Marketing Midterm Notes
Macro Example
North Korea - no advertisements; South Korea - many advertisements
Any small feature in the environment that attracts our attentions and influences the behavior we make
Nudge
This is a measure of the benefits that the product delivers to the customer, regardless of whether the consumer recognizes those benefits
Objective value
What is the motive for marketing?
P & L (profit and loss)
this type of analysis is used to gauge external factors that could impact the profitability of a company
Political issues: legal problems, trade regulations, taxes or labor laws Economic issues: Growth rate, labor costs, and business cycle stage Social impacts: demographics, education, and culture Technological developments: impact on cost structures PEST Analysis
What is the method for marketing?
Pondering to people's insecurities
General indicators of price sensitivity
Product Buyer Price
Four components are the central tools that marketers use:
Product (features, packaging, services, design) Place (retail, wholesale, internet, direct) Price (payment terms, pricing strategy, discounts) Promotion (messaging designed to convince purchase)
Profit equation
Profit = revenue - cost
Great marketing always revolves around ___
Profits and Losses
Statements that may seem to convey some sort of potentially profound meaning, but are merely a collection of buzzwords but together randomly in a sentence that retains syntactic structure
Pseudo profound bullshit
___ of the landing page is measured by the bounce rate, or how quickly consumers leave the advertiser's website after landing there
Quality
Return on investment (ROI) equation
ROI = (Investment - Cost of marketing ________________________________________ Cost of marketing) X 1
Price you or someone else is willing to pay
Sale price
consumers settle for an alternative that is "good enough" or that passes some acceptable threshold
Satisficing decision making
Identifying similar groups of customers: dividing the market into identifiable and distinct groups (segments)
Segmenation
STP
Segmentation targeting Positioning
What makes a good story?
Story's narrative structue: message, conflict, characters, plot
will help you identify areas of your business that are performing well
Strengths: innovative products, expertise and procedures Weaknesses: lack of knowledgable technical support or average product quality Opportunities: a new international market or a market led by a weak competitor Threats: a new competitor or price war SWOT Analysis
events of an advertisement devised and presented by the marketer as an interrelated sequence
The Plot
a product's country of origin establishes its authenticity
The provenance paradox
What is the law of diminishing marginal utility?
The satisfaction received by obtaining one more unit of a good declines as one consumes more of it
celebrity branding
Type of advertising in which a celebrity uses their status in society to promote a product, service, charity or cause
what is brand partisanship?
When a brand takes on a political side/stance/issue
Oversupply definition
When a company creates more supply than people want (demand)
When does marketing become necessary?
Whenever supply exceeds demand
What is an undersupply scenario?
Yeezy shoes: they make a small amount and people want more than they make
when buyers become locked in to a particular product, either due to preference or to habit, price sensitivity becomes higher
able to switch easily
good brand elements works well if they have ability to be quickly updated
adaptable
Demographics
age, gender, family structure, social class / income, race / ethnicity / geography / lifestyles
Features of heuristics
anchoring, availability, representativeness
the more a decision maker bears the cost of a purchase, the greater is their sensitivity to price
bearing cost
Maslow's hierarchy of needs
bottom to top: physiological, safety, love/belonging, esteem, self-actualization
a way of presenting a brand - its symbology, values, behaviours, messages - as a persona, thus making it more recognisable and relatable to target audiences
brand archetypes
features of brand equity
brand awareness, perceived quality, brand associations, brand loyalty
is the set of assets linked to a brand's name that adds to or subtracts from the value of that product or service
brand equity
is a consumer's preference to buy a particular brand in a product category. It occurs because consumers perceive that the brand offers the right product features, images or level of quality at the right price. This perception becomes the foundation for a new buying habit. Basically, consumers initially will make a trial purchase of the brand and, after satisfaction, tend to form habits and continue purchasing the same brand because the product is safe and familiar
brand loyalty
mix of human traits that we can attribute to a particular brand
brand personality
what a brand stands for in the minds of customers, relative to competition and the benefits or promises
brand positioning
strategic document that communities the unique value that the brand offers to a particular target market segment
brand positioning statement
Branding origination
branded cows
method in which a manager calculates how many product units must be sold at a given price to cover the company's fixed costs
breakeven analysis
- a single product may require variations on the same theme - keywords in different languages reach customers with different demographics - misspellings and typos are common, so firms may buy common misspellings of keywords - negative keywords may be needed to prevent ads from appearing in some searches
buying keywords
organizing the context in which people make decisions
choice architecture
Factors that influence whether a purchase decision is compensatory or non-compensatory
choice-set size; importance of various product attributes to the consumer; and the extent of time, patience, and access to product information that the consumer has
in what ways can brands take on brand partisanship?
clothing, automobiles, alcohol, restaurants, news/media
purchase decisions entail a deliberative, information-based processing of relevant product characteristics. Is often slower, more systematic, and more exhaustive than emotional decision making
cognitive decision making
refers to a situation involving conflicting attitudes, beliefs or behaviors. This produces a feeling of mental discomfort leading to an alteration in one of the attitudes, beliefs or behaviors to reduce the discomfort and restore balance.
cognitive dissonance
5 C's of Marketing: popular framework for marketing decision making
company customers competitors collaborators context
When should consumers purchase an item?
consumers should purchase an item when the perceived value of that item exceeds it's actual price (perceived value - actual price) >0
the percentage of clicks by visitors that results in a product sale or desired action, such as a membership regristration
conversion rate
is the total sales and marketing cost required to earn a new customer over a specific time period
cost of customer acquisition
an internet advertising metric that can be defined simply as "the amount spent to get an advertisement clicked." Cost per click is used as a billing mechanism in the pay-per-click advertising model
cost per click (CPC)
when a firm selects a representative set of customers and asks about their willingness to pay for a planned, new, or existing product
customer surveys
a graphic representation of the relationship between product price and the quantity of the product demanded. It is drawn with price on the vertical axis of the graph and quantity demanded on the horizontal axis
demand curve
purpose of search ads
designed for immediate action or sale
media spread when customers, the press, and the public share a company's content or discuss a company's brand through word of mount. It is stimulated by viral and social media marketing
earned media
If all available options satisfy a customer's needs in much the same manner, it should be easy to compare alternatives, thus heightening price sensitivity
easy comparability
the ease with which prices can be compared heightens price sensitivity
easy comparability
price
easy comparability high in a relative sense reference prices exist not needed as quality que
decisions entail a subjective preference for one option over another
emotional decision making
a product or service in which product characteristics, such as quality or price, are difficult to observe in advance, but can be ascertained upon assumption
experience good (Good type)
brand awareness =
familiarity; awareness allows consumers an increased feeling of confidence making them more likely to consider the purchase
highest bidder gets the first ad position but pays the bid amount of the second highest bidder, who in turn gets the second position but pays the bid amount of the third-highest bidder, and so on
generalized second-price auction
- typically have no brand name and have plain labels - minimal to no advertising to support the product
generic products
the greater the impact a product has on a person's total income, the more price-sensitive the buyer is likely to be
high in a relative sense
the buyer is fully engaged, the decision making tends to be effortful, the time frame tends to be relatively long, and the consequences of making a good versus a bad choice tend to be greater and more visible
high-involvement decision making
Highlights newly added new attributes, benefits, or values to attract customers
horizontal positioning
Creative appeals
humor appeal sexual appeal fear appeal
purpose of display ads
immediate action or sale; increase brand awareness
Social beliefs influenced by what people think and do
information
It recognizes that business buyers don't just wake up one day and decide to purchase something - they go through a journey of several steps to get there.
leaky funnel
Good brand elements work well if they leave consumers with a positive feeling about the brand
likable
if there is little performance differentiation between alternatives, price is likely to be important (gas)
low differentiation of alternatives
purchases require little effort, happen quickly, and are perceived as having low risk
low-involvement decision making
good brand names work well if it suggests the corresponding category, product ingredients, purpose, or type of customer that might use it
meaningful
brand names should be easy to say, read, spell, and remember
memorable
Building successful brand elements
memorable, meaningful, likable, transferable, adaptable, protectable
6M Model of marketing communication
mission message money market media measurement
technologies that are not desktop/laptop based, such as web-enables phones, smartphones, tablets, wearable technology and hybrid devices
mobile technologies
What does a brand consist of?
name, logo, slogan
components of a brand
name, logo, slogan
consumers may consider some, but not all, or a product's attributes, and ignore potential tradeoffs between those attributes. In particular, in non compensatory decision making, a product's failure to reach an acceptable threshold on one attribute cannot be compensated for by high performance on other attributes
non-compensatory decision making
when the performance of a product is mission critical, price sensitivity will be depressed when performance is not mission-critical and a product's failure is more bothersome than significant, sensitivity to price should be higher
not mission critical
when buyers become locked in to a particular product, either due to preferences or to habit price sensitivity becomes higher
not motivated by prestige
when inherent product quality is difficult to judge, potential buyers often use price as an indicator of quality, thereby decreasing price sensitivity (chanel perfume)
not needed as quality que
consumers seek to purchase the best alternative they can
optimizing decision making
media or channels created and controlled by the brand, such as its websites, blogs, and mobile apps ,or its social presence on Facebook, Linkedin, or Twitter
owned media
the media for which a company pays an online search engine or publisher to attract potential customers
paid media
the top 20 percent of buyers for most any consumer product account for fully 80 percent of sales
pareto principle
social beliefs influenced by what crowd might think of you
peer pressure
this is the value that the consumer understands the product to deliver
perceived value
provides a visual image of consumers' mental landscapes
perceptual mapping
occurs when individual members of a group believe that others in their group hold comparably more or less extreme attitudes, beliefs, or behaviors. When many members of any one group hold the same misperception about the group norn, this norm ceases to represent the actual composite beliefs and attitudes of the group. In other words, there is an actual group norm, comprised of the actual average attitudes, beliefs, and behaviors of all individuals in the group, and there is a perceived norm, which is the group-wide assumption of extremity in the attitudes, beliefs, and behaviors of other group member
pluralistic ignorance
creating a concept to appeal to the target market to occupy the right spot in the mind of target consumers
positioning
expresses how you wish to be perceived
positioning statement
Features of quality score
potential click-through rate (CTR) relevance Quality of the landing page
potential to set different prices to different consumer segments based on their different valuations of the product being sold
price customization - control the availibility of prices by selectively presenting an offer to a particular group of customers but not to othger - set the price based on buyer characteristics, such as age, gender, location, or affiliation, when those characteristics correlate with the TEV and or/ PV for an individual - set the price on transaction characteristics, such as quantity purchased, time or purchase, or method of payment, when those characteristics corrleate with the TEV and/or PV for an individual - manage the product-line offering such that the offered assortment provides increasing functionality at an increasing price, sometimes called a good/better/best strategy
observation into how customers actually do behave relative to price
price experimentation
The degree to which an individual's willingness to purchase changes with a change in price
price sensitivity
entirety of a company's product offering
product mix
what influences whether a purchase decision is primarily cognitive or emotional
product type, purchase context, and individual differences
good brand elements works well if they have ability to be legally defensible
protectable
tries to persuade with scientific and technical evidence from authoriative voices and field tests or with testimonials from celebrities or everyday consumers who use the product regularly; often uses comparisons
rational approach
buyers often consider more than just the price of competitive alternatives
reference prices exist
product/service positioning
refers to the technique in which marketers try to create an image or identity for a product compared with the image of competing products.
is the match between the keywords used by a consumer while searching and the content of ad
relevance
a website on which reviews and ratings can be posted about people, businesses, products, or services by either website users or writers employed by the website
review website
features of outbound marketing
search display video ads
the process of using features that make a company website rank higher in the organic link on a search engine without paying any money
search engine optimization (SEO)
a product or service with features and characteristics easily evaluated before purchase. Search goods are more subject to substitution and price competition than experience goods
search good (Good type)
what is retail therapy
shopping in order to make oneself feel happier; pleasure is short term, happiness is longer
slope of the demand curve equation
slope of the demand curve = change in price / change in quantity demanded
interactive computer mediated technologies that facilitate the creation or sharing of information, ideas, career interests and other forms of expression via virtual communities and networks
social media
We view a behavior as correct in a given situation to the degree that we see others performing it
social proof
informed buyers navigate price complexities resulting in heightened price sensitivity
sophisticated, deliberative
buyer
sophisticated, deliberative bearing costs able to switch easily not motivated by prestige
is a cost that has already been incurred and cannot be recovered
sunk cost fallacy
"The sunk cost effect is manifested in a greater tendency to continue an endeavor once an investment in money, effort, or time has been made. Evidence that the psychological justification for this behavior is predicated on the desire not to appear wasteful is presented."
sunk-cost fallacy
a headline that encapsulates main message of the positioning statement
tagline
Determining which groups of customers to aim for and making them focus of the marketing programme
targeting
a movement indicated that user attention focused almost exclusively on the upper left side of the search results page, where the top few search results are located
the "Golden Triangle"
a moral lesson or strong takeaway that defines the stories audiences find most memorable
the message
product/service differentiation
the provision of something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition
good brand elements works well if are able to be marketing across geographic borders
transferable
true or false: consumers are likely to choose brands whose personalities match their own
true
true or false: even the best products and services don't sell themselves
true
true or false: the right price can boost profit faster than increasing volume will
true
what is key to matching brand personality to the targeted audience?
understanding and listening to consumers is key to matching this brand personality to the targeted audience
serves dual purpose of being both functional and promotional
unique packaging
Pricing model which is based on the economic value created by an organization's product for a given customer
value-based pricing
highlights attributes that are shared among brands, but stress a particular brand's superior performance on those attributes
vertical positioning (positioning strategy)
Equilibrium point
where supply and demand intersect
Define your audience: market
who what why/how where/when
when performance can be fully assessed before purchase, price sensitivity is likely to be high. When performance is harder to predict, as with experience goods, brand assurances become more important and price sensitivity is typically lower
will perform as expected
Three Cs Model of Brand positioning
- Consumer analysis (relevant, resonant, realistic) - Competitive analysis (distinctive, defensible, durable) - Company analysis (feasible, favorable, faithful)
Marketing fail/fails
- Over reliance on market research / sentiment - Over abundance / lack of privacy
Standard brand personality traits
- Sincerity (down-to-earth, honest, wholesome, and cheerful) - excitement (daring, spirited, imaginative, and up-to-date) - competence (reliable, intelligent, and successful) - sophistication (upper-class and charming) - ruggedness (outdoorsy and tough)
Branding plays an important informational role by:
- assuring customers of the quality and workmanship of the product based on reputation or previous experience with the manufacturer - reducing the time and effort needed to make purchasing decisions - reducing the risk in the purchasing decision
features of perceived quality
- can be good or bad - real or perceived - provides a point of differentiation and positioning - reason to buy - grounds for higher pricing - increased interest - possible line extensions
Positioning statement components
- for whom, for when, for where? - what value? - Why and how? - Relative to whom?
purpose of slogan
- sets you apart from the competition - allows for increased familiarity - builds brand value
procedures for assessing price sensitivity
-customer surveys -analysis of historic pricing and sales data -price experimentation
Section 2: strategic execution
1. What is the story to be communicated 2. Where and how will the story will be delivered (media)
Section 3: Strategic impact
1. how much money to spend (money) 2. what is the return on investment (measurement)
Product indicators
1. low differentiation of alternatives 2. easy comparability 3. will perform as expected 4. not mission critical
step 1: strategic intent
1. set the communication's objective (mission) 2. define and understand its audience (market)
Money: budgeting for marketing communication
1. the message delivery, or how widely and deeply the message has spread 2. the message impact , or whether and how it influenced consumers' purchase behavior
6 factors which influence product pricing
1. variable cost 2. fixed cost 3. price of competitor's products 4. value of the product to customer 5. consumers willingness to respond to price changes 6. consumer willingness to pay
allow you to compare 2 versions of something to learn which is more effective
A/B Testing
Research from interactive advertising bureau concluded that: 26 percent of desktop users and 15 percent of mobile consumers use blockers to remove ads from publishers' websites
Ad Fatigue
what is greenwashing?
Advertising a product or policy to be more environmentally friendly than it really is
Break even cost equation (BEV)
BEV = fixed costs/ revenue per unit - variable cost per unit = fixed cost = unit margin
Name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers
Brand
keywords that leads use as a shortcut to search for information close to the conversion and, therefore, require an efficient strategy
Branded Keywords
what is the breakeven point?
Break even point= when total costs are revenues are equal
products that incorporate other brands
CO Branded
Taken together, the phenomena suggests that individual faces will seem more attractive when presented in a group because they will appear more similar to the average group face, which is more attractive than group members' individual faces. We tested this hypothesis in 5 experiments in which subjects rated the attractiveness of faces presented either alone or in a group with the same gender
Cheerleader Effect
Clicks divided by impressions
Click through rate
"the internal psychological processes of the individual's organism. The main concepts of this theory are extremely simple: the simultaneous existence of knowledge elements that, one way or another, do not agree (dissonance), results in an effort to make them, one way or another, better agree (dissonance reduction)
Cognitive dissonance
consumers consider (or attempt to consider) all of the attributes of a product that are relevant, making tradeoffs between and among those attributes
Compensatory decision making
Consumer's incentive to purchase equation
Consumer's incentive to purchase = Perceived value - price
what influences whether a purchase decision primarily involved optimizing or satisficing?
Cost, variance in quality, and how long a product will be used
Refers to the amount a firm bids on a particular keyword
Cost-Per-Click (CPC) Bid
pricing approach which typically takes the form of cost-plus pricing organizations typically apply a predetermined markup to its cost to make or obtain the product
Cost-oriented pricing
is the metric that indicates the total revenue a business can reasonably expect from a single customer account. It considers a customer's revenue value, and compares that number to the company's predicted customer lifespan. Businesses use this metric to identify significant customer segments that are the most valuable to the company
Customer Lifetime Value
graphic advertising on the Internet that appears next to content on web pages, instant messaging (IM) applications, email, and so forth. These ads come in standardized ad sizes and can include text, logos, pictures, or, more recently, rich media (videos)
Display Ad
What is marketing ultimately about?
Driving value creation
plays to feelings that evoke a visceral rather than cognitive response. Can arouse positive or negative feelings, using humor, fear, and sex to incite and engage consumers
Emotional approach
what do brands do?
Express personalities, status, lifestyles, social class, ideologies, and variety of other social identities
What is buyer's remorse?
Feeling regret or concern after making a large purchase
Firm's incentive to sell equation
Firm's incentive to sell = price - COGS
when an individual erroneously believes that a certain random event is less likely or more likely to happen based on the outcome of a previous event or series of events ( coin fip)
Gambler's Fallacy
are terms that broadly describe your products or services. They have a wider reach and they help to target people who search for something without a specific brand or location in mind
Generic keywords
as considered a cognitive social bias that a person who experiences a successful outcome has a greater chance of success in further attempts (basketball)
Hot hand
increase in valuation of self-made products - participants saw their amateurish creations as similar in value to experts' creations and expected others to share their opinions - labor leads to love only when labor results in successful completion of tasks labor increases valuation for both "do-it-yourself" and novices
Ikea Effect
a single instance of an online advertisement being displayed. Many websites sell advertising space by the number of impressions displayed to users. Also known as view
Impression
Distinguishing characteristics of the product that provide consumers with no actual economic, functional, experimental, or social value
Irrelevant attributes
Lifetime value equation
Lifetime value = average purchase value x average purchase frequency x average customer lifespan
Manufacturer's distributor's, or retailer's quoted, published, or displayed price. Also referred to as retail price
List price (retail price)
What is loss?
Loss = when amount is less than COGS (cost of goods sold)
What is real world marketing?
Marketing is the activity for processing, creating, communicating, and delivering that adds value to your firm