Marketing Principles

Marketing Fundamentals

• Marketing is about creating and managing value, not just tactics
• Identify, design, communicate, and deliver value to customers
• A marketing plan should be Actionable, Relevant, Clear, and Succinct (ARCS)

Value Principle

• The 3V market value principle involves optimal value proposition (OVP)
• OVP consists of customer value, collaborator value, and company value

Market Definition

• The market is defined by customer needs
• Market types: B2C (business to customer), B2B (business to business), C2C (customer to customer)

Target Market Strategy

• Analyze the 5 C's: Customer, Collaborators, Competitors, Company, and Context

Competitor Analysis

• Use the 5 Forces framework to analyze competitors
• The 5 Forces: Rivalry among existing competitors, Threat of new entrants, Bargaining power of suppliers, Threat of substitute products, and Bargaining power of buyers

Company Culture and Values

• Core values are independent of the economic or competitive environment
• Core values stand the test of time
• Examples of core values: Customer obsession, Ownership, Invent and simplify, Bias for action, Frugality

Mission and Vision

• Mission defines why a company exists (main goal, long-term view)
• Vision defines what the company wants to become (image of the future)

SWOT Analysis

• Strengths and Weaknesses (company analysis)
• Opportunities and Threats (market analysis)

Goal Setting

• A goal is the ultimate criterion for measuring success

Marketing Principles

• Marketing is about creating and managing value, focusing on identifying, designing, communicating, and delivering value.

Marketing Plan

• ARCS: Actionable, Relevant, Clear, and Succinct
• Goal, Strategy, Tactics, Implementation, and Control

3V Market Value Principle

• Optimal Value Proposition (OVP): Customer Value, Collaborator Value, and Company Value

Market Definition and Types

• Market is defined by customer needs
• Market types: • B2C (Business to Consumer) • B2B (Business to Business) • C2C (Customer to Customer)

Target Market Strategy

• 5 C's: Customer, Collaborators, Competitors, Company, and Context

Competitor Analysis

• Five Forces: • Rivalry among existing competitors • Threat of new entrants • Bargaining power of suppliers • Threat of substitute products • Bargaining power of buyers

Company Culture and Values

• Core values: • Independent of the economic or competitive environment • Timeless
• Amazon's core values: • Customer obsession • Ownership • Invent and simplify • Bias for action • Frugality

Mission, Vision, and Goal Setting

• Mission: Defines why a company exists, with a long-term view
• Vision: Defines what the company will look like, as an image of the future
• Goal setting: Defines focus and performance benchmarks
• Goal: The ultimate criterion for measuring success

SWOT Framework

• Strengths and Weaknesses (Company Analysis)
• Opportunities and Threats (Market Analysis)

Marketing Offering and KPI

• Marketing offering: OVP (Optimal Value Proposition)
• Attractiveness: Designing value
• Awareness: Communicating value
• Availability: Delivering value
• KPI (Key Performance Indicator): Measures how effectively a company achieves key business objectives

The Customer Decision Journey

• Need: Physiological or psychological requirement for wellbeing
• Want: Specific expression of a given need
• Preference: Benefits expected from a given product, brand, or service
• Customer decision journey: • Active need • Search • Evaluate • Choose • Purchase • Use • Again

Maslow's Hierarchy of Needs

• Self-actualization
• Esteem
• Love and Belonging
• Safety needs
• Physiological needs

Information Search and Choice

• Modernity and Postmodernity
• Information sources: • Internal sources (past experiences, memory) • External sources (friends, reviews, advertising)
• Selective memory
• Involvement
• Choice: A trade-off between benefits and costs of multiple options
• Rational model and Bounded rationality
• Satisficing heuristics
• Lexicographic heuristic

Purchase and Consumption

• Purchase decisions can be influenced by unavailability, budget constraints, urgent needs, and cognitive dissonance
• Impulsive purchases involve immediate need, whereas delayed purchases involve careful consideration
• Consumption and satisfaction involve the actual use of the product

New Product Adoption

• Roger's model is a descriptive model that assumes a normal distribution pattern, but this may not always be the case
• Customers can be innovators in one domain and laggards in another
• Moore's model is discontinuous and requires different marketing strategies for different customer segments
• Target customers are critical to the new product adoption process

Target Market and Value Proposition

• The target market defines the environment in which the company aims to create value
• The value proposition defines the benefits and costs for the company, its customers, and its collaborators
• The market offering is the actual good that creates value in the target market

Segmentation and Targeting

• Segmentation involves grouping customers into segments with similar needs
• Segment size depends on customization costs
• Targeting involves identifying customer needs and fulfilling them with the company's offering

Company Value and Customer Loyalty

• Company value is generated by customer revenues, costs, communication, and information value
• Customer loyalty involves both affective and behavioral commitment
• The path to loyalty involves satisfaction, managing dissatisfaction, building relationships, and rewarding customers
• Switching costs, brand communities, and reward programs can increase customer loyalty

Positioning and Differentiation

• Positioning involves identifying the primary benefit of the offering
• Differentiation involves creating a competitive advantage that is meaningful to customers
• Framing benefits can be need-based, category-based, user-based, or competitive

Customer Equity and Strategic Value

• Customer equity is the value generated by customers over their tenure with the company
• Strategic value is indirectly generated value that may produce a loss that is recovered by other offerings

Collaborations and Market Position

• Collaborations can have pros (effectiveness, cost efficiency, flexibility, and speed) and cons (loss of control, loss of competences, and empowering competition)
• Market position can be defined in terms of share of market, share of mind, and share of heart

Pioneering and Market Strategies

• The benefits of pioneering include being first to market, but drawbacks include free riding, incumbent inertia, and market uncertainty
• Vertical extension involves changing both price and benefits, while horizontal extension involves changing functionalities or features
• Fighting-brand strategy involves creating a brand to combat low-price rivals, while sandwich strategy involves simultaneous upscale and downscale
• Good-better-best strategy involves a three-tiered product line with additional product development and management costs

Obsolescence

• Generation obsolescence: new products make old products inferior, leading to termination of support
• Product obsolescence: forcing users to repurchase, generating revenue through frequent updates
• Component obsolescence: used to increase post-sale assistance, generating additional revenue

Managing Services

• SaaS (Software as a Service) model: subscription-based, accessible on multiple devices
• Traditional software model: one-time fee, limited to a single device
• Empowerment: shifting decision-making power from management to frontline employees, who own the problem until resolved

Employee Motivation

• Intrinsic motivation: driven by interest and enjoyment of the task itself
• Extrinsic motivation: driven by the outcome or reward resulting from doing the task

Pricing

• Strategic pricing: prices determined by strategy, not just profit margins
• Price elasticity of demand: percentage change in quantity sold relative to the percentage change in price
• Company costs: considering both fixed and variable costs to determine a profitable price
• Economies of scope: total cost decreases as the number of different goods produced increases
• Pricing based on costs: markup pricing is less strategic, with price driving costs rather than the opposite
• Penetration pricing: low initial price to attract high sales volumes, often used in competitive markets
• Skim pricing: high initial price to maximize margins, often used in markets with low competition
• Loss-leader pricing: low price for a product to increase sales of other offerings

Price Segmentation

• First-degree price segmentation: different price for each customer based on needs, price sensitivity, and prior purchase
• Second-degree price segmentation: different unit price for different quantities
• Third-degree price segmentation: different price for different customer segments

Reference Price Effects

• Internal reference price: based on prior purchases
• External reference price: based on competitive offerings

Auctions and Pricing Wars

• Auctions: used when there is uncertainty about the optimal price
• Reverse pricing: customers pay what they want
• Price wars: occur when there is low differentiation, economies of scale, low customer loyalty, and detrimental to profit

Illegal Pricing Practices

• Predatory pricing: selling at a low cost to drive competitors out of business
• Price fixing: companies conspiring to set prices

Branding

• Brand image: designing and sustaining a mental image in people's minds
• Brand motto: articulating the brand positioning to customers, often taking the form of an imperative, descriptive, declarative, superlative, or provocative statement
• Brand character: a fictional personality that embodies the brand essence
• Product design: a brand identifier that distinguishes the brand from other products

Branding Strategies

• Umbrella branding: a single brand strategy
• Sub-branding: creating multiple brands under a single umbrella, e.g., Coca-Cola, Coca-Cola Zero, and Coca-Cola Diet
• Endorsement: partnering with another brand to increase credibility, e.g., Marriott and Nestle (Kit Kat)

Brand Power and Equity

• Brand power: the ability to influence the behavior of customers, employees, and collaborators
• Semantic brand score: measuring brand importance and associations
• Brand equity: the monetary value of the brand, measured through cost, market, and financial approaches