chapter 5 textbook

Question 1

Marketers have been forced to embrace new appraoches because of

Answer 1

rapid tech advamcenets
greater customer empowerment
fragmentation of traditional media
growth of digital and mobile marketing options
increased competition
globalization

Question 2

integrating marketing

Answer 2

Brand equity can be built in may ways
Mamy firms are trying to build their brand equity in the market place
Creativity cant sacrifice a brand building goal

Question 3

personalized marketing

Answer 3

The rapid expansion of the Internet and continued fragmentation of mass media have brought the need for personalized marketing into sharp focus.
Marketers have started embracing concepts like experiential marketing and relationship marketing
Branded experiences are playing an increasingly important role in helping forge a personal connection with consumers,

Question 4

Experiential marketing

Answer 4

Experiential marketing promotes a product not only by communicating a product’s features and benefits but also by connecting it with unique and interesting consumer experiences
“The idea is not to sell something, but to demonstrate how a brand can enrich a customer’s life”
Brands are investing in unique experiences that allow consumers to enjoy memorable experiences without feeling that they are being marketed to
Ex: van cleef launched a prgram for people interested in how jewerly was made-> the brand reinforces quality perceptions and enables customers to obtain new information about the brand, thereby making it seem more accessible.
It helps expand brand awareness, build brand buzz, can help reshape consumer perceptions of the brand

Question 5

Cem process that ivolves monitoring 3 patterns:

Answer 5

past patterns, present, potential
past patterns (evaluating completed transactions), present patterns (tracking current relationships), and potential patterns (conducting inquiries in the hope of unveiling future opportunities).

Question 6

Relationship marketing

Answer 6

Marketing strategies must transcend the actual product or service to create stronger bonds with consumers and maximize brand resonance
the role of relationship marketing is to put customers’ needs front and center of everything that is done in marketing
This broader set of activities is sometimes called relationship marketing and is based on the premise that current customers are the key to long-term brand success
Relationship marketing attempts to provide a more holistic, personalized brand experience to create stronger consumer ties. It expands both the depth and the breadth of brand-building marketing program
Benefits of relationship marketing: Acquiring new customers can cost five times as much as satisfying and retaining current customers.
The average company loses 10 percent of its customers each year.
A 5 percent reduction in the customer defection rate can increase profits by 25 to 85 percent, depending on the industry.
The customer profit rate tends to increase over the life of the retained customer.

Question 7

Three cncpets helpful in relationship marketing

Answer 7

mass customization, personalization/one-to-one marketing, and permission marketing.

Question 8

Mass customization

Answer 8

The concept behind mass customization—namely, making products to fit customers’ exact specifications—is an old one, but new digital-age technology now enables companies to offer customized products on a previously unheard-of scal
By going online, customers can communicate their preferences directly to the manufacturer, which, by using advanced production methods, can assemble the product for a price comparable to that of a non-customized item
In an age defined by the pervasiveness of mass-market goods, mass customization enables consumers to distinguish themselves with even basic purchases.
Mass custmiztion isnt just products
companies must also evolve their offerings to tap into real value or emotional drivers that influence customer purchases→ involve customers in the purchase process and customers can co rceate their offerings with firms. Ex: nike, you can personalize a message on shoes
Location based marketing→ companies tailor and customize their offerings depending where the consumer lives
Ex: tesco has a loyalty program with its clubcard and it allows tesco to see customer behvaiour

Question 9

Permission marketing

Answer 9

Permission marketing, the practice of marketing to consumers only after gaining their express permission, is another influential perspective on how companies can break through the clutter and build customer loyalty
A pioneer on the topic, Seth Godin, has noted that marketers can no longer employ “interruption marketing” or mass-media campaigns featuring magazines, direct mail, billboards, radio and television commercials, and the like because consumers have come to expect—but not necessarily appreciate—these interruptions
Seth defined “permission marketing” as anticipated (people look forward to hearing from you), personal (messages pertain directly to individuals), and relevant (the focus of the effort is of interest to the prospect
Because we see so many ads, have to have some type of inducement
E mail is used
Brands should be managing their relationships with customers
Permission marketing does pose threats to marketers →issues f privac
Permission marketing works if companies respect boundaries
People are more aware of privacy risks

Question 10

5 steps to effective permission marketing

Answer 10

situational permission’
brand trust
personal relationship
incentive based permission
intravenous permission

Question 11

Reconciling the Different Marketing Approaches

Answer 11

Mass customization and one-to-one and permission marketing are all potentially effective ways to get consumers more actively engaged with a brand.
Different approaches empahsze different aspects of brand equity
For example, mass customization and one-to-one and permission (or participation) marketing are particularly effective at creating greater relevance, stronger behavioral loyalty, and attitudinal attachment. Conversely, experiential marketing is particularly effective at establishing brand imagery and tapping into a variety of feelings as well as helping build brand communities. Despite potentially different areas of emphasis, all four approaches can build stronger consumer–brand bonds
The classic four ps doesnt capture all modern tactics ut still have to answer them

Question 12

Product strategy

Answer 12

The product itself is the primary determinant of what consumers experience with a brand, what they hear about a brand from others, and what the firm can tell customers about the brand. At the heart of a great brand is invariably a great product.
Need to design and deliver a product that fully satisfies consumer needs
Need to surpass expectations
After considering how consumers form their opinions of the quality and value of a product, we consider how marketers can go beyond the actual product to enhance product experiences and add additional value before, during, and after product use

Question 13

Perceived quality

Answer 13

Perceived quality is customers’ perceptions of the overall quality or superiority of a product or service compared with alternatives and with respect to its intended purpose.
Achieving a satisfactory level of perceived quality has become more difficult for companies as continual product improvements over the years have led to heightened consumer expectations
General dimensions : primary ingredients and supplementary features; product reliability, durability, and serviceability; and style and desig
Product quality also depends on speed, accuracy, care of predict, customer service
Brand attitudes may also depend on more abstract product imagery, such as the symbolism or personality reflected in the brand. These “augmented” aspects of a product are often crucial to its equity.
onsumer evaluations may not correspond to the perceived quality of the product and may be formed by less thoughtful decision making, such as simple heuristics and decision rules based on brand reputation or product characteristics such as color or scent.

Question 14

Managing customers post purchase

Answer 14

Product strategies should focus on both purchase and consumption
Finding ways to encourage trial and repeat purchases
Most favorable associations and sgtrongest come frm actual product experiences
Unfortunately, too little marketing attention is devoted to finding new ways for consumers to truly appreciate the advantages and capabilities of products
Afyermarketing: marketing activities that happen after customer purchase
Innovative design, thorough testing, quality production, and effective communication—through mass customization or any other means—are without question the most important considerations in enhancing product consumption experiences that build brand equity
Post-purchase marketing or aftermarket is particularly important in the context of e-commerce.

Question 15

User manuals

Answer 15

Instruction or user manuals for many products are too often an afterthought, put together by engineers who use overly technical terms and convoluted language.
As a result, consumers’ initial product experiences may be frustrating or, even worse, unsuccessful. Even if consumers can figure out how to use the product’s basic functions, they may not learn to appreciate some of its more advanced features, which are usually highly desirable and possibly unique to the brand
To enhance consumers’ consumption experiences, marketers must develop user manuals or help features that clearly and comprehensively describe both what the product or service can do and how consumers can realize these benefits. With increasing globalization, writing easy-to-use instructions has become even more important because they often require translation into multiple languages.39 Manufacturers are spending more time designing and testing instructions to make them as user-friendly as possible

Question 16

Customer service programs

Answer 16

“The term ‘aftermarketing’ describes a necessary new mindset that reminds businesses of the importance of building a lasting relationship with customers, to extend their lifetimes. It also points to the crucial need to better balance the allocation of marketing funds between conquest activities (like advertising) and retention activities (like customer communication programs).”41 Customer service plays an important role in the post-purchase phase. Investments in customer service offer multiple benefits, including the ability to connect with customers and gain valuable feedback.
People will pay a premium for good customer service
Bad customer service, on the other hand, can create significant negative publicity and with the help of social media, has the potential to go viral and damage the reputation of the compan
In recent years, to strengthen ties with customers, companies are turning to brand communities to help enhance the support provided to customers and quickly resolve technical issues. Nearly half of all companies with brand communities can reduce customer support costs by 10 to 25 percen
Ex: sephora beauty talk
Companies can also gain significant benefits from cross-selling and up-selling following good customer service. Post-purchase marketing can include the sale of complementary products that help make up a system or, in any other way, enhance the value of the core product
Aftermarketing can be an important determinant of profitability.
Aftermarket sales are strongest when customers are locked into buying from the company that sold them the primary product, due to service contracts, proprietary technology or patents, or unique service expertise

Question 17

Loyalty programs

Answer 17

Have become a pooualr way which marketers can create stronger ties to customers
Their purpose is “identifying, maintaining, and increasing the yield from a firm’s ‘best’ customers through long-term, interactive, value-added relationships.
All industries have developed
Loyalty programs can be integrated into e commerce trasnacips
Loyalty programs reduce defection rates and increase retention, and the value created by the loyalty program creates switching costs for consumers, reducing price competition among brand
However, loyalty programs are increasingly finding it difficult and costly to maintain, given the proliferation of such programs
The product is at the heart of brand equity. Product strategy entails choosing both the tangible and intangible benefits the product will embody and marketing activities that consumers desire and the marketing program can deliver. A range of possible associations can be linked to the brand—some functional and performance related, and some abstract and imagery related. Perceived quality and perceived value are particularly important brand associations that often drive consumer decisions

Question 18

Pricing strategy

Answer 18

Price is the one revenue-generating element of the traditional marketing mix, and price premiums are among the most important benefits of building a strong bran

Question 19

Choosing a pricing strategy to build brand equity means determining:

Answer 19

A method for setting current prices, and A policy for choosing the depth and duration of promotions and discounts

Question 20

important determinants in pricing strategy

Answer 20

Factors related to the costs of making and selling products and the relative prices of competitive products
Increasingly, however, firms are putting greater importance on consumer perceptions and preferences. Consumers perceptions of pricing are based on price tiers in a categor

Question 21

Consumer associations of perceived value are often an important factor in purchase decisions.–>

Answer 21

many marketers have adopted value-based pricing strategies in an attempt to sell the right product at the right price to meet consumer wishes better, as described in the next section

Question 22

companies are moving away from c

Answer 22

companies are moving away from constraints imposed on customers in the post-purchase phase.

Question 23

LAUNCHING a free service

Answer 23

​​Despite its apparent advantages, companies need to be cognizant that this model could potentially weaken the company if the cost of servicing customers for free turns out to be too high, relative to the number of premium customers who form part of the installed base. To ensure a healthy mix of free and premium customers, companies should work to provide good value for their premium customers and to clarify the value proposition relative to that for free customers. For this model to be effective, firms must ensure sufficient conversion among free customers to the premium-pricing tier

Question 24

pay as you wish

Answer 24

The pricing strategy can dictate how consumers categorize the price of the brand (as low, medium, or high) and how firm or flexible they think the price is, based on how deeply or frequently it is discounte

Question 25

many firms are now employing what

Answer 25

Many firms are now employing a value-pricing approach to setting prices and an everyday-low-pricing (EDLP) approach to determining their discount pricing policy over time. Let’s look at both.

Question 26

what can consumers infer by price

Answer 26

infer wquality

Question 27

Value Pricing

Answer 27

Objective of value pricing is to uncover the right blend of product quality, product costs and product prices that satisfy the needs and wants of consumers and profit targets A successful value pricing strategy should strike the balance among 3 components: product design and delivery, product costs, and product prices Hyundai example: Dont strop down the product to sell it at a lower price→ consumers are willing to pay price premiums when they perceive added value in products and services Ex: amazon that has maintained market leadership was able to force out lower priced competitors

Question 28

Product costs

Answer 28

The second key is to lower costs as much as possible Meeting cost targets invariably requires finding additional cost savings through productivity gains, outsourcing, material substitution, product reformulations and process changes such as automation

Question 29

Product prices

Answer 29

Need to know how much value consumers perceive in the brand The price suggested by estimating perceived value can be a starting point for determining actual marketplace prices adjusting by cost and competitors

Question 30

Communicating value

Answer 30

Delivering value isnt enough, consumers need to understand and appreciate the value of the brand If value is not obvious consumers will default to lower priced competitors in some cases, the solution may simply require straightforward communications that expand on the value equation for the brand, such as stressing quality over price

Question 31

Price segmentation

Answer 31

Price segmentation sets and adjusts prices for appropriate market segments Consumers have different value perceptions of goods, can price goods accordingly Because of the internet firms are using Yield management principles or dynamic pricing ex: allstate insurance decided to asess drivers’ credit history, demographic profile and other factors Because of the internet companies can alter their pricing minute to minute making it easier to use these pricing strategies

Question 32

Everyday Low Pricing

Answer 32

EDLP avoids the pattern of alternating price increases and decreases or discounts in favor of a more consistent set of everyday base prices on products, often based on value pricing Ex: P&G experience: procter and gamble made a conversion to EDLP by reducing prices and eliminating many temporary discounts→ saved them a lot of money and helped build loyalty. Fight off private label inroads and reduce manufacturing and inventory costs However P&G ran into difficulties so they adopted a more fluid pricing strategy in reaction to market conditions

Question 33

Reasons for price stability

Answer 33

With forward buying, retailers order more product than they plan to sell during the promotional period sot they can sell the goods at regular price after the promotional period has expired Diverting: retailers pass along or sell the discounted products to retailers outside selling area Manufacturers dont like this because it can result in excess demand during promotion period ad slack capacity when the promotion period ends Marketers believe thai leads customers to wait until brand is discounted thus eroding perceived value

Question 34

Channel Strategy

Answer 34

Marketing channels refer to “sets of interdependent organizations involved in the process of making a product or service available for use or consumption. Includes the design and management of intermediaries such as wholesalers, distributors, brokers and retailers

Question 35

Channel Design

Answer 35

Classified into direct and indirect channels Direct channels mean selling through personal contacts from the company to prospective customers by mail, phone, electronic means, in-preson visits, and so forth Indirect channels sell through the third-party intermediaries such as agents or broker representatives, wholesalers, distributors and retailers or dealers Winning channels are Integrated shopping experiences→ combine physical store, internet, phone and catalogs Branded nike stores: each shop develops its own concepts with lights, music, temperature, and multimedia, shows the latest styles and showcases a different sport

Question 36

Direct channels may be preferable when

Answer 36

when product info needs are high, product customization is high, product quality assurance is important, purchase lot size is of consern and logistics are important Indirect channels may be prefera

Question 37

Channels can often blend 3 factors:

Answer 37

information, entertainment and experiences→ consumers may learn about a brand and what it does and why it is special, consumers may also be entertained by the means through which the channel permits shopping and purchases, consumers may be able to participate in and experience channel activities

Question 38

Omnichannel integration

Answer 38

Omnichannel integration is a multichannel sales approach that provides the customer with an integrated experience Each touchpoint turns into a direct or indirect experience of the customer with the brand Several brands and companies are investing in augmented reality→ tech that helps bridge online and offline worlds Another approach is to permit customers to place orders online for easy pickup at the store Many retailers have a retailer app and byu online, pick up in store option Another approach is the use bluetooth beacons when shoppers enter a store or when they are nearby Disney does a good job of integrating online and offline marketing strategies→ they use My DIsney Experience tool to help customers plan their entire teme park trip and more A concern with growing integration of online and offline applications is that customers are using their mobile decies to find better prices elsewhere→ called showrooming, webrooming is a similar practice when customers search for info online and purchase offline

Question 39

Indirect channels

Answer 39

Can consist of different types of intermediaries but focus on retailers Retailers have the most visible and direct contact with customers and have opportunity to affect brand equity, theory are the most visible and direct contact with customers therefore they have the greatest opportunity to effect brand equity Retailers strive to create their own brand equity by establishing awareness and strong favorable associations through the products and brands they stock and the means by which they sell FMOT, or first moment of truth, reflects the first time a customer views a product (e.g., on the retail shelf) The retail channel impacts hwo consumers perceive their interaction with the brand, there are spillover effects from the retailer to the brand itself

Question 40

Pull and Push strategies

Answer 40

Retailers can also directly affect the equity of the brands they sell→ their methods of stocking, displaying, and selling products can enhance or detract from brand equity Online retailers (amazon) exert a great deal of clout over manufacturers and consumers by making available information info about product reviews Shopper marketing emphasizes collaboration between manufacturers and retailers on in store marketing, such as brand building displays, saompling, promotions, and other in store activities There is greater competition for shelf space so retailers have gained power Increased power means that retailers can command more frequent and lucrative trade promotions Consumers have gained even more pwoer because of the availability of info abbott pisces online, therefore digital channels pose challenges to brick and mortar retail stores Manufacturers can regain some of their lost leverage by creating strong brands through brand building tactics ex: selling innovative and unique products properly priced anda advertised that consumers demand Pull strategy: devoting marketing efforts to the end consumer, as consumers use their power and influence over retailers to pull the product through the channel Marketers can provide incentives for channel members to stock goods and sell them→ this is called a push strategy, pushing the product through each step of the distribution chain

Question 41

Channel Support

Answer 41

Establishing a marketing partnership with retailers may be critical to ensuring proper channel support and the execution of these various services Firms must keep up with new retailer capabilities ex: augmented reality and virtual reality in showrooms To compensate retailers manufacturers can offer dealers exclusive access to new products or branded variants Experts advise that manufacturers stick to fixed prices when offering them to customers, manufacturers can also educate their distributors ont their products for an effective sales force Two important components of partnership strategies are retail segmentation activities and cooperative advertising programs

Question 42

Retail segmentation

Answer 42

Retailers may need to be divided into segments or individuals so they will provide the necessary brand support Frito-lay developed a tailored supply chan system for its corn chip which helped reduce stock outs, and better store displays Retailers may require different product mixes, special delivery systems, customized promotions, or even their own branded version of the products Amazon has many guidelines for its marketing, Amazon tries to provide accurate product info so that customers can find specific products, and a white box feature which features certain brands Branded variants are branded items in a diverse set of durable and semidurable goods categories that are not directly comparable to other items carrying the same brand name Manufacturers create branded variants including changes in color, design, flavor, etc Branded variants are used to reduce retail price competition because they make price comparisons by consumers difficult and as more variants are offered more retail stores carry the product

Question 43

Cooperative advertising

Answer 43

Well-designed cooperative advertising programs can help increase channel support Co-op advertising: a manufacturers pay for a portion of the advertising that a retailer runs to promote the manufacturers product Manufacturers partake in this because they believe it may have relevance and selling impact with consumers

Question 44

Company-owned stores

Answer 44

To gain control over selling process and build stronger relationships with customers some manufacturers introduce their own retail outlets and other means of selling their products directly to customers Can take the form of company owned stores One recent redn is the launching of pop up stores- temporary stores that blend retail and event marketing Other digital brands are embracing brick and mortar outlets to build high touch relationships with customers However company stores can act as a method to improve brand image weather than as direct sales devices By creating their own stores manufacturers can also hedge bets with retailers that continue to push their own labels ex: JCpenny sells their own store brand jeans, so levis can protect its brand by establishing its own dsitrbution channel Manufacturers ensure their stores are not a competitive threat to retailers but rather a showcase of their merchandise

Question 45

company stores benefits

Answer 45

Company stores provide many benefits: a companies products may not be displayed in a logical fashion and certain product lines might no be stocked, by opening its own stores a company can put its best foot forward by showing the depth and breadth of their branded products Company stores can also act as a test market to gauge consumer response to product designs, presentations and prices

Question 46

company store disvadntages

Answer 46

A disadvantage of company stores is that come companies lack the skills, resources or contact to operate as a retailer Possibility of conflict between existing retail channels and distributors

Question 47

Store-within-a-store

Answer 47

Some marketers are creating their own shops within major department stores → can offer benefits of appeasing retailers and allowing them to benefit from retailers brand image while allowing the firm to retain control of product presentation For retailers these arrangements help drive foot traffic, for smaller brands they allow for quick distribution growth Retailers are combining with other retailers to gain similar benefits

Question 48

Other means

Answer 48

Another channel option is to sell directly to consumers by phone, mail, or electronic means Direct selling helps to sell products but also contribute to brand equity and increased consumer awareness of the range of products associated with a brand and increased knowledge of product benefits Marketers can use catalogs, videos, physical sits or the internet to engage with consumers

Question 49

Online strategies

Answer 49

The advantages of having both a physical and brick and mortar channel and a virtual online retail channel are that consumers are able toshop when adn how they want Many consumers value the convenience of online order or over the phone pick up, they also want to be able to return merchandise at a store Consumers also like being able to access online accounts inside the store and use internet kiosks to research purchase decisions in the store itself According to JCpennys research its most profitable customers are the ones who shopped multiple channels The boston consulting group said Multichannel retailers can get customers for hald the cost of internet only retailers, citing advantages: they have market clout with suppliers, they have established distribution and fulfillment systems, they can cross-sell between web sites and stores Multichannel product manufacturers can realise many of the same advantages