Marketing Management Course Notes
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Questions and Answers

What is the traditional name for "Place" in the marketing mix?

Distribution

What are two key pillars that are distinguished in the modern definition of "Place"?

Channel management and Logistics

What are the key differences between direct and indirect sales channels?

Direct sales channels involve selling directly to customers without intermediaries, while indirect sales channels rely on wholesalers, distributors, and retailers.

Is the statement "The cost is not important for establishing the price. It only serves for knowing if you should or shouldn't fabricate the product." generally true?

<p>True</p> Signup and view all the answers

What are three major pricing strategies that are commonly used?

<p>Cost-based pricing, Customer value-based pricing, Competition-based pricing</p> Signup and view all the answers

What is the core metric used in customer value-based pricing?

<p>Customer's willingness to pay</p> Signup and view all the answers

In the context of customer-value-based pricing, what is the meaning of "good value"?

<p>Offering the right combination of quality and good service at a fair price.</p> Signup and view all the answers

Is the statement "Good value' is the same as 'low price'" accurate?

<p>False</p> Signup and view all the answers

What is the simpler cost function to determine in contrast to the price-response function?

<p>The cost function is simpler to determine because the necessary information comes from within the company.</p> Signup and view all the answers

What does "price elasticity" measure?

<p>Price elasticity measures the responsiveness or sensitivity of demand to changes in price.</p> Signup and view all the answers

Is the statement "Own price elasticity is always positive" true?

<p>False</p> Signup and view all the answers

What are some of the key factors that affect the price elasticity of demand?

<p>Key factors include market characteristics (competitive pressure, price transparency, and frequency of purchase) as well as customer characteristics (price awareness, willingness to accept risk, and brand loyalty).</p> Signup and view all the answers

What is an example of an industry segment with relatively elastic demand?

<p>The compact car segment is a prime example of an industry with relatively elastic demand.</p> Signup and view all the answers

What is the difference between own-price elasticity and cross-price elasticity?

<p>Own-price elasticity measures the impact of a product's price change on its own demand. Cross-price elasticity examines the impact of a competitor's price change on the demand for a product.</p> Signup and view all the answers

Is the statement "Cross-price elasticity is always positive" accurate?

<p>False</p> Signup and view all the answers

What are the three key elements of the "promotion mix" in marketing?

<p>Advertising, Sales promotion, and Personal selling are the three key elements within the promotion mix, and they represent different approaches for communicating value and engaging with customers.</p> Signup and view all the answers

What are the factors that make up a company's total "promotion mix"?

<p>Along with advertising, sales promotion, and personal selling, the other two elements of the total promotion mix are public relations and direct marketing.</p> Signup and view all the answers

Which of these is NOT a key challenge in creating a successful "promotion mix"?

<p>selecting the appropriate creative message strategy</p> Signup and view all the answers

What is the difference between "above the line" advertising and "below the line" advertising?

<p>Above the line advertising focuses on mass media promotion to reach a large audience, often targeting the general public. Below the line advertising aims to reach a specific, smaller, more targeted audience, using a range of direct and less traditional marketing methods.</p> Signup and view all the answers

What does "funnel marketing" refer to and how it relates to the "AIDA" model?

<p>Funnel marketing is a strategy that aligns different marketing efforts with specific customer journey stages, often represented by a funnel. The AIDA model (Awareness, Interest, Desire, Action) provides a conceptual framework for mapping these stages and the types of marketing activities that are most effective at each step of the journey.</p> Signup and view all the answers

Is the statement "Paid media is the only marketing tool that is used to reach new audiences" accurate?

<p>False</p> Signup and view all the answers

How does the concept of "owned media" differ from that of "paid media" and "earned media"?

<p>Owned media refers to marketing channels that a company directly controls, such as their website, social media accounts, and email lists. Paid media involves paid advertising, such as banner ads and sponsored posts, on external platforms. Earned media is the result of positive word-of-mouth, mentions, reviews, and discussions about a company or product.</p> Signup and view all the answers

What is a key difference between inbound and outbound marketing?

<p>Inbound marketing appeals to pull customers in with valuable content and experiences, while outbound marketing attempts to push messages out directly to consumers without their prior interest.</p> Signup and view all the answers

What are some of the key decisions involved in setting up a successful advertising campaign?

<p>The key decisions involve defining campaign objectives, setting the campaign budget, crafting a compelling message strategy, selecting the best media mix, and ensuring effective campaign evaluation.</p> Signup and view all the answers

What are the three main advertising objectives?

<p>Informative advertising aims to educate customers about a product or service, persuasive advertising seeks to convince customers to choose a particular brand or product, while reminder advertising works to maintain customer relationships and remind customers about a product or service.</p> Signup and view all the answers

What is the concept behind "dynamic pricing"?

<p>Dynamic pricing is a strategy that involves adjusting prices based on time-based differentiation, often taking into account factors like time of day, day of the week, or season. The goal is to capitalize on variations in demand and optimize profits.</p> Signup and view all the answers

What are the three key types of channel setups depending on the number and integration of channels?

<p>Single-channel setup, Multi-channel setup, Omni-channel setup</p> Signup and view all the answers

What are some of the features of a "single-channel setup"?

<p>Single-channel setups often use a single channel, such as a physical store a website , or mobile app, to provide a unified customer experience.</p> Signup and view all the answers

Study Notes

Marketing Management - Course Notes

  • The course covers marketing management, focusing on the marketing mix and its instruments, with a particular emphasis on the 'product' aspect.
  • Customer value is derived from three levels of the 'product': core customer value, actual product, and augmented product.
  • Product decisions, including quality, features, packaging, style, design, branding, and support service, are important components of the marketing mix.
  • Brands are crucial in influencing customer perceptions and differentiating a firm's offering.
  • Managing a product over time involves brand architecture development and new product introductions.
  • Digitalization has significantly impacted product innovation and related processes.
  • Potential ethical issues related to "product" are widespread.

Marketing Mix: Price

  • Price plays a critical role in the marketing mix, directly affecting business impact.
  • Price changes have immediate business implications.
  • However, price management presents unique challenges.
  • The concept of 'price' is multifaceted and requires consideration of different dimensions, including its meaning over time, and in the digital world alongside ethical price issues.
  • Factors influencing price decisions over time include customer perceptions of value, competitors' pricing strategies, and various external considerations like legal regulations.
  • Key to price decisions is comprehension of consumer reaction to price changes and the available freedom a company has in setting prices.

Price Decisions

  • Three main pricing strategies exist: customer-based, cost-based, and competition-based.
  • Customer's perception of the price-value relationship is the primary driver for pricing decisions.

What are major pricing strategies?

  • The key to successful pricing decisions is utilizing customer-based pricing alongside cost-based and competitive-based strategies, to effectively balance value for the customer and profitability for the business.

Major pricing strategies and why they are needed

  • Cost-based pricing is determined by a company's costs, with fixed costs not influenced by volume and variable costs being dependent on production volume.
  • Value-based pricing is predicated on customer's perception of value for a product.
  • Competition-based pricing examines competitor prices against the firm's own price structure.

How is the price determined?

  • The price must reflect the perceived value of the product for the customer as well as cover the firm's costs.

Customer-value based pricing: Overview

  • A firm's perceived value is key to successful value-based pricing.
  • Price should be considered in conjunction with all other marketing mix variables prior to the creation of a marketing program.
  • "Good value" does not necessarily mean "low-price".

Customer-value based pricing: Major types

  • Good-value pricing strives to offer the right combination of quality and service for a fair price.
  • Value-added pricing seeks to enhance the product or service with increased features to justify the higher price point.

Cost-based pricing

  • For pricing decisions, the core component of cost analysis is the distinction between fixed and variable costs.
  • Fixed costs do not vary according to production volume, whereas variable costs are dependent on the production volume.
  • In contrast to the price-response function, the cost function is relatively easier to determine within a company.

Cost-based pricing: Key use case

  • Cost is not a primary factor in determining the price.
  • Cost analysis is essential for deciding whether to manufacture the product in the first place.

Competition-based pricing: Analysis

  • Identifying relevant competitors
  • Analyzing competitors' current pricing
  • Foreseeing future pricing trends

Managing “price” over time

  • Understanding customer reactions to price changes.
  • Analyzing price elasticity.
  • Understanding the psychology of pricing and communicating the price effectively.

Managing “price” over Time - When to change price

  • Motivations for price cuts include excess capacity, reduced demand, competition pricing reductions and/or economic downturn.
  • Motivations for price increases include improving profits/increased costs and to manage over-demand.

What to expect when increasing or cutting prices?

  • Price repositioning downwards may yield success, due to positive responses. A company must account for costs when changing product positioning downward.
  • Price repositioning upwards is time-intensive with potential for negative and unpredictable results.

What will competitors do?

  • Competitors are more likely to react when the number of competing firms is low, when the product is uniform, and when consumers are well-informed.

Understanding the impact of price changes

  • Evaluating price elasticity allows for understanding the impact price changes have on the sales volume.

How to understand the price-demand relationship

  • Price-demand relationships are optimized by understanding price elasticity.
  • Price elasticity measures how changes to a product's price affect the quantity of product demanded.
  • Own-price elasticity relates to changes in a company's own prices, while cross-price elasticity relates to changes in competitors' prices on a company's volume.

Interpreting price elasticity metrics

  • Understanding a product's demand elasticity is critical in decision making concerning price change.

When do price changes have a high impact

  • Market, customer, and product characteristics play a critical role in determining the impact of price changes.
  • Key factors that affect the high impact of price changes are factors of high competition, high price awareness, and high consumer price sensitivity. Product characteristics such as the high similarity/substitutability of multiple products, high purchase frequency, and wide market availability also affect the impact.

How do real-world price elasticities look like

  • Research findings on price elasticity lack conclusive evidence across industries.
  • Price elasticity is best determined on a case-by-case basis depending on specific industry specifics and context.
  • The demand for compact cars, for example, is highly dependent on price, exhibiting a relatively high elasticity.

Static price-elasticity

  • Static price elasticity is oversimplified as other factors influence consumer behavior in response to price changes.
  • External factors such as customer expectations regarding price need to be considered.

What is “price” in a digital world

  • The price customers pay is “data”.
  • Price transparency is key in the digital world.
  • Dynamic and personalized pricing techniques are becoming popular.
  • Long-term price optimization with relationship-based pricing.
  • Important in the digital world is making the price signals clear concerning perceived, customer value as is ensuring consumer privacy.

Recent regulatory initiatives to reduce data practices

  • Modern data privacy principles emphasize collecting only necessary data.
  • Limited collection and storage practices associated with privacy concerns.
  • Apple's iOS privacy changes lead to a substantial drop in revenue for Meta (Facebook) in 2022.

Price transparency

  • Consumers are empowered by price comparison websites.
  • Retailers and brand manufacturers react to these trends by providing greater price transparency in response to consumer demand.

Examples of price transparency

  • Digitec Galaxus, a Swiss online retailer, provides an example of companies proactively showing price history.
  • Everlane demonstrates a fashion brand's approach to detailed production costs and markup.

Dynamic and personalized pricing techniques

  • Dynamic pricing leverages time-based price differentiation.
  • Personalized pricing segments customers according to characteristics, such as sociodemographic factors, product use, or device type.

Beyond personalized pricing

  • Dynamic personalized pricing dynamically adjusts prices for customers based on their profiles.

Long-term price optimization

  • Understanding customer retention and developing strategies for customer loyalty.
  • Customer loyalty programs are useful for pricing strategies as well as for promoting a connection with the company.
  • Utilizing relationships with existing customers for increasing profitability

What is “promotion”?

  • Promotion is the key element within marketing and involves a specific blend of advertising, sales promotion, personal selling, public relations, and direct marketing
  • Promotion can be achieved by communicating customer value, persuading consumers and building customer relationships.

Understanding promotion typologies

  • The approach of using promotion to achieve goals can be understood through the concept of media typologies which involve several factors, including reach, frequency and engagement.
  • The choice of promotion channels is critical for a successful campaign.
  • Effective multi-platform campaigns build cumulative reach while minimizing redundancy.

What can be learned from digital adaptation to promotion

  • Internet advertising now surpasses other advertisement spending.
  • Digital channels are paramount in the modern landscape

Promotion - Decisions

  • The budget is the initial decision in promoting a product/service.
  • Advertising campaigns and related strategies comprise further decisions concerning the promotion.

Measuring the effectiveness of Advertising promotion

  • Analyzing advertising effectiveness involves assessing communication impact and sales and profit impact.
  • Measuring return-on-advertising spend (ROAS) and returns on investment (ROI) are important metrics for evaluating ad campaign performance.

What are some possible advertising strategies

  • The initial decision is the budget allocations.
  • Choices concerning media types, vehicles and timing of advertising campaigns need to be made following the budget.
  • Other decisions such as brand awareness, message strategy, and message execution are also critical aspects of evaluating the campaign strategy's effectiveness.

Key challenges for promotional mix decisions

  • Ensuring consistency across the various promotional mix elements for effective communication.
  • Identifying the appropriate promotion channels, especially considering the rapidly changing digital landscape.

Managing "promotion" over time

  • Consistency is crucial in all aspects of promotion, specifically concerning integrated marketing communications.
  • This entails the proper management of advertising, advertising campaigns, personal selling and coordination across all media touchpoints.

Ethical "promotion" issues

  • Businesses should not engage in unethical promotional practices such as misleading marketing, or selling tactics like bait and switch.
  • It is important that promotion practices do not discriminate against consumers such as women, minorities, or senior citizens.

"Promotion" in a digital world

  • The digitalization of promotion strategies has created a complex platform through which ads get displayed and presented.
  • Real-time bidding is an automated platform for digital advertising.
  • Retail commerce is frequently affected by online ad businesses and how they are displayed to potential consumers.
  • Influencer marketing is now a key dynamic within the promotional mix landscape.

Customer Mix - Defining "customer mix"

  • Customer mix is a firm's balanced decision-making process between customer acquisition versus customer retention and development.
  • The focus of a customer mix is to balance marketing activities for acquiring new customers with those activities designed to retain and develop relationships with existing customers.

Managing the customer mix

  • Customer-centric marketing is based on two key aspects : (1) understanding individual customer value and (2) delivering accordingly, in order effectively serve a business clientele.
  • Business strategies for customer prioritization rely on effective tools and methods to measure the customer lifecycle process.
  • Optimization of efforts for acquiring new customers and for retaining current customers is critical for successful companies.

Customer Prioritization

  • Prioritizing customers is an effective marketing tool to increase profitability and customer retention, which reduces marketing spend.
  • Customer prioritization affects relationships with top-tier clients positively and does not negatively affect relationships with other clients.
  • Customer prioritization reduces costs associated with marketing and sales activities.

How to assess customer value

  • Customer value is based on long-term customer contributions.
  • Companies can employ tools/metrics (CLVTools) to identify and quantify the value of certain customer groups.

How to assess customer value-analyses

  • Effective analysis of customer value assessments relies on the "whale curve" and other methods that effectively visualize the impact of several customer groups on a business' bottom line.
  • Analysis determines the optimal balance for allocating resources among customer acquisition and customer retention activities.

Customer Acquisition

  • Strategies to optimize acquisition may involve the use of different media channels.
  • Several strategies for acquiring customers can be categorized into 7 key strategies, including: going to the user, both online and offline; inviting friends; create FOMO; leveraging influencers; getting press coverage; building a community

Customer Retention/Development

  • Retention/development processes are complex and require managing activities over time in order to achieve effective results.
  • Key aspects to effective customer retention/development activities include financial incentives, social bonding, and enhanced customization.
  • Loyalty programs can be efficient instruments for promoting customer retention and loyalty.

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Description

This quiz covers key concepts in Marketing Management, focusing on the marketing mix, particularly the product aspect and pricing strategies. It delves into customer value, brand influence, and the impact of digitalization on product innovation. Explore essential product decisions, ethical considerations, and the overarching role of price in the marketing mix.

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