PSU Marketing 301 Exam 2 (Winterich)

Strategic Planning
Internal: Organization’s goals and capabilities
Strategy: An “ongoing process”
External: Marketing Opportunities
Steps in Strategic Planning
1. Define the company mission
2. Setting company objectives and goals
3. Design the business portfolio
4. Planning marketing and other functional strategies
mission statement
a statement of the organization’s process

ex. Nike: “To bring inspiration and innovation to athletes around the world

business portfolio
a combination of businesses that has the potential of reaching objectives
(What businesses to enter/exit, how much to invest)
Strategic Business Units (SBU’s)
different divisions, markets, product lines (businesses) that a company has

ex. Proctor & Gamble owning 100’s of brands

BCG Growth- Share Matrix
used for a company w/ many different product offerings

Question Mark- Low market share, high market growth rate (good potential)
Star- High market share, high market growth rate
Cash Cow- High market share, low market growth rate
Dog- Low market share, low market growth rate

Market penetration
company growth by increasing sales with current products in current markets
Market development
bringing current products to new markets
Product development
bringing new products to current markets
Diversification
company growth by creating new products in new markets
SWOT analysis
Strengths, Weaknesses, Opportunities, Threats
Internal Positives
Strengths
Internal Negatives
Weaknesses
External Positives
Opportunities
External Negatives
Threats
Marketing Strategy (parts)
Segmenting, Targeting, Positioning (STP)
Steps in STP
1. Strategy or objectives (segmentation)
2. Describe segments (segmentation)
3. Evaluate segment attractiveness (targeting)
4. Select target market (targeting)
5. Identify and develop positioning strategy (positioning)
Market
a group of consumers or potential customers
4 requirements of a “Market”
-must be a need
-must be an ability to purchase the product
-must be willing to use this purchasing product
-must have the authority to make the purchase
Segmentation
the process of dividing a market into smaller, more manageable customer groups that share common characteristics
Segments must be:
-measurable
-accessible: have to be able to reach through communication/distribution
-differentiable: each segment should respond differently to our marketing efforts
-substantial:large enough to be profitable
-actionable: we must have the resources
undifferentiated (mass) marketing
firm ignores strategies altogether, and focus on positioning strategies to appeal to a large number of people

ex. walmart

differentiated (segmented) marketing
targets several market segments and designs, separate positioning strategies for each

ex. capital grille, olive garden, bahama breeze: all owned by same company trying to appeal to different segments

concentrated (nich) marketing
targets a large share of one or a few small segments or niches

ex. coca- colas different products reaching different segments

micro- marketing
tailoring products and marketing programs to suit the tastes of specific locales and or individuals

ex. customization, local marketing

4 basic elements to segment consumers
1. geographics
2. demographics
3. psychographics
4. behaviorgraphics
geographic segmentation
dividing market into geographic units
demographic segmentation
dividing a market based on demographic variables (gender, income, race, family size)

ex. Gillete fusion (mens) vs. venus (womens)

psychographic segmentation
dividing a market based on personality, lifestyle, and social class

ex. Hollister: California lifestyle
Mountain Dew: extreme lifestyle

behavioral segmentation
based on behaviors such as:
-usage occasion
-benefits sought
-user status (light users, medium users, heavy users)
-usage rate
-loyalty status
Intermarket segmentation
segments of consumers who have similar needs and buying behavior even though they are located in different countries

ex. mercedes, coca-cola, ikea

Evaluating market segments
internal: does the segment fit with our objectives and resources
external: how big is the segment? what is its growth potential? are there alot of substitutes? How much power do suppliers and customers hold?
sales estimates
-market potential
-company sales potential
competitive assessment (segments)
who, how many, how large, how strong
cost estimates
-the expense of developing a marketing mix
-costs of reaching segment relative to competitors costs
targeting
choosing the segment that is most attractive to your organization
positioning
the place the product occupies in the consumer’s mind relative to competing products
a good positioning strategy will incorporate at least one…
competitive advantage
competitive advantage
differentiate your brand based on:
-product (jersey mike’s)
-services (chick-fil-a)
-channels (esurance)
-people (southwest)
-image (nike)
what helps a company understand what their positioning should be?
-market research
-perceptual maps
the product positioning map
Quad 1: high price, high quality
Quad 2: low price, high quality
Quad 3: low price, low quality
Quad 4: high price, low quality
Why use perceptual maps?
-see what people think of us
-make decisions about how a product should be positioned
-find out what the most important product attributes are
-see who our competition is
Integrated Marketing Campaign (IMC)
a positioning strategy in which all 4 P’s work together to give consumers a clear, defined definition of what a brand means, or to reinforce what consumers believe about a product
3 levels of product (the product concept)
1. core benefit
2. Actual product
3. augmented product
core benefit
benefit or service that the consumer seeks from the product
Actual product
product planners turn the core benefit into an actual product
Augmented Product
built around the core benefit and actual product by offering additional consumer services and benefits

ex. warranty, instillation

types of consumer products
-convenience
-shopping
-speciality
-unsought
convenience product
product bought easily and frequently
Buying Behavior: frequent, little planning/ comparison
Price: low
Distribution: wide spread
Promotion: mass promotion

ex. laundry detergent, soap, milk

Shopping product
products not bought as frequently that consumers spend a little more time evaluating
Buying Behavior: less frequent, more comparison, more effort
Price: higher
Distribution: Selective
Promotion: advertising and personal selling

ex. cell phones, clothing brands

speciality product
A consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort
Buying Behavior: special purchase, effort, low price sensitivity
Price: high
Distribution: exclusive
Promotion: carefully targeted

ex. luxury items, designer cars/clothes

unsought product
products people dont really care about or pay attention to
Buying Behavior: low product awareness
Price: varies
Distribution: varies
Promotion: aggressive advertising, personal selling

ex. quick and loans, progressive

Industrial products
product bought by individuals and organizations for further processing or for use in conducting a business
Organizations “other products”
for profit and non profit schools, churches etc.
People (persons) “other products”
politicians, entertainers, pro athletes, doctors
Places “other products”
tourism, immigration
3 levels of product decisions
-individual
-product line decisions
-product mix decisions
factors in the individual level
-product attributes: quality, features, style, design
-branding: a name, term, symbol, design or combination
-packaging: un-boxing, transportation
-Labeling:identifies the product/brand, adds personality to the brand
-product support services: keeping the customer happy after the sale
Product line length
the number of items in a product line
How is product line length adjusted?
-stretching: upward- BMW making 9 series (expensive)
downward- BMW making 1 series (cheaper)
-filling: BMW making the x3 to go between the x1 and x5
Product mix decisions
all of the product lines and items that a particular seller offers
Product mix dimensions
-width: # of product lines
-Length: # of items within product line
-Depth: ex. different flavors of V8 juice
-Consistency
What is a brand?
-a marker of identification for a product
-a promise to the consumer
-a representation of what perceptions and feelings consumers have toward a product offering
Brand Equity
the positive effect that knowing the brand has on customer response to the product; a financial evaluation of how much a brand is worth
High brand equity provides…
-consumer willingness to buy over competitors and/or willingness to pay a premium for the brand
-basis for strong, profitable customer relationships
-greater awareness and loyalty
Brand Positioning
based on product attributes, benefits, beliefs/values
How do brands select their name?
-easy to pronounce, recognize, remember
-distinctive
-translates into foreign language
-suggests products benefits/qualities
-extendable (not limited to one particular product)
-capable of being registered and legally protected
How do brands protect their names?
-trademark
– genericization voids trademarks legal protection
National Brands vs. Store Brands
coca-cola vs. great value cola
co- branding
2 companies coming together also know as co-partnership

ex. go- pro and redbull “stratus”, bonne belle and dr.pepper making dr. pepper flavored lip balm

licensing
entering foreign markets through developing an agreement with a licensee in the foreign market

ex. star wars: toys with the stars wars name are made by hasbro

line extension
introduction of additional items within the current product category under the same brand name

ex. coke zero, budlight lime, Iphone 5c

Cannibilization
a risk associated with line extension in which people begin buying the line extension (coke zero) more than the normal product (coke)
Brand Extension
use a successful brand name to launch a product in a new category

ex. clorox extending the brand from bleach to dish detergent

Multibranding
multiple brands by the same company in the same product category

ex. pepsico owns pepsi, sierra mist, mug, etc.

New Brands
used when existing brand names are either unsuitable for brand extension or the company doesn’t want to dilute them

ex. toyota creating lexus as their luxury brand

4 service characteristics
-intangibility
-variability
-inseparability
-perishability
intangibility
services cannot be seen, tasted, felt, heard, or smelled before purchase
variability
quality of services depends on who provides them and when, where, and how
inseparability
services cannot be separated from their providers
perishability
services cannot be stored for later sale or use
internal marketing
between company and employees
interactive marketing
between employees and customers
external marketing
between company and customers
Why do we want new products?
New products are crucial for the health of the enterprise
NPD
New Product Development
NPD Process
-Idea Generating
-Idea Screening
-Concept development/testing
-marketing strategy development
-Business Analysis
-Product Development
-Test Marketing
-Commercialization
Idea Generation
the systematic search for new products
-Internal sources: company employees at all levels
-External sources: customers, competitors, distributers, suppliers, outsourcing partners
Idea Screening
screening process to reduce # of ideas by spotting good ones and dropping poor ones
Concept development/testing
-development: where the product is described in a way so that the consumer can begin to understand it
-testing: using things like focus groups to test the product
Marketing Strategy/development
initial marketing strategy
1. Target market/objectives
2. launch tactics: making the product available on a large scale
3. long term objectives
Business Analysis
does the idea make business sense?
-review of sales, costs, and profit projections to see if it matches objectives
-Assess risk
-If results are positive move on
Product Development
Develop physical/actual product
-investment increases considerably
Test marketing
release product to limited geographic area to test sales
What percent of products fail?
90%
What percent of products are truly successful?
less than 2%
commercialization
“launch”; must decide where and when to initially introduce the product
-must develop a roll out plan
Customer Centered NPD
focus on finding ways to solve customer problems and create more customer satisfying experiences
Team-based NPD
cross-functional teams work through overlapping steps to save time and increase effectiveness
Introduction stage
-product is first launched
-costs are high and sales are usually slow
-profits are usually negative
What is the objective of the introduction stage?
create product awareness and get consumers to try the product
Growth stage
-if the product gains traction, sales start growing rapidly
-higher unit sales lead to lower avg. costs per unit, letting profitability be achieved
What is the objective of the growth stage?
maximize market shares, build customer loyalty
Maturity stage
-sales level off
-many people already have the product ; some are re-buying or upgrading
-costs are low, so with a high market share can still make good profits
What is the objective of the maturity stage?
defending our market share through gradually reducing the price
How do you grow during the maturity stage?
-modify the market: target new segments or increase usage among current customers
-modify the product: deliver an improved product to get new or repeat customers
-modify the rest of the marketing mix: add services, cut prices, change distribution, change promotion
decline stage
-sales fall as people don’t need the product anymore
-unit sales and prices fall, hard to remain profitable despite low production costs
-some niche products may do well
What is the objective of the decline stage?
reduce cost as much as possible to stay profitable
Product Life cycle (PLC) model
Introduction stage–> Growth stage–> maturity stage–>decline stage
What is the problem with the PLC model?
reality is never as clean as it makes it out to be
Consistency
How closely related product lines are