more from losses than benefit
from gains of the same amount
Brand Architecture Strategies (Pro’s & Con’s)
Branded House
pro: • Increased brand awareness • Efficient use of resources, focused on building 1 brand image • Increased consumer acceptance
con: • Negative impact Risk: A crisis with one product will affect the entire brand
Sub-Brands
pro: • Quality assurance (endorser brand) for the product brand, increasing consumer confidence and acceptance • Maintains ‘individuality’, allowing for better targeting • Efficient marketing resource use (advertise both brands at once)
con:
• Contamination risk (both ways)
• Costs associated with launch of
new brand (creative, legal)
Endorsed Brand
pro:
• Better targeting through building individual identities into each subbrand • Useful when you want to enrich the masterbrand with new associations, or expand to new target or category
con:
• Contamination risk (both ways) • Costs associated with launch of new brand (creative, legal)
House of Brands
pro: • Lowers risks of contamination in case of a failure • Each brand can cover a different segment – market coverage & niche, with unique identity • Creates sense of ownership for managers, not resting on the strength of one brand
con: • Expensive: inefficient use of resources • No equity is built on the parent brand
Establish clear service quality
policy (Process???)
Desired level
of service
=>
Company
Policy
=>
Employee
Behavior
=>
Customer
Satisfaction
