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2 Session #13 : Agenda for MM2– MARKETING STRATEGY Logistical Issues & Review Tools for Strategic ‘Shaping’ of Customer Preferences (cont.) ODI Case

3 Tools for Strategic Shaping of Customer Preferences Reason Based Choice What attributes strongly affect perceived quality? ‘Meaningless’ differentiation Un-needed premiums/ promotions Context Effects Attraction & Compromise Effects Choosing vs. rejecting Meaningless reasons Importance of reasons

4 Tools for Strategic Shaping of Customer Preferences (cont.) Loss Aversion & Framing Endowment Effect Status Quo Bias Price Stickiness Framing Ethics of Shaping Customer Preferences

5 Optical Distortion Inc.

6 ODI Case – Take Aways Simple ‘implementation’ problems can kill an otherwise good product Successfully introducing really new products is very difficult and most likely to fail (for variety of reasons) Important to anticipate & confront consumer objections to product adoption Various types of risks

7 Attributes of Innovations that Improve/Detract from their Chances of Adoption by Consumers The Relative advantage of the innovation over the products/procedures it is designed to supersede. Its perceived complexity. Its compatibility in use with present behavior patterns and complementary products. The ease with which its features (especially its benefits) can be observed and communicated. The degree of risk (physical, financial and social) attached to adoption of the innovation in preference to existing products or procedures. The extent to which the innovation can be tried on a limited basis before being adopted on a large scale, permanent basis.

8 Assessing Delivered Value Product Value Services Value Personnel Value Image Value Monetary Price Time Cost Energy Cost Psychic Cost Total Customer Value Total Customer Price Delivered Value

9 New Products % of Successful new products Prominent failures Chances can be improved if Ask customers Create gateways (specific criterion for each stage) Set realistic goals Do post-mortems