Exam 1
De Beers- channel
"Real is Rare" campaign
percent contribution margin
$ margin / selling price
units sold
% of market x market units
markup
(retail price - selling price) / selling price
profit
(selling price x units) - (COGS x units) - FC (margin per unit x units) - FC $ margin - FC
regulatory forces
Consists of restrictions that state and federal laws place on business with regard to conduct of its activities, protecting new technology, society, businesses, and consumers
Political/regulatory factors
Federal, state, local, and international governments enact legislation and impose regulations affecting business practices with las to protect consumers or safeguard companies from each other
Generation X (born between 1965 and 1978) and Baby Boomers (born between 1946 and 1964)
Gen X Savvy and cynical consumers; time is at a premium and outsourcing is utilized Work-life balance is especially important BB -$1 trillion in spending power and income will continue to grow as they keep working
aspects of segmentation
-Businesses can be described in terms of their purchase behavior, ie. Programmed routine buyers, loyal relationship buyers, switching transaction buyers, price and service sensitive bargain hunters -Segmentation scheme should produce clusters that are identifiable, measurable, sizable, accessible, actionable (will respond favorably to marketing efforts) -Segments should be based on the opportunity to maximize return on investment and profitability; when finer segmentation produces clusters that cannot be reached, the marketer has gone too far -Allows for product testing and satisfaction/loyalty analysis (identifying and measuring drivers of satisfaction) -Types: brand awareness and reach surveys, pricing research
ethical decision making
-CRITICAL RULE of decision making: marketers should not engage in any behavior with the potential to harm consumers, harm relationships with consumers, harm host communities, and harm companies future cash flows -Firms engaging in unethical practices will be caught and negative publicity affects sales and stock prices; so, examining potential impact of decisions can lead to correct course of action -Owners interests are often served by actions representing greater good, ie. Promoting unapproved treatment drug may boost short term sales but consumers harmed by it can file lawsuits damage company's reparation and market value in the long term
American marketing association statement of ethics
-Commits itself to promoting highest standards of professional ethical norms and values for its members that are expected and maintained by society and/or professional organizations -Marketers are expected to embrace the highest professional ethical norms and values implied by responsibility toward stakeholders -Ethical norms: do no harm, foster trust in marketing system, embrace ethical values -Ethical values; honesty, responsibility, fairness, respect, transparency, citizenship -implementation: members must be courageous and proactive in leading organizations to fulfill the promises made to stakeholders
marketing in business
-Companies don't make money; customers give it to them by delivering dollars as marketing delivers customers -Marketing is the process of creating, maintaining, and improving mutually valuable customer relationships
post purchase evaluation and behavior
-Compare product to expectations; companies market to alleviate post purchase doubt -Can involve cognitive dissonance (buyers remorse- can be limited with after-sales communications and support from company)
Concerns regarding products/services
-Concerns: safety, targeting of marketing strategy, product proliferation, misleading labels, wasteful packaging -Price issues: fixing (ie. Restraining trade), discrimination (favoring last minute purchasers), gouging (unconscionable prices on basic necessities) -Place issues: gray marketing, slotting allowances (creating entry barriers for small businesses), bait and switch, abuse of power and control -Promotion issues: deceptive information, reinforcement of stereotypes, unrealistic ideals, guerrilla tactics, sex and violence, invasion of privacy, spam, junk mail, unmentionables -Issues with social responsibility: integrity of manufacturing/product quality, disclosure and labeling, marketing and advertising, selling practices, pricing, distribution and access
how will data be analyzed?
-Conjoint analysis, regression, factor analysis, analysis of variance, cluster analysis -Data explosion resulted from rise of social media, mobile marketing, and internet of things (connected devises using sensors to collect and transfer data without human interaction such as smart TVs or fitness trackers)
consumer behavior
-Creating and delivering benefits to target markets is a critical part of marketing as consumer wants to know what's in it for them (WIFM: the value created by the product/service) -Consumer behavior: the actions a person takes in purchasing and using products nd services, including the mental and social processes that proceed and follow these actions.
marketing
-Creating exchanges: giving up something you'd have for what you'd rather have, involving two parties with something of value involving communication, acceptance or rejection, and desire to deal -Marketing is creating, maintaining and improving mutually beneficial relationships with customers. -4 Ps: product, promotion, price, place (used in order to maximize the potential of a product or service and its relationship with its customers)
targeting: zeroing in
-Criteria used: estimated size of market in the segment, expected growth, competitive position, cost of reaching the segment, compatibility with the organization's objectives and resources -Involves evaluating the attractiveness of the various segments and zeroing in on one ore more; attractiveness is determined by identifying a match between what the brand offer and the consumer wants or needs -Finding a match between brand's benefits and consumer wants is necessary for selecting a target market but not sufficient, we need to take into account a company's goals and competencies -Attractive segments are sizable, offer growth potential, produce positive returns on investments, and provide the firm with opportunities for brand differentiations
health cruises- competition
-Cruise line -Weight loss programs, gyms or other alternatives -Hotels and resorts
purchase decision stage (5 step consumer decision making process)
-Decision is made; can be impulsively or routine, or may require limited or extended problem solving -2 remaining decisions: from whom (price, product availability) and when (promotional program, terms of sale)
market research steps
-Define the problem and set up research objectives that are specific, measurable, achievable, and leading to marketing actions -Develop research plan, specifying constraints (time, money), identifying data needed for action, and determining how to collect data -Collect relevant information (secondary internal or external) -Analyze data/look for insights -Develop marketing plan
ways to segment
-Demographic criteria (age, gender, income, education, occupation, nationality, religion) are used to segment markets and is easy to obtain from databases online but doesn't take into account many ways humans with some similarities differ in other ways -Geographic factors -Psychographics: based on assumption that predicts and services a person purchases and media he/she consumes reflects their personality, characteristics, values, interests, attitudes, and opinions but is harder to obtain -Buying Situation: benefits offered (convenience, economy, prestige) and usage rate (daily, occasional, special occasion)
information search stage (5 step consumer decision making process)
-Internal search: memory, experience, brand loyalty -External search: new outside information (risky if wrong decision made), from sources that are personal (word of mouth), public (consumer reports), market dominated (advertising, internet)
business databases
Nexis Uni: -Search bar - synonyms or connecting words- put in " " with OR or AND -Filter by publication type, news =Filter by timeline Statista: -blue boxes- show statistics making up reports -source on side of articles show citations of information Mintel: -type in Pet Food -see report, look into overview for different sections -analyst insights Mediamark — now called Simmons Insights -add 3 brands- add to column -add to row: age ranges Ibis world -type in subject: look into industry research on left hand side Reference USA -type in company name (if dont know name, click keyword under advanced search and search under industry) -choose company interested in and review their stats, ie. Advertising expense estimates
why is information needed?
Only research when necessary, so identify and define research question, ie. Finding reason for drop-off in sales
breakeven market share
breakeven units / total market size
marketing functions
environmental analysis, consumer analysis, product planning (items/image/packaging), distribution planning, price plannin, promotion planning
breakeven units
investment FC / $ margin per unit
breakeven dollars
investment VC / % margin per units
selling price
retail selling price - retail margin % of sp
dollar contribution margin
selling price - vc (including commission % x selling price)
macroeconomic conditions
-Inflationary: higher costs to produce and to buy goods -Recessionary: decreases in production/jobs and less money and willingness to spend while incomes rise slowly -Education primary determinant of earning potential -Women bring in half of the household income, control over half private wealth in US, control majority of household spending, and are primary buyers in male-dominated categories (new cars, computers, new homes, investments, consumer electronics) -Families moving every year equates to 14% of population (people more for housing, jobs, family)
Product concepts
-A distillation of the product development and market research work that has been done; clear and concise statement of the product physical characteristics and attributes, the target consumer and customer, and rationale for purchase. -What: physical characteristics (size, color, weight), packaging (number of units, display type, unique features), pricing -Who: purchaser and consumer demographics/psychographics and purchase dynamics of decision maker and decision influencer -Where: outlet type (traditional supermarket, home delivery), instore location (frozen section, special display) -Why: product superiority, value regarding price and quality, problem/solution, imagery/perception, unique selling proposition
SWOT analysis
-Internal (strengths and weaknesses) vs. External (opportunities and threats) -Controllable factors (4 Ps) vs. external forces (marketing environment)
value of marketing relationships
-A satisfied customer will pay more -loyalty drives repeat businses -strong brands lend immediate credibility to new products -acquisition costs of new customers is 5 or 6 times higher than maintaining existing customers -70% + of purchases are made based on peer recommendation -Strong brands allow for greater shareholder returns and keep internal focus -Value is determined by benefits and price; businesses share a purpose for creating value for the owners (but corporations have to consider stakeholders who can influence their ability to maximize owner value)
for profit businesses
-Aimed to maximize value created for shareholders (who are its owners); entrepreneurs start for-profits and shareholders by stock in them because they expect positive returns n investments -Individuals buy shares in the hope they will pay dividends or will appreciate in price so can be sold for gain, and people who work for for-profits essentially work for the shareholders
marketing ethics
-Brands that marketing builds generate cash flows firms use to invest in customers and create wealth for owners, but marketing is often under attack for competitive practices because it is responsible for consumer dollars -Some believe marketing creates false needs, fosters materialism, and reinforces stereotypes, but not everyone can be happy and there is always someone who isn't -Unhappy people affect the firms ability to create wealth and value for consumers, but can give insights regarding changing social moods and improvements to products/services -When industries do not limit their questionable practices, governments often intervene, ie. Soda tax on soda companies or McDonald's lawsuit about removing luring toys from Happy Meals -Marketing is persuasive and effective when it focuses on a target market composed of people who do or could have inherent appreciation for what the firm offers, but the consumer often needs a nudge before purchasing which may lead to ethical problems
specifics of marketing research
-Broader pursuit including market research but also demographics, psychographics, beliefs, attitudes, preferences, behaviors -Crucial for better understanding of customers, provides knowledge about competitors, allows testing of product before launch -Results are used to pinpoint problems, identify opportunities, formulate marketing plans, calibrate the marketing mix, monitor performance, and guide managerial decision-making -Can consume time, money and energy but can put firm at risk for competition by delaying product/service launches -Research shouldn't be undertaken simply to learn things you'd like to know; managers should not track down every last detail before choosing source of action
Elements of the relationship: promise, acceptance, trust, hope
-4 components of marketing strategy (marketing mix) that increase firm's top line (Sales revenue), unit margin (cost - sale price) and bottom line (profit) -Product: firms offering and what creates value for consumers, ie. Skittles -Price: sacrifice customers make to buy or consume product/service and what captures value for the firm (value = benefits/price) and are based on manufacturing costs, competitors, or profit targets -place: gets product to consumers when and where they want it, delivering value through a distribution channel as a part of the supply chain -Promotion: communicates value to consumer, ie. Through advertising
sociocultural factors
-Demographic makeup of a population (gender, race, religion, income) and increase in diversity brings opportunities for marketers to forge new customer relationships -Changes in societal values and attitudes can have many effects for marketers, and ages and experiences of cohorts results in many levels of trust in institutions, marketing skepticism, social consciousness, and status orientation -Generations provide the opportunity to look at Americans both by their place in the life cycle (whether a young adult, a middle-aged parent or a retiree) and by their membership in a cohort of individuals who were born at a similar time. -Growth of dual income families results in more purchase power, more women in workforce, and single households outnumbering married households with kids -Women expect different things: purchase bulk of technology products, doing most of grocery shopping, second largest group of home buyers after couples -Eco-consumption becomes less about the status of opting in, and more about the shame of opting out -Pace of population growth has slowed by half and is projected to continue to slow through the end of this century; going global may mean rethinking your -Marketing Mix (4P's) to adapt to different cultural marketing environment.
capitalism
-Economic foundation of US businesses; owners of firms invest funds they could have used in other ways and face the risk of losing their money if the companies fail because they could be rewarded for doing so with profits -Private ownership by which goods and services are produced -Free markets in which companies compete for customers against other firms for economic gain, production/distribution/prices are affected by forces of supply and demand, and the primary role of government is protection of private property rights
ethics
-Ethics: moral principles and values that guide and govern the conduct of individuals and organizations characterized by knowing the difference between your rights and the right thing ti do -Ethics are crucial to marketing because it focuses on long term relationships with customers which depend on trust, which unethical practices destroy
health cruises- potential solutions
-Expand geographical reach -Advertise through weight-watchers or doctors offices -Reevaluate grouping: people who need to lose weight do not need to be grouped with people who need to quit smoking
external factors
-External conditions outside a company's control can impact its ability to maintain customer relationships and engage in business, whether threats or opportunities -We must use our eyes and ears to monitor the environment to gain information needed to plan by making proactive adjustments to marketing strategy/tactics to create, maintain, and improve mutually beneficial customer relationships -Environmental scanning: the process of continually acquiring information on events occurring outside of the organization to identify and interpret potential trends. -Sources of environmental trends: social, economic, technological, competitive, regulatory
Segmentation on characteristics of organizations
-Filmographies: location, size, annual sales -Purchase conditions/situation: evaluation criteria, order size, type of buy -Relationship: values, risk profile, loyalty,
positioning: narrowing down
-Firms often use an internal brand concept/positioning statement to delineate the brand's benefits and the target consumers who value them, requiring marketers to zero in on the value proposition appealing to the target market and differentiate the brand from competitors -Brand statement includes brand name, product category/segment, target market, benefits, product features supporting/providing evidence for benefits -Companies who refuse to emphasize just a few benefits focus on a particular segment because they want to do everything for everyone get lost among competitors with clear positions -Brand can position itself by feature of benefit, by use or application, by user, by product/service. category, by competitor, by price or quality, by cultural symbols -Brands don't always fit into one category and often use many approaches, but marketers must be careful when choosing a positioning strategy because it determines how consumers will see the brand relative to competitors -Consumers ultimately see brand sin terms of benefits that can be functional (performance based) experiential (sensory based), psychological (emotion based), or symbolic (value based), but a brands benefits can be perceived differently by different people
health cruises- marketing environment
-Holiday season (may have expensive advertising costs) -Targeted at people with free time, wanting to go to warmth -Aligns with new years resolutions to be healthy -Competes with family gatherings
Study of marketing (understanding = influence) helps companies
-Imagine, design, and develop products/service meeting consumer desires -Make those products/service stand out from competitors in consumers' minds -Choose brand names/packaging that facilitates consumer decision making -Determine how many varieties of a product/service to offer -Set a price that communicates and captures value -Distribute product/service through effective channels -Communicate with consumers about products/services
technological factors
-Inventions and innovations from applied science or engineering research that can replace existing products or companies. -Payment apps resulting from mobile phones has -affected buying activity, -New inventions in AI involve robots who can locate store inventory and deliver it to pickers and drones used for commercial purchases are increasing -Increased desire for sites like Netflix has decreased blockbuster and body composition monitors have decreased use of regular scales -Rapid evolution of how people communicate: baby Boomers grew up as television expanded dramatically, Generation X grew up as the computer revolution was taking hold, Millennials came of age during the internet explosion, all of the above have been part of lives of Gen Z from the start.
Factors in decision
-Involvement of others: decision groups may involve initiator, influencers, decision makers, buyer, and another consumer -Personal factors: age, income, gender, race, education all affect consumer behavior -Psychological factors (motivation, personality, perception, learning) -External factors Situational factors can affect your purchase opportunity for the product ie. purchase task (gift or self use) social surroundings (others in store), physical surroundings (store decor), temporal effects (time of day), antecedent states (mood or cash available) -Sociocultural influences: personal (word of mouth, opinion leaders), cultural attitudes (conformity, individualism, reference groups), family (consumer socialization, family life cycle and decision making), social class, and culture -Time and location: once decision is made, we must determine when and where to make purchase
involvement and problem solving variations
-Level of involvement can range from low to high, based on importance of purchase -Routine purchases: frequently purchased and are low price, ie. Milk, salt -Limited purchases: seek some advice and consider more than one brand, ie. restaurant, toaster -Extended purchases: automobiles, stocks & bonds, TVs
Different strategies for different involvement levels
-Low level leaders: distribution, quality control, reinforcing messages & product loading. -Low Level challengers: trial of product, sampling, get in the "evoked set". -High Level: deal on objective and subjective levels, providing images and facts
What effective manager needs to know
-Market related information: size, growth rate, forecasted demand, competitor market shares, barriers to entry, opportunities/threats Segmentation/targeting/positioning information: size, growth rate, demographics, psychographics, benefits, choice processes, satisfaction, competitive brand positions -Product/service information: ratings of current brands, packaging trends, potential new products/services and users/uses for existing ones, brand awareness, brand image perceptions, evaluation of new ideas -Price information: price elasticity of demand, price-benefit tradeoffs, cost and profit analysis, reference prices, acceptable prices -Place information: sizes and growth rates, innovation and trends, marketing and service support, site selection, online/offline purchasing habits -Promotion information: advertising copy testing/recognition/recall, sales promotion responses, sales force compensation, trial and repeat purchase, social engagement/sentiment analysis
market research
-Marketers learn what consumers value through marketing research; the process of collecting insights that can be mined from raw data -Insights: light bulbs in the brain that click when you figure out something you couldn't before, which requires approaching research as an intelligence gathering mission to discover hidden secrets for strategic direction -Example: Under Armor works with enterprise software specialist to combine retail sales data with consumers' daily lifestyle and behavioral information to inform strategy to develop a shoe tracking steps and alerting when its time for a new pair -Consumers supply information —> marketers extract insights —> insights incorporated into strategy —> cash flows increased -Market research: deals with analysis of markets; sizes, segments, growth rates, etc
economic factors
-Marketers need to be prepared for effects of changes in markets vitality on consumer behavior as key driver of economic growth is consumer spending -Changes in interest rates or exchange rates can affect buying activity and therefore market shares and global sales
De Beers- consumer
-Marrying later or not at all, committed relationships -Concern with human rights and sustainability -Debt and job market issues -Focus on experiences rather than goods -Prefer personalized individual products to mass produced products; still interested in diamonds but are open to alternatives -Concerns about corruption in China -Skeptical of premium jewelry industry but still favorable view of diamonds -International marketing efforts to different targets
health cruises- consumer
-Mary Porter -Self motivated and have desire to change -From major metropolitan areas because they found the advertisement -From high economic status because can pay for cruise -Have time off work to go on cruise
positioning elements
-Refers to the place an offering occupies in consumer's minds on important attitudes relative to competitive offerings -Key elements of product/service: sustainable competitive advantage (allows higher prices, keeps competitors at bay) and distinctive competence (technology/design, customer service, reputation) -Effective positioning: target market (demographics, psychographics), unique benefit, relevant supporting elements, important to the target, different from competition -Describing or defining a person, place, product, service, or idea in a way that explains what its all about to a relevant audience, brand's position tells consumers what it stands for and what value it promises to deliver that differentiates it from competitors
psychological factors
-Maslow: motivators of choices can include physiological, safety, social, self esteem, or self-actualization needs -Motivation: force that causes behavior that satisfies a need; marketing's role is to arouse these needs -Personality: a person's consistent behaviors or responses to recurring situations (seen in Myers Briggs test- extroversion/aggressiveness/assertiveness/compliant) and marketing looks to match products with personality types. -Perception: individual selects, organizes, and interprets information to create their picture of the world -Learning: behaviors that result from repeated experience (behavioral learning) or thinking (cognitive learning); marketing is concerned learning because it affects brand loyalty. -Values, beliefs, and attitudes: marketing is concerned with changing beliefs about brand attributes, changing the perceived importance of attributes, and adding new attributes -85% of human decisions governed by instinct, intuition, emotions, desires, memories, values
health cruises- channel
-Miami based -Newspaper advertising
millenials
-More than eight in 10 Millennials (81%) expect companies to make a public commitment to good corporate citizenship -It used to be that companies would align with charities that shared their same values; now brands are taking these do-good values and baking into their corporate identities. -Millennials take a decidedly longer view than previous generations and are likely to make purchases that are only "really necessary" and that are well researched, considering resale value of items they buy and preferring brands that allow them to repair, reuse and/or recycle the goods they consume
Generation Z (born after 1997)
-Most racially and ethically diverse generation, diverse and on track to be the most well-educated generation yet -76% hope that their future jobs will be derived from their hobbies. =Digital natives, entrepreneurial, diverse, less religious, blurry between home and work, overwhelmed, lonely, progressive (less likely to smoke and use drugs), individualistic
Customer lifetime value analysis: determines financial worth of customer relationship
-Net present value of cash flows attributable to a customer over length of his/her purchase history less total acquisition and retention costs -Focuses on importance of increasing customer retention rate and decreasing defection rate because cost of acquiring new customers 5-10 times higher than cost of retaining existing one
health cruises- company
-New company run by Susan Isom -Aimed to help customers to break unhealthy habits and change behavior -Has help of 10 onboard psychologists, health specialist, and Miami management consultant -Key players include investors, Carolyn Sukhan
Who will incorporate findings in decision making?
-New tools facilitate transformation/analysis of raw data so we can study/understand/influence consumers and support tactical decision making -Data analytics: allows researcher to mine big data for unimagined patterns and connections so they don't have to collect data to support or refute their hypotheses -ie. Netflix has teams of trained people to watch movies and tag them with metadata related to various content and selection and playback attributes are inputed into a recommendation engine which predicts other offerings -Ask consumer —> listen to consumer —> act on consumer preferences
WIFM
-Objective of marketing strategy is to persuade consumers to move form where they are (not purchasing the product/service) to where marketer wants them to be -4 Ps can remove hurdle by making WIFM clear but company needs to know what impediment is stopping the target consumer, ie. Lack of awareness or unfamiliarity
firms social responsibility
-Obligation to maximize positive and minimize negative societal impact; firms should demonstrate proactive concern about the environment and human rights -Companies who value doing good while doing well gain competitive advantage because they appeal to social and environmentally aware consumers
Chapter 6: Segmentation, Targeting and Positioning
-Once a firm makes STP position, developing strategies for the 4 Ps is easier because knowing the target consumer and brand promise helps you rule out inconsistent ideas -If company doesn't know right consumer or right promise, marketing is ineffective and budget is wrong; successful marketing plans begin with STP considerations
business to business market
-Organizations purchase goods or searches for their own use or for resale, ie. schools, hospitals, manufacturers -Characterized by larger sales, greater product complexity, higher buyer expertise, closer buyer-seller relationships, longer selling cycles, and more involvement of people in the process
positioning process
-Process: identify competitors, assess perceptions of them, determine their positions, analyze consumer preference, make the positioning decision, monitor efforts -Positioning questions: What position do we have now? What position do we want to own? From whom must we win this position? Do we have the money to do the job? Do we have the tenacity? Does our creative strategy match it? -Position by: Attributes and benefits, Price/Quality, Use or application, Product class, Product user, Competitor, Cultural symbols
competitive forces
-Refers to the alternative firms that could provide product to satisfy a specific market's needs and questions size, amount, and interdependence of competitors -Components of competition: barriers to entry (how likely will new competition emerge) and existing competitors and substitutes (market conditions and production costs)
Marketing individuals need to find the right customer for the organization and figure out ways to deliver value to them through marketing strategy
-Right consumer: someone who gets value from it but brings value to it by buying the goods/services at margin preserving prices -Consumers who do not purchase without discount or demand costly levels of service are not worth pursuing or keeping -The wrong customers fail to build value for the firm and consume resources that could be better spent on the right customers -Companies cant ignore competitors but should keep them in they peripheral vision and focus on pleasing their target customers, placing higher value on relationships (share of wallet) than transactions (market share) oShare of wallet: total spending in a category that a brand captures in existing customers, ie. A customer spends $20 a week on beverages on $10 on smart water so that brand's share of wallet is 50%
What kind of data will be collected (secondary, primary, qualitative, quantitative)?
-Secondary: already exist and were collected from internal or external sources but are fast and inexpensive to compile oInternal: profit and loss statement, balance sheet, sales figures, inventory records, prior reports oExternal: government, books, commercial suppliers, internet Time saving and cheaper but out of date and not always specific oTime saving and cheaper but out of date and not always specific -Primary: original and collected buy marketer, such as qualitative or quantitative data which differ in terms of number of participants and how they are chosen (probability means each member has non-zero chance of being included, whereas non-probability means the chance is unknown) -How will data be collected (focus group, interview, survey, experiment)? -Sampling method (probability or non-probability)?
perception
-Selective exposure: attention to messages consistent with beliefs -Selective comprehension: interpreting info based on consistency with attitudes. -Selective retention: remember only what is important to you (marketers need to make it important)
De Beers- company
-Since 1870- 20,000 employees and made up of 2 brands in 35 countries and 6500 stores -Originally was a monopoly but now produces 1/3 of all diamonds -Fighting anti-trust -Coined the term "a diamond is forever" 2015- Formed Diamond Producers Association "Real is Rare" -Pioneered diamond engagement trend
Segmentation: cutting up
-Some differentiating dimensions are meaningful to marketers whereas others are not; not everyone wants to buy a particular product or service and marketer probably does not want to sell to all of them -Segmentation: dividing a market of consumers into separate, smaller groups that are similar on an underlying dimensions into homogenous clusters the are easier and cheaper to reach -Aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action. -Market: people or organizations with needs or wants, and with the ability and the willingness to buy. -Numbers alone don't go far enough in defining segments; look for common characteristics/behaviors/beliefs
criteria for segmentation
-Substantiality: segment must be large enough to warrant a special marketing -Identifability/measurability: segments must be identifiable and their size measurable. -Accessibility: members of targeted segments must be reachable with marketing mix -Responsiveness: unless segment responds to a marketing mix differently, no separate treatment is needed.
De Beers- competition
-Synthetic diamonds 20% cheaper -Other gems such as emeralds, sapphires, rubies -Second-hand diamonds -Moissanite -Online purchases or Russian company -Negative history of mining
Building brands: a marketing program is a plan that integrates the marketing mix (the Four P's) to provide a good, service, or ideas to prospective buyers.
-The cycle of building brands: Concepts for products —> satisfy consumer needs (with combination of 4 Ps) —> create product/service/idea —> the market / potential customers —> informtion about needs —> discover consumer needs -Marketing mix is optimized to achieve firms objectives when all Ps are in line, to maximize the business top line (sales revenue)< unit margin (differnece between cost to make one unit and price it is sold at), and boom line (profit) -The more value you can build into a brand, the higher price you may obtain- the higher price means a higher contribution rate and the higher the contribution rate, to more you can do to build the brand. -Margins: higher margins mean more money to invest in customers in the form of new product/service development, improvements to current products/services, or enhanced customer experiences
problem recognition stage (5 step consumer decision making process)
-There is a difference between a person's ideal and actual situations which can trigger action (ie. Functional or social) -Product is marketed by comparative claims or creating awareness of issues -Buying to fill a need or satisfy a want, ie. Out of stock, dissatisfaction, new needs or wants, related product purchase, market induced recognition, new products
primary: qualitative data
-Used for exploratory purposes to form hypotheses and involves small number of respondents; designed to provide information depth rather than breadth through changing direction of questions -Exploring motivations and likes/dislikes, probe for market gaps and brand imagery, screen prototypes and concepts, learn evaluative attributes, visualize usage rituals -Findings have no statistical significance and cant be generalized and participants are often a small and biased sample selected through non-probability sampling, often for convenience or willingness -Focus groups, interviews, surveys, online chats, one-on-ones
primary: quantitative data
-Used to draw statistically significant conclusions from large sample sizes that can be generalized to greater target population -Rigorous to ensure validity and reliability -Involve many participants selected through probability sampling that can be randomized, stratified (involving same characteristics groups and equal chance) or clustered (Individuals placed into groups and one cluster is chosen) -Surveys, questionnaires, experiments, numeric scales, segmentation/positioning studies, attitude/usage studies, purchase architecture studies
Consideration set/alternative evaluation stage (5 step consumer decision making process)
After clarifying criteria for use, creating group of brand names that meet need, and developing consumer value perceptions, create evaluative criteria (both objective and subjective factors) and create evoked set
Deloitte
How consumers are spending their money -Per capita retail spending increasing due to population growth rather than spending per person -Costs for education/housing/healthcare are increasing so higher wallet share here; more demand for education so further economic pressure -More people buying online; high income groups spending more than low income groups but low income groups are still among fastest growing population of online purchases Impacts of marketing strategies -Should be more online because cheaper, more sustainable, and all groups are now shopping more online -Experience based marketing- involve the consumer more in adverts -Obesity rates increasing- market more for healthy lifestyle targets an present long term effects of obesity to low income populations with tendencies to resort to fast foods -Target baby boomers; focus on current consumer rather than just future consumer
Generation Y (born between 1977 and 1996)
Impatient, family-oriented, inquisitive, opinionated, diverse, time managers, street smart, coming into earning years
knowing the consumer
Marketers need to know about consumers to create, maintain, and improve mutually beneficial relationships, ie. demographics, decision making qualities, stages in decision making progress, their influences on decisions, and who they share their feelings of the product with
what are budgets and timeframes?
Should be set in advance because marketing research can be resource-intensive
