Marketing 6800 Product/Branding Objectives (Ch.7)
Preparation for Exam II
Your review sheets containing the learning objectives are posted on D2L. It is recommended that you answer the questions based on class discussion first and then use the text for supplemental information.
Simulation : The questions will be based on your team’s performance for quarter 8 of the simulation. You are not required to memorize information related to your performance and decisions. You should have a good working knowledge of what your team is doing and how it is competing. You should also know where to find the following information in your simulation: a) Financial & Balanced Scorecard information b) Customer measures (branding, pricing, and advertising judgments) c) Market share and unit sales d) Competitor Profiles e) The decisions your team made in quarter 8
I could use information from your decisions/performance in the simulation as the context for answering questions related to the review information. Below are a few examples (keep in mind that most of the information we have discussed can be related to your simulation):
1.
Evaluate your brand based on the brand health report card and other measures we discussed in class – refer to handout.
2.
Based on the strategies we discussed in class, what would you do to improve the performance of an underperforming brand in your portfolio – refer to handout?
3.
How would your pricing objectives and/or strategies change based on the stage of the PLC?
4.
How would IMC objectives and/or strategies change based on the stage of the
PLC?
5.
Develop a marketing dashboard for your team. What metrics would be included and why?
Discussion:
1.
Explain what happens in the three parts of the STP process.
STP Process: Segmentation, Targeting, Positioning
2.
Why organizations cannot be “all things to all people”.
3.
Explain the steps of the segmentation process. a.
Identify the variables that can be used to segment consumer and business markets (refer to text for examples).

Marketing 6800 Product/Branding Objectives (Ch.7)
Variables: Demographic – age, income, education, occupation; Geographic;
Psychographic – lifestyle (AIO analysis – attitudes, interests, opinions), personality;
Purchase Behavior – frequency, size; Product Use – heavy vs. light; Buyers’ Needs &
Preferences – brand loyalty, benefits sought. b.
What is a market segment profile? c.
What factors should be examined when assessing the attractiveness of a market segment?
4.
Identify the difference between a concentration and a multi-segment strategy.
What are the advantages/disadvantages of each? What are some other targeting strategies that can be pursued (i.e., product or market specialization, full coverage).
Remember, we discussed positioning here as well as with product/ brand analysis.
Your review questions for positioning are on that review sheet.
Product Portfolio Management
Discussion:
1.
The strategic decisions such as the number of product lines to offer (variety) and the depth of each product line (assortment).
The strategic decisions involved in product portfolio management regard product lines and product mixes. One of the most important decisions is the number of product lines to offer, referred to as the width or variety of the product mix. A product line is the product category (ex. Meat). The width or variety of the product mix is the number (#) of product lines; it is how companies organize their products (ex. Tylenol is a mix of products.
Tylenol has 6 product lines: head and body, arthritis, sinus and allergy, cold and flu, pain and sleeplessness, and children. Sara Lee is another product mix. It has several product lines: bakery is 1 product line, beverages is another product line, meats, body care, air care, detergents, shoe care, and insecticides). Having a wide variety of product lines can extend the company’s image and reduce risk. Looking at the product lines themselves, we assess the depth and assortment of each product line. The depth of the product line is the number (#) of products and brands within a product line (ex. The number of products within the meat product line of the Sara Lee company). A deep product line has brands targeted toward unique needs of their customers, also known as extending product lines.
Product Line:

Marketing 6800 Product/Branding Objectives (Ch.7)
Depth (# of products in PL)
PProduct
Variety
(# of Product Lines)
2.
The benefits of managing products as a product portfolio.
There are several benefits of managing your products as a product portfolio : creates package uniformity (ex. Healthy Choice packaging); offers advertising benefits; standardization of components, in which product lines often use the same component parts, which can reduce manufacturing and inventory costs (ex. Ford F15 and Ford
Explorer have same body frame); efficient distribution, in terms of when a firm offers many different product lines, sales personnel can offer a full range of choices and options to customers; quality enhancements, in terms of customers expecting and believing that all products in a product line are about equal in terms of quality and performance. Think about your entire product offering and find synergies.
3.
Why cannibalization to some degree is accepted by firms and how they can minimize the effects of cannibalization.
In Cannibalization , the sales of your new product take away sales of your existing product. The new and existing products are of similar price, components, make, and product. This is okay to an extent and is tolerated because if you don’t come out with a new product, your competitor will; if you are trying to extend your market and product line, then you recognize that your sales are shifting and you are still making a profit; and it can help increase market opportunities and market shares. You must take into consideration your new target market’s unique needs.
4.
The key challenges in developing product strategy for services.
Services vs. tangible products: The key challenges in developing product strategy for services lie in the Characteristics of Services : perishability – can’t store services, service demand is very time and place sensitive; to overcome this, use price adjustments, known as dynamic pricing. Intangibility of the service – difficult to evaluate the quality, difficult to convey service characteristics and benefits in promotion, and cannot take possession of a service; overcome this by offering guarantees and/or warranty.
Heterogeneity of service – no two services are performed the same; overcome this with training and evaluation of satisfaction with the process and outcome. Simultaneous production and consumption – be sensitive to consumer’s environment (music, lighting, loud noises, etc.).

Marketing 6800 Product/Branding Objectives (Ch.7)
5.
The appropriate strategies marketers could take during each stage of the Product
Life Cycle (PLC) as related to Product Strategy. (You need to have an understanding of the characteristics of each stage (e.g., sales/profits/competition) as well as the overall goals of each stage.)
The Product Life Cycle addresses the management of products and brands over time. It traces the evolution of a product’s development and birth, growth and maturity, and decline and death over four stages: Introductory stage – sales increase at slow rate, profits are non-existent (characteristics); build primary demand for product category
(marketing objective); focus on quality, quality improvements, technical changes, no great assortment of brand (actions marketers should take regarding product strategy).
Growth stage – sales increase rapidly, become profitable, competitors introduce their version, competition increases and intensifies (characteristics); build selective demand for brand by asking what makes our products unique (marketing objective); continue with improvements, product lines go deeper by introducing brands, variety, etc. (actions marketers should take regarding product strategy). Maturity stage – sales level off, profits decrease, competitors decrease, a competitor comes out on top through a shakedown (characteristics); holding market share by focusing on differentiation and building customer loyalty and satisfaction (marketing objective); some hold product lines constant, some expand product lines to reach more markets and customers, focus on your product’s uniqueness (actions marketers should take regarding product strategy).
Decline stage – sales and profits go down (characteristics); reduce expenses, decide to keep product, sale product, or abandon product (marketing objective); scale back, reduction in product line, reduce marketing expenses (actions marketers should take regarding product strategy).
Brand Management
Discussion:
1.
The advantages of branding.
A brand is a combination of name, symbol, term, and/or design that identifies a specific product. To be truly effective, a brand should succinctly capture the product offering in a way that answers a question in the customer’s mind.The overall advantages of branding include: product identification, in which customers can easily identify the brands they like; comparison shopping, in which branding assists customers in comparing and evaluating competing products; shopping efficiency, in which branding speeds up the buying process and makes repeat purchases easier by reducing search time and effort; risk reduction, in which branding allows customers to buy a known quantity, thereby reducing the risk of purchase; product acceptance, in which new products under a known brand name are accepted and adopted more easily; enhanced self-image, in which brands convey status, image, or prestige; and enhanced product loyalty, in which branding increases psychosocial identification with the product.
2.
How to measure brand equity.

Marketing 6800 Product/Branding Objectives (Ch.7)
In order to measure the value of the brand in the marketplace, you must look at the
Brand Equity , which is the marketing and financial value associated with a brand’s position in the marketplace. Interbrand, a branding consultant, measures the strength of the brand and the earnings the brand is expected to generate in the future. The measures used to determine brand equity are the following: brand awareness; brand quality, in which the quality associated with the band equals the consumer measure – the perceived quality; consumers perceived differentiation of brand; market share; and the degree of brand loyalty. Brand awareness and brand loyalty increase customer familiarity with a brand, and customers familiar with a brand are more likely to consider the brand when making a purchase. When this familiarity is combined with a high degree of brand quality, the inherent risk in purchasing the brand decreases.
3.
How to develop brand loyalty.
Brand Loyalty is an important concept because it guarantees repeat purchases. It is a positive attitude toward a brand that causes customers to have a consistent preference for that brand over all other competing brands in a product category. Brand loyalty moves consumers through 3 stages: brand awareness (customer knows about the brand), brand preference (customer prefers one brand when it is available), and brand insistence
(customer insists on one brand and won’t accept substitutes).
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
1.
Brand awareness 2. Brand preference 3. Brand insistence
You want to reach brand insistence. In order to move them from 1 to 3 and develop brand loyalty, you must: offer differential advantage; have good advertisements; have good pricing; show key benefits of product; and have effective salespeople. More brand loyalty equals a better brand equity outlook.
Application:
4.
Evaluate the performance of a brand using the tools discussed in class (e.g., PLC, financial analysis, etc.)
In order to evaluate the performance of the brand , you must: look at financial analysis; look at research studies (how consumers perceive the brand in terms of benefits and strengths and weaknesses and how your brand compares to the competition); look at the product life cycle and product positioning map or perceptual map; and look at the product performance analysis which looks at overall strengths and weaknesses based on all other data.
5.
Analyze a brand using a brand health report card.
A Brand Health Report Card should answer the following questions: does the brand excel at delivering benefits?; is the brand relevant to consumers and the company?; is the

Marketing 6800 Product/Branding Objectives (Ch.7) pricing strategy in line with the perception of value?; is the brand properly positioned in accordance with the wants of consumers?; is the brand consistent with strategies?; and is the brand given proper support, in terms of financial support and marketing support?
Product Positioning
Discussion:
1.
The role of differentiation and positioning in product strategy.
Differentiation and positioning in product strategy involve creating differences in the firm’s product offering that set it apart from competing offerings ( product differentiation ), as well as the development and maintenance of a relative position for a product in the minds of the target market or the creation of a mental image of the product offering and its differentiation features in the minds of the target market ( product positioning ). Whereas differentiation is about the product itself, positioning is about customers’ perceptions of the real or imaginary benefits that the product possesses.
Differentiation and positioning can be monitored through the use of perceptual mapping, are fundamentally based on the brand, as well as on product descriptors, customer support services, and image, and include the positioning strategies of strengthening the current position, repositioning, or repositioning the competition. Product positioning and differentiation include identifying competitive advantages in terms of product, services, channels, people, and image. Once the right competitive advantages to focus on are chosen, you must determine how many differences should be promoted. Differences should be in terms of importance, distinctiveness, not easily imitated, and profitability.
2.
How a perceptual map can be used as a tool in the development of marketing strategy. What does a perceptual map tell a marketer?
Perceptual Mapping is a visual, spatial display of customer perceptions and preferences on two or more key dimensions. It can be used as a tool to monitor product differentiation and product positioning. Perceptual positioning maps display how consumers perceive competing products/brands on two dimensions that are important to consumers. The dimensions can reflect product attributes or benefits. Perceptual maps indicate products/brands that are similar in terms of relative mental position, and the illustrate voids in the current mindscape for a product category. The value of perceptual mapping is to compare competitor brands to see where your brand stands; to identify potential target markets, needs, and opportunities for new products that may not be satisfied in the marketplace; and to compare our own brands to see if they are being perceived they way we intended.
Application:
3.
Write a positioning statement using the format presented in class.
Positioning Statements should be written in the following form: To (target segment and need) our (brand) is (concept) that (point-of-difference).
Ex. “T (young, active

Marketing 6800 Product/Branding Objectives (Ch.7) soft-drink consumers who have little time for sleep) our (Mountain Dew) is (the soft drink) that (gives you more energy than any other brand because it has the highest level of caffeine. With Mountain Dew, you can stay alert and keep going even when you haven’t been able to get a good night’s sleep).”
4.
Analyze a perceptual map for market opportunities and determine the appropriate positioning strategy to use.
Pricing
Discussion:
1.
Discuss the factors that influence the setting of prices.
Factors influencing the setting of prices : objectives (volume-oriented, profit-oriented –
ROI, market share, prestige, status quo, competitive matching); cost structure (break-even analysis); consumer (value and expectation – what are the benefits they want and what are their expectations?); demand (dependent on price elasticity – sensitivity to price changes); competition (number of competitors; competitive market structures – monopolistic, where there are many sellers and buyers, and oligopoly, where there are few dominant sellers; strength of comp. matters because they can retaliate to your price change); product life cycle stage (what are the pricing strategy options for each stage?).
2.
Explain the difference between cost-based versus value-based pricing.
Cost-based pricing tells customers what to value:
Product idea

Cost of developing product

Price (determined by product cost)

Value of product

Customers
Value-based pricing builds product on what customers value (ties in with market orientation:
Customers (what they value and want in a product)

Value

Price customers are willing to pay  Cost based on what customers want  Product
Cost-based is more common.
3.
Explain the various pricing objectives a company can set.
There are several pricing objectives a company can set: volume-oriented (what are the # of units we want to sell); profit-oriented (focus on return on investment); market share
(maintain or increase share); prestige pricing (usually high pricing); status quo (maintain prices); competitive matching. Depending on where your product is at in the Life Cycle, you will pursue one of these pricing objectives.
4.
Understand the price and quantity demanded under conditions of elastic and inelastic demand.

Marketing 6800 Product/Branding Objectives (Ch.7)
Elastic Demand : inverse relationship, in which if price goes up, quantity goes down and total revenue decreases; if price goes down, quantity goes up and total revenue goes up.
With elastic demand, lowering prices help total revenue. Inelastic Demand : inverse relationship, in which if price goes up, quantity goes down and total revenue goes up; if price goes down, quantity goes up and total revenue goes down. With inelastic demand, raising prices can help total revenue.
5.
Discuss the conditions under which a consumer is likely to be less price sensitive.
Substitutes, purchasing power, durability and demand influence sensitivity . The fewer the substitutes, the more likely a consumer is going to be less price sensitive. With inelastic demand, people are less price sensitive. If you have greater purchasing power, you are going to be less price sensitive. The lesser the durability, the more likely a consumer is going to be less price sensitive. Other conditions that decrease price sensitivity: products are highly differentiated from the competition; customers perceive products as being necessities; the prices of complementary products go down; customers believe that the product is just worth the price.
6.
Discuss how pricing strategy will change according to the stages of the Product
Life Cycle.
Pricing strategy changes according to which stage of the Product Life Cycle you are in.
Introductory Stage : decide between price skimming and penetration pricing. Skim pricing involves charging high prices initially and focusing on achieving higher profitability in the early stages rather than unit volume. This is most likely to occur at early stages and late stages of PLC. Favorable conditions for price skimming include: considerable differentiation (consumers have to see there is a difference in product to justify high price); quality-sensitive customers (customers willing to pay higher price for quality); sustainable advantage; few competitors; few substitutes (for the product); difficult competitor entry. Penetration Pricing is more appropriate when business is focused on building unit volume. This is most likely to occur at early stages of PLC.
Favorable conditions for penetration pricing include: no/limited differentiation; pricesensitive customers; no sustainable advantage; many competitors; many substitutes; easy competitor entry. Very difficult to raise prices because competitors will follow suit.
Growth Stage : stimulate demand, drive toward break-even point. Maturity : defend market share, retain customers, pursue profitability and expand into additional channels.
Decline : stimulate demand and clear out old products, or to milk existing products for profitability at end of life cycle.
Application:
7.
Calculate a break-even point, total cost, total revenue, and total profit.
Break-even worksheet (Memorize Equations)
Metrics

Marketing 6800 Product/Branding Objectives (Ch.7)
Discussion:
1.
Explain why marketing metrics have become more important within organizations.
Marketing Metrics have become important because of the following: managers under pressure to justify their contribution to firm performance by linking marketing activities to financial performance and justifying the firm’s performance in meeting its objectives.
But it is hard to link financial performance to certain ads or brands (marketing activities), so need to identify gaps and corrective action. The two most used metrics are market share and product/service quality. Gauge quality through satisfaction surveys. Set objective and develop metrics to evaluate the achievement of that objective.
2.
Describe the primary goals and benefits of developing a marketing dashboard.
A marketing dashboard is a computerized, graphical presentation. It helps managers see the situation at a glance, based upon a limited number of data inputs and helps you see your performance in your brands, etc. There are various levels of dashboards – corporate, divisional, or functional. See the metrics, the measures on the Dashboard.
3.
Discuss what has to be considered when developing and evaluating metrics.
Metrics used to gauge progress toward achieving objectives; forecasts of future sales and costs; budgets allocating financial resources; schedules identifying the timing of marketing tasks. Metrics are most valuable to the marketer when viewed in the context of: expected outcomes; historical results; competitive or industry outcomes; environmental factors.
Application:
1.
What would be on your marketing dashboard in regards to the simulation?
Simulation: price, ad, and brand judgments, market share and demand, unit sales in each segment.

Marketing 6800 Product/Branding Objectives (Ch.7)
Chapter 9: Distribution & Supply Chain Mgmt
Discussion:
1.
How marketing channels, logistics, and supply chains differ.
Supply Chain Management:
2.
Why some manufacturers elect to perform most if not all of the channel functions themselves. (i.e., a direct channel structure?)
3.
Why intermediaries are often needed in channels of distribution.
4.
The differences among the three degrees of market coverage for products: intensive, selective, and exclusive distribution. What types of products are usually distributed with each type of market coverage?
5.
Current trends and issues in distribution and supply chain management.
Chapter 9: IMC Strategy
Discussion:
1.
The three main decision areas in IMC we discussed in class.
2.
The benefit of using a push strategy and a pull strategy.
3.
The AIDA model and how the promotional mix elements can help move a consumer through this process.
4.
How the three primary objectives of IMC relate to the stages of the PLC.
5.
The usefulness of each of the IMC tools. When and why should they be used?
(Refer to the sections on each of these tools in the text.) a.
The difference between institutional and product advertising.

Marketing 6800 Product/Branding Objectives (Ch.7)
Chapter 9: Distribution & Supply Chain Mgmt
Discussion:
How marketing channels, logistics, and supply chains differ.
A marketing channel is a system of marketing institutions through which products, resources, & information flow from point of production to the final user. Some channel members take possession of the products such as wholesalers, distributors & retailers or some members facilitate the process such as agents & brokers. Logistics is a form of physical distribution and includes activities such as order entry, transportation, warehousing, and inventory carrying. The supply chain is the connection and integration of all members of the marketing channel. The supply chain integrates firms such as suppliers, manufacturers, retailers, and the final consumer into a seamless process.
Supply Chain Management:
Why some manufacturers elect to perform most if not all of the channel functions themselves. (i.e., a direct channel structure?)
Why intermediaries are often needed in channels of distribution.
Channel members particularly manufacturers, can cut costs by working through channel intermediaries. Throughout the marketing channel, some firms are good at manufacturing, some at storage, and others at selling, and because of the high costs involved intermediaries are often used. They typically attain specialization in one or more of the following functions: sorting, breaking bulk, maintaining inventories, maintaining convenient locations, or providing services.
The differences among the three degrees of market coverage for products: intensive, selective, and exclusive distribution. What types of products are usually distributed with each type of market coverage?
Intensive distribution makes a product available at the maximum number of merchants or outlets in each area to gain as much exposure and as many sales opportunities as possible.
It is most commonly used for convenience goods such as candy, soft drinks, and cigarettes. Selective distribution gives several merchants or outlets the right to sell a product in a defined geographic area. This is desirable when customers want to comparison shop. For example, Kodak cameras are available at Best Buy, Walmart and
Target stores so consumers can compare prices and shop at their favorite locations.
Exclusive distribution gives one merchant or outlet the sole right to sell a product. It is usually used for prestige products such as BMW, and targets a single market segment.
Current trends and issues in distribution and supply chain management.

Marketing 6800 Product/Branding Objectives (Ch.7)
A good distribution strategy is essential for success because once a firm selects a channel and makes commitments to it distribution becomes highly inflexible due to long term contracts. Another issue for supply chains is that each firm in the supply chain has its own goals and objectives, conflict can also arise in a supply chain because each firm possesses different resources, skills and advantages.