Introduction to Marketing - MKTG 1020 - PDF

Lecture 1 - Introduction to MKTG 1020 and What is Marketing? ​ Tactics - the activities you use to communicate your strategy to the customer and consumer Tutorial 1 Lecture 2 - Market Segmentation, Targeting, and Positioning Segmentation by...

Lecture 1 - Introduction to MKTG 1020 and What is Marketing? ​ Tactics - the activities you use to communicate your strategy to the customer and consumer Tutorial 1 Lecture 2 - Market Segmentation, Targeting, and Positioning Segmentation by Behaviour ​ Benefits: segmenting buyers by the benefits that they seek from the products ​ Usage: segmenting buyers by the frequency that they use/buy products ​ Application: segmenting buyers by the way in which they use products ​ Marketers can tailor products to consumers for optimum results if they know: ○​ The benefits that consumers seek ○​ How often they purchase the product ○​ Usage situation (daily, weekly, monthly, holiday, etc.) ○​ The manner in which the product is used Segmentation by Demographics ​ Demographics are used to segment markets because demographic information is publicly available in databases around the world ​ The most popular type of segmentation. ​ Includes: ○​ Age ○​ Gender ○​ Occupation ○​ Income ○​ Social class ○​ Education ○​ Ethnicity ○​ Family life cycle and family size ○​ Nationality ○​ Religion Segmentation by Geography ​ Geographic segmentation divides buyers by where they are located: ​ World Region or Country - North America, Western Europe, European Union, Pacific Rim, Mexico, etc. ​ Country Region - Pacific, Mountain, Easter, etc. ​ City or Metro Size - New York, Mexico City, São Paulo ​ Population Density - Urban, Suburban, Rural ​ Climate - northern, southern, tropical, semi-tropical, desert ​ Geocoding - is the process of plotting geographic marketing information on a map ​ Geodemographics (or neighbourhood geography) - combines both demographic and geographic information for marketing purposes ​ Claritas’ PRIZM NE is a good source to see how this process works  ​ Proximity marketing - an interesting new technology firms are using to segment and target buyers geographically within a few hundred feet of their businesses using wireless technology Segmentation by Psychographics ​ Questions includes: ○​ Why consumers behave the way they do? ○​ What is of high priority to them? ○​ How they rank the importance of specific buying criteria? ​ Psychographic information is frequently gathered via extensive surveys that ask people about their: ○​ Activities ○​ Interests ○​ Opinions ○​ Attitudes ○​ Values ○​ Lifestyle ​ One of the most well-known psychographic surveys is VALS (which originally stood for “Values, Attitudes, and Lifestyles”) and was developed by a company called SRI International in the late 1980s The VALS Types - Values & Lifestyles ​ Innovators: successful, sophisticated, take-charge people ​ Thinkers: mature, satisfied, comfortable, well educated ○​ Motivated by strongly held beliefs, driven by a vision of how the world should be and a desire to make it better ○​ Motivated by impact ○​ People that work at non-profits are thinkers ​ Achievers: goal oriented, conservative, predictable, stable ○​ Motivated by status and external rewards ○​ Executives, politicians, financiers, and venture capitalists are achievers ​ Experiencers: young, enthusiastic, seek variety and excitement ○​ Motivated by self-expression, personal growth, and the joy of craft ○​ They strive to live in the moment, seek adventure and challenge, and meaningful work ○​ Designers, artists, mechanics, and lifelong learners are experiencers ​ Believers: conservative, conventional, believe in established codes ​ Strivers: trendy, fun loving, seek approval, job vs. career ​ Makers: practical, self sufficient, suspicious of large institutions ​ Survivors: few resources, concerned with safety, low motivation Segmentation in B2B Markets ​ There are fewer behavioural and needs-based segments in B2B markets than in business-to-consumer (B2C) markets for two reasons: ○​ Business markets are made up of a few hundred customers whereas consumer markets can be made up of hundreds of thousands of customers ○​ Businesses aren’t as fickle as consumers ​ The behavioural segments in B2B markets include the following: ○​ A price-focused segment - small companies that have low profit margins ○​ A quality and brand-focused segment - firms that want the best possible products and are prepared to pay for them ○​ A service-focused segment - firms that demand high-quality products and have top-notch delivery and service requirements ○​ A partnership-focused segment - firms that seek trust and reliability on the part of their suppliers What Makes a Good Target? ​ It is a sizeable (large) enough to be profitable given your operating cost. ○​ Indian and China have about the same population but the market for cars in China is six times bigger because China has more people with enough money to buy cards. ​ It is growing. ○​ The size of the middle class in countries other than the U.S. has tripled over the past twenty years (the U.S. middle class has declined), and that growth will continue. That’s why Netflix, Starbucks, and others are focusing their growth efforts in other countries. ​ It is not already swamped by competitors, or you have found a way to stand out in a crowd. ○​ IBM used to make PCs. However, after the marketplace became crowded with competitors, IBM sold the product line to a Chinese company called Lenovo. ​ Either it is accessible, or you can find a way to reach it. ○​ Accessibility, or the lack of it, could include geographic accessibility, political and legal barriers, technological barriers, or social barriers. ​ The company has the resources to compete in it. ○​ Elon Musk had the idea of building electric cars but to do so, he had to raise the money and he had to be wary of traditional car companies like GM and Mercedes. He also had to convince engineers that it was a good idea to join his company - and he did. ​ It “fits in” with your firm’s objectives ○​ Unilever produces all of its products in plants powered by renewable energy sources, as part of its commitment to sustainability. Its customers can count on ingredients that were also sourced sustainably.  Tutorial 2 ​ Marketing Plan - a roadmap to provide details on the project you are working on  Lecture 3 - Consumer Behaviour (with a little bit of B2B) Physical Factors ​ Some physical factors can be controlled by design, others must be accommodated ​ Atmospherics: The physical aspects of the selling environment retailers try to control ○​ Store layout ○​ Music played ○​ Lighting ○​ Temperature ○​ Smell ​ Uncontrolled: weather Social Situation ​ Circumstances in which consumers may find themselves ​ Factors such as an obligation, expected behaviour, or a need to impress may compel purchases Time ​ In the right place ​ The right product ​ At the right time Mood ​ People’s moods temporarily affect their spending patterns ​ Some people enjoy shopping, Others less so ​ A sour mood can spoil a consumer’s desire to shop Economic Situation ​ People’s economic situation affects what and how much they buy ​ People reduce spending during economic downturns ​ Stores with lower prices (like Walmart) fare better during economic downturns than high-end stores Personality ​ It describes a person’s disposition ​ It helps show why people are different ​ It encompasses a person’s unique traits Self-Concept ​ Marketers have had better luck linking people’s self-concepts to their buying behaviour ​ Your self-concept is how you see yourself - be it positive or negative ​ For example, the U.S. Army “Be All That You Can Be” slogan ​ Your ideal self is how you would like to see yourself ​ Your self-concept is how you see ○​ Fitter ○​ More popular ○​ More eco-conscious ​ People buy products to enhance how they feel about themselves Gender ​ Women - tend to try on everything; shop ‘til they drop ​ Men - prefer sites with pictures of products Motivation ​ It is the inward drive people have to get what they need ​ In the mid-1900s, Abraham Maslow developed the hierarchy of needs Perception and Retention Factors ​ Selective attention - filtering out irrelevant information ​ Selective retention - forgetting information that contradicts your beliefs Perception and Retention Factors ​ Shock advertising - surprising stimuli that can increase retention ​ For example, the Centers for Disease Control used shock advertising to try to convenience Americans of the terrible toll smoking has on people’s health ​ Research on shock advertising is mixed ​ Subliminal advertising - stealthily embedded messages in media ○​ Movies, ads; banned by the Federal Communications Commission (FTC); opposite of shock advertising Learning ​ It is the process by which consumers change their behaviour after they gain information or experience ​ Operant (instrumental) conditioning - a type of behaviour that’s repeated when it’s rewarded ○​ Prizes and toys in Cracker Jack boxes and McDonald’s Happy Meals ○​ Free sandwich after a certain number of purchases ○​ Free car washes when you fill up your car with a tank of gas ​ Gamification - strategy of building a game component into a product to encourage consumers to buy a product or use it more; Peloton’s exercise bike Attitudes ​ Attitudes are: ○​ Mental positions or emotional feelings ○​ Favourable or unfavourable evaluations ○​ Action tendencies people have about products, services, companies, ideas, issues, or institutions ​ They tend to be enduring and hard to change because they are based on people’s values and beliefs Consumer Cultures ​ Culture - a group of people with shared beliefs, customs, behaviours, and attitudes ​ Subculture - a group of people within a culture who are different from the dominant culture but have something in common with one another such as: ○​ Common interests ○​ Vocations or jobs ○​ Religions ○​ Ethnic background ○​ Geographic locations Social Class ​ It is a group of people who have the same social, economic, or educational status in society ​ While income helps define social class, the primary variable determining social class is occupation Reference Groups and Opinion Leaders ​ Reference groups - groups a consumer identifies with and may want to join ○​ Ex. movie idols and professional athletes ​ Opinion leaders - people with expertise in certain areas; trusted publicly known figures ​ Influencers - people who have a significant amount of influence over what people purchase; not necessarily celebrities or athletes; often post online Consumer Decision-Making ​ Routine response behaviour - automatic purchase decisions based on limited information or information consumers have gathered in the past ​ Impulse buying - purchases that occur with no planning or forethought ​ Low-involvement decisions - used for products that carry a low risk of failure or have a low price tag ​ High-involvement decisions - used for products that carry a high price tag or high level of risk ​ Limited problem solving - consumers already have some information but search for a little more before making buying decisions ​ Extended problem solving - consumers gather a significant amount of information before making a buying decision Stages in the Consumer’s Purchasing Process ​ Need recognition - you realize you need a better backpack to travel across the country after you graduate ​ Search for product information - you begin looking at different backpacks on the Web, talking to friends about them, and visiting stores to look at them ​ Product evaluation - you decide on the price you want to pay and certain what you “must have” in a backpack. You then examine each product based on those criteria. ​ Product choices and purchase - you decide what the best backpack for you is, based on your evaluation criteria, and decide when, where, and how to purchase it ​ Post purchase use and evaluation of product - you decide if the backpack is everything you thought it would be and meets your needs - or not ​ Disposal of the product - you realize you like the backpack so much you buy another one or an upgraded version of it. Or you throw it away, give it to a friend, or sell it on eBay  ​ Post-purchase dissonance - situations that occur when experiences do not match expectations and consumers rethink their decisions after purchasing products and wonder if they made the best decision The Customer’s Journey ​ Marketers have begun to rethink a buyer’s purchase decision as a journey ○​ Why do some customers “travel” with a company for the long haul? ​ Companies are developing customer journey “maps” to walk a mile in their customers’ shoes ​ A company also wants to get an idea of the emotions customers experience at east stage when they do business with it ○​ Are they delighted? ○​ Disappointed? ○​ Or somewhere in between? Business Customers are Different From Consumers ​ Number sold ○​ The number sold to business markets and size of each transaction is much greater than consumer markets ○​ The size of each transaction for business customers is also much greater ​ Complexity ○​ Business products can be far more complex ○​ Custom building and retrofitting is common ​ Personal selling ○​ Because the transactions are large, personal selling is justified ○​ The agility of interactive personal selling allows changes to be made to meet conditions ○​ Personal selling is worth it when the stakes are high Demand for B2B Products ​ Derived demand - demand that is derived from a source other than the primary buyer of a product ​ Fluctuating demand - a small change in demand by consumers can have a big effect throughout the chain of businesses that supply all the goods and services that product it ​ Joint demand - occurs when demand for one product increases the demand for another ​ Companies try to influence their B2B sales by directly influencing consumers ​ Producers - companies that purchase goods and services that they transform into other products ○​ These businesses have to buy certain products to produce the goods and services they create ○​ Producers generally buy in large quantities ​ Resellers - companies that sell goods and services produced by other firms without materially changing them ○​ Large wholesalers, brokers, and retailers are typical resellers ○​ Large resellers wield considerable power over producers as they provide customers and influence prices ○​ Value-added resellers (VARS) - companies that buy finished products from other companies, customize them in some way, and then sell them at higher prices ​ Governments (B2G Markets) - State/local governments buy huge amounts of products ○​ The U.S. government is the world’s largest buyer of goods and services ○​ Each agency will have its own procurement policies ○​ Would-be sellers are asked to submit sealed bids ​ It’s not always the lowest bid that’s accepted ○​ Selling to the government is not always easy ​ Additional regulations or specifications may be required ​ Decision cycles can be very long and involve large buyer centers ○​ Some businesses avoid selling to the government because the perceived hassle (“red tape”) is too great to warrant the effort ○​ Other businesses, though, realize that government purchases can become a sustainable competitive advantage