Maketing Test #1

What is marketing?

• the process of identifying and satisfying customer wants and needs

• create a marketing plan to satisfy those needs (positioning, product pricing, distrubtion, promotion)

• use a range of KPIs (key performance indicators) to measure if you are successful

What is the value of marketing?

• in the short term it drives growth through increased sales and profits

• in the long term it creates value through brand equity

brand equity

• a value premium that a brand has because of their recognizable name when compared to a generic equivalent (for example kraft mac and cheese can charge more than the generic version)

• evcerything else besides the product that creates value (how it makes you feel, does it solve a problem, make life easier)

• lego creates brand equity by “inspring the builders of tomorrow, it makes parents feel smart)

• customers think of you first, benefit of the doubt with new products, brand loyalty they become advocates, better insulated from competition, profit advantage, insulkated from competition, easier to go into new categories

• brand equity premium is the difference between prices divided by the generic price

marketing plan structure

Planning:

1. business mission and objectives

2. situational analysis (SWOT)

Implementation:

1. identify opportunites (segmentation, targeting, positioning)

2. Implement marketing mix (prive, product, place, promotion)

Control:

1. evaluate performance using marketing metrics

the planning phase

• this includes company objectives/mission and situational analysis of the market

• for lego the mission is to “inspire the builders of tomorrow” but their objectives would be to increase revneue, launch 10 new retial stores, spend 20% on marketing, etc…much more profit driven

• market definition - you need to choose who your market is it can be very broad (toy market) or more narrow (building toy market), there are benefits and drawbacks to each, in order to grow you either need to take more market share of a stagnant market or keep your market share in a goriwng market

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market growth forumla

new - old / old

• if sales increased from 6 M to 10 M this would be 66% sales increase

market share growth is relative

• you have a 100M market and your market share is 10%, the market grows to 105M which is a 5% increase, if you gorw to 10.5M you have not grown relative to the market because you are keeping the same slice of the pie chart

• however if you grow to more then 10.5M then you are taking over some the the total market share and you are growing

• market share only changes when your growth rate diverges from the market growth rate

• if the market is growing and you are growing along with it your company will grow (circle size increasing) but if the market is not growing you need to increaase your market share to grow as a company (stagnant circle but taking more of the pie)

the BCG matrix

• used to understand the potential for certain products or businesses

• relevant to a firm with multiple product lines

• helps them decide where to invest money

• top is relative market share and left is relative market growth

• high ms high mg is a star and significant resources should be pourred into r and d

• low ms high mg is a question mark investment should go into ? so they can potentially become a star

• high ms low mg is a cash cow, do not pour money into investment use them as a source of income to fund other products that could be stars

• low ms low mg is a dog and should be phased out unless they are a compliment to another product

the ansoff matrix

• helps provide direction on how do we grow

• bottom is existing/new products and left is existing/new markets

• exisitng existing - market penetration

• exisitn new - market devleopment

• new existing - product developemt

• new new - diversification

SWOT analysis

• strengths weaknesses opportunites threats

• good bad, internal external

• helps assess current position and plan strategically

consumer insight

• what the marketing team knows about the consumer

• for progressive they know that the average person find insurance boring and confusing so their strategy was just to entertain the customer and grab their attenition so that progresssive is at the top of their mind when they need to but insurance eventually

market research vs. market analytics

• market research is gathering conusmert and market information (40 people walk down the street everyday, 20% are carrying water)

• market anaytics is the process of measuring performance from business activity (70% of our sales occur between 2 and 5, 90% are repeat customers)

2 types of market research

1. primary - data you collect yourself for your specific purpose (panels, interviews, surveys such as the ulta beuty joy project to stop negative self talk the survey found that 73% of people cited negative self talk but 70% people also were not able to identify it themselves so people did not even realize they were being mean to themselves so ulta trained its employees to create an uplfiting environment that is more welcoming, focus groups, observational research/ethnographies, social listening, shopalongs)

2. secondary - data that already exists that someone else collected but you use it in your research (US census data, annual reports, industry reports), helps you define the market understand growth and size

types of secondary research

1. scanner - bar codes at stores, track what happens when prices drop for example, can see how you are doing compared to competitors

2. syndicated - hiring a commercial firm to to do you research

3. free/internet - us census data, often outdated

4. panel - groups of consumers responding to questions

why do we need consumer research?

• understand you customers world better

• their unmet wants/needs

• their shopping habits

• their favorite products /brands

• how they use your product

• how they shop

• how you fare vs. competitors

• SO important because of the video with kids using playground wrong way, you need to understand your consumer

focus groups/interviews

• qualitative

• moderator ask questions and researchers sit behind a mirror

• feedback on a product, new logo, etc

• looking for “pain points”, “unmet needs”, or “actionable insights”

• good for understanding their lifestyle

ethnographies

• researcher becomes part of the family

• qualitative

• 1 on 1, understanding their life routines

• looking for pain points or unmet needs

shop alongs

• qual and quant

• 1 on 1 or in groups

• often a video component

• looking at how they browse and make purchase decisions

• looking for pain points or unmet needs

usability tests

• watcing how a consumer uses your product

• physical or digital product

• looking for pain points or opportnunites to improve

• qual and quant

• polaroid camera in the mall

social listening

• looking at social commentary on social media

• to understand what people are saying about you

• software monitoring is scraping online commentary from many sources

difference between data, obeservation, and insight

• data is not actionable (luxury dog food buyers are between 30 and 55)

• observation is something actionable (tthey want healthy nutricious food for their dog

• insight is highly detailed and actionable, often surprising (they dont like wet dog food because it sticks to the bowl and is hard to clean)

consumer behavior

• understanding why and how we buy

functional needs vs emotional needs

• functional describes the performance and features of the product

• emotional needs describe the benefit you get/feel from a product, the so what

• example: functional needs is a low carb beer emotional needs is taking care of my health

• high interest categories (cars, shoes) will have more of an emotional component than low interest categories (mayonaisse, cleaning supplies)

• even low interest categories try to make things emotional (hellmans mayo commercial, shows caring mom using hellmans)

factors that infleucne the consumer decision process

1. social factors - your family friends and culture affect what you buy

2. psychological factors - our mtoives maslow’s hierarchy of needs), attitudes and perceptions social proof(when people are unsure about something they tend to follow others, stanley cup), scarcity things are more valuable when they are hard to get like a birkin, authority if someone trusted or famous tells you something is good it must be right

3. situational factors - shelf placement, impulse items in line to checkout, sales, web designed in a certain way that makes you want to click to checkout, dog treats on bottom shelf because kids are sometimes the biggest influencers and they can only see bottom, timberland had a poster on their shop window that had a man gazing towards the door and this increased the amount of people that walked in, lighting smells, temporal state

4. marketing mix - product, price, place, promotion

consumer decision process

• the path to pruchse reflects the different steps consumers take to buy something

• each product have functional needs and emotional needs backed up by reasons to believe (voted #1 car this year) - marketers need to consider these when devleopong the 4 P’s

• psychological, social, and situational factors need to be understood by marketers

• often situtational factors (convenience of buying) end up trumping higher order beliefs

the segmentation, targeting, and positioning process

1. establish the company’s startegy or obejecttives

2. segment the market based off the 4 segmentation methods (psychosocial, demographic, geogrpahic, behavioral)

3. evaluate whether the segment is attractive or not - is it profitable, are they reachable, responsive

4. select your target market

5. identify and develop a positioning strategy - this is done with a goal for the brand but throught the eyes of the consumer

brand personality

• how you would describe a brand if they were a person

• apple smart, ikea practical,

brand promise

• on top of the brand positioning pyramid

• what the brand promises they will do for you every time you interact with their product

• marketing efforts lead up to this positioning statement (describes the category you are in, the target audience, the unique benefits they offer, the reason you will deliver this promise)

• ex: for anyone who needs durable and practical footwear, timberland is the best boot for longlasting support because we believe that a boot should move with you and adapt to whatever life throws your way

• ex: Walmart is low prices that help you save money and live better

perceptual maps

• a visual tool that helps show your positioning strategy and how you compare to your competitors

• helps you reposition if you need to

rebranding of sierra mist

• pepsi co has always looked to appeal to the new generation

• sierra mist was meant to copy sprite but consumers saw it as a knock off

• starry is more aromatic and is more similar to mt dew but with lower sugar which appeals to this new generation

ways brands get a competetive advantage

1. operational excellence - excellent supply chain management and good relationships with suppliers, amazon because they organize operations efficiently by hriring the right people and having the right tech that will be able to get you your package the same day

2. locational excellence - starbucks has locational excellence because they have put stores on a large amount of busy corners that other competitors now cannot take so they are forced into lesser percieved value spots

3. customer excellence - providing great customer service to retain loyal customers, airlines

4. product excellence - offering producs with high percieved value with effective branding and positioning, pepsico able to take over bubly because of their established high value

febreeze case

proctor and gamble launched febreeze in the 90’s and were shocked when the product was unsuccessful and mainly sat on the shelves. they did an in home usage test of a cat lady and asked her why she didnt use the product to get rid of her cat smell and she said the smell in her house didnt matter even though it reeked. this was a major discovery and febreeze switched from marketing to people who want to get rid of a specific smell to people who used it after claening as preventative like spraying on a rug after vacumming. this shows the importance of market reseacrh!

market research copilot excercise

• under armours decline

• unclear brand identity

• innovation gap in footwear hoka has new technology which makes UA seem outdated

• frequent promotions deters people from buying at full price

how luxury brands get you to buy

1. limited stock makes it seems more valuable

2. situational factors - water bottle given, salesperson pressuring you

3. salesperson -

liquid death

• less a beverage company more of an entertainment company

• used humor to grob peoples attention he said he needed a product that people ssked about when they were holding it

• the aluminum can made it look like an energy drink or beer which aligned with the punk/cool rockstar image

• it also had environmenatl benefits which was another benefit that may or may not have been intentional to grabbing the attention of the climate conscious segment

aaron carpenter insider view

• he worked at the north face and levis

• levis was unique because it was able to appeal to multiple demographic segments which is not typical

• sold in walmart and high end stores

timberland

1. their goal was to reposition the brand

2. there were 3 main segments available (the outdoor lifestylers, the functionalist, and the trend seeker)

3. they chose the outdoor functionalist

4. is the segment attractove (is it profitable, are they responsive, are they reachable,

5. brand become wishy washy because it was fashion in italy and also a symbol of fashion in the hip hop world

6. VERSATALITY - was the differentiating factor for timberland because guys wanted to be able to go about their everyday without limit but didnt want to look like an REI guy, rtb was the iconic yellow boot, heritage of fine leather, functional was versatility of all outdoor situations and aa look that was rugged and practical, emotional was they felt ready for anyhting that the world could throw at me, personality is adventurous, genuine and promise is everyday adventure

positioning

• the act of designing a company’s offering and image to occupy a specific place in the mind of the customer

• uses the consumer value proposition pyramid to create a positioning statement