Marketing Exam 1

Consumer

End user

Experience Qualities

Experience attributes are those that need some trial or consumption before evaluation. So, if friends recommend a new restaurant, you might trust your friends and expect to like the restaurant, but it's not until you personally go there, experience the ambience and service, try the food, pay the bill, etc. that you can judge the purchase as satisfactory or not for yourself.

Market Segments

Groups of customers who share similar needs and wants.

Product Orientation

This view defines organization around our products Higher quality, higher performance, and innovative. The organization tends to define itself around what if offers rather than what customers need

Potential Market

All possible users of a product

Brand Association

All those sensory and perceptual impressions can become brand associations. To say that consumers have brand associations means that, in their memory, they have stored certain attributes attached to the brand. When the brand is mentioned, those associations are brought to mind. Learning is the process by which associations get past the sensory and perception stages into short-term memory and then, with repetition and elaboration, into long-term memory. Of the several theories about learning, two are so fundamental and pervasive that every marketer should know them. If branding begins with simple physical qualities (a name, logo, color, packaging, etc.), the far more interesting and flexible aspects of a brand are the intangible cognitive and emotional associations that the company helps the customer connect to its brand. Marketers talk about a hierarchy of brand associations. At the bottom of a brand value hierarchy are the concrete product attributes, such as color, size, shape, flavor. As we travel up the hierarchy, these brand attributes extend to product benefits; e.g., this blue sweater will be flattering; this sized jar of salsa should be enough for the recipe; the shape of the new RayBans is too boxy; the favor of the beef at Fogo de Chão is just spicy enough. Benefits are more intangible than attributes. Emotional benefits are the next level, and they're more intangible yet; e.g., a flattering sweater is a means to be attractive; a good meal is a means to please family or friends, etc. Strategically, the concrete features are easiest to deliver and explain to customers, but they're also relatively easily matched by competitors. The more abstract benefits are values that are more meaningful to customers and easier for a company to claim as a competitive advantage, but they're also more difcult to create. The key brand association is the extent to which the customer feels a personal connection to the brand. For example, think of the middle-aged man who rides a Harley, telling himself, "I'm so cool!" Brands aren't just extensions of the customer, they are expressions of the customer's ideal self or the self to which they aspire. A brand carries a promise that it can help customers achieve their desired persona. This aspiration function of brands begins in childhood, when kids believe that their popularity and acceptance are partly a function of wearing the right sneakers or listening to the right music on the right MP3 player. Adults may deny that they use brands in the same manner, but watch their behaviors: They attend "certain" schools, drive "certain" cars, and wear "certain" designers' clothing and shoes. Brands can also serve other social functions. Brands can become the focal point of bonding, as in so-called brand communities, exemplified by the well-known Harley treks, Mac user groups, Lego clubs (club.lego.com), or even traditional fan sites (e.g., hundreds for Beiber), etc. To nonmarketers, rabid fan dedication can be surprising; people talk about loving (some) brands. All of these connections can be depicted, as in Figure 7.3, in a brand association network. The nodes in the network include elements such as the brand name (and perhaps competitors), along with attributes and abstract benefits about the brand. The links between the nodes indicate some connection (unlinked nodes have either no or weak connections), and strong links are depicted with bold lines. This mapping is not meant to be a literal representation of what customers have in their heads, and yet it's not a bad metaphor. This idea is that we have stored quite a lot of information about a brand in memory, and, when the brand name is activated (e.g., through advertising), the brand associations are subsequently (even instantaneously) triggered (like brand information jumping across neurons). Links that are further from the brand may take milliseconds longer to retrieve and activate than those most closely and directly associated with the brand. Thus, while the brand associations in the figure indicate that Bose is perceived to be expensive, that attribute is not likely to be one of the very first qualities that comes to mind when the brand name is stimulated. In addition to memory implications, there are attitudinal ones as well. For example, measures of customer satisfaction with the brand are most heavily affected by the positivity or negativity of the nearest links. When company advertising emphasizes one benefit, the cognitive maps may be simple: e.g., Volvo's link with safety dominates everything else, and ditto Nordstrom's link to good customer service. If those solitary links are strong and positive, the focused message has been delivered, and the position of the brand in the marketplace is clear and positive. Networks can be more complex, due either to a long heritage in the marketplace (e.g., McDonald's may be linked to fries, quickness, inexpensiveness, the two-all-beef-patties jingle, road trips, fat food concerns, etc.) or to inconsistent advertising messages or customer experiences. In addition to classic studies of brand associations to understand customers' memory and attitudes, recent research has examined two special classes of brand associations: brand personalities and brand communities.

Marketing

An exchange between a firm and its customers. The customer wants something from the firm, and the firm wants something from the customer. Marketers try to figure out what customers want, how to provide it, and how to do so profitably. The key to marketing is being customer oriented.

Selling Orientation

Belief that it's not the products that sells, it's the selling that sold the product. Assumes that the market is saturated and customers must be attracted. -Selling what you have is key

Societal Marketing Orientation

Companies are responsible for what happens in society. Implementing the marketing concepts while taking the welfare of society into consideration Ben and Jerry's, expensive ice cream, weird flavors, profits go to save the rainforest. Focused on being nice people.

Production Orientation

Emphasize efficiency. Tend to treat markets are homogenous. Tend to have an internal focus based on improving efficiency. Can be extremely important but its not everything. An example is an engineering firm that emphasis widely available, inexpensive market options, but sometimes consumers want more bells and whistles

New buy

High involvement; Buy something that has not been previously bought with much thought or planning High involvement, purchase something that hasn't been purchased before. Requires much thought and planning. More people are needed, more complex and shit.

House of Brands

House of brands approach is one for which the company introduces a new brand name for every major line of product it brings to the marketplace. Procter & Gamble is a famous house of brands. It produces some 80 major brands, including Charmin, Crest, Downy, Gillette, Hugo Boss, Ivory, Pringles, Swiffer, Fide, and on and on. No connections among these brands are apparent to customers. In B2B land, DuPont had similarly introduced a portfolio of great brands: Kevlar, Kalrez, Lycra, Teflon, Tinsulate, and Stainmaster. The company has subsequently sold of some of these brands not because they weren't good brands. Rather, for strategic purposes, they sought to focus on a subset of their business lines. Indeed, because even the brands they sold of had strong equity, they were profitable transactions.

What is brand equity and how can it be measured?

How to measure the worth of a brand. Here is a quick reference on how brand equity is determined and valuated: 1. Start with the firm's net operating earnings (for the entire company, e.g., a corporate brand, or for a specific brand in a company's portfolio). 2. Subtract taxes on these earnings. 3. Determine the amount of tangible capital associated with the brand and by some expected rate of return (e.g., a conservative rate might be 6%). This rate of return is also subtracted from the firm's net operating earnings. The resulting figure after we subtract taxes and the rate of return expected is the earnings based on intangibles. 4. Use a brand contribution index (which varies based on the type of brand) to identify a multiplier against the earnings based on intangibles. 5. The result refects the intangible earnings related to the brand (i.e., estimated brand value).

Positioning

It's about identity: who your brand or company is in the marketplace vis-à-vis the competition and in the eyes of the customer. Once you see who you are, you can also determine who you want to be. Positioning comprises much of a marketer's responsibilities. It requires designing a product with benefits that the target segment will value (how do you want your customers to think about your brand?), pricing it so that it's profitable yet seen as valuable (how high a price can you command for your brand?), building distributor relationships to make the market offering available (where do customers go to and your brand?), and communicating all of this to the customer through an array of promotional activities (what do you say about your brand?). In other words, positioning involves all the marketing mix variables.

Search qualities

Search qualities are those attributes that may be evaluated prior to purchase, as the customer learns about the competitive offerings. For example, when you go to a department store to purchase socks, you can just look at a pair and know before buying them whether you'll like them. You can see the color, the price, the material they're made of, and you can imagine immediately what they'll feel like on your toes.

STP

Segmentation Targeting Positioning STP is the essence of marketing strategy: What kinds of customers are out there (segments)? Which targets do we wish to serve? Then we'll begin to formulate our brand position.

Target Market

Users we will be focusing on

Breadth

When a company that is trying to reach more than one segment with its product.

Market

o A market consists of all the consumers, who purchase a particular type of product • Market for automobiles • Market for hair care services

lexicographic

An example of this approach is called lexicographic; the idea is that a customer would compare all the possible brands along the attribute or dimension that is most important (e.g., quality, price, size, color, etc.). Whichever brands make the cut on this first dimension continue to be considered. That subset of brands is compared on the next most important attribute, and so on until the set is reduced to only a few brands.

One-to-one

At the other extreme, one-to-one marketing means that each customer serves as his or her own segment. Tis approach sounds appealing from the customer's point of view because the product would be tailored specially for each person's idiosyncratic desires. Some manufacturers of computers and cars are experimenting with letting customers design their own models. Are these companies truly offering one-to-one tailored products? Not really. Dell's website may seem to do so, but users are allowed to choose only from short lists of features. Nevertheless, even those variations result in a large number of combinations, such that one person's computer seems rather different from another's. The result approaches one-to-one marketing.

Points of Difference

Attributes that differ from competitors

Points of Parity

Attributes that match competitors

Selling orientation

Belief that it's not the products that sells, it's the selling that sold the product. Assumes that the market is saturated and customers must be attracted. -Selling what you have is key

What are the four dimensions of brand experience?

Brakus, Schmitt, and Zarantonello studied and tried to characterize consumers' brand experiences. These marketers interviewed many people about many products and collected their thoughts about their brands. Next, the researchers identified themes running through these consumers' descriptions of brands. Ultimately, their research distinguished four distinct elements of brand experiences: 1. Consumers experience emotions, such as when they pick out a Hallmark greeting card. 2. They experience a taste sensation, such as when they drink their Starbucks Frappuccino. 3. They face an intellectual challenge, such as when they try to solve crosswords and Sudoku puzzles. 4. They encounter behavioral challenges, such as when they play various sports.

Cobranding

Cobranding is when two companies collaborate in a joint venture to create a good or service for the customer: "Brought to you by ... [both companies]." Kevlar fabric is used and touted when selling protective body gear (vests, helmets), bicycle tires, racing sails, and so forth.

Noncompensatory

Te first stage to decision making and brand choice is thought to be conducted quickly by noncompensatory mechanisms. Non-compensatory means that some attributes are very important, and if the brand has them (or doesn't), then it may be considered further, and if not, the brand is precluded. Even if the brand excels at something else, that other excellent attribute does not compensate for the lack of the first, important quality. An example of this approach is called lexicographic; the idea is that a customer would compare all the possible brands along the attribute or dimension that is most important (e.g., quality, price, size, color, etc.). Whichever brands make the cut on this first dimension continue to be considered. That subset of brands is compared on the next most important attribute, and so on until the set is reduced to only a few brands.

Position Matrix

The assumptions we made in the positioning matrix are not unduly restrictive, and the matrix provides a useful focus when making decisions in many marketing scenarios: Very simply, do we go basic (low price, low quality, wide availability, and heavy promotion), or do we go upscale (higher price, high quality, exclusive availability, and lighter promotion)? You can move off these two extreme positions in the matrix, but you better have a reason. Is that what your customers want? Can you make money the

Company

The customer and company are the central players in the marketing exchange.

Differentiation

This strategy is an attempt to distinguish one's products as unique in the industry. Differentiation may be fostered through excellent quality in products and customer service, distinctive design, exclusivity, value-addeds bundled into the core purchase, etc.

Brand Leveraging

Taking a strong brand name and using it to bring more produts out under that same brand name. Bic cam out with inexpensive pens - bic brand came to be associated with low price, acceptable equality, and throwaway. US ethsi to leverage highlighting pens. Still are lower price. Then they brought out razor blade. No longer writing expense. But they leverage the throwaway and low price. Now they make lighters. Inexpensive throwaway. Now Bic makes deodorant, inexpensive but now throwaway. Can stretch it too far that the associtions doesn't mean anything to users.

Market orientation

Understand and pay attention to your customer and your competitor. The companies that fail to look outside of their firm get left out when the market place changes. (Internal Orientation) What companies do and don't? To make it successful, you have to bring it back to them company. Make a change on the interior. Types of information that we can choose to determine our orientation Explicit information - can be written down, reported, quantified. Tacit information - cannot be written down. i.e. a deep understanding of your customer. Hard to share, in order to share you have to teach it, and to teach it takes time. If there's no interaction, it will never be shared. Need to be face to face in order to learn and teach.

Market Orientation

Understand and pay attention to your customer and your competitor. The companies that fail to look outside of their firm get left put when the market place changes. (Internal Orientation) What companies do and don't? To make it successful, you have to bring it back to them company. Make a change on the interior. Types of information that we can chase to determine our orientation Explicit information - can be written down, reported, quantified,. Tacit information - cannot be written down. i.e. a deep understanding of your customer. Hard to share, in order to share you have to teach it, and to teach it takes time. If there's no interaction, it will never be shared. Need to be face to face in order to learn and teach.

Penetrated Market

Users who currently use your product

Available Market

Users who would truly consider buying from you

Operant conditioning

We reward/punish behaviors. The consequences are based off of your action. Purchase turns to satisfaction.

Customer and Company Orientation

We want to understand trends and predict actions. Companies are run by people, and people have predictable tendencies.

Market segmentation

o The process of identifying characteristics that allow a market to be divided into groups of consumers that have similar behaviors and needs o Overlap between segments → can be in two different target markets • Members of the same segment are similar to each other (homogenous) • Same age • Backgrounds • All young children • Etc • Members of different segments are dissimilar to each other (heterogeneous) • Need a different strategy for different strategies • What it isn't o It is not cutting up a market into groups o Segments already exist o Do some segments provide more opportunities for success? • One to one marketing (not profitable) • Marketing segmentation (just right) • Mass marketing (low customer satisfaction)

What are the different levels of Maslow's hierarchy of needs? Why is it important?

psychologist Abraham Maslow's hierarchy of needs. Consumers have to meet basic needs—put food on the table and a roof overhead—before considering buying nice clothes. Once basic needs have been met, consumers are driven by more abstract motivations, such as love and esteem, qualities that begin to define humanity. At the peak of this pyramid is self-actualization, an achievement of one's ideal self, with no needs, no excessive wants, no jealousies, etc. ● Self actualization ● self-esteem, respect ● friendship, love, belonging ● safety, security ● food, water, sleep, sex One way that marketers use this hierarchy is by identifying their product with a certain level of needs. They use imagery to appeal to those motivations. For example, the VW crash ads appeal to consumers' needs for safety. Similarly, the entire Volvo brand is positioned for safety. Beyond cars are examples that involve different kinds of security. For example, in B2B, they used to say, "You won't get fired for buying IBM." Even though IBM was often the most expensive choice, buyers knew that the quality would be good, so any risk-averse buyer would feel secure in having chosen a good brand. Many consumers are fortunate enough to have their simpler needs met, so a great number of brands are positioned to heighten a consumer's sense of belonging or, in the next level, social acceptance and respect. Belonging can be signaled by explicitly affliative products, such as team logos, or conspicuously branded products, as in certain men's athletic shoes or women's handbags. Belonging can also be more subtle; many ads appeal to a person's concern with fitting in with the norm—wearing the right clothes, driving the right kind of car, etc. On the higher level, the acceptance by self (esteem) and others (respect) is often signaled by marketers by pointing a consumer toward an aspiration group. MBA students may find ads appealing that display the clothes, restaurants, and cars that successful CEOs wear, dine in, and drive. The aspirations begin to shape consumer preferences accordingly, so that, when they achieve that desired executive status, the purchases will be appropriate and exhibit good taste. Another way that marketers have used this hierarchy is to offer an extended brand line that encourages a customer to reach ever higher in the pyramid. For example, Mercedes makes their entry-level C-model for the driver who wants the brand but cannot afford much. Mercedes hopes that the driver will like the C-model and, when they're ready, trade it in for an E-, then S-, then CL-model. This product range is a simple manifestation of customer relationship management. Yet another way that the hierarchy is used is when brand managers think about positioning their brands as high in the pyramid as possible. Walmart may make basic sneakers that satisfy simple needs at the bottom of the hierarchy. Well-made athletic shoes, affiliated with strong brand equity, can command a higher price not just because the product may be somewhat better but also because the consumer wants to believe that the shoes will make them better—better athletes, more fit, more attractive, better people. The basic Walmart sneakers probably can't be positioned too high in the pyramid, but it would behoove any other sneaker maker to strive for imagery as high in the hierarchy as possible.

Product

A good or service that customers need or want

Market Offerings

Composed of bundles of attributes, which may be tangible or intangible, objective or subjective, and which may be viewed by some potential buyer(s) as a want-satisfier

Punishment

Operant conditioning o A negative consequence that adversely affects a behavior • i.e. Late fees

Price

The cost of a product, which needs to be set appropriately

Why is sensory stimulation important for marketers?

When marketers formulate positioning statements or produce perceptual maps, they pre-suppose a complicated system through which consumers sense and perceive their environment. An enormous wave of sensory stimulation washes over and through us every day. We are selective in our attention, choosing to consider certain stimuli and effectively screening out others. The multitude of stimuli, helping us focus and block out what is deemed to be irrelevant. Marketers can use information through each of the senses. Visual stimuli are obviously important to marketers. Ads show products, product design, print information, imagery visualization to facilitate desirable lifestyles, etc. Even simple colors imbue brand associations and can be integral to some brand identities. If consumers understand colors, marketers can use that information. Colors can also convey cultural meaning. Hearing is also important to marketers. Research shows that when retailers play background music that is energetic, with a quick tempo, customers spend more. Even the sound of a brand name can have an effect on consumers' perceptions of that brand. Marketing linguists tells us that the sound of a long e, reminiscent of the sound that small animals make such as a mouse (squeak) or a little bird (cheep), are fitting for products that are positioned as small and quick: Beetle, Miata, Neon. In contrast, vowel sounds like short o sound slow, large, heavy (e.g., ox, cow) and should be used for naming larger, more powerful products to convey their heft: Durango, Bronco, etc. A third sense is smell. Shopping malls excel at wafting out scents, from the Cinnabon in the food court to the coffee store in the corner. Samples of new perfumes are inserted into magazines, and women work cosmetic counters in department stores to spray shoppers. Scent is featured in ads for cleaning products—things that make our houses smell fresh or lemony. Given the biology of scent, it's not surprising that there are gender differences, e.g., Hummer's fragrance for men says it's the smell of testosterone, whereas Elizabeth Arden's perfume Splendor, for women, is called "a sparkling love story" and "wonderfully romantic." A fourth sense is taste. A classic marketing exercise is to run blind taste tests in order to declare that one's own product is superior to the market leader. These tests can be dramatic and compelling. They are also interesting to marketers because they clearly distinguish the power of the brand from the product itself. A fifth sense is touch. The predominant means of conveying brand imagery through touch is when marketers create well designed products, compared to products intended to be positioned for value. Design can mean good ergonomics, as in OXO's Good Grips kitchen utensils, wrist-friendly mice or keyboards, or the iPhone compared with other mobiles. Design can also mean clean lines, simplicity, and beauty, and it can certainly mean a sensual experience, like leather interior options in cars, compared to less expensive, less touchable alternative materials. Finally, a discussion about sensation and perception wouldn't be complete without a mention of so-called subliminal advertising. The idea is that an ad can be shown very quickly, on TV or in the movies, so that it doesn't quite meet the threshold of liminal recognition and consciousness, and therefore it is said to be subliminal. Yet somehow the vision is captured subconsciously, and marketers hope the message will compel action. great deal of research in areas called mere exposure and perceptual fluency. Marketers know that repeated exposures to a brand name or an ad bring familiarity, and with familiarity comes a comfortable, positive feeling. Tus, brands advertised on billboards are familiar and would probably rate fairly positively. Perceptual fluency is also a subtle phenomenon. When consumers thumb through a magazine or click through websites, they are probably paying most of their attention to the content of the message. However, other information is being expressed. Colors and fonts can make a message seem more professional, more emotional, more contemporary, more gothic. Those cues make an impression as well. The cues are liminal but subtle and are part of the brand.

Promotion

via advertising and sales promotions to help customers understand the product's benefits and value

Umbrella Branding Approach

A company that attaches the same brand name to all of its products is using an umbrella branding approach. There are lots oh examples, such as Honda, who makes cars, motorcycles, and lawnmowers, and calls them all Hondas. Nike makes athletic shoes, sports jerseys, gym bags, and other products, all oh which bear the same company brand name and swish logo. All oh HP's products say "HP." Canon's cameras and photocopiers say "Canon." GE puts its corporate brand on its diverse lines oh appliances, lighting, financial services, and engines.

Buying Center

A lot of decisions we make are done buy groups of people The center doesn't exist. Different people in the company will have different effects on your product. One person in the company/group may want to buy it but they might need clearance. Users - have it and use it Influences - can influence the choice. Finance sets budgets Deciders - anything for a high amount you have to go through protocol to see if you can buy it. Approvers- Say yes or no Buyers- Buy new computers for everyone in the building.

Market segment

A market segment is a group of customers who share similar inclinations toward a brand. On a continuum from mass marketing to one-to-one marketing, market segmentation is in the middle.

Brand

A portfolio of qualities associated with a name. Marketers care about brands because brands have value above and beyond the benefits of the product itself. Brands signal information to customers about predictability in their purchases, about anticipated reliability and expected quality. ● Brands can command higher prices, because the brand offsets any uncertainties or risks associated with the purchase in the mind of the customer. ● Brand associations are the cognitive and emotional elements that combine to create the larger brand story. ● Companies can employ any of a number of strategies with their brands. They can put their corporate name on everything (i.e., an umbrella brand), or they can create a portfolio of different brands (i.e., the house of brands). ● Brand valuation, e.g., per the method of Interbrand reported in the BusinessWeek annual polls, are all the rage, and are likely to continue to be important to branders for the future.

Depth

A strategy whereby a company has decided they want to be everything to a particular segment, serving those customers very well.

Brand Community

Brands can become the focal point of bonding, as in so-called brand communities, exemplified by the well-known Harley treks, Mac user groups, Lego clubs (club.lego.com), or even traditional fan sites (e.g., hundreds for Beiber), etc. To nonmarketers, rabid fan dedication can be surprising; people talk about loving (some) brands. There are brand commu- nities around iPhone, Lego, Jonessoda.com, and Dell's ideastorm.com. Some customers are so passionate about their love for certain brands that they like to connect with other like-minded customers. Whether these brand communities take the form of social media interactions or interactions IRL (like a Harley posse who rides together), customers are coming together over brands. Currently, marketers don't quite know what to do with these communities (other than trying to engage them to spark viral campaigns). Will brand communities enhance the bottom line? Probably. How could it not be a good thing if people gather to rave about your brand, but how will that be monetized? Companies are still figuring that out.

Specialty Purchases

Car, house, or new laptop. High involvement. Put much more effort into purchases. These purchases are occasional, they are often more expensive, and as a result they require more thought.

SWOT

Companies constantly face the decision of how to grow by serving their current or new customers with current or new products. The decision requires two kinds of information: first, a SWOT analysis and, second, estimates on the sizing and profitability of the potential growth paths. SWOT stands for strengths, weaknesses, opportunities, and threats. ● The S & W characterize our own company and are said to be internal to the organization. ● The O & T characterize the broader environment (e.g., industry, suppliers, government, etc.) and are factors external to the company. Regarding our strengths and weaknesses, ideally we'd conduct or commission marketing research to obtain the perceptions of our customers. It is most meaningful to assess our S & W relative to our competitors. If our brands, product lines, and company have perceived weaknesses in areas that customers care about, we should make changes to address those shortcomings. If our brands and products have perceived strengths, we will do what we can to assure that these remain sustainable competitive advantages, and we'll advertise them like crazy. Opportunities and threats are usually driven by changes in the 5Cs. If the context is changing, are our competitors being affected in the same way? Are our collaborators changing, say, through an acquisition, a supplier is morphing into a competitor, etc. Which opportunities should we pursue? Which threats pose the biggest risks? How shall we respond, and how is the competition likely to counteract? The second element to the company's choice of growth patterns is the estimation of market potential. We wish to size the likely current market and forecast, or predict, growth in the future. SWOTs are useful in clarifying just about any marketing question. In such an analysis, we can declare our strengths and weaknesses relative to our competitors, but our opinion doesn't matter as much as that of the customer base. Hence, we'd obtain some marketing research data, such as the perceptual maps described in the section that follows. If our brands, product lines, and company have perceived weaknesses in areas that customers care about, we should be motivated to make changes to address those shortcomings. If our brands and products have perceived strengths, we will consider what we can do to assure that these will be sustainable competitive advantages, and we'll advertise them like crazy. Opportunities and threats are usually driven by changes in one of the 5Cs: The economic or environmental context might be changing, a supplier might be morphing into a competitor, a competitor might be offering extended services that are desired by our customers, etc. Whether any of these shifts is perceived as a threat or opportunity depends a bit on corporate philosophy: Is the glass half empty or half full? Are we nimble enough to respond and react, thus seeing the changes on the horizon as opportunities? Or are we bureaucratic or not very creative and react pessimistically to the changes as threats?

Customer Behavior

Consumer is the end user. The one who buys the computer and actually uses it. For P&G the customers are the retailers. The Intermediates. B to B Marketing. Do care about consumers, but the relationships with customers (retailers) are key. 3 Tiers - make decisions based on the people in your company. They're looking for 4-6 key drivers. DeWalt - Their target is a professional user. What's different about them? How do their products need to be different? The professionals used to buy the cheaper products. Didn't work. They need special tools, they need to be valuable. Can't really use TV to market to these people, don't like to see work when they're chilling. Instead, they came to job sites to market. Went to NASCAR, put the sticker on the car of the favorite driver. They're very loyal. Where do they shop? What do they use it for? In all decision making it starts off with problem recognition. How do you get people to believe that they need something? Stickiness - Look for opportune changes, times when their buying habits are up for grabs. We have to trigger their recognition, get them out of their bubble of normality. Not manipulation, just understand how people do things. Get them out of their mode of doing the same shit every day.

Convenience Purchase

Consumers purchase convenience items, or business customers a straight rebuy, fairly mindlessly. It's the proverbial no-brainer. They won't spend much time thinking about brands or attributes because they just don't care enough to do so. The challenge for marketers is to break that rote behavior and shake up the consumer with news of their brand.

Attribute-Based Perceptual Map

Customers complete a survey that looks like that in Figure 15.8. Te customer makes two kinds of ratings: (1) How does our brand rate on a number of attributes? (2) How important is each of these attributes? This particular study was motivated by Ford's frustration that its Fiesta wasn't perceived more favorably, or so they thought. They solicited a positioning study of that car and some recent appealing com- petitors. They asked customers how well each car fared on the bases of value, comfort, fun, design, and the extent to which the car brand reflected their personalities. The analysis begins by merely taking simple averages over these questions. Doing so results in a pair of means for each attribute; e.g., there is a mean on whether the Fiesta is good value and a mean for how important value is to this customer. These pairs of means are used to plot the 5 attributes in a 2-dimensional space (or chart) as in Figure 15.9. The higher the mean on performance on an attribute (in the first 5 rat-ings) translates to how far to the right the attribute will be plotted. The importance of the attribute (in the second 5 ratings) is the coordinate on the vertical axis of the chart. Along the horizontal axis, these data indicate that the Fiesta is perceived to be good value and comfortable, relative to the other cars tested, but not as strong on the other attributes. Along the vertical axis, these data indicate that value, comfort, and design are the most important features of the cars, whereas "Fun to own and drive" is less so. This very simple construction (simple in the survey, data analysis, and plotting) of an attribute-based perceptual map yields pretty helpful insights. The car has strengths, including some in areas that are important to customers. Unfortunately, the car is seen as weaker in some areas that are also important. Attributes on which a brand is doing poorly and yet are important to the customers would be priority 1 for fixing.

Credence Qualities

Finally, credence qualities are those that are difcult to judge even postconsumption, hence the term "credence." You just have to trust or believe that the quality is good. When you leave your psychotherapist's office, did the therapy improve you? Did that vasectomy work? Sometimes credence means we go beyond trust to sheer hope, e.g., we hope the mechanic fixed our car and didn't cause any new problems. This sentiment is captured perfectly when Charles Revlon says of his company, "In the factory we make cosmetics; in the store we sell hope."

Penetrated market

If you want to disperse your brand quickly and widely throughout the marketplace, that is, penetrate the market, the brand would be priced low at the time of its introduction to stimulate sales and to encourage trial and word of mouth. This approach is intended to capture a large market share. It is a little risky because if many customers immediately start buying your brand, you better be ready. The product better be good (no beta testing, thank you!), and your production capacity and your channels better be ready to serve. With time, the price is usually raised as the brand reaches maturity and finds its segments; the product is adorned with more features that customers care about, etc. In the upper left of the matrix, we see the strategy of market penetration. In this scenario, we have no plans of expanding our product lines, nor do we seek new customers. We will simply encourage our current customers to purchase from us more frequently. This strategy is low risk, but obviously it also might max out quickly.

Marketing concept

In order to market to people - you have to talk to them to find out what they want, then design it for them, and do a better job than your competitors. Do all companies go out and talk to their potential customers first? No Post it notes - no one wanted it. Gave it our for free to secretaries and they loved it. A lot of companies don't have this as their orientation.

Customer

Intermediary The customer and company are the central players in the marketing exchange.

Straight rebuy

Low involvement; purchase what was purchased last time with little or no thought -Reorder those paper things. Low involvement purchased last time with little or no thought. Get a personal relationship and ask to see what the straight rebuys are?

Perceptual Maps

Marketers and senior managers like to see graphical depictions of where their brands are, and where their competitors are, in the minds of their customers. These pictures help us envision how customers think about our brand and give us initial answers to many questions: What are our strengths and weaknesses? What are those of our competitors? Even though we think of certain companies and brands as our competitors, do customers view it the same way? What is our position in the market space? Who do they think are our closest substitutes for the benefits they seek when they're buying in this product category? Perceptual maps provide these pictures

How are the different kinds of purchases for B2C similar to those of B2B? (Figure 2.2)

Marketers distinguish among types of purchases. For consumers, a convenience item is a purchase that doesn't require a lot of thought, such as staples or standard, frequently consumed goods like bread or gas, or impulse purchases such as candy or magazines that are available near grocery checkouts. There are also shopping purchases, which require some thought or planning, as when using citysearch or OpenTable to find a restaurant before heading out of town. Third, there are specialty purchases such as a car or new laptop. These purchases are occasional, they are often more expensive, and as a result they require more thought. For B2B customers, the terms are different, but the ideas are analogous. A purchase can be a straight rebuy, such as when the office copier needs toner and the office administrator buys the usual brand. Another purchase may be a modified rebuy, such as when the copier lease comes up and the boss wants to try a different vendor. Third, there is the new buy; for example, perhaps the office is considering buying teleconferencing equipment for the first time, and some investigation is required to even identify the relevant attributes to consider. As Figure 2.2 indicates, what differentiates these purchases is not the product itself. The distinction is more in the minds of the customers and their involvement with the brand and product category. For example, the purchase of the same product—an energy drink—can be convenience when shoppers mindlessly put their usual brand in their grocery cart, it can be a shopping purchase when customers see a new offering that they consider trying, and it can be a specialty purchase when customers see an expensive brand that promises antioxidants, which they chose to read up on before making the purchase. Consumers purchase convenience items, or business customers a straight rebuy, fairly mindlessly. It's the proverbial no-brainer. They won't spend much time thinking about brands or attributes because they just don't care enough to do so. Te challenge for marketers is to break that rote behavior and shake up the consumer with news of their brand. For items that customers care more about, they'll expend some time and effort prior to the purchase, seeking out more information to be a smart shopper and obtain good value. For even higher customer involvement, as in specialty purchases or new buys, the customers are definitely engaged. There is a great deal of effort put into researching the best brands, quality, and price. The marketer's challenge is to convince the buyer that their brand is the best choice.

Mass Marketing

Mass marketing means that all customers would be treated the same. This approach might sound attractive because it simplifies the business (i.e., only one product needs to be offered), but it is usually unrealistic (because customers differ).

Modified rebuy

Medium involvement; something about the purchase is altered requiring some thought Something about the purchases is altered requiring thought. More chance as a marketer to be involved in that process

Marketing myopia

Narrow-sidedness within the company Defines production and product. Growth industries are not based around products. Things were happening in the dynamics outside of your company. A better way to define yourself is by being a customer. There's no such thing as a growth industry. Companies get to wrapped up in themselves. Example: Train company is in the business of transportation. The value is getting bodies from a to b. Trains never through that they would get replaced. But they might still be here today if they thought about new ways that consumers will want to transport. Can't be too inwardly focused on a product, or else someone will innovate and replace you.

Position statement

Once a company has decided on its positioning, either for the corporation as a whole or for one of its brands, it must be able to communicate succinctly the parameters of that position to a number of different audiences (to customers, employees, shareholders, general public, etc. ) A positioning statement is that communication, and it takes a pretty standard form. Just as marketing itself begins with the segmentation part of STP, a positioning statement also includes the specification of the target segment(s). As we have tried to illustrate in the chapter on segmentation, you don't want to strive to be all things to all people. So your positioning statement should address your target segment. Anything else you say in the positioning statement will have no meaning to customers who are not in that segment. The next element oh a positioning statement is what has been called the unique selling proposition (USP). The idea is to express your brand's competitive advantage clearly and succinctly. The USP concept captures two things: First, what is the product category (the SP), and second, how does your market offering dominate these other providers (the U). It's also important that these statements should be succinct. A simple statement facilitates communication and an understanding in the marketplace. Thus, while you might think your brand excels on many attributes, try to think of a word that captures all their essence and use that word. Or make a list of your brand's benefits and prioritize them.

Compensatory

Once the consideration set has been reduced to a manageable number, consumers switch gears and use a compensatory model. This model uses a costs and benefits logic, whereby excellence on one attribute can make up for the fact that the brand is not so great in some other ways. One such model is that of averages; e.g., if a brand is strong on attribute A and only so-so on B, it may dominate a brand that was average on both attributes A and B. A lot of online sites allow consumers to select from a number of brands or models to enable a side-by-side comparison. This information sorting helps consumers see which brands are best on the attributes they care most about. The algorithms request that consumers first select the brands to be compared, thus mimicking the noncompensatory stage in reducing the number of possible brands to a more manageable number for further consideration. The online comparators facilitate the second, compensatory stage in that the attributes are lined up for easy viewing. A brand choice is made, and the decision process is completed. It is also possible, of course, that a customer can choose to delay a purchase; that is an action of a sort also. Delaying a purchase decision allows buyers time to gather more information, form clearer opinions about brand choices, etc.

What is a brand personality?

One way that marketers get customers to relate to their brands is by creating a brand personality. A brand doesn't have to be personified or anthropomorphized, as with Keebler's elves. Any brand can be said to have a distinct personality. Five different kinds of brands: sincere, competent, exciting, sophisticated, and rugged. The personalities capture information specific to the brand, as well as holistic perceptions about the brand and company position in the marketplace. For example, when customers say Ben & Jerry's is sincere, they mean partly the ice cream (e.g., they use only quality ingredients) and partly the company (e.g., those ingredients come from fair trade sources). Consistent with their personalities, different brand experiences highlight different elements. i.e. Disney appeals more to customers' hearts, building blocks to customers' heads, and iPods to how people navigate their worlds.

Reinforcement

Operant conditioning o Positive consequence that favorably affect a behavior o Purchase → satisfaction o Purchase → satisfaction o Purchase → satisfaction

Shopping purchase

Requires some thought or planning, as when using citysearch or OpenTable to find a restaurant before heading out of town.

Product Ecosystem

Product ecosystems • Core product + accessories

Multidimensional Scaling (MDS) Perceptual Map

Rather than asking customers, "What's important?" MDS simply starts by asking, "How similar are these 2 brands for every pair in the set?" So, in Figure 15.10, the first ratings are the similarities judgments for all pairs of the 4 cars. The next ratings cycle through each car and ask how each brand rates on each of a number of attributes. MDS takes the similarities data to create a map like the result in Figure 15.12. This figure represents cars as points in 2 dimensions such that cars that customers think are similar are points close together, and cars that customers think are different are points that are father apart. Hence, recall that the Mini and Fiat were similar, and here they are close in space. Next, the marketer must interpret the north-south, east-west of the map. To do so, we overlay the basic perceptual map with the attribute ratings to obtain Figure 15.13. Now the interpretation is a little clearer. The Mini and Fiat are similar, and what they have in common is that they're attractive and fun and project personality-plus (these two cars project high onto the vectors). Ford does well on comfort and value, as we had seen in the raw data, and it does not fare well on these self-expression sorts of measures. For more information, the overlay is known as attribute vector fitting. Imagine a little data set with 4 rows, 1 for each brand, then 2 columns, 1 for each coordinate (on dimension 1 and 2). Add a column for the means for each brand on how good it is on the first attribute, e.g., value (and then add more columns for the means of all the remaining attributes). Then, run a regression using the 2 dimensions variables to predict the attribute variable (and run another regression for each additional attribute). The resulting beta weights give you the coordinates to put in these vectors. Then, the final step is to overlay respondents onto these maps, in what are called "ideal points." That is, is a brand could have just the right set of features to make the customer perfectly happy, what combination of features would those be? Perceptual maps with ideal points, one point per customer, are frequently used to identify market opportunities. These perceptual maps offer a great deal of descriptive information about current positions among competitors. It is a strategic question to consider possible repositioning efforts. Thus, for example, Figure 15.14 shows one of the directions Ford is considering. Mini is fun in part because of its looks, so if Ford creates more superficial personalization (and paint is cheap), it figures its Fiesta will be seen as more personal and more fun, as well.

Perishability

Services are simultaneously produced and consumed. Whereas goods can be manufactured and then inventoried in distribution warehouses, most services have to be created on the spot in the presence of the customer. For example, you have to be present to have your haircut. This inseparability of production and consumption leads to the inevitable result that services tend to be more perishable. Perishability has consequences for the marketer to even out demand. The inseparability of production and consumption also has consequences in the interaction between the service provider and the customer. For example, a cast rehearsing a Broadway play is offering roughly the same service during the rehearsal as when they performing during showtimes, but when the audience is present and able to respond with laughter or applause, the cast is more energized, and the adrenaline and pheromones in the theater make for a different experience. The nature of interactions varies with setting and societal norms, of course. An orchestra playing in the same auditorium would generally expect no laughter and applause only at appropriate breaks in the music; premature applause would be censured by frowns of other patrons at the offending novice. (The real world is more gray, of course. For example, while services tend to be more perishable than goods, certainly some goods are more perishable than others [e.g., bananas vs. Jet Skis]. Further, marketers can make goods more perishable when striving for other desired ends; e.g., just-in-time delivery systems comprise very little [if any] inventory, toward the goal of being responsive to customers' needs.)

What is a store brand?

Store brands are big business. The traditional idea behind private labels is that they're less expensive and more of a me-too product offering than an innovative brand. Most of us are price sensitive in some product categories that are usually (by definition) those we don't care much about. In product categories we care more about, we're less price sensitive. Some customers seem to be price sensitive across the board; these are customers with sort of a cheap gene—a broader trait or propensity to go for store brands—across numerous categories (perhaps due to limited resources). Cost savings for customers isn't the only motive for store brands. Retailers are also offering premium private labels. Although traditionally generic (non)brands were packaged unattractively and thought to be of lesser quality, these days the packaging and quality are usually on par with the big national brands, and many customers don't know that the store brand is a store brand. Walmart's brand of Sam's Choice might be an obvious name, but con- sider Safeway's Eating Right, Target's Archer Farms, Kroger's Private Selection, and Costco's Kirkland Signature. These are high-end or specialty products made available at value prices. The retailer can offer decent quality for lower prices because certain costs are reduced; e.g., they can advertise very inexpensively in fliers in the local weekend newspaper and radio spots, and they can easily promote the brands in-store. Thus, to the customer, it looks like a brand, and it smells like a brand, so it must be a brand. And if it's a brand, it might be high quality. As is always the case, the advertising helps ensure trial, and the quality of the product determines satisfaction and repeat purchasing. A lot of private label and pricing games go on in retailing. Retailers naturally want their shoppers to buy their brands, and, given their tremendous growth in power, they have been demanding better package deals from other source manufacturers. Between the added competition (including the store brands) and the aggressive deal demands, the manufacturers aren't going to sit still, of course. Premium ("real") brands are launching their own second label, priced near the store label to provide an alternative to price-sensitive customers, rather than losing them to the store brand (or other competitors). What do the premium brand manufacturers do next? They raise the price of their original premium brand. It's also important to note that, if brands represent culture, then nonbranded goods are embraced by various countercultures. Free spirits from skateboarders to yogi to Burning Man attendees eschew big national brands due to the commercialism they represent.

Variability

The final major difference between goods and services is that services are said to be more variable. Manufacturers of goods can set quality standards like Motorola's 6s (i.e., only 3 or 4 errors per million pieces produced) because a machine is producing their products. For a service provider, say a hairstylist, experiences vary across customers or even within a customer across time. Your friend might swear by this stylist, but you prefer classic styles and your friend's hair is always a little . . . edgy. Even with your own stylist, someone you typically like, some days you're in one mood or the other, or the stylist is. The heterogeneity across experiences is due in large part to the people component of services. The service marketing exchange happens between a customer and a service provider representing the company. Tee frontline rep and you have different and changing needs, abilities, etc., and the customer service interaction can be either fruitful or frustrating. Self-service is advancing in many industries, such as banking, airport check-in, prescription renewals, and so forth. When customers interact with technology and machines, the variability of the service encounter is reduced by the standardization of the equipment. It should be noted that, like cholesterol, there is good and bad variability. Bad variability involves errors in the system (e.g., poor customer service), and people in logistics and human resources and in marketing are concerned with its reduction. In contrast, good variability involves the customization and tailoring of the service delivery for the customer's unique needs, and, not surprisingly, it often enhances customer satisfaction. Automated services are usually introduced to reduce the errorful (bad) variability, and with time, as menus become more sophisticated and offer more options, it is conceivable that good variability may also be enhanced (at least for customers who can deal with the technology). Perhaps the most pervasive and successful example of self-service is online shopping. Shopping at home when one cannot sleep at 3 a.m. is the ultimate in convenience. In addition, comparing information on prices and product attributes is easier online than IRL and made even easier with the AI of shopping bots. Furthermore, the advantages of the technology and standardization are clear: A website may occasionally crash, but it's seldom cranky. The online purchase is a mix of goods and services and of tangible and intangible.

Targeting

The idea of targeting is selection. So we will try to serve the segments whose needs match our abilities to deliver, and, in doing so, we hope to make very happy, very loyal customers, who will be very proftable to us. The reasons we segment and target is that it's foolhardy to try to be all things to all people. Most markets are not comprised of customers with identical tastes, thereby facilitating the identification of segments. The targeting question is this: Which of those segments do we want to be our customers? There are two perspectives in assessing the attractiveness of each segment in terms of its potential for our targeting, and it is extremely important to consider both. We will iterate between our top-down vision of corporate strategy and a bottom-up data-informed approach to segment size and proftability.

Place

Where the product is made available for purchase via appropriate distribution channels

Classical conditioning

Where you're not really conscious, learning takes place at an unconscious level. Natural reaction that makes the association between two things, didn't have to teach him to react, so pair that with coke. Furry bears are fun and so is coke! Have to repeat it over and over again for it to take effect, you have to be patient. Gorilla on the glue - gorilla are strong so this glue should be strong. You create the associations between the gorilla and the glue- classical conditioning. You already know about one of the things and you can now associate it with something else. • Unconditioned stimulus and Unconditioned response • Pair with a neutral stimulus (consumers come to learn and associate these fairly similar looking symbols with their unique brands and brand images, like the checkmark with Nike). o associate good feelings with a product o peripheral route to persuasion i.e. sex sells 1. An attractive person elicits drool. 2. A car or other product initially elicits no response. 3. A car with an attractive person draped over it elicits drool. 4. With time, a car elicits drool. i.e. jingles: get in people's heads and they're hard to forget

Difference between B2B and B2C purchases

While consumer and business customers are analogous with regard to understanding their level of involvement and therefore their likely predilection for quality or price, they are different at least . in degree. Certainly B2B purchases are often more complicated than consumer purchases, in part be- cause they tend to be big and expensive. In addition, B2B purchases are complex because the business customer is an entity—an organization or a group of people, a so-called buying center. Rarely does a single person at a company have unilateral purchase rights. As a result, the B2B purchase involves group decision making. Several kinds of colleagues have input in business purchases. These different perspectives need to integrated and reconciled before the decision process is complete and an order submitted. Imagine a small company deciding to purchase a new printer. The typical roles in a buying center are these: ● The Initiator: Such as an administrative assistant who notices that one of the printers in the office is frequently breaking down ● The User: Every staff member who tries to use that printer ● The Infuencer: The IT guy who says, "Well, Brand X is cheaper, but I like Brand Y" ● The Buyer: The head administrative person whose responsibilities are to facilitate supplies but also to answer to ... ● The Gatekeeper: Traditionally, a conservative accountant type whose job it is to tighten purse strings.

Target market

• A market segment that a firm choose to focus its marketing efforts on • Members tend to react similarly to a form's marketing efforts • If two market segments react in the same way to the same marketing strategy, they are the same market

Proxy

• Age doesn't mean anything • Its because they were born at the same time, same behaviors, similar attitudes because you have the same experiences

5 Cs

• Customer • Company • Context • Collaborators • Competitors

4 Ps

• Product • Price • Place • Promotion

Product Mix

• Product mix (assortment) o A company's product lines

Customer Choice Overload

•Consumers face an increasing number of choices •We must help customers narrow down choices