Design Principles: Effective Whitespace Usage

Today's Agenda

• Strategic Planning - where are we, what should we do?
  • Effective Mission Statements
  • Frameworks for Strategic Analysis
  • SWOT analysis
  • Set objective
  • Competitive advantage
  • Business Portfolio Matrix
• Ethics & CSR
  • 2 ethical theories
  • Developmental psychology of ethics

Marketing Mix

• Product
• Place
• Price
• Promotion

Overall Marketing View

• Assessing the Environment: Social, Demographic, Economic, Technological, Political, & Competitive Forces
• Analyzing the Market: Customers, Direct Competitors, and Company
• Approaching the Market: Segmenting, Targeting, and Positioning
• Using Tactics: Product, Place (Distribution), Price, Promotion (Advertising, Salespeople, Public Relations, Sales Promotion)

Zappos' Customer Focus

• CEO Tony Hsieh: "We are a service company that happens to sell shoes."
• "The payoff for great customer service is a year or two down the line."
• Training
• Bribes
• Reinforcement

Bad Example: United

• United Broke Guitar
  • Posted on July 6, 2009. Amassed 150,000 views within one day, over half a million hits by July 9, 5 million by mid-August 2009.
  • UAL opened at $3.31 on 6 July 2009, dipped to an intra-day low $3.07 (-7.25%) on 10 July 2009

Definitions of Marketing

• Textbook: the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
• AMA: an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders

Brief Notions of Marketing

• "Business has only two basic functions: marketing and innovation. Marketing and innovation produce results; the rest are support."
• Creating value through exchange
• Managing profitable customer relationships

Why Study Marketing?

• Intellectual value
• Practical utility
• Career importance

Marketing Emphases

• Past Marketing Emphases
  • Product Leadership
  • Cost Optimization
  • Sales Orientation
• Current Marketing Emphases
  • Market Orientation
  • Societal Orientation

Past Marketing Emphases (Version A)

• Production Orientation
• Focus on product quality, performance, and features (aka Product Leadership)

Past Marketing Emphases (Version B)

• Production Orientation
• Focus on improving production efficiency and distribution (aka Cost Optimization)

Sales Orientation

• Focus on encouraging customers to make more purchases

Current Marketing Emphases

• Focus on understanding customers, delivering superior value, retaining customers for the long term (Thanks to the technology development)
• Lifetime value of customers to the organization

Societal Marketing Orientation (Sustainability)

• Focus on the above, and also society's Long-term interest

Today's Agenda (Page 17)

• Marketing Overview
  • What is Marketing?
  • Definition of Marketing
  • Marketing Emphases
• Break-even Analysis
• Your Marketing Plan

Break-even Analysis

• Break-even unit volume: how many units will we have to sell to cover our costs exactly? (i.e., no profit, no loss)

Example 3: Avatar 2

• James Cameron: $10m
• Cast: $30m
• Visual effects: $200m
• Post-production besides visual effects: $30m
• Advertising: $30m
• Average ticket price: $20
• Cost of playing (theater, etc.): $10
• What's the break-even unit volume?

Today's Agenda (Page 20)

• Marketing Overview
  • What is Marketing?
  • Definition of Marketing
  • Marketing Emphases
• Break-even Analysis
• Your Marketing Plan

1. Defining the Business Mission

- Mission Statements
    - Disney: We run theme parks.  We create fantasies — a place where America still works the way it's supposed to.
    - Hulu(Netflix Competitor): We are an online video service. We let people enjoy their favorite content any time, anywhere.
    - Wal-Mart: We run discount stores. We deliver low prices every day and give ordinary folks the chance to buy the same things as rich people.
    - Charles Schwab: We are a brokerage firm. We are the guardian of our customers' financial dreams.

An Ideal Mission Statement

• States one or two broad/fundamental goals
• Is consumer oriented; promises to satisfy basic consumer needs or wants
• Should provide motivation to the organization's employees/members

An Ideal Mission Statement: Examples

• "We will help people trade anything on earth. We will continue to enhance online trading experiences of all - collectors, dealers, small businesses, unique item seekers, bargain hunters, opportunity sellers, and browsers." - eBay
• "To organize the world's information and make it universally accessible and useful." - Google
• "To have any book ever printed, in any language, all available in under 60 seconds." - Amazon Kindle
• "Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings." - Apple
• Nokia: Connecting People

Global Market Share Nokia

• Global market share held by Nokia smartphones from 1st quarter 2007 to 2nd quarter 2013

Apple iPhone Unit Sales

• Apple iPhone Unit Sales by Calendar Quarter

2. Next Step: SWOT

• External
  • Largely uncontrollable to the company
  • E.g., COVID, global warming
• Internal
  • Things the company has reasonable control
  • E.g., the 4Ps

SWOT Analysis

• Internal
  • Market share
  • Customer retention
  • Seasonality
  • Product quality
  • Cost of capital
  • Flexible workforce, etc.
• External
  • Marketing “environment”: new tech, regulation changes, economic trends, etc.
  • Size of potential market
  • Change in channels used by customers

3. Set Objectives

• Realistic
• Measurable
• Time-specific
• Compared to a benchmark

4. Choosing a Strategy for Competitive Advantage

• Cost - lower cost than competition
• Niche - focus intensively on smaller target market
• Differentiation - offering unique value beyond similar price

Planning Strategy: Business "Portfolio Matrix"

• High Stars
• Question Marks
• Cash Cows
• Dogs

Portfolio Matrix Example (For Apple)

• Airpods (Star)
• iPhone (Cash Cows)
• Apple Watch (Question Marks)
• iPod (Dogs)

CSR (Corporate Social Responsibility)

• For: It's the right thing to do; Government will create new regulations and levy fines if firms aren't socially responsible; It can enhance a company’s profitability
• Against: the job of the corporation is to maximize profits for stockholders; Businesses are better suited to produce goods and services and not to be involved in welfare services; If global competitors don't have to be socially responsible, they will have lower costs and can compete more effectively in the global marketplace

Ethics in Marketing

• Definition of Ethics: "moral principles and values that generally govern the conduct of an individual" vs. laws
• Ethical Theories
  • Deontology: unchanging rule, standard, or “ought”, obligation or duty
  • Utilitarianism (greatest good for the greatest number)
• The Trolley Problem

Ford Pinto

• Model years 1971–1980, over 3m produced.

Benefits and Costs Relating to Fuel Leakage

• Savings - 180 burn deaths, 180 serious burn injuries, 2100 burned vehicles.
• Unit Cost - $200,000 per death, $67,000 per injury, $700 per vehicle.
• Total Benefit - $49.5 million.
• Costs - 11 million cars, 1.5 million light trucks.
• Unit Cost - $ll per car, $ll per truck.
• Total Cost - $137 million.

Process

• WIS has been asked by CSCS (our client) on behalf of Johnson & Johnson to purchase all MOTRIN IB Caplet 8ct Vial in the stores.
• You should simply "act" like a regular customer.
• Avoid mentioning that this is a recall.
• If asked, simply state that your employer is checking the distribution chain and needs some of the product purchased for a project.
• With your purchase, request a bag for the product to keep separate from other purchases.
• Immediately after each purchase and while in car, fill out the Product Purchase & Ship Instructions form, and include a copy for each store.
• Fill out the WIS Daily Activity Sheet with details from each stop and repeat the process for each visit.

Is This Ethical?

• Buys own product
• Buy Instagram/Twitter/Facebook followers
• Buy (positive) reviews
• Overbooking

Developmental Psychology and Ethics

• 3 levels of ethical thinking and decisions
  • Preconventional: self-centered, decisions based on immediate punishments or rewards.
  • Conventional: loyalty to group or society most important.
  • Postconventional: focus on long-run consequences.

Apple Battery Gate

• Apple Agrees to Pay $113 Million to Settle 'Batterygate' Case Over iPhone Slowdowns (November 18, 2020)

Google

• "Don't be evil"
• Drug suit

Half a Million Dollars Lost to Fraudsters

• Google ads are spoofing bank hotlines.
• Losses amounted to at least S$495,000 (Jan 19).

Digital Readiness for Teaching and Learning (DRTL)

• Week 5 (No in-person class): 2 hours online open-book quiz (due 11:59 pm Friday, Week 5). Exclusively multiple-choice questions covering all week's contents
• Group works explained: Product topic submission (eLearn). Optional, not graded (Due 11:59 pm, the day before week 6's class)

Today's Agenda (Page 48)

• Marketing Environment
  • Demographics
  • Social change
  • Economics
  • Political/Legal
  • Technology
  • Competition

Overview of Marketing Research

• Techniques to describe, diagnose, predict and improve decision-making for organizations and their products, customers etc.

Types of Data: Secondary vs Primary

• Secondary data is gathered for other purposes/often incomplete. Internal and external sources (CRM, sales records, etc.)
• Primary data is collected for a specific research question/more comprehensive/more expensive

Types of Primary Data Collection: Qualitative vs Quantitative

• Qualitative data is exploratory, focused on understanding motivations (in-depth interviews, focus groups)
• Quantitative data is confirmatory, useful for comparisons (surveys, experiments)

Quantitative Methods: Lab Experiments, Field Experiments, Natural Experiments

• Lab experiments: controlled environment, typically no real-world consequences (pro: accurate, con: not generalizable)
• Field experiments: real-world environment, participants don't know they're in study, participants can be exposed to real-world consequences (pro: generalizable)
• Natural experiments: control conditions determined by nature (e.g., changes in weather affecting sales). Impossible field experiments (made real by others)

Big Data

• Previously known as “junk data”, now providing marginally better results
• Combining data from many different sources to create insights that aren't immediately clear from standard data analytics tools.
• Data sources include browsing history, location, demographics, likes and dislikes, and social media activity.

Sample Finding by Recent Research

• Why are ratings for great products ever-decreasing?

Data Analysis

• “All models are wrong, some are useful”
• We want to draw casual inference (A -> B) from data analysis
• However, there are some traps in data analysis
  • Correlation ≠ Causation: Correlation could imply causation (A -> B), but it may be a coincidence, reverse causality, or the implication of an unobserved third factor (C).
  • Endogeneity
    • Unobserved/unexpected cause in a correlation that might lead to spurious conclusions

Real Causation

• Supermarkets place chocolate & candies at checkout counters to promote impulse purchases.
• Probably causation there. But may become less useful as customers can kill time with smartphones.

Traps in Data Analysis: Flukes

• Urban myth: Stores placing diapers and beers together due to data analysis showing they're often bought together (likely from a correlation, not causation).
• Example of diaper-beer data correlation.

Traps in Data Analysis: Reverse Causality

• Example cartoon illustrating reverse causality.
• Casual inference: an unobserved cause (C) might be the real cause of the observed effects.

Traps in Data Analysis: Endogeneity

Finding the Safest Car

• Driver death per million registered cars

Should I Use Celebrity Endorsements?

• How many customers can endorsers bring?
• What is the probability that endorsements will involve scandals?
• How serious will the scandal be?
• How long will the impacts last?

Textbook's Definition

• The process of planning, collecting, and analyzing data relevant to a marketing decision.
• Goals: describe, diagnose, predict -> better decisions; tracking problems; keep customers; understanding the market.

Quantitative Methods: Observational

• Observational methods: In-person vs. mechanical
• E.g., gates

Quantitative Methods: Experiments

• Experimental & control groups : Double-blind design in medical research
• Manipulate independent variable across groups (e.g., placebo vs. real medicine). Keep everything else constant.

Qualitative and Quantitative Methods of Data Collection

• Qualitative
  • Discovery/exploration of new ideas
  • Preliminary understanding of key variables
  • Deep understanding of (hidden) motivations
  • Open-ended, unstructured format
  • Small, representative samples
  • Descriptive and interpretive analysis
• Quantitative
  • Validation/confirmation of estimates
  • Mostly structured format
  • Large, varied samples
  • Statistical and descriptive analysis

Overview of Marketing Research

• Types of Data: Secondary vs. Primary
  • Secondary: Data collected for other purposes; may not fully address current needs
  • Primary: Data collected for a specific need; more complete, but might be more expensive to gather

Today's Agenda (Page 168,180)

• Overview of marketing research
• Types of data: secondary vs. primary
• Types of primary data collection: qualitative vs quantitative
• Quantitative methods: lab experiments, field experiments, natural experiments
• Big data: what it is

Primary Data Collection

• Qualitative
  • Depth interviews
  • Focus groups
• Quantitative
  • Surveys
  • Observational
  • Lab experiments
  • Field experiments
  • Natural experiments

Qualitative Methods: Examples

• Depth interviews: "Anthropological" one-on-one study. Researcher speaks very little.
• Focus groups: Moderator leads discussion with group

Consumer Decision-Making Process: 5 Steps

• Need recognition
• Information search
• Evaluation of Alternatives
• Purchase
• Postpurchase behavior