words

what is marketing?

• Managing profitable customer relationships

• Satisfying customer needs

• Creating and capturing customer value

• Provide something that is worth our and the customer’s time

Marketing is 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.

B2C

Business to consumer

individuals or households, personal use of goods and services

B2B

private companies and public organizations

goods and services used in production of further goods and services

value

perceived benefits in relation to perceived costs (e.g. skills, effort, money)

value in use

value cerated for/by the customer through use of offering

value in exchange

value offering prior to use, reflecting invested resources, indicated by price

customer lifetime value

the value of the entire stream of purchases a customer makes over a lifetime of patronage

share of customer/wallet

portion of the customer’s purchasing power that a company captures in its product categories

customer equity

the total customer lifetime values of all of the company’s customers

microenvironment

actors directly related to the firm, e.g. the company, suppliers, marketing intermediaries, customers, competitors, publics, stakeholders

macroenvironment

larger societal forces that affect the firm, e.g. society, markets, economic situation, inflation, demographics

what does the marketing strategy depend on?

• Offering: what products/services we offer

• Competition: we need to position and differentiate our offering

• Customer: what is the best way to reach to specific kind of customers

• Market situation: what is the overall economic situation

• Firm financial and other goals: e.g. corporate social responsibility

market segmentation

dividing a market into distinct groups of buyers who have different needs, characteristics or behaviors, and who might require separate products or marketing programmes.

market segment

a group of customers who respond in a similar way to a given set of marketing efforts

targeting

The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

target market

a set of buyers sharing common needs or characteristics that the company decides to serve

mass marketing

undifferentiated offering for the entire market, bulk products. marketing strategy in which a business aims to reach and appeal to the largest possible audience with a single, unified message or product offering

segmented marketing

several segments with separate offerings, e.g. apple ipads or car manufacturers. strategy where a company targets two or more distinct market segments, designing separate marketing mixes

niche marketing

focus on one lucrative segment (niche) with a highly specialized offering. focus on serving a specigic, well-defined segment of the market, often a small group of customers with uique needs

one-to-one marketing

tailor marketing for individual customers or location, e.g. luxury products, industrial marketing

differentiation

Define the offering in a way that sets it apart from competitors and creates superior customer value and a competitive advantage over competitors

positioning

Arranging a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target customers

reference points

product should be similar enough to be familiar to customers 

Unique selling point (USP)

key difference valuable for customers, statement that highlights what makes a product/service/business stand out from the competition by emphasizing a unique benefit

value proposition

the full mix of benefits upon which a product is positioned, the overall offering to customers in terms of what is valuable

competitive advantage

Offering consumers, or employees, visitors or patients etc. greater value than competitors do

competitive analysis

Identifying key competitors, assessing their objectives, strategies, strength and weaknesses, reaction to patterns and selecting which competitors to attack or avoid

competitive marketing strategy

Position the company against competitors that give the company the strongest possible strategic advantage

benchmarking

process of measuring a company’s performance, products, services or processes against those of top competitors or industry leaders to identify areas for improvement

market leader

the firm with the largest market share in its industry

market challenger

a runner-up firm seeking to increase its market share

market follower

a runner-up firm that wants to hold its share in an industry without creating disruption

market nicher

a firm that serves small segments that the other firms overlook or ignore

market penetration

increase market share with existing (or slightly improved) products

• Increase product usage through promotion

• Frequency of use

• Quantity used

• New applications of product

• Changed pricing

• (seasonal) promotions

product development

increase revenue with new products

• Product improvement

• Product line extensions – new variants

• Completely new products on the same market

market development

increase revenue by expanding market

• geographic extension

  • target new segments

diversification

creating new products on new markets

• vertical integration

• diversification into related/unrelated markets

vertical integration

Forward integration: a company expands closer to the end customer, often by acquiring distribution or retail channels

Backward integration: a company expands by acquiring or developing operations earlier in the supply chain

variety seeking behavior 

• Do not pay much attention

• Achieving low risk, does not matter so much for consumer

• Relatively cheap products, low-risk purchases, low switching costs

• Lot of variety usually available

• Usually leads to experimentation and spontaneous buying behavior

• Importance of constantly getting consumer attention (promotions, new product variants)

• Examples: wine, different types of coffee, restaurants

habitual buying behavior

• Very low difference between products

• Type does not matter so much, buy something standardized

• Cheap product, low-risk purchases, low switching costs

• Not much perceived difference between brands/products, i.e. the products are considered largely interchangeable

• Importance of availability, overall positive brand image à presence in sales channels, price promotions, long-term brand development

• Examples: soap, washing detergents, toothpaste

dissonance-reducing behavior

• Highly involved buying process, little perceivable differences between products

• Dissonance occurs when customers worry they may make the wrong choice

• Importance of assuring consumers (satisfaction guarantee, ability to return products, expert and other users’ opinions)

• Example: flights, hotel booking, websites, insurance, electricity

complex buying behavior

• High involvement buying process, expensive and complex products, purchased infrequently, possibly risky purchase

• Can be considered an investment rather than consumption

• Significant differences between products and brands

• Important to support customers individually in buying process à personal selling, providing expertise and advice

• Examples: specialized IT equipment, wedding dress, house, car

switching costs

cost associated with switching: Monetary, Psychological, Contractual, Social.

value creating logic

customer value creation using the offering occurs over a longer period of time

relationship marketing

objectives: customer satisfaction, customer delight, share of customer, customer retention, customer loyalty

central concepts: trust, commitment, co-operation, communication, shared values, confict, power, interdependence, non-opportunistic behavior

tools: direct marketing, database marketing, quality management, services marketing, customer partnering

transactional marketing

• one-off exchanges, promotions

• brand management

• customer interaction: short-term focus

• mass communication

• top-down market research

• market share

• profitability

• customer service: reactive problem solving

• data usage: limited to financials

• focus on decision phase

relationship marketing

• ongoing exchange

• customer management

• long-term focus

• personal communication, personalization

• ongoing dialogue

• consumer mind share

• lifetime value of customer

• customer understanding through segmentation and profiling

• customer engagement: active interaction

• loyalty program

• focus on post-purchase

customer relationship management (CRM)

the practical process of building and maintaining profitable customer relationships

derived demand

match needs and wants to consumers. Generate demand by certain levels of purchase power, which create demands of goods for B2C. this needs a certain level of manufacturing/service factories, which leads to the investment in systems/products from B2B

roles in organizational buying

Initiator: initiates the buying process

Influencers: affect the purchase, e.g. by deciding on the specification of the purchase

Decider: decides on specifications, makes final purchase decision

Buyer: manages the buying transaction in practice

Users: use or are affected by the purchase

Gatekeepers: control access to other persons

product

Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need.

In practice: physical goods, services, ideas, experiences, event, persons, places, ownership, information. Can be bundled to form an offering.

core benefit

problem-solving benefits

actual product

The core benefits are fulfilled with an actual product with service features, design, an adequate quality level, a brand name and an appealing package

augmented product

An augmented product is built around the core benefit and acutal product by offering additional services and benefits. e.g. warranties, instructions, support, installation, delivery, after-sales service and a nice retailing environment

IHIP service characteristics

Intangibility: services cannot be directly observed or evaluated prior to delivery (e.g. movies)

Heterogeneity: service outputs vary widely depending on customer and service provider (e.g. restaurants)

Inseparability: production and consumption is simultaneous (can’t be separated, e.g. eating at a restaurant)

Perishable: services cannot be stored

goods-services continuum

offerings that are highly good/service like

• pure goods (food products, chemicals, books)

• core goods (appliances, data storage systems, automobiles)

• core service (intangible elements, hotels, airlines, internet service providers)

• pure services (teaching medical advice, financial consulting)

product line

A group of related products sold to the same customer groups marketed through the same types of channels or fall within given price ranges

product mix

The set of related products and services offered by a firm (e.g. offering)

market penetration

get more consumer in our existing target segments, develop branding/offering to increase value instead of changing  product e.g. promotions, pricing. Increasing market share in current market/segments

market development

Entering another geographical market. Selling same product to another segment

product development

create new variants of existing products. Developing existing products. new products/offerings -are they valuable for the same product

diversification

Creating new products for markets outside the current customer segments

value delivery network

supply chain, A set of independent organisations making the product of service available for the customer.

direct marketing channel

manufacturer-owned and has no intermediary levels. Channels with intermediaries owned and operated by the manufacturer also fall under this definition (e.g. HM and Zara)

indirect marketing channel

contains one or more intermediaries other than the manufacturer

horizontal channel conflict

multiple channel members compete for same customers in the same area/segment

vertical channel conflict

different levels in marketing channels compete for same customers

market communication

promotion, reaching the customer and communicating about your value proposition

proof-of-concept promotion

show customers that your product actually provides the benefits that you are offering (new product)

brand

A brand represents everything that a product, a service, an organization, an employer, a region or a person means to consumers and other target audiences. Brands reflect consumers’ perceptions and feelings associated with a product and its performance

the meaning attached by consumers to a product of firm.

brand equity

level of financial performance/outcomes due to us having a strong brand

product branding

develops unique marketing strategies for each product

firm/corporate branding

creates an universal image and reputation aligned with the company’s vision

characteristics customer brand relationship

• Brand recognition

  • Familiarity with brand symbols

  • Association with other symbols or characteristics

• Valence: from negative to positive (feeling)

• Relationship strength

  • Brand love

• Brand community engagement

value-based pricing

setting price based on buyers’ perceptions of value rather than on the seller’s costs

cost-based pricing

setting prices based on the costs of producing, distributing and selling the product plus a fair rate of return for effort and risk

cost-plus pricing

adding a standard mark-up to the cost of a product. Example: a retailer buys a T-shirt for $10, adds $5 to cover overhead and profit, and sells it for $15.

target costing

pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met

product line pricing

setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features and competitors prices

optional-product pricing

offering to sell optional or accessory products along with the main product, this taking advantage of an existing purchase transaction (example: apple)

captive-product pricing

setting the price for a critical complementary product that must be used along with the main product (for example: spare parts and replacement cartridges). Often with high mark-ups.

product-bundle pricing

setting a price for a bundle of products not available as separate products (example: meals at McDonald’s)

price skimming

setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price. The company makes fewer but more profitable sales

market-penetration pricing

setting low a price for a new product in order to attract a large number of buyers and a large market share

dynamic pricing

Price changes according to time, actual use of product, even individual consumer characteristics

exploratory research

• goal: gather preliminary information, define problem

• usually based on qualitative approach

• e.g. what kind of services could we provide around our product?

descriptive research

• goal: describing markets and customers (in detail)

• both qualitative and quantitative approaches can be used

• e.g. what age groups buy our products (brand development?)

casual research

• goal: test hypotheses about cause-and-effect relationships

• usually based quantitative survey or experimentation data

• e.g. how do customers react to change in price (product introduction)

sampling unit

who is to be surveyed

sample size

how many people should be surveyed

sampling procedure

how should the people in the sample be chosen

simple random sampling (probability strategy)

every member of the population has a known and equal chance of selection. Only one stage of selection

systematic sampling (probability strategy)

starting point selected by random process and then every nth number of the list is selected. The problem of periodicity occurs if a list has a systematic pattern (not random)

stratified sampling (probability strategy)

simple random subsamples are drawn from within each stratum of the population. First, a variable is identified for stratification (e.g. age). Second, for each separate subgroup/stratum (e.g. 16-25, 26-40, 42-55), a list of population elements must be obtained.

cluster (area) sampling (probability strategy)

the primary sampling unit is no longer the individual element in the population (e.g. grocery store) but a larger cluster of elements located in proximity to one another (e.g. cities).

convenience sampling (non-probability strategy)

people that are most conveniently available (e.g. selecting all visitors to a website). Produces a large number of responses quickly and at a low cost but induces a self-selection bias.

judgement sampling (non-probability strategy)

based on personal judgement about some appropriate characteristic, to achieve specific objective.

quote sampling (non-probability strategy)

various population subgroups are represented on pertinent characteristics to the extent that the researcher desires.

snowball sampling (non-probability strategy)

initial respondents are selected by probability methods and additional respondents are obtained from information provided by the initial respondents.

qualitative data

textual, visual, oral

Focus on stories, portrayals, meaningful characterizations, interpretations, expressive descriptions