BA514 – Test #2 Study Guide

Chapter 6: Product and Brand Strategy

3 Ways to View a Product [TEG]

- Tangible Product: The physical entity or service that is offered to the buyer
- Extended Product: The tangible product along with the whole cluster of services that
accompany it
- Generic Product: The essential benefits the buyer expects to receive from the product

Brand Equity; define – must know “Elements”

Brand Equity: The set of assets (or liabilities) linked to the brand that add (or subtract) value.
The value of these assets is dependent upon the consequences or results of the marketplace’s
relationship with the brand.

Elements of Brand Equity: [Brandon No Quiere a Brandy]

- Brand loyalty: Likelihood of customers returning based on brand alone

- Name awareness: Do people know who you are/what you do?
- Perceived quality: Do customers associate the brand with high or low quality?
- Brand associations: What else comes to mind when people think of the brand?
- Other proprietary brand assets

Brand Equity – Value to the firm

Provides value to the firm by enhancing:

- Efficiency and effectiveness of marketing programs

- Brand loyalty
- Prices/margins
- Brand extensions
- Trade leverage
- Competitive advantage

Brand Equity – Value to customers

Provides value to customers by enhancing:

- Interpretation/processing of information
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- Confidence in purchase decision

- Use satisfaction

Audits & Deletions – why done/ result is…

The product audit is a marketing management technique whereby the company’s current product
offerings are reviewed to ascertain whether each product should be continued as is, improved,
modified, or deleted.

- Deletions: One of the main purposes of the product audit is to detect sick products and
then bury them. Factors to be considered:
o Sales trends
o Profit contribution
o Product life cycle
o Customer migration patterns
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Classifying Consumer Goods (Insight 6-2)

- Convenience: A consumer product or service that consumers normally buy frequently,

immediately and without great comparison or buying effort.
- Shopping: Products that the customer usually compares on attributes such as quality,
price and style in the process of selecting and purchasing.
- Specialty: Consumer products and services with unique characteristics or brand
identification for which a significant group of consumers is willing to make a special
purchase effort.
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Chapter 7: New Product Planning and Development

“Facts” about new products

- Many new products are failures. Estimates of new product failures range from 33% to
90%, depending on industry.
- New product sales grow far more than sales of current products, potentially providing a
surprisingly large boost to a company’s growth rate.
- Companies vary widely in the effectiveness of their new product programs.
- A major obstacle to effectively predicting new product demand is limited vision.
- Common elements appear in the management practices that generally distinguish the
relative degree of efficiency and success between companies.

Idea screening & 3 forms of risk

Idea Screening: Apply the goals and objectives company has set; examining risks associated
with product; decide to go forward, drop idea or look for help.

- May do customer research at this point, find out market needs, and the form and function
needed
- Must have a clear definition of the new product at the end of this stage

The primary function of the idea screening process is twofold:

- To eliminate ideas for new products that could not be profitably marketed by the firm
- To expand viable ideas into full product concepts

3 forms of risk: [Sin Mas Internos]

- Strategic Risk: The risk of not matching the role or purpose of a new product with a
specific strategic need or issue of the organization.
- Market Risk: The risk that a new product won’t meet a market need in a value-added,
differentiated way.
- Internal Risk: The risk that a new product won’t be developed within the desired time
and budget.
-
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“Primary Reason” for new product failure / 3 factors why

Many products with satisfactory potential have failed to make the grade for reasons related to
execution and control problems.

1. No competitive point of difference, unexpected reactions from competitors, or both

2. Poor positioning
3. Poor quality of product
4. Non delivery of promised benefits of products
5. Too little marketing support

Chapter 8: Integrated Marketing Communications

Personal vs. Non-Personal Communication Forms

Personal Communication [PersonalPersonal]

- Personal Selling: Face-to-face communication with potential buyers to inform them

about and persuade them to buy an organization’s product.

Non-Personal Communication [Advertir, Salir Por Directo]

- Advertising: Communication through a mass medium to a target audience.

o Ex. TV, radio, newspaper, internet, outdoor displays, etc.
- Sales Promotion: An activity or material that offers customers, sales personnel, or
resellers a direct inducement for purchasing a product.
o Ex. Coupon, sweepstakes, refund, display.
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- Public Relations: Communication that seeks to influence the attitudes, feelings, and
opinions of stakeholders. A popular form is publicity.
o Ex. Publicity; not paid by the organization, through mass medium in the form of a
news story.
- Direct Marketing: Direct forms of communication with customers.
o Ex. Direct mail, online, mobile marketing, catalogs, etc.

IMC – is? / “Seeks to manage”

Integrated Marketing Communications (IMC): Marketing communication programs that

coordinate and integrate all elements of the promotion mix so that the organization presents a
consistent message.

- It seeks to manage all sources of brand or company contacts with existing and potential
customers.

The “end goal” of an advertisement…

Then end goal of an advertisement and its associated campaign is to move the buyer to a decision
to purchase the advertised brand.

Sales Promotion – Reasons for growth

Sales Promotion: An activity or material that offers customers, sales personnel or resellers a
direct inducement for purchasing a product.

Increase in sales promotion popularity and growth:

- Increased pressure on management for short-term results

- The emergence of new purchase tracking technology
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Promotion Mix – define each

The combination and types of nonpersonal and personal communication an organization puts
forth during a specified period.

Previously defined in Personal vs. Non-Personal Communication Forms section

- Advertising
- Sales Promotion
- Public Relations
- Direct Marketing
- Personal Selling

2 “Decisions” in advertising

- Determining the size of the advertising budget

- How the advertising budget should be allocated

Insight 8-7: Procedures for evaluating specific ads (MAT)

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Sales Promotion – Why not used as sole tool / “inability”

There are several compelling reasons why it should not be used as the sole promotional tool.

These reasons include sales promotion’s inability to:

- Generate long-term buyer commitment to a brand in many cases

- Change, except on temporary basis, declining sales of a product
- Convince buyers to purchase an otherwise unacceptable product
- Make up for a lack of advertising or sales support for a product
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Chapter 9: Personal Selling, Relationship Building, and Sales Management

Personal Selling (define; 3 tasks…)

Direct relationships between the seller and the prospect or customer. A two-way flow of
communication between a potential buyer and a salesperson.

3 Tasks:

- Identify the potential buyer’s needs

- Match those needs to one or more of the firm’s products or services
- Convince the buyer to purchase the product

Objectives of the sales force – 3 keys [IPA]

- Information Provision: Salesperson needs to fully explain all attributes of the product or
service, answer any questions, and probe for additional questions.
- Persuasion: Key objective to convert potential to buyers.
- After-Sale Service: To build relationships.

Salesperson #1 problem

Salespeople will readily admit that their number one problem is getting through the door for an
appointment with a prospect.

The “difference between good salespeople…”

The difference between good salespeople and mediocre ones is often the result of training plus
experience.

Quotas (define)/ 3 benefits & 3 key factors that impact

Quotas represent goals assigned to salespeople.

3 benefits of quotas:

1. They provide incentives for salespeople

2. Provide a quantitative standard against which the performance of an individual sales
representatives or other marketing units can be measured
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3. Quotas can be used not only to evaluate salespersons’ performances but also to evaluate
and control their efforts

3 key factors that impact:

1. All territories will not have equal potential so compensation must be adjusted accordingly
2. All salespeople will not have equal ability and assignments may have to be made
accordingly
3. The sales task in each territory may differ from time period to time period

2 vital duties of personal selling

Vital duty for customers: Salesperson dispenses knowledge to buyers.

- Knowledge

Vital duty for companies: Salespeople act as a source of marketing intelligence for management

- Marketing Intelligence

“Best source” for prospects

The best source for prospects is referrals from satisfied customers

Commitment in sales – occurs how

At some point, if all objections have been resolved, the salesperson must ask for commitment.
Occurs when a sale is closed.

Why sales forces must be controlled

Two obvious reasons why it is critical that the sales force be properly controlled:

1. Personal selling can be the largest marketing expense component in the final price of the
product
2. Unless the sales force is somehow directed, motivated, and audited on a continual basis,
it is likely to be less efficient than it is capable of being

Four key functions to control the salesforce:

- Forecasting sales
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- Establishing sales territories and quotas

- Analyzing expenses
- Motivating and compensating performance

Chapter 10: Distribution Strategy

Why are channels hard to change

Most difficult part of the marketing mix to change due to the time and money required to
establish an efficient channel.

“Producers use marketing intermediaries because…”

Producers use marketing intermediaries because the intermediary can perform functions more
cheaply and more efficiently than the producer can

Total distribution cost – know concept & key issue

The concept suggests that a channel of distribution should be viewed as a total system composed
of interdependent subsystems, and that the objective of the system (channel) manager should be
to optimize total system performance.

- Key issue: In terms of distribution costs, it is assumed that the total system should be
designed to minimize costs for a given level of service

What utilities channels provide

Utilities (satisfaction) provided:

- Time: Whenever wanted

- Place: Wherever wanted
- Possession: Formalize the exchange

Why channels and intermediaries? Functions performed more cheaply and efficiently; provide
“order” to the system

“The managerial question” of channel is

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The managerial question is not whether to perform the functions, but who will perform them and
to what degree.

Product Chapters:

Densification is (defined): how being done?

Densification: Redesigning current aircraft to increase capacity in the cabin to gain more
revenue.

- Additional rows
- Less legroom
- Slimmer seats
- Skinnier bathrooms

Single aisle planes compared to dual aisle / long haul

Single aisle long haul changes focus on the densification of the economy class cabin by adding
more rows on gained space from less legroom and slimmer seats. A way to distract passenger
from this is in-flight entertainment such as Wi-Fi.

Dual aisle/long haul aircraft changes focus on adding the premium economy class as a profitable
section of the cabin. Also adding more personal space with slimmer sidewalls as well as larger
luggage compartments. Finding the balance of space saving and customer comfort. Folding first-
class into business class and introducing the premium economy class.

What is the difference seen in seat layout in the economy section of the 777/330/350
aircraft? Differences by airline business model?
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B777 (301-368)

- United, American, Qatar, Air France, Cathay

- Cargo
- Economy: 9 seats or 10 seats per row
o 2-4-3 arrangement (9)
o 3-4-3 arrangement (10)

A330 (278-293)

- Turkish, Air China, China Eastern, Delta

- Economy: 8 seats per row
o 2-4-2 arrangement (8)

A350 (300-350)

- Singapore, Qatar, Delta, Lufthansa, Cathay

- Economy: 9 seats per row
o 3-3-3 arrangement (9)

Promotion Chapter: Getting to Know Your Digital-Age Customers: An Airline Industry

Case Study case
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2 areas to review:

(1) 4 methods named for ‘How Does the Airline Industry Use Social Media?’

1. Buzz: Social media platforms allow the business to reach out to a large number of current
and potential customers.
2. Crisis and Complaints: Can update customers about situations that may directly or
indirectly affect their flight, respond to their inquiries in real time, or assuring
compensation if they are negatively affected by issues that arise.
3. Revenue: Companies can generate faster and greater revenues by promoting special deals
via social media platforms.
4. Loyalty: Can be fostered by participation in discussions and constant interactions to allow
customers to feel personally connected to the brand and relate positively to it.

(2) Table 1: Initial metrics for project success – look at the KPI’s noted and be able to
discuss at least two that may be more ‘count’ oriented versus two more ‘sentiment’
oriented

Count Oriented

- KPIS for Measuring Dialogue

o Share of voice
o Audience engagement
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o Conversation
- KPIS for Measuring Customer Support
o Resolution rate
o Satisfaction score

Sentiment Oriented

- KPIS to Measure How We Spurred Innovation

o Topic trends
o Sentiment ratio
o Idea impact
- KPIS for measuring advocacy
o Active advocates
o Advocate influence
o Advocacy impact

Distribution Chapter:

(a) Why will a low-cost airline (LCC) participate in a GDS? Airline Examples & the key
segment trying to serve

Currently all major budget carriers or LCCs work with at least one GDS provider distributing
through indirect channels. GDSs started to offer a number of products tailored to the low-cost
model.

Low-cost carriers need GDS distribution to expand beyond their core domestic markets,
particularly if they want to attract higher-yielding customers from the corporate travel world.

Sabre (SabreSonic) and Amadeus (Altea) created strong business hosting airline IT systems.
There are economies of scale that exist when negotiating with a vendor across multiple products.
JetBlue uses SabreSonic.

Spirit  Amadeus

Southwest  Travelport

EasyJet  Amadeus, Sabre, Travelport

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- EasyJet is the clearest example of an airline that has used distribution to drive a change in
business strategy. It works with the GDSs specifically to sell to business travelers who
still use TMCs, although leisure agents are also now on its radar.

JetBlue  Amadeus, Travelport

Low-cost carriers focus on price-conscious travelers mostly leisure travelers, they target business
travelers through GDSs, reason of their implementation.

(b) What is “New Distribution Capability” – focus on how different than current
distribution model? What lead to push to develop? What added features allow? What
terms do you hear in videos / readings used for benefits to customers? What does NDC
promote as the benefits of the system to an airline?

New Distribution Capability: A data exchange format based on offer and order management
processes for airlines to create and distribute relevant offers to the customer regardless of the
distribution channel.

IATA created it in 2012 in order to improve the connection between airlines and third parties.

NDC allows airlines and airline service providers to deliver rich content and ancillaries (such as
baggage allowance and seat upgrades). It also gives the airline more control and access over
customer information (API) allowing them to give greater levels of personalization.

NDC provides a better connection between airlines, GDSs and OTAs, giving airlines a
standardized means to sell their products beyond the base fare via these third-party distributors.

3 Major GDS: Travelport, Sabre, and Amadeus

How is Hawaiian airlines ‘new’ strategy different from what has occurred in US? How
similar to elsewhere (clue – look to the EU and the airline that started this!)

Hawaiian is the first US-based airline to add distribution surcharges.

Travel agencies that use the technology of Amadeus, Travelport, or Sabre will be cut from the
airline’s fares for travel within the Hawaiian Islands. Agencies using those channels will have to
pay a surcharge.

The purpose is to push travel agencies to switch from old technical methods to NDC.
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The surcharge is meant as a cost recovery from what the third parties charge, not as a revenue
generator.

Air France/KLM started the surcharge to GDSs, the strategy was to push travel agencies toward
NDC-supported direct-channel sales.

For handling social media customer service/complaints, one could use KPIs for
measuring customer support - more particularly the resolution rate. This is the percentage of
customer service inquires resolved satisfactory using social media channels. KPI`s to measure
how one spurred innovation may also be used: Topic trends measure key brand/product/service
topics identified by monitoring social media conversations.

Additional KPI´s used for handling social media customer service/complaints (measuring
customer support), may be the satisfactory score – this score indicates the relative satisfaction of
customer by dividing positive customer feedback by all customer feedback collected using
airlines social media channels.

On a dashboard for a marketing/brand manager to see, one should have key performance
metrics on display, allowing for quick, organized review and analysis. Key performance
indicators are quiantifiale