Marketing Theory

marketing - CIM definition

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management process responsible for __**identifying, anticipating and satisfying**__ customer needs profitably

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*(IAS)*

marketing - AMA definition

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activity, set of institutions and process for creating, communicating, deciding and exchange offerings that offer value for customer, clients, partners, and society at large

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*(CCDE)*

marketing periods

*(PSMS)*

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Production Period (1890-1920): focus on physical production & supply, demand exceeded supply, after industrial revolution

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Sales Period (1920-1950): focus on personal selling supported by advertising and market research, after World War I

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Marketing Period (1950-1980): more advanced focus on customer focus, after World War 2

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Societal Marketing Period (1980-now): stronger focus on ethical and social concerns in marketing, during information revolution

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Who invented marketing mix?

Eugene Mc Carthy

Marketing Mix

product

place

price

promotion

Extended marketing mix (7ps)

*(for services)*

4ps + 3 service p’s :

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Physical Evidence (tangible components of services are strategically important)

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Process (importance of service delivery, easier to mange customer expectations when processes are standardized)

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People (importance of customer service)

relationship marketing

marketing with management of successful relational exchanges

\--→ focus on building long-term relationships with CUSTOMERS + STAKEHOLDERS

Unsustainable marketing

marketing that does not serve the common good

* criticized for being unethical in nature, manipulative and creating unnecessary needs and wants
* imp of critical market analysis and mainstream market analysis

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Critical market analysis

helps in problematizing hitherto uncontentious marketing areas to reveal underlying institutional and theoretical dysfunctionalities

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Key topics:

1) Marketing as manipulation (framing -→ spin)

2) Commodity Fetishism (MARX)

3) Need vs Choice

sustainable marketing

focus on 3 E’s of sustainablity

1) Ecological

2)Equitable

3)Economic (long-term economic development not short-term)

5 motivations behind CSR

1) Responsibility to go beyond production of goods and services for a profit

2) Responsible to solve social issues, including those they helped to create

3) companies have a broader constituency than shareholders alone

4)companies have impacts that go beyond simple marketplace transaction

5) companies serve a wide range of human values that go beyond economic values only

Ethical Marketing

The analysis sand application of moral principles to marketing decision making and their outcomes

5 types of ethics

normative ethics - concerned with the rational enquiry into societal norms accepted by a society

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social/religious ethics - concerned with right or wrong w.r.t to conduct and character, while making an implicit claim to an allegiance to something (e.g. God)

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positive morality - knowledge adhered to by a social group, concerning right and wrong in respect to character and conduct

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descriptive ethics - study of system of beliefs and practices of a social group from outside that group

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Metaethics - form of philosophical enquiry treating ethical concept and belief systems as objects of philosophical enquiry themselves

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Norms of AMA (American marketing association)

* do no harm
* foster trust in the marketing system
* embrace ethical values

fundamental aspects of understanding customer behaviour

Cognition, Learning, Perception

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other less imp: personality + motivation

The consumer proposition acquisition process

1) Motivation Recognition (problem recognized that one is far from desired state)

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2)Information gathering

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3)Proposition evaluation (determining criteria to rank possible option - may be irrational/rational)

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4)Proposition selection

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5)Acquisition (purchase)

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6)Re-evaluation

Cognitive Dissonance

we are motivated to re-evaluate our beliefs, attitudes, opinions, or values if the position we hold on them at one time is not the same as the position we held at an earlier period

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\-more likely with high involvement purchases (e.g car / house)

3 theories of human learning

1)classical conditioning - when unconditioned stimulus becomes associated with conditioned stimulus; learning by association

\----→ e.g. perfume samples - normal ad is associated wwith scent from perfume sample

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2) operant conditioning - learning by behavioral reinforcement through punishment and rewards

\--→ offering free food samples in supermarkets + loyalty cards

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3) social learning - learning by modelling others, humans can delay gratification and dispense own punishments or rewards

6 memorisation processes impacting consumer choice

1) factors affecting recognition and recall (words used less often are recognized more and recalled less)

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2) importance of context

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3)load processing effect (more info at once = harder to process into memory)

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4)form of object coding and storage in memory (info is stored in form it is presented to us in)

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5)input mode effects (short term recall of sound is better than short-term recall of visuals)

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6) repetition effects (repetition increases recall but this plateaus)

How do researchers characterize personalities?

using BIPOLAR SCALES

Maslow’s hierarchy of needs

\---------------please stay by every sunday ---------------

1) Physical

2) safety

3) belonging (affection ,attachment, friendship)

4) esteem (valued and respected by self and others)

5) self-actualization (need to fulfil own potential)

Theory of planned behavior

(motivation theory)

Our behavior (to buy) is brought about by our intention to act in a certain way. This intention is shaped by the attitude towards the behaviour (good or negative?), the subjective norm (societal pressure to perform or not perfom the behaviour) and the perceived behavioural control (perceived ease/difficulty of performing the behavior)

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who makes the decisions in terms of organizational buyer behaviour?

Decision-making unit / Buying Centre

6 members of the decision making unit and their roles

1)users - use the actual product

2)decision-makers

3) deciders - make purchasing decisions and are hardest to identify

4)gatekeepers - have potential to control info flow to organization

5)influencers - consultants/experts who set technical specifications and assist evaluation of alternatives

6)initiators - request purchase

Buy class

__***BUYING SITUATIONS***__

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3 buy classes:

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1)new task

2)modified rebuy

3)rebuy

Buy Phases

SERIES OF STEPS WHICH ORGANIZATIONS PASS THROUGH WHEN MAKING PURCHASING DECISIONS

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6 steps:

1) need recognition

2) product specification

3)supplier and product search

4)evaluation of proposals

5)Supplier selection

6) evaluation

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%%***No p slips every single evening***%%

Marketing with ethnic groups

1) total standardization

2)product adaptation

3)advertising adaptation

4)ethnic marketing (e.g. BOLLYWOOD)

Market Research vs Marketing Research

Market Research: research to understand the market (customers, competitors & industries)

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Marketing Research: __***SUBSUMES MARKET RESARCH***__: gives insight into efficacy of different marketing strategies and tactics

when is customer insight valuable?

if rare, hard to replicate and of potential use for management decisions

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(customer insight is actionable knowledge about customers gained by research)

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role of CEO/CMO in research

* recognize importance of supporting the insight
* ask helicopter questions
* not guess answers to strategic questions but demand evidence-based answers
* provide required resources

role of RESEARCHERS in research

* act as PROBLEM SOLVERS not reporters
* focus on gaining a CAUSAL understanding not just describing attitudes
* focus on changing marketing situation

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role of INSIGHT MANAGERS in research

* challenge the company’s strategy assumptions
* challenge the obvious
* analyze and combine all existing relevant data
* devote greater resources to providing insight

Research Brief

preliminary outline of client’s needs given to shortlisted agencies

Types of commissioned market research agencies

* consultant (when no extensive fieldwork is needed)
* Field + tab agency (carries out data collection but company designs research itself)
* Data preparation + analysis agency (only does data anlaysis)
* Full service agency (does everything)

criteria for choosing the agency

\-reputation + expertise of agency

\-monetary value of study

\-time needed for study

\-likelihood that research will help solve **Management Problem**

Marketing Research Process

1) define problem *(define management problem and use to formulate research question)*

*2)plan research*

3)data collection

4)data analysis/interpretation

5)write report & make presentation

8 parts of a basic research proposal

* executive summary
* research background
* research objectives
* research design
* personnel specification
* time schedule
* costs
* references

3 types of marketing research objectives

1) Exploratory research - enables the development of HYPOTHESES or inventing new concepts

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2)Descriptive research - describes key variables like market characteristics or spending patterns

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3)Causal research -determines whether the effect in one variable causes an effect in another variable

Types of marketing research (sources)

1)Primary research - research conducted for FIRST TIME

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2)Secondary ==*(or: DESK)*== research - uses previously collected data

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***(sources: government sources, internet, internal company records, market research companies etc.)***

types of marketing research - methodology

**1) Qualitative research**

(small samples, open + probing Q’s to undercover underlying motives, convenience or judgemental sampling, hard to replicate, oriented towards discovery and exploration, __**EMERGENT DESIGN**__ - merges data collection w/ data analysis, research has an involved role, u__***nit of analyis is a HOLISTIC SYSTEM***__)

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**2) Quantitative Research**

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(uses pre-determined standardised questions, large sample, uses descriptive statistics for data analysis, uses ***p**robability sampling techniques*** oriented towards cause and effect, PREDETERMINED DESIGN, __***unit of analysis is SPECIFIC VARIABLES***__)

6 major components of research design

* data analysis
* question(naire) design
* research type and methods
* sampling methods
* interviewing methods
* research objectives (all above linked to research objectives)

competitive intelligence

the organized, systematic collection of information, typically through informal mechanisms, used for the achievement of strategical and tactical organizational goals

Bid data

more comprehensive set of data than traditionally used to provide marketing + customer insight

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refers to volume, velocity and variety of data

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VOLUME: very large amount of info

VELOCITY: data is recorded in real time

VARIETY: combines data from many sources

5 sources of Big data

1) public data (gov sources etc)

2)private data

3)data exhaust (passively collected date)

4)community data (e.g. facebook likes)

5)self-quantification data (e.g. fitbit)

3 types of non-probability (judgmental) sampling methods

1)CONVENIENCE - anyone who wants to take part can be choses

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2)QUOTA - certain criteria e.g. gender, age, ethnicity must be met must still up to researcher’s judgement

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2)SNOBWALL - in rare populations, initial respondents refer other people to respond

3 types of probability (Random) sampling techniques

1)SIMPLE RANDOM - each person is assigned a number and each number has an equal chance of being choses

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2)SYSTEMATIC RANDOM - first person is chosen randomly using number system above but rest are picked depending on if they fall in the nth position (n=population size/sample size)

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3) STRATIFIED RANDOM - individuals are divided into strata based on a common characteristic and individuals from each group are chosen randomly to form sample

3 types of semantic equivalence in international marketing research

==1) FUNCTIONAL EQUIVALENCE== - whether behaviors or objects are interpreted in similar ways across countries (no brand loyalty in country where competition is limited)

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==2) FUNCTIONAL EQUIVALENCE== - whether a concept has a similar function in different countries (e.g. bike in India and bike in Norway)

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==3)TRANSLATION EQUIVALENCE== - words in some language have real equivalence

Reliability

measure of consistency and stability of the rating generated by a scale

\-→ ways to ensure reliability: %%‘test-retest’%% method & z%%-test + t-test%%

Validity

measure of extent to which a scale is a true reflection of what is required

→ ways to ensure: Researcher must give __***subjective judgment***__ on if instrument actually measures what it’s supposed to

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==→ FACE VALIDITY TEST -== for ***QUALITATIVE DATA***: analysts read data collected from critical view to determine if it fits expectations

3 types of measurement and data collection equivalence

1) MEASUREMENT EQUIVALENCE (how comparable are measurement scales across countries)

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2)SAMPLING EQUIVALENCE (hard to determine sample when conducting international research)

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3)DATA COLLECTION EQUIVALENCE (different data colelction strategies for different countries)

sampling frame

a list of population members from which a sample is generated

portfolio analysis

an assessment of a company’s mix of products, services, investments, and other assets aiming to optimize the use of resources and to assess

3 marketing environments

1)external environment

2)performance environment

3)internal environment

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What composes the external enviornment?

\-----------------P.E.S.T.L.E---------------------------

political

(lobbysit firms, pr consultants,pr manager for gov relations, politician invited to join board, industrial association)

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economic

(wage inflation, price inflation, GDP, taxes, exchange rates, export controls)

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socio-cultural

(DEMOGRAPHIC + LIFESTYLES)

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technological

(reverse engineering)

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legal

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ecological

(green marketing strategies)

4 green marketing strategies

1) ECO-BRANDING %%*(differentiation to promote environmental respinsability)*%%

2) ECO-EFFICIENCY (%%*lower costs through organisational processes e.g resource productivity)*%%

3)BEYOND COMPLIANCE LEADERSHIP %%*(certified schemes to show ecological credentials)*%%

4)ENVIRONMENTAL COST LEADERSHIP *(*%%*offering environmentally products at a lower cost)*%%

performance environment

organizations that directly or indirectly influence an organizations’ operational performance

__3 types:__

1)competitors

2)suppliers

3)indirect influences e.g. consultancy + financial services

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PORTER FIVE FORCES (of his industry analysis)

\-threat of new competitors entering market

\-threat by substitute product

\-BARGAINING POWER of buyers

\-BARGAINING POWER of suppliers

\-intenisty of rivalry between current competitors

BOSTON BOX (internal environment portfolio matrix)

**CASH COWS** - high market share, low growth (STABLE MARKET) → ==:)==

DOGS - low market share, low growth → ==:(==

QUESTION MARKS - high market growth, low market share - ==:(==

STARS - high market growth, high market share → ==:)))==

SWOT Analysis

strengths *(something firm is good at doing and gives market credibility + advantage)*

weakness

opportunity

threat

5 strategic marketing goals

1)Divest - remove offering: needed when offerings continue to infer losses and generate negative cash flows

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2)niche - made for companies in a market operated by a large competitor & having limited resources

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3)hold - defence: to prevent and fend-off attack from aggressive competitors

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5)Growth (ansoff/s matrix)

ansoffs matrix

3 marketing strategies by Porter

1) %%cost leadership%% - focuses on lower cost NOT LOWER PRICE (although lower prices may be used to attract customers), allows firms to produce offerings of decent quality but HIGH PROFITS, if competitor uses lower price strategy the one with lower cost wins

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%%2)differentiatio%%n - all value chain activities are geared towards creating offerings for certain market segments

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%%3)focus strategies%% - seeking gaps in broad market segment or in a competitor’s range

marketing planning

EMM,

OMI

MMS

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1)executive summary

2)objective

3)market background

4)marketing analysis

5)marketing strategies

6)marketing goals

7)marketing progams %%*(marketing mix)*%%

8)Implenentation %%*(how to control and evaluate the plan & financial scope of the plan & operational implementations e.g. HR + R&D)*%%

9)supporting documentation %%*(PESTLE + SWOT)*%%

STP Process

segmentation, targeting, positioning

\-CORE FOUNDATION OF **STRATEGIC MARKETING PROCESS**

why is stp process used?

due to the prevalence of mature markets and greater diversity in customer needs (plus it helps to identify niche segments)

3 benefits of STP Process

1)Enhances a company’s competitive position by providing direction for marketing strategies (e.g. targeted ads)

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2)identifies market growth opportunities

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3)effective + efficient matching of frim’s resources to wear they are needed

fist definition of market segmentation

a condition of growth when core markets have already been developed on a generalised basis to the point where additional promotional expenditures are yielding diminishing returns

market segmentation vs product differentiation

%%***BOTH ARE RELATED***%%

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product differentiation - starts with product first and adapts it for the segment

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market segmentation - starts by identifying the segment and making a specific offering for it

2 approaches to segmenting

Breakdown method - assumes market consists of consumers who are similar and differences need to be found to make segments

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Build-up method - considers market to consist of consumer with many differences and similarities need to be found to form segments

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checks if a segment is good

SEGMENT HETEROGENEITY - segments are different & MEMEBER HOMOGENEITY - members have similarities

Segmentation basis for consumer markets

1)BEHAVIOUR ==*(purchase behaviour, usage, media usage , tech usage)*==

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2)PSYCHOLOGICAL (==*personality, lifestyle A.K.A* __***PSYCHOGRAPHICS***__*, perception, benefits sought etc.)*==

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3)PROFILE ==*(who and where: demographic, socio-economic, geographic)*==

main criteria for segmenting business markets

1)ORGANIZATIONAL SIZE

2)GEOGRAPHIC LOCATION

3)INDUSTRY TYPE

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also : economic, firmographic, geographic

customer characteristics concerning buyers of organisations used to cluster companies

1)Decision Making Unit

2)choice criteria

3)purchase situation

SIC code

code used to understand market size + industry type

targeting criteria

^^***D.A.M.P***^^

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Distinct

Accessible

Measurable

Profitable

4 targeting approaches

1)**undifferentiated marketing -** one mass market with one marketing strategy

**2)differentiated marketing** - several attractive marketing segments so a different strategy is developed for each

**3)concentrated/niche/focused marketing** - limited funds avalaibe and only a few market segments e.g. local electrician

**3)customised marketing** - strategy is developed for each customer instead of each segment e.g research agencies

positioning

act of designing the company’s offering and image so that they occupy a meaningful and distinct competitive position in the target customer’s mind

2 key elements of positioning

1) physical attributes - functionality + capability of brand

2)communication - how brand is percevied relative to other offerings on the market

Perceptual Map

displays the differences in perceptions that customers, consumers, or the general public have of different products or services specifically, or brands in general

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→The further apart the positions, the greater the opportunity for new brands to enter the market

4 strategies for repositioning

1) change tangible attributes and then communicate the changes to the same market

2)change the way the product is communicated

3)change the target market but keep same product

4)change both product attributes and target market

Proposition

a product/service made representing a promise to customers and stakeholders

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\-broad compass encompassing the satisfaction of consumer needs

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3 product levels

**1) CORE** proposition - the real core benefit or service (maybe be functional in what product does or emotinal: how product makes people feel)

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**2)EMBODIED** proposition - physical good/service that provides an expected benefit: may factors/features (durability, design, packaging etc.0

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**3)Augmented** proposition - embodied product + all other factors necessary to support purchase/post-purchase (e.g delivery, guarantee, installation)

2 types of consumer products (involvement)

Durable - high level of consumer involvement e.g. car

marketing communications

management process through which a company attempts to engage with its various audiences

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P:promotion

3 elements of marketing communications

(EAR)

1)Engagement (communication needs of the audience - one-way/two-day/interactive)

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2)Audience (who)

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4)Responses (desired outcome)

5 marketing tools

direct marketing, PR, promotion, personal selling, advertising

\+media e.g. tv and radio

marketing communications mix

media

set of tools

messages

3 main communication models

1)LINEAR - source → encoding →message → decoding →receiver - phase with distinct characteristics

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2)Two-step: recognizes influence of personal influence (OPINION LEADERS + OPINION FORMERS)

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3)Interaction model: all parties interact together in a COMMUNICATION NETWORK

Marketing communcation theory

potential customer must pass through a series of steps for a purchase to be made

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__**models:**__

\-AIDA (must create: awareness, interest, desire, action)

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\-HofE (Hierarchy of effect) - awareness, knowledge, liking, preference, conviction, purchase

3 stages of attitude formation

1) Learn (COGNITIVE)

2)FEEL (affective/emotional)

3)ACT (conative/behavioural)

WOM

* robust
* perceived by consumers as unbiased and objective
* can be actively controlled by marketers
* electronic: WORD OF MOUSE

strong theory of advertising

advertising can increase sales for a brand/product by moving passive buyers to make a purchase

weak theory of advertising

advertising reinforces existing attitudes instead of changing them drastically by retaining customers and increasing brand usage

DRIP \[fill and turnbull\]

Tasks of marketing communications:

* differentiate
* re-inforce
* inform
* persuade

3 communicating strategies

1)pull - for end-users e.g. supermarkets

2)push - for trade and channel intermediaries

3)profile - for stakeholders e.g. government

MCPF

market communications planning framework

ZMOT (zero moment of truth)

Brands can no longer control what is being said about their brand and in what order or form their communications reach the masses. People have the power to universally share and access actual experiences of a brand, influencing the choices of people only starting their own decision journey. The experience of initial users moves ‘upstream’ to affect future users.

fragmentation

\-Media + Audience fragmentation

* range of media increases but audience for each medium goes down

how do channels reduce uncertainty?

* increase value and competitive advantage
* routinization
* specialization

types of utility

* place utility
* time utility
* ownership utility
* info utility