EXAM DAY 1 1st Questions on all exams: Marketers are responsible for generating profitable revenue. Marketing is the process an organization undertakes to engage its target audience, build strong relationships to create value in order to capture value in return. It’s one of the primary components of business management and commerce. 2 test questions: 1. Digital direct delivery - Id the person - Id the action - Determine ROI Instant collection of data 2. Non-digital= linear- Portfolio mix analysis Volume = B0 + B1 ADV + B2 Promo + B3 Price Volume x Average price = Revenue 3 year period Delayed- collected data 1. How does idea generation play a role in the new product development process? a. Systematic search for new product ideas b. First step in new product development c. Use Internal and/or External Sources 2. Detailed understanding of Michelle Adams a. Politics in food brands b. Public policy in food industry i. Ex. Cheetos c. No positive return on investment = no job for her d. Marketing Brainology- art and science of decision-making i. Eye-tracking ii. COVID ● Shipping eye-tracking equipment for tests ● Discover issues with brands ● Exploratory research iii. Understand dynamics and influence on buyingà Vault of Human Understanding iv. Neuromarketing- combination of Psychology, Behavioral Economics, and Neuroscience v. Challenges ● Irrational behavior ● Say vs. Think/Do ● Having the right tools vi. Women are important because majority of buyers vii. Technology ● EEG ● Eye tracking ● Interviews ● Measuring a. Identify area of interest b. Individual gaze plots c. Aggregated maps 3. Use of various techniques for new product ideas a. Internal vs. External i. Internal- company find new ideas through R&D, pick brains of own people (internal social networks and intrapreneurial programs) ● Hackathons- employees take time from daily work to develop new ideas a. Boost employee morale and engagement b. Produce fresh new ideas c. Ex. Apple and Facebook ii. External- obtain new ideas from external sources ● Distributors and Suppliers a. distributors are close to market and can pass along info about consumer problems and new product possibilities b. suppliers can tell the company about new concepts, techniques, and materials that can be used to develop new products ● Competitors- watch competitors’ ads to get clues about their new products, take them apart to see how they work, analyze their sales, and decide whether they should bring out a new product of their own ● Customers- most important source of ideas a. company can analyze customer questions and complaint to find new products that better solve consumer problems b. invite customers to share suggestions and ideas ● Crowdsourcing- Company invites broad communities of people into innovation process b. Truly innovative companies don’t rely on only one source or another for new product ideas, instead they develop extensive innovation networks that capture ideas from any source 4. Once a product prototype is developed, what comes next in the new product development process? a. Product testing/Test Marketing i. Product Testing- tests prototypes to find a successful one ● Often involves actual customers in product development ● Product must have required functional features and also convey the intended psychological characteristics ii. Test Marketing- product and its proposed marketing program are tested in realistic market settings ● Test the product and its entire marketing program ● Amount varies with each new product a. Big investment b. High risks c. Uncertainty ● Testing is costly in time and money ● Little to no test marketing when: a. Costs of developing and introducing a product are low b. Management is already confident c. Ex. Simple line extensions or copies of competitors’ successful products d. Fast-changing market developments ● Alternative is controlled or simulated test markets a. Controlled- controlled panel of shoppers and stores b. Simulated- laboratory stores or simulated online shopping environments 5. Optimal pricing strategy is based upon a fundamental principle a. Value-based pricing i. Using buyers’ perceptions of value rather than seller’s cost ii. Customer Driven iii. Assess customer needs and value perceptions and then sets a target price based on perceptions of value iv. Consumer Surplus 6. What are the specific types of pricing strategy? a. Value Based- sets price ceiling i. Good value: offering right combo of quality service at a fair price ● Ex. Less-expensive versions of established brand name products ● Relative to the provider ii. Everyday low: charging a constant everyday low price with few discounts ● Ex. Walmart iii. High low: charging higher prices on an everyday basis but running frequent promotions to lower prices on items temporarily ● Ex. Macy’s iv. Value added: attached value-added features/services to differentiate offers and their higher prices ● Ex. Bose b. Cost Based- sets price floor i. Cost based: set prices based on costs for producing, distributing, and selling product plus a fair rate of return for effort and risk ii. Cost plus: adds a standard mark up to the cost of the product ● Ex. Construction companies iii. Break even: setting price to break even on costs or to make a target return (FC/CM): CM=Price-Variable cost iv. FC= Fixed cost ● Fixed costs- don’t vary with production or sales level a. Ex. Rent ● Variable- vary directly with level of production a. Ex. Cost per item produced c. Competition Based i. Setting prices based on competitors’ strategies, costs, prices, and market offerings ii. Look at customer perceptions between products iii. Strength of competitors and pricing strategies iv. Goal is to set prices according to relative value 7. Another, similar question related to pricing as question 6 a. Experience Curve b. Price Elasticity 8. Apple uses a specific type of pricing strategy for new products…don’t they? 😊 a. Price Skimming b. Charge ton of money and then lower over time 9. How to distinguish between upstream and downstream in the supply chain a. Upstream- firms supply raw materials, components, parts, information, finances, and expertise needed for product/service creation b. Downstream- marketing channels or distribution channels that look toward the customer, including retailers and wholesalers c. Upstream (producers) vs. Downstream (distributors) 10. Role of supply chain intermediaries a. Transform assortment of products into assortments of products wanted b. Bridge gaps (time, place, possession) that separate goods/services from users c. Distributors: Reduce number of channel transactions d. Add most value for the cost it requires e. Information- gather and distribute info about forces in marketing environment f. Promotion- develop and spread persuasive communications about offers g. Contact- find and engage customers and prospective buyers h. Matching- shape offers to meet buyer’s needs, including manufacturing, grading, assembling, and packaging i. Negotiation- reach an agreement on price and other terms so ownership can be transferred j. Physical distribution- transport and store goods k. Financing- acquire and use funds to cover costs of channel work l. Risk Taking- assume risks of carrying out channel work 11. Conflict in the supply chain can be either vertical or horizonal a. Vertical: conflict between different levels of the same channel (more common) i. Ex. McDonald’s facing conflict with its franchisees b. Horizontal: conflict among firms at same level of channel i. compete at same level of sales ii. Ex: fast-food all in one place with similar food types iii. Ex. Nike vs. Dick’s 12. The new concept to supply chain integration – participant roles a. Vertical Marketing System i. Provides channel leadership and consists of producers, wholesalers and retailers acting as a unified system ii. Ex. Retailer shares what is selling so producer knows when start making more iii. Corporate VMS- combines successive stages of production and distribution under single ownership ● Gives a company more channel control and flexibility ● Ex. Tesla with factory, showrooms, direct ordering iv. Contractual VMS- consists of independent firms at different levels of production and distribution who join together through contracts ● Ex. ChickfilA with franchisees v. Administered VMS- leadership is assumed through size and power of one or a few dominant channel members ● Ex. Home Depot strongly influences many manufacturers 13. Some marketers choose to sell through more than one channel a. Multichannel Distribution System i. Most companies use this system ii. Ex. John Deere to customers, Lowes, Home Depot iii. With new channels, company expands its sales and market coverage and gains opportunities to tailor products/service to specific needs of customer segments iv. Harder to control and can generate conflict amongst channels b. Multichannel (not integrated) vs. Omnichannel (connected) i. Consistent message and pricing and availability in Omnichannel 14. All the steps in designing and marketing a new product for new families (8pt Question) a. Idea generation i. Systematic search for new product ideas ii. First step in new product development iii. Use Internal and/or External Sources b. Idea screening i. RWW (real, win, worth doing) ● Is it real? a. Is there a real need and desire, and will it be bought? b. Is there a clear product concept and will the product satisfy the market? ● Can we win? c. d. e. f. g. a. Sustainable competitive advantage? b. Resources for product success? ● Is it worth doing? a. Fit growth strategy? b. Sufficient profit potential? Concept development and testing i. Idea developed into a product concept ● Product idea- idea for a possible product that the company can see itself offering ● Product concept- detailed version of the idea stated in meaningful consumer terms ● Product image- way consumers perceive an actual or potential product ii. Concept development- Develop new product into alternative product concepts, find out attractiveness of each concept, and choose best one iii. Concept testing- testing new product concepts with groups of target consumers Marketing strategy development i. Designing an initial marketing strategy for introducing product into market ii. Statement consists of three parts ● 1. Describes target market ● 2. Outlines value proposition ● 3. Sales, market-share, and marketing mix Business analysis i. Review sales, costs, and profit projections for new product to find out whether they satisfy objectives of company Product development i. Developing product concept into a physical product to ensure that product idea can turn into a workable offer ii. Product Testing- tests prototypes to find a successful one ● Can be done by company or outsourced ● Often involves actual customers in product development ● Product must have required functional features and also convey the intended psychological characteristics Test marketing i. Test Marketing- product and its proposed marketing program are tested in realistic market settings ● Test the product and its entire marketing program ● Amount varies with each new product a. Big investment b. High risks c. Uncertainty ● Testing is costly in time and money ● Little to no test marketing when: a. Costs of developing and introducing a product are low b. Management is already confident c. Ex. Simple line extensions or copies of competitors’ successful products d. Fast-changing market developments ● Alternative is controlled or simulated test markets a. Controlled- controlled panel of shoppers and stores b. Simulated- laboratory stores or simulated online shopping environments h. Commercialization i. Introducing new product into market ii. Face high costs iii. Decisions ● 1. Introduction timing (when to launch?) a. Ex. Still has kinks vs. competitors about to introduce a product ● 2. Where to launch? a. Ex. Single location, region, nationally, globally ● 3. Planned market rollout 15. Know the individual elements of the marketing communications mix a. Also known as Promotion Mix b. Engage consumers, persuasively communicate customer value, and build customer relationships i. Advertising- any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor ii. Personal Selling- personal customer interactions by the firm’s sales force to engage customers, make sales, and build customer relationships iii. Sales Promotion- short-term incentives to encourage the purchase or sale of a product or service iv. Public relation- activities designed to engage the company’s various publics and build good relations with them v. Direct and digital marketing- engaging directly with carefully targeted individual communities to both obtain an immediate response and build lasting relationships 16. How to connect to specific consumer targets a. Marketing and advertising to specific target market 17. Someone who has direct interaction with customers is a… a. Salesperson 18. OK, mega question: how to design a new product, be specific with respect to the type of new product mentioned in the question! (5 pts.) a. RWW (real, win, worth doing) i. Is it real? a. Is there a real need and desire, and will it be bought? b. Is there a clear product concept and will the product satisfy the market? ii. Can we win? a. Sustainable competitive advantage? b. Resources for product success? iii. Is it worth doing? a. Fit growth strategy? b. Sufficient profit potential? 19. Steps in developing an advertising program a. Step 1: Setting Objectives i. Informative ● Used when introducing a new product category to build primary demand ● More at beginning of product life cycle ii. Persuasive ● Convince of having a better product and build selective demand ● More important as competition increases and usually around mature stage ● May become comparative advertising where a company compares brand to other(s) iii. Reminder ● Important with mature products to maintain customer relations and keep product in relevance ● Usually in mature stage or decline iv. Corporate ● Eco-social responsibility expected b. Step 2: Budget Decisions i. Stage in product life cycle ● Ex. New products need relatively large advertising budgets to build awareness and mature brands usually require lower budgets ● Ex. More competitors and high clutter must be advertised more heavily ii. Market share iii. Competition c. Step 3: Developing Strategy i. Message decisions ● Issues: clutter ● Brand integrations (branded entertainment) involve making the brand an inseparable part of some form of entertainment or content a. Ex. Paid placement ● Native advertising- advertising that looks (in form and function) like other content surrounding it on the platform a. Ex. Ads in news articles ● First step in creating content is to plan a message strategy (the general message communicated) a. Identifies consumer benefits b. Follows company’s positioning and value strategies ● Creative concept- compelling “big idea” that bring strategy to life in a meaningful, believable, and distinctive way ● Message Execution- advertiser turns big idea into an actual ad execution that captures target market’s attention and interest a. Slice of life- typical people using product in normal setting b. Lifestyle- product fits with a particular lifestyle c. Fantasy- fantasy created around product or its use d. Mood or image- builds a mood or image around the product or service e. Musical- employs music or dance to engage viewers with brand f. Personality symbol- style creates a character that represents product g. Technical expertise- shows the company’s expertise in making product h. Scientific evidence- presents survey or scientific evidence that brand is better or more liked i. Testimonial- features a highly believable or likable endorsement Execution includes i. Tone- positive or negative ii. Attention-getting words iii. Format 1. Illustration 2. Headline 3. Copy ii. Media decisions ● Major steps in selection a. Determining i. Reach- measure of percentage of people in target market who are exposed to the ad campaign during a given time period ii. Frequency- measure of how many times the avg. person in the target market is exposed to message iii. Impact- qualitative value of exposure through a given medium iv. Engagement- measure of things for interest from audience b. Choosing media types c. Selecting media vehicles- specific media withing each general media type d. Choosing media timing- consider seasonality and real-time responses d. Step 4: Evaluating Effectiveness i. Return on investment = net return on investment divided by costs of investment ii. Attribution models iii. Communication effects- whether ad and media are communicating message well iv. Sales and profit effects- compare past sales and profits with past expenditures or through experiments 20. What is an acquisition anyway? a. Obtain new products: i. Company buys another company ii. Company buys a patent iii. Company buys a license to produce another’s product 21. What is a detailed product idea called? a. Product concept 22. What does a world class innovation factory do and how do they do it? Specifically what do they put on place that allows their clients to utilize their approach? (IDEO) (Worth “quite a few points”) - shopping cart -teamwork and creativity - “design thinking” - creating more variations -idea generation, (made 100 sketches), test products, refine -co design: bringing people from community that is using the design in to help design -understanding context of customer -not trying to know the answer at the beginning of the project -people relations, bringing people in to help THINKING, TALKING, LISTENING, AND LEARNING HOW, WHY, WHEN, WHERE, FOR WHOM, FOR WHAT. 23. A gimme, but please think about your response because grading will vary on quality!
