Marketing Strategy: Key Concepts 4

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Marketing Mathematics

The basic marketing math that is needed to help make marketing decisions are below. These are critical to understand when performing case analysis.
They include:

Market Segment Sizing

Estimate the number of customers by starting with the most general population, and then reducing according to the characteristics of the actual segment being sought.
Segment value = Number of Customers x Value per Customer
Number of Customers = Population x Segment Size (%) x Segment Penetration (%)
Customer Value = Customer Usage Rate x Unit Price ($) x Unit Contribution (%)
Improving Decision Making With Simple Break-Even Analysis
Attacking Business Decision Problems With Break-even Analysis
Formula for Incremental Break-Even Analysis
Lifetime Value in Relationship Marketing
Determining Customer Lifetime Value for your Internet Marketing Plan
The Lifetime Value of a Customer

**Discussion Topic: Any issues with respect to the above marketing mathematics?

Marketing Information Collection

Marketing Information System:
1.   Internal records
2.   marketing intelligence system
3.   marketing research
1.   defining problem and research objectives
2.   developing the research plan
3.   collecting information
4.   analyzing information
5.   presenting findings
4.   marketing decision support system
**Discussion Topic: Assess the impact of the web on the area of data gathering.
Primary research: Data gathering.
Example surveys:
Stanford Web-site Survey
Wharton Matric Survey

**Discussion Topic: After reviewing the Wharton and Stanford surveys, discuss the goals of the surveys, in terms of what each school is trying to learn. Comment on the effectiveness of each survey.
Note: Zoomerang is a great resource for designing online surveys.
Balance between data gathering and the need for privacy. A great site to explore your privacy rights/issues.

Some useful secondary resource sites on the web:
Business Information, CommerceNet, American Marketing Association, A Business Researchers Interests, Bloomberg, C/Net, EDGAR, Hoover's, National Trade Data Bank, Public Register's Annual Report Service
Census Bureau, FedWorld, Thomas
The Electronic Embassy, I-Trade, The United Nations
Non Profit, Internet Non Profit Center, Nonprofit Resource Center

Importance of demand analysis, market demand, product demand, expansible markets.


  • Demographic
  • Economic
  • natural
  • technological
  • political/legal
  • social/cultural
Faith Popcorn's Trends
Sierra Club
Creative Destruction: The Essence of Capitalism

Relevant K@W Article:
Role Playing: A Method to Forecast Decisions
Role Playing as a Forecasting Tool
Marketing Science Meets Hollywood
Forecasting in Conflicts: How to predict what your opponenet will do.
Making CD Sales Ring
Ethical Inspirations for Marketing Managers

Link to discussion board
Return to Syllabus



Marketing Strategy: Key Concepts 5

Product scope: goods, services, experiences, events, persons, places, properties, organizations, information and ideas.
Product Levels:
1.   Core Benefits
2.   Basic Product: to satisfy core benefit sought
3.   Expected Product: meet buyers expectations for product
Focus of competition in LDC
4.   Augmented Product: exceed expectations
Focus of competition in developed countries
5.   Potential Product: future possibilities
Competitive pressures push competition at the augmented level, features at the augmented level become expected features, as the market adopts new features, further heightening competition. This leaves room to develop stripped down products for price conscious market.
Delight Customers by exceeding expectations.
Product Hierarchy:
1.   Need Family
2.   Product Family
3.   Product Class
4.   Product Line
5.   Product Type
6.   Brand
7.   Item
Product Classifications: Different types of goods require different marketing mixes to be successful.
1.   Durable Goods
2.   Non Durable Goods
3.   Services
Innovation of batteries?
Consumer Goods Classification:
  • Convenience: Packaging is important to sell the product. Consumers will accept a substitute. Marketers focus on intense distribution, time utility. Convenience products can be categorized into staple (milk), impulse (not intended prior to shopping trip).
  • Shopping: Consumers expend considerable effort planning and making purchase decisions (i.e., appliances, stereos, cameras). Consumers are not particularly brand loyal. Need producer intermediary cooperation, high margins, less outlets than convenience goods. Use of sales personnel, communication of competitive advantage, branding, advertising, customer service etc. Attribute based (Non Price Competition), product with the best set of attributes is bought. If product attributes are judged to be similar, then priced based.
  • Specialty: Buyer knows what they want and will not accept a substitute, IE Mercedes. Do not compare alternatives. Brand, store and person loyal. Will pay a premium if necessary. Need reminder advertising.
  • Unsought: Sudden problem to resolve, products to which consumers are unaware, products that people do not necessary think of purchasing. Umbrellas, Funeral Plots, Encyclopedia!!
Industrial Goods Classification:
  • Production Goods
    • Raw Materials:
    • Component parts: becomes part of the physical product: Intel, Gore
    • Process materials: not readily identifiable part of the production of other products
  • Support Goods
    • Major Equipment:
    • Accessory Equipment: desk tops and tools
    • Consumable Supplies: IE Paper, pencils or ink cartridges
    • Business-to-Business services: Financial, legal marketing research etc.
If an organization is marketing more than one product, it has a product mix.
  • Product item--a single product
  • Product line--all items of the same type
  • Product mix--total group of products that an organization markets
Depth measures the # of products that are offered within each product line. Satisfies several consumer segments for the same product, maximizes shelf space, discourages competitors, covers a range of prices and sustains dealer support. High cost in inventory etc.
Width measures the # of product lines a company offers. Enables a firm to diversify products, appeals to different consumer needs and encourages one stop shopping.
Product Line Decisions:
Cannibalization and consumer movement issues
Internal (company) versus external (market) needs/decisions

Coke Hunts for Talent ro Re-Establish Its Marketing Might
What is Branding? Why Brand?
A name, term, design, symbol or any other feature that identifies one seller's good or service as distinct from another’s.

  • Brand name is that part that can be spoken, including letters, words and #s, IE 7UP.
Brand names simplify shopping, guarantee a certain level of quality and allow for self-expression.
  • Brand mark-elements of the brand that cannot not be spoken, IE symbol/ logo
  • Trade Character IE Ronald McDonald, Pillsbury Doughboy
  • Trade mark - legal designation that the owner has exclusive rights to the brand or part of a brand.
  • Tradename-The full legal name of the organization. IE Ford, not the name for a specific product.
Provides benefits to buyers and sellers


  • Help buyers identify the product that they like/dislike.
  • Identify marketer
  • Helps reduce the time needed for purchase.
  • Helps buyers evaluate quality of products especially if unable to judge a products characteristics.
  • Helps reduce buyer’s perceived risk of purchase.
  • Buyer may derive a psychological reward from owning the brand, IE Rolex or Mercedes.


  • Differentiate product offering from competitors
  • Helps segment market by creating tailored images
  • Brand identifies the companies products making repeat purchases easier for customers
  • Reduce price comparisons
  • Brand helps firm introduce a new product that carries the name of one or more of its existing products...half as much as using a new brand, lower co. designs, advertising and promotional costs
  • Easier cooperation with intermediaries with well known brands
  • Facilitates promotional efforts
  • Helps foster brand loyalty helping to stabilize market share.
  • Firms may be able to charge a premium for the brand.
Branding versus Tactical Promotions?
Brand Equity (Customer Equity)
Operating profits - expected profits for generic $: 10 Most Valuable

Share of Mind, Attitudes = ImagePower. Landor Associates
Brand awareness = considered set

Brand awareness:
1.   within relevant market(s)
2.   with influencers
3.   with entire market
The Best Global Brands: Handout
Interbrand: Best Global Brand

Brand Name Decisions:

Selecting a Brand Name

Criteria for choosing a name, some issues to consider:
  • Easy for customers to say, spell and recall (inc. international ppl)
  • Indicate products major benefits
  • Should be distinctive
  • Compatible with all products in product line
  • Used and recognized in all types of media
  • Single and multiple words Bic, Dodge Grand Caravan, IBM PC (letters), or a combination Mazda RX7
  • Availability, already over 400 car "name plates", this makes it difficult to select a new one.
  • Use words of no meaning to avoid negative connotation, Kodak, Exxon
  • Can be created internally by the organization, or by a consultancy
  • Legal restrictions, i.e. Food products must adhere to the Nutrition Labeling and Education Act, 1990...May 8 1994
  • Global translations ?
The Brand Pyramid:
1.   Features: tangible characteristics of product
2.   Functional Benefits: benefits to consumer for brand features
3.   Emotional Rewards: psychological or emotional benefits received by using brand's product?
4.   Values: what are the values of the typical loyal customer for this brand?
5.   Personality: what words would you use to describe brand if it were a person?
Domain Names: Highjacking issues? (Highjacked Domain and New Domain): Help! I've Lost My Domain Name!
Discussion Topic: Investigate the above issues to determine who has rights to the use of a domain name.

Online brand investment versus offline brand investment

Discussion Topic: Discuss the challenges of branding on the web, how are Pampers developing a branding strategy?

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