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MKT 302 Part II (Biases (Overconfidence - overestimation, overplacement,…

- - - - segregate gains (more pleasure from receiving two $5 bills than one $10 bill)
      - integrate losses (losing two $5 bills hurts more than losing one $10 bill)
      - integrate small losses w large gains (offsets loss aversion, losing $2 while winning $10 results in positive net utility)
- - - - penalties for false advertising: cease-and-desist orders (i.e. stop and don't restart), civil penalties (financial penalties imposed by gov't agency), corrective ads/disclosures
- - - - solutions: standardized training for managers/franchisees, standardized guidelines/uniforms
    - - solutions: create tangible thing to intangible service, mascot/brand ambassador,
  - - - peak/end rule
        
        evaluations tend to reflect avg. peak pleasure/pain and final lvl of pleasure/pain
    - - benefit to retaining mildly dissatisfied customers - post-recovery satisfaction sometimes greater than satisfaction prior to service failure
- - - - 1st degree price discrimination: seller charges each buyer their max WTP (difficult to get enough info for this)
      - 2nd degree: seller charges less to ppl who buy in bulk (can be unethical as not everyone can buy in bulk)
      - 3rd degree: seller charges different amts to different classes of buyers (based on WTP/ability to pay)
      - endogenous price discrimination (aka pay what you want), pay what you can
  - - - more negative PED = more elastic, less negative = less elastic (marketing can help get us here)
  - - - loss leader - offer goods at or below costs to entice cusomers to come in and buy other higher-margin goods (eg. products that require constant part-replacement)
      - competitive - use of price to steal share rather than increase surplus
      - cost-price/markup - add markup to product's price, easiest to do as it ignores demand/perceived value/competition (why: cost easier to determine than demand)
- - - - awareness
        
        a. basic awareness - recognition
        
        b. top of mind awareness (TOMA) - recall
        
        events/experiences, PR, direct/interactive marketing (B2C, no 3rd party retailers, very customized to customer), sales presentations/trade shows
    - - familiarity/memory
        
        Illusory (truth) effect - consumers mis-attribute ease of processing for truth
        
        repetition: repeating false info = bad way of debunking (ppl forget context and remember false claims)
        
        sleeper effects - impact of persuasive msg increases over time, memory for content > memory for context (low cred course -- you eventually forget the source but remember the info)
      - ads/entertainment - best to integrate brand throughout
        
        the mere exposure effect - familiarity leads to liking (even when you aren't consciously aware of what you saw, it still leaves an impression)
      - New Ad Media (aka guerrilla marketing)
        
        native advertising
        
        ethical/legal issues: no explicit rules yet just guidelines
    - - coupons - only 1% redeemed, those who use coupons tend to spend less than those who don't
      - free gifts - false assumption that free gift can only increase sales: customers will take avg of product and gift, if gift is lower value than it will bring down the perceived value of the whole bundle
  - - - reach - # of ppl exposed to MV at least once in given time period (expressed as % of relevant population)
        
        important for new product launch, brand extensions, going after poorly defined target market
      - frequency - # of times receiver is exposed to MV in given time period, i.e. avg. # of times someone is exposed to ad
        
        important for when there are strong competitors, complex story to tell, or high customer resistance
      - Gross Rating Points (aka Total # of exposures, used to gauge strength of ad campaign) = R x F
    - - continuity - even exposure thru given period (frequently purchased items)
      - concentration - $ spent in sg period (seasonal/holiday products)
      - flighting - ad, break, ad (limited funding, seasonal goods, infrequent purchases)
      - pulsing - continuous at low lvls, periodic reinforcement (year-round sales that experience surges during certain periods)
    - - CPM = Cost per 1k impressions, good for brand awareness
      - CPC/PPC = Cost per click/Pay per click, good for campaigns meant to drive website traffic
- - - - macro vs. micro influencers, regulated by FTC (disclaimers)
        
        macro: status, reach, closer coordination, more expensive
        
        micro: authenticity, smaller/more specific target audience, agencies (brands have less control over content)
- - - - Wholesalers (aka Distributors)
        
        inventory efficiency: hold inventories, reducing costs/risks to retailers
        
        bulk-breaking: savings for retail clients by buying in discounted bulks and breaking them down into smaller units
        
        reach: sales forces help manufacturers reach small biz customers at low cost
      - Agents (communication) - negotiate purchases/sales, variety of physical distribution/transaction/communication/facilitating functions that make exchange between manufacturer and wholesaler/retailer possible
    - - double marginalization - independent retailer sets high price to max own profit, manufacturer ALSO seeks to max own profit --> can result in smaller total profit for entire channel (lower demand)
      - exacerbated by online: uncoordinated pricing/effort, under+over-distribution, division of work/pay --> compensation of intermediaries??
        
        getting online distribution right: Who are you targeting? Why do they go online? Where do you need to be (eg. which distributors, own website?, other e-retailers)
    - - distribution
        
        breadth - product accessibility/# of outlets,
        
        needs to be balanced w depth --> findability vs. profitability
        
        depth - degree of vertical integration (can be forward, backward, or max VI)
        
        most obvious remedy to channel conflicts: centralize decision-making (i.e. no outsourcing)
        
        backward vertical integration - incorporate production of supplies (raw material + manufacturer), can differentiate
        
        forward vertical integration - incorporate distribution activities (manufacturer + distributor + retailer)
        
        horizontal integration - merge w + acquiring peers who perform similar functions (eg. having multiple manufacturers)
        
        can be incredibly beneficial/helpful for supply chain transparency
        
        potential problems: reduces variety/convenience (eg. tobasco only found in tobasco store), lack of expertise
        
        balancing distribution and performance: measure distribution and performance (how retailer performs for supplier and vice versa), match distribution and demand, manage products/demand/policies
        
        challenges of optimizing distribution: not controlled by supplier, perverse effects of customers' search loyalty (the easier it is for you to get distribution, the less you need it), interactions/feedback effects hard to estimate/manage, complex distribution costs
      - length - # of intermediaries: short/direct, long/indirect, hybrid (has both direct and indirect processes, omni-channel shopping, multi-channel suppliers)