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