Marketing 201 Midterm #2

Marketing Myths

1. Marketers push products consumers don't want to buy (goes against what marketing is)

2. Consumers are no match for the power of marketing (cancel culture, so easy for consumers to write a review online)

3. Marketing is deceptive and not truthful or honest (most marketers know you need to be truthful to maintain trust with consumers)

4. Marketers believe in planned obsolescence (risk enormous backlash from consumer groups, at risk of other competitors who see an opening in that)

Green marketing

The development and marketing of products designed to minimize negative effects on the environment; used as a way to enhance brand image and could be used to increase profitability (shows they care about the environment)

Ex: US EPA Energy Star light bulbs

Sustainability

Organizations will focus on the world’s social problems and view them as opportunities to build profits and help the world

Ethical Leadership

Weak leadership permits a drift towards dishonesty

Strong leadership draws the middle towards honesty

Maxims for Ethical Behaviors in Business

The golden rule: act in a way that you hope others will treat you

The professional ethic: would your professional colleagues think it’s proper?

When in Doubt, Don’t

The TV, News-Site, Sunday School test: would I feel comfortable explaining my actions on the news or in sunday school

Slippery slope: Be careful not to engage in debatable practices that can lead to other ones

Your mother on your shoulder: Would your mom be comfortable with your decision/action

Do no harm: Never knowingly do harm

Analysis of Variance (ANOVA)

Comparing the averages of 3 or more averages to see a statistical difference

Regression Analysis

Use the independent variables to figure out the dependent variable

Factor Analysis

Take a large # of variables to categorize them into more meaningful categories (grouping questions)

Cluster analysis

Similar to factor analysis but it groups PEOPLE

Discriminant analysis

Perceptual maps

Figure out which characteristics distinguishes which companies, lets you figure out where you can enter the market

The closer two brands are to each other on the map, the closer their competition is

Conjoint Analysis

Breaking down the product to its elements and then ranking how important the features are

Nature of Consumer Behavior

1. People variability— people are not all the same

2. Situation variability—People make choices depending on the situation

Buyer’s Black Box

Stimuli → Person → Response

We can only guess what happens within the consumer’s mind

Opinion Leaders

Social media influencers, professionals, etc.

Buying Process

Cultural - influences consumer behavior the most; culture, subculture, social class

Social - family, reference groups, opinion leaders

Psychological - perception, motivation, learning, beliefs and attitudes

Individual - gender, age, famly life-cycle

Consumer Behavior Insight

Companies will perform research to gain marketing insights on the behavior of their consumers (ex: people skip over nike because it’s too expensive, nike does research and finds out the prices are high, starts giving discounts)

Reference groups

groups of people you know whose opinion, behaviors, or preferences influence your decision-making process (family, classmates. etc.)

Consumer Behavior Process

1. Problem Recognition (perceiving a need)

2. Information Search (looking for ways to solve the problem: internal and external search sources)

3. Evaluation of Alternatives

4. Purchase

5. Post-Purchase Evaluation (Delight: P>E, Satisfied: P=E, Dissatisfied: P<E)

   1. P = perception, E= expectations

Multi-Attribute Attitude Model

How consumers evaluate alternatives

Multiply how much the consumer values that characteristic with how the brand fares and then add going down the list

Criteria for Segmentation

1. Measurable— individuals can be assigned to a segment and counted

2. Accessible— can be reached through company’s promotio/distribution

3. Durable— segment membership is relatively constant

4. Substantial— large enough to make products profitable

5. Unique Needs— needs are homogeneous within segments and heterogenous across segments

Segmentation is splitting people into groups based on similarities

Ways to Segment the Market

Geographic (region, city, density, climate) — MOST USED

Demographic (age, gender, family size and life cycle, race, occupation, income)

Psychographic (lifestyle, personality, attitudes, values; things that interest them and cause them to act)

Behavioral (usage situation, benefits) — MOST USEFUL

Segment, Targeting, Position (STP)

Segment: Grouping customers who are relatively homogeneous that would react to the marketing effort geared towards them the same (Who could we exchange with?)

Targeting: Selecting a segment (who should we exchange with?)

Position: How we design the product offering so it occupies a distinct and valued place in the target customers’s mind (how do we want them to think and feel about us?)

How do you market to the swing group?

Sell to the swing group in the eyes of the love group

Personal Relevance Bridge

Shows the connection between the product benefit and personal benefit

What are product benefits

Features or qualities of a product that:

• Solve a customer problem

• Improve product performance

• Add unique value for the customer

How Product Benefits increase Customer Value

1. Enhances Quality (ex: using premium materials)

2. Improves Performance (ex: designed with better functionality—better. safer, stronger)

3. Addresses Specific Needs (ex: custom solutions tailored to industry or consumer demands)

How to Position

• Stand for something important (your customers decide this, not you; you can persuade them)

• Something that’s unique/different

“Me too” positioning

When you have the same price for the same benefits

AVOID THIS! Consumers need a reason to change and they’re not going to otherwise

Positioning—Unique Selling Proposition

Making a unique and strong proposition to the customer!

“[Product name] competes in the [product category] and provides [biggest benefit] to customer [identity] when they are [buying situation]. [Product] unlike [main competitors] is unique because it provides [element of differentness RTB]”

TAM, SAM, and SOM

TAM = Total Addressable Market (who is our market?, ex: the universe)

SAM = Service Available Market (who can we actually get to? ex: galaxy)

SOM = Service Obtainable Market (who can we realistically get? ex: solar system)

Criteria for Targeting Segments

• Market Size— is the market large enough to deliver profits

• Expected growth— is it growing?

• Competitive position— what is the level of competitive rivalry or intensity in the segment? Is your product offering valued by the segment?

• Cost to reach— Is the market economically accessible?

• Maximize company profit— Is profit being maximized for the company as a whole and for long term?

Target segments that maximize profits!!

Positioning Methods

Perceptual Mapping— spatial map, whichever brand is closest to each other are in direct competition

Gap Analysis— compares brands based on the importance and performance of their differentiating features and benefits

Hierarchal Values— 3-step research process: 1. eliciting distinctions (rank these drinks? why do you drink it?) 2. pyramiding down (what about coke do you and your friends like?) 3. laddering up (uncovers personal evaluations, moods, personal values, etc.); lengthy process

Different Consumer Products

Convenience Products— relatively cheap products that merit little shopping effort (snickers bar)

Shopping Products— more expensive than convenience prodcuts requiring more shopping effort (furniture, clothes, etc.)

Specialty Products— based on shopping effort, product attributes, and frequency of purchase (rolex, car, engagement ring)

Unsought Products— products that the buyer doesn’t actively seek out (life insurance policy, gravestone, funeral services)

Competitive Angle

1. Must be unique or different than other products in the market

2. Positive personal connection with others

3. Lift consumers over an important hurdle (reduce pain or increase fun)

Types of Business Products

Materials and parts— products used in the manufacturing process (chicken, veggies, broth = chicken noodle soup)

Capital items— products that aid in production or operations (factories and machines)

Supplies and services— Operating supplies, maintenance items, professional services (paint, bolts and screws, pencils, etc)

Product items, lines, and mixes

Item: specific version of the product (campbell’s chicken noodle soup)

Line: A group of closely related product items

Mix: All products an organization sells (campbells, pepperidge farm, prego, etc.)

Sharpening the Competitive Angle

1. Need to believe (what pain point is being addressed?)

2. Reason to believe (product demonstration RTB; how effective is the demonstration?)

3. Dominate situations (which usage situation or buying situations does the product dominate in a way that delivers superior value?)

4. Quantifiable support (quantifiable RTBs)— what are relevant facts and figures you use to support or enhance the product claims?; good for B2Bs; “be credible not incredible”

5. Unique Product Claim (how is the product distinctly different, better at solving problems and more memorable than it’s closest competitor?)

Product Life Cycle

Introduction: gain awareness, promote to inform and encourage trial

Growth: maximize market share, add features and improve quality, add channels and markets (most profit in this stage)

Maturity: maximize profit, modify market and marketing mix (most sales in this stage)

Decline: reduce expenditures; milk the brand, harvest, or drop

Early Market, Mainstream Market, Late Market

Transfer enthusiasm from the innovators to the rest of the people at the end

Innovators = 2.5%

Early Adopters = 13.5%

— CHASM —

Early Majority = 34%

Late Majority = 34%

Laggards = 16%

Types of brands

Functional: superior performance or economy—product, price, and/or place (ex: McDonald’s)

Image: desirable image—promotion (ex: Polo)

Experiential: unique, engaging experience—product and place (ex: Disney)

Point of difference vs point of parity

Point of difference = a feature, benefit, or attribute that sets a product or brand apart from its competitors; highlights what makes them unique or DIFFERENT (wink wink)

Point of parity = attributes or benefits that a product shares with its competitors to legitimatize its place in the product category

Product Life Cycle is based on 4 things:

1. Products have limited life

2. Product sales pass through distinct stages, each with different marketing implications

3. Sales and profits from a product vary at different stages in the life cycle

4. Products require different strategies at different life cycles

Brand equity

Brand awareness (they know about the brand) → Brand image (have a definite impression about the brand) → Brand Loyalty (purchase their favored brand) → Brand Equity (brand loyalty is transferred to new products)

A strong brand should…

• Resonate with customers

• Differentiate with competitors

• Motivate and inspire employees

Choice Architecture

What am I doing? → Why am I doing it? → Why are you doing that??

Brand

Not a symbol or graphic design, it’s a perception that exists in the minds of your constituents about your relevance and promise of value; sum total of the impressions formed through exposure to your touchpoints

Branding

Proactive attempt to shape constituents’ perceptions to some specific end through the purposeful use of touchpoints

Advantages of Branding

1. Allows marketers to distinguish their products from all others

2. Helps customers identify products they wish to buy again and avoid those they do not

3. Useful when introducing new products

4. Enables consumers to express personalities, lifestyles, and social identities