Marketing 301

Marketing (AMA definition)

The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Which source defined marketing as 'the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings'?

AMA (American Marketing Association)

Marketing mix

The set of Ps a company combines: the 4Ps (Product, Price, Place, Promotion), extended to the 7Ps for services (+ People, Processes, Physical Evidence).

Product (4Ps)

The service or product a business offers that is demanded by the market, customers or consumers.

Price (4Ps)

The amount customers will pay for the product or service; also dictates how profitable the business will be.

Place (4Ps)

Where and how customers can find and access your products/services (retail, resellers, distribution, franchising, etc.).

Promotion (4Ps)

How a company communicates the advantages of the product/service and convinces customers to buy; essentially where advertising comes in.

People (3 extra Ps)

From front-line sales staff to the Managing Director. The right people are essential because they are as much a part of the offering as the product/service.

Processes (3 extra Ps)

How the service is delivered - usually with the customer present, so the delivery is part of what the customer is paying for.

Physical Evidence (3 extra Ps)

Almost all services include physical elements even if most of what is paid for is intangible (e.g., a PDF still counts as a 'physical product').

What are the 3 extra Ps that turn the 4Ps into the 7Ps?

People, Processes, Physical Evidence

Marketing - responsibilities

Branding and USP, benchmarking, CRM, vision through departments, strategy, budget and ROI.

Advertising - responsibilities

Define buyer persona, pitching plans, media buying, creativity, campaign management, inform and report to the marketing team.

Sales - responsibilities

Deals and negotiations, customer relationships, generate leads, product expertise, manage goals and performance, track stock/inventory.

Marketing - purpose

Lead generation, new customers and retention, brand consistency, create opportunities, product development, global performance tracking.

Advertising - purpose

Boost brand awareness, attract and compel buyers, increase loyalty, create motivating ads and campaigns, stand out from competitors.

Sales - purpose

Increase sales, establish sales cycles, profit margins, reduce churn rate, new cross-selling and upselling opportunities, give customers more value.

Marketing - techniques and channels

Inbound marketing, content marketing, SEO, email marketing, affiliate marketing, employee/internal branding.

Advertising - techniques and channels

Traditional (TV, radio, print), retail (in-store and promotions), digital ads (social media, apps), native advertising, billboards.

PESTEL stands for...

Political, Economic, Social, Technological, Environmental, Legal.

What is PESTEL used for?

Identifying macro-environmental external forces shaping strategy; uncovering external threats and opportunities, feeding into SWOT and supporting strategic planning.

Political factors

Regulations, trade policies, taxation.

Economic factors

Growth, inflation, purchasing power.

Social factors

Demographics, culture, consumer lifestyles.

Technological factors

Innovation, digitalization, AI.

Environmental factors

Sustainability, climate change.

Legal factors

Consumer protection, data privacy laws.

Benefit of PESTEL: Informed decision making

Helps you see the bigger picture before acting; guides key decisions such as product launches, investments, expansion.

Porter's Five Forces

Strategic framework developed by Michael Porter (1979) to analyze the level of competition within an industry and its attractiveness (profitability potential).

What are Porter's Five Forces?

Supplier power, Power (bargaining) of buyers, Threat of substitution, Competitive rivalry, Threat of new entrants.

Supplier Power - definition

The ability of suppliers to drive up the price of inputs.

Supplier Power is HIGH when...

Few suppliers, unique resources, high switching costs for firms.

Supplier Power - impact + example

Strong suppliers raise costs and reduce margins. Example: Intel and NVIDIA in semiconductors (PC/laptop makers depend on them).

Power of Buyers - definition

The influence customers have on pricing and quality.

Power of Buyers is HIGH when...

Few buyers buying in bulk, low switching costs, high price sensitivity.

Power of Buyers - impact + example

Powerful buyers push prices down and demand better service/quality. Example: Costco shoppers (bulk discounts but pressure to keep prices low and value high).

Threat of Substitution - definition

Risk of customers turning to alternatives outside the industry.

Threat of Substitution is HIGH when...

Substitutes are cheaper, of similar or better quality, and easily accessible.

Threat of Substitution - impact + example

Substitutes limit profitability by capping price levels. Example: Uber/Lyft vs. traditional taxis; Kodak vs. digital photography.

Competitive Rivalry - definition

The intensity of competition among existing players in the industry.

Competitive Rivalry is HIGH when...

Many competitors, slow growth, low differentiation, price wars.

Competitive Rivalry - impact + example

Strong rivalry squeezes profits; weak rivalry allows more pricing power. Example: Nike vs. Adidas.

Threat of New Entrants - definition

The ease with which new competitors can enter the market.

Threat of New Entrants is HIGH when...

Low barriers to entry, low capital requirements, weak brand loyalty.

Threat of New Entrants - impact + example

New players increase capacity, pressure prices, reduce profitability. Example: fintech apps (e.g., Revolut) vs. traditional banks.

Supplier power: factors to enrich the analysis

Supplier concentration vs. industry dependence; uniqueness of inputs / switching costs; forward integration threat (suppliers moving into the buyer's market).

Buyer power: factors to enrich the analysis

Buyer concentration vs. industry fragmentation; price sensitivity & switching costs; backward integration threat (buyers producing it themselves).

Substitution: factors to enrich the analysis

Availability of alternatives; price-performance trade-off; switching costs for consumers; innovation & market trends.

Market structures (key concepts list)

Perfect competition, monopolistic competition, oligopoly, monopoly (the slides list these as key concepts alongside Five Forces and competitive advantage).

Consumer decision-making process (5 stages)

1) Problem recognition 2) Information search 3) Evaluation of alternatives 4) Purchase decision 5) Post-purchase evaluation.

Problem recognition

Stage 1: the consumer identifies a need (e.g., 'My laptop is too slow').

Information search

Stage 2: exploring solutions (online reviews, friends' advice).

Evaluation of alternatives

Stage 3: the consumer compares different brands and features.

Purchase decision

Stage 4: final choice based on perceived value of the product or service.

Post-purchase evaluation

Stage 5: satisfaction, dissatisfaction, or loyalty.

Motivation (consumer psychology)

Internal force that drives behavior (Maslow's hierarchy).

Learning (consumer psychology)

Changes in behavior from experience: classical conditioning, operant conditioning, cognitive learning.

Perception (consumer psychology)

How consumers interpret stimuli; selective attention means they filter most marketing messages.

Attitudes

Consumer evaluations (positive, neutral, negative) toward a product or brand; combine beliefs, feelings and intentions.

Nudges

Subtle changes in choice architecture that influence behavior without limiting options (e.g., putting healthier food at eye level).

Anchoring

The first price seen affects perception of later prices.

Scarcity effect

Perceived limited availability raises desire (e.g., 'only 2 seats left!').

Loss aversion

The fear of losing is stronger than the joy of gaining.

Marketing uses of behavioral economics

'Limited-time offers' and default subscription renewals.

Cross-cultural behavior

Cultural values shape preferences (Hofstede's dimensions). Example: U.S. advertising emphasizes individuality; Japan stresses harmony.

Self-concept theory / identity and lifestyle

Consumers buy products to express who they are. Example: Patagonia consumers align purchases with environmental identity.

Hofstede's six dimensions

Power Distance; Individualism vs. Collectivism; Masculinity vs. Femininity; Uncertainty Avoidance; Long- vs. Short-Term Orientation; Indulgence vs. Restraint.

Long-Term vs. Short-Term Orientation

Whether a culture focuses on future rewards (long-term) or immediate results and traditions (short-term).

Indulgence vs. Restraint

Whether a society allows free gratification of desires (indulgence) or emphasizes self-control and strict norms (restraint).

Quantitative research

Collects numerical data to measure trends, behaviors and opinions statistically. Focus: measurement, large samples.

Qualitative research

Seeks to understand motivations, emotions and experiences behind consumer behavior. Focus: exploration, depth, meaning.

Quantitative vs. Qualitative (one line)

Quantitative = measurement (what/how many, large samples). Qualitative = exploration (why, depth and meaning).

Sampling

Selecting a smaller group from a larger population to make inferences about the whole.

Representativeness

The sample reflects the key characteristics of the population.

Probability sampling

Random, stratified, cluster sampling.

Sampling example & marketing use

Smartphone company surveys 1,000 people across ages/incomes on screen size. Ensures insights are valid and unbiased.

Data science / online analytics and big data

Use of digital platforms' data and massive datasets to track consumer behavior in real time.

Triangulation (combining methods)

Using multiple research methods to cross-validate results, increasing reliability and depth.

Why triangulate?

Reduces risk of bias, gives a 360-degree view of consumers, strengthens decisions.

STP framework

Segmentation, Targeting, Positioning.

Segmentation

Dividing the market into groups of consumers with similar needs/characteristics. Identifies possibilities.

Targeting

Choosing which customer group(s)/segment(s) to serve and focus marketing efforts on. Chooses priorities.

Positioning

Designing marketing to occupy a distinct place in the consumer's mind and appeal to the selected audience. Creates perceptions.

Four bases of segmentation

Demographic, Geographic, Psychographic, Behavioral.

Demographic segmentation

Age, gender, income, education. Example: Pampers targets parents of infants by age stage.

Geographic segmentation

Region, climate, city size. Example: McDonald's adapts menus regionally (spicy in India, rice dishes in Asia).

Psychographic segmentation

Lifestyle, values, personality. Example: Patagonia attracts eco-conscious adventurers.

Behavioral segmentation

Usage rate, benefits sought, brand loyalty. Example: Spotify distinguishes casual listeners from premium subscribers.

Three criteria for effective segmentation

Measurable, Accessible, Actionable.

Measurable (segment criterion)

Can the segment's size or characteristics be quantified?

Accessible (segment criterion)

Can the segment be reached via channels?

Actionable (segment criterion)

Can the firm design strategies to serve it profitably? (A niche hobby group may be passionate but too small - not actionable.)

Steps in the segmentation process

1) Identify market 2) Select bases 3) Develop profile 4) Evaluate attractiveness (size, growth, competition) 5) Select target segments.

Benefits of segmentation

Focus (resources to promising segments), Efficiency (avoid wasting effort on uninterested audiences), Relevance (messages resonate with specific groups). Example: Nike tailors campaigns for runners, basketball players, casual wearers.

Segment profiling

Detailed description of a segment's demographics, psychographics and behaviors.

Buyer persona

A fictional character embodying a segment (name, habits, goals). Example: 'Emma, 28, urban professional, values sustainability, buys eco-brands.'

Data-driven micro-segmentation

Using big data and AI to identify very precise consumer clusters. Techniques: data mining, machine-learning clustering (e.g., K-means). Example: HBO micro-genres ('dark comedies with strong female leads'). Value: higher engagement and conversion.

Segmentation in digital marketing

Dynamic targeting via Google Ads audience targeting, Facebook lookalike audiences, retargeting pixels. Value: cost-efficient, real-time adjustments. Example: Zara retargeting Instagram ads for browsed products.

Dynamic and evolving segments

Segments are not fixed; needs evolve with trends, technology, life stage and culture. Example: 'digital nomads' created a new travel/lifestyle segment.

Targeting - definition and goal

Selecting the segment(s) the company will serve after segmentation. Goal: maximize fit between brand strengths and customer needs. Example: Tesla targets high-income, eco-conscious consumers.