1ZV20 – Marketing Perspectives on prod. Inn. Keywords → Bold Marketing and Consumer Behavior – Lecture Week 1 Product Innovation → stage gate model Marketing Perspective in process 1. STP 2. 4P’s: Price, Product, Place, Promotion 3. Marketing Plan Marketing History 1. Production Era → bulk production 2. Sales Era → aggressive sales method 3. Customer Era → customer segments (cheaper to retain customers rather obtain) 4. Societal Theoretical Approach to Consumer Behavior – Lecture Week 1 Approach: Economic Man Maximize Utility – Microeconomics Foundation Approach: Psycho-Dynamic (indirect response) Pleasure (Id.) vs. Reality (super ego.) [morality] – Psychology, Biology Marketing adverts try to activate this subconscious idea Approach: Behavior (direct response) Stimulus Response Psychology – Sound, Smell, etc. Approach : Cognitive Intrapersonal Condition Stimulus → Organism (Emotions, Motives, Attitudes) → reaction (hopefully buying behavior) Approach: Humanistic Stress on personal emotions, volition, self-actualization Consumer Decision Model Sentient Analysis Pattern analysis of behavior amongst millions of people to predict → e.g. gender, religion, political preference, pregnancy probability, etc. Homophily → tendency for people to associate with common interests. Segmentation and Involvement – Week 2 Segmentation → similar needs, but also similar response to marketing action (stimuli) Create more value More willing to keep buying (retaining customers) Types: Personal Profile Geographical + Demographic Shape the products based on different locations, and preferences by location Psychographic Psychological + Sociocultural; Outdoor spots store, e.g. Behavioral Use-related, Benefit People seek different things from a product, e.g. Gingerbread brand creating different products according to when they want people to eat them. First step in STP process: segmentation, targeting, positioning Targeting → Not differentiating same product for everyone Segmentation: marketing mix for each customer segment Niche marketing focuses on only 1 segment Customization: marketing mix for only 1 customer Positioning: How the customer views the brand in the market; expensive, high quality, luxury, etc. Built with MDS Brand equity: differential preference based on its brand Energized differentiation → brand is considered dynamic, innovative Cadillac vs Infiniti (Relevant Stature vs. Differexsntiation) Brands that scored low on RS, have better market chance by emphasizing segment typicality. Whereas brands with high RS, but they can differentiate from their design, standout as a brand from the segment. Study shows: Brands with low RS, benefit most by producing products typical for segment but not typical for brand, therefore straying away from the brand average. Brands with high RS, benefit most by producing products which are not typical for the segment, but which reflect the brand. (segment average vs brand average) Involvement: Internal vs External search Product factor, situational factor, personal factor Enduring Involvement → continuous interest Situational Involvement → only interested during specific time High → extensive research Low → costumer does not care Instrumental Importance influences Involvement Attributes Cost → e.g. higher cost, higher perceived financial risk Dependency Differentiation → if products are too alike, risk of purchasing wrong product Meaning Situation → where the customer is when consuming the product (private vs public) Elaboration Likelihood Model for Advertising Involvement can be a. Peripherical Cues (Low) i. Non thoughtful process information ii. Positive moods and feelings → perfume commercials that display a likeable character (actors) but no product information b. Central Cues (High) i. Thoughtful process information ii. Product information, argument quality → displayed attributes of a specific product High vs. Low For low involvement purchases, product does not necessarily need to be the best one. However, high involvement products require a bigger loyalty, therefore the central cues need to be well established. Consumer Learning – Lecture Week 3 Marketing stimulus → customer retention (in the model) Learning Breakdown Behavior Learning Classical Conditioning Operant Conditioning Cognitive Learning Classical Conditioning (Pavlov) An unconditional stimulus triggers an unconditional response. If paired with a conditional stimulus, and repeated, the conditional stimulus may lead to a conditional response. E.g. Using a song (unconditional stimulus) that brings sweet memories (unconditional response) in a commercial of a brand (conditional stimulus) to bring the same memories (conditional response). Stimulus Generalization How to use the brands family name and response associated with it, to all products of the same brand Stimulus Discrimination One brand wants the stimulus (positioning) from one product to not get mixed with the positioning of another, and therefore, there is differentiation between products. Operant Conditioning (Skinner) Behavior is learned based on rewards and punishment from previous responses *giving something for free will actually create a negative reinforcement because (taking something away that people don’t like ?) Examples of Negative Reinforcement → minimum amount for free delivery, no ads on premium account, insurance Examples of Scheduled Reinforcement Continuous: 10% of all product with loyalty card Systematic: 10% after 5 products Random: 10% at random Cognitive Learning Interpret information → create new knowledge (memory of associations, experiences) Where to place stimulus within the memory associations that I have Branding map → what different tiers of customers think about a brand → how to strengthen such attributes Memory and perceptions Learning → process of acquiring information Memory → storying information Involvement helps with turning stimulus into long term memory. Gestalt Psychology → how information is perceived Figure – ground(the world around you) relationships, what you see vs. what you now Grouping (memorizing phone number) Closure → stimulate involvement by having users ‘play’ with the product, or VR goggles from Nespresso for coffee farm. Selective Attention People only pay attention to the things they want to pay attention to → gorilla walking past in the video Mere Exposure Effect Turning people which are neutral to a certain stimulus to liking the stimulus by extended repetitive exposure Liking a new song after hearing it many times Noticeable Difference → how different must one stimulus be to be immediately noticed as standing out Diminishing the size of packages slowly and slowly so that customers don’t notice it. Delaying developments of newer features to make sure customers don’t notice negative changes in a product, and only notice the positive. Coca-Cola case study New coke formula Pissed old customer Failed to segment market Attitudes and Behavior – Week 4 (decisional variables in the model → beliefs, attitudes, intentions) Memory + Information search | Involvement → Awareness Set (products that you already know) Evoked (positive) Inert (neutral) Inept (negative) Attitude towards a product will influence the awareness set → predisposition behavior towards an objects, negative or positive Expectancy value model → attitude towards an action or product is the result of the multiplication of attitude vs. important (e.g. buying a house, all the attributes vs their importance) Likert Scale vs Semantic Differential How to determine which attributes are important? → modal salient beliefs (set of beliefs important to a population) How to change attitude Change beliefs Add new attributes Increase importance of strong attributes Decrease importance of weak attributes Change beliefs about competitors Cognitive vs. Attitude component of attitudes Cognitive → actual features, something perceived Attitude → how do you feel, emotional Conative → behavior nature, to what extend do I consider acting Theory of Reasoned Action (TRA) Attitude towards behavior Behavior leads to outcome | Evaluation of outcome Subjective Norm Belief that others think I should perform in specific way | motivation to comply + Theory of Planned Behavior Perceived Behavior Control Can you perform the intention you would want? | Importance of factors contributing to such behavior E.g. : You would like to buy a Porsche because the attitude towards the car is positive, and people tell you that the car is good, youll be perceived in a certain way, but you cannot afford one so you cannot perform the intention, because affording it is very important. Table PC Case Study Network effects iPad was more valuable when there were apps that could be used in the iPad, so then when people starting using the iPad, the value increased Choices rules and Strategies – Week 4 Criterion Location Size Cost View Pool A 5 3 5 1 3 B 3 4 5 3 3 C 4 5 5 1 4 D 4 4 2 4 3 E 2 3 5 1 5 Importance 35 25 20 15 5 Compensatory (House C) Summation of addition of attributes and their importance Conjunctive (House B or D) Select (usually) the first alternative that passes minimum acceptance for each criterion Disjunctive (all houses except D) → all houses must have at least one feature which is 5 Select (usually) the first alternative that passes a standard level for each criterion Lexicographic (A?) Rank from most to least important, pick the best of each level Elimination by aspects (B) Establish minimum cutoffs for each criterion and eliminate alternatives that do not match minimum These rules can be useful in segmentation of the market. Low Involvement Strategies Thought Based (Affective) Brand Loyalty (loyalty point that you may lose if switching) Habit → hard to switch brands or products (android vs iphone) Feeling Based (Cognitive) e.g. Customer wearing piece of clothing in trying room being attractive or not AriBnb → attractiveness in the owners of the listings (too high is good, but too low is also good) Impulse Buying Means End Chain – Week 5 (short comings of the multi attribude models) Bridge between beliefs and expectations from outcomes from products that they might buy. Customers do not only think about attributes → they think about an idea, and benefits Bundle of Attributes → features of the product, specification (price, sensor size, capabilities) Bundle of Benefits → take better photos, run better, protect ankle Value Satisfiers → be fit, look good, impress others From attributes to values there may be a positive or a negative chain of effects: Flavored potato chip → high calories → gain weight → not attractive to others → low self esteem Flavored potato chip → bbq flavor → tastes good → guests enjoy themselves more → social regonition However, some attributes do not get noticed by customers, and hence do not bring any value. Therefore, marketers worry about whether promoting such attributes is even worth it. Steve Jobs Case Study → adding value to the customers by offering different fonts and amount of menus in the computer. Olay case study → change how customers have access to their product during a google search : dark spots under eyes Product was skipping the means-end chain, and it changed that by showing customers how this problem is created, and solutions. Diffusions of Innovation and lead users – Week 5 Adoption vs. Diffusion Adoption → focuses on individual Relative advantage Observability Complexity Compatibility Triability External variables → attitude towards use → intention to use → use Diffusion → focus on market → early adaptors, early majority etc. market to each adaptor differently, using different techniques and communication channels Early Adapters vs Late Adapters comparison Early adapters tend to use less of the product in the beginning, but increase their consumption with time, due to low functionality in the beginning, or lack of network. Late adapters, when they join, tend to have high usage (high buzz, more functionality and utility), but soon it drops due to expectations not being matched. Early adapters have more realistic expectations, stronger spirit to persevere against challenges. Fewer Users Close Relationships Representative Atypical Co Development Lead Users Crowdsourcing Extreme Users Many Users Loose Links Leading (B2C) Co-Development → L’Oreal → specific labs to perform ethnographic research to determine special needs from certain customers → customers who wash their heads with bowl Lead user → users who come up with an idea Crowdsourcing → users can vote for new ideas in the product, voice opinions Extreme users → F1 innovations which are very niche and specific that will later make their way to more general markets Lead users → seed users: identify a small number of key individuals which will maximize the network, the reach User Generated Product Design – Week 6 Crowdsourcing design → lays flavor potato chips Dutch Innovation perception if designed by users → higher when designed by users, but expertise is lower (only for low complexity products) Numbers argument → more people involved, more creative ideas Diversity argument → more diversity, more creative User argument → professional misinterpret what users want → value Constraint argument → users don’t have to abide by company constraints Customer participation can happen at various parts of the MPD process model, even when the product is already on the market, e.g. Ikea. High design participation leads to higher identification → product evaluation is higher (I designed it myself effect) High realization (participation) → Affective commitment → product evaluation (Ikea effect) Customized marketing → Nike ID Self -expressed design → self identity expressed → motivation to perform well → enhanced performance Customer identity case study → Pen design When customers design a product that reflect their “self” they identify themselves with it more, and used it more → enhanced performance Option of customization Differs in the west vs. east → holistic (display the entire product with all the options) vs attribute options, attributes get added one by one (Subway offering feature by feature in customization) Choice Heuristics – Week 6 (situational influences → choices | in the model) Availability Heuristics Question → memory → retrieve items → asses ease of recall (easiest item) → evaluation Availability (memory) → causes bias in the people which put too much emphasis on recent events In marketing → make your brand very familiar and visual (recognizable) → brand quity BMW case study Difficulty in coming up with 1 then 10 positive and negative reasons why to drive or not to drive a BMW. When coming up with positive reasons, going from 1 reason to 10 reasons, the evaluation decreases, since users perceive it as being difficult to come up with positive aspects. However, when looking for negative reasons, going from 1 to 10, is perceived a negative, since users perceive it as being hard to find negative reasons. Representative Heuristics Question → specific features → memory of features of something that you know (which has those features) → similar category of question → evaluation Marketing makes use of this by making similar packaging of B brands to A brands. Anchor – and – Adjustment When making difficult judgement we anchor ourselves to something we are familiar with. Happens when there is a question such as is the population of Bangladesh more than 20 million, and if you do not know the answer you will anchor yourself at 20 million, and only adjust your evaluation slightly. Marketing → discounts for 5 for 3, quantity limits, suggestive selling (buy 8 and save x), expansion (multi use of a prouct) Setting a limit on how much people can purchase will actually anchor the consumer into buying that amount → cans of soup.
