MGT 103 Midterm

4 P’s of Marketing

All internal controllable factors - organization controls

• Product: what is being offered (good, service, idea)

• Price: what is being exchanged for the product

• Promotion: how it’s being communicated to consumer

  • how is it being advertised?

• Place: how is product getting to the consumer

  • where are you selling the product?

Value Proposition

Benefits that an organization promises to the customer

• company + customer must have something to exchange

  • each must value what the other has

• target a certain population → have to create different things for different populations of people

Corporate Sustainability vs Corporate Social Responsibility

Corporate Sustainabiity:

Considers financial, social, and environmental consequences of business decisions

• ability of corporation to continue

  • need to take care of people + planet, but also need to make profit

  • Triple Bottom Line: Profit, People, Planet

Corporate Social Responsibility:

• helps company be socially accountable to itself, stakeholders, and to the public

• global brands expected to address social problems regarding what they sell + how they conduct business

• expected to conduct themselves to higher standard than local competitors

Organizational Structure + Why Need Strategy

Board of Directors: governance, accountability, and long-term oversight

Corporate Level: sets overall direction and allocates resources across the organizaiton

Strategic Business Unit (SBU): a business or group within the organization with its own market + compettive strategy

Functional Level: specialists within the business - marketing, finance, operations, HR, etc.

Need strategy because resources are limited!

• need to make choices about where to compete, how to create value, what to prioritize, what NOT to do

• provides long-term direction for business decisions

Core Values + Cultures

Culture: what you observe, behaviors you see

• easier to see this

Values: principles that organization holds

• instead of hierarchical business structure → more managerial, can talk to managers anytime instead of having to book 3 weeks in advance

• choose culture that fits you!

BCG Matrix

Stars: high share of high growth

• may need extra cash to finance their own rapid future growth

• when growth slows → become cash cows

Cash Cows: high share of low growth market

• ie iphone, not a lot of growth, but apple has huge share of it → use iphone sales to fund other portions of business

Question Marks: low share of high growth

• need lots of cash just to maintain market share

• need to choose right ones to invest in, phase out the rest

Dogs: low share of low growth market

• may have enough cash to sustain themselves, but may not become real winners for the organization

Growth Strategies: Products x Markets

Market Penetration Strategy

• seek to increase sales of existing products to existing markets

• safest strategy, already have product working in market, just trying to push more out

Product Development Strategy

• create growth by selling new products in existing markets

• ie making new oreo flavors

Market Development Strategy

• introduce existing products to new markets

• ie introducing chinese snacks to brazilian people

Diversification Strategy

• emphasize both new products + new markets to achieve growth

The Strategic Marketing Process (SWOT)

SWOT:

• Strengths (internal)

• Weaknesses (internal)

  • hire more workers!

• Opportunities (external)

  • look for opportunities and capitalize on those

• Threats (external)

  • need to figure out how to respond and defend against them

Sociocultural Shifts Shaping Business + Egocentrism

What’s trending → what consumers are asking for/actively engaged in

• Wellness: high protein - drinks, bars, chips

• Experiences over possessions: going to concerts

• Identity and Representation: be careful of brands that say one thing but do another

• Social Proof: when we look around and see what people are doing → take that as cue to what we should do

  • ie TikTok made me buy it

  • peer influences

Egocentrism: thinking that because you think a certain way, everyone else thinks the same way

Indicators of Economic Health + Economic Environment

Indicators of Economic Health:

• Gross Domestic Product (GDP): value of goods + services produced in country

• Inflation: rate at which overall prices are rising

  • ideal inflation ~2%

• Unemployment: % of labor force without work and seeking jobs

  • # of people trying to get job vs those who are successfully employed

• Interest rates: cost of borrowing money

Less money consumers have → less money they have to buy products

• economic conditions affect consumers’ ability + willingness to spend

Consumer Income and Purchasing in Recession

Gross income - total money earned

Disposable income - income left after taxes

Discretionary income - income left after paying for taxes and necessities

During times of recession, not all goods + services suffer:

• expensive items suffer, ie designer bags

• generic version of things survive better

• Other items thrive:

  • education sector does better → people take classes since they can’t get a job

  • home repair/auto repair/buying used vehicles

  • tobacco products, alcohol

Technological Forces

• AI more widely available to everybody

• everything we do online is constantly being monitored

  • in-store tracking apps

  • we are fed marketing ads for things we search up

Competitive Forces + Modern Competitive Landscape

Most companies we purchase from in monopolistic competition

• large # of suppliers/producers of product → branding critical!

• product doesn’t vary much, but experience with brand matters

• perception drives behavior!

Modern Competitive Landscape:

• Direct Competitor: same need, same category

  • Dunkin, Starbucks, Peet’s

• Product Substitutes: different products, same need

  • Red bull/Celsius vs espresso you make at home

• Budget Competition: different purchases, same wallet

  • getting Celsius vs making coffee at home

• Attention Competition: competing for time, attention + spending

  • Netflix, Insta, Tiktok, etc.

Regulatory/Political and Legal Forces

Marketers have to adjust to conditions and influence the legal process through contributions and lobbying

• be aware of what laws in place that can affect how you brand products

  • tariffs change how businesses do their business

  • used to sell flavored vapes → now illegal in California

Tactics in Ads

Recency: most recent thing you see sticks in your mind very well

• is why companies usually put their logo at the end of an ad

Primacy: first words you hear stick with you

• start of ad can say something related to brand, ie “Hey Siri”

Ethical vs Legal + Ethical Dimension of Social Responsibility

Ethics: personal moral principles and values

Laws: society’s values and standards that are enforceable in courts

Responsibility to fulfill ethical obligations to various stockholders:

• consumers, employees, suppliers, shareholders, community

• take care of employees first!

  • take care of employees → customers want to come to your business → shareholders very happy

Green Marketing, Greenwashing, Green Attitude-Behavior Gap

Green Marketing: promotes environmentally conscious production process of product and product itself

• Walmart asks suppliers to use environmentally friendly packaging

• Patagonia: built reputation on being environmentally friendly

  • WornWear - buy back program

Greenwashing: making unsubstantiated or misleading claim about environmental benefits of product/services

Green Attitude-Behavior Gap: gap between people saying sustainability matters to them and their purchases

B2B: Organizational Buying Situations

1) Straight rebuy - company buys same thing for a while → keeps purchasing from same company w/o thinking about other options

• buying the same printer paper from same supplier

2) Modified Rebuy - company is used to purchasing something but reconsiders whether they want to purchase from somebody else or what they’re buying

• ie trying new flavors + prices from different suppliers

3) New Task - company has never made this purchase in the past

• ie university purchases AI-powered advertising platform

Consumer Behavior + Types of Decision Making

Process we use to select, purchase, use, and dispose of goods, services, ideas, or experiences to satisfy needs/desires

Types of Decision Making:

• Extended: where you’re going to school, where you’re moving; will really change your life

• Limited: choosing where to go eat on one day

• Habitual: something you buy habitually, ie toothpaste, protein bar

Decision Making Steps

1) Problem Recognition

• difference btwn your actual/current state and ideal state

• actual state could decrease, ideal state could increase

2) Information Search

• need adequate info to make a decision

• internal + external search

• pre-purchase and ongoing search

• searching too much can cause higher levels of dissatisfaction; once you make purchase, DON’T CONTINUE SEARCHING

  • Maximizer: have less satisfaction with their lives, more stressed/anxious

  • Satisfier: very happy, search long enough to find good solution, then stop

• Behavioral Targeting - what ads follow you

3) Evaluation of Alternatives

• Universe of potential brands/products → all the possibilities

• Unawareness set → don’t know

• Evoked set → know these alternatives

  • Inept set: alternative not suitable for us

  • Consideration set: things that are suitable for us, weighing pros/cons

4) Product Choice

• heuristics + contextual cues

5) Post-purchase evaluation: consumer satisfaction/dissatisfaction

• degree of satisfaction influenced by whether expectations of product quality met (underpromise, overdeliver)

• post-purchase regret → cognitive dissonance

Product Choice: Heuristics (Mental Shortcut)

Heuristics: what we do instead of putting in a lot of cognitive effort towards a decision

• Price = quality

  • higher quality = cost more

  • not true 100% of the time, but is true enough that we can assume it

• Brand loyalty

  • emotional connection w brand, good experiences you’ve had with them

  • their values consistent with your values → feel connection with them

  • if this brand and another brand makes same product, easier decision to make

• Status Quo Bias

  • repeated purchase, if you like something at restaurant you keep ordering it

  • changing what we’re doing is a risk

• Country of Origin

  • chocolate from Switzerland, coffee from Italy, skincare from Korea

• Affect

  • just go with what feels good

  • after finishing 8 hour study session, you want something unhealthy, not salad!

• Normative Tactics

  • choose to do something because someone else tells you to do it

  • someone you know!

Product Choice: Contextual Cues

Sunk Costs: every decision we make has cost associated with it

• lose money + time with it, can also be applied to relationships

Endowment affect: feeling when a product becomes yours or when feels like ti becomes yours

• product endowed with value

• try on clothes → become ours in our mind

Compromise Effect (Extremeness Aversion)

• have 3 options, usually choose the middle option

• Starbucks has tall, grande, venti option → most people choose grande

• when Starbucks had trenta, sales of venti went up because venti moved to middle!

Decoy Effect (asymmetric dominance)

• company trying to push you into more expensive option

• doing it in a way that you feel dumb if you don’t choose it → option dominates

• ie at movie theater, small box is 8.99, large bucket is 9.99

• middle option can serve as information for people

Internal Influences on Decision Making

Perception, Motivation, Learning, Attitudes in Marketing, Age, Personality + Lifestyle

Perception

process by which we select, organize, and interpret info from outside world

• exposure → attention → perception

  • you can have good product, but if customers don’t perceive it as good, won’t sell!

• two people can look at exact same thing and interpret it differently!

  • people would like clown at kids party but not at our classroom right now

Takeaway: products are often tied to values / seen as having particular role

• psychological barriers to purchase can exist!

Motivation

Internal state that drives us to satisfy needs by activating goal-oriented behavior

• if marketers don’t understand your motivation → can’t talk to you

  • what will move you towards a purchase?

Learning

Relatively permanent change in behavior caused by info or experience

• Behavioral: how interactions with the environment shape our actions

  • Classical Conditioning: Pavlov’s dogs, pair bell with meat

    • Marketer takes celebrity you like and pair it with brand, over and over → think positively of brand

    • can change the way we think about something, but isn’t great at making us buy something

  • Operant Conditioning: really influences our behavior!

    • when you collect enough stars at Starbucks → exchange for merch/drinks

    • after you do this a number of times, can get something out of it

    • makes you interact with company/app

Attitudes in Marketing

Learned predispositions to respond favorably or unfavorably to stimuli on the basis of enduring evaluations of people, objects, and issues

• if we like your product but don’t like the ad → might not like product

• Puppy Monkey Baby: played during Superbowl, a lot of guys probably thought that it was awesome!

  • other audiences might not like

Age

Products can be targeted at certain age groups

• if product not appropriate for certain age, can’t market to them

• have to talk to different ages of people differenlty

  • use different social media platforms

Personality + Lifestyle

Personality: set of unique psychological characteristics that influences the way a person responds to situations in the environment

• product helps you be unique!

Lifestyle: shows how one spends their time and resources

• Psychographics: group consumers based on psychological + attitudinal similarities

Situational Factors in Decision Making

Physical Environment, Scarcity

Physical Environment

Can include lighting, way things are displayed, scents

• stores can have very strong scent, can make us really attracted or not at all

• mixue song playing 24/7

• Zara online experience: can’t find what you want

Scarcity

Relates to product and/or time

• time poverty: feeling as though you are running out of time

  • ie flash sales

• Limited time offers

  • limited chips, Girl Scout Cookies

Social Influences on Decision Making

Family Influence, Culture + Subculture, Social Class, Group Membership, Opinion Leaders, Gender Roles

Family Influence

Decisions within your household when you were growing up

• information gatherer: who is searching up all the info about a product?

• influencer: who is telling other people to buy it?

• decision maker: who decided to buy it?

• purchaser: who actually bought the product?

• user: who uses the product?

Social Class

overall rank/social standing of groups of people within a society according to factors like family background, education, occupation, and income

• Conspicuous consumption: buying luxury goods to show power, wealth, social status

• Compensatory consumption: retail therapy, compensating for some emotional sadness you have

  • ie fight with significant other, bad grade on test, etc.

• Parody display: status symbols that move in opposite direction

  • people in higher socioeconomic class observe what is consumed by people in low socioeconomic class

  • ie shirts with holes, beat up shoes, ripped jeans

Cultures and Subcultures

Culture: values, beliefs, customs, tastes produced/practiced by group of people

• ethnic, national, regional, university culture, Harley Davidson, etc.

Group Membership

Aspiration group: someone you look up to

• aspiring to go on this trip, have this product, etc.

Associative group: group you belong to

• ie friends, classmates, coworkers

• see them all the time → affects your behavior

Dissociative group: don’t belong to them, don’t want to

• don’t like music they listen to

• impact your behavior in a negative way

Opinion Leaders + Word of Mouth

• frequently able to influence others’ attitudes or behaviors

• people in your life who are first to purchase something and share you info about the product

  • can be both good or bad

Word of Mouth: can be positive or negative, incredibly influential

• we pay more attention to what people we know say

  • we’re more influenced by negative reviews than positive ones!

Gender Roles

Society’s expectations regarding appropriate attitudes, behaviors, and appearance for mena dn women

• gender neutral products on the rise (skin care, oversized hoodies)

Marketing Research + Types of Research Projects

Marketing Research: collecting, analyzing, and interpreting data about customers, competitors, and the business environment to improve marketing effectiveness

Types of Research Projects

• Basic: research to build general knowledge of consumer behavior / marketing

  • Academic research: info disclosures on consumer decision making

    • advertising repetitino on consumer memory

    • pricing changes on sales

• Applied Research: addresses specific organizational problem

  • corporate research:

    • designing ad campaigns

    • designing products

    • segmenting consumers

Types of Data about Consumers

Primary: collected specifically to answer the current research question

• can be collected internally or externally

• answers specific research question, more costly + time consuming

  • experiments, test markets, focus groups, surveys, observations

• doesn’t matter who collects it, as long as it answers research question

• collected using qualitative + quantitative data

  • qualitative: harder to generalize!

Secondary: previously collected for another purpose; already exists

• less costly, might not exactly answer research question

• less expensive + quicker to get, don’t need to spend extra money if data already exists

• Rule: collect secondary data first → then primary

  • Advantages: time saving, low costs

  • Disadvantage: may be out of date, not specific enough, definitions/categories may not be what we’re looking for

Research Methods

Depth Interviews: used for exploratory research

• one on one - market researcher + participant

• 30-60 minutes, preplanned questions with follow-up

• primarily qualitative

  • ask why they did something before and changed up

  • not making product decisions based on their answers!

Focus Groups: group of respondents discuss marketing problem by responding and reacting to each other

• usually 6-10 participants, trained interviewer develops discussion guide

  • ie interviewer passes around insulated drink container, talk about what you think about it and what comments you have

  • cons: not personal, not natural environment, lot of influence from others

• only exploratory, don’t take it and make decisions → only draw some conclusions

Observational Research: making observations of behavior → recording observations in objective manner

• Natural (home, store) vs artificial (lab) settings

  • pros: observe what customers actually do, rather than relying on what they say they do

  • cons: observation can reveal behavior, but may not explain why it occurred

• Mere measurement effect: can impact the behavior just by measuring something

Survey Research: personal interview (expensive), mail, phone, online surveys (fast + inexpensive)

• Types of Questinons:

  • Open-ended: ask to explain something

  • Close-ended: yes/no, Likert Scale, Semantic Differential Scale

• Can get lazy when filling out survey, may start clicking random things

Experimental Research: test hypotheses about causal relationship between variables

• look at effect of IV on DV

  • manipulate IV to have at least 2 conditions → measure DV

• different groups of customers get different treatments

Correlation vs Causation

Correlation: relatinoship between two variables

• two variables change at same time

Causation: one variable produces an effect on another variable

• need 3 factors:

  • 1) Correlation

  • 2) Temporal Antecedence

    • did anything happen before that could cause it?

  • 3) no third factor driving both

    • no confounding variables!

Study of Consumer Behavior: General Comments

1) Beware of Common Sense!

• must look at data instead of saying “oh of course they act this way”

2) understand the nature of the relationship!

• correlational or causal?

3) Consumer research is a social science

• can only reduce uncertainty rather than establishing certainty

• there is social aspect of human behavior, so there will always be uncertainty

• can’t say with 100% certainty that something will happen, can only look at general trend

4) qualitative or quantitative

• qualitative provides richer data

Three Market Segmentation Strategies

1) one product, multiple market segments

• Harry Potter books: read by kids, adults, elderly; lot of different segments, but is the same product

2) multiple products, multiple market segments

• change up product due to needs of people

• companies make multiple models of vehicles they have based on needs of customers

  • Ford: have big trucks to haul, big trucks to drive people

• Legos: sets for kids, adults, collector sets

• Cannibalization: need to make sure new product doesn’t steal customers from original product!

3) segments of one, mass customization

• company allows customer to personalize their product; not super common

• with nike shoes, can change color of the shoe, laces, etc.

Segmentation Variables

Demographic: age, gender, race, income, education, occupation, family, religion, etc.

Geographic: region, city / county size, state size, climate, terrain, etc.

• do you live near beach? 10 miles inland? In the mountains?

• will have different products for people in those areas

• by seeing how many people live in your county, can see if it’s good market!

Psychographic: personality attributes, motives, lifestyles

• hobbies, how you spend your time, etc.

Behavioral/Behavioristic: take into account what you’re buying

• if you’re a skateboarder, don’t take into account if you like to spend time at the skate park

• instead, look at what skateboards / gear you’re buying

Psychographic vs Behavioral Segmentation

Psychographic segmentation: group consumers according to psychological + attitudinal similarities regarding interests, activities, and social values

• Lifestyle groups: patterns of daily life and consumption

• Activities, interests, opinions: hobbies, what you do in freetime

• Values and Belief: personal principles + worldviews

• Personality Traits: materialism, individual differences

Behavioral segmentation: based on how consumers act toward, feel about, or use a product

• this group buys stuff in bulk, this group buys from us all the time

• Starbucks use stars system to keep you using the app

• Different benefits → different purchasing behaviors

• 80/20 rule: 80% of sales come from 20% of customers, 20% of sales come from 80% of customers

  • relatively smal group of customers buy from you all the time → most of the sales

  • reward the 20% of customers since they are buying from us all the time

Positioning vs Targeting

Positioning: what you do with our product, design company’s offer and image so it occupies a distinct and valued place in the target customers’ minds

• Good: clarify what brand is about, how it’s unique, how it’s similar, why consumers should buy and use it

• Points of parity: minimum you need in order to compete in a category

  • runners need certain things in their running shoes; cushioning, traction

• Points of difference: strong, favorable, unique associations that matter to the consumer

• are points of difference compelling?

  • Parity gets you considered, difference gets you chosen

Head to Head vs Differentiation Strategy

Head to Head: match rivals on attributes consumers already weight the most, win on execution

• ie Mastercard vs Visa → fighting for same customers, attitudes are around the same

Differentiation: make new attribute matter, where rivals are absent or weak

• ie cushioning in HOKA vs bare feet like Birkenstocks

• Trader Joes: grocery store, but doesn’t go head to head with Vons/Walmart

  • differentiate themselves by selling their own brand, can only go to Trader Joes to get it!

Potential Competitive Advantages

1) Product Differentiation: features, performance, style, design, attributes

2) Services Differentiation: delivery, installation, repair services, customer training

3) Image Differentiation: symbols, atmospheres, events

4) Personal Differentiation

Basic Positioning Statement + Repositioning

Basic Positioning Statement: identifies target market and needs satisfied, product class or category in which organization’s offering competes, offering’s unique benefits or attributes provided

• for internal audience to know what we’re doing

• who you are, what business you’re in, who do you serve, etc.

Repositioning: shifting a position, changing place product occupies in consumer’s mind relative to competitive products

• kids like chocolate milk, once they grow older → don’t drink anymore

• want to market to adults that they can still drink it after they’re older → tell athletes they can drink it after workout to replenish nutrients

Service: Unique Elements

Intangibility: can’t touch them

• can buy a day at Disneyland, can’t take the ride with you back home

• taking a flight

Inseparability: service is inseparable from the customer

• customer has to be there to experience the service

Inconsistency: services not always consistent due to human error / impacted by other humans

• goods are very consistent, looks all the same on the assembly line

• can get haircut at one place and like it but maybe not like it the second time you go

Inventory (there is none): if you don’t sell service then, it goes away

• if you take reservations for tables and then people don’t show up, you can’t say you’ll sell it tomorrow; you lost revenue

• Cancellation fee: helps mend inventory issue

Three Properties Every Service Has (based on when customers can judge their quality)

1) Search Attributes: customers can readily evaluate prior to purchase (size, price, TV picture quality)

2) Experience Attributes: can only be evaluated after purchase, or once customer has experienced

• haircut, flight, meal in restaurant

• can search as much as you want, but can’t say you like it until you experience it

3) Credence: even after experiencing it, is difficult for most customers to objectively evaluate

• often has certification associated with it, ie physical therapy, mechanic, therapy, jeweler

• ie psycho-therapy, physical therapy, acupuncture, religious services, etc.

Durable vs Non-Durable Goods

Durable: long lasting, don’t get used up as you use it

• more expensive, purchased infrequently, needs more information search, requires more selling effort

• ie presentation clicker

Non-Durable Goods: get used up as we use them

• less expensive, more frequently purchased, needs less info search and selling effort

• ie food, drinks, toothpaste

Product Classifications

1) Convenience Products

• purchased frequently, don’t put a lot of thought into them since we buy them so often

• very readily accessible, ie toothpaste

2) Shopping Products

• will spend more time thinking about it, will do more comparisons

• take longer / more effort to purchase than convenience product

• not as available to you, can’t go to corner store and get a new mattress or laptop

3) Specialty Products

• unique, very difficult to find, ie Rolex and Bentley

4) Unsought Products

• consumers don’t really seek them out, ie life insurance + fire extinguisher

• not on our shopping list usually

• consumers don’t know about or normally think of purchasing these items

Product Items, Lines, and Mixes

Product Item: individual product, specific product with unique brand, size, price

• iphone 16

Product Line: number of products that serve a similar need for a consumer

• all created by same brand

• ie iphones 15, 16, 17, pro max, etc.

Product Mix: all the product lines that an organization offers

• ie iphone, ipad, apple watch, apple vision pro, etc.

New Product Development (Innovation) + Paradox of Choice

Innovation: can be technological, but can also be something small

• Continuous: very incremental, all you need is to change the signage

  • can put something on packaging that says “new design”, add sparkles to toothpaste

  • don’t need to explain benefits / teach anything, just small note that points out to consumer it is new

• Dynamically Continuous: costs more, need to point out benefits to consumer, explain why they would want to purchase this

  • ie electric vs manual → electric costs more, explain to consumer why they should buy it

• Discontinuous: completely new, requires new learning + consumption patterns by consumers

  • ie electric car, must tell consumers why its good

Paradox of Choice: consumers believe they want a lot of options, but not really the case

• marketers are better off constraining your options!

• makes your decision easier → fewer options reduces anxiety

• if goal is sales → shouldn’t give too many options

Pepsi vs Coca Cola (New Coke) Story

In a blind taste test, people prefer the taste of Pepsi to Coke

• Puffery: make outrageous statements, saying you have the best of something

Coke made something sweeter than its usual formula to match Pepsi (#1 New Coke)

• in a blind taste test, people liked this New Coke over regular Coke and Pepsi!

• Coke took out all regular Coke and replaced with New Coke

  • Cannibalism: taking sales from one product to another, not bringing in new customers

• Biggest product failure of century, consumers sued company, huge protests, wrote to congressman

• lasted for 79 days until Coke realized their mistake and brought back regular Coke

Moral: people buy with their eyes first!

• in blind taste test, people can’t see what they’re getting

• when buying Coke, people want to buy what they’ve always had (red and white can)

• make sure you understand what is driving your customers’ purchasing!

Product Life Cycle

1) Introduction Stage

• no profits since company is recovering from marketing + R&D

• only a few competitors on the market

2) Growth Stage

• profits increase and peak

• product is accepted → sales rapidly increase, competitors increase

3) Maturity Stage

• sales peak, highest # of competitors

• weaker competitors start to leave. market, pull their products off the market

• can last a long time!

  • Coke: lasted over 100 years

4) Decline Stage

• rest of the competitors start to pull their funding and go off the market

• promotional spend decreases, sales decrease as customer needs change

Extending the Maturity Stage

• find new uses for product

• increase usage among current customers

• find new users or markets

• add features / improve quality

• change packaging (2 liter bottles, glass / plastic bottles)

• repositioning the product (change where you’re selling)

• changing price, promotion, or distribution

Product Adoption Process

Awareness → interest → evaluation → trial → adoption → confirmation

Awareness: massive advertising, tell customers you exist!

• even if you create awareness, doesn’t mean you create interest

Interest: teaser advertising

Evaluation: provide info to customers about how product can benefit them

Trial: demonstrations, sammples, trial-size packages

Adoption: make product available, provide product use informaiton

Confirmation: reinforce customer’s choice through advertising, sales promotion, etc.

Diffusion of Innovations: Adopter Categories

Innovators: 2.5% of population, first people to adopt product

• venturesome, higher educated, use multiple info sources

Early Adopters: 13.5% of population

• leaders in social setting, slightly above average education

Early Majority: 34% of population

• deliberate; many informal social contacts

Late Majority: 34% of population

• skeptical; below average social status

Laggards: 16% of population

• fear of debt; neighbors and friends are information sources

Influences on Rate of Adoption

Relative Advantage: degree to which consumers perceive new product as having superior benefits

• bigger the relative advantage → quicker people will adopt it

Compatibility: consistent with existing cultural values, customs, practices, way of doing things:

• is it compatible with my current life? ie cultural values, cusotms, practices

Complexity: degree to which innovation is difficult to understand / use

• more complex → less rate of adoption

Trialability: ease of sampling a new product + its benefits

• if people can try out product → higher rate of adoption

Observality: degree to which others can witness new product + see benefits

• if observe more people using product → higher adoption rate

Brand + Brand Elements

Brand: emotional connection + set of perceptions people associate with your business or product

• communicates who you are, what you do, who you do it for

Brand elements: identifiers that distinguish a product

• name, logo, slogan, sound, URL, any unique element

Brand Equity

Added value that brand name gives to product beyond functional benefits provided; shapes how consumers respond to marketing, creates competitive advantage

• perceived quality: higher quality = higher brand equity

• brand associations: celebrities, etc.

• brand name awareness: if you say name and think about a scandal, will decrease!

• brand loyalty: more brand loyalty → increase equity

Tylenol + acetaminophen are the same, but Tylenol is more expensive

• people still grab Tylenol first → brand equity

Brand Hierarchy

Individual Branding (Multibranding)

• Multiple brands for each product or product line

  • ie Tide, Pampers, Crest, Secret, all brands of Proctor & Gamble

  • Chevrolet, Buick, Cadillac, all brands of General Motors

  • Attracting different target markets

Umbrella/Family/Multiproduct Branding

• single brand for all of company’s products

  • ie YETI (thermos, tent, pots/pans, glasses), Costco (Kirkland Signature)

  • Costco is reputable + trustworthy → people will buy

• trust, reputation, quality expectations, transfers expectations to new products

  • don’t need to put money into new brand, leverages existing brand equity, creates instant recognition

  • if something goes wrong with one of your products, can make brand equity suffer

Individual Branding: allows company to serve multiple segments without diluting the image of the brand

Repositioning a Product or Brand

Repositioning: changing how a product or brand is perceived by customers

• changing needs of target customers

• reach new target market

• react to competitors positioning, if they’re moving → move as well

• respond to legal challenges

Extending and Managing Brands + Benefit / Risks

1) Line Extension - same product category, new variation

• ie Coke → Diet Coke / Coke Zero

• Oreo → Oreo Ice Cream / Oreo Birthday Cake Flavor

2) Brand Extension - strategy of using established brand name to introduce offerings in new product category or context

• Dyson: vacuums → air con → hair care; anything with air flow

3) Brand Portfolio / Architecture - related brands serve different segments or price tiers

• Marriott → Fairfield / Courtyard / Westin / Ritz-Carlton

Benefit: leverage brand equity

Risk: poorly managed extensions can dilute or confuse the brand

Functions of Packaging

• may talk about how to use product

• conveys what is inside packaging

• protects product and maintains its functional form

• communicates quality, convenience, sustainability, safety, product benefits, brand identity