Class 1:
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What is marketing?
- Marketing is a process by which companies create value for customers and build
strong customer relationships to capture value from customers in return.
- The goals of marketing are to attract new customers by having superior value and
groom current customers through satisfaction
- His definition: marketing is the art of encouraging a transaction that makes your
customer feel good
Creating and capturing customer value
- Marketers must:
- Understand the marketplace and consumer's wants and needs
- Design a customer value-driven market strategy
- Construct and execute an integrated marketing program that delivers value
- Capture values from customers to create profits and customers equity
- The first three steps are about creating value for the customer and
building relationships, the last one is to capture value from the
customers in return.
- To create value for customers and build relationships
- Understand the marketplace
- Understand customer's wants and needs
- Have a value-driven marketing strategy
- Select costumers to serve - segmentation and targeting
- Analyze marketing environment
- Gather consumer data
- Understand consumer buying behavior
- Deliver superior value
- Product
- Pricing
- Place
- Promotion
- Capture value from customers to create profits and customers equity
- Create loyal and satisfied customers
- Capture lifetime customer value
- Increase share of market share of customer
- Measure and adjust
- Manage global markets
- Ensure environmental and social responsibility
Class 2
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Company marketing strategy must fit within the company's overall strategy and
philosophy → Company decisions will dictate the marketing decisions :
- Corporate strategy - companies mission, objectives, and goals
- Growth strategy - how does it want to pursue growth
- Organizational philosophy to marketing - how does the company approach
marketing - inside out or outside in
Corporate strategy - the mission
- A mission statement is the organization's purpose - what it wants to accomplish in
the larger environment
- 'Why are we here
- Generally, good company missions are market-oriented and not product oriented
Companies usually make strategic choices depending on what are and what they intend to
serve
Why must marketing need to align with corporate strategy
- Marketing is the most consumer-facing discipline and its actions shape public
perception of the company
- How consumers see you dictates who you are in the marketplace
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Marketing management orientation
- Production concept - focused on efficiency - lower costs and high volumes
- Product concept - focuses on improvements to have the best product
- Selling concept - tracking down prospects and marketing how a product would
benefit them
- Marketing concept - know your consumer best, make the right products for their
needs
- Implications: must focus on customers' needs and wants and this translates
to integrated marketing → "Integrated marketing is the process of
unifying all aspects of marketing communication — such as advertising,
PR, and social media — and using their respective mix of media,
channels, and tactics to deliver a seamless and customer-centric
experience"
- Integrated marketing involves using the main tools of the
marketing mix to deliver superior value to the consumer
- Product
- Price
- Promotion
- Place
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Societal marketing concept - deliver value that improves consumers and society's
well being
Needs wants and demands
- Needs: are states of felt deprivation
- Wants: form needs to be taken when they are shaped by culture and individual
personality
- Demands: human wants that are backed up by buying power $
Marketing strategy process
1. Analysis of the landscape: climate (macro - what is going on in the world
that can affect the marketing), competition, collaborators, company,
consumer behavior (micro)
2. planning: set marketing objectives, choose what consumers to serve, and
define your market offerings
3. Development: set marketing budget, construct integrated marketing
program
4. Implementation: carry out the plan
5. control: measure results, evaluate results, take corrective action
SWOT analysis: the goal is to match the company's strengths with attractive
opportunities and eliminate/overcome weaknesses, minimizing threats
- Strengths
- Weaknesses
- Opportunities
- Threats
SMART objectives: specific, measurable, actionable, relevant, time-bound
- An increasing share of customers can come from more variety and cross-sell/
up-sell programs
- It is 5x cheaper to keep a customer than get a new one
Selecting customers to serve:
- Market segmentation
- Select what segment to go after and market
- Marketers choose what customers, level of reach, timing, and nature
Market offerings: some combination of products services and info go satisfy a want or
need at a price that permits demand
- Needs to be set before choosing your target
Value proposition: a brands value proposition is the set of benefits it promises to deliver
to customers to satisfy their needs
- Why would they buy a brand over its competitors
Once you have a plan:
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Set budget
- Firms must make sure that the bidet allows for a larger return
- Ways of budgeting:
- Top-down: set a total marketing budget and marketers plan within
it
- Bottom-up: marketers determine their objectives and find a way to
meet them
- Implementation
- The practice of turning marketing strategies and plans into marketing
actions
- Consumer - perceived value
- The difference between total customer perceived benefits and
customer cost
- Customer satisfaction
- The extent to which perceived performance matches customer
expectations
- Control
- Making sure that it is investing in a successful manner
- Metric in business:
- Return on investment (ROI)
- Return Marketing Investment (ROMI)
- Net return from a marketing investment divided by the cost
of the marketing investment e
- Measurnebt if the profits generated by investment in
marketing activities
- Finding R and I is very hard
- Marketers used marketing dashboards including:
- Performance metrics (sales, market share)
- Soft brans metrics (equity measures)
- Customer-centered measures (retention,
lifetime value)
A marketing plan document takes the following form:
- Executive page
- Current marketing situation - market position, market description, product review
- Threats opportunities and analysis
- Objectives and issues - states goals and what can interfere with them
- Marketing strategy - target market, positioning, strategies for each of the 4 Ps
- Action programs - what will be done? When? Who? How much?
- Budgets - expected costs and revenues
- Controls - how progress will be monitored
Class 3
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The macro environment
- Climate or context
- Political
- Economy
- Social
- Technological
- Environmental
- Legal
- Demographic
- Natural
- Technological
- Cultural
Good marketing is consumer-centric: if you only look within your company,
opportunities will be missed
DENTPoC
- Demographic
- Demography is the study of human populations - sizes, density, location,
age gender race occupation
- There is a large difference between these characteristics, who
should be targeted, PAY ATTENTION TO SHIFTS
- The five generations - generational marketing allows for powerful mass
marketing that takes advantage of generational insights
- Baby boomers - born 1945-64 - 72 million
- Wealthier generation
- Forever young
- Gen X - 1965-80 = 55 million
- Skeptics
- Online shoppers
- Sarcasm
- Millennials - 1981-1996 - 75 million
- Digital natives
- Connected
- Impatient
- Gen Z 1997-2012 - 80 million (largest)
- Popular culture relevance
- Diversity and inclusion
- Gen alpha born after 2012 - will be biggest by 2025
- Purchase influencers
- Privacy concerns
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Demographic trends
- The changing American family
- Interracial
- Same-sex
- Single parent
- Changing gender roles
- Geographic shifts in population
- 10% move to a warmer climate
- Metropolitan areas
- Telecommuting
- More professional population
- Increasing diversity
- Hispanic
- LGBTQ
- Disabled
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Economic
- 1999-2007
- Spending beyond means
- Conspicuous consumption
- Carbon footprint became a thing
- Great recession 2008-2010
- Spend only what you can afford
- Credit was hard
- Not spending a lot
- 2011-2019 post-recession
- Wealthy got wealthier
- Stock market and housing market boom
- Recession remained
- 2020 pandemic
- Home was everything
- restaurants, travel, and entertainment died
- Post-COVID
- The larger demand for social luxuries
- Remote work (large cities)
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Natural
- Refers to the physical environment and the natural resources that are
needed as inputs by marketers or that are affected by marketing activities
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Trends
- Shortage of raw materials
- Increased effect of climate change
- Increased global pollution
- Increased government intervention
- Marketing strategies that support environmental sustainability
Technological
- Most dramatic changes occurring
- Disney's bracelets
- Alexa knowing shopping habits
- Self-driving cars
- New products create new opportunities and kill old technologies
- Blockbuster
- Blackberry
- Kodak
Political
- Laws, government agencies, and pressure groups help create legislation
- Putting guidelines on businesses
- Subsidies
- Business regulations protect
- Businesses from each other
- Consumers from unfair business practices
- The interests of society against unrestrained behavior
- Businesses are also governed by social codes and rules
- There has been increased emphasis on ethics and socially responsible
actions
Cultural
- Consists of institutions and other forces that affect society's basic values
and behaviors
- These Factors affect how people think and consume
- Core beliefs and values are what help us define what it is to be ______
- Core beliefs are passed on generationally and reinforced by
schools, churches, businesses, and governments
- Secondary beliefs and values are more open to change and include
people's views on themselves, others, organizations, society, nature, and
the universe
- Cultural shifts
- LGBTQ+ power
- White liberal guilt
- Political Polarization
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- Application to marketing: pandemic and EXTRA gum commercial
Responding to the marketing environment
- Tracking trends:
- May present opportunities
- trends allow companies to prepare for upcoming changes
- Proactive: take aggressive actions to affect forces in the environment
- Apple shaping a new industry with revolutionary products
- Lobby to affect legislation
- Use social media to shape public opinion
- Reactive: watch and react to forces of the environment
- Some forces are what they are - pandemic
- Adjust your stance as society changes - Walmart and LGBTQ
- When things arise, react swiftly
- Responding in the social media age - whole food oranges
- KFC - no chicken
Major trends in marketing
- The macroenvironment constantly shifts and marketers must adapt
- Pandemic for example was temporary but some shifts arent
- Major developments that challenge marketing strategy
- The digital age
- Everything is connected to everything else
- Digital and social media marketing engage consumers
EVERYWHERE at any time allowing for personalized massages
- Big Data and AI allow for deeper insights
- Sustainable marketing
- Corporate ethics and social responsibility have become important
for businesses
- Consumers can call out a company's behavior
- People want more like-minded companies
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Rapid globalization
- Marketing managers around the world take into account local and
global views of the companies industry, competitors, and
opportunities
- Consumers get to access products from around the world due to the
internet
The growth of not for profit
- Marketing can help organizations attract memberships funds and
support
Class 4:
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The Microenvironment
- Company
- Look internally, who are we, what resources do we have
- How well prepared are we to meet the requirements
- What do we do
- Are we set up for success?
- Value chain
- Is a series of departments that carry out value-creating activities to
design, produce, market, deliver and support a firm's products
- Inbound logistics - getting the right raw
materials/components at the right time and the right price
- Operations - the ability to make valued finished products
for consumers
- Outbound logistics - Ensuring you get your product to
consumers
- Sales - working with retail partners - know what you are
selling
- Services - after-sales support - returns refunds
- E.g. market working towards ‘save money, live
better
- Collaborators
- Companies and organizers are deeply intertwined proving to each other
that their services are needed
- The value delivery network
- Made up of the company, suppliers, distributors, and the customer,
who partner with each other to improve performance overall
- Collaborators include:
- Suppliers - provide resources to produce goods and services
- Suppliers shortages and delays can cost sales and
satisfaction
- Marketers must keep a close relationship with
suppliers
- Suppliers are treated as partners
- Resellers - distribution channel firms that are a medium
person between customer and firm
- For most B2C companies the majority of sales are
done through resellers
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Relationships with resellers are the second more
important after consumers
- Good relationships help with shelf placement,
quicker adoption of new items, and preferential
treatment
- E.g. Coca-cola spends a lot of effort with reseller
partners
- Sharing consumer insight
- Offers advice for drive-thru menu
- Merchandising tools to help food service
- Signing exclusive desks with McDonald /
subway
Marketing partners - include distribution firms, marketing
service agencies
- Physical distribution firms - help with company
stock and move goods
- Ad agencies, market research firms, and marketing
consultants - help the company target and promote
products to the right people
- Other agencies with whom you share co-brand or
licensing agreement
Content providers - celebs and influencers that are attached
to the brand
- Affect transfer - when an ad creates impressions of
the popularity of a brand - a person who represents
your brand is your brand → requires people to act a
certain way to maintain the brand's identity
- Bloggers
- Celebrities
- Media Properties
Publics - any group that has an actual or potential interest
in the company and will help it achieve objectives
- Media publics
- Government publics
- Financial publics - banks, analysis shareholders
- Internal publics - employees
- Citizen action publics
- Local publics
- General public
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Eg. P&G has a long history of giving back ‘hope not just soap’ - tide free mobile
laundry services
Consumers
- A most important actor in the microenvironment
- If nobody buys, marketing has no value
- Great marketers must know their customers
- What are trends in the marketplace?
- Who is currently buying from our category? Who would be
buying
- What are we doing to satisfy our needs
- How often do they buy
- Are they satisfied?
- The customer and their behavior
- Companies must fully comprehend their customers
- Airbnb - regularly stay at offerings
- Jeff Bezos has a customer-facing email where he
reads complaints about amazon
- Types of customers
- Consumer markets - individuals
- Business markets - buy stiff for further processing
- Reseller markets - buy things to resell for profit
- Government markets - buy stuff to produce public services
- International markets - buyers in other countries
Competitors
- Competitive analysis - the process of identifying assessing and selecting
key competitors
- Identify the company's competitors
- Narrowest level - those who offer similar products at a
similar price
- Wider level - firms with the same product or class of
products
- Widest level - all firms that compete for the same consumer
dollars
- Assessing competitor's objectives, strategies, strengths, and
weaknesses
- Objectives: what importance does the competitor give to
- Profitability
- Market share
- Cash flow
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- Tech leadership
- Service leadership
- Moving to a new segment
- Strategy: knowing competitors Marketing Mix- similar
strategies means the strongest competitions
- Product -quality, feature, mic, consumer services
- Price
- Palace - distribution
- Promo - sales strategy - digital, mobile, social
content
- Extra - R&D, manufacturing capabilities, and
financial position - either by word of mouth online
or in books
- ‘If you do have a competitive advantage, don't compete
- Strengths and weaknesses
- Where are they and what are they doing?
- Market share, speed of response, and goals
and strategies
- How? - secondary data, word of mouth, I
investigating consumers suppliers, and
dealers
- Select which competitors to attack or avoid
- Competitor reaction:
- What will they do - knowing objectives, history and
business philosophy
- Strong vs. Weak
- Strong competitors will offer resistance but
succeeding leads to stronger returns
- Weak competitors require fewer resources and time,
but victory is small
- Good competitors vs. bad competitors
- Some competitors do good things
- Volkswagen entering electric car market - pr
for product - normalizes it
- Competitors who break the rules are bad
- Ex. spirit airlines mess up airline pricing
Competitor myopia vs. boiling the ocean
- Myopia - if marketer looks too narrowly they can ignore important
things like new players and competitors and get buried
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Ocean - if marketer looks too broadly they can end up boiling the
ocean - undertaking unnecessarily large complex task they will
likely fail to do
Red ocean vs. blue ocean
- Blue ocean strategy - seeking unoccupied positions in the
marketplace that makes direct competition irrelevant
- Apple introducing iPad, iPod, app store
- Keurig with a cup at a time coffee
- Most companies compete in bloody red oceans (competitive)
Competitive market strategies
- Overall cost leadership
- Lowers production and distribution costs - lower prices and
higher market share (Walmart)
- Differentiation
- The company concentrates on creating differentiated
products so it is a class leader (Nike)
- Focus
- The company focuses its efforts on serving new market
segments
- Middle of the road (cannot win in this one)
- Does not stand out because of the lower price
- No perceived value
- Nit is the best at serving a market segment
How to deliver superior customer value
- Operational excellence - lead the industry in price and convenience
by reducing costs and creating an efficient delivery system
- Customer intimacy - segment markets and tailor products to match
needs or targeted consumers
- Product leadership - offer a continuous stream of leading-edge
products - be open to new ideas and bring them quickly to market
- E.g. trader joe's - low rent, random locations, small parking
lots, cheap and high quality
- Nordstrom - intimacy with customers
- Apple - product leadership
Your position in the market can dictate your strategy
- Market leader - a firm with the greatest market share
- Market challenger - runner-up firm that is fighting to gain market
share
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Market follower - runner-up firms that are trying to maintain share
and not rock the boat
- Market niche - friend serving small segments not pursued by others
Market leader strategies
- Expand total demand, find:
- New users (penetration)
- New uses (penetration and buy rate)
- More usage (buy rate)
- Protect market share
- Not allow for competitors to have opportunities
- Maintain consistency in pricing and value
- Strong customer relationship maintenance
- Promoting innovation
- Expand market share
- A higher market share usually means more profitability
- Maintaining high quality
- Creating experiences
- Building close relationships
- Market challenger strategies
- Challenge the leader - make an aggressive bid for more
market share
- Challenge smaller-sized brands - identify vulnerably and
take from them
- Employ second mover advantage - improve on what made
the leader successful
- Approaches
- Frontal attack - attacking competitors'
strengths, matching them on 4Ps
- Indirect attack - attack competitor
weaknesses - offer better products for lower
cost
- Market niche strategies - specialization
- The ideal market niche is big enough to be profitable, has
high growth potential, and little interest from competitors
- End user - eg. divorce lawyer, the engine that
doesn't track you
- Customer group size - eg. serving small businesses
- Few specific customers - a cart parts brand selling
exclusively to GM
- Geographic market - in N out only in the west
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Quality price - serving the high end of the market
Service offered - offering a service not available to
others
Class 5
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The need for consumer insight
- Marketers today have access to a lot of data
- Big data is a big complex set of data generated by today's information generation,
collection, storage, and analysis tech
- Comes from marketing research, internal transaction data, and real-time
data flowing from social media monitoring, connected devices
- Data on itself is meaningless
- Customer insight - fresh marketing information based understanding of customers
and the marketplace that becomes the basis for creating consumer value,
engagement, and relationships
- Companies seek to know their customer's beads and wants
- Problem - customer movies are not obvious - they don't tell you what they
want
- Takes multiple sets of data to reach answers
- He marketing information system - MIS
- The people and procedures dedicated to assessing info needs, developing
needed info, and helping decision makers to use into to generate and
validate actionable customer and market insights
- This begins and ends with information
- Assessing info needs
- Internal database
- Marketing intelligence
- Marketing research
- Analyzing and using the info
- What do you need to know → how are you gonna get it →
what are you gonna do with it
- Too much info is not necessarily good
- Marketers obtain info from three main sources
- Internal data - secondary data - either have already or just found it
- Market intelligence - secondary data
- Market research - primary data - looked to solve the issue
- Internal databases are collection sof consumer and market info obtained from data
sources within the company network
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- Critical to keep database current because data ages quickly
Marketing intelligence
- Systematic collection and analysis of publicly available info about
consumers, competitors and developments
- Consumer observations first hand
- Monitoring social media in real time
- Well designed online google searches
- Third party data
- Nielsen - 900,000+ shopper data drin stores
- Experian
- Mintel
- Kantaar
- ProQuest
- LexisNexis
- Secondary data pros and cons
- Pros: low cost, obtained quickly, and cannot be collected
otherwise
- Cons - may not be relevant, accurate or current, impartial,
may not fully answer the question at hand
Marketing research - is the systematic design, collection, analysis, and reporting
of data relevant to a specific marketing situation a company faces
- Customer research is specific to a company
Developing needed info
- Exploratory - used to gather preliminary info that will help define the
problem and suggest the hypothesis
- Designed to help solve marketing problems or define markets
- Causal - test hypotheses about cause and effect relationships
- Marketing information - information is only useful if it is used to make a
better decision
Marketing research
- Defining the problem and research objectives
- You must have the right answer to the right questions
- Eg. old spice not selling because females generally bought
things so they had to fix advertisements to focus on making
the product attractive to women
- Once you have a problem, what do you do about it? Wat
extra info do we need? Do we need to conduct primary
research? Or are secondary sources enough
- Developing the research plan
- Written proposal
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Management probklem
Research objectives
Information needed
How results help management decisions
What it the cost of this/ budget
- Eg. should chick fil a do a vegan meal?
- WHAT IS THE MARKET
- Who would consume
- Demographic
- Societal patterns of fast food
- Employee reaction
- Reputation
Collecting, analyzing, and interpreting the data
- Primary data collection:
- Research approaches;
- Survey
- Gathering primary data by asking people
questions about knowledge, attitudes,
preferences, buying behaviors
- Experiment
- Gathering primary data by selecting
matched groups of subjects, giving them diff
treatments, and controlling factors checking for responses
- Observation
- Involves gathering primary data by
observing relevant people, actions, situations
- Shopping
- Website
- Salesperson interaction
- Contact methods
- Mail
- Personal interviewing
- Telephone
- Online - surveys, focus groups, consumer tracking,
experiments, panels
- Personal(ethnohraphic)
- Sending observers wo watch and interact
with consumers in natural environment
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Sampling plan : sample is a segment of the population
selected for marketing research to represent the population
and a whole
- Sampling unit: who is studied
- Sample size: larger are usually more reliable but
cost more
- Sampling procedure : random samples - each
mempor in chosen population has an equal chance
of being selected
Research instruments
- Questionnaire
- Open ended questions or closed ended
questions
- Mechanical instruments
- Gps tracker
- Nielsen bozes
- Checkout scanera
- Biometric devices
Big Data
- Companies collect data from their customers to better predict future
behavior and tailor individual offers
- Data is collected:
- Purchases (cards or registration )
- Service and support callsn
- Weba dn social media visits
- Satisfaction surveys
- Credit and payment interactions
- Consumers volunteer a bunch of data to marketrers (Big Data)
- Offers more customer focused offerings through personalization
- Allows for better ability to find high - value customers
- More customized service
- Opportunities to cross-sell, up-sell and create tailored offers
- Better management of the marketing messages
- Better loyalty
Marketing analytics and artificial intelligence
- Marketing analytics are tools marketers use to dig out meaningful patterns
in Big Data to better predict future behaviors (If this than that IFTTT)
- Helps with personalization
- Engages customers one by one
- Creates advertising and promotions that are tailored to ones taste
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Ethical consideration of gathering intelligence:
- Marketers can paint a good picture of you through what they hayher
through online habits
- How much privacy is too little
- What if this information gets out? Is the company liable?
- Do we trust these companies
- Biased research - fake news
Class 7:
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Marketing affect how consumers think and act, engaging with them
- To understand the whats, when s and house of buyer behavior marketers must
understand the why - this is complicated - even buyers don't know the answer
Consumer buying behavior
- Refers to the buying behavior of the final consumer
- 328 Million ppl in US → 13T dollars
Model of consumer behavior
- Environment :
- Marketing stimuli
- Product
- Place
- Promotion
- Other
- Economic
- Technological
- Social
- Cultural
- Buyers black box - we don't really know
- Buyers characteristics
- Buyers decision process
- Buyer response
- Buying attitudes & preferences
- Purchase behavior
- What they buy
- When
- Where
- How much
- Brand engagements & relationships
Factors influencing consumer behavior
- Cultural
- Human behavior is learned
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Culture is a set of values perceptions wnants and behaviors learned by a
member of society from family or other influences
- Marketers look for cultural shifts example whole foods and the
increase of fitness awareness
Subcultures - nationalities, religions, racial groups, geographic regions
- Hidpanic americans -59MM
- Asian americans - 20MM
- African american - 47MM
- Cross Cultural marketing or a total marketing strategy ks the
practice of including ethnic themes and cross cultural perspective appeals to customer similarities across subcultures
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Social
- Affected by
- Consumers group and social network
- Reference groups - serve as direct or indirect point of
comparison to form persons attitude
- Opinion leaders - has social influence on other because of
skill or knowledge
- Word of mouth influence - impact of recommendations
from friends family associates
- Influence marketing
- Cover Girl
- Disney influencer moms
- Online social networks - blogs social media - where people
exchange information
- Family
- Children influence family purchases 93%
- Kids factor into purchases including eating our 95%, take
vacations (82%) mobile devices to buy (63%) and what car
to buy (45%)
- Family dynamics have been changing
- Men taking more active role in family care
- Purchasing power of single women
- LGBTQ families
- Social roles and status
- Your role and status will make you be in a different state of
mind and therefore purchase different things
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Personal
- Occupation
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A person's job affects the goods and services they purchase
- White vs. blue collar
- Commuters - cars
- Business owners and vans
- Age and life stage
- Different interests hobbies and necessities
- Your neighborhood is a good indicator of your life stage - people
generally act like their neighbors
- Economic situation
- People with more money spend more money
- Social classes are predictors of buying behavior - semi permanent
- Determined by income, occupation, education, wealth and
geography.
- People in same class hold similar values interests and behaviors
- Have brand preferences in areas like clothing, home furnishings,
travel, leisure, financial services and automobiles
- Lifestyle
- Involves measuring dimensions like activities (hobbies shopping
sports), interests (food fashion recreation), opinions (social issues,
abt themselves)
- Personality and self concept
- Personality is the psychological characteristic that distinguished a
person or group from others
- Brands have personality traits and people are attracted to what they
identify with
Psychological
- Motive
- Motive is a need that is pressing enough for the person to seek
satisfaction
- Determining motive is hard - people dont necessarily know
why they do what they do
- Motivation research involves projective techniques
or interpretive consumer research - seeking to figure
out the motivations which can be leveraged in
marketing communication
- Maslows hierarchy of needs
- self-actualization : desire to become the most one can be
- Esteem : respect, self esteem, status, recognition
- Love and belonging - friendship intimacy family
connection
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Safety needs - personal security employment, health
Psychological needs - air water food sleep
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Perception
- The process by which people select organize and interpret
information to make meaningful picture of the word
- We all interpret things differently
- Perceptual processes
- Selection attention
- The ability to screen out information - what you
choose to process vs what you don't
- Selection distortion (bias)
- Interpreting things to match your belief system
- Selection retention
- You often associate good with what you like and
bad with what you dislike
- Attitudes and beliefs
- People acquire beliefs through learning and doing
- How someone thinks of something due to their beliefs climate change will make me have to eat vegan meat
- Attitudes are if a person is favorable towards something - i do not
eat vegan meat it is bad
Types of buying behavior
The buying decision process
- Need recognition
- Can be an internal stimuli by being hungry or external stimuli by
seeing a food ad
- Information search
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Consumer is motivated to research more information
- Family
- Friend
- Sites
- Ads
- Online reviews
- Consumer reports
- Using product (experimental)
- Evaluation of alternatives
- Stage where buyer compares brands
- This can only be done if the purchase wasn't impulsive
- Purchase decision
- Buyer decides what brand it wants to buy from
- Two factors come between purchase intention and actual purchase
- Attitudes of others
- External factors
- Post purchase behavior
- How the customer feels after the purchase
- cognitive dissonance - the byuyer discomfort caused b post
purchase conflict - marketers attack this by being aggressive with
post purchase marketing efforts
The buying decision process for new products
- Awareness
- Interest
- Evaluation
- Trial
- Adoption
Why do some new products take off and others take time?
- Relative advantage
- Is it superior to what already exists
-
Compatibility
- How well does it fit the values of customers
Complexity
- Do people know how to use it
Divisibility
- Can the innovation be tried on limited basis
Communicability
- Is it easily describable
Class 8
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-
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Business to business marketing
Most large companies sell to other organizations
- Cheerios, nature valley and haagen dazs sells to walmart
B2B still involves marketing
- They must create profitable relationships creating superior customer value
- Linkedin - every business uses it to scout and communicate with each
other
B2B vs. B2C
- Market structure and demand
- Fewer but larger buyers in B2B
- Demand is inelastic (won't buy if you don't need it) → there are
peaks whenever needed
- Fluctuating changes quicker than consumer demand
- Derived (comes from demand of consumer goods)
- Nature of the buying unit
- business purchase involves more decision participants
- More professional purchasing efforts
- Better trained managers (sellers)
- Types of decisions and decision process
- Business buyers face more complex things
- Larger sums of money
- More formalized process
- Buyers and sellers are more dependent on eachother - contracts
- Closer relationships
- Supplier development Business buyer behavior
- Environment
- Marketing stimuli
- Product
- Place
-
-
-
- Promotion
- Other
- Economic
- Tech
- Social
- Cultural
- Competitive
- The buyer center
- Buyer decision process
- Interpersonal and individual influences
- Organizational influences
- Buyer responses
- Product or service choice
- Supplier choice
- Supplier relationship
- Order quantities
- Service terms
- Payment
Major types of buying situations
- Straight rebuy
- Buyer routinely resources something without modifications
- Modified rebuy
- Buyer want to modify product, specs, priers terms or suppliers
- New task
- Buyer purchases a product or service for the first time
Participants in the buying process
- Users those that will actually use the product
- Influencers - those who affect buying decisions - managers and space available
- Buyers - those who actually purchase
- Deciders - those who have power to decide
- Gatekeepers - those who control the flow of info
- Biggest challenge for buyers - who participates and what are their
influence
- Biggest challenge for marketers - who to target in the buying center depends on the company decider
Major influences on business buyers
- Environmental
- economy
- Supply conditions
- Tech
-
- Politics and regulation
- Competition
- Culture and customs
- Organizational
- Objectives
- Strategies
- Structure
- Systems
- Procedures - risk taker or just getting the job done
- Interpersonal
- Influence
- Expertise
- Authority
- Dynamics
- Individual
- Age
- Education
- Motive
- Personality
- Preference
- Buying style
Stages of the business buying decision process
- Problem recognition
- A company realizes a problem or need
- Internal stimuli
- External stimuli - trade show or ad
- General need description
- Describes characteristics and quantity needed for the item
- Rank importance of attributes
- Product specification
- Decision on best technical product for a needed item
- Cost
- Standard
- VALUE ANALYSIS
- Supplier search
- Compiling a list of qualified suppliers
- Increasing online task
- Proposal solicitation
- Buyer invites supplies to submit proposals
- Marketing documents
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-
-
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Supplier selection
- Review the suppliers and select one or more
- Negotiate for favaroble terms
- Delivery
- Quality
- Reputation
- Ethic behavior
- Price
- Order-routine specification - payment and routine shipping
- Final order with cohen suppliers
- Vendor-managed inventory - ordering and inventory are suppliers'
responsibility
- Performance review
- Both sides monitor each other
- Critique of supplier performance
- Changes upon that
Online purchasing
- E-procurement gives buyers access to new suppliers at low costs and makes
delivery and processing easier
- Sellers connect with customers to share marketing info
- Pros
- Access to new suppliers
- Lower costs - more options
- Speeds order processing and delivery
- Enhances information sharing
- Improves sales
- Facilitates service and support
- Cons
- Erodes long-established relationships
- Can put companies against each other
- Price war
B2B digital marketing
- Can connect with key contacts anywhere any time
- Better access to info
- Brand stories are well known
Selling to institutions and governments
- Schools hospitals nursing homes prisons
- Us 80B$
- Low budgets
- Governments - $2.3 T
-
Sellers must locate key decision makers and identity factors that affect
their behavior
Issues with working with gov
- Paperwork due to being tax money
- Contracts are won on bids - price war
- Favor domestic suppliers
- Amy favor minority owned firms
Class 10:
Segmentationa and Targeting
Planning
- Planning is step two in the marketing process
- The first is an analysis of the landscape - climate, competition, collaborators, company,
and consumer behavior
-
Planning consists of setting your marketing objectives - choosing which consumers to serve and
define your market offering
- Two decisions must be made before building marketing tactics - deciding who your
prime prospect is and what your offer is
STP Marketing
- You decide what your tactic is based on prospect and offerings:
- Segmentation: group customers based on similar needs
- Targeting: select the most attractive segments and dig deep to learn more
- Positioning: Define your value proposition for your new target market
Segmentation
- Segmentation refers to a separation of heterogeneous group of consumers with different into
homogeneous subgroups where customers have similar needs and preferences
- Segments are not made, they are revealed
- WHY would your want to segment the market?
- Benefits to the marketer:
- Identifies unfulfilled needs
- Better product design
- More targeted communication
- Increased customer satisfaction
- Benefits to customer:
- Convenience and time savings
- Tailored products
- Relevant messaging
-
TYPES of consumer segments:
- Demographic - age, gender, income, race
- Examples include Diet Coke and Coke Zero and one a day vitamins
-
-
Psychographic - values, opinions, attitudes, activities and lifestyle
- This type of segmentation emphasizes an understanding of consumers
mindsets
- Takes into consideration may factors like: lifestyle, interests, values,
personalities, religion, opinions, attitudes, social status and hobbies
- Examples of psychographic handles are - fortinters, young at heart, fashionistas,
LGBTQ+ allies, thrifters
-
-
-
By race and gender / sexual orientation
- Toothpaste with gay couple
Pros and cons of demographic segmentation:
- Pro: clear segmentation approach that’s easy to reach via traditional
media since media is segmented on demographics
- Cons: may be too broad - often strand differences within demographic as
profound as differences between demographics
Examples of products: Toms deodorant - natural ingredients, ford explorer - for
those who push boundaries, bud light with the football team
Examples of psychographics in action: Loews hotel resort - offers different forms
of exclusivity
Pros and cons of psychographic segmentation:
- Pros:
- Easier to craft messages/ compelling positioning given these are more
lifestyle traits
- Cons:
- While hyper-targeted and niche media exist it is more costly to buy
psychographic segments
Geographic - international, regional, zip code, climate
-
-
-
Examples include - in-n-out burgers, McDonalds regional products, and suburban
- Chevrolet (people won't buy it in NYC)
- Pros and cons of geographic segmentation:
- Pros:
- The difference in interests, values, and preferences vary dramatically
through cities states, and regions - this accounts for logistic differences
such as language, shipping, and local legislation
- Cons:
- Not applicable to brands with more universal appeal
Behavioral - occasions, benefits sought, user status, usage rate, loyalty
- Use actual consumer behavior to build segments:
- Seasonal buyers vs. year-round buyers
- Those seeking flavors vs. nutrition
- Emergent consumers vs. experienced
- Heavy/committed users vs. light users
- Brand evangelists vs. switchers
- Examples: dayquil vs. NyQuil, pumpkin spice things
- Occasions: how or when will you use this product
- Benefit sought:
- User status: new user vs. repeat user
- Usage rate: heavy user vs. occasional user
- Loyalty: don julio - dor those who know(loyal) vs. variety pack beer fort hose seeking variety
- Pros and cons of Behavioral segmentation:
- Pros: brands may craft their marketing message based on consumer habits and
practices that they have already been proven
- Cons: While consumer behavior can be tracked it is not always easy to pinpoint
the motivations behind those behaviors as they can vary greatly from person to
person
Segmenting business markets:
- Consumer and business marketers use many of the same variables to
segment their markets
- Additional variables include:
- Customer operating characteristics
- Purchasing approaches
- Situational variables
- Personal Characteristics
-
Requirements for effective segmentation
- Measurable - size, purchasing power, and profiles of the sentiments can be
measured
- Accessible - the market segments can be effectively reached and served
- Substantial - the market segments are large or profitable enough to serve
-
-
Differentiable - the segments respond differently to different marketing mix
elements and programs
Actionable - effective programs can be designed for attracting and serving the
segments
Targeting - your target market:
- The target market is a set of buyers who share common needs or characteristics
that the company decides to serve
- After evaluating different segments the company must decide which
and how many segments to target
- Evaluating market segments:
- Segment size and growth
- Segment structural attractiveness
- Company objectives and resources
-
Market targeting strategies
- Undifferentiated (mass) marketing
- Threats to while market with one offer
- Focuses on common needs rather than what different
- Makes sense for products with wide appeal
- Can be cost-efficient but its increasingly difficult to be all
things to all people
- Differentiated (segmented) marketing
- Targets several different market segments and designs
separate offers for each
- The goal is to achieve higher sales and a stronger position
- More expensive than undifferentiated marketing
- Eg. Marriott has 30 differentiated hotel brands dominating the industry and capturing a large share of
the travel and hospitality than a single brand would
- Concentrated (niche) marketing
- Targets a large share of a smaller market
- Focuses limited company resources
- Stronger knowledge of the limited market
- Can be effective and efficient but may also be limiting and
risky (all eggs in one basket)
- Micromarketing (location-based or individual) marketing
- Micromarketing is the practice of tailoring products and
marketing programs to suit the taste of specific individuals and
locations
- Location marketing involves tailoring brands and promotion to
the needs and wants of local segments:
- Cities
- Neighborhoods
-
-
- Stores
Individual marketing: involves tailoring products and marketing
programs to the needs and preferences of individual customers one-to-one marketing, mass customization
Choosing a marketing strategy:
- Company Resources - concentrate efforts when resources are limited
- Product variability - for uniform products, undifferentiated make more
sense; products that vary in design should be differentiated
- Product life-cycle stage - new: launch one product and use
undifferentiated or concentrated, later differentiated makes sense
- Market variability: the more homogeneous the tastes, the less need for
highly targeted marketing
- Competitors' strategies: your hand may be forced to use a differentiated
or concentrated approach
- Choice of target impacts your entire strategy
- Choice of segment affects your prime prospect choice and your brand
promise
- It has an impact on all 4P’s:
- The product feature
- Your pricing strategy
- Your distribution strategy
- Your advertising
- Example: GATORADE
-
Ethical questions in target marketing
- Targeting vulnerable segments - should fast food companies be allowed to market their
affordable but unhealthy foods to low-income urban residents
- Should mortgage lenders have a higher income cut off
-
- Should companies be allowed to target children?
Hyper-targeting
- Should companies be allowed to build amazingly detailed
profiles of you? When does it become stalking?
Class 11:
Positioning
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-
-
Positioning is the last step in classic STP Marketing
- Segmentation: group customers based on similar needs
- Targeting: select the most attractive segments and dig deep to learn more
- Positioning: Define your value proposition for your new target market
P&G is great at STP - they often have multiple brands to target multiple segments in the
same category - each product has its reason for being and they compete with themselves
Positioning: an act of designing the company's offer and image so that it occupies a distinct
and valued place in the target customers' minds - place in individuals' brains is small
- The heart of marketing strategy finds a proper location in the minds of customers or
market segments so they to think about the product or service from the right
perspective
- The positioning provides consumers a shortcut to decision making
- Positioning clarifies what a brand or product is all about:
- Outlines for whom it is best suited
- Highlights how it is unique to competitors
- Highlights how it is similar to competitors
- Gives it a reason for why consumers would purchase it
- There are two types of positioning: product and brand positioning
-
Product positioning - gives the product a reason for being
-
Owning a space
- Arriving at the proper product positioning requires establishing the correct
points of difference and points of parity associations
- Points of difference: attributes or benefits strongly associated with the
product - what makes it different than other products
- Points of parity association: not factors necessarily unique to the product
buit important for playing in the category - 'great taste' for cake mix something you cannot play in the category without
Choosing PoD and PoPs to yield a competitive advantage
- Competitive advantage is gained by offering consumer greater value
through lower prices or better quality
- Value can come from performance attributes- performance benefits
or imagery associaltions - eg. Tesla, iPhone and LV respectively
-
-
Winning product positions: offering more value
-
-
Winning product positions: offering uniqueness/differentiation
Brand positioning Guidelines:
- Define the competitive frame of reference - who is your REAL competitor
- What businesses are we in
- Eg. McDonalds can be identified as fast food, quick service restaurant
or family fun - all have different competition
- Your real competition is your frame of reference
- If you define too narrowly you risk missing threats
- If you define too broadly it become unusable
-
-
Summarize your design target
- This is a direct reflection of the design target developed earlier - it should include
- Descriptive handle and core consumer insight that will drive them to
your brand
- Eg. guys under 40 who feel like their best stories come out with
their buddies - hineken and siuccessfiul people 40-65 who
demand higher standard - mercedes
The Brand promise
-
-
-
-
This is the value or experience a brands customers can expect to receive
every single time they interact with the brand
- Is it simple - credible - unique - memorable - inspiring
It is not a slogan - though sometimes outward facing taglines streams directly
from the brand promise
Your brand promise is your brands best offer - the great brand promise:
- Is something you deliver well
- Something your comeptitiors arend promising
- Is wanted by your target
Some brand promises are tangible and some are rational - brand promises rooted
in something tangible are easier to communicate
- Tangible features can include better quality, more convenient
experience or best customer service
- Biggest challenge of tangible brand promises is that they can be easier to
copy
-
Anchor your brand promise in a critical reason to believe / reason to care
- Rational brand promises
-
Some brand promise are more image - based
- Some brand include benefits not directly related to using the product
- Such intangible features may include desired image of the user or a belief / pov
- They lack tangible evidence and can take longer to establish in the market
- Examples of irrational brand promises
Ladder to a brand promise
-
How far up the ladder should I go
- Items in lower rungs tend to be more believable since they are most tangible
- Leading brands have credibility to ascend further up the ladder
- The higher the ladder the more flexible and stretch you have in the brand but
the more challenges you have in delivering the promise
-
Underpin your brand promise with reason to believe/reason to care
- Grounding the brand promise
- Brand promises can sometimes feel far removed from the actual functional
purpose of the products that make up the brand
- Its hood to ensure that you have a genuine reason why you have the right to make
a priomsie
- Why should the consumer believ you (give reason to eg. 45% less sugar)
- Proving your promise
- Brand promises are generally stated in terms of a benefit - what can the brand do
for its target market
- RTB's are simplu the underlying proof points and they can come in a variety of
ways:
-
Bring it all together: the positioning statement
-
Positioning
- Short from positioning statements:
- Some brand try to summarize their longer posioning statement into one short,
pithy sentence that makes their marketplace intent clear
- The luxury automobile for those with unocmptiomsed taste - merceded
- Organizing the worlds information to make it universally accessible google
- The positioning map:
- Often marketers will map out competition - positioning maps show consumer
perceptions of marketers brands versis cipetuing products on important buying
dimensions
- Provides a visual summary of the market
- Will show which brands are closes (most direct competitors)
- May show swhite space opportunities with pursuing
-
Communicating and delivering the chosen position
- Choosing the positioning is often easier than implementing it
- Establishing a position or changin one usually takes a long time
- Maitianig the position requires consistent performance and communication
Class 12:
Products and services
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-
What is a product?
- Product is anything that can be offered in a market for attention, acquisition, or use of
consumption that might satisfy a need or want - this can include tangible objects as well
as services, events, persons, places, organizations, and ideas
- Eg. tennis racket, car, cereakm Mocha Cafe, trips to vegas
- Services are a form of product that consists of activities, benefits or satisfactions and that
is essentially intangible and does not result in the ownership of anything
- Eg. banking, hotels, airline travel, retail, wireless communication
Good marketers think not in terms of products, but in terms of benefits
- While products and services satisfy a customer's need when theyre acquired, used or
consumed people are really buying the benefit that tjey are provided rather than the actual
product
-
-
-
-
-
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Tylenol - when a consumer has a headache they are in-market to purchase pain
relief not acetaminophen or ibuprofen
- Merceded - is really selling prestige superior technology not just transportation
What is the consumer really buying?
Stay customer focused and avoid marketing myopia
- Many sellers mistakenly pay more attention to the specific products than to the benefits
and experiences produced
- They are so taken with their products they lose sight of the underlying consumer wants
and needs and forget their product is only a tool to satisfy a need - if a bew product
comes along that is better or less expensive consumers will like the new product
Your market offering is often a mix of tangible goods and services
Managing the entire product experience helps the marketer set expectations
- Consumers face a broad array of products and services that satisfy needs/ wants customers form expectations about the value and satisfaction of market offerings
- Satisfied customers buy again, not satisfied ones chose competitors
- Marketers need to set the right level of expectations - consumer delight happens
wehn you exceed them
There is no right way to exceed expectations:
- Eg. good return policy, cheap prices, outstanmding product performance
-
Product classification
- Consumer products
-
Industrial products - those procucst purchased for further procession or for use in conducting a
business
- Materials and parts
- Capital items (bottling machine)
- Supplies and services (maintenance on the machinery)
Intangible products
- Marketing can be used to create, maintain or change the attitudes and begaviros of the
target consumers toward other types of products including
-
-
Key product decisions
- Marketers make product and service decisions at three levels
-
Individual product and service decisions
- Key decisions in the development and marketing of individual products
- Product attributes/ features
- Assessed based on the balue to the consumer versus the cost to the
company
-
-
-
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Product style and design
1. Style describes the appearance of the product and pleasing
aetheticas grab attention
2. Design contributes to a products usefulness as well as to its looks
- this behind by undrstndin consumers needs and shaping the
proidcut user experience
Product quality:
1. Refers tot eh characteristics of a product or service that bear on
its ability to satisfy tated or implied consumer needs
Branding
- A brand is a name, term sign, symbol or design or combination of these
that iedntifies the maker or seller of a product or service
- A brand can really onmcrease the balue of a product offering
Packaging
- Packaging involves designing and producing the container or wrapper for
a product
1. Traditionally the primary funcion of the packaging was to gold
and protect the product
-
2. Now packaging represents priomce marketing space (ex. Coke
bottle, amazon box, tiffanny box)
- Labeling and logos
- The albel performs several functions like identifying the product or
brand, describing the product (who made it, wher,e when, contents, how
it is to be used and how to safely use it), and helps promote brande and
engage customers
- Logos serve as visual representation of the brand - apple, merceded, nike,
mcdonalds
- Product support services
- Customer service augments the product itlesf and may be the most
improtat part to the brand experience
Product line decisions
- A product line is a group of products that are closely related because tejy
function in a similar manner, are sild to the same customer groups, are marketed
throught he same oujtlets and fall within the same price range
-
Product line filling: involves adding more items within the present range or the
line for: extra profit, satisfying dealers, using excess capacity, leading the
full-line company or plugging holes to keep out competitors :
-
-
Product line stretching occurs when a company legthend its procuc line beyond
its current range - downward or upward or bothways
- Downward to plig a market hole that otherwise would attract new
competitor or because it finds faster growth taking place in the low-end
segments
- Stretch upward to add prestige to theri current products or chase higher
margins
Product mic decisions
- Product mic consists of all the products lines and items that a particular seller offers
- Optimiszing product mix - best portfolio fits the companies strengths and
weaknesses to the opportunities in the environment
- Portfolio planning involves:
1. Analyze current business portfolio and determine investment
levels for each business
- Company will want to put strong resources into
profitable high potential bisoneses and phse doen its
weaker ones:
1. Identify key businesses- company devions,
product line division, single produc or brand
2. Assess the attracyuveness of each strategic
business unit ˆ
3. Allocate resoruces
-
-
-
2. Shape its future portfolio and develop strategies for growth and
downsizing
- Sometimes a company must harvest or divest businesses
that are unprofitable or no longer fit the strategy
Product mix dimensions
- Product mix width is the number of different product lines the company
carries
- Product mix length us the total number of items the company carries
within its product lines
- Product mix depth is the number of versions offeredd od each product in
the line
- Consistency is how closel various product lines are in end use,
production requirements or distribution channels
Roles of product in the portfolio
Services marketing
- Are the fastes growing segment of the us economy - takes up 80% of us gdp and 64% of
world gdp
- Sevices include
- Business organications like airlines and banks or retailers
- Governments like courts and hospitals or polcie departments
- Private non-for-profit organiztions like musiums and colleges or hospitals
-
Service firms rely on more than external marketing
-
The three major marketing tasks of service firms are
- Servcoe differentiation
- Service quality
- Service productivity
Major task of service firms: differentiation
- If consumers dont see you as different you end up competing on price - service
differentiation creates a competitive advantage at least in the short term
- Ways to differentiate
- Offer features (emirates)
- Delivery (cvs minute clinics, walmart [pick up)
- Image (the result of branding)
Major task of service firms: quality
- Wualirtt is harder to measure in service frims but the best service firms conssutly deliver
higher quality than its competitors
- But variability is inevitable when teh proicut is being made daily bu humans rather than
machines - so service recovery is vital
-
-
-
Major task of service firms: productivity
- Managing service productivity refers to the cost side of marketing strategies for service
firms
- Employee hiring n and training
- Technology
- Balance efficacy with the need to cerate consumer value
Class 13:
Branding
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-
-
What is a brand - an identifier
- Derived from the old norse word brandr or to burn - branding cattle goes back as
far as 20000 BC
- Brands also offered protection for 14th century bakers who marked their loads
sold to ensure that sizes were correct
- Also used to identify people who died in wars - noble families adopted certain
colors and shapes to create unique coat of arms
- Helped illiterate peasantws identify things ex. Barber shops and hospitals
- A brand is a perception
- A brand is a persons gut feeling about a market offering - brands represents consumers
perceptions and feelings about a product and its performance and everything that the
producer or service means to the consumer
- Branding is the act of shaping perceptions - and because perception is reality, branding is
the act of shaping reality
Branding has genuine business value - apple brand has more value than nfl, nba, nhl and baseball
all together
Brands are more than products
- Products
- Expand choice
- Occupy functional terrirotu (physiology)
- Are made in factories
- Can be copied by competitors
- Can become outdated
- Do something
- Brands:
- Simplify choice
- Occupy mental and emotional territory (psychology)
- Are cradted in consumers' minds
- Are unique
- Are timeless (when successful)
- Stand for something
Example - the tangible product vs. the intangible brand
- Coke fail
- Over 190,000 taste test conducted and the new formula was preferred to the new
one
- The changin the iconic formula created a guge backlas - the classic product was
back on the shelves within months and the new coke was dead in a year
- Brands are everyhwere - the average consumer is exposed to 6k - 10k brands every day
and the number has doubled since 2007
- More products, brands and brand extensions have become a part of the ecosystem
-
-
E-commerce has removed barriers to get to market so more products and
brands are alunched
- There are 30,000 new launches every year (only 11% survive the first
year)
- on -going global trade has facilitated more roreign brands to entder the
american market
- Spending more time with media thanks to multicreen consumption - we
see more branded messages
- The clutter of brands makes branding even more important
- The sheer choice we haeb forces us to take shptcuts in decision making bramnds servce as short cut decision making - they are needed to help us
navigate life
Benefits of brands
- Consumer benefits of rbands
- Types of risks that brands mitigate
- Functional - product works as it says
- Physical - produ ct wont harm
- Financial - product is worth the price paid
- Time - i can quickly find a satisdactoty option
- Brands reduce emotional risk - Social risk
- Embarrassment when using a disaproved brands or products
- Well known brands often have more social approvals
- Psychological risk
- Risk that usign the product may have ill-effect on the users mental
well-being
- Core consuemr benefit differs by product type
-
Brand as time saver
- Rbands help us identify the source or market of the product - we assign
responsibility of the product to its maker and practical identifications is the very
genesis of branding
-
-
-
-
-
Branding hlpos ius find desired product quickly due to visual iconography
associated with brands
Brand as a cue
- Brands trigger desire and can conure up past good feeling immetiatky
- Feelings can be triggered instantly causing us to act on impulse and experience
joy - it is instant even in clurrered field
Brand as mark of quality
- Brands provide predictability - giving us confidence in purchases where 100%
knowledge is impractical
- Brands lower seach costs
- Includes tiem to invest in fully learning the category, time spend at retail
to find the one we want ect.
- We need not be experts in the category o the brand does the thinking for
us
Brands as an extension of self
- Brands offer benefits beyond the functional an play at higher levels pf maslows
pyramid
- Brands can
- Allow a person to project their desired image
- Reinforce self - worth
- Feel like a part of a team
Firm benefits of brands
- Strong brands can provide frims wotha pricing advantage
- Price premium mightb be the best measure of a strong brand
- Some producers decide mot to take out the brand value in higher price and the
value comes from higher market shares, salesa nd loyalty
-
-
Strong brands make marketing dollars work harder
- Strong brands give ,arketers many advantages and ultimately help drive
profitability including:
- Trade benefits
- Greater customer loyalty
- Entry barriers
- Increased effectiveness of marketing spend
- Increased opportunities ins storytelling
- Strong brand scan provide stock market advantages
- Strong brands are recognized in the stock market as valuable assets leading to higher share price for the company
- Strong brands have also been shown to translate into lower risk for the
company shares
- Investors recognize that a strong brand will likely have more loyal
following and in a stock market downturn and shares will love less
Brand equity
- When a product is introduce its not yet a brand
- Product might have all marketings of a brand and the opwenrs may know how
they are going to position it, but consumers have yet to assign it any meaning markers s and positioning plans are empy
- Over time - ideas accumulate and form brand meaning - meaning comes form a variety of
sotires froma variety of sources
-
-
The accumulates stories create value or equity for a brand - stories collide and collective
perception is formed, creating a view of the brand
- BRAND EQUITY: the differential effect that brand knowledge has on the consumer
response to marketing
- A marketers goal is to create brands with positive brand equity - eg. nike shirt costs $45
vs shirt w/out logo that costs $15
The four pillars of brand equity:
-
Building strong brands
- Considerations of brand builders
-
Brand elements
- Trademarkable devises that serve to identify and differentiate brands including:
- Brand names
- logos/ symbols
- Packaging
- Characters
- Slogans
- Jingles
-
-
-
Brand elements are non trademarkable devices that serve to identify and differentiate the brand
including
- Colors - peptobismol
- A font - google font
- Spokesperson
- An aesthetic - inclusivity and Dove
- A ritual - Corona beer
- A place
Choosing a brand element
Brand personality - the set of human characteristics attributed to a brand name
- It emerges gradually from all the exposure and interactions that consumers have
with the brand including paid communication and user experience
- Once a strong personality is established its difficult for consumers to accept
information inconsistent with it
- Jennifer Aakers' 5 personality dimensions that help define brand personality:
- Sincerity
- Excitement
- Competence
- Sophistication
- Firth personality dimension differs by culture and market - USA(peacefulness)
BR (passion)
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Brand sponsorship
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Brand development
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Brand management tips
- Invest at consistently healthy levels to create awareness and build loyalty - coke spends 4
Billion annually
- Build great brand experience - make sure engagement is positive
- Ensure all marketing activities are consistent with the brand promise - ensure all
stakeholders understand the meaning of the brand
- Audit your brands strengths and weaknesses regularly
Class 14:
New Product Development and the Product Life Cycle
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New products make up half of all growth strategies
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Businesses are tasked to grow revenue
Creating new products are two of the four main growth strategies
- New product introduction are often critical to long term health of the firm
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There are two main strategies for a firm to obtain new products
- Acquisition - buy a company, patent or license (buying something that already exists)
- New product development (NPD) - new products, improved products, modifications and
new brands
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Innovation is generally expensive and risky
- 30,000 new products every year
- 80%-95% failure rate - this si so high because businesses go into it looking for money
and aren't consumer focused
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New product development and strategy and process
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Idea generation
- The systematic search for new product ideas
- Sources of new product ideas are:
- Internal - when the company's own formal research and development,
management and staff generated the new product
- Facebook uses hackathons to pick the brains of their own
employees for innovative ideas
- External - when customers, competitors, distributors, suppliers push for
new products
- Salesforce ideaExchange invites customers to input on software
features
- Tupperware used crowdsourcing when it sponsored the clever
container challenge - seeking ideas for integrating technologies
into food containers for future smart kitchens
Idea screening
- Identify good ideas and drop poor ideas
- RWW screening framework
Concept development and testing
- An attractive idea needs to be developed into a product concept
- Product idea: a possible product that the accompany can see itself
offering to the market
- Product concept - detailed version of the idea stated in meaningful
consumer terms
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Product image - the way consumers perceive an actuarial or potential
product
Concepts are then exposed to consumers and tested for comprehension,
believability and purchase intention
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Marketing strategy development
- Marketing strategy development is designing an initial marketing strategy for a
new product based on the chosen product concept
- Marketing strategy statements consist of:
- Target market description - panned value proposition - short term
business goals
- Key marketing mix decisions for Year One:
- Ie. planend price, distribution and marketing budget
- Long term goals and plans - sales, market share and future marketing mix
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Business analytics
- Once the management is satisfied with the product concept and marketing
strategy, it evaluates the business attractiveness of the proposal
- This involves reviewing the sales, costs and profit projections for a new product
to find out whether these factors satisfy the companies objectives
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Product development
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Product development is developing the product concept into a physical product to
ensure that the product idea can be turned into a workable market offering
- Usually involves a large investment
- Often involves consumers in development and testing
- Must also satisfy base requirements for a product in the category in
addition to product concept
- Test marketing - the stage of new product development in which the product and its
proposed marketing program are tested in realistic market settings
- Test markets - firms test the product and full marketing program in a
'typical' city to gauge the reaction before full launch
- Controlled test markets - new products and tactics are tested among
controlled panels of shoppers and stores to assess the impact of in-store
and in-home marketing efforts - this is often a secret
- Simulated test market - researchers measure consumer response in
laboratory stores or simulated online shopping environments - this is the
cheapest way
- Test marketing is likely when launching a new product with large investment,
when there is uncertainty about product or marketing program
- Test marketing is unlikely when it is a simple line extension, copy of competitor
product, low costs and management confidence exists
- Commercialization - the actual introduction of the product into the market
- Key decisions
- When to launch
- Where to launch
- Planned market rollout
Managing new product development
- Successful new product development should be:
- Consumer centered
- Successful new product development begins with a thorough
understanding of what a consumer needs and values
- Consumer centered new product development focuses on finding new
ways to solve customer problems and creating satisfaction
- Team based
- Involves various company departments working closely together,
overlapping the steps in the product development process to save time
and increase effectiveness
- An assembles team of people from various departments stays
with the new product from start to finish
- They work together to get through problems
- Systematic NPD
- NPD process should be holistic and systematic rather than
compartmentalized
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To ensure that new ideas surface and not sputter and die, a company can
install an innovation management system to collect, review and evaluate
new product ideas
- Tsi helps create an innovation-oriented company culture
- Yields a large number of new product ideas
Product life cycle strategies
- The product life cycle
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The length of product life cycle
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Managing the product life cycle during the introduction phase
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Managing the product life cycle during the growth phase
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Managing the product life cycle during the maturity phase
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Managing the product life cycle during the declining phase
Socially responsible product decisions
- Some things can't be done due to legal and regulatory issues - public policy may dictate
certain business decisions when it comes to:
- Adding or dropping products
- Can add or acquire new products if the government believes it creates
unfair competition
- Companies dropping products may have legal or moral obligations to
suppliers, dealers or consumers
- Companies must obey US patent and trademark law and not blatantly
copy other protected products
- Product quality and safety
- Poor quality products are quickly rooted out and can have lasting impact
on firms brand image
- food , drug and cosmetic ad set standards must be met
- Safety regulation has been passed on fabrics, chemicals, automobiles,
toys, drugs poisons
- Consumer product safety act allows seizure of harmful products and
large fines
- Lawsuits due to defective design can be expensive to fight and cause
harm to firms reputation
- Product liability insurance costs have skyrocketed, forcing manufacturers
to pass the costs along to their consumers
- Product warranties
- Warranty is a promise or guarantee made by a seller or lessor about the
characteristics or quality of property goods or services
- Can be either expressed or implied
- Warranties are essentially promises that must be kept
- Businesses increasingly held to higher warranty standards not by the law
- dissatisfaction is expressed through social media
Class 16:
Pricing Strategies
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Basic pricing strategies
- A price is the amount of money charged for a product or service or the sum of all values
that customers exchange for the benefits of having or using the product or service
There are three main pricing strategies
- Customer value-based
- Price based on buyers' perceptions of value - price is set to match value to the
customer
- Cost based
- price set based on the cost to the seller plus a fair rate of return
- Competition based
- Precise set based on competitors prices
Price ceiling and floor - the key is finding a sweet spot
Consumer value-based pricing strategies
- When customers buy something theye xchange something of value - money - for
something of value - benefits of using product
- Effective customer value based pricing involves understanding how much value a
customer places on the benefits they receive frm the product - and setting a price that
captures that value
- This requires that marketers set a price before they set the rest of their marketing program
Customer value-based pricing vs. cost-based pricing
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Customer value-based pricing strategies - Two basic strategies
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Competition - based pricing strategies
Set prices based on competitors strategies, costs, prices and market offerings
- Eg. a market leader may price low to drive weak competitors out or niche brand
may add balue tot he product and charge a higher price
- Gaol is not to match or beat competitors prices, but to set prices according to relative
value - give consumers superior value at whatever price point selected
Cost based pricing strategies
- Pricing is based on total cost to seller
- Total cost per unit = variable cost per unit + (fixed costs/units produced)
- Variable cost per unit: raw materials, packagins and commissions
- Fixed costs = overhead costs that do not bvary with production or sales
level, rent, heat, interest, executive salaries
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Cost per unit drops with accumulated product experience
- As firms produce more units they learn how to do this better
- With practice the work becomes more organized and production processes are
made more efficient
- Economies of scale are gained amd price per unit drops
- This is why bigger companies can keep costs lower and either earn higher
margins or keep prices low to generate even more sales
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Break even analysis and target profit pricing
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If target market volume dies not seem probable - or if a company seeks a higher return they may
need to set a different price
- Remember the main rule of consumer demand: higher prices mean fewer units sold (but
higher margins per uni) and lower prices more units sold (bot lower margins per unit)
- Companies will run various scenarios to determine optimal price based on expected units
sold
Break-even analysis
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Margins vs. markups
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Factors affecting price decisions
- Price needs to cover costs
- Even if not using cost-based pricing, the price decisions need to be coordinated
with product design, distribution, and promotion
- When the market dictates price point, forms even use a technique called target
costing: start with the selling price and then targets costs to ensure that the price
can be met
- Eg. honda designed fit to hit a starting price point of $13,950 and
highway mileage of 33mpg
- Price should match your overall strategy
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Price needs to reflect the type of market in which youre playing
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Other factors affecting pricing decisions
Price elasticity
- The demand curve
- Basic microeconomics philosophy states that as the prices of a good or service
goes down more people will buy it - all other things constant
- Conversely as the price goes up, fewer people will buy it - all other things
constant
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Marketers need to know how responsive demand will be to a change in price
- If demand hardly changes with a small change in price we say demand is
inelastic
- If demand changes greatly we say its elastic
Calculating elasticity
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Evaluating elasticity
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Elasticity examples
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Elasticity and revenue
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Factors affecting price elasticity of demand
Class 17:
Pricing as a Marketing Tool
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Companies must consider company, environmental and competitive forces - pricing is something
you can change quickly
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To make things more complex - most companies dont set a single price, but pricing
structure
- Covers different items in tis line
- Changes over time as products move through PLC
- Is adjusted as costs and demand changes
- Accounts for variations in buyers and situations
Using pricing decisions strategically
- Examples
- Set prices to attract new customers/ profitably retain existing ones
- Lower prices to prevent competition from entering the market
- Natch a competitors price to stabilize the market
- price to keep dealers happy
- Set a price to avoid government intervention
- Temporarily reduce the price to create excitement for the brand
- Price one item in the line low to create buzz for the whole
- Strategic pricing decisions
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Pricing new products
- Go in high and take profit ar to go in low and grab market share?
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New product pricing strategies: when to use which strategy
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Product mix pricing strategies
- When the products is a part of a product mix, the frm should look for a aset of prices that
maximizes profit on the total product mix
- Pricing is more difficult because the various products have related demand and costs and
face different degrees of competition
Product line pricing
- Determine the price steps between the various products in a line, accounting for
- The costs differences between products in the line,
- Customer evaluations of their features
- Competiors prices
- Optional product pricing
- Determine how to price optional or accessory features sold witht he main product
- Decide which to include in the base price and which to offer as options
Captive product pricing
- Pricing products that must be used witht he main product
- Companies often price the main product low to encourage more people to get into its
"system", then set high markups on supplemental products
- Includes: razor blades, printer cartridges, single serve coffee pods, videos game consoles
and e-readers
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By- product pricing
- Often producing products generates by-products
- Theres a cost of disposing them which us passed along
- But it a firm can find a market for its by-products by pricing them low, it can
make the main product more competitive
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Product bundle pricing
- Sellers combine several products and offer the bundle at a reduced price - price
bundling promotes sales of products consumers might not otherwise buy, and
allows the bundler to grab a higher share of requirements
- Eg. fast food combos
Princing differently for different segments
- Consumer-segment pricing - Price the same product depending on the audience
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Segmented pricing; product form pricing
- Different versions of the same product are priced differently but NOT according to
differences in costs
- Eg. business class pricing 10X
- Premium software
Segmented pricing: location based pricing
- Charging different prices for different locations even if cost of offering eahc location is
the same
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Segment pricing: time based pricing
- Frims vary their price depending on season, month, day and even hour
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Dynamic pricing
- Most businesses use a fixed price policy - one price for all
- Dynamic pricing involves adjustiung prices continually to meet the
characteristics nad needs of individual customers and situations
- Eg. airlines change ticket price based on demand for the flight
- Sports teams charge more for rivalry games
- Uber 'surge' pricing
Personalized pricing
- Personalized pricing uses Big Data for firms to charge based on personal data including
zip code and previous purchases
- It uses automation to estimate to estimate your personal price threshold based on previous
behaviors and personal data eg. high end zip codes will served mnire luxury items at
higher prices
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International pricing
- Adjusting your priced to reflect local market conditions and cost considerations
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Psychological pricing
- Sellers often consider hte psychology of prices not simply economics
- Consiumers usually perceive higher-priced products as having higher quality
- Better lawyers are more expensive
Reference pricing
- Reference prices are precise that buyers carry in their minds when looking at a given
procuts
- Grocers often sell items like milk and eggs at a loss to attract vuyers who assume
good pricing on all items
- Sellers can influence reference pricing when setting a price
- Store brands placed beside the mmore $$$ national brand
- Sale signs, price - matching guarantees
- Size of pring: smaller print can make the price feel lower - oversized print draws
attention to the price creating the assumption of a good deal
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Importance of the actual number
- Prices that end in 9 seem lower
- Most products at overstock.com end in 9
- Apple priced the iphone X at $999
- Eye surgery at 299 vs. 300$
- Whole number prices feelm more high end with 8's creatubng a soothing effect and 7's
with jarring effect
Promotional pricing
- Using price to create an urgency to buy
- A temporary reduction in price creates buying excitement and urgency
- Discounts to normal prices
- Special event pricing (black friday)
- Limmited time offers and flash sales make buyers feel lucky
- Promotional pricing can move some customers over the hump
Effectiveness of using price to create demand depends on the elasticity of the brand
- If demand is inelastic - demand hardly changes with small changes in price
- Marketers should charge as high a rpuce as they can and avoid
discounting
- If demand is elastic - demand changes greatly with small changes in price
- Marketers can use discounting and low prices as a tool to drive demand
so long as costs do not exceed the extra revenue
Discounts and allowances
- Discounts and allowances are price reductions that reward customers for doing things like
paying early, volume purchases or promoting the product
- Discounts
- Cash discounts for early payment
- Quantity discounts for large orders
- Trade discount for channel members for functions like selling, storing or
record keeping
- Seasonal discounts for those who buy in the off season
- Allowances
- Trade in allowance for turning in an old item eg. car
- Promotional allowance to reward dealers for participating in program
Other promotional tactics
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Dangers of promotional pricing
- So frequently used anc lead to buyer wearout
- Can redefine the normal price and erode margins
- Can cause a price war - lower margins with no change in market share
- Can train consumers to wait for the deal
- Can adversely affect brand equity
Making price changes
- Initiating price cuts
- With excess capacity or falling demand in the face of price competition a firm
may aggressively cut prices to gain market share
- Often just lead to price wars in which no one wins
- May try to dominate the market through lower costos (has a lower cost
product or can get to lower cost with volume
Initiating price increases
- Taking a price increase is tempting
- If a companies profit margin is 3% of sales a 1% price increase boosts profit bu
33% if sales and cosnts remain unaffected
- Often done with over-deman - a company cannot supply everything its customers
need
- Rather than taking price - many brands reduce costs by substituting less
expensive ingredients or striking the pagage size while maintaining price
Reaction to price changes
- Consumer reaction
- In most cases price increases negatively affect consumer perceptions and price
decreases are seen positively
- May not be true for all goods - eg. rolex suddenly you may think quality
has been reduced
- Competition reaction
- Most likely respond when there are fewer firms competing and the product is
uniform - buyers are well informed on price
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Responding to competitive price cuts
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Public policy and pricing
- Major public policy issues in pricing
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Pricing within channel levels
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Pricing across channel levels
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Ethical issues in pricing
- Government intervention - can a business be too successful requireing intervention on its
pricing policy
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Opportunity pricing - is it ok for businesses to take advantage of rare market conditions and make
big short-term profit?
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Price discrimination
- What is the difference between segmented pricing and discrimination? Eg. gender pricing
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Pharmaceutical pricing - is it ethical to charge what consumers are willing to pay for
patent-protected life-saving drugs?
- Epi-pen
Class 19:
Marketing Channels
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Place-Marketing channels:
- Most companies are only a single link in the larger marketing supply
- The science of getting products made and available for purchase is critical
- Good distribution strategies can contribute strongly to consumer value and create a
competitive advantage - the sale is impossible if you can't get the product to the buyer
Supply chains and the value delivery network:
Value delivery network: made up of company, suppliers, distributors consumers - all improving
the performance of the entire system
Marketing channel - a channel is where you buy it:
- A companies channel decision is directly affected by every other marketing decision:
- Pricing may depend on whether the company works with national discount
chains, high-quality stores, or sells online (eg. dollar stores)
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Whether a company develops or acquires certain new products may depend on
how well those products fit the capabilities of its channel members
Distribution channels often involve long-term commitments:
- Can introduce new products and scrap old ones
- Can quickly change or adjust the price
- Can't just change from dealers to companies stores
- Cant just switch to direct selling from big retail
- Can change campaigns and promo programs
How channels add value:
- Channel members reduce the amount of work for both producer and consumer:
- You don't have to buy a truckload of soap from Unilever, but you do buy one bar
of soap
- Reduces the time, place, and possession gap that separates goods com consumers
- You don't have to go to Oregon to buy a pair of Nike shoes
Channel members reduce the amount of work for both producers and consumers
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Chanel's behavior and organization
- Various levels of marketing channels:
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Examples fo firms using different channels
- Directly: casper, mary kay (cars sell makeup from door to door), boeing
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Indirect marketing channels: tide, coca-cola, doritos
Both: nike (nike.com + nike store(if it is not a franchise)), geico, hilton (can call the hotel
or use site)
More levels means more opportunity but also more complexity
- The more levels the bigger opportunity for physical availability of your product
- More levels mean less control - difficulty increases because of the interconnectivity
between channels
- All levels are connected by several types and flows which need to be managed
Channel behavior
- Channels rely on each other - they have partnered for a common good
- Dealer needs fort to design cars people want and ford needs the dealers to
persuade customers and service the cars
- Channel conflict
- While channel partners work together they often act alone and their own
short-term best interest and disagree on who should do what wor what rewards
- Horizontal conflict: conflict amongst two firms at the same level - ex.
Two Toyota dealers in the same geographic area - one has a more
aggressive sales
- Vertical conflict: same company but there are conflicts between different
levels of the same company - executives of McDonald's vs. stores
without icecream machine
- Achieving channel leadership through vertical marketing systems
- A big issue in conventional channel relationships it the lack of a clear boss to
assign roles and manage conflict
- In convetional channel each business seeks to acimize its own profits even at the
expense of the system as a whole
- A VMS consists of producers wholesalers and retailers acting in a unifies system
either through ownership, contracts or the power they wield
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Types of VMS
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Corporate VMS
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Contractual VMS
- Franchising is the most common example of a contractual vertical marketing
system
- There are three types
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Administered VMS
Horizontal marketing systems
- A horizontal marketing system is a channel arrangement in which two or more companies
at one level join together to follow a new marketing opportunity
- Eg. CVS now at target and Starbucks at Publix
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Multichannel distribution system
- An increasing number of companies have set up multiple marketing channels to best
reach multiple consumer segments
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Disintermediation
- Thanks largely to e-commerce many producers can now sell directly to final buyers
instead of going through intermediaries
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Channel design decisions - marketing channel design calls for
- Settings channel objectives
- Channel objectives should be set based on the targeted levels of customer service
at the lowers cost to properly serve the segment
- Other factors that inf;uece channel objectives are
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Identifying channel alternatives
- What channel members are available to carry out channel work?
- Eg. Dell - sell direct, use sales force to sell to large buyers, sell through
retail, sell to value added resellers
- The more intermediaries the more potential sales but more
compel management and greater chance of conflict for channels
to compete with each other
- Number of marketing intermediaries
- How many channel members use each level
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Responsibilities of the channel members
- Producer and intermediaries have to agree on
- Price policies
- Conditions of sale
- Terriroy rights
- Sepcific services
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Evaluating the alternatives
- Each alternative should be measures against
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- Economic criteria - what is expected in sales, costs and profitability
- Control issues - how much control is one willing to cede
- Adaptability - how well can it flex to changing environmental contions
May need to account for unique contions if designing international distribution channels
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Channel management and the law
- Executives distribution agreements
- For the most part companies are leghally free to develop whatever channel
arrangements suit them - including exclusive distribution arrangements
- Such arrangements can benefit both parties: seller obtains more loyer and
dependable outlets and the dealers obtain a steady source of supply and
stronger sales support
- Some forms of exclusivity can violate the Clayton Act of 1914 - monopolies
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Physical distribution and supply chain management
- Marketing logistics - physical distribution - involves planning, implementing and
controlign the physical flow of goods, services and related information from points of
origin to points of consumption to meet consumer requirements at a profit
Types of logistics
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Major logistics function
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The importance of logistics to marketers
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Integrating logistics management - requires teamwork inside and out
Class 20:
Retailing and wholesaling
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Definitions:
- Retailing includes all the activities in selling products or services directly to final
consumers for their personal nonbusiness use
- Retailers are businesses whose sales come primarily from retailing
- Shopper marketing focuses the entire marketing process on turning shoppers into
buyers as they approach the point of sale, whether during in-store, online or mobile
shopping
The shifting model of retailing
- Shoppers now a days are omnichannel buyers and they make little distinction between
in-store and online shopping
- Omni-channel retailing - creates a seamless cross-channel buying experience that
interhrayes in-store, online, and mobile shopping, creating a single shopping experience.
- Types of retailers: product line
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Department stores have been on downfall
Superstore is a combination of merch and supermarket
Speciality store - one type of product like cosmetics - but you have a lot of it
Category killer is a larger specialty store
Types of retailers: service levels
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Types of retailers: relative prices
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Types of retailers: organizational approach
Omnichannel retailing : blending in-store, mobile and social media channels
- While most of the purchases still happen in stores, retailers are becoming showrooms
Omnichannel retailing : shopping typically includes website, smartphones, mobile apps, social
media and other digital things
- Omnichannel shoppers:
- Research procuts online
- Shop from home, work or stores
- Get ideas and advice on social media
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The idea of omni channel retailing is to integrate channels for a seamless buying
experience
Retailer marketing decisions:
- Retail marketing strategies
-
STP marketing defines the retail brand and guides all decisions
- Successful retailers define their target markets and position themselves strongly - what
they are about is what they are ALL about
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Product decisions: differentiation through product assortment and service mic:
- Differentiation through product assortment
- Amazon - huge choice
- Torrid - targeted choice (plus size)
- Kohl's - exclusive brands (vera wang)
- Loblaws - store brands
- Differentiation through service mix
- Home depot - how-to classes, do it yourself workshops
- Nordstrom - vows to take care of customer no matter what it takes
Product decisions: differentiation through store admosphere
- Stores use scents, music, color, layouts, displays to orchestrate shopping experiences
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Product decisions:differentiation through store atmosphere
- Experiential retailing: increasingly, bricks and mortar stores are creating consumer
experience that cant be duplicated online
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Pricing decisions
- Choose between high markyps and lower volume - bergdof goodman OR low markups
and higher volume - marchalls
- Choose between frequent sales and promotions - old navy OR everyday low pricing family dollar OR not dsicouting - apple store
Promotion decisions
- Use various combinations of the five main promotional tools
- Advertising
- Personal selling
- Sales promotion
- Public relations
- Direct/social media marketing
- Increasingly, retailers are using personalized digital promotions with carefully targeted
message based on:
- Past search behaviors
- Past purchase behaviors
- Environmental factors
- Opt ins
Place decisions - locations should be consistent with brand strategy and retailer positioning
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Central business districts - located in cities and include department and speciality stores,
banks, movie theaters
Shopping centers - are a georup of retail businesses planned, developed, owned and
managed as a unit
Retailing trends and developments
- Seven major trends
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Tighter consumer spending
- Less conspicuous consumption - you dont buy to show off
- Squeezing of the middle class has eld to fewer margin impulse buys
- One conter-move: retailers have boosted their lower cost private labels
- Retailers need to beware of death by discounting
Shortenting retail lifecycles and new retail forms
- Shortening lifecycle
- Years to reach lifecycle maturity: department stores: 100 years to reach
maturity, club stores: 10 years to reach maturity
- NEw forms like pop-up-shops and flash-sales
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Retail convergence - as a consumer you can find anything you want almost anywhere makes it harder for retailers to differentiate
- Eg. a consumer cna buy a toaster at amazon, macys, best buy….
- The rise of mega-retailers
- The biggest retailers have power
- Clorox sells 27% of its goods to wlamart
- Clorox goods account for 0.33% of walmart sales
- Green retailing
- Modern retailers are
- Greening up their stores
- Promoting more environmentally responsible porducts
- Launching programs to help consumers be more responsible
- Working with toher channel members to reduce their environmental
impact
- Global expansion of major retailers - carrefour, walmart, walgreens, mcdonalds
The growing importance of retail technology
Wholesaling - includes all activities involved in selling goods and services to those buying for
resale of business use - selling to someone who will re-sell what you sold them - selling to
retailers, other wholesalers or industries
- Wholesalers buy mostly from producers and sell mostly to - retailers, industrial
consumers and other wholesalers
- Many of the nations argos and most important wholesalers are largely unknown to final
consumers
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What services does a wholesaler provide?
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Types of wholesalers: full-service merchant wholesalers:
- Full service wholesalers provide the full line of services:
- Carrying stock
- Maitaingin sales force
- Offering credit
- Making deliveries
- Providing management assistance
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Types of wholesalers: limited service merchant wholesalers
- Offer fewer services to suppliers and customers
- Perform varied specialized funciotns in the distribution channel
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Types of wholesalers: brokers and agents
- Never take title to goods
- Main function is to facilitate buying and selling (earn commission on sale)
- Generally specialize by product line or customer type
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Types of wholesalers: retailers and manufacturers branches and offices
- Wholesaling operations consducted by sellers or buyers themselves
- Alternative to using independent wholesalers
- Separate branches and offices can be dedicated to sales or purchasing
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Wholesaler marketing decisions:
- Must choose target group - can make decisions based on:
- By size of customer
- By type of customer
- The need for service
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Trends in wholesaling
Class 22
Promotion - Integrated marketing communications
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An integrated marketing program is a comprehensive plan that communicates and delivers value
Promotion goes beyond the making of a good product, pricing it attractively, and making it
available to target consumers, companies must engage consumers and communicate the value
proposition
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What is integrated marketing communication? - the coordinated use of multiple channels
promotion elements that drive awareness and engage customers through clear, consistent and
compelling messages and content about an organization and its products
We need multiple promotional elements because;
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The ideal media and promotion tactic may differ at each stage:
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The promotion mix: has six major tools of it:
- Advertising
- Personal selling
- Public relations
- Direct and digital marketing
- Sales and promotion
- Content marketing
Integration is key: consumers are bombarded with content, with that in mind all points must be
coordinated to ensure clear brand messages and no piece should be in conflict with each other, all
pieces should serve a purpose
Advertising: the mass reach tool
- Advertising is a paid mass-mediated attempt to persuade, this can include; broadcast (TV
and radio), print(magazines and newspapers), online(panners, live videos, search, native
advertising, social media ads), mobile(display, search, geo-targeted ads, geofences ads
and in-app/video ads) and outdoor advertising (billboards, transit shelters, airport
signage, skywriting, trash can ads, street truck and bus ads)
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Pors: can reach masses of geographically disperse buyers at low costs, a good tool for
building product awareness, enables the seller to repeat its messaging many times,
large-scale advertising makes the product seem more popular and successful
- Cons: impersonal and lacks direct persuasiveness, mainly one-way communication that
can be turned out, can be expensive (super bowl)
Personal selling: personal customer interactions by the sales force to encourage customers to
make sales and this builds customer relationships, this includes in-person, online, and telephone
salespeople - are effective but very expensive
Public relations - activities designed to engage the company's public and build good relationships
with them, including publicity stores, sponsorships, events, and earned media coverage ('im
cool'(Ad) vs. 'he's cool'(PR)
- Pros: the message can dramatize the brand and the message can seem more believable
and credible because it comes from a third party
- Con: less control of the message
Direct and digital media: engaging directly with carefully targeted individuals and communities
to obtain an immediate response and build a lasting customer relationship
- Traditional: catalogs email Telephone
- Digital: social media, email, mobile marketing
- It is targeted, immediate and personalized and is designed to be two way
Sales promotion - buy me now
- Sales promotions are short-term incentives to encourage the purchase or sale of a product,
examples include coupons, contests, discounts, premiums, in-store displays,
demonstrations, mobile offers, and events
- Pros: effective at driving short-term sales spikes
- Cons: effects tend to be short-lived and build long-term brand preference
Content marketing - strategic marketing approach focused on creating and distributing valuable,
relevant, and consistent content to attract and retain a clearly defined audience - drive profitable
customer action - a merger of advertising and PR
- Follows the philosophy of the digital age to stop interrupting what people are interested
in and simply be what people are interested in
- Types of content marketing include product placement (paid placement of brad within a
movie or tv show, unskippable implied enforcement), branded events and
experiences(creating brand experiences helps bring the brand to life and acts like a
one-on-one piece or marketing, are staged exclusively for the brand),
sponsorships(brands help fund events to get exposure, generates real returns when the
program surrounds the sponsorship ex. Halftime show sponsor), branded utility(brands
offering something of value to advance the brand position image feeling), influencer
marketing (influencer marketing - sponsored bloggers, celebrities, experts, opinion
leaders, looks like an honest endorsement) and owned media(comprises marketing
channels that a company exercises complete control over; branded website, social media,
original company content)
The communication process: has four steps: sender, medium, message, and receiver
- The issue is that consumers don't just do as they're told
- Receivers aren't only recipients, they are participants
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THEY PARTICIPATE IN DISCOURSE - THE BEST ADVERTISING IS
ALWAYS INTERACTIVE
The real communications model
A lot can go wrong - You may encode your message poorly
- The audience may misinterpret your message
- The medium may be wrong and the intended receiver never gets the messaging
- Unplanned noise can distort or weaken the message
- The consumer may have a response other than the one intended - not buying it
- The product may be poor and communication just makes more people aware of it
and try it
Managing communications
- Identify a target audience
- Determine the communication objectives
- Design the message
- Choose the media to send a message
- Collect feedback
Designing the message
- Determine the message content
- Figure out message structure and format
Choosing communication channels
- Personal: two or more people communicate directly with each other
- Salespeople
- Online chats
- Brand ambassador or opinion leader
- Word of mouth
- Nonpersonal - media that carry messages without personal contact
- Broadcast
- Print
- Online display
- Outdoor
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Choosing promotional mix strategy - push vs. pull
Budgeting communications
Class 23
Promotion - Advertising and PR
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Advertising is a paid mass-mediated attempt to persuade
- If not paid its word of mouth or brand advocacy, advertising needs a sponsor or client
- If it's not scalable its one on one selling
- You want a response - a sale, a like, an improvement in awareness, an improved
perception
An ad is a single piece of sponsored communication - an "execution" or spot (broadcast)
An advertising campaign is a series of ads that often across several media, are tied together
strategically and elocutionary to deliver a brand message on a singular theme
What cant advertising do? What cant it do? What does it need to do?
- Advertising is the most visible form of marketing but it's only one - it can't overcome the other Ps
- a bad product, pricing strategy, or promotion
- Advertising cant overcome bad distribution - advertising can drive demand and put the brand on
the consideration set - but if you go to the store and can't find the product it does no good, a
person will buy the competitor
- Advertising cant overcome bad pricing: if you have a large provide disadvantage or if the price
doesn't go with the products image it can be harmful to sales
What cant it do?
- Create awareness and provide information
- Highlight product features
- Showcase a competitive advantage
- Introduce new variant
- Stimulate primary demand by highlighting an unmet need
- Create trade interest for a brand or product
- A retailer is more likely to accept a new brand and provide shelf placement if there's
evidence that they are spending to generate demand
- Trigger sale
- Most advertising is not made to trigger immediate sales - promotion-oriented advertising
creates a sense of urgency - anything with limited time
- Help shape and brand image
- Advertising's
the greatest strength is its ability to help shape and mold brand perceptions
- How do you want your audience to perceive your brand?
- What kind of personality do you want your brand to exude?
- What kind of user imagery are you trying to impart?
- These brand images can be the company's most valuable assets
- Apple brand image example - a different type of technology - simple, well designed, and
intuitive - to power the creative class
What does it need to do?
- Get noticed
- This is very hard - we see thousands of brand messages a day - only two stick
- It's hard to stand apart from the clutter - if you don't stand out you become clutter advertisers have to try and find new media
- Main causes:
- The media plan wasn't strong enough - consumers didn't see it
- Creative wasn't breakthrough enough - consumers didn't notice it or blocked it
- Be Remembered
- This is also hard
- Even if you manage a breakthrough there is no guarantee you will be remembered when
it comes to purchase
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Main causes:
- Media plan delivers the message to the worn person (not relevant)
- The brand name is forgotten (poor branding in the execution)
- Massage not relevant to the category or consumer need (creative for creative's
sake)
- Media plan crafted for efficiency not impact (lack 'big' media)
Superbowl adds
Building strong advertising
- Marketers must tailor their advertising to its objectives and their brand, main decisions of an
advertiser:
- Who is your target?
- How does the messaging strategy change for each target for dog food
- Must decide if they want to go broad or go narrow in its target
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What is your message?
- Your messaging strategy starts with setting objectives
- An advertising objective is a specific communication task to be
accomplished with a specific target audience during a specific time
- Examples
- To showcase for Clorox bleach to drive a 5% increase in
purchases
- To introduce new snickers peanut butter bears and drive
awareness to 15%
- To encourage McDonald's customers to come to Wendy's
and experience the difference that fresh burgers make
- To ensure your message is…
- Meaningful - relevant to consumer needs
- Believable
- Distinctive
How are we delivering it?
- Advertising is flexible - there is no 'one' way
- Advertising can sell a benefit or an attitude
- Complex or simple narrative
- Can appeal to the head or heart
- Han is highly visual or relies on words
- Ensure your message is
- Relevant - designed to solve a consumer need not a marketing problem
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- Unique - in ht brand's style - done with some attention-getting originality
- On-brand - consistent with brand positioning and brand personality
Where/when are we delivering the id?
- Where to place the message has become difficult in today's fragmented media
environment
- The major steps in advertising media selection are:
- Determining reach, frequency impact, and engagement
- Choosing among major media types
- Selecting specific media vehicles
- Choosing media timing
- Media planning terms
- Reach - the measure of the percentage of people in the target market who
are exposed to the ad campaign during a given period
- Frequency - a measure of how many times the average person in the
target market is exposed to the message
- Impact - is the qualitative value of the message exposure through a given
medium
- Engagement is a measure of things such as ratings, readership,
listenership, clickthrough rates
- Where - media vehicles
- Select specific media vehicles must consider the mediums - impact,
effectiveness, and cost
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When - deciding on media timing the planner must consider
- Seasonality
- Time of day
- Real-time response: connects the brand to what is going on in real life
- The light went out at SuperBowl and oreo made an ad saying
that you can still dunk in the dark - tide ad: if it's clean its a tide
ad (everything is a tide ad)
How much
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Where and when: media budgets
- Budgets will dictate how much exposure your brand will have
- A media budget is usually one of the largest marketing expenses
- Generally, more is better
- If you still want a positive return on advertising investment - the net return on
advertising investment divided by the cost of the advertising investment
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Factors that may dictate increases or decreases in budget
- Product life cycle - overinvest early in the cycle
- Competition - if competitors increase their spending you may need to as well
- Market share goals - aggressive goals call for aggressive budgets
Public relations
- P.R. involves building good relations with the company's various publics by:
- Obtaining favorable publicity
- Building up a good corporate image
- Handling or heading off unfavorable rumors, stories, and events
- Types of P.R.
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Product publicity: interviews and features on 'news and talk shows - have heightened credibility
because it feels like editorial not advertising
The role and impact of PR
- Lower cost than advertising
- Don't pay for air time - pay for staff time to develop and circulate information
and manage events
- Risker than advertising since coverage is not guaranteed and is dependent on the
content - no guarantee
- Stronger impact on public awareness than advertising - 3rd party credibility - has
the power to engage consumers and make them part of the brand story
The PR tool kit
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The power of P.R. - a simple statue with a big massage backed by an imaginative PR
campaign, has had a larger and more lasting impact than even the most memorable super
bowl ad - probably at a lower cost - fearless girl statue by wall street
Class 24
Promotion: personal selling and sale promotion
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Role of the sales force - for companies who sell products
- For companies selling business products, sales force people to work directly with
customers and are often the only direct contact with the company
- For consumer product companies the sales force works behind the scenes dealing with
wholesalers and retailers to obtain their support and help them sell products
Personal selling involves interpersonal contact
Personal selling involves interactions between salespeople and individual consumers
- Face-to-face communication
- Telephone communication
- Video or web conferencing
Personal selling allows for dialogue - often more effective than advertising in complex selling
situations - allows for firms to probe and learn about customer needs and adjust the marketing
offer
The nature of personal selling - salespeople are the effective link between the company and its
consumers to produce customer value and company profit by
- Representing the company to customers
- Representing the customers to the company
- Working closely with marketing
Managing the sales force
- The major steps in managing a motivated, effective sales force
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Designing the sales force strategy and structure
Restructuring and selecting salespeople
- Careful selection and training increases sales performance - poor selection increases recruiting
and training costs and leads to a loss in sales as well as disrupts customer relationships
- Four key traits of successful salespeople
- Intrinsic motivation
- A disciplined work style
- The ability to close
- The ability to build relationships with customers
- Training salespeople
- Goals - customer knowledge, selling process, knowledge of products company, and
competitors
- Many companies are adding e-learning to their programs
- Test based
- Internet-based
- Simulations that recreate the dynamics of real-life sales calls
- On-demand training
- Compensating salespeople
- A good compensation plan motivates and directs activity - can be fixed, variable,
expense, or fringe benefits - ratios depend on companies objectives
- Supervising salespeople
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The goal of supervision is to help them work smart by doing the right things in the right
ways
- Tools include: call plans (month, week, year) - show which customers and prospects to
call on and which activities to carry out
- Time and duty analysis to help with time management
Supervising and motivating salespeople
- Sales morale and performance can be increased through
- Organizational climate (do they feel valued)
- Sales quotas (how much they should be selling)
- Positive incentives - contests awards and meetings in fun places
- Evaluating salespeople:
- The main information source are sales reports, call reports and expense reports,
customers surveys, fellow salespeople, and personal observation
Social selling: online, mobile, and social media tools
- Social selling is the use of mobile online and social media to engage customers, build
stronger customer relationships and augment sales performance
- They can make salespeople more productive and effective
- Common uses of digital salespeople:
- Provide more product info
- Reach out o customers or send follow-ups
- Entering blogs and discussions to reach their prospects sooner
The personal selling process
Prospecting and qualifying - identify qualified potential customers through referrals from other
customers, suppliers, dealers, or the internet
Pre-approach - the process of learning as much as possible about a prospect including their needs,
who is involved in the buying, and the characteristics or styles of the buyers
The salesperson must then apply the research gathered to develop a customer strategy
Objectives
- Qualify the prospect
- Gather info
- Make an immediate sale?
Ways to pre approach
- Personal visit
- Phone call
- Letter or email
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Approach - the process where the salesperson meets and greets the buyer and gets the relationship
off to a good start involves the salesperson's appearance, opening lines, and remarks
Presentation and demonstration - tell the value story to the buyer showing how the company
offers solves the customer's problems, the customer solution approach fits better with today's
relationship marketing focus than does a hard sell or glad-handing approach - the goal is to show
how the company's products and services fit the customer's needs
Handling objections - the process where salespeople resolve problems that are logical,
psychological, or unspoken
The handling objections from buyers, salespeople should:
- Be positive
- Seek hidden objections
- Ask the buyer to clarify any objections
- Take objections as opportunities to provide more info
- Turn objections into reasons for buying
Closing - is the process where salespeople should recognize signals from the buyer - including
actions, comments, and questions to ask them for and finalize a sale
- Ways to close:
- Ask for the order
- Review points of agreement
- Offer to help write up the order
- Ask if the buyer wants this model or another one
- Incentivize - lower price or higher quantity
- Note that the buyer will lose out if the order is not placed now
Follow up:
- The last step is which the salesperson follows up after the same to ensure satisfaction
- Make sure the customer received the proper installation, instruction, and service
- Reveal any problems
- Ensure the buyer of the salesperson's ongoing interest
Personal selling is not just transactional - it is about relationships: the long-term goal of personal
selling is to develop a mutually profitable relationship - companies want their salespeople to sell
value
- Demonstrate and deliver superior customer value and capture return on that value
Sales promotions
- Are short-term incentives to encourage a purchase NOW accounts for 20% of total
marketing spending in the USA
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Consumer promotions
- Sales promotions are short-term incentives to make a sale
- Encourages immediate purchase or sale of a product or service
- Advertising offers reasons to buy a product or service
- Sales promotion offers reasons to buy NOW
- Why sales promotion has been growing - product managers are under pressure to increase
sales, companies face more competition, competing brands offer less differentiation,
advertising efficiency has declined due to rising costs, clutter, and legal constraints,
consumers have become deal oriented
Key decisions when designing a sales promotion program
- Size of incentive
- Conditions for participating
- Promoting and distributing details
- How long should the program run for
- What metrics will we use to evaluate the program?
Categories of promotions
Consumer promotions
- Coupons and rebates
- Price packs and bonus packs
- Sampling
- Premiums
- Advertising specialties
- Contests and sweepstakes (games where consumers can win something - require an entry
by consumers, are random draws)
- Point of purchase marketing
- Include displays and demonstrations that take place at the point of sale - designed
as a last reminder to buy (displays, shelf ads, floor ads, cart ads)
Trade promotions - push tactics
- Get prime cut of limited shelf space - manufacturers incentivize retailers to help push
their products through secondary displays, eye-level shelf placement, and sales
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Tools include - discounts, allowance, free goods after someone buys a certain
quantity, and specialty advertising items for retailers to give away
Business promotions and sales force promotions
- Companies use conventions and trade shows not find new sales leads by showcasing new
products and meeting potential customers - elaborate booths
Salesforce contests - close the deal
- Contests can provide extra motivation to the company's most competitive people
- Can be used to encourage new accounts, revive old accounts, and upsell to
improve profitability.
Class 25
Promotion - direct, online, social media, and mobile marketing
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What are direct and digital marketing?
- Direct and digital marketing involves engaging directly with carefully targeted individual
consumers and customer communities to both obtain an immediate response and build
lasting customer relationships
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Many of the biggest brands have been built entirely on direct marketing
- While most brands use digital and direct as a part of the promotion mix for some
companies it's a complete model for doing business
- Amazon
- Netflix
- Expedia
- Many startups have achieved success selling directly to consumers - allowing them to
charge lower prices (with no retail markup) and direct relationships with consumers
- Casper
- Dollar shave club
- Peloton
Digital marketing has grown by leaps and bounds
- Digital marketing makes up half of all advertising spending with growth rates averaging
20% annually for the past decade
- Expected to be ⅔ of all spending in 2023
- Traditional media has remained flat - digital growth has been incremental
advertising spending
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There are benefits of direct and digital marketing to both buyers and sellers
- For Buyers
- Ready access to many products
- Access to comparative info about companies, products, and competitors
- interactive, immediate, convenient
- Sense of brand engagement community
- For seller
- Tool to build customer relationships
- Low-cost, efficient fast alternative
- Flexible
- Access to buyers not reachable through other channels
Issues with direct and digital marketing
- Irritation - can seem intrusive when the consumer has not opted in
- Unfairness - impulsive or less sophisticated buyers can be fooled
- Deception - includes heat merchants who design mailers and write copy designed
to mislead
- Fraud - eg. identity theft
- Consumer privacy - do marketers have too much information? Can they use it to
take unfair advantage?
Traditional direct marketing
- Direct mail
- Direct mail marketing involves an offer announcement, reminder, or item
to a person at a particular address
- Personalized
- Easy to measure results
- Costs more than mass media
- Provides better results than mass media
- Catalog
- Printed or web-based catalogs
- Firms can create slimmed down a tailored catalogs with more
relevant offers
- Web catalogs can be produced for a lower price, lower carbon
footprint, and offer an unlimited amount of merch - but they
need to be promoted to get traffic
- Phone
- Telemarketing involves using the telephone to sell directly to consumer
and business customers
- Inbound telephone marketing uses toll-free numbers to receive orders
from television and print ads, direct mail, and catalogs
- Outbound telephone marketing sells directly to consumers
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DRTV - direct response television
- 60 to 120-second advertisements that describe products or give
customers a toll-free number or website for ordering
- 30-second infomercials such as home shopping channels
- Many see them as low-brow pitches that could harm the brand but it is
eBay to track returns than most other promo vehicles
- Kiosk
- Many companies are replacing human service people with information
and ordering digital screens
- Found in self-service hotels, airline check-ins, unmanned product
and information booths in malls, stores
Online direct marketing
- Online marketing is marketing via the internet using company websites, online
ads, promotions, email, live video, blogs
- Websites: marketing websites engage consumers to move them closer to a direct
purchase or another marketing outcome
- Websites: branded community websites present brand content that engages
consumers and creates a consumer community around a brand
- Search - ads that appear on search engines that are triggered by a users search
- The audience is self qualifies - enjoy 1.91% click though
- Advertisers pay for clicks
- To the top of page placement, marketers bid on certain keywords via a
continuous online auction
- Company blogs are online journals where companies post their thought and other
content - usually related to narrowly defined topics
- Email marketing involves sending highly targeted and personalized
relationship-building marketing messages via email
- Spam is unsolicited, unwanted commercial email messages
- Online advertising - appears while consumers are browsing online and includes
display das, search-related ads, online classifieds, and other forms
- It can gain immediate response
- Digital banner types
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Online advertising and retargeting - the act of serving consumers digital ads that are
directly based on past online content clicked on
- Retargeting actress media - consumer buys a beer in a bar you offer them another beer
offer online
Online advertising - online video
- Is clickable promotional content that plays before, during, or after streaming content this involves posting digital video content on brand websites or social media sites such as
youtube or Facebook
Omnichannel marketing - creates a seamless cross-channel buying experience that integrates
in-store, online, and mobile shopping- creates a single sipping experience
Social media marketing - is a social media action you take that is unpaid
- Posting about your blogs
- Sharing info with your followers
- Commenting in social media groups
Social media advertising is any action you take on social media that is paid
- Booted posts
- Full on ads
- Like campaigns
- Social media marketing advantages
- Targeted and personal
- Interactive
- Immediate and timely
- Cost-effective
- Engagement and social sharing capability
- eg . Wendys twitter
- Social media warnings
- User controlled
- Brands need to earn the right to be there
- Even a seemingly harmless social media campaign can backfire
Mobile marketing - delivers messages, promotions, and other content to the go consumers
through mobile phones, smartphones, tablets, and other mobile devices
Viral marketing - is the digital version or word of mouth marketing - videos, ads, and other
content that is so infectious that consumers seek it out or pass it along
- Gouging viral is an outcome, not a strategy
- To go viral is to create amazing content - worthy of being shared
- Eg. KFC painting - 5 spices and 6 guys named herb
- The key to going viral is great content - Provides genuine utility
- Valuable info
- Interesting curations
- Entertainment or aesthetic value
Online marketing is a critical component of most modern content marketing efforts
Class 26
Global Marketing
International Product and Service Marketing
Standardization or customization: most brands when they enter new markets want to take their
product as is - they were successful enough to now consider an international expansion
- There are many advantages to keeping the offering standardized:
- Consistent worldwide image
- Significant lower product design and manufacturing costs
- Savings in marketing costs
- But people around the world have different tastes, and speak different languages, packaging and
label laws may be different and customs and values differ
- Key decisions:
- Which products and or business practices should we import
- What do we need to adapt to maximize chances of success
- Global marketing mantra: as similar as possible and as different as necessary
- Loreal is an example of a global marketer - the market leader - good manager with cultural
backgrounds Global marketing overview
- What makes a firm global?
- Operates in more than one country
- Gains marketing, production, R&D, and financial advantages not available to purely
domestic competitors
- Sees the world as one market
- Before going international firms must study the global marketing environment
- The international trade system
- Key terms:
- Tariffs - taxes on certain imported products designed to raise revenue or
protect domestic firms
- Quotas - are limits on the number of imports a country will accept in
certain product categories to conserve foreign exchange and protect
domestic industry and employment
- Exchange controls - are limits on the amount of foreign exchange and the
exchange rate against other currencies
- Non Tariff trade barriers - biases against bids or restrictive product
standards that go against American product features
- GATT: general agreement on tariffs and trade: designed to promote world trade
and reduces tariffs and other international trade barriers
- WTO: World trade organization enforces GATT rules, mediates disputes, and
imposes trade sanctions
- Regional free trade zones:
- EU - European Union
- North American free trade agreement NAFTA - trade over 1.3T annually
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Economic environment
- Industrial structural structures
- Industrial economies: US, Japan, Western Europe
- Emerging economics: BRICS (Brazil, Russia, India, China), MENA
- Subsistence economies: sub Saharan Africa
- Income distribution
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Targeting the bottom of the economic pyramid - low pricing, worth scarce
spending, (customer-driven) product innovation, meeting a consumer need
- More companies are targeting the bottom of the economic pyramid
- Lower absolute price points - smaller sizes
- Lower absolute price points - fewer features
- Lower absolute price points - cheaper packaging
- Hyperlocal distribution to offset lack of transit options
Political legal environment
- Countries' attitude toward international buying - some make operating a
challenge: others offer incentives
- Government bureaucracy - lots of government red tape and corruption
that follows
- Political instability - cause hyperinflation and ever-changing regulations
- Monetary issues could also be a macro factor - does the country use a blocked
currency (one whose removal is restricted) - is there enough currency to get
physical payment or might I need to resort to barter
Cultural environment
- The impact of culture on marketing
- Sellers must understand the different ways consumers in different
countries use products, cultural norms, religious norms, business norms
- The impact of marketing on culture
- The Americanization of global culture is attributed to America's
dominance in popular culture and the American brands in
- Anuythere is becoming more like everywhere
Key decisions in international marketing, five key decisions:
- Whether to go global and which markets to enter
- Deciding whether to go global
- A business can thrive by staying in its home market
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No language issues - no currency issues - no legal uncertainties no need to tailor its product to meet different expectations
Why go global? Growth opportunities. Provided the company can:
- Offer competitively attractive products
- Adapt to other countries' business cultures and practices
- Find managers with the necessary international experience
Deciding which markets to enter: don't spread yourself too thin by expanding
beyond your capabilities - evaluate the potential new country on several factors
How to enter the market
- Exporting - direct or indirect?
- Entering foreign markets by selling goods produced in the company's
home country often with little modification
- Indirect exporting - dealing through independent international
marketing intermediaries who bring know-how and networks to
the table
- Direct exporting - handling your exports, taking on all the risk,
and getting all the reward
- Joint venturing - licensing, contract manufacturing, management contracting,
joint ownership
- Entering foreign markets by joining with foreign companies to produce
or market a product
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Direct investment - assembly facilities, manufacturing facilities
- Entering a foreign market by developing foreign-based assembly or
manufacturing facilities
- While this involves more risk and capital it may:
- Lower costs if the cost to produce is cheaper - labor, raw
materials
- Improve the firm's image in the host country since it brings jobs
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Allow the company to better maintain control over the brand,
pricing, distribution, operations, and manufacturing
Going down this list the amount of commitment, risk, control, and product potential
increases
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The global marketing program
- Standardized global marketing - the global marketing strategy that uses the same
marketing strategy and mic in all the company's international markets
- Cost-effective
- Consumer needs around the world are becoming more standardized
- Consistency of marketing leads to greater brand power
- Adapted global marketing - a global marketing strategy that adjusts the marketing
strategy and mixes elements to each international target market, which creates
more costs but hopefully produces a larger market share and return
- Marketing is more engaging when tailored to the unique needs of each
target group
- Despite globalization, consumers have widely varied cultural
backgrounds leading to different needs and want, shopping patterns, and
spending power
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Global Marketing: Price
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Usually, the foreign price is higher than the domestic price due to transportation,
tariffs, importer margin, and retailer wholesale markups
- Internet is making this practice harder and is leasing to more
standardized pricing
- To avoid pricing themselves out of the market companies make a smaller or
simpler version that can be sold at lower prices
Global marketing: distribution channels
- Global distributions must take a whole-channel view to effectively design and
manage an entire global value delivery network
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Other key factors:
- Traditional vs. modern trade
- Lack of an efficient distribution network
- Poor transportation - unaffordable or inefficient
Deciding on the global marketing program - promo
Global marketing: brand name
- Beware the unintended or hidden meanings when your brand name gets translated into
other languages
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The global marketing organization