Chapter 1: Defining Marketing for the New Realities
Marketing
• Identifying and meeting human and social needs
• Activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and society at large
• Societal process by which individuals and groups obtain what they need and want
through creating, offering, and freely exchanging products and services of value with
others
Aim
• Make selling superfluous
• Know and understand the customer so well that the product or service fits him and sells
itself
Marketing Management
• Art and science of choosing target markets and getting, keeping, and growing customers
through creating, delivering, and communicating superior customer value
Marketing Entities (10)
• Goods
• Services
• Events
• Experiences
• Persons
• Places
• Properties
• Organizations
• Information
• Ideas
Marketer
• — — Someone who seeks a response attention, a purchase, a vote, a donation from another
party
• If two parties are selling to each other they are both called marketers
Prospect
• Another party
Demand States (8)
• Negative
o Consumers dislike the product and may even pay to avoid it
• Nonexistent
o Consumers may be unaware of or uninterested in the product.
• Latent
o Consumers may share a strong need that cannot be satisfied by an existing
product
• Declining
o Consumers begin to buy the product less frequently or not at all
• Irregular
o Consumer purchases vary on a seasonal, monthly, weekly, daily, or even hourly
basis
• Full
o Consumers are adequately buying all products put into the marketplace
• Overfull
o More consumers would like to buy the product than can be satisfied
• Unwholesome
o Consumers may be attracted to products that have undesirable social
consequences
Market
• Collection of buyers and sellers who transact over a particular product or product class
• Also used to describe customer groups
• Types (5)
o Resource
o Consumer
o Government
o Manufacturer
o Intermediary
Industry
• Collection of sellers
Market
• Collection of buyers
Key Customer Markets
• Consumer
o Companies selling mass consumer goods and services such as juices, cosmetics,
athletic shoes, and air travel establish a strong brand image by developing a
superior product or service, ensuring its availability, and backing it with engaging
communications and reliable performance
• Business
o Companies selling business goods and services often face well-informed
professional buyers skilled at evaluating competitive offerings. Advertising and
Web sites can play a role, but the sales force, the price, and the seller’s reputation
may play a greater one
• Global
o Companies in the global marketplace navigate cultural, language, legal, and
political differences while deciding which countries to enter, how to enter each
(as exporter, licenser, joint venture partner, contract manufacturer, or solo
manufacturer), how to adapt product and service features to each country, how to
set prices, and how to communicate in different cultures
• Nonprofit and governmental
o Companies selling to nonprofit organizations with limited purchasing power such
as churches, universities, charitable organizations, and government agencies need
to price carefully. Much government purchasing requires bids; buyers often focus
on practical solutions and favor the lowest bid, other things equal
Needs
• Basic human requirements such as for air, food, water, clothing, and shelter
• Types (5)
o Stated
o Real
o Unstated
o Delight
o Secret
Demands
• Wants for specific products backed by an ability to pay
Value Propositions
• set of benefits that satisfy those customer needs
Brand
• Offering from a known source
Marketing Channels
• To reach a target market
o Types (3)
▪ Communication
• Deliver and receive messages from target buyers
▪ Distribution
• Help display, sell, or deliver the physical product or service(s) to
the buyer or user
▪ Service
• To carry out transactions with potential buyers, the marketer
Paid Media
• Include TV, magazine and display ads, paid search, and sponsorships, all of which allow
marketers to show their ad or brand for a fee
Owned Media
• Communication channels marketers actually own, like a company or brand brochure,
Web site, blog, Facebook page, or Twitter account
Earned Media
• Streams in which consumers, the press, or other outsiders voluntarily communicate
something about the brand via word of mouth, buzz, or viral marketing methods
• Allows some companies to reduce paid media expenditures
Impressions
• Occur when consumers view a communication, are a useful metric for tracking the scope
or breadth of across all a communication’s reach that can also be compared
communication types
• Negative
o Impressions don’t provide any insight into the results of viewing the
communication
Engagement
• Extent of a customer’s attention and active involvement with a communication. It reflects
a much more active response than a mere impression and is more likely to create value
for the firm
Value
• Sum of the tangible and intangible benefits and costs
• Central marketing concept, is primarily a combination of quality, service, and price (qsp)
o Customer value triad
• Perceptions increase with quality and service but decrease with price
Satisfaction
• Reflects a person’s judgment of a product’s perceived performance in relationship to
expectations
Supply Chain
• Channel stretching from raw materials to components to finished products carried to final
buyers
Competition
• Includes all the actual and potential rival offerings and substitutes a buyer might consider
Marketing Environment
• Consists of the task environment and the broad environment
• Task environment
o Includes the actors engaged in producing, distributing, and promoting the offering
• Broad environment
o Consists of six components (6)
▪ Demographic environment
▪ Economic environment
▪ Social-cultural environment
▪ Natural environment
▪ Technological environment
▪ Political-legal environment
Transformative Forces (3)
• Technology
• Globalization
o Has made countries increasingly multicultural
o Changes innovation and product development as companies take ideas and
lessons from one country and apply them to another
• Social responsibility
New Consumer Capabilities (5)
• Consumers can use the Internet as a powerful information and purchasing aid
• Consumers can search, communicate, and purchase on the move
• Consumers can tap into social media to share opinions and express loyalty
• Consumers can actively interact with companies
• Consumers can reject marketing they find inappropriate
New Company Capabilities (5)
• Companies can use the Internet as a powerful information and sales channel, including
for individually differentiated goods
• Companies can collect fuller and richer information about markets, customers, prospects,
and competitors
• Companies can reach consumers quickly and efficiently via social media and mobile
marketing, sending targeted ads, coupons, and information
• Companies can improve purchasing, recruiting, training, and internal and external
communications
• Companies can improve their cost efficiency
Retail Transformation
• Store-based retailers face competition from catalog houses; direct-mail firms; newspaper,
magazine, and TV direct- -customer ads; home shopping TV; and e-commerce to
Disintermediation
• Early dot-coms such as Amazon.com, E*TRADE, and others successfully created dis-
intermediation in the delivery of products and services by intervening in the traditional
flow of goods
Private Label
• Brand manufacturers are further buffeted by powerful retailers that market their own
store brands, increasingly indistinguishable from any other type of brand
Mega Brands
• Many strong brands have become mega-brands and extended into related product
categories, including new opportunities at the intersection of two or more industries
Deregulation
• Many countries have deregulated industries to create greater competition and growth
opportunities
Privatization
• Many countries have converted public companies to private ownership and management
to increase their efficiency
Moving Forward
• Means incorporating the Internet and digital efforts into marketing plans
Measures for Marketing and Business Performance (3)
• Brand equity
• Customer lifetime value
• Return on marketing investment (ROMI)
Production Concept
• One of the oldest concepts in business
• Holds that consumers prefer products that are widely available and inexpensive
Production Oriented Managers
• Concentrate on achieving high production efficiency, low costs, and mass distribution
Product Concept
• Proposes that consumers favor products offering the most quality, performance, or
innovative features
Selling Concept
• Holds that consumers and businesses, if left alone, won’t buy enough of the
organization’s products
• Practiced most aggressively with unsought goods
Marketing Concept
• Emerged in the mid-1950s as a customer-centered, sense-and-respond philosophy
Holistic Marketing Concept
• Based on the development, design, and implementation of marketing programs,
processes, and activities that recognize their breadth and interdependencies
• Acknowledges that everything matters in marketing and that a broad, integrated
perspective is often necessary
• Recognizes and reconciles the scope and complexities of marketing activities
Relationship Marketing
• Aims to build mutually satisfying long-term relationships with key constituents in order
to earn and retain their business
• Key constituents (4)
o Customers
o Employees
o Marketing partners
o Members of the financial community
Marketing Network
• Ultimate outcome of relationship marketing
• — Consisting of the company and its supporting stakeholders customers, employees,
suppliers, distributors, retailers, and others with whom it has built mutually profitable —
business relationships
• Operating Principle
o Build an effective network of relationships with key stakeholders, and profits will
follow
Integrated Marketing
• Occurs when the marketer devises marketing activities and assembles marketing
programs to create, communicate, and deliver value for consumers such that “the whole
is greater than the sum of its parts
• Themes (2)
o Many different marketing activities can create, communicate, and deliver value
o Marketers should design and implement any one marketing activity with all other
activities in mind
Internal Marketing
• Element of holistic marketing
• Task of hiring, training, and motivating able employees who want to serve customers
well
Performance Marketing
• Requires understanding the financial and nonfinancial returns to business and society
from marketing activities and programs
Four P’s of Marketing (4)
• Product
• Price
• Place
• Promotion
Modern Marketing Management Four P’s (4)
• People
o Reflects, in part, internal marketing and the fact that employees are critical to
marketing success
• Processes
o Reflects all the creativity, discipline, and structure brought to marketing
management
• Programs
o Reflects all the firm’s consumer-directed activities
o Encompasses the old four Ps as well as a range of other marketing activities that
might not fit as neatly into the old view of marketing
• Performance
o To capture the range of possible outcome measures that have financial and
nonfinancial implications
Key Market Outcomes (2)
• New consumer capabilities
• New company capabilities
Fundamental Pillars of Holistic Marketing (4)
• Relationship marketing
• Integrated marketing
• Internal marketing
• Performance marketing
Chapter 2: Developing Marketing Strategies and Plans
Value Creation and Delivery Sequence Phases (3)
• Choosing the value
• Providing the value
• Communicating the value
Value Chain
• Michael Porter
• Tool for identifying ways to create more customer value
Primary Activities that Create Value and Cost in a Specific Business (5)
• Inbound logistics or bringing materials into the business
• Operations, or converting materials into final products
• Outbound logistics, or shipping out final products
• Marketing, which includes sales
• Service
Support Activities that Create Value and Cost in a Specific Business (4)
• Procurement
• Technology development
• Human resource management
• Firm infrastructure
Core Business Processes (5)
• Market sensing process
• New offering realization process
• Customer acquisition process
• Customer relationship management process
• Fulfillment management process
Core Competency Characteristics (3)
• It is a source of competitive advantage and makes a significant contribution to perceived
customer benefits
• Has applications in a wide variety of markets
• Difficult for competitors to imitate
Realignment Steps
• Redefining the business concept or “big idea”
• Reshaping the business scope, sometimes geographically
• Repositioning the company’s brand identity
Priority Strategic Planning Areas (3)
• Managing the businesses as an investment portfolio
• Assessing the market’s growth rate and the company’s position in that market
• Establishing a strategy
Organizational Levels
• Corporate
• Division
• Business unit
• Product
Marketing Plan
• Central instrument for directing and coordinating the marketing effort
• Levels (2)
o Strategic
▪ Lays out the target markets and the firm’s value proposition, based on an
analysis of the best market opportunities
o Tactical
▪ Lays out the target markets and the firm's value proposition, based on an
analysis of the best market opportunities
Strategic Planning (4)
• Corporate planning
• Division planning
• Business planning
• Product planning
Strategic Implementation (2)
• Organizing
• Implementing
Strategic Control Processes (3)
• Measuring results
• Diagnosing results
• Take correction action
Planning Activities (4)
• Defining the corporate mission
• Establishing strategic business units
• Assigning resources to each strategic business unit
• Assessing growth opportunities
Target Market Definition
• Tends to focus on selling a product or service to a current market
Strategic Market Definition
• Focuses on the potential market
Market Definition
• Describe the business as a customer satisfying process
Mission Statement Characteristics (5)
• They focus on a limited number of goals
• They stress the comp any’s major policies and values
• They define the major competitive spheres within which the company will operate
• They take a long-term view
• They are as short, memorable, and meaningful as possible
Strategic Business Units (SBU) Characteristics (3)
• It is a single business, or a collection of related businesses, that can be planned separately
from the rest of the company
• It has its own set of competitors
• It has a manager responsible for strategic planning and profit performance, who controls
most of the factors affecting profit
Market Development Strategy
• Considers whether it can find or develop new markets for its current products
Market Penetration Strategy
• Considers whether it could gain more market share with its current products in their
current markets
Product Development Strategy
• Considers whether it can develop new products for its current markets
Diversification Strategy
• Firm will also review opportunities to develop new products for new markets
Company Organization
• Consists of its structures, policies, and corporate culture, all of which can become
dysfunctional in a rapidly changing business environment
Corporate Culture
• Shared experiences, stories, beliefs, and norms that characterize an organization
Scenario Analysis
• Develops plausible representations of a firm’s possible future using assumptions about
forces driving the market and different uncertainties
Business Unit Strategic Planning
• Steps (7)
o Business mission
o SWOT analysis
▪ Overall evaluation of a company’s strengths, weaknesses, opportunities,
and threats
o Goal formation
o Strategy formulation
o Program formulation
o Implementation
o Feedback and control
• Objectives (4)
o They must be arranged hierarchically, from most to least important
o Objectives should be quantitative whenever possible
o Goals should be realistic
o Objectives must be consistent
Marketing Opportunity
• Area of buyer need and interest that a company has a high probability of profitably
satisfying
• Sources (3)
o Offer something that is in short supply
o Supply an existing product or service in a new or superior way
o Totally new product or service
Problem detection method
• Asks consumers for their suggestions
Ideal method
• Has them imagine an ideal version of the product or service
Consumption chain method
• Asks them to chart their steps in acquiring, using, and disposing of a product
Environmental Threat
• Challenge posed by an unfavorable trend or development that, in the absence of defensive
marketing action, would lead to lower sales or profit
Goal Formulation
• Developing specific goals for the planning period
• Objectives that are specific with respect to magnitude and time
Strategy
• Game plan for getting there
• Must consist of a marketing strategy and a compatible technology strategy and sourcing
strategy
Porter’s Generic Strategies (3)
• Overall cost leadership
• Differentiation
• Focus
Strategic Group
• Competing firms directing the same strategy to the same target market
Strategic Partnership Categori es
• Product or service alliances
• Promotional alliances
• Logistics alliances
• Pricing collaborations
Partner Relationship Management (PRM)
• Corporations have begun to develop organizational structures to support them, and many
have come to view the ability to form and manage partnerships as core skills
Soft Element Styles (4)
• Company employees share a common way of thinking and behaving
• Skills, means employees have the skills needed to ca rry out the company’s strategy
• Staffing means the company has hired able people, trained them well, and assigned them
to the right jobs
• Shared values, means employees share the same guiding values.
Chapter 3: Collecting Information and Forecasting Demand
Advantages for Identifying Significant Market Changes (2)
• disciplined methods for collecting information
• Time spent interacting with customers and observing competitors and other outside
groups
Marketing Information System
• Consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and
distribute needed, timely, and accurate information to marketing decision makers
• Relies on internal company records, marketing intelligence activities, and marketing
research
Ways to Spot Opportunities and Potential Problems (7)
• Internal reports of orders
• Sales
• Prices
• Costs
• Inventory levels
• Receivables
• Payables
Marketing Intelligence System
• Set of procedures and sources that managers use to obtain everyday information about
developments in the marketing environment
• Internal records system supplies results data, but the marketing intelligence system
supplies happenings data
• Ways to improve (7)
o Train and motivate the sales force to spot and report new developments
o Motivate distributors, retailers, and other intermediaries to pass along important
intelligence
o Hire external experts to collect intelligence
o Network internally and externally
o Set up a customer advisory panel
o Take advantage of government-related data resources
o Purchase information from outside research firms and vendors
Places to Find Competitors Strengths and Weaknesses Online (5)
• Independent customer goods and service review forums
• Distributor or sales agent feedback sites
• Combo sites offering customer reviews and expert opinions
• Customer complaint sites
• Public blogs
Fad
• Unpredictable, short-lived, and without social, economic, and political significance
Trend
• More predictable and durable than a fad
• Reveal the shape of the future and can provide strategic direction
Megatrend
• Large social, economic, political, and technological change [that] is slow to form, and
once in place, influences us for some time between seven and ten years, or longer
Major Forces in the Broad Environment (6)
• Demographic
• Economic
• Social-cultural
• Natural
• Technological
• Political-legal
Cohorts
• Groups of individuals born during the same time period who travel through life together
Industrial Structures (4)
• Subsistence economies
• Raw material exporting economies
• Industrializing economies
• Industrial economies
Income Distribution Patterns (5)
• Very low incomes
• Mostly low incomes
• Very low, very high incomes
• Low, medium, high incomes
• Mostly medium incomes
Core Beliefs
• Passed from parents to children and reinforced by social institutions
Secondary Beliefs
• More open to change
Subcultures
• Groups with shared values, beliefs, preferences, and behaviors emerging from their
special life experiences or circumstances
Finite Nonrenewable Resources
• Oil, coal, platinum, zinc, silver
• Face substantial cost increases as depletion approaches
Market Capitalism
• Dynamism that tolerates the creative destructiveness of technology as the price of
progress
Consumerist Movement
• Organized citizens and government to strengthen the rights and powers of buy- ers in
relationship to sellers
• Have won the right to know the real cost of a loan, the true cost per standard unit of
competing brands (unit pricing), the basic ingredients and true benefits of a product, and
the nutritional quality and freshness of food
Sales Forecasts
• Used by finance to raise cash for investment and operations; by manufacturing to
establish capacity and output; by purchasing to acquire the right amount of supplies; and
by human resources to hire the needed workers
Ways to Breakdown the Market (4)
• Potential market
o Set of consumers with a sufficient level of interest in a market offer
o Their interest is not enough to define a market unless they also have sufficient
income and access to the product
• Available market
o Set of consumers who have interest, income, and access to a particular offer
o Qualified available market
▪ Set of consumers who have interest, income, access, and qualifications for
the market offer
• Target mark et
o Part of the qualified available market the company decides to pursue
• Penetrated market
o Set of consumers who a re buying the company’s product
Market Demand
• Total volume that would be bought by a defined customer group in a defined
geographical area in a defined time period in a defined marketing environment under a
defined marketing program
• Not a fixed number, but rather a function of the stated conditions
• Also called market demand function
Market Potential
• Marketing expenditures beyond a certain level would not stimulate much further demand,
suggesting an upper limit
Marketing Sensitivity of Demand
• Distance between the market minimum and the market potential
Market Share
• Higher level of selective demand for their product
Market Penetration Index
• Low index indicates substantial growth potential for all the firms
• High index suggests it will be expensive to attract the few remaining prospects
Market Forecast
• Only one level of industry marketing expenditure will actually occur the market demand
corresponding to this level
Market Potential
• Limit approached by market demand as industry marketing expenditures approach
infinity for a given marketing environment
Product Penetration Percentage
• Percentage of ownership or use of a product or service in a population
Company Demand
• Company’s estimated share of market demand at alternative levels of company marketing
effort in a given time period
Company Sales Forecast
• Expected level of company sales based on a chosen marketing plan and an assumed
marketing environment
Sales Quota
• Sales goal set for a product line, company division, or sales representative
Sales Budget
• Conservative estimate of the expected volume of sales, primarily for making current
purchasing, production, and cash flow decisions
Company Sales Potential
• Sales limit approached by company demand as company marketing effort increases
relative to that of competitors
Total Market Potential
• Maximum sales available to all firms in an industry during a given period, under a given
level of industry marketing effort and environmental conditions
Chain Ratio Method
• Multiplies a base number by several adjusting percentages
Area Market Potential
• Market buildup method
o Calls for identifying all the potential buyers in each market and estimating their
potential purchases
o Produces accurate results if we have a list of all potential buyers and a good
estimate of what each will buy
o Not easy to gather
North American Industry Classification System (NAICS)
• Classifies all manufacturing into 20 major industry sectors and further breaks each sector
into a six-digit, hierarchical structure
Brand Development Index (BDI)
• Index of brand sales to category sales
• Normally, the lower the BDI, the higher the market opportunity
Census Tracts
• Small, locally defined statistical areas in metropolitan areas and some other counties
Forecasting
• Art of anticipating what buyers are likely to do under a given set of conditions
Purchase Probability Scale
Grassroots Forecasting
• Provides detailed estimates broken down by product, territory, customer, and sales rep
Exponential Smoothing
• Projects the next period’s sales by combining an average of past sales and the most recent
sales, giving more weight to the latter
Statistical Demand Analysis
• Measures the impact of a set of causal factors (such as income, marketing expenditures,
and price) on the sales level
Econometric Analysis
• Builds sets of equations that describe a system and statistically derives the different
parameters that make up the equations statistically
Direct Market Test
• Can help forecast new-product sales or established product sales in a new distribution
channel or territory
Chapter 4: Conducting Marketing Research
Marketing Research
• Function that links the consumer, customer, and public to the marketer through
information—information used to identify and define marketing opportunities and
problems; generate, refine, and evaluate marketing actions; monitor marketing
performance; and improve under- standing of marketing as a process
• Specifies the information required to address these issues, designs the method for
collecting information, manages and implements the data collection process, analyzes the
results, and communicates the findings and their implications
Marketing Insights
• Provide diagnostic information about how and why we observe certain effects in the
marketplace and what that means to marketers
Marketing Research Firm Categories (3)
• Syndicated-service research firms
• Custom marketing research firms
• Specialty-line marketing research firms
Marketing Research Process (6)
• Define the problem and research objectives
• Develop the research plan
• Collect the information
• Analyze the information
• Present the findings
• Make the decision
Secondary Data
• Data that is collected for another purpose and already exist somewhere
Primary Data
• Data freshly gathered for a specific purpose or project
Research Approaches (5)
• Observational
o Researchers can gather fresh data by observing unobtrusively as customers shop
or consume products
o Ethnographic research
▪ Uses concepts and tools from anthropology and other social science
disciplines to provide deep cultural understanding of how people live and
work
▪ Goal
• Immerse the researcher into consumers’ lives to uncover
unarticulated desires that might not surface in any other form of
research
▪ Isn’t limited to consumer products
• Focus groups
o Gathering of 6 to 10 people carefully selected for demographic, psychographic, or
other considerations and convened to discuss various topics at length for a small
payment
o Researchers must avoid generalizing to the whole market because the sample is
too small and is not drawn randomly
• Surveys
• Behavioral data
o Experimental research
▪ Designed to capture cause-and-effect relation- ships by eliminating
competing explanations of the findings
• Experiments
Questionnaire
• Consists of a set of questions presented to respondents
• Most common instrument used to collect primary data
• Mail
o One way to reach people who would not give personal interviews or whose
responses might be biased or distorted by the interviewers
Qualitative Research Techniques
• Relatively indirect and unstructured measurement approaches, limited only by the
marketing researcher’s creativity, that permit a range of responses
• Advantages
o Can be an especially useful first step in exploring consumers’ perceptions because
respondents may be less guarded and reveal more about themselves in the process
• Disadvantages (2)
o Samples are often very small, and results may not generalize to broader
populations
o Different researchers examining the same qualitative results may draw very
different conclusions
Sampling Plan Decisions (3)
• Sampling unit: Whom should we survey?
• Sample size: How many people should we survey?
• Sampling procedure: How should we choose the respondents?
Telephone Interviewing
• Good method for gathering information quickly
Personal Interviewing
• Most versatile method
Arranged Interviews
• Marketers contact respondents for an appointment and often offer a small payment or
incentive
Intercept Interviews
• Researchers stop people at a shopping mall or busy street corner and request an interview
on the spot
Market Decision Support System (MDSS)
• Coordinated collection of data, systems, tools, and techniques, with supporting software
and hardware, by which an organization gathers and interprets relevant information from
business and environment and turns it into a basis for marketing action
Complementary Approach to Measuring Market Productivity (2)
• Marketing metrics
o Assess marketing effects
• Marketing-mix modeling
o Estimate causal relationships and measure how marketing activity affects
outcomes
Marketing Dashboards
• Structured way to disseminate the insights gleaned from these two approaches
• Concise set of interconnected performance drivers to be viewed in common throughout
the organization
Marketing Metrics
• Set of measures that helps marketers quantify, compare, and interpret their performance
Evaluation of Marketing Performance Parts (2)
• Short term results
• Changes in brand equity
Marketing Mix Models
• Analyze data from a variety of sources, such as retailer scanner data, company shipment
data, pricing, media, and promotion spending data, to understand more precisely the
effects of specific marketing activities
• Disadvantages (4)
o Marketing-mix modeling focuses on incremental growth instead of baseline sales
or long-term effects
o The integration of important metrics such as customer satisfaction, awareness, and
brand equity into marketing-mix modeling is limited
o Marketing-mix modeling generally fails to incorporate metrics related to
competitors, the trade, or the sales force
o Only as good as the information on which they’re based, but sophisticated
visualization tools are helping bring data alive
Market Based Scorecards (2)
• Customer performance
o Records how well the company is doing year after year on such customer-based
measures
• Stakeholder performance
o Tracks the satisfaction of various constituencies who have a critical interest in and
impact on the company’s performance
Chapter 5: Creating Long Term Loyalty Relationships
Customer Perceived Value (CPV)
• Difference between the prospective customer’s evaluation of all the benefits and costs of
an offering and the perceived alternatives
Total Customer Benefit
• Perceived monetary value of the bundle of economic, functional, and psychological
benefits customers expect from a given market offering because of the product, service,
people, and image
Total Customer Cost
• Perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and
disposing of the given market offering, including monetary, time, energy, and
psychological costs
Customer Value Analysis
• Reveal the company’s strengths and weaknesses relative to those of various competitors
• Steps (5)
o Identify the major attributes and benefits that customers value
o Assess the quantitative importance of the different attributes and benefits
o Assess the company’s and competitors’ performances on the different customer
values against their rated importance
o Examine how customers in a specific segment rate the company’s performance
against a specific major competitor on an individual attribute or benefit basis
o Monitor customer value over time
Loyalty
• Deeply held commitment to rebuy or repatronize a preferred product or service in the
future despite situational influences and marketing efforts having the potential to cause
switching behavior
Value Proposition
• Consists of the whole cluster of benefits the company promises to deliver; it is more than
the core positioning of the offering
Value Delivery System
• Includes all the experiences the customer will have on the way to obtaining and using the
offering
• At the heart of a good value delivery system is a set of core business processes that help
deliver distinctive consumer value
Satisfaction
• Person’s feelings of pleasure or disappointment that result from comparing a product or
service’s perceived performance (or outcome) to expectations
Periodic Surveys
• Can track customers’ overall satisfaction directly and ask additional questions to measure
repurchase intention, likelihood or willingness to recommend the company and brand to
others, and specific attribute or benefit perceptions likely to be related to customer
satisfaction
Quality
• Totality of features and characteristics of a product or service that bear on its ability to
satisfy stated or implied needs
Profitable Customer
• Person, household, or company that over time yields a revenue stream exceeding by an
acceptable amount the company’s cost stream for attracting, selling, and serving that
customer
Customer Profitability Analysis (CPA)
• Best conducted with the tools of activity based costing
Activity Based Costing
• Tries to identify the real costs associated with serving each customer the costs of —
products and services based on the resources they consume
• Company estimates all revenue coming from the customer, less all costs
Customer Lifetime Value (CLV)
• Describes the net present value of the stream of future profits expected over the
customer’s lifetime purchases
• Company must subtract from its expected revenues the expected costs of attracting,
selling, and servicing the account of that customer, applying the appropriate discount rate
(say, between 10 and 20 percent, depending on cost of capital and risk attitudes)
Customer Churn (Defection)
• Losing customers
• Ways to reduce (3)
o Define and measure its retention rate
o Distinguish the causes of customer attrition and identify those that can be
managed better
o Compare the lost customer’s lifetime value to the costs of reducing the defection
rate
Marketing Funnel
• Identifies the percentage of the potential target market at each stage in the decision
process, from merely aware to highly loyal
• Consumers must move through each stage before becoming loyal customers
Conversion Rates
• Percentage of customers at one stage who move to the next
Customer Base
• Number and value of customers who will do business with the new firm
Customer Relationship Capital
• Satisfied customers
Frequency Programs (FPs)
• Designed to reward customers who buy frequently and in substantial amounts
• Can help build long-term loyalty with high CLV customers, creating cross-selling
opportunities in the process
Club Membership Programs
• Attract and keep those customers responsible for the largest portion of business
Brand Community
• Specialized community of consumers and employees whose identification and activities
focus around the brand
• Characteristics (3)
o A “consciousness of kind,” or a sense of felt connection to the brand, company,
product, or other community members
o Shared rituals, stories, and traditions that help convey the meaning of the
community
o A shared moral responsibility or duty to both the community as a whole and
individual community members
Customer Relationship Management (CRM)
• Process of carefully managing detailed information about individual customers and all
customer “touch points” to maximize loyalty
• Important because a major driver of company profitability is the aggregate value of the
company’s customer base
Customer Value Management (CVM)
• Describes the company’s optimization of the value of its customer base
• Focuses on the analysis of individual data on prospects and customers to develop
marketing strategies to acquire and retain customers and drive customer behavior
Customer Touch Point
• — Any occasion when a customer encounters the brand and product from actual
experience to personal or mass communications to casual observation
Personalizing Marketing
• Making sure the brand and its marketing are as personally relevant as possible to as many
customers as possible a challenge, given that no two customers are identical —
Permission Marketing
• Practice of marketing to consumers only after gaining their expressed permission, is
based on the premise that marketers can no longer use “interrupti eting” via mass on mark
media campaigns
Ways to Recover Customer Goodwill (5)
• Set up a seven-day, 24-hour toll-free hotline (by phone, fax, or e-mail) to receive and act
on complaints ke it easy for the customer — ma
• Contact the complaining customer as quickly as possible. The slower the company is to
respond, the more dis- satisfaction may grow and lead to negative word of mouth
• Accept responsibility for the customer’s disappointment; don’t blame the customer
• Use customer service people who are friendly and empathic
• Resolve the complaint swiftly and to the customer’s satisfaction. Some complaining
customers are not looking for compensation so much as a sign that the company cares
Chapter 7: Analyzing Business Markets
Business Market
• Consists of all the organizations that acquire goods and services used in the production of
other products or services that are sold, rented, or supplied to others
B2B Marketing Hurdles (3)
• Building stronger interfaces between marketing and sales
• Building stronger innovation-marketing interfaces
• Extracting and leveraging more granular customer and market knowledge
Institute for the Study of Business Markets (ISBM) Imperitives (4)
• Demonstrating marketi n to business performance ng’s contributio
• Engaging more deeply with customers and customers’ customers
• Finding the right mix of centralized versus decentralized marketing activities
• Finding and grooming marketing talent and competencies
Contrast Between Business Markets and Consumer Markets (10)
• Fewer, larger buyers
• Close supplier-customer relationships
• Professional purchasing
• Multiple buying influences
• Multiple sales calls
• Derived demand
• Inelastic demand
• Fluctuating demand
• Geographically concentrated buyers
• Direct purchasing
Buying Situation Types (3)
• Straight rebuy
o Purchasing department reorders items
• Modified rebuy
o Wants to change product specifications, prices, delivery requirements, or other
terms
• New task
o Purchaser buys a product or service for the first time
Roles in the Purchase Decision Process (7)
• Initiators
• Users
• Influencers
• Deciders
• Approvers
• Buyers
• Gatekeepers
Buying Center
• Typically has five or six members
• Usually include participants with differing interests, authority, status, susceptibility to
persuasion, and sometimes very different decision criteria
Business Marketer
• Not likely to know exactly what kind of group dynamics take place during the decision
process, though whatever information he or she can obtain about personalities and
interpersonal factors is useful
• Must periodically review their assumptions about buying center participants
• Must therefore ensure that customers fully appreciate how the firm’s offerings are
different and better
Small Sellers
• Concentrate on reaching the key buying influencers
Larger Sellers
• Go for multilevel in-depth selling to reach as many participants as possible
Business Buyer
• Seek the highest benefit package (economic, technical, service, and social) in relationship
to a market offering’s costs
Framing
• Occurs when customers are given a perspective or point of view that allows the seller to
put its best foot forward
Buying Process Stages (8)
• Problem recognition
• General need description
• Product specification
• Supplier search
• Proposal solicitation
• Supplier selection
• Order routine specification
• Performance review
Risk and Gain Sharing
• Can offset price reductions customers request
Vendor Managed Inventory (VMI)
• System where companies go further and shift the ordering responsibility to their suppliers
Buyer Performance Review Methods (3)
• Buyer may contact end users and ask for their evaluations
• Rate the supplier on several criteria using a weighted-score method
• Aggregate the cost of poor performance to come up with adjusted costs of purchase,
including price
Prime Contractors
• If awarded the contract, became responsible for bidding out and assembling the system’s
subcomponents from second-tier contractors
• Provided a turnkey solution, so-called because the buyer simply had to turn one key to
get the job done
Systems Contracting
• A single supplier provides the buyer with its entire requirement of MRO supplies
Systems Selling
• Key industrial marketing strategy in bidding to build large-scale industrial projects
Buyer-Supplier Relationship Categories (8)
• Basic buying and selling
• Bare bones
• Contractual transaction
• Customer supply
• Cooperative systems
• Collaborative
• Mutually adaptive
• Customer is king
Vertical Coordination
• Can facilitate stronger customer-seller ties but may also increase the risk to the
customer’s and supplier’s specific investments
Specific Investments
• Those expenditures tailored to a particular company and value chain partner (investments
in company-specific training, equipment, and operating procedures or systems)
• Help firms grow profits and achieve their positioning
• Also entail considerable risk to both customer and supplier
Transaction Theory
• Maintains that because these investments are partially sunk, they lock firms into a
particular relationship
Opportunism
• Some form of cheating or undersupply relative to an implicit or explicit contract
• Passive form
o Refusal or unwillingness to adapt to changing circumstances or just negligance in
satisfying contractual obligations
• Concern
o Firms must devote resources to control and monitoring that they could otherwise
allocate to more productive purposes\
Institutional Market
• Consists of schools, hospitals, nursing homes, prisons, and other institutions that must
provide goods and services to people in their care
Chapter 8: Tapping Into Global Markets
Global Industry
• Competitors’ strategic positions in major geographic or national markets are affected by
their overall global positions
Global Firm
• Operates in more than one country and captures R&D, production, logistical, marketing,
and financial advantages not available to purely domestic competitors
Draws to the International Arena (5)
• Some international markets present better profit opportunities than the domestic market
• The company needs a larger customer base to achieve economies of scale
• The company wants to reduce its dependence on any one market
• The company decides to counterattack global competitors in their home markets
• Customers are going abroad and require international service
Risks to Consider Before Going Abroad (5)
• The company might not understand foreign preferences and could fail to offer a
competitively attractive product
• The company might not understand the foreig n country’s business culture
• The company might underestimate foreign regulations and incur unexpected costs
• The company might lack managers with international experience
• The foreign country might change its commercial laws, devalue its currency, or undergo
a political revolution and expropriate foreign property
Internationalization Process Stages (4)
• No regular export activities
• Export via independent representatives (agents)
• Establishment of one or more sales subsidiaries
• Establishment of production facilities abroad
Waterfall Approach
• Gradually entering countries in sequence
Sprinkler Approach
• Entering many countries simultaneously
Born Global
• Market to the entire world from the outset
Modes of Entry into Foreign Markets (5)
• Indirect exporting
o Work through independent intermediaries
o Advantages (2)
▪ Less investment
▪ Less risk
• Direct exporting
o How it occurs (4)
▪ Domestic-based export department or division
▪ Overseas sales branch or subsidiary
▪ Travelling export sales representative
▪ Foreign based distributors or agents
• Licensing
o Simple way to engage in international marketing
o Licensor issues a license to a foreign company to use a manufacturing process,
trademark, patent, trade secret, or other item of value for a fee or royalty
• Joint ventures
o Company in which they share ownership and control
• Direct investment
o Ownership
o Foreign company can buy part or full interest in a local company or build its own
manufacturing or service facilities
Domestic Based Export Merchants
• Buy the manufacturer’s products and then sell them abroad
Domestic Based Export Agents
• Seek and negotiate foreign purchases for a commission
• Including trading companies
Cooperative Organizations
• Conduct exporting activities for several producers
• Often of primary products such as fruits or nuts—and are partly under their
administrative control
Export Management Companies
• Agree to manage a compan y’s export activities for a fee
Contract Manufacturing
• Firm hires local manufacturers to produce the product
• Reduces the company’s control over the process and risks loss of potential profits
Franchising
• More complete form of licensing
Acquisition
• Companies choose to acquire local brands for their brand portfolio
Standardized Marketing Program
• Promises the lowest cost
Adapted Marketing Program
• Company, consistent with the marketing concept, believes consumer needs vary and
tailors marketing to each target group
Globally Standardized Marketing Pros (6)
• Economies of scale in production and distribution
• Lower marketing costs
• Power and scope
• Consistency in brand image
• Ability to leverage good ideas quickly and efficiently
• Uniformity of marketing practices
Globally Standardized Marketing Cons (6)
• Ignores differences in consumer needs, wants, and usage patterns for products
• Ignores differences in consumer response to marketing programs and activities
• Ignores differences in brand and product development and the competitive environment
• Ignores differences in the legal environment
• Ignores differences in marketing institutions
• Ignores differences in administrative procedures
Hofstede’s Cultural Dimensions (4)
• Individualism versus collectivism
• High versus low power distance
• Masculine versus feminine
• Weak versus strong uncertainty avoidance
Straight Extension
• Introduces the product in the foreign market without any change
• Requires no additional R&D expense, manufacturing retooling, or promotional
modification
Product Adaptation
• Alters the product to meet local conditions or preferences
Product Invention Forms (2)
• Backward invention
o Reintroduces earlier product forms well adapt ed to a foreign country’s needs
• Forward invention
o Creates a new product meet a need in another country to
Communication Adaptation
• Changing marketing communications for each local market
Dual Adaptation
• When the company adapts both the product and the communications
Choices for Setting Prices (3)
• Set a uniform price everywhere
• Set a market based price in each country
• Set a cost based price in each country
Dumping
• If the company charges its subsidiary too low a price
Arm’s Length Price
• Price charged by other competitors for the same or a similar product
Gray Market
• Diverts branded products from authorized distribution channels either in-country or
across international borders
• Create a free-rider problem, making legitimate distributors’ investments in supporting a
manufacturer’s product less productive and selective distribution systems more intensive
to reduce the number of gray market possibilities
• Multinationals try to prevent gray markets by policing distributors, raising their prices to
lower-cost distributors, or altering product characteristics or service warranties for
different countries
Seller’s International Marketing Headquarters
• Export department or international division makes decisions about channels and other
marketing activities
Channels Between Nations
• Gets the products to the borders of the foreign nation
• Decisions made in this link include the types of intermediaries (agents, trading
companies), type of transportation (air, sea), and financing and risk management
Channels Within Foreign Nations
• Gets products from their entry point to final buyers and use rs
Country-of-Origin Perceptions
• Mental associations and beliefs triggered by a country
Chapter 9: Identifying Market Segments and Targets
Market Segment
• Consists of a group of customers who share a similar set of needs and wants
Major Segmentation Variables (4)
• Geographic
o Divides the market into geographical units such as nations, states, regions,
counties, cities, or neighborhoods.
• Demographic
• Psychographic
o Buyers are divided into groups on the basis of psychological/personality traits,
lifestyle, or values
o People within the same demographic group can exhibit very different
psychographic profiles
• Behavioral segmentation
o Marketers divide buyers into groups on the basis of their knowledge of, attitude
toward, use of, or response to a product
Grassroots Marketing
• Marketers concentrate on making such activities as personally relevant to individual
customers as possible
Multicultural Marketing
• Approach recognizing that different ethnic and cultural segments have sufficiently
different needs and wants to require targeted marketing activities and that a mass market
approach is not refined enough for the diversity of the marketplace
Psychographics
• Science of using psychology and demographics to better understand consumers
Buying Decision Roles (5)
• Initiator
• Influencer
• Decider
• Buyer
• User
User and Usage Related Variables (5)
• Occasions
o Mark a time of day, week, month, year, or other well-defined temporal aspects of
a consumer’s life
• User status
o Every product has its nonusers, ex-users, potential users, first-time users, and
regular users
• Usage rate
o Segment markets into light, medium, and heavy product users
• Buyer readiness stage
o Some people are unaware of the product, some are aware, some are informed,
some are interested, some desire the product, and some intend to buy
• Loyalty status
o Groups (4)
▪ Hard core loyals
▪ Split loyals
▪ Shifting loyals
▪ Switchers
Consumer Attitudes (5)
• Enthusiastic
• Positive
• Indifferent
• Negative
• Hostile
Segmentation Process (7)
• Needs-Based Segmentation
• Segment Identification
• Segment Attractiveness
• Segment Profitability
• Segment Positioning
• Segment “Acid Test”
• Marketing-Mix Strategy
Market Segment Criteria (5)
• Measurable
• Substantial
• Accessible
• Differentiable
• Actionable
Michael Porter Forces (5)
• Industry competitors
• Potential entrants
• Substitutes
• Buyers
• Suppliers
Evaluating Market Segment Factors (2)
• Segment’s overall attractiveness
• Company’s objectives and resources
Undifferentiated or Mass Marketing
• Firm ignores segment differences and goes after the whole market with one offer
• Designs a marketing program for a product with a superior image that can be sold to the
broadest number of buyers via mass distribution and mass communications
• Appropriate when all consumers have roughly the same preferences and the market
shows no natural segments
Differentiated Marketing
• Firm sells different products to all the different segments of the mark et
Supersegment
• Set of segments sharing some exploitable similarity
Selective Specialization
• Firm selects a subset of all the possible segments, each objectively attractive and
appropriate
Product Specialization
• Firm sells a certain product to several different market segments
Market Specialization
• Firm concentrates on serving many needs of a particular customer group, such as by
selling an assortment of products only to university laboratories
Niche
• More narrowly defined customer group seeking a distinctive mix of benefits within a
segment
• Usually identified by dividing a segment into subsegments
Mass Customization
• Ability of a company to meet each customer’s requirements—to prepare on a mass basis
individually designed products, services, programs, and communications
One to One Marketing Framework
• Works best for firms that normally collect a great deal of individual customer information
and carry a lot of products that can be cross-sold, need periodic replacement or
upgrading, and offer high value
• Steps (4)
o Identify your prospects and customers
o Differentiate customers in terms of (1) their needs and (2) their value to your
company
o Interact with individual customers to improve your knowledge about their
individual needs and to build stronger relationships
o Customize products, services, and messages to each customer
Chapter 10: Crafting the Brand Positioning
Positioning
• Act of designing a company’s offering and image to occupy a distinctive place in the
minds of the target market.
• Goal
o Locate the brand in the minds of consumers to maximize the potential benefit to
the firm
• Requires that marketers define and communicate similarities and differences between
their brand and its competitors
• Requirements for deciding on a positioning
o Choosing a frame of reference by identifying the target market and relevant
competition
o Identifying the optimal points-of-parity and points- of-difference brand
associations given that frame of reference
o Creating a brand mantra summarizing the positioning and essence of the brand
• Key
o Not so much achieving a point-of-difference as achieving points-of-parity
• Inform consumers of a brand’s membership before stating its point- of-difference
Competitive Frame of Reference
• Which other brands a brand competes with and which should thus be the focus of
competitive analysis
• Decisions are closely linked to target market decisions
Category Membership
• Products or sets of products with which a brand competes and that function as close
substitutes
• Ways (3)
o Announcing category benefits
o Comparing to exemplars
o Relying on the product descriptor
Points of Difference (PODs)
• Attributes or benefits that consumers strongly associate with a brand, positively evaluate,
and believe they could not find to the same extent with a competitive brand
Criteria for Determining Whether a Brand Association Can Truly Function as a Point-of-
Difference (3)
• Desirable to consumer
• Deliverable by the company
• Differentiating from competitors
Point of Parity (POPs)
• Attribute or benefit associations that are not necessarily unique to the brand but may in
fact be shared with other brands
• Forms (3)
o Category
▪ Attributes or benefits that consumers view as essential to a legitimate and
credible offering within a certain product or service category
▪ Represent necessary but not sufficient conditions for brand choice — —
o Correlational
▪ Potentially negative associations that arise from the existence of positive
associations for the brand
o Competitive
▪ Associations designed to overcome perceived weaknesses of the brand in
light of co -of-difference mpetitors’ points
Straddle Positioning
• Occasionally, a company will be able to straddle two frames of reference with one set of
points-of-difference and points-of-parity
• Points-of-difference for one category become points-of-parity for the other and vice versa
• Allow brands to expand their market coverage and potential customer base
• Often attractive as a means of reconciling potentially conflicting consumer goals and
creating a “best of both worlds” solution, it also carries an extra burden
o If the points-of-parity and points-of-difference are not credible, the brand may not
be viewed as a legitimate player in either category
Competitive Advantage
• Company’s ability to perform in one or more ways that competitors cannot or will not
match
• Few are inherently sustainable
Leverageable Advantage
• One that a company can use as a springboard to new advantages
Perceptual Maps
• Visual representations of consumer perceptions and preferences
• Provide quantitative pictures of market situations and the way consumers view different
products, services, and brands along various dimensions
Brand Matra
• Three- to five-word articulation of the heart and soul of the brand and is closely related to
other br anding concepts like “brand essence” and “core brand promise”
• Purpose
o Ensure that all employees within the organization and all external marketing
partners understand what the brand is most fundamentally to represent with
consumers so they can adjust their actions accordingly
• Must economically communicate what the brand is and what it is not
• Criteria (3)
o Communicate
o Simplify
o Inspire
Variables in Assessing Potential Threats from Competitors (3)
• Share of market
• Share of mind
• Share of heart
Narrative Branding
• Based on deep metaphors that con ries, associations, and stories nect to people’s memo
• Elements ) (5
o The brand story in terms of words and metaphors
o The consumer journey or the way consumers engage with the brand over time and
touch points where they come into contact with it
o The visual language or expression for the brand
o The manner in which the narrative is expressed experientially or the brand
engages the senses
o The role the brand plays in the lives of consumers
• Framework (4)
o Setting
o Cast
o Narrative arc
o Language
Branding Guidelines for Small Businesses (8)
• Find a compelling product or service performance advanta ge
• Focus on building one or two strong brands based on one or two key associations
• Encourage product or service trial in any way possible
• Develop cohesive digital strategy to ma ke the brand “bigger and better”
• Create buzz and a loyal brand community
• Employ a well-integrated set of brand elements
• Leverage as many secondary associations as possible
• Creatively conduct low-cost marketing research
Chapter 11: Creating Brand Equity
Brand
• A name, term, sign, symbol, or design, or a combination of them, intended to identify the
goods or services of one seller or group of sellers and to differentiate them from those of
competitors
• A brand is thus a product or service whose dimensions differentiate it in some way from
other products or services designed to satisfy the same need
• Means to distinguish the goods of one producer from those of another
• Identify the maker of a product and allow consumers to assign responsibility for its
performance to that maker or distributor
• For consumers
o Promise between the firm and the consumer
o Means to set consumers’ expectations and reduce their risk
• For firms
o Perform valuable functions for firms
o Offers the firm legal protection for unique features or aspects of the product
o Can be protected through registered trademarks, manufacturing processes can be
protected through patents, and packaging can be protected through copyrights and
proprietary designs
Credible Brand
• Signals a certain level of quality so satisfied buyers can easily choose the product again
Brand Loyalty
• Provides predictability and security of demand for the firm, and it creates barriers to entry
that make it difficult for other firms to enter the market
Branding
• Process of endowing products and services with the power of a brand
Brand Equity
• Added value endowed to products and services with consumers
• Tends to emphasize strategic issues in managing brands and creating and leveraging
brand awareness and image with customers
Customer Based Brand Equity
• Differential effect brand knowledge has on consumer response to the marketing of that
brand
• Key ingredients (3)
o Brand equity arises from differences in consumer response. If no differences
occur, the brand-name product is essentially a commodity, and competition will
probably be based on price
o Differences in response are a result of consumers’ brand knowledge, all the
thoughts, feelings, images, experiences, and beliefs associated with the brand.
Brands must create strong, favorable, and unique brand associations with
customers, as have Toyota (reliability), Hallmark (caring), and Amazon.com
(convenience and wide selection)
o Brand equity is reflected in perceptions, preferences, and behavior related to all
aspects of the marketing of a brand. Stronger brands earn greater revenue
Brand Knowledge
• All the thoughts, feelings, images, experiences, and beliefs associated with the brand
Brand Promise
• Marketer’s vision of what the brand must be and do for consumers
Components or Brand Equity (4)
• Energized differentiation
o Measures the degree to which a brand is seen as different from others as well as
its pricing power
• Relevance
o Measures the appropriateness and breadth of a brand’s appeal
• Esteem
o Measures perceptions of quality and loyalty, or how well the brand is regarded
and respected
• Knowledge
o Measures how aware and familiar consumers are with the brand and the depth of
their experien ce
Brand Strength
• Leading indicator that predicts future growth value
• Combination of differentiation and relevance
Brand Stature
• “Report card” of past performance and a lagging indicator of current operating value
• Combination of esteem and knowledge
Power Grid
• Depicting stages in the cycle of brand development in successive quadrants
• Combination of brand strength and brand stature
Outcome Measures of a Brand (3)
• Power
o Prediction of the brand’s volume share
• Premium
o Brand’s ability to command a price premium relative to the category average
• Potential
o Probability that a brand will grow value share
Brand Resonance Model
• Enacting the four steps means establishing a pyramid of six “brand building blocks”
• — Emphasizes the duality of brands the rational route to brand building is on the left side
of the pyramid, and the emotional route is on the right side
• Steps (4)
o Ensuring customers identify the brand and associate it with a specific product
class or need
o Firmly establishing the brand meaning in customers’ minds by strategically
linking a host of tangible and intangible brand associations
o Eliciting the proper customer responses in terms of brand-related judgment and
feelings
o Converting customers’ brand responses to intense, active loyalty
Brand Equity Building Blocks (6)
• Brand salience
• Brand performance
• Brand imagery
• Brand judgments
• Brand feelings
• Brand resonance
Resonance
• Intensity of customers’ psychological bond with the brand and the level of activity it
engenders
Sets of Brand Equity Drivers (3)
• The initial choices for the brand elements or identities making up the brand (brand
names, URLs, logos, symbols, characters, spokespeople, slogans, jingles, packages, and
signage)
• The product and service and all accompanying marketing activities and supporting
marketing programs
• Other associations indirectly transferred to the brand by linking it to some other entity (a
person, place, or thing)
Brand Elements
• Devices, which can be trademarked, that identify and differentiate the brand
Criteria for Choosing Brand Elements (6)
• Brand building (3)
o Memorable
o Meaningful
o Likable
• Defensive and help leverage and preserve brand equity against challenges (3)
o Transferable
o Adaptable
o Protectable
Brand Contract
• Any information-bearing experience, whether positive or negative, a customer or
prospect has with the brand, its product category, or its market
• Can affect consumers’ brand knowledge and the way they think, feel, or act toward the
brand
Integrated Marketing
• About mixing and matching marketing activities to maximize their individual and
collective effects
• Marketers need a variety of different marketing activities that consistently reinforce the
brand promise
• Can be evaluated in terms of the effectiveness and efficiency with which they affect
brand awareness and create, maintain, or strengthen brand associations and image
Internal Branding
• Consists of activities and processes that help inform and inspire employees about brands
Brand Bonding
• Occurs when customers experience the company as delivering on its brand promise
Brand Promise
• Will not be delivered unless everyone in the company lives the brand
Principles for Internal Branding (4)
• Choose the right moment
• Link internal and external marketing
• Bring the brand alive for employees
• Keep it simple
Indirect Approach
• Assesses potential sources of brand equity by identifying and tracking consumer brand
knowledge structures
Direct Approach
• Assesses the actual impact of brand knowledge on consumer response to different aspects
of the marketing
Brand Audit
• Focused series of procedures to assess the health of the brand, uncover its sources of
brand equity, and suggest ways to improve and leverage its equity
Brand Tracking Studies
• Use the brand audit as input to collect quantitative data from consumers over time,
providing consistent, baseline information about how brands and marketing programs are
performing
Brand Valuation
• Job of estimating the total financial value of the brand
Ways to Convey the Brand’s Meaning (2)
• What products it represents, what core benefits it supplies, and what needs it satisfies
• How the brand makes products superior and which strong, favorable, and unique brand
associations s hould exist in consumers’ minds
Reinforcing Brand Equity
• — Requires that the brand always be moving forward in the right direction and with new
and compelling offerings and ways to market them
• Providing consistent marketing support
Branding Strategy
• Also called brand architecture
• Reflects the number and nature of both com- mon and distinctive brand elements
• Choices (3)
o It can develop new brand elements for the new product
o It can apply some of its existing brand elements
o It can use a combination of new and existing brand elements
Brand Extension
• When a firm uses an established brand to introduce a new product
• Sub-brand
o When marketers combine a new brand with an existing brand
• Categories (2)
o Line extension
▪ The parent brand covers a new product within a product category it
currently serves
o Category extension
▪ Marketers use the parent brand to enter a different product category
• Advantages (2)
o They can facilitate new-product acceptance
o Provide positive feedback to the parent brand and company
• Disadvantages (2)
o Firm forgoes the chance to create a new brand with its own unique image and
equity
o May cause the brand name to be less strongly identified with any one product
Parent Brand
• Existing brand that gives birth to a brand extension or sub-brand
Master Brand
• Also called family brand
• If the parent brand is already associated with multiple products through brand extensions
Brand Line
• — — Consists of all products original as well as line and category extensions sold under a
particular brand
Brand Mix
• Also known as brand assortment
• Set of all brand lines that a particular seller makes
Brand Variants
• Specific brand lines supplied to specific retailers or distribution channels
• Result from the pressure retailers put on manufacturers to provide distinctive offerings
Licensed Product
• One whose brand name has been licensed to other manufacturers that actually make the
product
Strategies for Choosing Brand Names (3)
• Individual or separate family brand names
• Corporate umbrella or company brand name
• Sub-brand name
House of Brands Strategy
• Use of individual or separate family brand names
Branded House Strategy
• Use of an umbrella corporate or company brand name
Flagship Product
• One that best represents or embodies the brand as a whole to consumers
• Often is the first product by which the brand gained fame, a widely accepted best-seller,
or a highly admired or award-winning product
• Play a key role in the brand portfolio in that marketing them can have short-term benefits
(increased sales) as well as long-term benefits (improved brand equity for a range of
products)
Reasons for Introducing Multiple Brands in a Category (4)
• Increasing shelf presence and retailer dependence in the store
• Attracting consumers seeking variety who may otherwise have switched to another brand
• Increasing internal competition within the firm
• Yielding economies of scale in advertising, sales, merchandising, and physical
distribution
Components of Branding Strategy (2)
• Brand portfolio
o Set of all brands and brand lines a particular firm offers for sale in a particular
category or market segment
o Requires careful thinking and creative execution
o Basic principle
▪ Maximize market coverage so no potential customers are being ignored,
but minimize brand overlap so brands are not competing for customer
approval
• Brand extensions
Flankers
• Also called fighter brands
• Positioned with respect to competitors’ brands so that more important (and more
profitable) flagship brands can retain their desired positioning
Traffic Builders
• Able to trade up customers to a higher-priced brand
Brand Dilution
• Occurs when consumers no longer associate a brand with a specific or highly similar set
of products and start thinking less of the brand
Preemptive Cannibalization
• Consumers who switched to a line extension might otherwise have switched to a
competing brand instead
Acquisition
• Depends on the number of prospects, the acquisition probability of a prospect, and
acquisition spending per prospect
Retention
• Influenced by the retention rate and retention spending level
Add-On Spending
• Function of the efficiency of add-on selling, the number of add-on selling offers given to
existing customers, and the response rate to new offers
Chapter 12: Addressing Competition and Driving Growth
Strategies to Grow the Core (3)
• Make the core of the brand as distinctive as possible
• Drive distribution through both existing and new channels
• Offer the core product in new formats or versions
Requirements of Increasing Frequency of Consumption (2)
• Identifying additional opportunities to use the brand in the same basic way
• Identifying completely new and different ways to use the brand
Anticipative Marketer
• Looks ahead to needs customers may have in the near future
Creative Marketer
• Discovers solutions customers did not ask for but to which they enthusiastically respond
• Proactive market-driving firms, not just market-driven ones
Proactive Skills
• Responsive anticipation to see the writing on the wall, as when IBM changed from a
hardware producer to a service business
• Creative anticipation to devise innovative solutions
Responsive Anticipation
• Performed before a given change
Reactive Response
• Happens after the change takes place
Proactive Companies
• — — Create new offers to serve unmet and maybe even unknown consumer needs
Proactive Firms (5)
• Are ready to take risks and make mistakes
• Have a vision of the future and of investing in it
• Have the capabilities to innovate
• Are flexible and non-bureaucratic
• Have many managers who think proactively
Defense Strategies (6)
• Position defense
o Occupying the most desirable position in consumers’ minds, making the brand
almost impregnable
• Flank defense
o Market leader should erect outposts to protect a weak front or support a possible
counterattack
• Preemptive defense
o More aggressive maneuver is to attack first, perhaps with guerrilla action across
the market hitting one competitor here, another there and keeping everyone — —
off balance
• Counteroffensive defense
o Market leader can meet the attacker frontally and hit its flank or launch a pincer
movement so the attacker will have to pull back to defend itself.
• Mobile defense
o Leader stretches its domain over new territories through market broadening and
market diversification.
• Contraction defense
o Also called strategic withdrawal
o Give up weaker markets and reassign resources to stronger ones
Market Broadening
• Shifts the company uct to the underlying generic need ’s focus from the current prod
Market Diversification
• Shifts the s company’s focus into unrelated industrie
Factors to Consider Because of the Cost of Buying (4)
• The possibility of provoking antitrust action
• Economic cost
• The danger of pursuing the wrong marketing activities
• The effect of increased market share on actual and perceived quality
Market Challengers
• Attack the leader and other competitors in an aggressive bid for further market share
Market Followers
• Choose to not “rock the boat”
Who to Attack in the Market (4)
• It can attack the market leader
• It can attack firms its own size that are not doing the job and are underfinanced
• It can attack small local and regional firms
• It can attack the status quo
Attack Options
• Frontal
o Attacker matches its opponent’s product, advertising, price, and distribution
• Flank
o Another name for identifying shifts that cause gaps to develop in the market, then
rushing to fill the gaps
o Particularly attractive to a challenger with fewer resources and can be more likely
to succeed than frontal attacks
• Encirclement
o Attempts to capture a wide slice of territory by launching a grand offensive on
several fronts. It makes sense when the challenger commands superior resources
• Bypass
o Bypassing the enemy altogether to attack easier markets instead offers three lines
of approach (3)
▪ Diversifying into unrelated products
▪ Diversifying into new geographical markets
▪ Leapfrogging into new technologies
• Guerilla
o Consist of small, intermittent attacks, conventional and unconventional, including
selective price cuts, intense promotional blitzes, and occasional legal action, to
harass the opponent and eventually secure permanent footholds
o Can be expensive, though less so than a frontal, encirclement, or flank attack
Innovative Imitation
• Innovator bears the expense of developing the new prod- uct, getting it into distribution,
and informing and educating the market.
Growth Path Strategies
• Cloner
o Emulates the leader’s products, name, and packaging with slight variations
• Imitator
o Copies some things from the leader but differentiates on packaging, advertising,
pricing, or location
• Adapter
o Takes the leader’s products and adapts or improves them
o May choose to sell to different markets, but often it grows into a future challenger
Nicher
• Achieves high margin
• Tasks (3)
o Creating niches
o Expanding niches
o Protecting niches
• Risk
o The niche might dry up or be attacked
Mass Marketer
• Achieves high volume
Elements of a Life Cycle (4)
• Products have a limited life
• Product sales pass through distinct stages, each posing different challenges, opportunities,
and problems to the seller
• Profits rise and fall at different stages of the product life cycle
• Products require different marketing, financial, manufacturing, purchasing, and human
resource strategies in each life-cycle stage
Product Life Style Stages (4)
• Introduction
o A period of slow sales growth as the product is introduced in the market profits
are nonexistent because of the heavy expenses of product introduction
• Growth
o A period of rapid market acceptance and substantial profit improvement
• Maturity
o A slowdown in sales growth because the product has achieved acceptance by
most potential buyers. Profits stabilize or decline because of increased
competition
• Decline
o Sales show a downward drift and profits erode
Style
• Basic and distinctive mode of expression appearing in a field of human endeavor
Fashion
• Currently accepted or popular style in a given field
• Stages (4)
o Distinctiveness
o Emulation
o Mass fashion
o Decline
Fads
• Fashions that come quickly into public view, are adopted with great zeal, peak early, and
decline very fast
Inventor
• First to develop patents in a new-product category
Product Pioneer
• First to develop a working model
Market Pioneer
• First to sell in the new-product category
Ways to Sustain Rapid Market Share Growth (6)
• Improves product quality and adds new features and improved styling
• Adds new models and flanker products (of different sizes, flavors, and so forth) to protect
the main product
• Enters new market segments
• Increases its distribution coverage and enters new distribution channels
• Shifts from awareness and trial communications to preference and loyalty
communications
• Lowers prices to attract the next layer of price-sensitive buyers
Chapter 13: Setting Product Strategy
Customer Value Hierarchy (5)
• Core Benefit
o Service or benefit the customer is really buying
• Basic product
• Expected product
o Set of attributes and conditions buyers normally expect when they purchase this
product
• Augmented product
o Exceeds customer expectations
• Potential product
o Encompasses all the possible augmentations and transformations the product or
offering might undergo in the future
Durability and Tangibility Groups (3)
• Nondurable goods
o Tangible goods normally consumed in one or a few uses, such as beer and
shampoo. Because these goods are purchased frequently, the appropriate strategy
is to make them available in many locations, charge only a small markup, and
advertise heavily to induce trial and build preference
• Durable goods
o Tangible goods that normally survive many uses: refrigerators, machine tools, and
clothing. They normally require more personal selling and service, command a
higher margin, and require more seller guarantees
• Services
o Intangible, inseparable, variable, and perishable products that normally require
more quality control, supplier credibility, and adaptability
Convenience Goods
• Usually purchased frequently, immediately, and with minimal effort
Shopping Goods
• Consumer characteristically compares on such bases as suitability, quality, price, and
style
Specialty Goods
• Have unique characteristics or brand identification for which enough buyers are willing
to make a special purchasing effort
Unsought Goods
• Those the consumer does not know about or normally think of buying
• Require advertising and personal selling support
Form
• Size, shape, or physical structure of a product
Features
• A company can identify and select appropriate new features by surveying recent buyers
and then calculating customer value versus company cost for each potential feature
Performance Quality
• Level at which the product’s primary characteristics operate
Conformance Quality
• Degree to which all produced units are identical and meet promised specifications
Durability
• Measure of the product’s expected operating life under natural or stressful conditions, is a
valued attribute for vehicles, kitchen appliances, and other durable goods
Reliability
• Measure of the probability that a product will not malfunction or fail within a specified
time period
Repairability
• Measures the ease of fixing a product when it malfunctions or fails
• Ideal repairability would exist if users could fix the product themselves with little cost in
money or time
Style
• Describes the product’s look and feel to the buyer and creates distinctiveness that is hard
to copy
Ordering Ease
• Describes how easy it is for the customer to place an order with the company
Delivery
• Refers to how well the product or service is brought to the customer, including speed,
accuracy, and care throughout the process
Installation
• Refers to the work done to make a product operational in its planned location
Quick Response Systems (QRS)
• Link the information systems of their suppliers, manufacturing plants, distribution
centers, and retailing outlets to improve delivery
Customer Training
• Helps the customer’s employees use the vendor’s equipment properly and efficiently
Customer Consulting
• Includes data, information systems, and advice services the seller offers to buyers
Maintenance and Repair
• Programs help customers keep purchased products in good working order
• These services are critical in business- -business settings to
Product Returns (2)
• Controllable
o Result from problems or errors made by the seller or customer and can mostly be
eliminated with improved handling or storage, better packaging, and improved
transportation and forward logistics by the seller or its supply chain partners
• Uncontrollable
o Result from the need for customers to actually see, try, or experience products in
person to determine suitability and can’t be eliminated by the company in the
short run
Design
• Totality of features that affect the way a product looks, feels, and functions to a consumer
• Offers functional and aesthetic benefits and appeals to both our rational and emotional
sides
Levels of Product Hierarchy (6)
• Need family
o Core need that underlies the existence of a product family.
• Product family
o All the product classes that can satisfy a core need with reasonable effectiveness
• Product class
o Group of products within the product family recognized as having a certain
functional coherence
o Also known as a product category
• Product line
o Group of products within a product class that are closely related because they
perform a similar function, are sold to the same customer groups, are marketed
through the same outlets or channels, or fall within given price ranges
o May consist of different brands, a single family brand, or an individual brand that
has been line extended
• Product type
o Group of items within a product line that share one of several possible forms of
the product
• Item
o Also called stock-keeping unit or product variant
o Distinct unit within a brand or product line distinguishable by size, price,
appearance, or some other attribute
Product System
• Group of diverse but related items that function in a compatible manner
Product Mix
• Also called a product assortment
• Set of all products and items a particular seller offers for sale
• Width
o Refers to how many different product lines the company carries
• Length
o Refers to the total number of items in the mix.
• Depth
o Refers to how many variants are offered of each product in the line
• Consistency
o Describes how closely related the various product lines are in end use, production
requirements, distribution channels, or some other way
Product Map
• Shows the location of the various product line items of company X and four competitors,
A, B, C, and D. Competitor
Line Stretching
• Occurs when a company lengthens its product line beyond its current range, whether
down-market, up-market, or both ways
Line Filling
• Firm can also lengthen its product line by adding more items within the present range
• Motives
o Include reaching for incremental profits, satisfying dealers who complain about
lost sales because of items missing from the line, utilizing excess capacity, trying
to become the leading full-line company, and plugging holes to keep out
competitors
• Overdone if it results in cannibalization and customer confusion
Product Mix Pricing
• Firm searches for a set of prices that maximizes profits on the total mix
• Process is challenging because the various products have demand and cost
interrelationships and are subject to different degrees of competition
• Situations (6)
o Product line pricing
o Optional-feature pricing
o Captive-product pricing
o Two-part pricing
o By-product pricing
o Product-bundling pricing
Mixed Bundling
• Seller offers goods both individually and in bundles, normally charging less for the
bundle than if the items were purchased separately
Co-Branding
• Also called dual branding or brand bundling
• Two or more well-known brands are combined into a joint product or marketed together
in some fashion
Pure Bundling
• Occurs when a firm offers its products only as a bundle
Ingredient Branding
• Special case of co-branding
• Creates brand equity for materials, components, or parts that are necessarily contained
within other branded products
• Try to create enough awareness and preference for their product so consumers will not
buy a host product that doesn’t contain it
• Requirements (4)
o Consumers must believe the ingredient matters to the performance and success of
the end product. Ideally, this intrinsic value is easily seen or experienced
o Consumers must be convinced that not all ingredient brands are the same and that
the ingredient is superior
o A distinctive symbol or logo must clearly signal that the host product contains the
ingredient. Ideally, this symbol or logo functions like a “seal” and is simple and
versatile, credibly communicating quality and confidence
o A coordinated “pull” and “push” program must help consumers understand the
advantages of the branded ingredient. Channel members must offer full support
such as consumer advertising and promotions and sometimes in collaboration —
with manufacturers retail merchandising and promotion programs —
Self Branded Ingredients
• Companies advertise and even trademark
Packaging
• Includes all the activities of designing and producing the container for a product
• Might have up to three layers
o Primary
o Secondary
o Shipping
• Objectives
o Identify the brand
o Convey descriptive and persuasive information
o Facilitate product transportation and protection
o Assist at home storage
o Aid product consumption
Engineering Tests
• Ensure that the package stands up under normal conditions
Visual Tests
• Script is legible and the colors harmonious
Dealer Tests
• Dealers find the packages attractive and easy to handle; and consumer tests, that buyers
will respond favorably
Warranties
• Formal statements of expected product performance by the manufacturer
Chapter 14: Designing and Managing Services
Government Sector
• Courts, employment services, hospitals, loan agencies, military services, police and fire
departments, postal service, regulatory agencies, and schools, is in the service business
Private Nonprofit Sector
• Museums, charities, churches, colleges, foundations, and hospitals is in the service —
business
Business Sector
• Airlines, banks, hotels, insurance companies, law firms, management consulting firms,
medical practices, motion picture companies, plumbing repair companies, and real estate
firms, is in the service business
Manufacturing Sector
• Computer operators, accountants, and legal staff, are really service providers
Service
• Any act or performance one party can offer to another that is essentially intangible and
does not result in the ownership of anything
Categories of Offerings (5)
• Pure tangible good
• Tangible good with accompanying services
• Hybrid
• Major service with accompanying minor goods and services
• Pure service
Experience Qualities
• Characteristics the buyer can evaluate after purchase
Credence Qualities
• Characteristics the buyer normally finds hard to evaluate even after consumption
Service Characteristics that Affect the Design of Marketing Programs (4)
• Intangibility
o Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled
before they are bought
• Inseparability
o Whereas physical goods are manufactured, then inventoried, then distributed, and
later consumed, services are typically produced and consumed simultaneously.
• Variability
o Because the quality of services depends on who provides them, when and where,
and to whom, services are highly variable
• Perishability
o Services cannot be stored, so their perishability can be a problem when demand
fluctuates
Marketing Tools (6)
• Place
• People
• Equipment
• Communication material
• Symbols
• Price
Dimensions of Brand Experience (4)
• Sensory
• Affective
• Behavioral
• Intellectual
Steps Service Firms Take to Increase Quality Control (3)
• Invest in good hiring and training procedures
• Standardize the service-performance process throughout the organization
• Monitor customer satisfaction
Conditions Where Employees Thrive (4)
• Pamper customers
• Accurately read their needs
• Develop a personal relationship with them
• Deliver high-quality servi ce to solve customers’ problems
External Marketing
• Describes the normal work of preparing, pricing, distributing, and promoting the service
to customers
Internal Marketing
• Describes training and motivating employees to serve customers well
Interactive Marketing
• Describes the employe es’ skill in serving the client
Best Practices of Top Service Companies (5)
• Strategic concept
• History of top-management commitment to quality
• High standards
• Profit tiers
• Systems for monitoring service performance and customer complaints
Voice of the Customer (VOC) Measurements
• Probe customer satisfiers and dissatisfiers and use comparison shopping, mystery or
ghost shopping, customer surveys, suggestion and complaint forms, service- audit teams,
and customers’ letters
Importance-Performance Analysis
• Rates the various elements of the service bundle and identifies required actions
Factors Leading to Customer Switching Behavior (8)
• Pricing
• Inconvenience
• Core service failure
• Service encounter failures
• Response to service failure
• Competition
• Ethical problems
• Involuntary switching
Gaps that Prevent Successful Delivery (5)
• Gap between consumer expectation and management perception
• Gap between management perception and service-quality specification
• Gap between service-quality specifications and service delivery
• Gap between service delivery and external communications
• Gap between perceived and expected service
Determinants of Service Quality (5)
• Reliability
• Responsiveness
• Assurance
• Empathy
• Tangibles
Zone of Tolerance
• Range in which a service dimension would be deemed satisfactory, anchored by the
minimum level consumers are willing to accept and the level they believe can and should
be delivered
Worries About Product Service
• Failure frequency
• Downtime
• Out of pocket costs
Life Cycle Costs
• Product’s purchase cost plus the discounted cost of maintenance and repair less the
discounted salvage value
Chapter 15: Introducing New Market Offerings
Incremental Innovation
• Entering new markets by tweaking products for new customers, using variations on a
core product to stay one step ahead of the market, and creating interim solutions for
industry-wide problems
Disruptive Technologies
• Cheaper and more likely to alter the competitive space
• Established companies can be slow to react or invest in these disruptive technologies
because they threaten their investment
Drawbacks New-Product Launches Face (8)
• Fragmented markets
• Social, economic, and governmental constraints
• Cost of development
• Capital shortages
• Shorter required development time
• Poor launch timing
• Shorter product life cycles
• Lack of organizational support
Customer-Driven Engineering
• Develop new products, incorporating customer preferences in the final design
Venture Teams
• Cross-functional groups charged with developing a specific product or business
Skunkworks
• Informal workplaces, sometimes garages, where intrapreneurial teams work to develop
new products
Communities of Practice
• Often housed on internal Web sites where employees from different departments are
encouraged to share knowledge and skills with others
Crowdsourcing
• These paid or unpaid outsiders can offer needed expertise or a different perspective on a
task or project that might otherwise be overlooked
Stage-Gate System
• To divide the innovation process into stages, with a gate or checkpoint at the end of each
Spiral Development Process
• Recognizes the value of returning to an earlier stage to make improvements before
moving forward
Techniques for Stimulating Creativity in Individuals and Groups (6)
• Attribute listing
• Forced relationships
• Morphological analysis
• Reverse-assumption analysis
• New contexts
• Mind mapping
Lateral Marketing
• Combines two product concepts or ideas to create a new offering
DROP-Error
• Occurs when the company dis- misses a good idea
Screening
• Purpose is to drop poor ideas as early as possible
Overall Probability of Success
• Probability of technical completion Probability of commercialization given technical x
completion Probability of economic success given commercialization x
Product Idea
• Possible product the company might offer to the market
Product Concept
• Elaborated version of the idea expressed in consumer terms
Category Concept
• Defines the product’s competition
Brand-Positioning Map
• Perceptual map showing the current positions of three existing brands
Rapid Prototyping
• Design products on a computer and then produce rough models to show potential
consumers for their reactions
Conjoint Analysis
• Method for deriving the utility values that consumers attach to varying levels of a
product’s attributes
• Has become one of the most popular concept- development and testing tools
Dragalong Income
• Additional income to them
Cannibalized income
• Reduced income
Types of Products (3)
• One time purchased
• Infrequently purchased
• Frequently purchased
Quality Function Deployment (QFD)
• Job of translating target customer requirements into a working prototype
Alpha Testing
• Tests the product within the firm to see how it performs in different applications
Consumer-Products Tests to Estimate Variables (4)
• Trial
• First repeat
• Adoption
• Purchase frequency
Methods of Consumer-Goods Market Testing (4)
• Sales wave research
• Simulated test marketing
• Controlled test marketing
• Business goods market testing
Commercialization
• Incurs the company’s highest costs to date
Crowdfunding
• Individuals or start-ups fund their projects by using social media and other means to
generate interest and contributions from the general public
Critical Path Scheduling (CPS)
• Develops a master chart showing the simultaneous and sequential activities that must take
place
Adoption
• An individual’s decision to become a regular user of a product
Innovation
• Any good, service, or idea that someone perceives as new, no matter how long its history
Innovation Diffusion Proce ss
• The spread of a new idea from its source of invention or creation to its ultimate users or
adopters
Consumer-Adoption Process
• Mental steps through which an individual passes from first hearing about an innovation to
final adoption
• Steps (5)
o Awareness
o Interest
o Evaluation
o Trial
o Adoption
Adopter Groups (5)
• Innovators
• Early adopters
• Early majority
• Late majority
• Laggards
Personal Influence
• Effect one obability, has greater person has on another’s attitude or purchase pr
significance in some situations and for some individuals than others, and it is more
important in evaluation than in the other stages
Characteristics that Influence of Adoption (5) an Innovation’s Rate
• Relative advantage
• Compatibility
• Complexity
• Divisibility
• Communicability
