Intro to Marketing

needs

needs

states of felt deprivation, essentially required to live

wants

options that are used to fill needs that are not necessary

demands

wants that are supported by the customer’s buying power, a strong desire to obtain such things

customer equity

the sum of the lifetime values of all a company’s current and potential customers; dependent on customer loyalty from a firm’s profitable customers, and it is the reflection of a company’s future

strategic planning

the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and changing market opportunities

strategic business units (SBUs)

key company divisions, product lines, or brands that make up a company

business portfolio planning

1. Current business portfolio analysis, followed by decisions about what businesses should receive more, less, or no investment

2. Planners shape the future portfolio by developing strategies for growth and/or downsizing

Boston Consulting Group (BCG) matrix

• Question Marks: High growth, low share

• Stars: High growth, high share products

• Cash cows: Low growth, high share

• Dogs: Low growth, low share

Question Marks

high growth, low share products

Stars

high growth, high share products

Cash Cows

low growth, high share products

Dogs

low growth, low share products

strategies for growth

market penetration, market development, product development, and diversification

market penetration

making more sales to current customers without changing products

market development

identifying and developing new markets for a company’s products

product development

offering modified or new products that are made for current markets

diversification

companies consider acquiring or starting new businesses unrelated to their core competencies

Situational (SWOT) analysis

Build upon Strengths

Correct Weaknesses

Exploit Opportunities

Avoid Threats

market-product focus and goal setting (targeting and positioning)

• Set marketing and product goals (e.g., generally to whom and when)

• Select target markets (specifically to whom)

• Find points of difference (superiority to other products)

• Position the product

market program of the 4 P’s

• Product

• Price

• Promotion

• Place

product

a good, service, or idea to satisfy the customer’s needs

price

the amount exchanged for the product

promotion

a means of communication between the seller and buyer

place

a means of getting the product to the consumer

implementation

• Obtain resources

• Design the marketing organization

• Define responsibilities

• Execute the marketing system

evaluation

• Identify deviations from the plan

• Act on deviations and fix them

external factors

uncontrollable forces that shape business opportunities and threats

CREST

Competitors

• Who are they?

• What are they doing?

Regulatory and Political

• Restrictions placed on business activities by:

  • state and federal law

  • politics (ex. tariffs, less formal boycotts)

Economic

• Purchasing power and spending

• Important trends:

  • Income level changes

  • Spending pattern changes

Social-Demographic

• The Population Mix

  • Location

  • Gender

  • Occupation

  • Ethnicity

  • Age

Technological

• New product and market opportunities

null hypothesis

we think there are no differences between the experimental groups

alternative hypothesis

we think differences do exist between the experimental groups

rejecting the null hypothesis

since there are differences that exist between the groups, we cannot say that the null hypothesis is true

• the t-obt/t-stat is greater or equal to the critical two tail value

failing to reject the null hypothesis

there are no differences between the two groups, so the null hypothesis is true

• the t-obt/t-stat is less than the critical two tail value

independent variable

the presumed source of differences in the data, which is often manipulated by the study

dependent variable

the presumed effect that “depends” upon the independent variable

market segmentation

the division of the market into distinct groups who call for separate products or market mixes

geographic segmentation

Classifies the consumer’s location by region, whether they’re in the city or rural area, by density, and by climate

demographic segmentation

Classifying the consumer by their age, sex, gender, race, ethnicity, nationality, etc.

psychographic segmentation

Classifying the consumer’s social class, lifestyle, and personality

behavioral segmentation

Examining a product’s features (occasions and benefits) and how a product is used (user rate and user status)

Values and Lifestyles System (VALS)

consumers are divided along two dimensions, those with either high or low resources to achieve their goals

Ideals category

the consumer relies on belief systems and they are unconcerned with others’ views; high resources: thinkers, low resources: believers

Achievement category

the consumer is success-oriented and considers what others think; high resources: achievers, low resources: strivers

Self-expression category

the consumer likes social and physical activity while desiring variety and risk; high resources: experiencers, low resources: makers

target market selection

first, we must evaluate the segment attractiveness, then choose the best segment(s) for the situation

traditional targeting strategies

• undifferentiated

• differentiated

• concentrated

• mass customization (“one-to-one marketing”)

undifferentiated targeting strategy

a broader approach to communicating the product to the audience

• Ex. the same music ad that shows up on Instagram every single time

differentiated targeting strategy

identifying and focusing on segments that could further benefit your brand, a more specific approach

• Ex. Honkai: Star Rail making hundreds of different advertisements to try and appeal to their audience

concentrated targeting strategy

focusing all of the effort into ONE particular target audience

• Ex. a wedding ring company that only appeals to people planning to get married

mass customization targeting strategy

also called “One-to-One” Marketing, this allows the tailoring of products to individual consumers on a high-volume scale

• Ex. people being able to order necklaces that have their names engraved on them

considerations for targeting strategy

• market size (present and future)

  • How many people will be your future customers?

• competitive position

  • Does your item stand out from the rest of the competition?

• cost of reaching the segmentation

  • How much will it cost to reach the target audience?

• compatibility with company’s objectives and resources

  • Assess the progress of the company and the resources it has to obtain said goals

innovators

the category with the highest resources

strugglers

the category with the lowest resources

market positioning

the place within the segment where the company wishes its product to occupy

• define YOUR product relative to the competition’s in terms of benefits

• make sure to detail a market plan to SUPPORT that definition

  • Ex. RIOT making Valorant to fit in with all the other FPS games

positioning statement

• For (the target customer)

• who (statement of need/opportunity)

• the (product name) is a (product category)

• that (core benefit preposition)

• unlike (primary competitive alternative(s))

• our product (point of difference)

  • For Winners That Try Uniting Otters

keys to successful positioning

• Complete corrective analysis

• Strong understanding of current positions

• Identification of Re-positioning opportunities and/or new product openings

repositioning

taking an existing product and reworking it in order to attract a newer customer base

• Ex. A fast-food chain turning into a vegan food chain

new product opening

new products are created to add to the current market

• Ex. NFL making shirts for women after demand

strategic marketing process

a strategy where a company allocates their marketing mix resources to reach target audiences

discount rate

amount given divided by (1 + % rate); n/(1 + %)

psychological factors

• Decision Making

• Motivation

• Perception

• Attitude Formation

buying decision making process

• Problem Recognition

• Information Search

• Alternative Evaluation

• Purchase Decision

• Post-purchase Behavior

motivation category

a need pressing enough to cause a person to seek satisfaction

Maslow’s Hierarchy

• Self-actualization needs

• Personal needs

• Social needs

• Safety needs

• Physiological needs

positive illusions

maintaining a positive self view throughout life

• Unrealistically positive self evaluations

• Illusions of control

  • Pocket of Incompetence

• Overly optimistic thoughts about the future

• Emotional reappraisal

  • Rethinking emotions

pocket of incompetence

by recognizing we’re not good at something, we take control over it

• Ex. Guy can’t dance so he invited a girl whose leg was in a cast to overcome his pocket of incompetence

perception category

consumers use their inferences to judge products

• Evaluation-based inference

• Similarity-based inference

• Correlation-based inference

evaluation-based inference

whole to part, part to whole

• Ex. A new car that’s shiny and beautiful with a nice interior. A part inside might be made by Intel, which had a good reputation.

• Ex. Professor made the inference of thinking her coworker’s son was their daughter

similarity-based inference

beliefs about an object based on its similarity to other objects

• Ex. Lots of sugary cereal brands seem unhealthy cause of how each one has lots of sugar in it

correlation-based inference

two attributes are so highly correlated that the presence of one leads to an inference about the presence of other

• Ex. Someone driving a Mercedes-Benz or fancy car may be perceived as someone who is rich

attitude formation category

consumers’ attitudes towards different brands, products, etc.

• Heider’s Balance Theory

• Theory of Reasoned Action (Fishbein and Ajzen)

  • To create or change attitudes, attempt to:

    • Alter variables in the model, and/or

    • Find relative advantages against competitors

      • Beliefs about attributes

      • The evaluation of the attributes

      • Normative beliefs

      • Motivation to comply with norms

      • Behavioral intentions

Heider’s Balance Theory

individuals alter their perceptions to maintain consistency between beliefs and evaluations

• Triads:

  • Person

  • An attitude person or object

  • Another person or object

    • Suppose that some consumers do not want to be associated with the store Macy’s.

    • This is denoted by a minus sign between the two points connecting them.

      • Consumers - Macy’s

      • Consumers + Celebrity

      • Celebrity + Macy’s

        • Consumers may disassociate from the celebrity, changing the sign between them.

• An even number of minus signs gives the triad “balance”.

  • Unbalanced triads have an odd number of minus signs. 

  • Balance triads have two minus signs OR no minus signs.

Theory of Reasoned Action

• The first half of the model:

  • bi = belief (e.g., a consumer’s belief about a brand regarding a product attribute)

  • ei = evaluation of the belief (i.e., the amount of importance a consumer gives to that attribute)

  • Ex. Wanting to change consumer’s beliefs with advertisements

• The second half of the model:

  • Ni = Normative belief (beliefs external to the consumer, such as peer group norms)

  • Mi = Motivation to Comply with normative beliefs (e.g., to comply with what peers believe)

• The two model halves result in BI, Behavioral Intentions

  • BI = Behavioral Intentions (e.g., a consumer’s intention to purchase a particular brand, which is thought to approximate actual behavior)

social/cultural factors

factors that influence the consumer’s opinions

• Reference Groups

• Cultural Differences

reference groups

could be related to the consumer’s memberships or aspirations

• Ex. We’re members of the SJSU Undergraduate Program and we aspire to graduate.

  • Influences Behavior (lifestyle), Attitude (self concept), Product (brand choice)

cultural differences

consumer has a different background or culture that may influence their attitude to things

• Ethnicity

• Religion

• Cultural background

organizational buying category

contains different types of organizational markets consumers buy from:

• Industrial Markets

• Reseller Markets

• Government Units

industrial markets

markets that reprocess a product or service before selling it to the next buyer

• Ex. chefs buy ingredients for their meals

reseller markets

markets that DO NOT reprocess before reselling

• Ex. retailers buy clothing from manufacturers and sell them as is to consumers

government units

the government also buys goods and services for their constituents, they buy and give

• Ex. NASA buys engineering equipment from private companies

product life cycle

the life cycle of products from when they begin and end

• Intro

• Growth

• Maturity

• Decline

intro

• Competition: None to few

• Marketing Objective: Gain awareness

• Profits: Negative to low

growth

• Competition: High increase

• Marketing Objective: Differentiate

• Profits: Trade off of market share and profits

maturity

• Competition: Many

• Marketing Objective: Loyalty

• Profits: Level or start to decrease

decline

• Competition: Reduced

• Marketing Objective: Harvest, deletion

• Profits: Reviewed regularly

diffusion of innovation

the different categories of innovation, starting from when they start and when they are widely accepted

• Innovators

• Early Adopters

• Early Majority

• Late Majority

• Laggards (old people)

innovators (diffusion)

• Consumer “innovators” have valuable word-of-mouth influence over consumers

  • Younger

  • Educated, knowledgeable

  • High income

  • Positive attitude towards change

early adopters (diffusion)

reliant upon salespersons to promote the product to them

early majority (diffusion)

reliant on advertisements and innovators to promote the product to them

late majority (diffusion)

people that are skeptical of the change, and they only adopt the product due to peer or economic pressures

laggards (diffusion)

usually older people that wait for the evidence that the product works, they are extremely skeptical of the change

branding

brands should:

• Suggest benefits and qualities

• Be easy to pronounce, recognize, and remember

• Be distinctive

• Be translatable into other languages

• Be legally protectable (able to register)

  • Ex. M&Ms candy

    • Trademark

      • The “m”

      • The characters

    • Copyright

      • The way the candy is made

      • Slogans: “Look for the m on every piece.”, “The candy that melts in your mouth.”

packaging

Packages are made:

• To contain and protect

• To attract attention

• To describe the product

• To make the sale

product line and mix decisions

the decisions that influence the sale of all similar products that are created by the company

product line

products similar in function, sold to the same groups or within a certain price range

mix

all product lines and items a company sells

product category

Products as they exist:

• Existing

  • Line Extension

    • Cereal boxes that look the same but they’re different colors

  • Brand extension

  • Multi-brands

  • New brands

new product development category

different categories for producing new products for the market

• New-Product Strategy Development

• Idea Generation

• Screening and Evaluation

• Business Analysis

• Development

• Market Testing

• Commercialization

new-product strategy development

defines the role for a new product in terms of the firm’s objectives

• SWOT example: Considering a McDonald’s USA New Product “Failure”

  • Strengths: Burgers are quick (but the pizza was not)

  • Weaknesses: Known for unhealthy food (the pizza did not help the image)

  • Opportunities: Can add to the menu (perhaps mismatched image)

  • Threats: Fast food competitors like Domino’s (but did not draw from the competitors)

idea generation

the creation of ideas to create new products and efficiency

• Develop a pool of concepts as potential new products

  • Customers and supplies

  • Employees, research and development labs

  • Competitors

  • Other external sources (e.g., universities, inventors)

• In other words, ideas can come from anywhere!

  • Ex. Hallmark’s keepsake ornaments where they have many ideas for different types of ornaments

    • People are interested in collecting ornaments

  • Ex. Encouraging employee idea generation with Airbnb and Judy Faulkner

    • Airbnb was not just about renting homes for other people, they even sheltered refugees in need

    • Judy Faulkner created beautiful environments for her computer programmers to have ideas to inspire and keep them happy

screening and evaluation

a “product idea” evolves into the development of “alternative concepts”