The 4 P’s
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Product – creating value.
Price – capturing value.
Place – delivering value.
Promotion – communicating value.
Marketing Eras
1) Production-Oriented Era.
The 20th century idea that good products would sell themselves. Producers were concerned
with innovation, not satisfying individual consumers’ needs.
2) Sales-Oriented Era.
From 1920-1950 where the Great Depression and WWII stunted consumer activity,
businesses were overproducing. They were then forced to depend on personal selling and
advertising.
3) Market-Oriented Era.
After WWII consumer activity skyrocketed and businesses were able to focus on what
consumers wanted and needed before they created products. Marketing was discovered in this
era.
4) Value-Based Marketing Era.
The current era of marketing that focuses on creating and presenting more value to the
customer than other firms.
Value cocreating – allows customers to directly tell firms what they want and need.
Relational orientation – think about customers in terms of relationships rather than
transactions.
CRM – business philosophy and set of strategies, programs, and systems that focus on
identifying and building loyalty among the firm’s most valued customers.
Sustainable Competitive Advantage
Four strategies:
1. Customer excellence – retaining loyal customers and excellent customer service.
2. Operational excellence – efficient operations and excellent supply chain and HR
management.
3. Product excellence – products with high perceived value and effective branding and
positioning.
4. Locational excellence – having a good physical location and Internet presence.
The Marketing Plan
Phase 1 – Planning
Step 1. Mission statement.
Step 2. Situation analysis.
Phase 2 – Implementation
Step 3. Evaluate opportunities using market segmentation, targeting and positioning.
Step 4. Implement marketing mix and allocate resources using the four P’s.
Phase 3 – Control
Step 5. Evaluate performance using marketing metrics.
SBU (strategic business unit) – a division of the firm itself that can be managed or operated
somewhat independently from other divisions and may have a different mission or objective.
Boston Consulting Group Matrix
BCG is one of the most popular portfolio analysis methods. It’s the relationship between the
relative market share and the market growth rate.
Stars:
● High relative market share + High market growth rate.
● Require a heavy resource investment in such things as promotions and new
production facilities to fuel their rapid growth.
● As their market growth slows, stars will migrate from heavy users of resources to
heavy generators of resources and become cash cows.
Cash Cows:
● High relative market share + Low market growth rate.
● Because these products have already received heavy investments to develop their high
market share, they have excess resources that can be spun off to those products that
need it.
● The firm may decide to use the excess resources generated by Brand C to fund
products in the question mark quadrant.
Question Marks:
● Low relative market share + High market growth rate.
● Most managerially intensive products in that they require significant resources to
maintain and potentially increase their market share.
● Managers must decide whether to infuse question marks with resources generated by
the cash cows so that they can become stars, or withdraw resources and eventually
phase out the product.
Dogs:
● Low relative market share + Low market growth rate.
● Although they may generate enough resources to sustain themselves, dogs are not
destined for “stardom”.
● Should be phased out unless they are needed to complement or boost the sales of
another product or for competitive purposes.
Four Growth Strategies
Strategy
Market penetration
Market development
Product development
Diversification
Markets
Current
New
Current
New
Products and Services
Current
Current
New
New
The 4E Framework
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Excite.
Educate.
Experience.
Engage.
The 7C Online Marketing Framework
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Core goals.
Contextual elements.
Content.
Community.
Communication.
Commerce.
Connection.
The Wheel of Social Media Engagement
The Information Effect – relevant information is spread to other members of the
social network.
The Connected Effect – outcome of social media that satisfies humans’ innate need
to connect with other people.
The Network Effect – outcome in which every post is spread instantaneously across
social media.
The Dynamic Effect – information is exchanged to network participants through
back-and-forth communications.
The Timeliness Effect – firms must engage with the customer at the right place and
time.
CSR vs Conscious Marketing
Corporate Social Responsibility:
➔ Is independent of corporate purpose or culture.
➔ Reflects a mechanistic view of business.
➔ Is often grafted onto traditional business model, usually as a separate department or
part of PR.
➔ Sees limited overlap between the business and society, and between business and the
planet.
Conscious Marketing:
➔ Incorporates higher purpose and a caring culture.
➔ Takes a holistic, ecosystem view of business as a complex adaptive system.
➔ Puts social responsibility at the core of the business through the higher purpose and
views the community and the environment as stakeholders.
➔ Recognizes that business is a subset of society, and that society is a subset of the
planet.
● Stakeholders: Employees, Customers, Society, Marketplace.
The Marketing Environment
Immediate Environment:
● Company.
● Competitors.
● Physical environment.
● Corporate partners.
Macroenvironment:
● Culture.
● Demographics.
● Social trends.
● Technological advances.
● Economic situation.
● Political/legal environment.
The Consumer Decision Process
1. Need recognition – functional or psychological needs.
2. Search for information – internal or external search.
a. Internal or external locus of control.
b. Five types of risk that delay a purchase: performance, financial, social,
physiological/safety, psychological.
3. Evaluation of alternatives.
a. Universal sets.
b. Retrieval sets (memory).
c. Evoked sets (alternative brands).
d. Determinant attributes – brand differentiation.
e. Consumer decision rules:
i.
Compensatory – trades off one characteristic against another.
ii.
Noncompensatory – one characteristic, regardless of the value of its
other attributes.
f. Choice architecture:
i.
Nudge – tactic to encourage impulse purchases.
ii.
Default – impose a choice on a person who fails to make a decision.
4. Purchase and consumption – conversion rate to measure how well firms convert
purchase intentions into purchases, e.g. number of real or virtual abandoned shopping
carts.
5. Postpurchase.
a. Customer satisfaction.
b. Postpurchase cognitive dissonance – consumer questions their purchase
decision.
c. Customer loyalty – firms use analytics software and CRM programs to acquire
and retain customers.
Factors Influencing the Consumer Decision Process
1. Psychological factors.
a. Motives.
b. Attitudes.
c. Perceptions.
d. Learning and memory.
e. Lifestyle.
2. Social factors.
a. Family.
b. Reference groups.
c. Culture.
3. Situational factors.
a. Purchase situation.
b. Sensory situation.
c. Temporal state.
4. Marketing mix.
a. Product.
b. Price.
c. Place.
d. Promotion.
Involvement and Consumer Buying Decisions
Two types of buying decisions, depending on their level of involvement (high or low):
1. Extended problem solving – risky purchases.
2. Limited problem solving – moderate amount of effort and time.
The B2B Buying Process
Stages:
1) Need recognition.
2) Product specification.
3) Request for proposal (RFP) process.
4) Proposal analysis, vendor negotiation, and selection.
5) Order specification.
6) Vendor performance assessment using metrics.
The Buying Center
People responsible for buying decisions.
Six buying roles:
Initiator – person who first suggests buying it.
Influencer – person whose views influence other members of the buying center in making
the final decision.
Decider – person who ultimately determines any part of or the entire buying decision
(whether, what, how and where to buy).
Buyer – person who handles the paperwork of the actual purchase.
User – person who consumes or uses the product or service.
Gatekeeper – person who controls information or access, or both, to decision makers and
influencers.
Organizational Culture
Types of buying centers:
Autocratic – one person makes the decision alone.
Democratic – majority vote.
Consultative – one person makes the decision but solicits input from others.
Consensus – unanimity
The Buying Situation
The three types of B2B buying situations:
● New buys.
● Modified rebuys.
● Straight rebuys.
The Segmentation, Targeting and Positioning Process
Step 1: Establish the overall strategy or objectives.
Step 2: Use segmentation methods.
Segmentation methods:
● Geographic – country, region, city.
● Demographic – age, gender, income, education.
● Psychographic – self-values, lifestyle, self-concept.
● Benefit – convenience, economy, prestige.
● Behavioral – occasion and loyalty.
Step 3: Evaluate segment attractiveness.
Is the segment…
Identifiable – identify who is within the market and ensure segments are distinct from one
another.
Substantial – the size and buying power of the market.
Reachable – market must be able to be reached through persuasive communication and
product distribution.
Responsive – customers must react similarly and positively to the firm’s offering.
Profitable – assess the potential profitability (Current and Expected Market Growth Rate,
Market Competitiveness, Market Access).
Step 4: Select a target market.
Targeting strategies:
Undifferentiated, Mass Marketing – same strategies for different groups.
Differentiated – target several market segments with a different offering for each.
Concentrated – focus on a single, primary market.
Micromarketing – extreme form of segmentation, individual customer with one-to-one
marketing.
Step 5: Identify and develop positioning strategy.
Positioning Using Perceptual Mapping
A perceptual map displays, in two or more dimensions, the position of products or brands in
the consumer’s mind.
The Marketing Research Process
Steps:
1) Defining the objectives and research needs.
2) Designing the research.
3) Collecting the data.
4) Analyzing the data and developing insights.
5) Developing and implementing an action plan.
Types of Data – Secondary Data
Secondary data might come from free or very inexpensive external sources such as census
data, information from trade associations, and reports published in magazines.
Inexpensive secondary data – Some sources of secondary data can be quickly accessed at a
relatively low cost, but are often not adequate to meet researchers’ needs.
Syndicated secondary data – Data available for a fee from commercial research firms such
as IRI, the NDP Group, Nielsen.
Scanner data are used in quantitative research obtained from scanner readings of
Universal Product Code (UPC) labels at checkout counters.
Panel data is information collected from a group of consumers, organized into
panels, over time. Data collected from panelists often include their records of what they have
purchased (i.e. secondary data) as well as their responses to survey questions that the client
gives to the panel firm to ask the panelists (i.e. primary data).
Types of Data – Primary Data
Primary data collection method can employ a qualitative or quantitative research method.
Qualitative – broad, open-ended questions.
● Observation.
● In-depth interviews.
● Focus groups.
Quantitative – structured responses that can be statistically tested.
● Survey.
● Panel.
● Scanner.
● Experiments.
Big Data
Big data (a type of secondary data) are data sets that are too large and complex to analyze
with conventional data management software. They are accessed from numerous sources
including sales transactions, CRM systems, websites, social media, blogs, locational devices,
etc. and are stored in large computer files known as data warehouse. These data are then
analyzed with a variety of statistical tools known as data mining tools.
The 5 V’s of Big Data
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4.
5.
Volume.
Variety.
Velocity.
Veracity.
Value.
Marketing Analytics Tools
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Descriptive.
Predictive.
Prescriptive.
Active.
Product Complexity
Actual product – brand name, quality level, packaging, features/design.
Associated services – financing, product warranty, product support.
Types of Consumer Products
By most to least time consumers spend doing research before purchase:
1. Specialty.
2. Shopping.
3. Convenience.
4. Unsought.
Product Mix
Product mix – the complete set of all products offered.
Product lines – group of similar products.
Breadth – number of product lines.
Depth – number of products within a product line.
Brand Equity
Brand equity is the value of a brand.
Four aspects of a brand to determine its equity:
1.
2.
3.
4.
Brand awareness.
Perceived value.
Brand associations.
Brand loyalty.
Brand Ownership
Manufacuter/National brands – owned and managed by the manufacturer.
Retailer/Store brands – products developed by retailers.
Naming Brands
Family brand – a firm’s own corporate name is used to brand its product lines.
Individual brand – use of individual brand names for each of a firm’s products.
Brand and Line Extensions
Brand extension – use of the same brand name for new products being introduced to the
same or new markets.
Line extension – use of the same brand name within the same product line, represents an
increase in a product’s line depth.
Brand dilution – dilutes brand equity, when a brand extension adversely affects consumer
perceptions about the attributes the core brand is believed to hold.
Co-Branding – marketing two or more brands together in the same package or promotion.
Brand licensing – contractual agreement between firms, where one firm allows another to
use its brand name, logo, etc for a fee.
Brand repositioning (rebranding) – change a brand’s focus to target new markets or realign
the brand’s core emphasis with changing market preferences.
Packaging
Primary Package – The packaging the consumer uses, such as the toothpaste tube.
Secondary Package – Packaging of the exterior carton that contains the primary packaging,
such as the toothpaste box. Contains additional information not found on primary packaging.
Diffusion of Innovation
Diffusion of innovation is the process by which the use of an innovation spreads throughout a
market group, over time and across various categories of adopters.
Pioneers – Product introductions that establish a completely new market or radically change
both the rules of competition and consumer preferences in a market. Pioneers have the
advantage of being first movers, making them readily recognizable to consumers and
establishing a commanding and early market share lead.
Groups of Purchasers
Innovators – Buyers that want to be the first to have the new product or service.
Early adopters – Don’t take as much risk as innovators but wait and purchase the product
after careful review.
Early majority – 34% of the population, members don’t take much risk and therefore tend to
wait until bugs are worked out. Few new products don’t become profitable until this market is
reached.
Late majority – The last group of buyers to enter new product market, when they do, the
product achieved its full market potential.
Laggards – Consumers who like to avoid change and rely on traditional products until they
are no longer available.
Factors Affecting Product Diffusion
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Relative advantage.
Compatibility.
Observability.
Complexity and Trialability.
The Product Development Process
1) Idea generation.
2) Concept testing.
3) Product development.
4) Market testing.
5) Product launch.
6) Evaluation of results.
Product Life Cycle
1.
2.
3.
4.
Introduction.
Growth.
Maturity.
Decline.
Services
Services are:
● Intangible.
● Inseparable.
● Heterogeneous.
● Perishable.
The Seven P’s
Traditional 4 P’s – product, price, promotion, place.
Additional 3 P’s – presentation, personnel, processes.
Service Gaps
Knowledge gap – difference between customer and firm expectations.
Standards gap – difference between a firm’s perceptions of customers’ expectation and the
service standards it sets.
Delivery gap – difference between firm’s service standards and the actual service it provides.
Communication gap – difference between actual service provided and the service that the
firm promotes in its advertisements.
Dimensions of Service Quality
– Reliability
– Responsiveness
– Assurance
– Empathy
– Tangibles
Finding a Fair Solution
When mistakes happen, customers want to be treated fairly, whether that means distributive
(the benefits compared to the costs of the inconvenience) and procedural (efficient
complaint procedures) fairness.
The Five C’s of Pricing
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Company objectives.
Customers.
Costs.
Competition.
Channel members.
Company objectives:
Profit orientation – focus on target profit pricing, maximizing profits, or target return
pricing.
Sales orientation – focus on increasing sales and overall market share.
Competitor orientation – competitive parity, status quo pricing.
Customer orientation – focus on adding value to its product and services, match prices to
customer expectations.
Pricing Strategies
Everyday Low Pricing (EDLP) – continuity of retail prices at a level somewhere between
the regular, nonsale price and the deep-discount sale prices their competitors may offer.
High/Low Pricing – set a high price and attract customers with big sales.
Pricing strategies for new products:
Penetration Pricing – set the initial price low to build sales, market share and profits
quickly.
Price Skimming – set a premium price for innovator/early adopter customers who are
willing to pay a high price to get it first.
Illegal Pricing Strategies:
Deceptive or Illegal Price Advertising – deceptive reference prices, loss-leader pricing, bait
and switch.
Predatory Pricing – prices set low with the intent to drive competitor out of business,
difficult to prove.
Price Discrimination – when firms sell the same product to different resellers at different
prices.
Price Fixing – the practice of colluding with other firms to control prices.
Marketing Channel Management
Distribution center – inventory storage from manufacturer to stores.
Fulfillment center – inventory storage shipped directly to customers.
Designing Marketing Channels
Direct – The manufacturer sells directly to the customer.
Indirect – The manufacturer sells to one or two intermediaries (retailer, or wholesaler to
retailer) who sells to the customer.
Franchising – A contractual agreement between a franchisor and a franchisee that allows the
franchisee to operate a retail outlet using a name and format developed and supported by the
franchiser.
Channel Conflicts
Vertical channel conflict – Members of the same marketing channel (manufacturers,
retailers, etc) disagree.
Horizontal channel conflict – Members at the same level of a marketing channel
(two competing retailers) disagree.
Power in the Marketing Channel
Reward – offer rewards to get something back.
Coercive – threats of punishment for not undertaking certain tasks.
Referent – others wants to be associated with the firm.
Expertise – use experience and knowledge to make decisions without external input.
Information – withholding important market information.
Legitimate – based on contractual agreements.
Factors for Establishing a Relationship with Retailers
When choosing retail partners, manufacturers go through these steps:
1.
2.
3.
4.
Choosing retailing partners.
Identifying types of retailers.
Developing a retail strategy.
Managing an omnichannel strategy.
1. Choosing retailing partners.
Factors: channel structure, customer expectations, channel member characteristics,
distribution intensity.
Distribution intensity – number of channel members to use at each level of the marketing
channel.
Inclusive – get as many products into as many outlets as possible.
Exclusive – only selected retailers can sell a manufacturer’s brand.
Selective – lies between intensive and exclusive distribution strategies.
2. Identifying types of retailers.
Food – Supermarket, Supercenter, Convenience, Warehouse Club.
General merchandise – Full-Line Discount, Specialty, Category Specialist, Department,
Drug, Off-Price, Extreme Value.
Service – Auto Rental, Health Spa, Vision Center, Bank.
Integrated Marketing Communications
IMC represents the promotion dimension of the four P’s. There are three elements in an IMC
strategy: the consumer, the channels and the evaluation.
Components: Sender > Transmitter > Receiver
The AIDA Model
Awareness, Interest, Desire, Action.
Aided recall – when consumers indicate they know the brand when the name is presented to
them.
Top-of-mind awareness – when consumers mention a specific brand name first when they
are asked about a product or service.
Planning and Executing an Ad Campaign
1.
2.
3.
4.
5.
6.
7.
Identify target audience.
Set advertising objectives.
Determine the advertising budget.
Convey the message.
Evaluate and select media.
Create advertisements.
Assess impact.
Pull strategy – get consumers to pull the product into the marketing channel by demanding
it.
Push strategy – motivate the seller to highlight the product and push the product to
consumers.
Advertising Schedule: Timing and duration of advertising.
● Continuous, Fighting (in spurts, periods of heavy advertising followed by none) and
Pulsing (combines continuous and fighting).
Pretesting: Assessment done before an ad campaign to ensure elements are working.
Tracking: Monitoring key indicators while the ad is running.
Post-testing: Evaluation of IMC impact after it’s implemented.
Lift: Additional sales caused by advertising.
Cause Related Marketing: Businesses and charities that form a partnership to market an
image, product, or service for mutual benefit.
The Sales Force
Preapproach – technique for practicing the sales presentation prior to meeting with a
customer. Acts out a simulated buying situation.
Sales Force Structure
● Company Sales Force: Comprised of people who are employees of the selling
company and are engaged in the selling process.
● Independent Agents: Salespeople who sell a manufacturer’s products on an extended
contract basis but are not employees of the manufacturer. Also known as a
manufacturers’ representative.
Salesperson Duties
● Order Getting: Primary responsibility is identifying potential customers and
engaging them in discussions to attempt to make a sale.
● Order Taking: Primary responsibility is to process routine orders or reorders or
rebuys.
● Sales Support Personnel: Employees who enhance and help with a firm’s overall
selling effort, such as by responding to the customers technical questions or
facilitating repairs.
● Selling Teams: Combinations of sales specialists whose primary duties are order
taking, getting, or sales support but work together to service important accounts.