MKT 302
MECE
-"mutually exclusive and collectively exhaustive" -Segmentation efforts will ideally yield MECE segments -Segments should be sufficiently diff from one another so they do not overlap -And, identified segments should include all customers in a given market (but identifying every segment does not mean u should pursue every segment)
identifying your core business
-(myopic) tendency to define business based on products rather than consumer benefits -ex: newspapers vs information -hard to know who else you are competing with ex:If coke is in the refreshment business (not soda business), who are they really competing with? Water If coke is just soda-competing with pepsi, etc., but if it's a refreshment business, competing with more things ex:: Dominos'-not just competing with other pizza shops like pizza hut-also competing with all fast food-pizza hut response-saying dominoes is generalist-ocusing on all sorts of stuff-while pizza hut saying we focus on pizza-so we are the best bc we are a specialist- good rebuttal- neither is "right" persay ex: Netflix thinks they are competing with Amazon, FX, HBO, but when someone is looking for something to do at night, broad range of things they can do (ex: hand out, games,etc.)-competing with all of that
category confusion ex:
-7up-used to not be considered a soda-used to be something to settle the stomach, for hospital or home use-but realize there's more money in being a classic soda like coke, pepsi Current behavior→ people want soda, they dink coke -Current belief-7 up is for mixed drink and upset stomachs -Uncola campaign-take away heaviness and heavy syrup of soda-undo that and left with 7up-refreshing, light alternative-anchor u on cola and say here is how we are better ex: Casper mattress
80/20 rule
-A lot of 80% of profits come from top 20% of heavy users -But this only works if you get some people hooked -Discounts only work if some consumers get hooked-won't work if no consumers like product-lose money over time
source of price premiums
-Additional amount a customer will pay for a brand in comparison w another brand offering similar benefits -Additional amount a customer -will pay for a brand in comparison w another brand offering similar benefits Ex: will pay 2.50 for a 6 pack of coke over a 6 pack of pepsi that's also 2.50, would also pay 2.70-2.90 for a 6 pack of coke over a 2.50 6 pack of pepsi, but won't pay 3.10 for a 6 pack of coke over a 2.50 6 pack of pepsi
inertia
-Allows time to respond to competitor innovations -Protection against price attacks
flank attack
-Attack a leader's weak points, blind spots -Ex: attack an area where leader is geographically weak -Ex: attack a segment that has been neglected by leader
Customer Lifetime Value
-CLV: Present value of all future profits generated from a particular customer -We want to understand how profitable each customer has been and will be -Offers useful guidance: Pay no more than CLV to acquire customer, or to avoid losing customer
Some benefits of loyalty
-Can be a barrier to entry -Inertia -Source of price premiums
Surprising dangers of false positives in a proactive retention campaign
-Can disrupt habits -Some customers would have continued / renewed on autopilot -The offer (e.g., upgrade at a steep discount) can prompt them to review and changetheir consumption habits -those who would always qualify as a current customer-ex:world record holder of most big macs consumed
Acquistion challenge:Overcome existing brand loyalties
-Common loyalty definition→ a deeply held commitment to rebuy a product or service despite situational influences and marketing efforts having the potential to cause defection -Brand keys publishes a popular brand loyalty measure-Based on interviews with about 40k consumers, assessing their cognitive and emotional attachment to brands
identifying/cultivating your core competence
-Companies have many competencies (skills) -core competence is a skill set that is difficult for competitors to imitate -an input, not an output-generates strategic assets, which in turn generate benefits for consumer products
Potential unintended consequences of expanding the category
-Competitors growing as well -But still better than the alternative of not having the customers in the category -Can pick on competitors -Bad to pick on a smaller competitor-don't want to pick on a competitor when they are down-looks bad
Some current beliefs/feelings that we might want to address
-Confusion ab what category we're in -Doubts ab the quality of our goods -Our point(s)-of-difference aren't important -People don't care enough about what makes us special -safety/quality concerns -People thinking "I don't belong in this category"-so won't buy product -if we know ppl have a bad current belief-have to shift this
Variables on which consumers are commonly segmented
-Demographic -behavioral -attitudinal (thoughts, feelings, beliefs, desires, aspirations)
Conjoint Analysis
-Determines the importance of diff attributed to diff segments of consumers -One method for discovering attitudinal segments -Relative importance of product attributes is better measures when attributes CONSIDERED JOINTLY than separately -Forces consumers to make realistic tradeoffs (know who really cares ab quality vs price-not just saying something)
Determining the size of the customer base
-Different challenges depending on whether setting is contractualor noncontractual(a.k.a. transactional)
takeaways
-Everyone within category must at least provide point(s)-of-parity -Category leaders most motivated to stimulate demand -Attempts to steal share can create ambiguity ab category membership -Consumers are not blind-taste-testers -Capturing 100% of the market is rarely optimal -Acquisition costs, diluting the brands, quality concerns
safety/quality concerns
-Ex: 5 hour energy -Consumers scared ab safety of it-5 energy addressed this-commercial-said 73% of doctors recommend it/said it was fine-not good enough-can't say 73% when it comes to safety, who are these doctors? What credibility do they have? -Why do some doctors think its not ok But could still be effective-ppl who already ok with energy drinks or already drinking them-might not need too much of a push and any doctor's validation is ok-ppl probs won't be paying close attention to this ad-just hear a doctor saying about how safe it is-enough for ppl to buy it
aquistion marketing techqniues-Leveraging awareness of strong competitor
-Ex: McDonalds billboard - "$4 bucks is dumb"-referencing starbucks-saying we have same high quality coffee for cheaper -
false negatives
-Failing to identity customers who intend to leave
Do we target only one segment?
-Generally,no -Will often manage a portfolio of segments -ex: Banks: planning for retirement / retirees / home-buyers / small business owners -Decision models (based on planning horizon, focus on revenue vs. profit, segment size, etc) guide allocation of resources across segments
PRIZM (Potential Rating Index by Zip Markets)
-Geoclustering technique by Claritas -Takes into account location, education, affluence, family life cycle, urbanization, race/ethnicity, mobility -62 types of clusters
approaches to computing CLV
-Have to estimate approximate annual profit per customer -Usually assumed to be constant, but can certainly change over time -How leaky is our bucket? -how quickly do we lose customers -Also assumed to be constant-a problem -How much should we discount dollars received later -ex: Inflation-$1 received in 10 yrs is worth less to me today than $1 received today
frontal attack
-Head-on attack of fundamental aspects of leader (ex: Pepsi tastes better than coke) -Challengers need high resources
Caveat 2: consumer proposition→ desired belief
-Held beliefs difficult to change, even when we provide evidence that belief is false -Once uk something, hard to unknow it -belief perseverance -confirmation bias
What conjoint analysis is NOT (very incomplete list)
-How important is the presence of a good housekeeping seal when buying a vacuum (Please rate on 0-10 scale, where 0=not at all important, 10=very important) -Would you buy a vacuum without a Good Housekeeping Seal? -These questions are still valuable-but aren't conjoint analysis-at very least u can find out what story they are telling themselves or other ppl -Companies rarely createa segment - more often they uncover one
Current state of marketing research + practice
-Huge effort toward predicting churn (which customers are at the highest risk of leaving) -Less attention toward... -Who to target (highest risk of churning highest sensitivity to incentives to stay) -When to target, and w what incentives -How to manage multiple retention campaigns -How to integrate retention program w other marketing activities
Typical reward program pattern
-If u are the first ex: drugstore in area to have a rewards program -Heavy buyers already consolidated their purchases-already loyal to-can't get much more out of them-staying stagnant -Moderate and light buyers-now just going to (ex: CVS)-getting higher share of their wallet-colliating their purchases w the reward programs -buying more
takeaways
-Important to understand the diff segments relevant to your brand -Don't want to ignore demographics or prior behavior, but ideally u can incorporate attitudes into segmentation bc behavior and demographics might be misleading -Will only target those segments that are likely to be most responsive -Maybe some in non-targeted segments will also be persuaded (great!)
contractual
-In contractualsettings, we observe the time at which customers become inactive ("church" -In noncontractualsettings, we do NOT observe the time at which customers become inactive
RFM is common, but imperfect when purchases aren't involved
-Interactions between customers and firms can take multiple forms -Often in digital settings, there may be no monetary exchange (e.g., continuing to use free email or music service) -From this perspective, retention is when the customer continues to transact with the firm
Segmenting on behavior alone can also be problematic
-Lots of instances where our purchased don't reflect our typical example -Gifts -U got this good as a good-wouldn't normally buy it for yourself -Using company credit -For company-not u-wouldn't normally buy -On a date -Got this on a date-performative-not normally buying this
Steal share: steal (loyal) customers from competitor (s)
-Make competitors' customers go to the middle multi-brand customers first and then hopefully becoming loyalists-expanding middle circle -Or you could shrink the middle-make the multi-brand customers loyalists -Ads that invoke a comparison with the category leader are typically intended to steal share -We're bigger / better / faster / cheaper than... -Usually the strategy of choice for non-category leaders
When non-leaders promote the category
-Might buy the product-but not from them Ex: Loctite superglue-people will buy superglue, but maybe not from Loctite-helps gorilla glue-the leading superglue company-ad didn't say why loctite was particularly good-helps loctite a little, bc it also helps smaller competitors, but helps gorilla glue more-the leader -Nonleaders' ads especially likely to help leaders when leaders are prototypical-Ex: kleenex ad band-aid Particularly difficult in these categories bc the brand is the same as their name
Hard to Get Loyalty Programs Just Right
-Must create incentives good enough to change behavior, but no so generous that they erode margins -Most grocery store membership cards reward card ownership, not loyalty -Some companies reward profitability over mere volume of purchases -
false positives
-Offering incentives to stay (or renew, upgrade, etc.) to customers who never had any intention of leaving
expactations effect cosumer's enjoyment
-Palessi Launch party-fake luxury store-put payless shoes for more money-showed how it was ab expectation opposed to actual shoe ex:Kraft Mac & Cheese-secretly making it healthier-but didn't tell anyone, no one noticed-letting customers know that they didn't compromise on taste, keep loyalists, but also opening doors to people who wouldn't eat it before because it was unhealthy, and might eat it now
According to "red ocean" reading, whose beliefs should we be most focused on?
-People outside the category-noncustomers , not customers hold greatest insight into points of pain and intimidation... -important to just focus on those in the category-but have to focus on all the people not even in the category and trying to bring them in
Drawbacks of segmenting on demographic variables
-Potentially limits growth -Marketers can't grow a demographic segment -Only some behaviors are strongly predicted by demographics -Ppl can look the same demographically but have wildly different preferences
But research on amazon ratings suggest...
-Ratings correlate poorly w/consumer reports (CR) scores -Average user ratings don't predict resale value (CR scores do) -Average ratings are influenced by price and brand image, even when controlling for quality (CR scores) -Swayed by price and branding activities of company-so branding might be more important -Consumers focus on the average rating and ignore sample size or greatly underweight that -Not doing a great job of processing info in reviews
RFM-defining customers
-Recency-Frequency-Monetary analysis-a type of way of segmenting and identifyng customers -Diff. industries will have diff. RFM cutoffs for defining current customers -Better to combine purchase data with attitude data Reveals which profitable customers are vulnerable
takeaways
-Segmentation involves identifying and understanding diff groups of consumers -Mutually exclusive and collectively exhaustive segments -Targeting involves selecting segments to pursue and considering targeted consumers' perspective -Positioning: what do we need to say to induce the desired beliefs among our target audience
caveat of core consequences
-Some strategic assets are a consequence of core competencies -But some strategic assets are not -both types are valuable
Perceptions of category membership
-Sometimes attempts to steal share can create ambiguity ab category membership -Can create a need to reassure that the brad has the required points of parity -Reassure then you highlight Ex: Sprint- saying we are a proper cell-phone service (reassurance on point of parity), but we are much cheaper (highlight point-of-difference)
One note about evidence of attempts to steal share
-Sometimes, attempts to steal are obvious in advertising (e.g., Pepsi Challenge) -But, many brands don't feel comfortable attacking other brands, and want to focus on telling their story -they may still intend to steal from a larger competitor by highlighting their point(s)-of-difference -An explicit attack might provoke retaliation, hurting both brands Ex: Visa-"Like Takes Visa"-critique of AMEX-not taken everyone-but don't want to get into it w AMEX-want to imply it Sometimes the attempts to steal (or protect) share are really behind the scenes... -Ex: alc industry bankrolls fight against legal pot in battle of the buzz-lot of lobbying behind scenes by alc industries to slow down legalization of marijuana bc they are both these create these unsober feelings-competition
Distance b/w current belief and desired belief
-Tells us how costly it will be to move beliefs in the desired direction-the farther the current and desired belief are-the harder it is to get to desired belief-biggest gap-have to think about this difference -Sometimes, have to deal w haters
One way to conceptualize positioning:
-The 5-Box Positioning Statement -Current belief→ consumer proposition→ desired belief→ desired behavior -Have to change consumer proposition to get to desired behavior/results
Valence of positioning statements
-We've focused on positive "promotion-focused" positioning statements -Negative "prevention-focused" positioning statements often more powerful
Assertive slogans more effective (and common) for hedonic products
-When ppl shopping for these products and in good mood-talk in assertive statements and want to be addressed this way -Ex: u must try our chocolate vs u must open a bank account w us (ppl would not react well to latter)
Some fundamental questions that marketing managers have to ask
-Who are we? -Are we closely tied to a parent brand or could subrands live on their own? -What are we uniquely good at? -If there is nothing-and we just demonstrate a skill that our competitor could do better than we might just be doing the research for them and giving them an idea -what busienss are we in? -Soda vs refreshment-who are we competing against? Can we look bigger than just what looks like us -what are we trying to achieve -what are our goals?
Determining our marketing objective
-Will we emphasize acquiring new customers or retaining existing customers? -Not an exclusive focus -Try to acquire customers u will be able to retain who will spread positive word of mouth -Try to keep loyal customers while attracting new ones -Ex: JC penny in notes
According to Levitt, what do consumer buy when they buy a quarter-inch drill?
-a hole -hard to know who else you are competing with
brand variants
-accomodating customers with diff WTP (willingness to pay) often by offering cheaper versions at lower-status outlets ex: $Ex: 1,990 Burberry trench coat, or a 4,190 Burberry trench coat (not available at Saks)
new perspective ab brands
-because consumers now have better access to info, brands matter less than they used to -Now w rise of internet-ppl don't have to rely on what a brand tells u, and can rely on reviews and crowdsourced reactions-brands mattering less than they used to-people can look up a specific product and see reviews
Combining internal and external data
-both needed to determine whether barnacles don't have the money to spend or are disloyal -They are indistinguishable based on internal data alone, but call for diff relationship mgmt strategies -Infeasible to obtain transaction records from competitors-competitors won't just give u this info-But can obtain from surveys, secondary sources
what is a con of brand extensions?
-can dillute the brand ex:Ex: cadillac made a new car (on slide) but car was less nice and cadillac loyalists were mad cause it ruined the brand-looks cheaper-makes cadillac users look worse ex:HBO original logo is "It's not tv. It's hbo" so hbo max goes against this premium perception of hbo bc hbo max includes all these common everyday shows, diluting premium status, hbo is supposed to be an "event" not an everyday thing, HBO max ruins this
Consumer proposition and taglines
-consumer proposition and taglines go hand in hand -Taglines are a memorable articulation of our consumer proposition -taglines, if they are good or bad, short or long, go hand in hand w consumer proposition -ex:Ford has greatly improved the quality of its product line vs. Have you driven a Ford lately?-a better way to frame consumer proposition
why do we see so many brand extensions?
-customers can alleviate boredom, but stay in family -billboard effect -pricing breadth -lower cost -Need to create awareness of new product, but not brand -Reduced production/packaging/mkt research cost -Reduce risk of product failure, career risk
caveat w core competence
-don't necessarily need one -can get strategic assets elsewhere-like w patents etc.
Segment on behavior
-ex: ads for Nicorette gum in smoking lounges, Wedding dress ads on the Knot, Coupons that print out w ur receipts -Can segment on absence of a particular behavior -ex: "non blank" (drinkers)-can use this to segment
distinct branding
-firms offer several products w distinct meanings, brand names, and logos, targeted to diff audiences -house of brands
Non-leaders can steal a share in a variety of ways
-frontal attack -flank attack
Consumer packaged goods
-goods sold quickly at a relatively low cost ex: packaged foods, beverages, toiletires, candies, cosmetics, dry goods, household products
how are target market size and probability of conversion related
-inversley -the larger the market, the lowe probability of conversion-getting consumers not in the category to be in the category
what does core copetence do?
-it provides access to multiple markets -Ex: Anyone can figure out how to make tape, but 3m has unique insight into adhesives, which opens many doors -it requires continuos investment
barnacles
-long term, low profit customers
true friends
-long-term, high profit customers-super customers-best
when brand new-do u want to focus on marketing objective or source of volume
-marketing-idea that there is no one to retain when u are brand new
Illusion of progress
-most of points coming up front -Decreasing point structure -Not all same points
Is product line extension the same price?
-not a dramatic change in price-just a new version
marketing myopia
-not realize all ur competitors
what are cons of umbrella branding?
-not very flexible-only so much you can do with it -brand extensions may dillute the brand -damage fom product failures can be quite high
confirmation bias
-notion that sometimes we have a preferred or expected conclusion that we look to confirm and find ways to dismiss evidence that conflicts w our desired views
what to beware of with goals
-overly ambitious goals can stimulate dishonesty-ex: Pinto car-lied ab safety checks to reach goal -can overly focus our attention-we might zoom in to far ona goal and miss things-ex: video of people missing the gorilla
some people (negatively) review products they never purchased-who/why?
-people who love the brand (ex: have many past verified purchases,and continue buying) -they review to encourage the brand to stop carrying products that they see as inferior or brand-diluting -"self-appointed brand managers" Ex: someone who is a harley-davidson fan-leaving a fake neg review saying the perfume gave me a rash-want harley davidson to stop selling it bc they think it dilutes the brand
ways to plot perception data on conjoint analysis
-perceptual maps -mapping centrality and distinctiveness -Based on circles-size of circles based on diff things -When u see these maps-want to ask who took the survey-where are these perceptions coming from-can change the position of them -ex:Sample of US vs sample of northeasters can look v different -Want to go into areas where u can be distinctive and stand out-seeking out uncontested, ownable spaces
The "FUD" Factor: fear, uncertainty, doubt
-playing that up-showing u something bad might happen if u don't use their product-making it seem worse as it is -Used in politics-critiquing opponents-scaring voters to not vote for other candidate -Ex: ad that got ppl way to scared ab gold war -5 box not only relevent when current belief is neg-can do it w a pos belief as well
marketing theory past vs now
-practice had long prioritized making sales over building relationships -modern midnset: customer relationship management (CRM) -About 5 times cheaper to satisfy/retain existing customer than to acquire new customer -"Win-backs" often cheaper than new customers, as well
attributes of beneficial goals
-prioritized ex: Ex: an ultimate goal (max net income) driven by a series of smaller behavioral goals (increase # of 1st-time buyers, switchers) -quatified (when possible) -includes a temporal benchmark -realistic -internally consistent-can't have conflicting goals-can't have market share and profits going up at the same time
billboard effect
-relevent to grocery store settings -if u can have a bunch of goods on shelf w a bunc of similar visual elements-like a billboard-registers peoples attention-ex: big block of all orange boxes-better than a mish mash of boxes- carches
this research on amazon suggests that
-reviews are swayed, not objective, swayed by branding -branding might be more important that we think
Targeting often involves characterizing representativemember(s) of target audience
-rich description - helps illustrate needs we can satisfy -perspective taking -helps illustrate needs we can satisfy-Happens with a lot of products-not take user's perspective
aquistion marketing techqniues-repetion
-saying the brand name over and over again-even if its annoying-to get brand name out there -Works-can be effective-ppl will try it-break through clutter
butterflies
-short term, high profit customers
another caveat of core competence
-some companies do not have a core competence, lacking one does not mean instant failure but isn't ideal -some companies that have a core competence do not realize it, or might have a hard time identifying it -might differ from a competitiors core competencde in a very subtle way
Barnacles what do we need to measure?
-the size of wallet and share of wallet -Do they not have money to spend and only wait till discounts, or they have a big wallet but spreading all over to them and all customers-only buy when their is discounts
reactive campaign
-trying to get back consumers we lost
proactive campaign
-trying to get back consumers we lost and be proactive and try and get consumers we MIGHT lost-come w false positives and false negative
umbrella vs distinct branding
-umbrella-all same idea-like just do it-nike -distinct-all a bunch of distinct products under a brand-no relation to each other hybrid=like BMW w mini coopers-have BMWS-umbella, but have mini coopers which are kinda sep and not talked ab-distinct-tg and hybrid
caveats with brand loyalty
-why the relationship b/w loyalty and profitability is more nuanced that typically assumed -Surveys consistently reveal that consumers believe that loyal consumers deserve lower prices-Angry when new customers get the perks- the discounts -Loyal consumers more knowledge ab product offerings, prices-Might b more price-sensitive than sporadic customers-Ex might know sales on Wednesdays-will wait till then
If u were leader-is it obvious what source of volume would be
-yes-obvious u would be stimulating demand - obvious at this point if u were leader
Is brand variants the idea that ppl buy the cheaper version and get a snippet of the brand and then can extend to a more expensive product within the brand later
-yes-thats the hope -common w outlets -but also see ex: Saks selling the cheaper version the main store wouldn't sell-same idea
goals of identifying one's core business
1) simplify decision-making 2) performance benchmark
Two big caveats to the 5-box perspective (and positioning in general):
1) the sometimes weak link between beliefs and behavior 2) the sometimes weak link between the consumer proposition and (updated) beliefs
assessing business objectives
1) what is our brand architercture? 2) what is our core competence (if anything)? 3) what is our core business? 4) how should we define our goals?
takeaways
A continuum of branding strategies -Tradeoffs b/w efficiency sand flexibility Core competence: an input that must be nurtured -Not directly observable to customers Consumers should drive core business definition Goals can be beneficial under certain circumstances -selecting and implementing goals requires caution
Better to segment on generation or age?
Age is probs the better predictor of the 2
Which of the following businesses is most likely to face a share of wallet problem? -Motorcycle manufacturer -Desk manufacturer -Wedding planning business -A real-estate agency -An airline
Answer: airline-will split purchases over cheapest flight-use delta one time, united another-based on prices -Other industries are one-time purchases-not buying multiple of those products from multiple manufacturers at same time
points-of-parity
Attributes of benefits that brands w/in a category offer Ex: the minimum service speed required to be considered part of the quick-service food category generally viewed as necessary but not sufficient for success-have to have it but also have something else that sets u apart Cost of entry
points-of-difference
Attributes or benefits that consumers strongly associate with a brand, positively value, and believe they could not find to the same extent with a competitor Ex: in quick-service food category, subway's POD has long been healthiness -Strong brands have multiple points-of-difference Don't have too many-want consumers to have a strong view of what u are about
coke/pepsi epilogue
Coke now less focused on fighting Pepsi, more focused on saving the category -People think soda is super unhealthy-trying to prove that it's healthier -Launched a new coke campaign again recently
sequence of core competence
Core competence→ strategic asset→ product (benefit)
People thinking "I don't belong in this category"-so won't buy product
Ex: Prunes-ppl think its a product for old ppl-call them dried plums instead How do we convince adults that it's ok to drink wine out of a juice box?-hired a comedian who reassured ppl that it's not just a kids thing-can drink wine out of juice box -did not work but good idea
stimulating increased usage
Ex: got milk campaign
Demographic variables
Ex: region, population density, climate, gender, age, income, occupation, eduction, "life-cyle" stage -Easy to fall in love demo data -Cheap and abundant -Little need to take frequent measles -The more data, the safer we feel PRIZM -Brands also capitalizing on young adults delaying marriage or forgoing it all tg-single adults going up dramatically overtime-thoughts on how to serve them-ex: tiny refrigerator, toilet paper advancements -Marketing to women-"she-sheds," -race segmentation, pink tax
Segmentation
How should consumers be grouped by demographics, behavior, attitudes?
segmenting on attitudes
IDEAL -ideally these will translate to NEEDS we can fulfill profitably -Ex: i am a very busy person→ i have a high need for convenience -Can be quite predictive of behavior -Ex: age alone doesn't predict purchases of anti-aging products, "aging anxiety" and "importance of appearance" are also important factors -ex: Bring this sample segment person to life in these diff refrigerators- diff campbell products targeted towards these examples-all of these refrigerators look different in ads and are marketing differently to these diff types of people -Ex microwave spaghettios targeted toward uninvolved quick fixer -Translation to needs are not always straightforward -But attitudinal data more difficult to collect -Are ppl telling the truth -Requires more frequent measurement
Is an 100% market share necessarily the optimal market share?
NO -High demand, hard to improve -Might get lazy-no competition to keep u on ur feet -No room for growth -If exclusivity is part of ur brand-don't want everyone walking around w ur brand-ex: lux fashion -Quality-maybe i can't serve 100% of the market-just don't have infrastructure and resources to serve everyone -Some acquisition costs will be prohibitive-some people u will never be able to convert-some loyalties too difficult to overcome -Most of your profits come from top 20%-not all customers contributing to profits -How would this function look: Profitability will increase as market share increases, but will peak and start to go down a little as u get closer to 100%-Will vary from category to category on where exactly it peaks
Confusion about benefits of consumption
New positioning- emphasize social aspect of coke still, but also want to emphasize taste-show ppl consuming the coke tg-this is something that tastes good, not just something for social interaction (old belief ab coke)
caveat 1: belief--> behavior link
Not straightforward -not everything u believe will translate to a behavior -Supportive beliefs often a necessary, but not sufficient, precursor for behavior
rewad programs
Takes more time to get from coffee 1 to 2 than it does from 9 to 10-speeding up goal to get 11th free
core competence
a skill that the business/brand/company uniquely possesses -not all have one
marketing objectives
acquisition vs.retention
quadrents of perceptual map
aspirational-high centrality and high distinctiveness Unconventional-low centrality but distinctive Peripheral-unknown and not special Mainstream-known (central) but not special
Another way to stimulate demand
bring people into the category-people from outside -bring people into the category-people from outside -They are most recognizable brand, easiest to find -Most motivated to grow the category -competitiors will benefit as well but not as much as the category leader
What's a better predictor of price: centrality or distinctiveness?-ex
circles based on priced -bigger circles in on the distinctive portion of graph -distinctness is a better predictor of price than centrality
Coke vs Pepsi-background
coke-the big americana brand-nostalgic, all-american vibes -Pepsi-attacked them on that-we are your grandparents-we are the new generation-we are for fun, young people-didn't do as well- wanted more of a frontal attack-Pepsi Challenge-Pepsi proving they taste better -coke respond-made formula sweeter but made loyalists mad-new coke even tho it tasted bad, people were mad
Positioning involves making choices
deciding not to promote certain benefits to bring key benefit(s) into focus ex: BMW-lots of things to brag about, but there focus is on performance-ultimate driving machine -telling a story-letting other strengths be in backburner
Brand Architercutre
describes the realtionship b/w diff brands within your portfolio -therr are lots of firms that do not have brand architecture (ex: brands that only sell a single product or have a single location) common ones are distinct, hybrid, umbrella
low effeciciency/simplicity, high flexibility
distinct branding
with consumer packaged goods, what kind of branding is common?
distinct branding
flank vs frontal
frontal-going in on ex: biggest insecurity-ex: Pepsi tastes better than Coke flank-more lowkey insecurity- still attacking but something less obvious
where do most brands fall
in between distinct branding and umbrella branding
Centrality
The brands that come most to mind when u mention a product
stangers
short term, low profit customers
what happens if investments are neglected core competence-ex: Coke stops investing in marketing
short-run effect on profits -Benefit-save on marketing costs-no one will forget Coke exists long-run effect on profits -Some people on fence-all soda tastes same to them-if they keep seeing Pepsi, Pepsi, Pepsi, will start to pick Pepsi instead of Coke-top of mind-more visually salient to them Some coke loyalists forever-but not enough to upkeep profits
hybrid branding
somewhere in between distinct and umbrella branding ex:-bmw-someone who drives a BMW doesn't want to be associated with mini cooper-mini cooper more of a playful car-BMW is class, performance, and luxury-doesn't rlly fit in with mini cooper which is more quirky-hurt both brands to call it a BMW mini cooper-hybrid branding bc BMW have bmw's but also have minicooper world-mixed approach as to if they are putting bmw on everything
source of volume
stimulate demand vs. steal share
One way to stimulate demand
stimulated heightened usage among current customers
Category
the brands w which a brand competes and which function as close substitutes -usually narrower than core business -Coca-Cola's category: Soda -Coca-Cola's core business: Refreshment
category extension
jumping into other categories outside of the brand ex: army swiss knife making watches, clothes , lighters ex: Harley Davidson perfume-not a motercyle or motercyle part
pricing breadth
lets make a premium version and let them go nuts-these wealthy ppl have money to spend or other side-if people cant afford-bring in a brand varience and a cheaper version in hopes they will buy the expensive one
typical assumption graph
loyal consumers become more valuable over time -Pos correlation b/w company profit and time -Starts low at first-start up costs, have to give discounts at first, consumers might be wary of product at first and then become more comfortable over time-takes time to gain consumer loyalty but then once you have it you keep it then goes up: -Inertia-if consumers use the brand for longer-less likely to change their habit -Another positive benefit of loyal consumers-word of mouth-recommendations-referrals of companies to other -Might learn more ab the company and then buy other products
high effeciciency/simplicity, low flexibility
mbrella branding
advantages of umbrella brands
once consumers trust the brand-can extend it brand in various ways brand extensions
statista
one good source of category membership (+ market share data)
4 types of consumers
our consumers-Loyalists-ppl who within this category only shop with us Competitors customers'-People who only shop with competitors Multi-brand customers-Shop with multiple brands People who are outside the category for whatever reason-Don't partake in this category-Ex: don't drink soda-won't be part of soda category Ex: People who eat at McDonalds, but not other fast food restaurants, people who eat fast food but not at McDonalds, people who eat at multiple fast-food restaurants, people who don't eat fast food at all
why do we segment?
to increase the efficiency of our marketing efforts -Want to find optimal balance btwn size, pr(conversion) -We can't be everything to everyone -Some ppl will not be responsive to us
STP
Begins with an attempt to figure out who we're talking to -segmentation -targeting Then, we have to figure out what to say to them -positioning
What frequency/reward programs cannot do
Can't create heart loyalty-an emotional bond-ppl won't get an ex: tattoo of ur product-can do this through other ways-advertising, quality, marketing
Other loyalty program considerations
Costs -Foregone sales due to product giveaways -Administration, marketing, IT, or maintenance expenses Who benefits the most -frequent purchases -Infrequent customers may not purchase enough to obtain rewards -Are these the customers we want to offer discounts to?-already loyal to brand and buying product -Difficult to reduce or restructure loyalty programs without disappointing customers -Not a 1 size fits all-based on the structure of ur customers -Not everyone believes in loyalty programs-some companies believe they are above this -Building customer database and maintaining loyalty not a big concern for everyone -Ex: selling pianos, wedding dress, sailboat, once and a lifetime purchases-customer databases are less essential-won't rlly get repeat customers
How could you design a reward program punch card based on the goal-gradient hypothesis-making the punches bigger towards the end-email saying u are almost there
Create an "illusion of progress" -2 bonus punches in beginning-now u already started-jump start-endowed progress-more likely to finish the card faster-but could stretch this idea too far-don't wanna give too much away or give customers any ideas that they are being manipulated Manipulate the "points" per purchase -Either 3 points each for 8 purchases Or 5 points for first 4, then 1 point per purchase-so by time u had first 5-almost there-feel closer-will complete card faster -Can look at how progress is being mapped out using a bar visual being filled up
What loyalty programs can do
Create barriers to exit (a "lock-in") -ex:offer airline miles that disappear if you leave Win greater share of wallet (consolidate purchases) -ex:Amazon Visa offers 1 point/$1 spent but 3 points/$1 spent at Amazon Encourage purchases that wouldn't normally happen -Multi-tier reward programs (e.g., Silver, Gold, Platinum)
Similarity b'/w consumer proposition and desired belief
Desired belief is ideally more or less a restatement of the consumer position -diff b/w consumer proposition and desired belief-consumer proposition-might include specific arguments -Sometimes the consumer proposition will include facts that won't be retained in desired belief Desired beliefs-need to get gist, whats best, usually w less specific-we can expect tnem to retain general message-this product is safe Consumer proposition will lead u have desired beliefs that we want u to have Consumer proposition-a promise-heres what u can expect from us-w some justification behind us-we are safe bc 4/5 doctors say we are Desired belief might not be same thing as real belief ex: -"70% of people prefer Pepsi to Coke" (consumer prop.) -"Pepsi tastes better than Coke" (desired belief)
Some takeaways
Diff ways to measure value of a customer -RFM, size of wallet, share of wallet, CLV Acquisition efforts often have to overcoming existing brand loyalties -Sometimes efforts don't exist Acquisition efforts focus on raising awareness;retention efforts less focused on the product-want to be top of mind Generally, loyalty is positively correlated w profitability -But there are important caveats
why was the Pepsi Challenge was far removed from a typical consumption experience-coke should not have been fooled into responding this way?
Difference 1: we normally consume more than a sip-Pepsi challenge is just one sip-its more about the overall moment-to-moment enjoyment Difference 2: we normally know what we're consuming-against Pepsi challenge-We normally consume what we expect to consume - a lot of consumption based on expectations
firms face a tradeoff b/w distinct and umbrella branding
Distinct branding-not efficient-always have to introduce things and marketing new things-expensive, but can enter in new spaces and have more flexibility while umbrella branding could be safer and more cost effective, but also lacks flexibility -most brands are hybrids
Distinctiveness
Distinctiveness
Applying research on the goal-gradient hypothesis to reward programs
Goal pursuit intensifies the closer we get to a goal with a clearly defined end state -Goal-gradient effect in charitable giving -Charity has $300 goal -When u are almost there-more motivating to people-so close-want to help-ppl more likely to donate at $250 than $50-u can help cross the fish line -Jill stein campaign-goal keep changing and going up-always want u to have the sense that u are "almost there"-moving goal post-get more donations
retention involves
Proactive vs reactive campaigns -Reactive campaigns more straightforward (at least in contractual settings) -proactive campaigns are tricky-they involve both -A proactive approach focuses on eliminating problems before they have a chance to appear and a reactive approach is based on responding to events after they have happened
examples of MECE
Segmenting by age would produce MECE segments-Everyone is in a segment-No one in more than one -Segmenting by citizenship would not produce MECE segments -Everyone is in a segment, But some ppl in more than one (ex: dual citizenship)=
ex: What current belief is Snickers trying to repair here?
Snickers trying to repair-that we are not just empty calories-we are the filling candy-wants to be the filling candy (won't just get hungry right after and gain weight) -Special k box-addressing empty calories-showing it's 120 "nourishing calories", 10 g of protein-showing that its good calories that won't just make u hungry soon
ex of walmart-core competence
Superior "logistics know-how"--> low costs for WalMart→ low rices to consumers
People don't care enough about what makes us special
U should value our experience-we have best experience-care about what we are good at
Positioning
What must we say to change current beliefs to desired beliefs?
Targeting
Which segment(s) do we pursue? Who is in the selected segment(s)?
umbrella branding
a family of products that all deliver the same higher-order benefit ex: Crest toothpast-all want you to have healthy teeth-can be package and marketed to u in similar ways -a branded house
retention marketing technique-Ads that focus less on the product
ex: budweiser video Doesn't tell u any info on product-they know u know it already-just want it to float to top of mind and give u new positive associations w it-can just chill w a bud light-retention-want ppl who have already bought it remember it and buy again
product line extension
not jumping into any more categories-same aisle, same price, just diff type of product ex: Doritos making other flavors of dortios like cool ranch Doritos
segment definition
→ a group of consumers sharing at least 1 characteristic that should increase their responsiveness to a marketing effort -Segmentation represents a compromise b/w mass-marketing and one-to-one marketing-find groups of customers and find different products for them (or don't produce for them at all-if we can't serve them) Mass marketing-market to everyone, one-to-one marketing-marketing to individual customers-segmentation=in middle-marketing to groups of similar ppl