Chapters(2-9) notes

Lecture 2. Company and Marketing Strategy

1.1. Companywide Strategic Planning

• Strategic Fit: When a company’s goals and capabilities match the opportunities in the market.

• Strategic Planning: The process of creating and maintaining a strategic fit between the company’s goals and the market opportunities.

1.2. Steps in Strategic Planning

1. Market-Oriented Mission: Focuses on satisfying customer needs rather than just selling products.Example: Revlon doesn’t just sell cosmetics; they sell "hope" and "self-expression."

   • A good mission statement should be:

     • Market-oriented: Focused on customer needs.

     • Inspirational: Motivates employees and customers.

     • Based on distinctive capabilities: What the company does best.

2. Business Portfolio: A collection of all the businesses/products the company owns.

   • Portfolio Analysis: Evaluating which products should get more investment, less investment, or be dropped.

     • Boston Consulting Group (BCG) Matrix: A tool to analyze the business portfolio.

       • Stars: High growth, high market share (invest more).

       • Cash Cows: Low growth, high market share (generate cash).

       • Question Marks: High growth, low market share (decide to invest or drop).

       • Dogs: Low growth, low market share (consider dropping).

3. Set Objectives: Clear goals the company wants to achieve.

4. Make Functional Plans: Detailed plans for each department (e.g., marketing, finance).

1.3. Business Growth Strategies

• Product/Market Expansion Grid: A tool to identify growth opportunities.

  • Market Penetration: Sell more of existing products to current markets.

  • Market Development: Sell existing products to new markets.

  • Product Development: Create new products for current markets.

  • Diversification: Create new products for new markets.

1.4. Marketing Plan

• A detailed plan for each product, brand, or business line.

  • Executive Summary

  • Situation Analysis: Understanding the current market (using 5Cs, PEST, SWOT).

  • Marketing Objectives

  • Marketing Strategies: How to achieve the objectives (related to the 6Ps: Product, Price, Place, Promotion, People, Process).

  • Action Programs

  • Budgets

  • Evaluation and Control

1.5. Analysis Frameworks

• 5Cs Analysis: Company, Customers, Competitors, Collaborators, Context

• PEST Analysis: Political, economic, social, technical

• SWOT Analysis: strengths, weaknesses, opportunities, threats

Lecture 3. Analyzing the Marketing Environment

2.1. Microenvironment

• The immediate environment that affects the company.

  • The Company: Internal departments (e.g., marketing, finance).

  • Collaborators: Partners like suppliers and distributors.

  • Competitors: Other companies selling similar products.

  • Customers: People who buy the products.

  • Marketing Intermediaries: Middlemen like retailers and wholesalers.

2.2. Macroenvironment

• The larger external environment that affects the company.

  • Demographic: Population characteristics (e.g., age, gender).

  • Economic: Economic conditions (e.g., inflation, unemployment).

  • Natural: Environmental factors (e.g., climate, resources).

  • Technological: Advances in technology.

  • Cultural: Social trends and values.

2.3. Value System

• A network of companies that work together to deliver a product to the consumer.

  • Flow of Goods: From manufacturer to wholesaler to retailer to consumer.

  • Flow of Information: Communication between these entities.

  • Marketing Functions: Activities like promotion, pricing, and distribution.

  • Value = Q/P: Value is the quality (Q) of the product divided by its price (P).

2.4. Competitor Analysis

• Identifying Competitors: Direct and Indirect

  • Example: For frozen pizza, competitors could be other frozen pizza brands or even fast food restaurants.

• Customer Value Analysis:

  • Points of Parity: Features that are similar to competitors.

  • Points of Difference: Unique features that set your product apart.

• Share of X:

  • Share of Throat: % of the beverage market a company owns.

  • Share of Wallet: % of a customer’s spend goes to ur product.

Lecture 4: Marketing Information & Analysis

1. Managing Marketing Information

1.2. Marketing Information System (MIS)

• MIS: A system that collects, analyzes, and stores marketing information to help decision-making.

  • Exploratory research: “soft” insights

  • Conclusive research: “hard” measurement, cause and effect

1.3. Marketing Research Process

• Steps in the Marketing Research Process:

  1. Identify the Problem: What needs to be researched? Why?

  2. Examine Secondary Data: Existing data (e.g., sales reports, government data).

  3. Collect Primary Data: New data collected specifically for the problem (e.g., surveys, experiments).

  4. Analyze Data: Use statistics to understand the data.

  5. Make Recommendations: Suggest actions based on the findings.

  6. Implement Findings: Use the research to make decisions.

2. Basic Quantitative Analysis in Marketing

2.1. Market Share

• Market Share: % of total sales in a market that a company controls.

  • Volume Share: units sold by X/total units sold by all companies.

  • Value Share: of units sold by X/ of total units sold by all companies.

  • Example: If a company sells 100 units out of 1,000 total units sold in the market, its volume share is 10%.

2.2. Profit Calculation

• Profit: Total revenue minus total costs.

  • Total Cost = Fixed Cost + Variable Cost.

  • Unit Contribution(CM) = Price - Unit Variable Cost(k)

  • Total Contribution = Total Revenue - Total Variable Cost.

  • Profit = Total Contribution - Fixed Costs.

  • Total Contribution = Unit contribution * sales

2.3. Margins & Markup

• Margin: The difference between the selling price and the cost of a product.

  • Margin Percent = (Margin / Selling Price) x 100.

  • Example: If a product costs 10 and sells for10 and sells for 15, the margin is $5, and the margin percent is 33.3%.

• Markup: Selling Price - Cost = profit added to cost

  Markup on Cost: The markup as a percentage of the cost = Markup/Cost

  Markup on Selling Price: The markup as a percentage of the selling price = Markup / Selling Price

2.4. Break-Even Analysis

• Break-Even Point: profit is zero: The point total revenue = total costs (no profit, no loss).

  • Formula: Break-Even Volume = Fixed Costs / CM.

  • Example: If fixed costs are 300,000 and the unit contribution is 3, the break-even volume is 100,000 units.

  • Break-Even Volume = Fixed Costs / CM

  • Break-Even Revenue = Break-Even Volume × Price

    Price discount (old price*(1-discount); sales promotion(new price=old + promotion material)

  • New Unit Sales × New CM = Old Unit Sales × Old CM

2.5. Cannibalization

• Cannibalization: When a new product takes sales away from an existing product.

  • Rule: It’s okay if the profit from the new product makes up for the lost profit from the old product.

2.6. Measuring and Forecasting Demand

• Demand: The total amount of a product that consumers are willing to buy.

  • Primary Demand: level of existing demand for all
    brands or products

  • Selective Demand: Demand for a specific brand.

  • Methods to Estimate Demand: Surveys, test marketing, past sales analysis.

Lecture 5. Consumer Markets and Buyer Behavior

1.1. Factors Affecting Consumer Behavior

1. Cultural Factors: Culture, Subculture, Social Class

2. Social Factors

3. Personal Factors: age, occupation, income

4. Psychological Factors:

   • Motivation: What drives you to buy something (e.g., hunger, desire for status).

   • Perception: How you interpret information (e.g., ads, product quality).

   • Learning: How past experiences affect future buying decisions(consumption knowledge)

   • Beliefs and Attitudes: What you think about a product or brand.

1.2. Consumer Buying Decision Process

1. Need Recognition: Realizing you need something (e.g., hunger, boredom)→ internal vs external stimuli

2. Information Search: Looking for information about the product (e.g., online reviews, asking friends).

3. Evaluation of Alternatives: Comparing different products or brands.

4. Purchase Decision: Deciding which product to buy.

5. Post-Purchase Behavior: How you feel after buying (e.g., satisfied, regret).

1.3. Types of Buying Decisions

• Extended Decision Making: For big, expensive purchases (e.g., car, house).

• Limited Decision Making: For smaller purchases (e.g., clothes, gadgets).

• Routine Decision Making: For everyday purchases (e.g., groceries).

Lecture 7: Customer Value-Driven Marketing Strategy

1. Overview of STP

1. Segmentation: smaller groups of people with similar needs or characteristics: Geographic , Demographic , Psychographic , Behavioral , Benefit.

2. Targeting: which of these groups (segments) to focus on and sell to.

3. Positioning: Creating a unique image or identity for your product in the minds of the target customers.

2. Market Targeting

• Market Targeting: Choosing which market segments to focus on and sell to.

  • Why target? Not all segments are equally attractive or profitable.

3.1. Evaluating Market Segments

When choosing a target market, consider:

1. Segment Size and Growth: How big is the segment, and is it growing?

2. Segment Attractiveness: Is the segment profitable and easy to reach?

3. Company Resources: Does your company have the resources to serve this segment?

3.2. Target Market Approaches

1. Undifferentiated Marketing (Mass Marketing): Selling the same product to everyone.

   • Example: Selling basic salt to all consumers.

2. Differentiated Marketing (Segmented Marketing): Selling different products to different segments.

   • Example: Selling different car models to families, young professionals, and retirees.

3. Concentrated Marketing (Niche Marketing): Focusing on one specific segment.

   • Example: Selling luxury watches to high-income individuals.

4. Micromarketing (Local or Individual Marketing): Customizing products for local or individual needs.

   • Example: Customizing Levi’s jeans for individual customers.

3. Positioning

Value proposition: Mix of benefits upon which a brand is positioned

1. Identify Competitive Advantages

2. Choose the Right Competitive Advantage: Focus on what matters most to your target customers.

3. Communicate the Position: Use marketing to tell customers why your product is unique

3.2. Perceptual Mapping

• Perceptual Mapping: A visual tool that shows how customers perceive different brands(vertical and horizontal lines)

  • Example: A map showing that Volvo is seen as safe, while Ferrari is seen as fast.

3.3. Positioning Statement

• Positioning Statement: A clear, concise statement that explains your product’s unique value.

  • Format: To (target segment), who (need), our (brand) is (concept) that (point of difference) unlike (competitors).

  • Example: Volvo: To safety-conscious families who prioritize their well-being on the road, Volvo is the undisputed leader in automotive safety. Our advanced safety features, unlike competitors like Toyota and Honda, set the highest standard for protecting your loved ones.

Lecture 8: Product, Services and Brand

1. Product Planning and Product Design

1. Core Product: The main benefit or solution (e.g., a smartphone’s core benefit is communication).

2. Actual Product: Physical product with features, design, and packaging (e.g., iPhone’s design, screen, and camera).

3. Augmented Product: Extra services or benefits (e.g., Apple’s warranty, customer support, and app store).

2. Product Design Decisions

Key decisions in product design:

1. Product Attributes and Quality:

2. Branding: Brand Equity: Value based on loyalty, awareness, and perceived quality (e.g., Apple’s brand equity).

3. Packaging: Protects, attracts, and communicates (e.g., Coca-Cola’s iconic bottle).

4. Labeling: Provides information (e.g., food labels with ingredients and nutrition).

3. Branding and Managing Brand Equity

• Brand Equity: Value added by brand loyalty, awareness, and perceived quality (e.g., Apple’s brand equity allows higher prices).

• Protecting Brands: Using trademarks to prevent copying (e.g., Nike’s swoosh).

• Leveraging Brands: Extending to new products or markets (e.g., Oreo ice cream).

• Brand Extensions: Using an existing brand for new products (e.g., Uncle Ben’s rice to sauces).

• Co-Branding: Two brands creating a new product together (e.g., Breyers and Oreo ice cream)

4. Products vs. Services

• Pure Goods: Physical products (e.g., toothbrush).

• Pure Services: Intangible offerings (e.g., haircut).

• Mixed: Products with services (e.g., smartphone with customer support).

4.2. Characteristics of Services

1. Intangibility: Can’t be seen or touched (e.g., haircut).

2. Inseparability: Produced and consumed simultaneously (e.g., haircut in salon).

3. Perishability: Can’t be stored (e.g., empty flight seat).

4. Variability: Quality varies (e.g., different hairstylists).

Lecture 9: New Product Development

1. New Product Development (NPD)

• Types of new product:

  • Radically Innovative: "New-to-the-world" (e.g., first smartphone).

  • New Category Entry: "New-to-the-company" (e.g., Apple’s smartwatch).

  • Line Extensions: Additions to existing product lines (e.g., new Oreo flavors).

  • Product Improvements: Minor changes (e.g., iPhone 13 to iPhone 14).

2. Product Lifecycle (PLC)

3.1. What is the Product Lifecycle?

• PLC: Stages a product goes through from introduction to decline.

  • Stages:

    1. Introduction: Product is launched; sales are low.

    2. Growth: Sales increase rapidly; profits rise.

    3. Maturity: Sales peak; profits stabilize.

    4. Decline: Sales and profits decline.

3.2. PLC Analysis

• Levels:

  1. Product Categories: Broad types (e.g., smartphones).

  2. Product Forms: Specific types (e.g., foldable smartphones).

  3. Brands: Individual brands (e.g., iPhone).

• Uses:

  • Resource Allocation: Deciding where to invest.

  • Strategy: Adjusting marketing based on the stage.

3.3. Decline Stage Strategies

• What to do?

  1. Maintain: Keep the product going.

  2. Harvest: Reduce costs and milk the brand.

  3. Drop: Discontinue the product.

  4. Revitalize: Find new uses, markets, or improve the product.