Marketing Management
Core Competencies
- A source of competitive advantage and makes a significant contribution to perceived customer benefits. -Applications in a wide variety of markets -Difficult for competitors to imitate
Customer Profitability analysis
- Activity-based costing (ABC) A profitable customer is a person, household, or company that over time yields a revenue stream exceeding by an acceptable amount the company's cost stream for attracting, selling, and serving that customer. Customer profitability analysis is best conducted with the tools of an accounting technique called activity-based costing (ABC). The company estimates all revenue coming from the customer, less all costs.
Limitations of Big Data
- Big data is less useful to learn about consumers whom we have not yet acquired. • Do they know our brand? • What are they buying instead? • Why are they not buying our brand? How can we reach them? - It is challenging to learn what our consumers buy when they don't buy our products • How do they use products in the category, whether they understand our products, • How they will react to potential price changes (without actually changing the price), • What they think about our brand and other brands -Privacy issues
Information search (stage 2: consumer decision making process)
- Personal sources - Commercial sources - Public sources -Personal/experiential experience
Customer Lifetime Value (CLV)
- The net present value of the stream of future profits expected over the customer's lifetime purchases. -The company must subtract from its expected revenues the expected costs of attracting, selling, and servicing the account of that customer, applying the appropriate discount rate.
Brand Community
- sense of connection to brand -shared rituals,stories, and traditions that convey meaning -shared responsibility to the community member
Points-of-Difference (POD)
-Attributes/benefits that consumers strongly associate with a brand, positively evaluate, and believe they could not find to the same extent with a competitive brand P O D criteria: -Desirable to Consumer -Deliverable by Company -Differentiating From Competitors
Identity Value
-Consumers use products/brands for what they mean and to help construct their self-concept and social identity - Person's choice of clothing may communicate -personality(sexy,conservative,creative) -lifestyle and values (casual,sporty,goth,hippie) - their social roles (stay-at-home mom/dad, business man/women) - social class (lower, middle,upper)
Functional Value
-Offering new features, new functional benefits - Helps companies with design,ads, and positioning strategies. - Hard to compare functional value btwn 2 companies bcuz cannot be easily translated in terms of economic benefits($). - Various approaches to take when understanding what consumers prefer - Capaiblity vs. Usability
Cultural Branding
-Resonant value claims address consumers' deep seated needs. -They offer meaning required for living in consumers' unique cultural space and time. -To discern how consumers use brands to create meaning, marketers need to uncover their worldviews, ideologies, value systems, and deep motivations. -Douglas Holt's theory: • Brands that acknowledge major cultural contradictions can help consumers bridge the gap their actual side of being (i.e. what is) and their desired state (i.e. what could be)
Outcome/ Post-Purchase (stage 5: consumer decision making process)
-Satisfaction -Cognitive dissonance : feeling of psychological tension or post-purchase doubt. -Disposal
Rational Versus Emotional Appeals of Positioning
-Since the 1960s marketers have acknowledged that when making purchasing decisions consumes often rely on their 'irrational' emotions, memories, intuitions, dreams, and aspirations. -Brands increasingly attempt to connect to cultural values, lifestyles, ideals to position.
Economic value to the customer (EVC)
-The maximum price a customer should be willing to pay for a product. - Total life cycle cost or cost of ownership over the entire life of a product. - Is estimated compared with an existing product used by the customer.
Legal and Ethical issues
-Vulnerable groups -Disadvantaged groups -Potentially harmful products • Marketers must target carefully to avoid consumer backlash. Some consumers resist being labeled. Market targeting also can generate public controversy when marketers take unfair advantage of vulnerable groups (such as children) or disadvantaged groups (such as inner-city residents) or when they promote potentially harmful products. A key area of concern for many consumer protections advocates today is the millions of kids who are online.
Mission statement and marketing strategy
-a formal summary of the aims and values of a company, organization, or individual. -a plan of action designed to promote and sell a product or service.
Multiattribute model specify 3 elements:
1. Attributes 2. Beliefs 3. Importance weights
Markers of a brand community (3 pillars)
1. Consciousness of Kind 2. Shared Rituals of Traditions 3. Moral Responsibility
Market Research Process
1. Define the problem or question 2. Determine source of info & design a research process. 3. Choose appropriate data collection method 4. Collect the data 5. Analyze and interpret the data
Porters 5 forces to evaluate segments
1. Threat of Intense Segment Rivalry 2. Threat of Potential Entrants 3. Threats of Buyers' bargaining Power 4. Threats of Substitutes 5. Threats of Suppliers' Bargaining Power
What can marketers do to create value with brand communities?
1. Create a gathering place for fans to congregate • Can try to entice the fans to move to the official community site. - Offer incentives - Offer freedom - Create a forum • In these platforms the consumers can -Welcome -Empathize -Govern -Evangelize -Justify 2. Encourage consumers to collaboratively create the brand meaning -customizing • Customizing: Modifying the brand to suit group-level or individual needs. This includes all efforts to change the factory specs of the product to enhance performance. Includes fan fiction/fan art in the case of intangible products. 3. Provide parameters that encourage and enable collaboration - Customizing • e.g. threadless 4. Recognize variance within the brand community membership - Staking 5. Embed celebratory occasions - Milestoning • Offer users a series of seminal events. • Garmin consumers have milestones which revolve around first-use scenarios 6. Create badges -Badging • Many enthusiasts create symbols via a practice called 'badging.' • These may be virtual badges, in the form of an image on a Facebook page or in an email signature line; or physical badges. • Give consumers the ability to create an official, custom badge that commemorates a brand-specific milestone. - The Threadless community has an extensive array of badges for all kinds of engagement types (e.g., designing, voting, blogging, pilgrimages to the Chicago store, modeling merchandise) and depth of engagement (number of designs, votes, pilgrimages). 7. Encourage the tendency to document and share - documenting • Templates could be provided to encourage more users to document their experiences and make the sharing • Toyota highlighted real-life family stories of brand use: • How many Toyotas a family owns, and when; who used them; the ownership/use trajectory. • Ford Fiesta lent its cars to 100 consumers and asked them to record and share their experiences. 8. Solicit and distribute product/brand use tips - grooming • Allow consumers to share their cleaning and grooming procedures • Consumers tell one another usage tricks, and how to keep the product in tip-top shape for maximum effectiveness. • Within the Strivectin brand community, users discuss and vlog (i.e., video blog) how to care for the product. • Mini Cooper drivers share cleaning tips 9. Research, research, research • Each community will have its own priorities, values, symbols, and rules. • A little data can go a long way toward identifying opportunities for marketer intervention and involvement. • Ethnographic examination is a must.
Integrative Growth
A business can increase sales and profits through backward, forward, or horizontal integration within its industry -Backward Integration: company acquiring or partnering with one or more of its suppliers -Forward Integration: Company acquiring or patnering with one of more of its distributors -Horizontal Integration: Company acquiring or partnering with one or more of its competitors
Moral Responsibility
A felt sense of duty or obligation to the community as a whole, and to its individual members.
Threats of Substitutes -4th porter force
A segment is unattractive if buyers possess strong or growing bargaining power. Buyers' bargaining power grows when they become more concentrated or organized, when the product represents a significant fraction of their costs, when the product is undifferentiated, when buyers' switching costs are low, or when they can integrate upstream. To protect themselves, sellers might select buyers who have the least power to negotiate or switch suppliers. A better defense is developing superior offers that strong buyers cannot refuse.
Ethnography- qualitative method
Attempts to understand behavior and culture by finding target customers wherever they are, while they're doing whatever it is they do. -Entering someone elses world - Intensive involvement with pple in their natural environment. (not always over an extended time period)
Points-of-Parity
Attribute/benefit associations that are not necessarily unique to the brand but may in fact be shared with other brands P O P forms: - Category - Correlational - Competitive
Porter's Five Forces analysis to Evaluate Market Research
Bargaining power of: -Suppliers -Customers & Threat of the entry of new: -Competitors - Substitute Products = Competitive Rivary
Building Loyalty
Companies should strive to build loyalty for strong, enduring connections with customers. -Interact closely with customers: listening is crucial to customer relationshp managment -Develop loyalty programs: frequency programs are designed to reward customers who buy frequently -Create institutional ties: company may supply business customers with special equipment or services to help them manage orders, payroll, inventory. -Create value with brand communities: a strong brand community results in more loyal, committed customer base.
Marketing Research
Consists of a set of techniques and principles for systematicallyCOLLECTING, RECORDING, ANALYZING, and INTEPRETING DATA that can aid decision makers involved in marketing goods servics or ideas. - Method for developing insight into consumers and their needs -Is the pre-requisite to successful decision making
Community/Social/ Linking Value
Consumers look for products/brands to link them to a community and to facilitate/enhance relationships with others (family,friends). -Ex: Cheerios commercial with baby and grandma
Experiential Value
Consumers value the unique experiences the brand has to offer. -Themed retailing -Consumer involvement and interaction EX: Apple store & Starbucks
Intensive Growth
Corporate management should first review opportunities for improving existing business.
Economic Value
Cost of owning a product over its entire useful life. -Costs and savings -Total costs of ownership or lifecylce cost (EVC)
What is cultural branding? If you were to develop a cultural branding strategy for Longchamp how would it look like? a.What are some cultural contradictions you can identify in your target market's life?
Cultural branding is a strategy that targets cultural opportunities in our society and uses that to brand their company. If we were to develop a cultural branding strategy, we would break down their "feminity" look to target a unisex market. We would market the everyday use of men using the brand for accessories like sunglasses, shaving equipment, and even their bags for work or for travel. A cultural contradiction of this includes the idea that shaving bags and briefcases can seem tailored more towards men. This can cause a barrier to the targeted women who are seeking these products as well.
Segmentation
Division of a market into meaningful, identifiable segments or groups. -Seek within-group sameness (homogeneity) and between-group difference (heterogeneity).
Customer Value
Economic Functional Community/social Identity Experiential
Overall cost leadership - (porters generic strategy)
Firms work to achieve the lowest production and distribution costs so they can have the overall lowest cost compared to other companies in the same market.
Porters generic strategies
For strategic thinking: 1. Overall cost leadership 2. Differentiation 3. Focus -Competiting firms directing the same strategy to the same target market constitute a strategic group. The firm that carries out the strategy best will make the most profits
Bases for segmentation
Geography: Region, Market size, Nations, States, Neighborhoods, climate. (The company can operate in one or a few areas) -Nielsen Claritas has developed a geoclustering approach called PRIZM (Potential Rating Index by Zip Markets) that classifies more than half a million U.S. residential neighborhoods into 14 distinct groups and 66 distinct lifestyle segments called PRIZM Clusters. Demographics: Age, Gender, Income, Ethnicity, Family life-cycle. (often associated with consumer needs and wants) Psychographics: Personality, Lifestyle, Social class. (Psychographics is the science of using psychology and demographics to better understand consumers) Behavioral: Benefits, occasions, rates, loyalty status, 1st timer. (Marketers divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product.)
Diversification Growth
Identify opportunities to add attractive unrelated business -makes sense when good opportunities exist outside the present businesses -The industry is highly attractive and the company has the right mix of business strengths to succeed
Secondary Research (accumulator)
Internal (data found inside firm) & External (data found outside firm) EX: census data, Sales Invoices, internet info., books, and journal articles. - Advantages: Saves time in collecting data since they r readily available, reduces data collection costs -Disadvantages: Not precisely relevant to information needs, not as timely as needed, data collected may not be relevant or contain bias subject matter, sources may not be original.
Qualitative Research Methods
Interviews, ZMET, Etnography, Netnography - Observation (shopping with consumers) - In-depth interview -focus group
Longchamp: Who is Longchamp's target market(s)? (who appeals to accessible luxury) a. What bases of segmentation is the brand utilizing? b. What level of segmentation characterizes their strategy?
Longchamp's target market ranges from diverse working class women who desire accessible luxury handbags and those who love to travel, needing a nice bag that can handle the wear and tear of trains and planes. The brand is utilizing psychographic segmentation to identify their primary customer base. Segmentation is essential for all brands as it is the division of a market into meaningful identifiable segments or groups. This helps them focus their marketing and design to perfectly curate and generate revenue from their target audience. For Longchamp this means they are analyzing their customers based on lifestyle, social class and personality.
Marketing Mix
Marketing decisions generally fall into the categories (as a means of translating marketing planning into practice)
Multi-attribute model
Model that assumes a consumers A's will depend on the beliefs he or she has about several attributes towards the object. Assumptions of the model: -Ability to specify all relevant choice attributes -Identification, weight, and summing of attributes
Shared Rituals and Traditions
Perpetuate the community's shared history, culture, and consciousness. Rituals "serve to contain the drift of meanings;...[they] are conventions that set up visible public definitions" and social solidarity.
4 P's of Marketing
Product, price, place, promotion (advertisements)
Interviews- qualitative method
Researchers ask questions, listen to and record answers, then pose additional questions to clarify.
Attitude Model
Specify the different elements that might work together to inflience peoples evalutation of A's.
SWOT analysis
Strengths, Weaknesses, Opportunities, Threats -Scenario analysis, which develops plausible representations of a firm's possible future using assumptions about forces driving the market and different uncertainties. Managers think through each scenario with the question, "What will we do if it happens?", adopt one scenario as the most probable, and watch for signposts that might confirm or disconfirm it.
Focus- (porters generic strategy)
The Business focuses on one or more narrow market segments, gets to know them intimately, and pursues either cost leadership or differentiation within the target segment.
Netnography- qualitative method
an online research method originating in ethnography, is understanding social interaction in contemporary digital communications contexts.
Marketing
an organizational function and set of processes for CREATING, COMMUNICATING, CAPTURING and DELIVERING VALUE to customers and for managing customer relationshpis that benefit the organization and its stakeholders.
Chase Sapphire case
purpose: customer lifetime value. To enhance sapphire and keep their chase sapphire clients hooked on their card,since in the past customers would reak the rewards then not use the card. - Chase would look at the demographic segmentation to aim for mellenials since their generationi wants experiences and sapphire rewards give them more discounted experiences they can enjoy.
Consumer behavior
the study of how individuals, groups, and organizations select buy use and dispose of goods services ideas or experiences to satisfy their needs and wants
ZMET- qualitative method
uses consumers visual and other sensory images and employs qualitative methods to elicit the metaphors, and constructs the mental models that drive consumers thinking and behavior --EX: Interview with Gary Zaltman about how coke has deep childhood memories and meanings. EX: Zaltman metaphor of the collages of "newness" and "oldness"
Gap Case
• Consumer decision making process- . • How gap used big data to develop marketing strategy- to see what the most popular trends are. Also generated emailed on their birthdays. Track inventory records • Advantage and disadvantage of big data for gap- A: see which items are more popular to increase the inventory. D: gap won't be as innovative it just follows the trends and doesnt set them. •Why they should or shouldn't sell through amazon- They shouldnt sell through amazon because it wouldnt bring them to the actualy gap store.
Cultural Branding Strategy
• Consumers buy the product to experience stories and identity myths • Consumers value products as much for what they symbolize as for what they do. • Identity value: acting as vessels of self-expression, the brands are imbued with stories that consumers find valuable in constructing their identities. • Going beyond the usual benefits and behaviors associated with a product category • Understanding of people's most acute desires and anxieties; understanding of people's ambitions at work, their dreams for their children, their fears of technology, their difficulties in building friendships and so on. • Band's value resides in the specifics of the brand's cultural expression: the particular cultural contents of the brand's myth and the particular expression of these contents in the communication
Primary Research (Process)
• Experimental (Location) • Laboratory • Field • Non-Experimental (Orientation) •Qualitative (interviews,ZMET,net/etnography) • Quantitative (#'s) EX: observed consumer behavior, focus group interviews, surveys -Advantages: offers behavioral insights, specific to immediate data needs. -Disadvantage: usually more costly to collect,typically takes longer to collect, and often requires sophisticated training/experience
Understanding consumer behavior through big data
• Influenced by cultural social and personal factors. -Sales forecasting -Remarketing to consumers basd on their prior search behavior or abandoned shopping cart items - Recommendation engines - Microsegmentation and customized products and marketing communications -Clickstream anaylsis - Predictive algorithm driven promotions, such as catalina coupons, which are given to consumers at checkout based on what was in or not in their current shopping cart. -Dyanamic Pricing -Customer churn prediction
Problem Recognition (stage 1: consumer decision making process)
• Occurs when consumer sees difference between current state and ideal state (slide) • Need recognition: actual state declines • Opportunity recognition: ideal state moves upward • Occurs when a consumer's state of being declines (which then triggers a desire to return to normalcy) or when a consumer recognizes an idea state her or she wished to achieve. (notes)
Challenges of Positioning
- When a brand is repositioned, its existing customers may feel that their personal identity is threatened, particularly when they view new value claims or new target markets as undesirable. - Responses to Porche Cayenne: • "The Cayenne makes me feel like my favorite jazz record shop has decided to carry Britney Spears records." -Existing consumers will leave the brand because it is no longer communicating the identity, they wish to present • E.g. Liz Claiborne consumers left the brand when it was acquired by JC Penney -Existing consumers will fight against the brand's repositioning by co-creating their own meaning for it • E.g. Porche -New consumers will not be attracted to the repositioned brand because the memory trace of the old brand positioning is too strong and unappealing • E.g. Lululemon
Evaluation of Alternatives (stage 3: consumer decision making process)
-Evoked set: Products already in memory (the retrieval set) plus those prominent in the retail environment.
Product choice/ Purchase (stage 4: consumer decision making process)
-In store ads, reminder ads Heuristics: mental rule-of-thumb that lead to a speedy decision. -some heuristics that effect consumer choice: Price Brand Loyalty Country of origin
Stages in consumer decision making process
1. Problem recognition: (Richard realizes he's fed up with a black & white TV that has bad sound reproduction.) 2. Information search: (Richard surfs the web to learn about TVs.) 3. Alternative evaluation: (Richard compares several models in the store in terms of reputation and available features.) 4. Product choice/ Purchase: (Richard chooses one model because it has a feature that really appeals to him.) 5. Outcome/ Post purchase: (Richard brings home the TV and enjoys his purchase.)
What is a brand community? If you were to develop a brand community around Longchamp, what strategies would you adopt? a. Think about three pillars of the brand community (consciousness of kind, shared rituals and traditions and moral responsibility) and make recommendations to enhance each pillar towards creating a sense of community among Longchamp consumers.
A brand community is a non geographic community based on a structured set of social relationships among users of a brand. Great brand communities build loyalty and cult followings/ consumers of the brand. They give a sense of connection to something bigger than themselves and in many ways it helps people connect with one another through rituals, experiences and loyalty. I believe Longchamps community is quite strong based on how many people carry around their iconic nylon and leather bag. However this connects people on a very surface level way so their next challenge would be to have a great story that people can share with purchasing a longchamp item. I believe they should do this by emphasizing their origin story in France. They began by making luxury leather smoking pipes and later moving on to leather goods for horse jockeys in France. I believe selling a small piece of this story with each item they create will help them create a stronger brand community. Also absorbing and promoting their french roots will help them give their consumers that they are a part of a brand of authentic french leather goods.
Threat of Intense Segment Rivalry - 1st Porter force
A segment is unattractive if it already contains numerous, strong, or aggressive competitors. It's even more unattractive if it's stable or declining, if plant capacity must be added in large increments, if fixed costs or exit barriers are high, or if competitors have high stakes in staying in the segment.
Threats of Suppliers' Bargaining Power - 5th porter force
A segment is unattractive if suppliers are able to raise prices or reduce quantity supplied. Suppliers tend to be powerful when they are concentrated or organized, when they can integrate downstream, when there are few substitutes, when the supplied product is an important input, and when the costs of switching suppliers are high.
Threats of Buyers' bargaining Power - 3rd Porter force
A segment is unattractive when there are actual or potential substitutes for the product. Substitutes place a limit on prices and on profits. If technology advances or competition increases in these substitute industries, prices and profits are likely to fall.
The Value Chain
A tool for identifying ways to create more customer value, by which a company adds value to an article, including production, marketing, and the provision of after-sales service. -Every firm is a synthesis of activities performed to design, produce, market, deliver and support its product. 1. Nine strategically relevant activities—five primary and four support activities—create value and cost in a specific business. • The primary activities are (1) inbound logistics, or bringing materials into the business; (2) operations, or converting materials into final products; (3) outbound logistics, or shipping out final products; (4) marketing, which includes sales; and (5) service. • Specialized departments handle the support activities— (1) procurement, (2) technology development, (3) human resource management, and (4) firm infrastructure. • (Infrastructure covers the costs of general management, planning, finance, accounting, legal, and government affairs.)
Marketing Management
The art and science of choosing target markets and getting, keeping and growing consumers through CREATING, DELIVERING and COMMUNICATING superior customer value.
Differentiation -(porters generic strategy)
The business concentrates on achieving superior perfomrance in an important customer benefit area valued by a larger part of the market
Consciousness of Kind
The intrinsic connection that members feel towards one another, and the collective sense of difference from others not in the community. -Shared consciousness, a way of thinking about things that is more than shared attitudes or perceived similarity. It is a shared knowing of belonging
Threat of Potential Entrants - 2nd porter force
The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new firms can enter the industry, and poorly performing firms can easily exit.
Customer Lifetime Value (CLV)
The net profit contribution of the customer to the firm over time.
Developing marketing strategy
Value chain Core competencies Mission statement and marketing strategy Porter's generic strategies Swot Analysis Porters 5 forces -Uber case
Reverse Positioning
While its competitors are focused on augmenting their value proposition, a firm that adopts a reverse position does the opposite: it decides to withhold many of the attributes that its competitors consider necessary to compete. The company supplements its "stripped down" value proposition with one or more carefully selected attributes that would typically be associated with a highly-augmented product offering. IKEA'S REVERSE POSITIONING STRATEGY: • No in store sales assistance • Limited variety • No delivery • Substandard quality On the other hand, Company operated daycare center Swedish café Houseware items and toys Cheerful, airy, modern looking retail space
Repositioning
• Changing the position of a brand in the minds of consumers vis-à-vis its competitors • Identity brand allows consumers to create themselves by communicating important things about their masculinity, femininity, social class, personality.
Perceptual Map
• Provides a visual image of consumers' mental landscape • Consumers are asked to compare and contrast sets of brands across a set of attributes; then their answers are used to map the spatial differences among brands.
Positioning
• The art and science of fitting the product or service to one or more segments of the broad market in such a way as to set it meaningfully apart from competitors. • Points of Difference (PODs)
Paradox of choice
• The downside of too many choices in the marketplace • Regret and anticipated regret • Opportunity cost • Escalation of expectations
Uber Case
•Uber's Value Chain: 1. Reliable/consistent service- real time tracking 2. Luxury/cleanliness 3. Driver rating system/safety 4. Convenient Service 5. Customer Service
