Midterm #2 Review

Chapters 7, 8, 9, 11
 Midterm #2 Details
The midterm will be held in L303, Nov 6 (Not the regular room).
Time: 12:30pm - 2:20pm (110 minutes)
The midterm will be on Chapters 7,8,9 & 11 (what we've covered in class)
You do it in Brightspace, so be sure you can login to our course site.
composition of exam:
Case Study/Short Answer questions = 60%
Multiple Choice = 40%
Total: 80 points
What to Bring: Student ID, writing utensil, bottle of water
What I will Bring: Paper
Case Study/Short Answer - 48 Marks
Write your responses based off the case study, don’t just define or write

the model out.. ALWAYS tell me HOW does the framework apply to the

case?
 Chapter 7
Know how to describe the bases used to segment the market
Discuss the criteria used for successful market segmentation
Describe the steps involved in segmenting the markets
Be able to explain how and why companies implement positioning
strategies
 What are the four bases for segmenting the
market? Psychographic Benefit and
•
•
Personality
Motives
Usage-rate
Benefit
• Lifestyles • Groups potential customers on the basis of their
needs or wants
Geographic • Geodemographic
(neighbourhoodlifestyle categories) • Sobey’s developed a program aimed at those
with autism.
Region of the world
Region of the country
Demographic • Usage rate (COFFEE SHOPS)
Market size • Age • Based on amount bought or consumed —
former users, potential users, first-time users;
Market density • Gender
light, medium, or heavy
Climate Income
• Pareto Principle: 20% of all customers generate
• Ethnic about 80% of demand
• background
• Occupation
• Family lifecycle
Is this market segment worth pursuing?
Criteria:
Steps in Segmenting the Market
• Identifiable and measurable Can we find them and measure them?
• Substantial Profitable enough to serve?
• Accessible Can they be reached and served?
• Responsiveness Will they respond uniquely?

Review the Central Perk In-Class Assignment, I have added it into the
Resources and Answer Keys on Brightspace

Know the steps and be able to apply the concepts to an example with
customer profiles
 Positioning, what is it? How do we differentiate?
Position: The place the product, brand, or service • Positioning based on what distinguishes the product from the
occupies in the consumer’s mind competition
▶ positioning requires..... BASES EXPLANATION

Attribute A product feature, a product benefit

assessing the positions occupied by competing products Price and quality High price as a symbol of quality
Use or application Stress uses or applications
determining the important dimensions underlying
Product user Focus is on a personality type
these positions Product class Associated with a particular category of products
Competitor Against competition
choosing a position in the market where the
Emotion How the product makes you feel
organizations marketing efforts will have the greatest
Impact

Perception of the brand

Product Differentiation
 Chapter 8
Discuss the meaning of branding (current vs. old)
Identify and apply the 3 Cs of brand
Establish the organizational brand as the benchmark against which
all marketing a mangaement, and financial decisions must be
measured
Identify brand’s role as the catalyst to CSR and ESG
Distinguish between brand, branding, brandmark, and other brand
elements
Be able to speak to the evolution of branding... Creating a reputation built on consistent
behaviour (about how the brand is preceived by stakeholders).. no longer just about
differenciation or a logo/symbol
Know this and know how to speak to the different elements of the brand using the 3 C’s. For example, Competitive
advantage is the differenciation aspect fromt he competition... Contribution is the CSR or ESG (brand
recognition)... Communication is the “old brand definition” (logo, mark, the brand story that engages)
If I give you an example of a company in a case, I want you to speak to me
about how the company needs to be consistent from a brand perspective
Know what a trademark/service mark is and the different types are...
 Chapter 9
Define the term Product
Define the terms product item, product line, and product mix
Describe marketing uses of branding
Describe marketing uses of packaging and labelling
Discuss global issues in branding and packaging
Know the importance of developing new products and be able to
describe the 6 categories of new products
Understand the 6 steps in the new product development process
Know the diffusion process through which new products are adopted
Explain the concept of product life cycles
WHAT IS A PRODUCT?

DEFINITION: THINGS TO NOTE:

Anything both favourable and • Not all products can be
unfavourable received by a owned
person in an exchange for • Can also be a service, idea,
possession, consumption, person, and places—all things
companies offer customers
attention, or short-term use
 ► Require comparison shopping
► Consumers willing to put the time and effort into shopping
►Inexpensive items

►Takes little effort to shop for Grouped into two types of products....

►Unwilling to shop extensively for it

• Product is perceived as similar • Product is perceived as different in
►Require wide distribution
• Look for lowest-priced brand that has terms of features, quality, and
desired features performance
►Impulse goods • Benefit: consumers can find the best
EXAMPLE: Appliances product or brand for their needs

► Consumers search for extensively ► Unknown to the consumer

► Unwilling to accept substitutes ► Known product but not actively sought
after
► Unique characteristics
►Insurance, burial plots—require personal selling
and aggressive advertising
► New products—until consumer becomes
aware of them

MC
 ►Product item ►Product line ►Product mix
► Distinct offering ►Group of closely related ►All the products that
product items a company sells

►Product mix width

►Breadth
• The process of modifying products so
►Number of product lines offered
that those products that have already
►Product line length been sold become obsolete before they
►Number of product items in a product line actually need replacement
►Product line depth

►Number of types and sizes offered for each

product in the line

MC
 What are the packaging functions?
Containing or protecting the product
Promoting the product
Storage, use and convenience
Recycling and reducing environmental damage

Labelling
Persuasive vs Informational labelling
Bi-lingual labelling

Be able to explain the concepts

 Core Benefit
The main purpose the product performs, or job the product does.
Example: customer may need a car to get from point A to point B.
The core product of a car is transportation.

Generic Product
The main features a product must have in order to satisfy customer needs.
These are products that are similar to other products in the market.
Example: a generic car is a car that is like all other cars on the market. It
has four wheels, an engine, etc.

Expected Product
This is what the customer agrees to receive when purchasing the product.
Example: customer may expect a car to have a certain level of safety,
reliability, and comfort.

Augmented Product
These are products that exceed the customer’s expectations. These are the features
that differentiate the product from it’s competitors.
Example: a customer may not expect a car to have GPS, heated seats, or a sunroof.

Potential Product
The future enhancements which could improve the user experience.
Example: a customer may not know that cars in the future will have the
capabilities to be self driving vehicles.

Be able to expalin the different elements of a product

Developing + •New to the world

Managing New •Creation of entirely new market

•New product lines

Products • Allows a firm to enter an established market

•Additions to product lines
•Capitalize on brand equity
New products • Improvements or revisions to existing products
Sustain growth • Significantly or slightly changed
Increase revenue and profits •Could be a package improvement
Replace obsolete items • Repositioned products
Meet ever-changing new consumer wants • Existing products targeted at new markets or new
New technologies
segments

Shrinking product lifecycle • Lower-priced products

• Provide performance similar to competing brands at
a lower price
 Rainproof backpack

Luxury high end bag

Customers
Watches
Employees
Distributors
Competitors
Vendors
Research and development
Consultants

Good screening requires

The elimination of ideas that are • that management have a clear

understanding of what their Concept tests: Survey consumer
inconsistent with organization’s
business is all about reactions to description
new-product strategy
• an understanding of business
objectives

Analyze Market trends

Forecast: Demand, sales, market share
Question: Will it be profitable?

Develop a prototype
Sketch a marketing strategy
Determine Market Feasibility

Limited introduction of the product and marketing

program
allows for evaluation of the marketing mix and
market strategy
Select test cities
Test Marketing can be costly
Alternative is simulated market testing
Decision to market the product
Purchasing materials and equipment
Building inventory
Distribute to distribution sites
Training sales people
Announce and advertise new product
Categories of adopters
Innovators EARLY ADAPTORS
2.5%
Eager to try
• 13.5%
Self-confident 34%
• Adopt early in product’s life cycle
Well educated Evaluate pros and cons.
• Reliant on group norms
Use scientific sources • Oriented to local community Rely on the group.
Venturesome • Opinion leaders Friends of opinion leaders
High income
Deliberate decision makers

• 16%
34% • Do not rely on group norms.
Adopt because friend shave adopted Independence tied to tradition
Rely on group norms, pressure to Influenced by the past
conform •By the time they adopt, product out moded
Older and below average income Suspicious of new products
Depend on word of mouth • Tradition
Skepticism

Know the characteristics of each adaptor

What happens at each phase? Can you give an example with a product at
each stage.. what happens to price, promotions, place, etc.
 Chapter 11
Learning outcomes...
Know the importance of price and the
pricing process
Describe and give examples of the four-
step pricing process
Know the legality and ethics of price
Steps in Setting
the Price for a
Product!

Know these steps and what happens at each step

Step 1: Establish pricing goals/objectives
Status quo
Maintain existing prices or meet competition prices.
Requires little planning—passive policy

Sales oriented
Market share: Extreme competition may result in limited
share growth.
Sales maximization: Ignore profits, competition, and the
marketing environment, as long as sales are rising. Short-
term focus.

Profit Orientation
Profit maximization:Price so that total revenue is as large
as possible relative to total costs. Does not necessarily = high
prices.
Satisfactory profits: Reasonable level of profit, often
connected to CSR
Target ROI: Most common. Price to achieve a particular ROI
Step 2 –Estimate demand, costs and profits
Elasticity of demand
Cost estimation
Characteristics Product examples Company
Variable costs: vary based on the number of products produced
Elastic
Fixed costs: stay the same over time regardless of production Nonessential Smartphones
Many alternatives Fashion
Demand estimation Automobiles
Maslow’s social, esteem
Trickier needs
Historical data in the industry Inelastic
Essential Home heating and
Life cycle
Few alternatives electricity
Starts with price sensitivity and price elasticity of demand Maslow’s physiological Basic food staples
needs Winterboots

Break-even analysis
• How much does it cost to bring the
product to market?
• How much is the market willing to pay
for the product?
• BEP = Fixed cost ÷(Variable price per
unit − Variable cost per unit)
Step 3 –Choose a price strategy
Starts with current product positioning…
Know the 5 different strategies or
approaches.. be able to identify them
Then, a consideration of product’s costs and demand and PLC stage… and explain them
Then, a selection from three basic approaches

Price skimming: Start high and lower over time. New with unique benefits (specialty
products... high competition)
Penetration pricing: Low price initially. Capture large market share to reduce production
costs and discourage competition (generally convenience based products)
Status quo pricing: Price identical or close to competition (new products entering a market
or can be convenience based products)
Cost-plus Pricing: Analytical approach to pricing figuring out the price floor and ceiling of a
product to understand if the market is willing to pay more than originally projected (real-
estate market (neighbourhoods, sq foot, walking score, market trends etc) variable
considerations)
Value-based pricing: sets the price of a product or service based on what customers
perceive its value to be, rather than its production cost or the competition. (ex. art,
diamonds, technology, fashion, and cosmetics. Some companies that use value-based pricing
include Apple, Starbucks, Balenciaga, Gucci, Louis Vuitton, or Chanel Beauty.)
 Step 4: Using a price tactic
Set a base price—a general price level at which the company plans to sell.
Fine-tune the base price using a variety of pricing tactics.
Provides the opportunity to adjust for unforeseen events in the marketplace
Irrespective of price tactic, the driving force is profit, which results from markup.
The profit-producing device of price

Pricing Tactics Other pricing tactics

Single price (ex. Netflix)
Discounts and allowances Flexible price (ex. New car)
Value based pricing
Professional services pricing (ex. Chiropractor)
Dynamic pricing
geographic pricing Price lining (ex. Line of TVs)
Loss leader (ex. Free month at yoga studio)
Price bundling (ex. Microsoft office)
Two-part pricing (ex. Membership at fitness club)
Pay what you want (ex. Walking tour)

Know all the pricing tactics and how they should be applied