Marketing: Core Concepts

Marketing Basics

• Marketing is a management process that identifies, anticipates, and profitably satisfies customer needs
• Macromarketing studies marketing's impact on society and the economy, including social well-being, ethics, and sustainability

Supply and Demand

• Supply is the total amount of a good or service available to consumers at different price levels
• Demand is the quantity of a product or service consumers are willing and able to purchase at various price points
• Elasticity measures how demand changes based on price or income changes
• Variability refers to demand fluctuations due to seasonal, regional, or consumer preference shifts

Marketing vs. Sales

• Marketing focuses on long-term customer relationships and value creation
• Sales focuses on short-term customer conversion and revenue generation

Market Orientation

• Involves identifying and meeting customers' stated or hidden needs
• Customer orientation emphasizes customer needs and satisfaction
• Competitor orientation involves awareness of competitor strengths and weaknesses
• Interfunctional orientation coordinates efforts across departments to create customer value

PESTLE - The Marketing Environment

• PESTLE is a framework for macro-environmental analysis
• Political factors include legislation and trade policies
• Economic factors include inflation and unemployment
• Social factors include cultural shifts and demographics
• Technological factors include innovations and automation
• Legal factors include consumer protection laws
• Environmental factors include sustainability and climate

External, Performance, and Internal Environments

• The external environment consists of macro forces beyond a firm's control
• The performance environment includes direct industry competitors and partners
• The internal environment includes company-specific factors like culture, resources, and capabilities
• Portfolio Analysis/BCG Matrix assesses product performance based on market growth and share

BCG Matrix Components

• Stars: High market growth and high market share
• Cash Cows: Low market growth and high market share
• Question Marks: High market growth and low market share
• Dogs: Low market growth and low market share

Blue Ocean Strategy and Switching Costs

• Blue Ocean Strategy involves creating new, uncontested market spaces to make competition irrelevant
• Switching costs are the perceived or actual costs customers face when changing from one supplier or product to another

Consumer Behavior

• Motive development involves the emergence of a need or desire
• Information gathering involves research and seeking solutions
• Proposition evaluation (evoked set) includes the brands or products a consumer considers

Cognitive Biases

• Dunning-Kruger Effect involves overestimating one's own knowledge or ability
• Anchoring involves relying heavily on the first piece of information received
• Endowment Effect involves overvaluing what one owns
• Confirmation Bias involves favoring information that confirms existing preconceptions
• Sunk-Cost Fallacy involves continuing an endeavor due to past investments, even if unwise

Learning and Memory

• Classical conditioning associates a stimulus with a response, like branding
• Operant conditioning involves learning via rewards or punishments
• Social learning involves observing and imitating others

Theory of Planned Behavior and Life Stage

• Behavior is driven by intentions influenced by attitudes, subjective norms, and perceived control
• A consumer's life stage influences purchasing behavior

Pareto Analysis and Service Marketing

• Pareto Analysis follows the 80/20 principle, where 80% of effects come from 20% of causes
• Service marketing has five characteristics: intangibility, perishability, variability, inseparability, and lack of ownership

Service Marketing Characteristics

• Intangibility means services cannot be seen, touched, or stored like physical goods
• Customers experience a service but don't own a physical product, making evaluation before purchase difficult
• Branding, testimonials, physical cues, and demonstrations reduce uncertainty for marketers
• Perishability means services cannot be stored for later use, leading to lost opportunities
• Demand management strategies, like booking systems and discounts, are use by marketers to manage perishabilty
• Variability means service quality differs based on who provides it, when, and where
• Training, standardization, and monitoring ensure reliability and consistency
• Inseparability means services are produced and consumed simultaneously, requiring customer involvement
• Employee-customer interaction, service environment, and real-time service delivery are key for marketers
• Lack of ownership means customers gain access or use, not tangible possession
• Marketers emphasize value and benefits like time saved or convenience

Service Quality and Customer Relationship Management

• Disconfirmation Models compare perceived vs. expected service
• SERVQUAL measures service quality across dimensions like reliability, assurance, tangibles, empathy, and responsiveness
• SERVPERF focuses on performance-only measures of service quality
• Customer Relationship Management (CRM) manages interactions to increase loyalty and lifetime value

Customer Relationship Lifecycle and Loyalty

• Customer Relationship Life Cycle includes awareness, exploration, expansion, commitment, and dissolution
• Emotional loyalty is based on attachment
• Price loyalty is driven by deals
• Incentivized loyalty is driven by rewards
• Monopoly loyalty is due to lack of options
• Perceived risks reflect uncertainty in purchase decisions
• Customer engagement involves emotional and behavioral investment

Strategic Marketing

• Competitive advantage is a unique value offering that outperforms rivals
• Strategic marketing analysis evaluates internal and external factors
• SWOT analysis covers strengths, weaknesses, opportunities, and threats
• Ansoff's Matrix covers market penetration, market development, product development, and diversification

Generic Strategies and Market Positions

• Cost leadership involves being the lowest cost producer
• Differentiation involves having unique product features
• Focus involves targeting a niche market
• Market leaders have the largest market share and set industry standards
• Market challengers aim to challenge the leader, often ranked 2nd or 3rd in market share
• Market followers do not challenge but maintain a stable position by imitating and focusing on efficiency
• Market nichers target a specific segment or niche, with specialized products and loyal customers

Market Research

• Qualitative research include descriptive insights from interviews
• Quantitative research includes numerical data from surveys
• Test markets are limited geographic areas used to launch and test products

STP Process and Psychographics

• STP Process (Segmentation, Targeting, Positioning)
• Build-up method forms segments from individual customers
• Breakdown method divides a market into segments
• Psychographics studies personality, lifestyle, values, and interests

Product Differentiation, Positioning, and Global Markets

• Product differentiation includes features that distinguish a product from competitors
• Perceptual mapping graphs consumer perceptions for positioning
• Comparative advantage involves producing goods at lower opportunity cost in global markets
• Economies of scale involves cost advantages with increased production
• Uppsala Model involves internationalization through gradual steps
• International marketing environment includes social, cultural, technological, legal-political, and economic factors
• Trade barriers (tariffs) are taxes on imports
• Market entry models include exporting, joint ventures, franchising, and FDI

Brands

• Brand association & differentiation creates mental connections and uniqueness
• Manufacturer brands are created by producers
• Distributor brands are created by retailers
• Generic brands are no-frills, low-cost options
• Non-commercial brands are used by non-profits
• Brand extensions are new products under an existing brand
• Internal branding aligns employees with brand values

Propositions and Product Intangibles

• Core proposition fulfills a fundamental need
• Embodied proposition includes a physical product
• Augmented proposition includes extra services/features
• Unique Selling Proposition (USP) provides a distinctive benefit
• Product intangibles are non-physical attributes like reputation or service

Convenience Products and Product Mix

• Staple convenience products are regularly purchased
• Impulse convenience products are spontaneous purchases
• Emergency convenience products fulfill an immediate need
• Line in product mix concepts relates products
• Length is the number of items
• Depth includes variants of each item
• Width is the number of lines

Product Life Cycle and Service-Dominant Logic

• Product Life Cycle includes introduction, growth, maturity, and decline
• Service-Dominant Logic focuses on value co-creation with customers and service over goods

Diffusion and Adoption Models

• Diffusion model explains how innovations spread from innovators to laggards
• Adoption model includes awareness, interest, evaluation, trial, and adoption

Marketing Channels

• Indirect channel structures use intermediaries
• Multichannel marketing uses multiple simultaneous channels

Distribution Models and Channel Conflict

• Intensive distribution ensures wide availability
• Selective distribution uses limited outlets
• Exclusive distribution uses single/few outlets
• Channel conflict involves disputes between channel partners

Channel Intermediaries

• Channel intermediaries such as agents, merchants, distributors, franchisees, wholesalers, retailers and infomediaries have different roles in product flow

Fixed and Variable Costs and Pricing

• Fixed costs remain unchanged with output
• Variable costs vary with output
• Price advantage provides a competitive edge via price

Pricing Considerations and Approaches

• Price vs. Quality is a perceived link
• Price perception influences how customers view pricing
• Cost orientation includes pricing based on costs
• Competitor orientation includes pricing based on rival prices
• Demand orientation includes pricing based on customer willingness
• Value orientation includes pricing based on perceived value

Pricing Strategies and Consumer Tactics

• Premium, penetration, economy, and skimming are all key pricing strategies
• Consumer tactics include list, promo, segmentation, behavioral, freemium, and loss-leader pricing Product Life Cycles
• Impacts the pricing, promotion, and placement decisions

Models of Communication and Opinion Leaders

• Two-Step Model explains that opinion leaders influence others
• Linear Model explains that a sender sends message to a reciever
• Interaction Model explains that it adds feedback loop
• Leaders influence peers and formers are expert authority

Advertising Theories

• Strong Ads change the attitudes
• While Week Ads reinforce current behaviours
• AIDASLove: Attention → Interest → Desire → Action → Satisfaction → Loyalty.

DRIP Framework and Marketing Mix

• DRIP Framework: Differentiate, Reinforce, Inform, Persuade.
• Marketing Communication Mix comprises Advertising, Sales Promotion, PR, Direct Marketing, Personal Selling.
• Messaging Types: Informational, Emotional, User-Generated, and Branded.

Media Types: Print, Broadcast, and Out-of-Home

• The print media consists of Newspapers, magazines, brochures, flyers and are often used for targeting local or niche audiences
• Broadcasts consist of TV and radio. With a Large audience it is good for brand awareness and emotional storytelling
• Out-of-Home consist of Billboards, bus stops, transit ads, digital signage. They Reach people on the go and are Great for visibility and repetition.

Media Types: In Store and Interactive

• In store consist of Point-of-sale displays, posters, shelf talkers, demos and target shoppers at the moment of decision-making. These are effective at prompting impulse purchases.
• The Internet is interactive: websites, mobile apps, social media, email, online videos, etc and Enables two-way communication and personalization. These are Measurable and often cost-effective.

POEM: Paid, Owned, Earned Media

• Paid media is the Media space that the brand pays for. It includes TV ads, paid search (Google Ads), social media ads, and influencer sponsorships and is implemented to Drive awareness and traffic to owned or earned channels.
• Owned media includes the Channels the brand controls directly, a website, blog, social media pages, apps, and email lists. The Goals is to Build long-term relationships and provide a consistent brand experience.
• Owned media includes Publicity a brand gains organically through others with Examples such as Word of mouth, reviews, media coverage, and social shares and user-generated content. The Goal is to Boost credibility and reach, often seen as more trustworthy by audiences.

Ad Avoidance and The Digital Era

• Ad Avoidance the Techniques to skip or ignore ads.
• Digitization: Analog to digital.
• Digitalization: Process improvement via tech.
• Digital Transformation: Strategic reinvention.

Programmatic Advertising and Social Media

• Programmatic Advertising is Automated, real-time ad placement.
• Social Media & Co-Creation involves Consumers as content creators or brand participants.

Innovation

• Perennial Gale of Creative Destruction's Schumpeter’s idea involves innovation disrupting existing industries.
• Disruptive Innovation in Innovation (Christensen)'s model: Starts small, then overtakes.

Market Structures

• Monopoly: One seller.
• Duopoly: Two sellers.
• Oligopoly: Few dominant players.
• Market Power: Price setters vs. price takers.
• Long-Wave Business Cycle: Long-term economic cycles (~50 years).

Competitive Strategies

• Competitive Strategies of Copy, Acquire, and Kill are Strategic responses to competition.

Not-for-Profit and Ethics

• Not-for-Profit/Public Sector Marketing aim is that Profit is not the goal; focus on service.
• Their Customers are Often involuntary.
• Their Stakeholders are Diverse, including the public and funders.
• Negative Campaigning / Demarketing aims at Discouraging consumption or competitor preference.

Unethical behavior

• Anti-Competitive Behaviors of Collusion are Secret agreements.
• Anti-Competitive Behaviors of Monopoly Abuse are Exploiting dominance.
• Anti-Competitive Behaviors of Channel Exploitation are Unfair partner treatment. Also The Precautionary Principle is to Act to prevent harm when the impact is uncertain.