Marketing Strategies and New Product Legitimacy

Questions and Answers

Explain how the result of a market positioning analysis affects the final decision about where to position a new brand or reposition an existing one.

Positioning statement: refers to how the products/services meet a particular customer needs. Positioning is the process to define a suitable niche market for a product.
Repositioning statement: refers to the process of changing a target market’s understanding and perception of product/services due to unexpected reasons. The selection of position should match with the needs of target segmentation as well as the preference of customers; thereby, company can deploy marketing activities appropriately. Example: Bitis- one of the well-known brands. Bitis lost connection with gen Z (middle-age). CMO of Bitis realized that most of Gen Z moved into other brands: Nike, Adidas. Hence, Bitis decided to launch a new product named Bitis Hunter repositioning to those who live far away from home. When wearing these shoes, they will remember their hometown and desire to come back home. Consequently, this campaign is totally successful because it can touch into the bottom of the heart of audiences. It can be said that Bitis employs a repositioning strategy by launching new products as it can enhance the brand image and attract the target customers like Bitis desires.

Qantas (Australia's largest international and domestic airline) is in an extremely competitive and seemingly mature market. You have been asked by the marketing manager to come up with an alternative going forward. Offer suggestions to the manager on what is possible. (Examine the existing position of Qantas, what key competitors are doing? Which products/services do competitors serve to the customers?)

Before the business reach to mature stage, it would go through the growth stage. In this stage, business could capture the demand of customers, the profit increase dramatically. All supply and demand are both favored for supplier. However, the market is saturated which leads to both needs and demand of customers go down. Customers saw no innovation or differentiation in products/services. This is when the market reached maturity. Qantas is suffering this situation; it seemingly mature market. Mature market is the stage when the rate of growth slows or little growth. This may pressure on profit.
In order to exist as well as maintain the position in this situation. Firstly, Qantas should redefine targeted segmentation. It means that Qantas should consider desirable target customers to be strongly positive to market attractiveness and potential competitive position. Secondly, redesigning services should be applied in this case. Qantas must identify which flaws it is facing; thereby, adding more value or upgrade the quality are different from competitors and enhance augmentation for services. Finally, Qantas should develop new products. In order to attract customers’ attention, gain profit and enhance revenue, Qantas can add the utility for existing customers and enlarge more benefits for new customers.

Ford Motors want to be the profitable survivor in the declining market. Write a brief note on this strategy. Explain the conditions most appropriate for the use of the profitable survivor strategy

_ Any businesses has to be in declining market which cannot be generated money any more. This is considered as a difficult stage when business ongoing find ways to overcome and managers must seek opportunities to survive.
_ In case of becoming profitable survivor in this circumstance, it is feasible when a company see market start growing again in the future. A profitable survivor focus on gaining market share. Definitely, if a company still operate in declining market, it needs to adjust its strategies from the one it use in mature stage. There are some conditions for the use of profitable survivor strategy

Ford Motors should take risks by creating the breakthrough in designing products. Adding more value in products makes Ford Motors differentiate to competitors. From there, they can gain the position in the market
Exploring the latest trend and technology in order to catch up with the changing external environment. By doing that, Ford Motors can compete with other players as well as survive in declining market

In which of the following stages of the product life cycle do sales increase at a progressively faster rate as more people learn about the product and it becomes readily available?

Growth stage Signup and view all the answers

_____ is designed to obtain as much margin per unit as possible and also enables the company to recover its new product investments more quickly

Skimming Signup and view all the answers

Which of the following is true of the introductory stage in a product life cycle?

Skimming is one of the pricing strategies applied at this stage. Signup and view all the answers

Which of the following pricing strategies is appropriate during the maturity stage of the product life cycle?

Hold or reduce selectively Signup and view all the answers

Identify the appropriate response by a firm when its product line is in the mature life cycle stage.

Hold length of line Signup and view all the answers

The shakeout stage in a product life cycle is signaled by:

A drop in the overall growth rate and substantial price cuts. Signup and view all the answers

New-to-the-world products can be defined as:

True innovations that are new to the firm and create an entirely new market. Signup and view all the answers

Which of the following refers to products that supplement a firm’s established product line?

Additions to existing product lines Signup and view all the answers

Identify the firm characteristic of a new product pioneer pursuing the mass-market penetration strategy.

It should have the ability to shift from stimulation of primary demand to stimulation of selective demand. Signup and view all the answers

Sales promotion efforts (like coupon drops and merchandising deals) are examples of the _____ strategy to achieve share growth.

Guerrilla attack Signup and view all the answers

CEO of BHP Bilton is looking for to identify the source of synergy from different business in BHP.

_ Source of synergy: exist when business, product market, resource deployment and reinforce to each other. Synergy enables to total performance of the related business to be greater _ There are different kind of source of synergy that CEO of Qantas is looking for <ul> <li>Knowledge-based synergy: the performance of a business can enhance by transferring knowledge, competencies or intangible things (brand name, brand reputation) + Corporate identity and corporate brand: these help business stand out from their competitors and give it sustainable competitive advantages in the market.</li> <li>Shared resources: consists of share operational resources, facilities and function across business units which can increase the economies of scale. As a result, it can bring the efficiency as well as productivity for businesses.</li> </ul> Signup and view all the answers

Explain the various ways Tiger Airway as challenger can target other domestic airlines in an established market like Australia

When enter new market like Australia: <ul> <li>Tiger Airway segments the market, targets the most profitable ones (Behavioral Segmentation, Demographic Segmentation, Geographic Segmentation, Psychographic Segmentation) Tiger Airway can continue using their</li> </ul> <ol> <li>Cost Leadership strategy (maintained a sustainable low-cost advantage over their full-service competitors)</li> <li>Differentiation Strategy (Tiger airways focused on differentiation of their product, that mean they must also offer a product which is very highly rated by passengers in terms of value for money.)</li> <li>Operational strategy (focus on short haul route, perform a system of activities differently from that of traditional rivals and providing a coherent set of key activities that reinforce each other to achieve such position in a sustainable manner)</li> </ol> Signup and view all the answers

What is the major marketing objective for followers, particularly larger firms entering a product-market shortly after the pioneer?

Attain share growth. Signup and view all the answers

A primary marketing objective of all competitors in mature markets is simply to:

Hold their existing customers. Signup and view all the answers

The transition from market growth to maturity typically begins:

When the market is still growing but the rate of growth starts to decline. Signup and view all the answers

Goliath Corp. made overly optimistic forecasts of future sales volume. As a result, the firm expanded too rapidly, and production capacity overshot the demand as growth slowed. The excess, in turn, lead to an increase in price per unit. Which of the following strategic traps did Goliath Corp. fall into during the shakeout period?

Failure to anticipate transition from growth to maturity. Signup and view all the answers

"A business may survive and prosper during the growth stage even though it has neither differentiated its offering from competitors nor attained the lowest-cost position in its industry. But during the transition period, such is not the case." Which of the following strategic traps leads to a state where a business may struggle during the transition period?

Getting caught in the transition period without a clear strategic advantage. Signup and view all the answers

National Motors manufactures high-end automobiles. The attributes of their cars include excellent handling, acceleration, comfort, and braking, and provides the company an advantage over its competitors. Identify the product quality dimension emphasized by National Motors.

Performance Signup and view all the answers

The _____ quality dimension refers to the consistency of performance from purchase to purchase or to a product’s uptime, the percentage of time that it can perform satisfactorily over its life.

reliability Signup and view all the answers

The gap between management perceptions and service quality specifications occurs when:

A firm's policies concerning customer service are unclear or haphazardly enforced. Signup and view all the answers

The production of no-frills goods to maintain a low-cost position:

Involves removing all extras from the basic product or service. Signup and view all the answers

In some labor-intensive industries, a business can achieve a cost advantage, at least in the short term, by gaining access to inexpensive labor. This is an example of the _____ method used to obtain a sustainable cost advantage.

Innovative production processes. Signup and view all the answers

Papyrus Inc. achieved a cost advantage by being the first major papermaker to rely exclusively on recycled pulp. The firm’s lower cost gave it a competitive edge in the price sensitive commercial market for toilet paper and other such products used in hotels, restaurants, and office buildings. Which method of maintaining a low-cost position has the company used?

Cheaper raw materials. Signup and view all the answers

Which of the following is the critical determinant of success in mature markets?

Continually working to improve the value of offerings. Signup and view all the answers

Identify the market characteristic that affirms growth extension in maturing markets through application of an extended use strategy.

Relatively high penetration but low frequency of use in one or more major segments. Signup and view all the answers

Which of the following is a possible marketing action that may be taken to convert current nonusers in the target segment into users?

Enhance product's value by adding features, benefits, or services. Signup and view all the answers

To develop differentiated positioning focused on untapped segments using a market expansion strategy, a firm should:

Develop a differentiated flanker brand with more appealing unique features. Signup and view all the answers

Which of the following is a possible marketing action that can encourage extended use of products?

Developing line extensions suitable for additional uses or applications. Signup and view all the answers

_____ is a factor that helps to determine the strategic attractiveness of declining product markets.

Conditions of demand. Signup and view all the answers

_____ refers to the ease with which weaker competitors can leave the market.

Exit barriers. Signup and view all the answers

The objective of a _____ strategy is to generate cash quickly by maximizing cash flow over a relatively short term.

Harvesting. Signup and view all the answers

Which of the following is the primary objective of niche strategies in a declining market?

Focusing on strengthening position in one or a few relatively substantial segments with potential for future profits. Signup and view all the answers

Which of the following will be the primary objective of a firm, in a declining market, which has a sustainable competitive advantage in target segments but limited overall resources?

To focus on strengthening position in one or a few relatively substantial segments with potential for future profits. Signup and view all the answers

Which of the following is the most probable marketing action by a firm to implement a harvesting strategy in a declining market?

Eliminate R&D expenditures and capital investments related to the business. Signup and view all the answers

_____ is the process by which a market is divided into distinct subsets of customers with similar needs and characteristics that lead them to respond in similar ways to a particular product offering and marketing program.

Market segmentation Signup and view all the answers

_____ entails designing product offerings and marketing programs that can establish an enduring competitive advantage in the target market by creating a unique brand image, or position, in the customer’s mind.

Brand positioning Signup and view all the answers

Identify the scenario emphasizing the impact of income on consumer markets that are segmented demographically.

Cyan Mobiles launching a subsidiary to create an ultra-exclusive mobile telephone targeting customers who buy luxurious products Signup and view all the answers

Carol’s Trio, an upscale retail chain, stocks and sells only Spanish, German, and French products. Trio is an example of segmenting a market by _____

Ethnic origin Signup and view all the answers

_____ divides the market according to the characteristics of the buying organization using attributes such as age of firm, firm size, and industry affiliation.

Macrosegmentation Signup and view all the answers

In _____, customers are grouped by the characteristics of the individuals who influence the purchasing decision.

Microsegmentation Signup and view all the answers

AdventureBikes targets wilderness enthusiasts and introduced special robust bikes for them. PowerDrink’s target market comprises tennis players who need to replenish water and salts lost through perspiration. These are examples of _____ segmentation that is based on target consumers’ activities.

Behavioral Signup and view all the answers

When consumers evaluate product alternatives on the basis of desired characteristics and how valuable each characteristic is to them, it is referred to as _____.

Choice criteria Signup and view all the answers

Which of the following statements is true of behavioral segmentation?

It identifies new markets even among homogeneous demographic groups when segmented by lifestyle. Signup and view all the answers

Which of the following is true of principle-oriented consumers?

They are motivated by abstract and idealized criteria. Signup and view all the answers

A(n) _____ consumer shops for products that demonstrate the consumer’s success.

Status-oriented Signup and view all the answers

_____ is the degree to which buying activity is centralized and influences a buyer to consider all transactions with a given supplier on a global basis, to emphasize cost savings, and to minimize risk.

Purchasing structure Signup and view all the answers

A(n) _____ refers to a recurring buying situation handled on a routine basis.

Straight rebuy Signup and view all the answers

Which of the following buying situations occurs when some element, such as price or delivery schedules, has changed in a client–supplier relationship?

A modified rebuy Signup and view all the answers

What is the first step in constructing a market attractiveness/competitive position matrix for evaluating potential target markets?

Selecting market attractiveness and competitive position factors Signup and view all the answers

In which of the following steps of evaluating potential target markets is the market-attractiveness/competitive-position matrix plotted?

Rating segments on each factor Signup and view all the answers

Based on the market attractiveness/competitive position matrix, which of the following strategies should a firm consider when the market attractiveness is moderate and the competitive position is weak?

It should expand without high risk or minimize investment and focus on operations. Signup and view all the answers

Based on the market attractiveness/competitive position matrix, which of the following strategies should a firm consider when the market attractiveness is low and the competitive position is strong?

It should protect current strengths of the firm and seek ways to increase current earnings without speeding market’s decline. Signup and view all the answers

Based on the market attractiveness/competitive position matrix, which of the following strategies should a firm consider when the market attractiveness is high and the competitive position is strong?

It should invest more to grow at a maximum rate and concentrate on maintaining strengths. Signup and view all the answers

Which of the following is true of a mass-market strategy?

It involves designing a single product-and-marketing program that will appeal to the largest number of consumers. Signup and view all the answers

Which of the following market strategies is often favored by smaller companies to avoid direct confrontations with larger firms while building volume and share?

A growth-market strategy Signup and view all the answers

Apple gained significant market share within a short period of time following the launch of the first iPhone on 29/6/2007 in emerging smartphone market. Explain how Apple’s share gains are worth more in a growth market than in a mature market

<ul> <li>Firstly, Apple capitalized on the multi-touch technology and turn this technology into the new launching products. At that time, Apple recklessly removed physical keyboard, just only use virtual keyboard. This seems stimulate the interest and curiosity of customers, thereby many people bought and experience it.</li> <li>Growth market is the place where business could capture the demand of customers, the profit increase dramatically. All supply and demand are both favored for supplier. This is the reason why when the first iPhone was introduced, it receive good reaction from customers. It can be seen Apple employed a breakthrough strategy to differentiate. As a result, it can gain the market share in auto mobile phone industry.</li> </ul> Signup and view all the answers

CEO of Qantas is looking for to identify the source of synergy from different business in Qantas. What are the various sources of synergy for Qantas?

<ul> <li>Source of synergy: when the business’s business, product market, resource deployment and reinforces to each other. Synergy enables the total performance of the business to be greater.</li> <li>There are different kind of source of synergy that CEO of Qantas is looking for</li> </ul> <ul> <li>Knowledge-based synergy: the performance of a business can enhance by transferring knowledge, competencies or intangible things (brand name, brand reputation)</li> <li>Corporate identity and corporate brand: these help business differentiate from their competitors and give it sustainable competitive advantages in the market.</li> <li>Shared resources: consists of share operational resources, facilities and function across business units which can increase the economies of scale. As a result, it can bring the efficiency as well as productivity for businesses</li> </ul> Signup and view all the answers

Explain niche-market and growth-market strategies with relevant examples.

Niche-market strategy serves specialized customers; growth-market strategy targets fast-growing segments. Signup and view all the answers

Brand positioning refers to both the place a brand occupies in customers' minds relative to the competition, and:

The marketer's decision making intended to create that position. Signup and view all the answers

Identify a limitation of physical positioning.

Customers' attitudes toward a product are often based on social or psychological attributes. Signup and view all the answers

Which of the following is characteristic of perceptual positioning analysis of a brand?

R&D implications need to be interpreted Signup and view all the answers

Which of the following examples best illustrates perceptual positioning?

Colgate's toothpaste with enhanced freshness of breath and sparkly teeth Signup and view all the answers

A firm is considering introducing a new product category in a highly competitive environment. The marketers obtain customer perceptions of the new product concept relative to likely substitute products on various critical determinant attributes. Which of the following stages of the product positioning process is the firm currently in?

Identifying the relevant set of competitive products serving a target market Signup and view all the answers

Volvo's emphasis on safety, Toyota's emphasis on reliability, and Norelco's promising a 'close and comfortable shave' highlights which determinant attribute?

Benefits Signup and view all the answers

Which of the following positioning bases typically includes 'who made it' and 'prior products'?

Parentage Signup and view all the answers

Which of the following positioning bases is illustrated by a clothing manufacturer’s claim of their shirts being made from pure organic cotton?

Ingredients Signup and view all the answers

Which of the following is an example of using product features as a determinant attribute in positioning?

'This is the quietest dishwasher made in America.' Signup and view all the answers

Rex and Tens, a food manufacturing company, has the following tagline in its ad for a new health drink—Speedheal. 'Find out why thousands of nutritionists across America are recommending Speedheal to their clients.'—Which positioning base is used in this Speedheal ad?

Endorsements Signup and view all the answers

A bank positions itself using its deposit safety as an attribute. Why would this positioning not create an impact in the consumer's mind?

Because most consumers perceive all banks to be about equally safe. Signup and view all the answers

Two stores occupy positions comparable to one another on the positioning grid. This indicates that:

Consumers consider them to be relatively alike. Signup and view all the answers

Identify the limitation of a product positioning analysis.

It does not tell the marketer which positions are most appealing to customers. Signup and view all the answers

Customers are surveyed and asked their preferences among various real or hypothetical product configurations, each with attributes that are systematically varied. This is an example of a:

Conjoint analysis. Signup and view all the answers

Both positioning statements and value propositions should reflect a:

Unique selling proposition. Signup and view all the answers

_____ is the term marketers use to refer to the value created by establishing customer preference for one’s brand.

Brand equity Signup and view all the answers

Which of the following results when companies create differences between their brands and other brands that consumers perceive as meaningful?

Brand equity Signup and view all the answers

Study Notes

Market-Oriented Perspectives

Successful corporate, business, and marketing strategies are based on market-oriented perspectives
A new product can be communicated to the target market through various factors, including social media, product launches, and hiring well-known experts
The rate of adoption of a new product category is influenced by factors such as competition, reputation, and investment in R&D and marketing

Designing Marketing Databases

Designing marketing databases requires considering several major issues:
- Cost of collecting data
- Economic benefits of using data
- Ability to keep data current in a mobile society
- Rapid advances in technology to maximize data usage
Collecting and storing data costs money, and the cost must be weighed against its value

Market Segmentation

Market segmentation is the process of dividing a market into distinct subsets of customers with similar needs and characteristics
Segmentation can be based on various factors, including demographics, geographic location, behavior, and firmographics
Examples of segmentation include:
- Demographic segmentation (e.g., age, gender, income)
- Geographic segmentation (e.g., region, city, country)
- Behavioral segmentation (e.g., activities, interests, opinions)
- Firmographic segmentation (e.g., industry, company size, job function)

Target Market Strategies

A mass-market strategy involves designing a single product and marketing program that will appeal to the largest number of consumers
A niche-market strategy involves serving one or more segments that, while not the largest, consist of a sufficient number of customers seeking somewhat-specialized benefits
A growth-market strategy involves targeting one or more fast-growth segments, even though they may not currently be very large

Market Attractiveness and Competitive Position

Market attractiveness factors include:
- Market size and growth rate
- Trends (demographic, sociocultural, economic, political/legal, technological, and natural)
- Unmet customer needs
Competitive position factors include:
- Degree of differentiation from competitors
- Resources required to compete effectively
- Critical success factors and product life-cycle conditions

Differentiation and Brand Positioning

Brand positioning refers to the place a brand occupies in customers' minds relative to the competition
Physical positioning analysis is limited because it ignores customers' attitudes toward a product based on social or psychological attributes
Perceptual positioning analysis of a brand involves interpreting R&D implications and large number of dimensions### Physical Positioning Analysis
Physical positioning represents product specifications and communication
It has a technical orientation
Limited number of dimensions are involved in physical positioning

Perceptual Positioning Analysis

Perceptual positioning represents product attributes and benefits
It has a consumer orientation
It involves identifying relevant set of competitive products serving a target market
Perceptual positioning is based on perceptual measures
Examples of perceptual positioning include Volvo's emphasis on safety, Toyota's emphasis on reliability, and Norelco's promise of a close and comfortable shave

Determinant Attributes

Determinant attributes are the characteristics of a product that influence consumer preferences
Examples of determinant attributes include product features, ingredients, manufacturing process, benefits, and endorsements
Companies use determinant attributes to position their products in the market

Positioning Bases

Positioning bases are the characteristics of a product that are used to differentiate it from competitors
Examples of positioning bases include ingredients, manufacturing process, benefits, price/quality, and parentage
Companies choose a positioning base that is relevant to their target market and product

Product Positioning Analysis

Product positioning analysis involves identifying the target market and the product category in which the product competes
It also involves identifying the unique benefit that the product offers to the target market
The analysis is limited in that it does not indicate how alternative products are positioned relative to one another in customers' minds

Conjoint Analysis

Conjoint analysis is a research technique used to identify the preferences of consumers among various product configurations
It involves surveying customers and asking them to compare different product attributes
Conjoint analysis helps companies to identify the optimal product configuration that meets customer needs

Brand Positioning and Value Proposition

Brand positioning involves creating a unique identity for a brand in the market
Value proposition is a statement that describes the benefits of a product or brand to the customer
Both positioning statements and value propositions should reflect a unique selling proposition (USP)
A value proposition should include information about the target market, benefits offered, and price range relative to competitors### Product Life Cycle
Introduction of a new product requires large investments, resulting in short-term losses
In the growth stage, sales increase rapidly, and substantial investments continue; profitability is depressed due to building facilities in advance to ensure supply
The firm with the largest share during this period should have the lowest per-unit costs due to scale and learning effects
The innovating firm's share is likely to erode substantially during the growth stage

Mass-Market Penetration Strategy

Primary objective: to maximize the number of triers and adopters in the target market
Used by pioneers to stimulate primary demand and attract a large number of customers quickly

Niche Penetration Strategy

Used by pioneers to stimulate selective demand among early adopters
Involves starting with high-priced versions and introducing lower-priced versions later in anticipation of competitive entries

Entering a Foreign Market

Exporting is the simplest way to enter a foreign market, involving the least commitment and risk
Franchising grants the right to use the company's name, trademarks, and technology
Joint ventures involve a joint ownership arrangement to produce or market goods in a foreign country

Marketing Program Components for a Skimming Strategy

A high price is used to increase margins and revenues, focusing on customer groups who are least sensitive to price and most likely to be early adopters
Introductory promotional programs focus on customer groups who are likely to be early adopters and less sensitive to price
Continuing product development efforts focus on the next generation of technology or identifying new application segments

For share leaders, the primary objective is to stimulate selective demand among later adopters
Involves retaining existing customers and ensuring brand loyalty

For followers, the primary objective is to attain share growth by attracting new customers
Involves attacking the market-share leader within its primary target market or targeting smaller untapped or underdeveloped segments in the market

Flanking strategy: developing a second product line with features or price more appealing to a specific segment of potential customers
Market expansion strategy: developing multiple-line extensions or brand offerings targeted to the needs of various potential user applications or geographical segments within the market
Fortress strategy: defending market position by expanding into a number of market segments
Confrontation strategy: improving ability to win new customers who might otherwise be attracted to a competitor's offering
Encirclement strategy: targeting several smaller untapped or underdeveloped segments in the market simultaneously

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Description

This quiz covers market-oriented perspectives and strategies for successful corporate and business growth, including the role of social media and legitimacy of new products.