Marketing Ethics and Social Contracts

Marketing Ethics

• Marketing ethics applies ethical principles to marketing decisions
• Aims to confirm honesty, fairness, and responsibility in all marketing activities
• It looks into the moral implications of marketing strategies and practices
• Balances business objectives with societal well-being and consumer rights

The Social Contract

• The social contract is an implicit agreement between businesses and society
• Businesses should act responsibly in exchange for societal trust and support
• Ethical marketing upholds this contract through fair practices

Unethical Marketing

• Includes deceptive advertising, misleading claims, and manipulative tactics
• Damages consumer trust and harms brand reputation
• Is a violation of ethical standards and legal regulations

Predatory Practices

• Exploits vulnerable consumers through high-pressure sales and deceptive pricing
• Targets those unable to make informed decisions
• Examples include payday loans with exorbitant interest rates
• Is highly unethical and often illegal

Cultural Influences

• Marketing practices must be sensitive to cultural values and norms
• What is acceptable in one culture may be unethical in another
• Global marketing requires careful adaptation to local contexts

Value Creation

• Focuses on delivering products/services that meet consumer needs and wants
• Ethical marketing creates value by providing truthful information and fair pricing
• Builds long-term customer relationships based on mutual benefit

Value Capture

• Value capture is how businesses extract value from customers
• Ethical considerations are made around pricing, profits, and resource allocation
• Balances profitability with consumer affordability and fairness

Anti-Profit Beliefs

• Some ethical frameworks question the morality of profit-seeking
• Focus is given to social impact over financial gain
• Ethical marketing aligns with social enterprises that prioritize societal benefits

Marketing Mix Overview

• The marketing mix is a set of controllable, tactical marketing tools that a company uses
• Tools are used to produce the response it wants in its target market
• The most common classification of a marketing mix is the 4 Ps

Customer Experience

• Focuses on the overall impression a customer gets
• It is the interaction with the product/service/brand
• Enhances customer satisfaction and loyalty

Product

• Product refers to goods or services offered
• Features include design, quality, and packaging
• Addresses customer needs and desires

Promotion

• Promotion are communication strategies
• It is advertising, public relations, sales promotions, and personal selling
• Raises awareness and persuades customers

Pricing

• Pricing sets the price of a product
• Considers costs, competition, and value
• Affects the perceived value and demand

Place

• Place refers to distribution channels
• The location where products are available
• Ensures product accessibility

Customer Touchpoints

• Touchpoints are interactions throughout the customer journey
• Includes all points of contact
• Each touchpoint shapes customer perception

Customer Experience Overview (CX)

• CX encompasses every interaction a customer has with a company and influences their perception and loyalty
• Involves understanding customer needs and designing experiences that meet or exceed expectations across all touchpoints

Customer Touchpoints

• Touchpoints are interactions where customers engage with a brand: a website for example
• Other examples include social media, advertising, customer service, and in-person interactions
• Each touchpoint contributes to the overall customer experience

Marketing Mix

• The Traditional 4 P's: Product, Price, Place, Promotion.
• The Modern view includes: People, Process, and Physical Evidence
• Marketing Mix impacts customer perception and satisfaction

Building Relationships

• Building relationships focuses on creating long-term customer loyalty
• Involves personalized communication and support
• Strategies include: loyalty programs, feedback mechanisms, and proactive customer service

Customer Journey

• The customer journey is a series of interactions a customer has with a company
• Stages include: awareness, consideration, purchase, retention, and advocacy
• Mapping the journey helps identify pain points and opportunities for improvement

New Product Development Overview (NPD)

• New Product Development brings a new product or service to market.
• It encompasses various stages, from idea generation to launch.
• Involves understanding market needs, developing a viable product, and implementing effective marketing strategies.

New Products

• New products include original products, product improvements, product modifications, and new brands
• All are developed through the company's own R&D efforts
• It can be categorized by their degree of innovation and impact on the market

Product Life Cycle

• Describes the stages a product goes through from introduction to decline
• Stages: Introduction, Growth, Maturity, and Decline
• Marketing strategies and product offerings need to be adapted based on the stage

Product-Market Fit

• The degree to which a product satisfies market demand
• Product-Market Fit is achieved when the product meets the needs and desires of the target customer segment
• It is essential for the long-term success and sustainability of a product

Stage-Gate Model

• The stage gate model is a project management technique to guide new product development
• Involves a series of stages separated by "gates" which are decision points
• The project is evaluated and a decision is made to proceed, kill, hold, or recycle the project

Minimum Viable Products (MVPs)

• A version of a product with just enough features to be usable by early customers and provide feedback for future product development
• Allows companies to test product ideas quickly and efficiently with minimal investment
• Focus is on learning and iteration based on customer feedback

Market Tests

• Used to evaluate consumer acceptance of a new product before full-scale launch
• Methods include simulated test markets, controlled test markets, and in-market tests
• Provide insights into product performance, pricing, and marketing effectiveness

Marketing Mix

• The marketing mix is a set of controllable, tactical marketing tools that a company uses to produce the response it wants in the target market
• Often referred to as the 4 Ps: Product, Price, Place (distribution), and Promotion
• A well-integrated marketing mix is crucial for the successful launch and marketing of a new product

Product Life Cycle Overview (PLC)

• The PLC is a framework that illustrates the stages a product goes through from its initial introduction to the market until its eventual decline and withdrawal
• The PLC helps businesses manage products effectively, optimize marketing strategies, and make informed decisions about product development and resource allocation

Introduction

• Product is launched in the market
• Focus on building product awareness and trial
• Sales and revenue are low
• Marketing costs are high to promote and educate consumers
• Competition is limited

Growth

• Sales and revenue increase rapidly
• Product gains market acceptance
• Production is increased to meet rising demand
• Marketing focuses on differentiation and building brand loyalty
• Competition starts to emerge

Maturity

• Sales growth slows down and stabilizes
• The market is saturated
• Competition is intense
• Focus is on maintaining market share and extending the product's life through modifications or new features
• Marketing efforts are targeted at defending against competition

Decline

• Sales and profits decline
• Market becomes saturated or new, superior products emerge
• Product may be phased out, sold, or repositioned
• Marketing efforts are reduced

Product Development

• The initial stage before introduction, including research, design, and testing
• Significant investment with no immediate revenue
• Critical for product success

Marketing Costs

• High in the Introduction and Growth stages to create awareness and build a market
• Moderate in the Maturity stage to maintain market share
• Reduced in the Decline stage

Competition

• Low in the Introduction stage
• Increases in the Growth and Maturity stages
• Can intensify significantly during the Maturity stage, influencing pricing and marketing strategies
• May decrease in the Decline stage if competitors exit the market

Product Overview

• A product is anything that can be offered to a market to satisfy a want or need, encompassing both tangible goods and intangible services
• It represents a core element of a company's offerings, designed to provide value to customers

Offerings

• Products represent a broad category of offerings, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas

Tangible Goods

• Tangible goods are physical products that can be touched and possessed, such as consumer goods (e.g., cars, food) and industrial goods (e.g., machinery, raw materials)

Intangible Services

• Intangible services are non-physical products that provide value through actions, performances, or experiences, such as consulting, healthcare, and financial services

Solutions

• Products can be positioned as solutions and addressing specific customer problems or needs

Product Levels

• Products can be understood at different levels: Core Benefit, Actual Product, and Augmented Product

Core Benefit

• The fundamental need satisfied by the product (e.g., transportation)

Actual Product

• The tangible features, design, quality level, brand name, and packaging

Augmented Product

• Additional services and benefits that enhance the product (e.g., warranty, installation, customer support)

Product-Service Continuum

• Products and services can be viewed on a continuum
• Some offerings are predominantly goods, others predominantly services
• Examples: a car repair service is a mix of goods and services

Product-Service Bundling

• Combining goods and services to create a more comprehensive offering for customers (e.g., a phone with a data plan)

Product Life Cycle

• The stages a product goes through from its introduction to the market to its decline
• Introduction stage

New Product Development

• The process of creating and launching new products
• Typically Involves: Idea generation, Idea screening, Concept development and testing, Marketing strategy development, Business analysis, Product development, Test marketing and Commercialization

Pricing Overview

• Pricing is the process of determining the value a seller will receive in exchange for goods or services
• Effective pricing considers costs, business objectives, customer behavior, and market conditions to maximize profit

Profit

• Revenue minus costs
• Pricing strategies aim to maximize profit margins

Break-Even Price

• The price at which total revenue equals total costs
• Covers all expenses

Business Objectives

• Goals that influence pricing decisions
• Examples include: profit maximization, market share growth, or brand positioning

Customer Willingness to Pay

• The maximum price a customer is willing to pay for a product or service
• Customer Willingness to Pay is Influenced by perceived value, income, and alternatives

Price Skimming

• Setting a high initial price for a new product
• Targets early adopters and gradually lowers the price over time

Penetration Pricing

• Setting a low initial price for a new product
• Aims to gain market share quickly and increase volume
• Discourages competitors

Innovation Adoption Curve

• Illustrates how different customer segments adopt new products
• Influences pricing decisions, especially for new products (early adopters vs. mass market)

Value-Based Pricing

• Setting prices based on the perceived value of the product or service to the customer
• Focuses on the benefits customers receive

Demand Curve

• Shows the relationship between price and quantity demanded
• As price increases, demand decreases

Price Elasticity

• Measures the responsiveness of demand to changes in price
• Elastic demand: Significant change in quantity demanded with price change
• Inelastic demand: Little change in quantity demanded with price change

Psychology Pricing

• Using pricing strategies to influence customer perception
• Examples: setting prices just below a round number, like $9.99 instead of $10.00

Reference Prices

• Prices that consumers use as a benchmark when evaluating a product's value
• Can be internal (memory) or external (advertised prices)

Price Discrimination

• Charging different prices to different customers for the same product or service
• Examples: student discounts, senior citizen discounts, or geographic pricing

Fairness

• Ensuring that prices are perceived as just and equitable
• Customer perceptions of fairness can influence buying behavior

Promotion Overview

• Promotion encompasses all the activities a company undertakes to communicate with its target audience and persuade them to purchase its products or services
• It is a crucial element of the marketing mix and is designed to build brand awareness, generate leads, and drive sales

Customer Journey

• The process a customer goes through when considering, purchasing, and interacting with a product or service
• Promotion should be designed to align with each stage of the customer journey

Incentives

• Incentives are offers that encourage immediate action from customers
• Examples include: discounts, coupons, contests, and loyalty programs

Education

• Providing information to customers about a product or service
• Aim is to inform potential customers about the benefits and features of a product or service

Communication Process

• How a company transmits messages to its target audience
• Involves the sender (company), the message, the channel, the receiver (customer), and feedback

Promotion Mix

• The blend of promotional tools a company uses to communicate with customers
• Includes advertising, public relations, personal selling, sales promotion, and direct marketing

Integrated Marketing Communications (IMC) Plan

• A comprehensive plan that coordinates all promotional activities to deliver a consistent message
• Ensures all marketing efforts work together to achieve a common goal

Media

• Media refers to the channels used to deliver promotional messages
• Includes traditional media (TV, radio, print) and digital media (social media, websites, email)

Customer Response

• The reaction or behavior of customers to promotional efforts
• Can be measured through sales, website traffic, social media engagement, and customer feedback

Brand Equity

• The value of a brand is based on consumer perception and experience
• Effective promotion builds brand equity by creating awareness, loyalty, and a positive brand image

Media Overview

• Media encompasses various channels and platforms used to communicate and deliver information, entertainment, and advertising to audiences
• It includes both traditional and digital formats, each offering unique strategies for reaching and engaging consumers

Digital Media

• Online platforms and channels, includes websites, social media, streaming services, and mobile apps
• Offers interactive content, targeted advertising, and real-time analytics

Traditional Media

• Traditional Media includes established channels: television, radio, newspapers, and magazines
• Generally rely on mass communication strategies
• Offers broad reach but less precise targeting compared to digital media

Media Scheduling

• Determining the timing and sequence of media placements
• Factors include seasonality, campaign objectives, and target audience behavior
• Strategies: continuous, flighting, pulsing, and seasonal

Media Mix

• The combination of different media channels used in a campaign
• Goal: To optimize reach, frequency, and cost-effectiveness
• Considerations: target audience, budget, and campaign objectives

Reach

• The total number of unique individuals or households exposed to a media campaign
• Measured as a percentage of the target audience and is important for building brand awareness

Frequency

• The average number of times an individual is exposed to a media message
• Impacts message recall and persuasion, determined by the media schedule and budget

Cost Per Mille (CPM)

• The cost an advertiser pays for one thousand views or impressions of an advertisement
• Common metric for display advertising focuses on the cost of exposure

Cost Per Click (CPC)

• The cost an advertiser pays for each click on an advertisement
• It is a common metric for search engine marketing and focuses on driving traffic to a website

Cost Per Action (CPA)

• The cost an advertiser pays for a specific action, such as a sale or a lead and is used in performance-based advertising
• Focuses on conversions and ROI

Click-Through Rate (CTR)

• The Percentage of people who click on an advertisement after seeing it
• Measures the effectiveness of an ad and is calculated by dividing the number of clicks by the number of impressions

Ratings

• The percentage of households or individuals tuned into a specific program or time slot
• Used primarily in television and radio advertising and is determined through audience measurement systems

Gross Rating Points (GRPs)

• A measure of the total advertising weight delivered by a media schedule
• It is calculated by summing the ratings of all media placements and reflects both reach and frequency

Target Rating Points (TRPs)

• Similar to GRPs, but focuses on the target audience
• Provides a more accurate measure of advertising effectiveness within the specific target demographic

Social Media

• Online platforms that allow users to create and share content, and participate in social networking
• Provides opportunities for content creation, interaction, and targeted advertising and includes platforms like Facebook, Twitter, Instagram, LinkedIn, TikTok, and others

Place (Distribution) Overview

• Place (distribution) is one of the four elements of the marketing mix and refers to how products reach the end-user
• It involves various strategies, channels, and decisions to ensure products are available in the right place, at the right time, and in the right quantities

Distribution Channels

• The path a product takes from the producer to the consumer
• Channels include: direct (producer to consumer) such as online stores and Indirect (involves intermediaries) such as retailers and wholesalers

Channel Intermediaries

• Businesses or individuals involved in the distribution process
• Examples: Wholesalers, retailers, distributors, agents
• They add value by providing efficiency, expertise, and convenience

Channel Structure

• The design of the distribution network
• Includes the number of intermediaries, the length of the channel, and the types of intermediaries used
• Can be direct, indirect, or a combination

Omnichannel Marketing

• Integrating all available channels to provide a seamless customer experience
• Customers can interact with a brand through various touchpoints and utilizes consistent branding and messaging across all channels

Multi-channel Marketing

• Using multiple distribution channels to reach customers
• Each channel may operate independently, the goal is to increase market reach

Channel Conflict

• Disagreements among channel members that arise due to conflicting goals, competition, or different pricing strategies
• Examples include: Retailers competing with the manufacturer's online store

Value of Channels

• Channels add value by providing convenience, product information, and after-sales service
• Helps to overcome time and place gaps between producers and consumers
• Assists in overcoming discrepancies in quantity and assortment

Product Life Cycle

• The stages a product goes through from introduction to decline and distribution strategies need to be adjusted at each stage
• Intensive distribution is common during growth, while selective distribution may be used in the maturity stage

Distribution Intensity

• The number of outlets used to distribute a product
• Intensive: Maximum market coverage is used for convenience goods
• Selective: Limited number of outlets is used for shopping goods
• Exclusive: Single or very few outlets are used for specialty goods

Formulas

• Click through rate (CTR) = Clicks/Impressions
• Gross Rating Points (GRPs) = % of audience reached * frequencyTarget Rating Points (TRPs) = % of target audience reached * frequency
• Direct Marketing Spend = P(desired response) * Margin > Cost of contact (probability of purchase) (estimated)
• Direct Marketing Spend (using CLV) = P(desired response) * expected CLV > Cost of contact
• Profit = total revenues total costs
• Total costs = Fixes + variable costs
• Break-even price = Fixed costs + (variable costs x volume) / variable
• Break-even Quantity = fixes costs / (price -variable costs per unit)
• Value based Pricing = Reference Price (next best alternative) + added value
• Price Elasticity = E = % change in demand / % change in price