BADM 3401

Marketing

the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return

Peter Drucker

“The aim of marketing is to make selling unnecessary”

5-Step Marketing Process

first 4 steps create value *for* the customers; final step captures value *from* them

Market myopia

The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products.

\*drill bit, camera vs iPhone example

Marketing management

The art and science of choosing target markets and building profitable relationships with them.

Production Concept

The idea that consumers will favor products that are available and highly affordable; therefore, the organization should focus on improving production and distribution efficiency.

Product Concept

The idea that consumers will favor products that offer the most quality, performance, and features; therefore, the organization should devote its energy to making continuous product improvements.

Selling Concept

The idea that consumers will not buy enough of the firm’s products unless the firm undertakes a large-scale selling and promotion effort.

Marketing Concept

A philosophy in which achieving the organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.

\*\*Marketing concept starts with the needs and wants vs Product concept

Societal Marketing Concept

The idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests.

Needs

States of deprivation: physical, social, individual

Wants

Form that needs take as they are shaped by culture and individual personality

Demands

Wants backed up by purchasing power

Marketing Mix

set of tools (four P’s) the firm uses to implement its marketing strategy

4 P’s

1. Product
2. Price
3. Place
4. Promotion

Marketing segmentation

ex: GAP, Banana Republic, Old Navy serve different groups through *target marketing*

Target Market vs Value Proposition

What customers will you serve (target market)? How can you serve these customers best (value proposition)?

Analyzing the Marketing Environment

*the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers.*

Microevironment

The actors close to the company that affect its ability to serve its customers— the company, suppliers, marketing intermediaries, customer markets, competitors, and publics.

Macroenvironment

The larger societal forces that affect the microenvironment— demographic, economic, natural, technological, political, and cultural forces.

Marketing intermediaries

Firms that help the company to promote, sell, and distribute its goods to final buyers. *bridge the company and the consumers*

Resellers, physical distribution firms, marketing service agencies, financial intermediaries

Publics

Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. Financial, Media, Government, Local

Economic Environment

The factors that affect consumer purchasing power and spending patterns

Natural Environment

Trends include shortages of raw materials, increased pollution, increased government intervention, and a greater attention to environmentally sustainable strategies.

Technological Environment

Technology is the most dramatic force in changing the marketplace. It creates new products and opportunities, and kills off older products.

Political/Social Environment

Increasing Legislation. Legislation affecting business around the world has increased steadily over the years.

Cultural Environment

Core cultural values and Secondary cultural values

Secondary Cultural Values

(People’s view of …)

* themselves
* others
* organizations
* society
* nature
* the universe

Consumer buyer behavior

The buying behavior of final consumers — individuals and households that buy goods and services for personal consumption.\*

\*different than business or government

Consumer Market

All the individuals and households that buy or acquire goods and services for personal consumption.

The Environment: Marketing stimuli (product, price, place, promotion)

Buyer's Black Box: Buyer’s characteristics

Buyer Responses: Buying attitudes & preferences, purchase behavior

The Environment: Other (economic, technological, social, cultural)

Buyer's Black Box: Buyer’s decision process

Buyer Responses: Brand and company relationship behavior

Culture

The set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions

Subculture

A group of people with shared value systems based on common life experiences and situations

____are difficult to change

attitudes and beliefs

The Buyer Decision Process

Need recognition → Information search → Evaluation of alternatives → Purchase decision → Postpurchase behavior

Independent culture

western → achievement, success, individualism, freedom

Interdependent culture

eastern → collectivism

(Social Factors) Reference groups:

direct or indirect points of comparison or reference in forming a person’s attitudes or behavior

(Social Factors) Aspirational groups:

group that individual wishes to belong

(Social Factors) Opinion leaders:

persons within a reference group who because of special skills, knowledge, personality, or other characteristics exerts social influence on others

Personal Factors

* Ace and life-cycle stage
* Occupation
* Economic situation
* Lifestyle: a person’s pattern of living as expressed by their activities, interests, and opinions
* Personality: unique psychological characteristics that distinguish a person or group
* Self-confidence, dominance, sociability, autonomy, defensiveness, adaptability and aggressiveness
* Self-concept: e.g. below

Toyota Prius: connects to self-concept (people’s possessions contribute to and reflect their identities)

Psychological Factors

1. Motivation
2. Perception
3. Learning
4. Beliefs and attitudes

Perception is

the process by which people select, organize, and interpret information to form a meaningful information to form a meaningful picture of the world.

selective attention:

tendency for people to screen out most of the information to which they are exposed

selective distortion:

tendency for people to interpret information in a way that will support what they already believe

selective retention:

tendency to *remember* good points made about a brand they favor and *forget* good points about competing brands

(S)TEPPS

Social currency: does it make you look good?

S(T)EPPS

Triggers: reminder, ‘top-of-mind’

ST(E)PPS

Emotion: strong emotion = sharing

STE(P)PS

Public: mimic everybody else’s behavior

STEP(P)S

Practical value: share useful information

STEPP(S)

Stories

Belief:

descriptive thought that a person holds about something

Attitude:

a person’s long-term/consistently favorable or unfavorable evaluation, consistent feelings and tendencies toward an object or idea

Exploratory research

Marketing research to gather preliminary information that will help define problems and suggest hypotheses.

Descriptive research

Marketing research to better describe marketing problems, situations, or markets, such as the market potential for a product or the demographics and attitudes of consumers.

\*more concrete

Descriptive Research Example

Q: Consumer attitude towards online shopping: what do consumers want from online shopping?

**Causal research**

Marketing research to test hypotheses about cause-and-effect relationships.

\*testing a hypothesis

Primary data

(collected for specific purpose; e.g. observational, survey, experiment; disadvantages include cost and time)

Secondary data

(already exists, was collected for another purpose; e.g. internal data, government data, purchase data; disadvantages include risk of being old, irrelevant, or inaccurate)

CRM

Customer relationship management

Research Procedure

1. Defining the Problem and Research Objectives


1. exploratory, descriptive, causal
2. Developing the Research Plan


1. Determine exact information needed
2. Develop a plan to collect the information effectively (data sources)
3. Implementing the research plan— collecting and analyzing the data
4. Interpreting and reporting the findings

Contact Method: Focus groups

* Group of 6ish participants w/ a trained moderator
* Challenges: expensive, difficult to generalize from small group, consumers not always open/honest, risk of group-thinking

Contact Method: Online methods

* Internet surveys, online panels, online expiriments, online focus groups
* Advantages: low cost, speed, higher response rates, good for hard to reach groups

Contact Method: Other

Mail, telephone, personal

Marketing segmentation

Dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes

Why we segment the market

Different groups have different needs

Three characteristics for segmentation

Homogenous: establish the common needs of the group

Distinction: ensure the group is unique

Reaction: require group members to react

Ways/groups to segment the market

Behavioral, Demographic, Psychographic, Geographical

Differentiation

Differentiating the market offering to create superior customer value

Positioning

Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers

Segment size =

\# of buyers x units x price

Geographic Segmentation

divides the market into differentgeographical units such as nations, regions, states,counties, or cities

Demographic Segmentation

divides the market into groups based on variables such as age, gender, family size, family lifecycle, income, occupation, education, religion, race, generation, and nationality

Demographic Segmentation: Age and life-cycle stage segmentation

offering different products or using different marketing approaches for different age and life-cycle groups

Banana Republic 10% off for retirees

Demographic Segmentation: Gender segmentation

divides the market based on sex

Dr. Pepper 10 “for men”

Demographic Segmentation: Income segmentation

divides the market into affluent, middle, or low-income segments

e.g. Ritz Carlton versus Marriott

Psychographic segmentation

divides buyers into different groups based on lifestyle, or personality traits

e.g. who shops at whole foods versus Trader Joes

\*more influential than demographic

Behavioral segmentation

divides buyers into groups based on their uses or responses to a product.

\
occasions: candy on valentine’s day

benefits sought: charmin strong versus charmin soft

user status: first-time, regular, non, ex-, potential

usage rate

loyalty status

Requirements for Effective Segmentation

MASDA

* Measurable:
* Accessible:
* Substantial:
* Differentiable:
* Actionable:

Undifferentiated (targeting strategy)

Marketing mix → all buyers in one segment

e.g. Tangled

Differentiated (targeting strategy)

(Old Navy) Marketing mix 1 → Segment 1

(GAP) Marketing mix 2 → Segment 2

(Banana Republic) Marketing mix 3 → Segment 3

Concentrated marketing

targets niche markets (image is more salient, saves time and money when you design product for just one segment)

Micromarketing

local marketing and individual marketing (YouTube targeting you with suggested videos to watch)

Product position

* the way the product is defined by consumers on important attributes— the place the product occupies in consumers’ minds relative to competing products
* E.g. Tide (all-purpose family detergent), Uber (Move the way you want), Subway (eat fresh an live healthy)

Competitive advantage

advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices

value proposition

the full mix of benefits upon which a brand is differentiated and positioned (benefits to price ratio)

y axis: less benefit to more benefit

x axis: $$$

want to be in the “more for more”, “more for same”, “same/more for less”, or “less for much less”

STP

Segmentation, Targeting, Differentiation and Positioning

integrated together example: McDonald’s

Types of differentiation

1. production differentiation
2. service differentiation (jimmy johns delivery)
3. channel differentiation (amazon)
4. people differentiation (employees)
5. image differentiation (brand image)

service differentiation example

1. (jimmy johns delivery)

channel differentiation

1. (amazon)

people differentiation

(employees)

image differentiation

(brand image)

Product (tangible)

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

Service (intangible)

An activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything \*includes experiences

Convenience product

\: customers usually buy frequently, immediately, and with minimal comparison and buying effort

Shopping product

\: the customer, in the process of selecting and purchasing, usually compares on such attributes as suitability, quality, price, and style

Specialty product

\: with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort

Unsought product

the consumer either does not know about or knows about but does not normally consider buying (usually need use selling concept \*promote!!)