Principals of Marketing 240.60 Chapter 2
Value Proposition
A business or marketing statement that summarizes why a consumer should buy a product or use a service. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings.
Features
A company has just released a new phone with amazing features that appeal to you.
Product Consumer solution
A company will only sell what the consumer specifically wants to buy. So, marketers should study consumer wants and needs in order to attract them one by one with something he/she wants to purchase.
Examples of promotion include:
An advertisement in Cooking Light magazine A customer's review of the product on Tumblr A newspaper article in the local paper quoting a company employee as an expert A test message sent to a list of customers or prospects
The situation analysis
helps refine corporate goals and produce a relevant set of marketing objectives.
Value Propositions
show examples in reading Video Coffee Shop Marketing (show video)- UK coffee shop had another value proposition to convince coffee drinker they were worth another try
Chuck E. Cheese's focuses their resources and marketing messages to specifically address their desired customers: families, Chuck E. Cheese's marketing focus is known as
targeting
product
the goods and services offerec
Clay is a marketing student learning how to evaluate value propositions for effectiveness. He looked through ten different propositions and found them to all be ineffective. What elements did he mostly likely identify as the reasons for their ineffectiveness?
they were generic, and they had no unique value communicated
Outcome: Communicating the Value Proposition
what is value; what is the value this offering provides to the target customer; how is the value provided different from the value that competitor provides; how are you communication the promise of value to target customers?
A marketer conducted a target customer feedback survey that captured many points of information from customers. For a marketer to understand value, they must discover:
what the target customer values as greaterst
Planning process
will produce 1, 3 and 5 year plans for the company A situation analysis examines both the internal and external factors that might impact the marketing plan. You will look at Strengths, Weaknesses, Opportunities and Threats
One example is the four Cs, proposed by Robert F Lauterborn in 1990:
*Customer solution: what the customer wants and needs *Communication: a two-way dialogue with the customer *Convenience: an easy process to act or buy *Cost: the customer's cost to satisfy that want or need
Focus on the Customer
*Focusing the organization on identifying and understanding the customers' preferences in terms of needs and wants and delivering them more effectively and efficiently than their competitors. *Purpose of Marketing - Gain balance between creating more value for customers against making profits for the organization. Prior to the adoption of a marketing orientation, many organizations followed what was referred to as the "production philosophy." Can you name some companies that focus on marketing orientation?
to recognize when a value proposition is bad:
*If it is so general or universal that it doesn't articulate unique value, then it likely isn't very good. *If a value proposition has so many words that you need to read it twice—or worse, you stop reading and move on—then it's bad. As noted in the Quick Sprout infographic from the previous reading, it should take five seconds or less to read a value proposition. *If the value proposition does not provide clarity about the offering to the target market, then it isn't providing value. The target customer should understand exactly what is promised. *If the value proposition for an offering mimics the value proposition of a competitive offering, it isn't good. In the technology industry, many critics have poked fun at Microsoft for imitating Apple's simple marketing language and presentation style.
Value Is More Than Price
*Two products have exactly the same ingredients, but a customer selects the higher-priced product because of the name brand *A customer shopping online selects a product but abandons the order before paying because there are too many steps in the purchase process *An individual who is interested in a political cause commits to attending a meeting, but cancels when he realizes that he doesn't know anyone attending and that the meeting is on the other side of town.
Staying close to the Customer
*continuously collect information about customers' needs and competitors' capabilities; *share the information across departments; and use the information to *create a competitive advantage by *increasing value for customers. *An organization that knows a great deal about the characteristics, values, interests, and behaviors of its customers - is marketing focused
Value in a Competitive Marketplace
As if understanding individual perceptions of value weren't difficult enough, the presence of competitors further complicates perceptions of value. Customers instinctively make choices between competitive offerings based on perceived value.
What Is a Value Proposition?
As the company seeks to understand and optimize the value of its offering, it also must communicate the core elements of value to potential customers. Marketers do this through a value proposition, defined as follows:
competitive offerings; competitors and substitutes.
Both offerings are hotel rooms provided by different companies. The service includes different features, and the price and location vary, the sum of which creates different perceptions of value for customers.
Marketers communicate elements of value to potential customers through
Clear - short and direct Compelling - conveys the benefits in a way that motivates the buyer to act Differentiating - sets itself apart from other offerings Uber - The Smartest Way to Get Around Apple iPhone - The Experience IS the Product Slack - Be More Productive at Work with Less Effort
A value proposition should be clear, compelling, and differentiating.
Clear: short and direct; immediately identifies both the offering and the value or benefit Compelling: conveys the benefit in a way that motivates the buyer to act Differentiating: sets the offering apart or differentiates it from other offerings
Promotion Communication
Communications can include advertising, public relations, personal selling, viral advertising, and any form of communication between the organization and the consumer.
Convenience
Could you easily buy it online in a moment of indulgence?
Customer Profile Dimension
Demographic, Social graphic, Behavioral, Psycho graphic, Geographic, ^Step 1: Identify the Business Need You Address Step 2: Segment Your Total Market Step 3: Profile Your Target Customer Segment Step 4: Research and Validate Your Market Opportunity What do you know about them? Where are they geographically? What is there income? Language they speak? Who influences them?
Competitors and substitutes force the marketer to identify the aspects of the offering that provide unique value vis-à-vis the alternatives. We refer to this as differentiation
Differentiation is simply the process of identifying and optimizing the elements of an offering that provide unique value to customers. Sometimes organizations refer to this process as competitive differentiation, since it is very focused on optimizing value in the context of the competitive landscape.
four Ps
During the 1950s the components of the marketing mix were conceived as the "four Ps" and were defined as follows:
what is value
Each customer will weigh the benefits and the costs of an offering differently and determine whether it is providing value. It is important to understand how customers perceive value.
How is the value provided different from the value that competitors provide?
Each time a competitor shifts its offering(s), that change will have an impact on the perceived value of your offering. In a competitive marketplace, it becomes important to understand and react to changes, but also to identify the value that you provide that is most difficult for others to copy.
evaluate examples of value propositions
Evaluating art is akin to evaluating a value proposition—it's definitely a subjective process, and others may disagree with you. That said, below are a few pointers that can help you.
you want to develop a skill that's so important in modern life!
Explain why the customer is the cornerstone of marketing Briefly explain the concepts of segmentation and targeting Describe the marketing mix Explain how organizations use the marketing mix (often called the four Ps) to market to their target customers Explain the role of a marketing plan as a guiding document for marketing activities
Product-What solution does the customer want and need?
Features, Design, User experience, naming, branding, differentiation=consumer solutions *Solution that the customer wants and needs
How Do You Reach These Customers?
How can you connect with employers? Reaching prospective employers usually involves packaging and promoting yourself through a common set of job-search tools and activities—like job fairs, résumés, cover letters, LinkedIn profiles, networking lunches, meet-ups and other ways to get an "in." As you find pathways to an employer, how do you make a strong positive impression? Packaging and presentation are essential.
Information
How did you find out about this phone? Did you see an ad? Hear about it from a friend? See pictures and comments about it online?
Place Convenience
In the era of Internet, catalogs, credit cards, and smartphones, often people don't have to go to a particular place to satisfy a want or a need, nor are they limited to a few places to satisfy them. Marketers should know how the target market prefers to buy, how to be there and be ubiquitous, in order to provide convenience of buying. With the rise of Internet and hybrid models of purchasing, "place" is becoming less relevant. Convenience takes into account the ease of buying the product, finding the product, finding information about the product, and several other factors.
Customer Service
Is your cell service provider making it easier for you to buy this phone with a new plan or an upgrade?
why?
It must show that the offering is uniquely valuable to the buyer.
Marketing: A Life Skill
Marketing happens virtually everywhere. Job candidates like yourself have to figure out how to market themselves to employers. Companies market their products and services to customers. Nonprofit organizations market their altruistic missions and impacts to donors. Government agencies market their policies and programs to the general public. Candid
Promotion = what is the dialogue between customer and company?
Message, Method of delivering message, timing of delivery, communications by customer and influences, competitor promotions.
you need to market yourself.
Now you just need to get an employer to notice you, pick you out of the crowd, and invite you onto the team
Who Are Customers, and Why Do They Matter
One of the world's best-known brands, Coca-Cola, provides a high-profile example of misunderstanding customer "wants." In the following video, Roberto Goizueta—in his only on-camera interview on this topic—recounts the disastrous launch of New Coke in 1985 and describes the lessons the company learned. Goizueta was chairman, director, and chief executive officer of the Coca-Cola Company from August 1980 until his death in October 1997
the marketing mix
Organizations must find the right combination of factors that allow them to gain an advantage over their competitors. This combination—the marketing mix—is the combination of factors that a company controls to provide value to its target customers.
Price Cost
Price is only a part of the total cost to satisfy a want or a need. For example, the total cost might be the cost of time in acquiring a good or a service, along with the cost of conscience in consuming it. It reflects the total cost of ownership. Many factors affect cost, including but not limited to the customer's cost to change or implement the new product or service and the customer's cost for not selecting a competitor's product or service.
The marketing mix of Target Market
Product, Price, Place, Promotion, *Creating/Consumer Solution *Communicating *Delivery/Convenience *Exchange/Cost Organizations must find the right combination of factors that allow them to gain an advantage over the competition they do this by Reach Customers through the Marketing Mix
Promotion
Promotion refers to the communications that occur between the company and the customer.
TARGETED MARKETIG VERSUS MASS MARKETING
TARGETED MARKETING ^Also known as undifferentiated marketing. ^It evolved along with mass production. ^Involves selling the same product to everybody. MASS MARKETING ^Also known as undifferentiated marketing. ^It evolved along with mass production. ^Involves selling the same product to everybody
THE VALUE PROPOSITION
THIRTY-SECOND "ELEVATOR SPEECH" STATING THE SPECIFIC BENEFITS A PRODUCT OR SERVICE OFFERING PROVIDES A BUYER It shows why the good is superior to competing offers. ^ The value proposition answers the questions, "why should I buy from you or why should I her you?"
the product include:
The Tesla Model S, a premium electric car A Stay at a Holiday Inn Express, a low-price national hotel chain Doritos Nachos Cheese, a snack food Simple, an online banking service
what?
The offering needs to be defined in the context of that buyer.
price
ensuring fair value in the transaction
Focus on Customers: The "Marketing Orientation
The purpose of marketing is to gain a balance between creating more value for customers against making profits for the organization. To achieve this, many firms have adopted a marketing philosophy or what is generally termed a "marketing orientation."
Who?
The value proposition does not name the target buyer, but it must show clear value to the target buyer.
describe the marketing mix
The value proposition explains why a consumer should buy a product or use a service and how the product or service will add more value, or better solve a problem, than other similar offerings. Once you get the value proposition right, you still have to actually deliver value to your target customer. The marketing mix describes the tools that marketers use to create value for customers.
production philosophy
This approach focused on improving the efficiency of production and distribution in order to reduce costs and deliver more affordable products—both were considered the source of competitive advantage.
selling concept.
This approach required organizations to aggressively focus on selling and promotion efforts as a way to stimulate demand and drive sales.
Definition of Value
VALUE* = BENEFITS RECEIVED - (PRICE + HASSLE) ^Value is ultimately determined by the customer. ^When we use the term value, we mean the benefits buyers receive that meet their needs. ^In other words, value is what the customer gets by purchasing and consuming a company's offering. ^Hassle: the time and effort the consumer puts into the shopping process. ^Once you know your target market - you must have a compelling way to communicate your value proposition How is my value different from the value that competitors provide? How are you communicating it?
A simple formula to apply when identifying value is:
Value = benefit - cost
value
Value = benefit - cost is the measure of the benefit gained from a product or service relative to the full cost of the item.
Price =what is the cost to the customer?
Value to buyer, price sensitivity, existing price points, discounts, competitor pricing, cost/exchange price refers to the cost to the customer.
Why do Customers Matter
What does marketing do for a business? Marketing helps organizations understand, reach and deliver value to their customers.
Marketing you
What is the product? Who is your Customer? How Do You Reach These Customers? What's Your Price? What can you offer that's different and better than other candidates? Prospective employers are the customers you want to appeal to. Reaching prospective employers usually involves packaging and promoting yourself through a common set of job-search tools and activities—like job fairs, résumés, cover letters, LinkedIn profiles, networking lunches, meet-ups and other ways to get an "in." What salary do I want to receive (being realistic)
You Are the Product
What is the unique combination of skills and capabilities you provide to prospective employers? What can you offer that's different and better than other candidates? It might be a language you speak, a depth of prior experience you bring, a course of training you completed, a familiarity with the industry, great communication skills, or some combination of characteristics that make you an attractive employe
How Do You Create an Effective Value Proposition?
When creating or evaluating a value proposition, it is helpful to step away from the long lists of features and benefits and deep competitive analysis. Stick to the simple, and strive for focus and clarity.
What's Your Price?
When it comes to salary and benefits, what is your negotiating strategy? When discussions get serious—when you get a job offer, say—you'll want to get as much compensation as you can without pricing yourself out of the opportunity. After all, you're probably not the only candidate they are considering.
Who Is Your Customer
Who do you want to work for? What type of work do you want to do? Prospective employers are the customers you want to appeal to. Get to know them by researching who they are, who's hiring, what hiring process they use and what they look for, how they get information about job candidates, and what makes them take a closer look.
Defining Your Target Market?
Who needs my product? How can I segment my Customers? Which Segments offer the most opportunity? Based on segments that I want to reach - what is their profile? What do I know about them? Research to confirm the opportunity Use research to confirm your decisions ^conduct research to verify that there will be enough business in this group to support your company in its growth
A value proposition needs to very simply answer the question:
Why should someone buy what you are offering? If you look closely at this question it contains three components:
How are you communicating the promise of value to target customers?
With so many marketing channels and messages all around, customers have a very short attention span. The marketer has to grab that attention and communicate value to customers in only a few seconds.
MixFactors
You can see there are multiple factors that might influence your thinking and decision about what to buy—a mix of factors. Taken together, these factors are all part of the "marketing mix."
Need to Segment and Target Your Audience
You can't be all things to all people You have limited resources - prioritize and choose Marketing is effective when relevant to the potential customer You get there through segmentation and targeting Who do you want to reach (segmentation) Who are the most promising customers (target) Directs you in order to use your resources wisely
What is the value this offering provides to the target customer?
You hope that you have selected target customers that view the value that you provide favorably, but the marketer has to test and refine the assumption that the offering is actually providing value to the target customer.
Price
You're concerned about the price—is this phone a good deal? Too expensive? So cheap that you suspect there's a "catch"?
MARKETING VS MASS MARKETING
a. Mass marketing or undifferentiated marketing is the shotgun approach to marketing and involves mass production and selling the same product to everybody b. Example of mass marketing: Henry Ford and Model T c. Targeted marketing or differentiated marketing is the rifle approach and involves targeting specific customers by differentiating some aspect of marketing for different groups of customers selected. d. Example of targeted marketing: Alfred Sloan and GM in the 1950s. It is generally targets a huge group of individuals. It commonly uses Mass media but the message used is also not differentiated (unlike in differentiated marketing where mass media is used with a targeted message) The objective is of a scatter gun approach - hit as many people as you can to get some returns (differentiated marketing is a sniper type approach - hit the target only). Soaps and detergents use mass marketing. Many Deodorants and personal hygiene products use mass marketing because they are used by the complete market.
"Customers
are the people or organizations with needs or wants that a business aspires to address. The act of obtaining a desired object from someone by offering something of value in return is called the exchange process. Businesses live, thrive, or die based on their ability to offer value to customers through the exchange process. In other words
Substitute offerings
are viewed by the user as alternatives. The substitution is not a perfect replication of the offering, which means that it will provide different value to customers
Promotion includes
both the messages sent by the company and messages that customers send to the public about their experience.
A marketing orientation
can be defined as focusing the organization on identifying and understanding the customers' preferences in terms of needs and wants and delivering them more effectively and efficiently than their competitors.
Promotion
communication and information
Listia lets people list their stuff, sell their stuff for credits, then turn around and use those credits to purchase things on its website. Its value proposition is, "Get rid of old stuff. Get new stuff for free." Identify some of the aspects of their value proposition:
compelling and motivating to use website
the marketing planning process
corporate mission, situation analysis, internal factors, external factors, corporate strategy, marketing strategy, target market, product, price, place, promotion, evaluation
place
distribution or delivery
You are trying to define your target market for a travel agency service. Identify the correct order of the market targeting steps:
identify business needs, segment total market, profile target customer segment research and validate marketing opportunity
The four Cs
include a greater focus on the customer but align nicely with the older four Ps. They also enable one to think about the marketing mix for services, not just products. While it is difficult to think about hotel accommodations as a distinct product, it is much easier to think about a hotel creating a customer solution.
The value proposition
is a simple, powerful statement of value, but it is only the tip of the iceberg. How do marketing professionals ensure that they are reaching and delivering value to the target customer?
The Belvie company's value proposition on its website has few hints as to what it offers to the market. Its value proposition is ineffective because it:
is not compelling and is very genric
Whether we reference the four Ps or the four Cs
it is important to recognize that marketing requires attention to a range of different approaches and variables that influence customer behavior. Getting the right mix of activities is essential for marketing success.
The mix of factors a company or organization uses to bring value to its target customers is the definition for the:
marketing mix
The BFD International company just adjusted its corporate goals for the year. In order for the company to attain these goals, the marketing team must identify how to market accurately by creating:
marketing objectieves
In the marketing mix, the term "product"
means the solution that the customer wants and needs. In this context, we focus on the solution rather than only on the physical product
Promotion
n the marketing mix, the term "promotion" refers to the communications that occur between the company and the customer. Promotion includes both the messages sent by the company and messages that customers send to the public about their experience.
After thinking through the marketing mix, if a disposable razor is sold through a drugstore or grocery store to a discount type of customer, the disposable razor company is more likely to
package the razor in low-cost packaging
A customer is deciding between two milk chocolate ice creams that contain peanut butter and bananas. One company is a small local dairy company and the other a well-known national brand. The customer does not like the taste of the national brand ice cream and chooses the local dairy company ice cream, paying $1.50 more for it. This is an example of a:
perceived or added value
What is the right mix-shampoo
product, promotion, place, price ^It depends on the organizations goals. Approach it like a recipe. Consider a shampoo The key is what does the target customer want
A nonprofit raising awareness of post-traumatic stress disorder that is asking questions about its potential clients, such as "Who will use the service? Where are they located geographically? What is their annual income?" is in what part of the target market defining process?
profiling target customer segments
Effective marketing
requires a plan - must align with company goals Start with executive leadership to determine a company's mission, objectives and strategy.
Zeus' Boltz, a bolt manufacturer, pays a large sales staff to focus its efforts primarily on selling its bolts to vehicle manufacturers. They push purchases regardless of the manufacturer's needs, which often causes business relations problems. Zeus' Boltz is an example of a company using which marketing philosophy?
selling concept