Final Flashcards
(123 cards)
1
Q
Product Life Stages
A
- Introductory Stage
- Growth Stage
- Shakeout stage
- Mature Stage
- Decline Stage
2
Q
Introductory Stage
A
create primary demand
3
Q
Marketing Mix
A
pricing, promotion, programs ( or price, product, promotion, place)
4
Q
Skimming Pricing
A
objective obtain as much margin per unit as possible
5
Q
Penetration Pricing
A
objective strive for quick market development – large market and strong potential competition.
6
Q
mass-market penetration
A
capture and maintain a commanding share of the total new market
7
Q
niche penetration
A
new market is expected to grow quickly and there are number of different benefits or application segments to appeal to
8
Q
Growth Stage
A
Sharp Increase in sales, thus need to focus on product improvements. is an opportunity for followers
9
Q
Shake-out Stage
A
Drop in the overall growth rate—typically marked by substantial price cuts
10
Q
Mature Stage
A
Sales plateau
—usually lasts for sometime/consider brand extensions
—continue with creative advertising-
11
Q
Decline Stage
A
Eventually most products enter decline—change in macro-trends typically drives this decline
12
Q
Diversification
A
Expansion Strategies
13
Q
Backward Vertical Integration
A
Company setups up subsidiaries that produce some of the inputs used in production
14
Q
Forward Vertical Integration
A
Company sets up subsidiaries that distribute or market products to customers or uses the products themselves
15
Q
Balanced Vertical Integration
A
Company sets up subsidiaries that both supply them with inputs and distribute their outputs
16
Q
Horizontal integration
A
is a strategy where a company creates or acquires products / units for outputs which are alike - either complementary or competitive.
An example would be when a company acquires competitors in the same industry doing the same stage of production.
17
Q
Two types of horizontal integration
A
related (concentric), unrelated (conglomerate)
18
Q
horizontal integration: Concentric
A
Means that there is a technological similarity between the industries, which means that the firm is able to leverage its technical know-how to gain some advantage.
19
Q
horizontal integration: Conglomerate
A
The company markets new products or services that have no technological or commercial synergies with current products, but which may appeal to new groups of customers.
20
Q
seven domains of attractive opportunities
A
is a framework that looks at market attractiveness from both he macro and micro perspectives. it takes into account the competencies, capabilities and resources that a firm can use to exploit these opportunities
21
Q
five adopter categories
A
(1) innovators (2) early adopters (3) early majority (4) late majority (5) laggards
22
Q
What are the 3 compeitive strategies that michael porter identifies as ways that businesses compete with each other?
A
overall cost leadership, differentiation, and focus
23
Q
michael porter’s 5 forces
A
potential new entrants, threat of substitue products, bargaining power of buyers, bargaining power of suppliers, rivalry among competitors
24
Q
Seven Domains
A
Market domain- macro - market attractiveness
Market doman- micro - target segment
Industry domain-macro - industry attractiveness
Industry domain-micro- sustainable advantage
Team domain- aspirations, values, risk ability
Team domain- execution capability, CSFs (Critical Success Factors_
Team domain- Connections or networks - value chain
25
Bottom of the Pyramid
the largest, but poorest socio-economic group.
this is the 2.5 billion people who live on less than $2.50 per day.
Opportunities for new models of doing business that deliberately target that demographic
26
Prahalad proposes:
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That businesses, governments and donor agencies stop thinking of the poor as victims and start seeing them as resilient and creative entrepreneurs, value-demanding consumers
He proposes the below benefits to multi-national companies who chose to serve these markets
The poor today are the middle-class of tomorrow
Poverty reducing benefits—work with civil society organizations and local governments to create new local business models
```
27
Market segmentation and target marketing
two of the most fundamental tools. Successful marketers realize they cannot sell the same products/services to everyone
28
Three good ways to segment markets
Who the customers are
Where they are
How they behave
29
Why do Today’s Market Realities Often Make Segmentation Imperative
More Product-Markets are Maturing
Population growth has slowed in many regions
Social and economic forces have given rise to more expanding disposable incomes, higher educational levels more sophisticated consumers.
30
micro-segmentation
identifying a very small market segment—all about VALUE
Marketers can then direct specific marketing actions to each micro-segment to maximize the effectiveness of every contact with each customer.
eg Kevin Plank’s business--“Under Armour” started--T-shirt (sewn up in Lycra)—market segment—football players—consumer need—protection from heat exhaustion under their football pads
31
Choosing Attractive Market Segments—A Five-Step Process
Select Market-Attractiveness and Competitive-Position Factors
Weigh Each Factor
Rate Segments on each factor, plot results on matrices
Project future position for each segment
Choose Segments to Target, Allocate Resources
32
Positioning
is the act of designing the company’s offering and image to occupy a distinctive place in -- the target market’s mind.
33
What don’t we mean by positioning
Which stores or channels you’ll sell the product in
Where on the shelf you hope to have it placed
The market segment you will target
34
What does positioning have to do with the 4 Ps
Positioning is an important step to help you blend your 4P’s (because you’ll understand the competition and how the P’s should be blended to create VALUE/BENEFITS
35
Consumers/Organizational customers choose what they buy for one of two reason
Better, in some sense, or Cheaper . In either case, the good or service they choose is some way, almost always Different from others they could have chosen
36
Physical Positioning (definition)
Gives the marketer an opportunity to position the physical characteristics of one brand/product versus another—more prevalent with industrial goods and services
37
Perceptual Positioning (definition)
Consumers often know very little about the essential physical attributes of many products, especially household products
Therefore, perceptual positioning – consumers evaluate many products—factors other than physical properties
Such as, different histories, brand names, and advertising campaigns.
38
physical positioning (9)
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Physical positioning
Technical orientation
Physical characteristics
Objective measures
Data readily available
Physical brand properties
Large number of dimensions
Represents impact of product specs and price
Direct R&D implications
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39
perceptual position (8)
Consumer orientation
Perceptual attributes
Perceptual measures
Need for marketing research
Perceptual brand positions and positioning intensities
Limited number of dimensions
Represents impact of product specs and communication
R&D implications need to be interpreted
40
steps in the positioning process (7)
1. Identify relevant set of competitive products serving a target market.
2. Identify the set of determinant attributes that define the “product space” in which positions of current offerings are located.
3. Collect information from a sample of customers and potential customers about perceptions of each product on the determinant attributes.
4. Determine product’s current location (positioning) in the product space and intensity thereof.
5. Determine customers’ most preferred combination of determinant attributes.
6. Examine the fit between preferences of market segments and current position of product (market positioning).
7. Write positioning statement or value proposition to guide development and implementation of marketing strategy.
41
Analytical Tools for Positioning Decision Making (3)
The positioning process
Collecting marketing research data
Using software tools and statistical techniques to assist marketers in decision-making for “positioning”
42
format for positioning statement
For upscale American families, Volvo is the family automobile that offers maximum safety
Generic format for positioning statements: For (target market), (brand) is the (product category) that (benefit offered).
43
Positioning Grid or Perceputal Map
Looks at two determinant attributes of the competitors (ie. Value and fashionability)
44
Value Curve
More than two attributes – value curve (for example, customer service, ambience, value)
45
Pioneers: Strategies & Programs for Dev. Prod-mkts for the new target cust.
Focus is primarily on strategies/programs that the pioneer firm or first entrant into a product-market
Not all pioneers are intent on remaining the overall share leader as the market grows
Even a successful pioneer firm’s marketing strategy must change and adapt as its product moves through the product life cycle.
46
The various stages of the product life cycle present...
different opportunities and threats to the firm.
47
objectives in the introductory stage of product life cycle:
skimming, penetration pricing, promotion
48
skimming
designed to obtain as much margin per unit as possible—enables the firm/SBU to recover its new product investments more quickly
49
Penetration pricing
enables the firm to strive for quick market development and makes sense to lower costs when a large market and strong potential competitors
50
Promotion
involves advertising and sales force—key to generate awareness early-on..need to build the product’s unique selling proposition (USP)
51
growth stage strategies
This stage starts with sharp increase in sales
Important product improvements
During this period sellers of both industrial and consumer goods strive to build channel or a direct-sales system that provides maximum product availability and service at the lowest cost.
Promotion costs (advertising and personal selling) become more concerned with building demand for a company’s brand (selective demand) than for the product class or type (primary demand)
52
shakeout stage strategies
Must rationalize its product line by eliminating weaker items, emphasize creative promotional pricing
53
mature stage strategies
Most products now on the market are in the mature stage—strong market leaders, should enjoy strong profits and high cash flows—strong leaders should enjoy lower per-unit costs and lack of need to expand their facilities--
54
decline stage strategies
Eventually most products enter the decline stage
Products enter this stage typically due to technologically superior substitutes and a shift in consumer tastes, values and beliefs
If exit barriers are low, many first vacate the market, which increases the sales of remaining firms
55
implications of introductory and growth stages
Intro—new product requires large investments, most firms sustain a rather sizable short-term loss.
As product moves into growth stage, sales increase, substantially investments continue—profitability can be depressed because facilities have to be built in advance to ensure supply
56
implications of Mature and Declining Stages
As the product enters the mature stage, the larger share sellers should be able to reap the benefits of their earlier investments.
The leader’s profitability and positive cash flow can be substantial
57
Limitations of the Product Life Cycle
There is a “school of thought”—the product life cycle is driven by market forces expressing the evolution of customer preferences (the market), technology (the product), and competition (the supply side)—therefore, more emphasis on competitive issues helps to understand the evolution of a product-market.
58
New Market Entries—How New is New?
Booz, Allen and Hamilton conducted a study (700) US corporations and found that the products introduced by those firms were not all equally “new”.
The study identified six categories of new products based on their degree of newness as perceived by both the company and target market
59
Six categories of new products
New-to-world products (10%)—true innovations
New Product Lines (20%)—new to the company introducing – not new to customers
Additions to existing product lines—new items that supplement a firm’s established product line(26%)
Improvements in or revisions of existing products—Items providing improved performance or greater perceived value brought out to replace existing products (26%)
Repositioning—existing products that are targeted at new applications and new market segments (7%)
Cost Reduction—product modifications providing similar performance at lower cost (11%)
60
Objectives of New Product and Market Development
Primary objective of most new product and market development efforts is to secure future volume and profit growth
61
Pioneer Strategy
First choice of market segments and positions
Defines the rules of the game
Distribution advantages
Economies of scale and experience
Pioneers Strategic Marketing Programs focus on:
Niche penetration—focus on single market segment
Mass market penetration—focus on attempting to convince as many potential customers as possible to adopt the pioneer’s product quickly to drive down unit costs and build a large continent of loyal customers
Skimming and Early Withdrawal—setting a high price and engaging in only limited advertising and promotion to maximize per unit profits – (need strong focus on R&D and product development skills so it can produce a constant stream of new products or new applications to replace older ones)
62
Follower Strategy
Ability to take advantage of the pioneer’s product, positioning and marketing mistakes
63
Product Life Cycle Concept
Product’s sales change over time in a predictable way and that products go through a series of distinct stages
Marketers – have to anticipate / plan for changes and continually focus on strategic programs/tactics to extend their product
64
Early Share Leader“-- Share Maintenance”
focus on securing future volume and profit growth in the product-market category
65
objectives for new /growth market strategies
Retain repeat or replacement business
| Use proactive actions/marketing programs/ adjust the marketing mix
66
PIONEER OR SHARE LEADER
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Fortress Strategy
Flanker Brands
Confrontation Strategy
Market Expansion Strategy
Contraction or Strategic Withdrawal Strategy
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67
FOLLOWER
```
Frontal Attack
Leapfrog Strategy
Flanking Attack Strategy
Encirclement Attack Strategy
Guerilla Attack
```
68
Mature market strategies
Objective -- “Maximize the flow of profits over the remaining life of the product-market”
“Maintain and protect the business’ market share”
-Fortress defense
-Flanker brands
-Niche strategy
69
Customer retention & loyalty
Crucial in most mature markets
| Related to satisfaction
70
To retain customers, measure:
Expectations
Perceptions
Satisfaction
Behavior
71
how do you measure behavior
Retention rate
Frequency of purchases
% of total purchases in category
72
Market penetration (how to)
new users within current markets (increased penetration)
new uses for current customers (extended use)
more usage per consumer (extended use)
73
what is market development?
market expansion
74
Sources of sustainable competitive advantage
Cost Leadership
| Differentiation
75
Ways to achieve cost leadership (8)
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No-frills product
Logistics/supply chain management
Customer relationship management
Innovative product design
Cheaper raw materials
Innovative production processes
Low-cost distribution
Reductions in overhead
```
76
Bases for differentiation
Product differentiation
Personnel
High service quality
77
Product differentiation can be
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Features
Performance
Durability
Reliability
Repairability
Style
Design
```
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Personnel differentiation can be
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competence
courtesy
credibility
reliability
responsiveness
communication
```
79
High service quality can be
delivery
installation
customer suppor
80
Strategies for declining
| markets
Product/Brand/Category Managers have to plan for product obsolescence
81
Strategies for declining markets (4)
Harvesting
Maintenance
Profitable survivor
Niche
82
why should you harvest
Avoid additional investment
| Reduce expenditures
83
Conditions for harvesting (6)
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Leading share position
Existing base of loyal customers
Few strong competitors
Future rivalry not intense
Low exit barriers
Decline likely to be slow & steady
```
84
what is maintenacne strategy
Maintain share in short term
85
Conditions for maintenance (3)
Leading share position
Future direction uncertain
Few strong competitors
86
Profitable survivor strategy
Increase share of market
| Encourage weaker competitors to exit
87
Conditions for profitable survivor (6)
Slow and steady market decline
Substantial pockets of demand will continue to exist
Leading share position
Superior resources or competencies necessary to encourage competitors to exit
Few strong competitors
Low exit barriers
88
Niche strategy
Strengthen position in a profitable niche
89
What are conditions for niche (3)
Niches will remain in the market
Strong competitors absent from the target market
Sustainable competitive advantage in niche
90
Fortress Strategy
focus : strengthen your position with repeat purchases, loyalty, appeal to late adopters.
—add more attributes/functionality to your products
91
Flanker Brands
create a solution in an area that your product portfolio has a perceived weakness.
92
defensive strategies for a pioneer (5)
fortress strategy, flanker brands, confrontation strategy, market expansion strategy, contraction or strategic withdrawal strategy,
93
Confrontation Strategy-
protect against loss of current customers – if needed go “head-to-head” with a rival that will enter the market.
94
Market Expansion Strategy
you know this from Ansoff Growth strategies—product development or market penetration—do not allow strategic inertia
95
Contraction or Strategic Withdrawal Strategy
stay focused on high-growth segments—withdraw if needed from smaller or slower growing segments
96
defensive strategies for a follower (5)
frontal attack, leapfrog strategy, flanking strategy, encirclement strategy, guerilla attack
97
Frontal Attack
objective capture substantial replace business—position your product for later adopters—understand their behavior
98
Leapfrog Strategy
you typically have an offering/product that is superior in someway from the pioneer or share leader (for example Tesla or the iPad)—however doesn’t always have to be tangible—could be your staff/relationships
99
Flanking Strategies
attract new customers—go after smaller segment/niche
100
Encirclement Strategy
similar to the above—go after specialized segment that did not buy early.
101
Guerilla Attack
looking for a modest share in several segments—as you know with guerilla marketing—you have limited dollars to invest in promotional mix elements.
102
Shake out:
transition from market growth to maturity
103
Characteristics of the transition period (3)
- Begins when the market is still growing but the rate of growth is starting to decline.
- Sparked when changes in the market such as intensity in competitive environment - excess capacity, increased difficulty maintaining product differentiation
- Weaker member of the industry often fails and many times competitors are acquired in this shakeout stage
104
Strategic traps during the transitions (4)
Failure to anticipate transition from growth to maturity
No clear competitive advantage as growth slows
Assumption that an early advantage will insulate the firm from price or service competition
Sacrificing market share in favor of short term profit
105
What does a value curve graph
Value (negative to positive), Factors of Competition (eg low fares, online booking etc)
106
what was cool about apple's ipad curve?
An illustration of how at the time of product design/idea the iPad chose to “dive” into a Blue Ocean
The objective was to create a new market in an area where there were no real competitors (much like their iTunes solution)
107
positioning statement for VOLVO
Value Proposition: FOR VOLVE
--target market: Upscale American families
--benefits offered: safety
--price range: 20% premium over similar cars
Positioning Statement:
| For upscale American families, Volvo is the automobile that offers the utmost in safety.
108
So usually your value proposition focuses on...
the target market, the benefits, and lastly price range (I typically do not like including a price in the positioning statement. You take these (3) pieces from the value proposition and include in your positioning statement—COMPLETE THOUGHT). Your call—if you want to include the price range).
109
REMEMBER CUSTOMERS/CONSUMERS DON’T
DON’T BUY STRATEGIES—YOUR JOB IS TO MARKET/SELL—BENEFITS
110
Critical words : DISTINCT
DISTINCT: Why would anyone choose it, if it’s not different than what they now buy?
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Critical Words: VALUED
VALUED: Differences that are not valued won’t do much good. Clear-colored colas failed.
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Critical Words: PHYSICAL
PHYSICAL: The goods or services must “walk the talk” and be different: marketing “me-too” products is very difficult.
113
Critical Words: PERCEPTUAL
PERCEPTUAL: If the customer does not perceive, the difference, the difference will not matter. As perceived by/in the minds of: It’s what the customer perceives that counts, not what the marketer perceives.
114
Ries and Trout, did what
popularized the concept of positioning
| Look to create a distinctive position in the minds of targeted prospects
115
What is positioning focused on?
differentiation
116
Consumers/Organizational customers choose what they buy for one of two reasons:
Better, in some sense, or Cheaper . In either case, the good or service they choose is some way, almost always Different from others they could have chosen
117
What we don’t mean by Positioning
Which stores or channels you’ll sell the product in
Where on the shelf you hope to have it placed
The market segment you will target
118
Positioning Grid is also called a
perceptual map
119
Value Curve does what (4)
- Shows graphically where differing products compete within a particular marketplace.
- It can then be used to significantly differentiate your product from your competitors so that they are IRRELEVANT
- Typically positioning against more than two attributes (as shown in Exhibit 7.8—example in book)
- Is a diagram which can be used to show instantly where value is created within an organization’s products and services.
120
Positioning process (7)
- Identify a relevant set of competitive products
- Identify determinant attributes
- Collect data about customer’s perceptions for products in the competitive set
- Analyze the current position of products in the competitive products
- Determine customers’ most preferred combination of attributes
- Consider fit of possible positions with customer needs and segment attractiveness
- Write Positioning statement or value proposition to guide development of marketing strategy
121
Customer / Consumer Perceptual Map -- Example Peanut Butter
Peanut Butter—Your product
Look at two competitors
Jif (JM Smucker) and Skippy (Best Foods)
Decide on two attributes: taste/nutritious
Research how potential consumers feel about those two attributes
Plot your responses
Draw conclusions how your product competes with the competition—for example “head-on” or avoiding competition
122
perceptual map for peanut butter look like
grid, best taste high and best taste low on the y axis(top to bottom), nutritious not nutritious on the x axis (left to right)
123
Building a Value Curve will what (4)
-Value curves indicates how products within a category compare in terms of the level – high or low – using as many attributes that are relevant
-Sometimes value is best delivered by eliminating or reducing the level of some attributes
-Exhibit 7.8 in textbook—show (3) retailers JC Penny, Sears, Neiman Marcus—using attributes:
Customer service, ambience, fashion-ability and value for money
-The attributes that are “most prized” by the market segment is where you want to focus your marketing strategy/tactics/promotional mix decisions
