RSM251 Final Exam Notes.docx

RSM251 – FINAL EXAM NOTES Case Notes Microfridge  Possible markets: dorms, motels, mobile homes  Cost of this product (fridge and microwave in one) = $263  Analysis of 3 C’s and 4 P’s - Customers: dorms, motels Competitors: all fridge and microwave companies Company: product strengths = 2 in 1 weaknesses: consumers can buy a microwave/fridge separately and possibly cheaper Calyx and Corolla - 4 potential segments to enter 1. Gift 2. Personal 3. Events 4. Commercial - Company: strengths: longevity/freshness, Saturday delivery, management talent. Weaknesses: heavy reliance on single supplier (fedex), flowers not blossomed when received, cold weather - Target personal use based on weaknesses and strengths Colgate-Palmolive - New toothbrush, Precision, to be launched - Consumers: segmented by oral care involvement - Surge in the super-premium market - Competition: lots of competitors - Consumer segments: therapeutic, cosmetic, uninvolved - Mainstream marketing strategy: focus on several segments and sell larger volumes - Niche positioning: focus on a single, specific segment and charge a price premium - If mainstream marketing is used, Precision could cannibalize the sales of other Colgate brushes - Launch Precision as mainstream to earn the most profit Hilton HHonors - 3 segments in lodging industry: 1/3 business, 1/3 convention, 1/3 leisure - Competition: Starwood (Westin, Sheraton, 4 points, W), Mariott, Bass, Hyatt - Loyalty programs earn guests points with every stay - Consumers: ¼ of frequent travellers belong to a loyalty program but are not actually loyal to one brand - Company: strengths: double dipping, no expiry, convert hotel points to miles and vise versa. Weaknesses: blackout dates, no paperless rewards, relatively limited network size Kingsford Charcoal - Cecline in growth as consumers turn to gas grills - ¾ f U.S. households own a grill - Advertise to remind consumers that taste wise, Charcoal > Gas grilling - Attempt to extend the grilling season outside of the peak summer months through promotions - Increase prices because charcoal is price inelastic - With increased advertising and promotions Kingsford could survive and increase their market share. They should also raise prices by 5% Cumberland Metal - One of the largest curled metal product manufacturers in the U.S. - They are too dependent on one product and one industry – must diversify - They should adopt a value-based pricing strategy - Key decision makers are architectural engineers Netflix - industry trends: Early 1900s – consumers wanted quick rentals Mid 1990s to early 2000s – consumers wanted convenience Mid 2000s – the rise of video on demand - Netflix = online rental, while Blockbuster = retail - Subscription based model (pay a fee for the month and rent x numbers of movies) - Previously, pay per movie - Increased their number of distribution renters to mail customers movies faster - Jump on board with new VOD technology elBulli - Opens 6 months per year and serves 50 customers/night - Uses molecular gastronomy to transform food (lots of R&D) - Focus on creating an unforgettable experience for diners - New recipes each year - Weaknesses: high costs (can’t break even), limited reservations, seasonal - Next steps: book publishing and hotel Zara - Consumers: fashion forward, impulsive buyers, visit often - “medium quality fashion clothing at affordable prices” - Imitate high end designs, sense of scarcity (buy now) - Positioning: fast paced high-fashion company with internal manufacturing (vertically integrated) - Competitive Advantage: on trend with their designs, vertically integrated manufacturing, time compressed production - Standardization amongst stores all over the world: consistent company image, economies of scale, can maintain current production system, brand loyalty Biopure - Biopharmaceutical firm specializing in the ultra purification of proteins (to create marketable blood substitutes) - Biopure was the only company with shelf-stable products (did not require freezing or refrigeration) - Market potential through veterinary practices (smaller than human market and more price sensitive) - Hemopure = for humans Oxyglobin = for animals - Oxyglobin has been approved while hemopure will be approved in 2 years - Launch of oxyglobin has a minimal impact on the price of Hemopure Article Notes Marketing Strategy – An overview - Strategy = a plan of action designed to achieve certain define objectives - Defining objectives gives purpose and direction to strategies - Strategies are developed at multiple levels in the organization: corporate, divisional, business unit, and departmental - Marketing strategy is composed of… o Product/market selection o Distribution systems o Market communications - May also include…. o Product service o Technical service o Plant location - The combination of these factors = marketing mix - A market is a pocket of latent demand - Market segment = set of potential customers alike in the way they perceive and value the product, in their buying behaviour, and in the way they use the product - 4 types of segments o Demographic o Geographic o Psychographic o Product use/application - Factors for product/market decisions… o Product value o Long run growth potential o Company-product market fit - Prices are determined by… o Supply/demand conditions o Firms production and overhead costs o Competition o Buyer bargaining power o Product value to potential customers - Price skimming – price high at first then bring price down over time - Penetration pricing – offering a low initial price to attract customers - Decision making process: o Need awareness o Information search o Identification of options o Source qualification and short listing o Selection o Post purchase affiration - Pull strategy – create end-market demand and pull the product line through its distribution channels - Push strategy – offer resellers extensive incentives to promote, push, the product to end users Perceptual Mapping: A Manager’s Guide - two methods of perceptual mapping o attribute ration method o overall similarity method - Attribute rating method o Brand ratings on attributes o Attributes prespecified by analysts o Factor analysis or multiple discriminant analysys o Product positions on axes defines as combination of orginal variables o Best suited for applications with hard attributes which can be verbalized - Overall Similarity Method o Overall similarity ranking o Definition of similarity left to respondent o Multidimensional scaling o Relative product positions: axes must be interpreted by analyst o Best suited for categories dominated by not easily articulated attributes - 3 ways perceptual maps are used in the new product development process… o to obtain a better understanding of market structure o to test where a new product being considered for introduction would be perceived o to provide direction to R&D efforts to satisfy the wants of consumers better Note on Pricing - price = an expression of the usefulness and quality of the product itself, in the image that is conveyed through advertising and promotion, in the availability of the product through wholesale and retail distribution systems and in the service that goes with it - The struggle for market share focuses critically on price - Price should be set between cost and customer value - If price > value, there is no market - If price < cost, the business cannot suvice for long - Factors that influence pricing decisions… o Competitors products and price strategies o Government imposed constraints o Seller and buyers sense of what is fair - Company may set price less than cost when… o There is capacity underutilization o To get a large order o To gain a larger market share - Cost-plus pricing – set prices by addition a % over costs to provide an acceptable profit - Customers have the choice not to buy - Customers see price as a measure of value of the product - Pricing too low might cause the customer to see the product as low-value - Value is a function of… o The utility of its several attributes to the prospective buyer o The options the buyer has and is aware of o The extent to which the buyer perceives price as a measure of product value - Competitive market pricing usually imposes a tight discipline on value pricing - The greater the supply relative to demand, the lower the price - How much a competitive firm is constrained by competitor prices, therefore depends largely on how differentiated its product is - Pricing strategies can be carried out effectively if… o Pricing decisions are based on extensive current market information o Competitive and customer responses to price changes are carefully monitored and recorded o Pricing decision making is centralized within a business and not delegated to field representatives o Pricing moves are planned responses to market conditions and competitive behaviour Note on the Retailing Industry - Retailing links the producer of goods to the consumer - Retailers are classified into 2 main subsectors: o Durable goods: last more than 3 years, sales more volatile, not necessities o Nondurable goods: necessities - Time stresses have made shopping a chore rather than a source of recreation - Priorities have shifted - Consumers are more price conscious - Value is a more complex concept than it once was - Precision shopping has become more prevalent - The most common growth strategy has become purchasing market shrae - Retailing issues o The reality of a consolidating environment o Technology and its implications for communicating with customers, suppliers, and internally, and the power it gives consumers o Brand perception and ownership o Vendor relationships and the dawning realization that retailer and vendor are in it together, rather than participating in a zero-sum game Going to Market - Marketing channel = set of mechanisms or networks via which a firm “goes to market” - The channel first has to generate demand for a product/service, then fulfill that demand and provide for after-the-sale service - Next, the channel often serves a useful function in transmitting feedback from the custome