Marketing Lesson 1 & 2 - PDF

Marketing Lesson 1: What is Marketing / Creating and Capturing Customer Value / Sustainable Marketing Practice What is Marketing? Definition: Process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return....

Marketing Lesson 1: What is Marketing / Creating and Capturing Customer Value / Sustainable Marketing Practice What is Marketing? Definition: Process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. ○ “…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”.- American Marketing Association (2024) ○ “ …the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. ”- Philip Kotler (2012) Which Organization can do w/o Marketing? ○ A monopoly firm ○ A commodities company ○ A not-for-profit organization ○ Firms belonging to “sinful” industries? Examples of such industries include – Tobacco, Alcohol, Gambling, Pornography, Weapon Manufacturers, etc. Usually Closely Monitored Why?: Because it creates negative externalities ○ Companies that operate in the healthcare industry? For example, hospitals, pharmaceutical firms, medical device companies, etc. Usually Closely Monitored Why?: Because it is a necessity and needs to be marketed carefully since it will; directly affect customers [Public Health and Safety], Contains Ethical considerations [misinfo and exploitation of emotions], Regulatory compliance, legal liabilities, transparency and trust. The Profit EQUATION: π = (𝑝 − 𝑣) × 𝑞 − 𝑓 ○ 𝜋 = Profits [one of the “p” other “Ps” include product, place and promotion] ○ p = Price Per Unit ○ v = Variable Cost Per Unit [eg Commissions] ○ q = Qty sold in units ○ f = Fixed Costs of production [eg Advertising] Marketing can be in a form of traditional forms such as posters , or new forms such as websites, mobile apps, online videos and social media 1 Creating and Capturing Customer Value Diff Needs vs. Wants vs. Demands 2  Create customer loyalty and retention to capture customer lifetime value, i.e., the value of the entire stream of purchases that the customer would make over a lifetime of patronage Grow share of customer, i.e., the portion of the customer’s purchasing that a company gets in its product categories Build customer equity, i.e., the total combined customer lifetime values of all of the company’s customers Why is it better for firms to retain loyal customers as opposed to acquiring new ones?: 1. Cost Efficiency a. Lower Acquisition Costs: Acquiring new customers typically involves significant marketing and sales expenses, such as advertising, promotions, and onboarding. Retaining existing customers is generally less costly because they are already familiar with the brand and its products or services. b. Higher ROI on Marketing: Marketing efforts targeted at existing customers, such as loyalty programs or personalized offers, often yield a higher return on investment because these customers are more likely to respond positively to marketing initiatives. 2. Increased Customer Lifetime Value (CLV) a. Repeat Purchases: Loyal customers tend to make repeat purchases, contributing to a higher customer lifetime value (CLV). Over time, the revenue generated from a loyal customer far outweighs the initial cost of acquisition. b. Cross-Selling and Upselling: Firms can more easily introduce new products or services to loyal customers, who are more likely to trust the brand and be open to additional purchases. 3. Brand Advocacy and Word-of-Mouth a. Positive Word-of-Mouth: Loyal customers are more likely to recommend the brand to others, acting as brand advocates. This organic word-of-mouth marketing is highly valuable and can help attract new customers at a lower cost. b. Stronger Referrals: Recommendations from satisfied customers are more trusted by potential new customers than traditional advertising, making referrals a powerful tool in customer acquisition. 4. Predictable Revenue 3  a. Consistent Sales: Loyal customers provide a more predictable and stable revenue stream, as they are more likely to make regular purchases. This predictability can help in financial planning and managing cash flow. b. Subscription Models: Many firms use subscription-based models where retention of customers ensures a steady income over time. Losing a loyal subscriber can have a more significant impact than failing to acquire a new one. 5. Customer Feedback and Improvement a. Valuable Insights: Loyal customers are more likely to provide constructive feedback, which can be used to improve products, services, and customer experience. Their insights are valuable because they have a deep understanding of the brand. b. Co-Creation Opportunities: Firms can engage loyal customers in co-creating new products or services, leveraging their loyalty and insights to develop offerings that better meet market needs. 6. Competitive Advantage a. Higher Switching Costs: For loyal customers, the cost of switching to a competitor is higher, whether due to emotional attachment, familiarity, or the value they perceive in the existing relationship. This loyalty creates a competitive barrier for other firms. b. Brand Loyalty: A strong base of loyal customers can protect a firm from competitors' actions, such as price undercutting or aggressive marketing. Loyal customers are less sensitive to these external pressures. 7. Improved Profit Margins a. Willingness to Pay: Loyal customers often have a higher willingness to pay for the brand they trust and are less price-sensitive. This allows firms to maintain or increase prices without losing their customer base, improving profit margins. b. Reduced Discounting: Firms can reduce the need for discounts and promotions to keep loyal customers engaged, further improving profitability. Diff Types of Customers: It is crucial to build the right relationship with the right customers ! 4 So, Putting all together Sustainable Marketing Practices There’s an increasing trend that companies are spending more on sustainability or climate related issues How is Company leveraging marketing elements to combat climate qns? ○ Changing products and/or services ○ Changing Partners ○ Changing marketing promotions ○ Changing distribution ○ Changing market selection ○ Changing brand Definition: Calls for socially and environmentally responsible actions that meet the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. Customers actions to promote sustainable making ○ Consumerism: This is an organized movement by citizens and government agencies aimed at improving the rights and power of buyers in relation to sellers. ○ Traditional Rights: Historically, sellers have had more rights compared to buyers. 5 ○ Advocacy for Consumer Rights: Advocates are calling for additional consumer rights, which has led to increased consumer protection actions by the government ○ Environmentalism: An organized movement of concerned citizens, businesses, and government agencies to protect and improve people’s living environment 6  The role of ethics : Marketing Ethics ○ EG: American Marketing Association As Marketers, we must: Do no harm. This means consciously avoiding harmful actions or omissions by embodying high ethical standards and adhering to all applicable laws and regulations in the choices we make. Foster trust in the marketing system. This means striving for good faith and fair dealing so as to contribute toward the efficacy of the exchange process as well as avoiding deception in product design, pricing, communication, and delivery of distribution. Embrace ethical values. This means building relationships and enhancing consumer confidence in the integrity of marketing by affirming these core values: honesty, responsibility, fairness, respect, transparency and citizenship. Building a Sustainable Company 7 Lesson 2 : Marketing Strategy and the Marketing Market Analysis The Marketing Environment : includes the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. The Microenvironment ○ Consists of the actors close to the company that affect its ability to serve its customers Company Work with other departments [top management, finance, R&D, IT, HR, Accounting etc] Suppliers Provides the resources to produce G&S, treated as partners to provide customer value Marketing intermediaries Are firms that help the company to promote/sell/distribute G&S to final buyers Eg: Apple and Singtel, Lazada, Shoppee, Ninja, Paypal [customer paying thru this means], Nielsen [marketing firms] Competitors Gain strategic advantage by positioning their offerings against competitors’ offering in the minds of consumers In today’s world, given that technology is so advanced and switching to alternatives is just a click away, firms should work on providing greater satisfaction and value to consumers. Publics Grps that have interest OR impact to a firm's ability to achieve its objectives Customer Diff types of consumers: 8  The Macroenvironment ○ Consists of the larger societal forces that affect the microenvironment - demographic, economic, natural, technological, political, and cultural forces. Company and Marketing Strategy Role of Marketing in Strategic Planning: Strategic planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities, and its changing marketing opportunities. Product Orientation ≠ Market Orientation ○ Main difference is that MO emphasis on “What’s in it for you” ○ Eg: Pinterest PO:We provide an online platform for users to post pictures MO:We help people discover the things they love and inspire them to go do those 9  things in their daily lives ○ Eg Sephora PO:We are a beauty products retailer. MO:We sell lifestyle and self-expression by helping customers to unlock their beauty potential Roles of Marketing within the Firm The Chain of Marketing Productivity 10  Customer Value Driven Marketing Strategy Marketing Strategy: The marketing logic by which the company hopes to create customer value and achieve profitable customer relationships ○ Ask yourself: 1. What customers will we serve (target market)? Segmentation and Targeting 2. How can we best serve them (value proposition)? Differentiation and Positioning A brand's value proposition is the set of benefits or values it promises to deliver to customers to satisfy their needs. ○ Solving the “Why should i buy from you than other competitors” Choosing the Value Proposition [the diff marketing philosophies /concept] ○ The Production V.s. The Product Concepts 11  ○ The Selling Vs Marketing Concepts ○ The Social Marketing Concept This concept on whether the pure marketing concept overlooks the possible conflicts btw consumer short-run wants and long-run welfare The company’s marketing decisions should consider consumer’s wants, company’s requirements, consumer’s long-run interest and societies long run interest Not just looking at the diff concept, firms should not suffer from marketing myopia - where they focus on specific products and sell them rather than looking at what consumers really want [big picture] 12  The Marketing Mix Case Study: Gucci Data shown that there's’ an increasing revenue spent on luxury items 4 key elements of Luxury Growth: Growing Wealth, Ease of Travel, Millennials, Digitalise Characteristic of Luxury Industry: ○ Brand Management vs Sales Management 13 ○ Heritage vs New Customers ○ Wasteful Luxury vs Environmental Consciousness The fashion industry has been noted as one of the most energy consuming, polluting and wasteful industries. With a focus on churning out more collections every year, the fashion industry promotes frequent additions to the wardrobes. Most luxury fashion houses burn their unsold inventory rather than reuse, recycle or sell it at discount in order to maintain the scarcity of their products and exclusivity of their brands Belief that the less the product’s availability, the higher the demand levels and market value Most luxury brands see destroying inventory as a necessary evil to maintain their aspirational value; Unsold good→Discounts in grey market→Brand dilution 14  Customers will not spend a large amount for an item only to see it selling for half the price later Their idea Excess Production vs. Limited Supply Today, it is seen that there’s a growing environmental consciousness, especially on part of the young consumers,increasingly a core demographic for the luxury industry, has led to many brands committing to shunning such unsustainable practices E.g., Gucci and Burberry stopped using animal fur; Gucci went carbon neutral; Burberry stop burning unsold goods Lesson 3 : Consumer Analysis and Buying Behaviour Consumer vs. Business Markets Consumer Markets: These are markets where the buyers are individual consumers purchasing goods and services for personal use/consumption. For example, when you buy a smartphone, clothing, or groceries, you are participating in a consumer market. Consumer markets tend to have many small buyers (individuals or households), and the demand is often elastic (meaning it changes based on price). Decisions are usually made by one person or a small group, and the buying process is relatively quick. Business Markets: In contrast, business markets involve organizations that buy goods and services to use in the production of other products or services. These organizations include manufacturers [buy for their own use], resellers, and government entities. For example, a car manufacturer buying steel to make cars is part of a business market. Business markets often have fewer but larger buyers, and demand is derived (meaning it depends on the demand for the final product). The demand here is often inelastic (less sensitive to price changes) and fluctuating (small changes in consumer demand can lead to significant changes in business demand). Business buying decisions are more complex and involve multiple stakeholders. ○ They involve large sums of money and are have more complex technical and economic considerations B2C: Business Consumer ○ E.g., Luxottica promoting its house brand, Ray-Ban, to consumers via its own retail store, Sunglass Hut B2B: Business Business ( Consumer) ○ E.g., Luxottica promoting its house brand, Ray-Ban, to consumers via Paris Miki B2B: Business Business ○ E.g., Luxottica making eyewear products under license for Prada Consumer Buying Behavior Consumer buying behavior is the process that consumers go through when deciding whether to purchase a product or service. This process can be divided into several stages: 1. Need Recognition: The process begins when a consumer identifies a need or problem. This can be triggered by internal factors (like hunger or a need for a new phone because the old one is slow) or external factors (like an advertisement, other “Ps”). 15  2. Information Search: Once a need is recognized, the consumer searches for information to satisfy that need. This can involve looking at past experiences, asking friends and family, or researching online through reviews and product descriptions. 3. Evaluation of Alternatives: The consumer compares different products or brands to find the best fit for their needs. This evaluation involves considering various factors like price, quality, brand reputation, and specific product features. [with the info they hv] 4. Purchase Decision: The consumer decides to buy a particular product or service based on their evaluation. However, this decision can be influenced by others' opinions (e.g., friends or family) and unexpected situational factors (e.g., finding the product out of stock). 5. Post-Purchase Behavior: After the purchase, the consumer evaluates their decision. If satisfied, they are likely to make repeat purchases and recommend the product to others [word-of-mouth]. If dissatisfied, they may return the product or share negative feedback [-ve comments spread faster online]. This stage is crucial for marketers as it influences brand loyalty and reputation. Notes: Consumers may not necessarily do all steps! So, what exactly affects consumers's behavior? Characteristic of consumer buying behavior: The Adoption Process for New Products [consumers] When a new product is introduced, consumers go through several stages before they adopt (regularly use) the product. These stages are: 1. Awareness: The consumer becomes aware of the new product but lacks information about it. [Need Recognition] 2. Interest: The consumer seeks information about the new product. 3. Evaluation: The consumer considers whether trying the new product makes sense. 4. Trial: The consumer tries the product on a small scale to estimate its value. 5. Adoption: The consumer decides to make full and regular use of the product. 16  Consumers can be categorized into five adopter groups based on how quickly they adopt a new product: - Innovators:Try new ideas at some risk - Early adopters: Opinion leaders in their communities; adopt new ideas early but carefully - Early Majority: Adopt new ideas before the average person but are rarely leaders - Late Majority: Adopt an innovation only after the majority of people have tried it. - Laggards: Adopt an innovation only after it becomes a tradition or necessity. Types of Decision Behavior: Consumer Involvement and marketing strategy ○ Low Involvement Market leader will encourage habitual buying behavior Maintain product (or service) quality Avoid stockouts Repetitive advertising Challenger firms will encourage variety seeking buying behavior Sales promotions Ads that encourages consumer to try something new ○ High Involvement Make product information easily available Ads that differentiate the product’s (or service’s) features and/or benefits Use personal selling Business Buying Behavior Business buying behavior is different from consumer buying behavior because it involves a more complex process and multiple participants. The key roles in a business buying process are: a. Users: Those who will use the product or service. b. Influencers: People who provide information to evaluate alternatives. c. Buyers: Individuals with formal authority to select the supplier and arrange purchase terms. d. Deciders: Those who have the power to select or approve the final suppliers. e. Gatekeepers: Individuals who control the flow of information to others in the buying center. Factors affecting Buyers behavior: 17  When suppliers’ offers are very similar, business buyers have little basis for strictly rational choice. Because they can meet organizational goals with any supplier, buyers can allow personal factors [relationship] to play a larger role in their decisions. When competing products differ greatly, business buyers are more accountable for their choice and tend to pay more attention to economic factors The buying process in business markets includes several stages: - Problem Recognition: A problem or need is identified within the organization. - General Need Description and Product Specification: The buying organization describes the general characteristics and technical criteria of the needed item. - Supplier Search and Selection: The organization searches for and selects a supplier. [negotiations for btr deals] - Order-Routine Specification: The final order is made, listing all specifications and terms. - Performance Review: The supplier's performance is evaluated based on the orders specifications. Note: Buyers facing new, complex buying decisions usually go through all these stages. Those making rebuys often skip some of the stages. Either way, the business buyer decision process is usually much more complicated than this simple flow diagram suggests. Types of buying Situations: 18 Sustainable and Socially Responsible Consumption This concept focuses on companies incorporating Environmental, Social, and Governance (ESG) criteria into their marketing and business strategies. Consumers and investors are increasingly looking for companies that are not only profitable but also ethical and sustainable. Sustainable consumption includes environmentally friendly products, ethical labor practices, and community engagement. The "Cancel Culture" ○ Cancel culture refers to the phenomenon where individuals or companies are collectively "canceled" or boycotted by the public due to their actions or statements perceived as offensive. ○ For marketers, this means they need to be very careful with their messaging and actions to avoid backlash that can harm their brand reputation. Lesson 4 : Market Research Gathering Information on Customer Insights Big Data ○ Definition: Big data refers to the massive and complex data sets generated by modern technologies for information generation, collection, storage, and analysis. ○ Opportunities: By analyzing these large data sets, companies can gain valuable and timely insights into customer behavior, preferences, and trends. This enables companies to make data-driven decisions to improve marketing strategies and customer experiences. ○ Challenges: Many marketers or firms may lack the skills and resources to effectively access, maintain, interpret, and analyze big data. The complexity of managing and deriving meaningful insights from these vast data sets can be overwhelming. Customer Insights ○ Definition: Customer insights are fresh, deep understandings of customers' needs and wants. They are used by companies to develop strategies that create a competitive advantage in the market. ○ Importance: Customer insights help companies to better understand their target audience, improve product offerings, and create more effective marketing campaigns. ○ Difficulty: Gaining these insights is challenging because it requires managing a vast amount of marketing information from diverse sources, such as social media, customer feedback, surveys, and sales data. ○ Customer Insights Teams Composition: These teams consist of members from various functional areas of a company (e.g., marketing, sales, product development, customer service) to provide a holistic view of customer behavior and preferences. Function: They collect and analyze information from multiple sources to understand customer needs better. Goal: The ultimate aim is to use these insights to create more value for customers, thereby enhancing customer satisfaction and loyalty. 19 The Marketing Research Process Defi: the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization Process: Step 1 : Define the Problem and Objectives [determine the type of research that will best address the defined problem and set the direction for the subsequent steps.] - Purpose: clearly define the problem the company wants to address and set specific research objectives. This step is about identifying what needs to be researched and why. - Exploratory Research [Used when the problem is not well-defined and the goal is to explore and gain a deeper understanding of the issue.] - Gather preliminary information that will help define the problem and suggest hypotheses - Seeks to explore and generate ideas or hypotheses. - Example: Conducting focus groups to understand why customers are dissatisfied with a product. The findings might suggest potential reasons for dissatisfaction, which can then be studied further. - Descriptive Research [Used to describe characteristics of a specific group, situation, or market (e.g., customer demographics, buying behaviors). It answers questions like "what," "who," "where," and "how."] 20  - Describe things, such as the market potential for a product or the demographics and attitudes of consumers who buy the product - Aims to describe and quantify aspects of the market or consumer behavior. - Example: Surveying a group of consumers to determine their average age, income, buying habits, or attitudes toward a specific product. It provides a snapshot of "what is happening" in the market. - Causal Research [Used to understand cause-and-effect relationships, It tests specific hypotheses about how one variable influences another.] - Test hypotheses about cause-and effect relationships - Focuses on establishing cause-and-effect relationships through controlled testing. - e.g.,Conducting an experiment to test whether 10% decrease in price will lead to an increase in sales Step 2 : Develop the Research Plan - Purpose: This step involves creating a detailed plan for how the research will be conducted. The research plan outlines how data will be collected, which methods will be used, and what tools and techniques will be employed. - Components of the Research Plan: - Sources of Data: Identify existing data sources (secondary data) and determine what new data needs to be gathered (primary data). - Research Approaches: Decide on the research approach, such as surveys, interviews, focus groups, or experiments. - Contact Methods: Choose the method for reaching participants (e.g., online, phone, in-person). - Sampling Plans: Define how to select the sample (e.g., random sampling, stratified sampling) and the sample size. - Instruments for Data Collection: Specify the tools to be used (e.g., questionnaires, observation checklists). - Written Proposal: The research plan should be documented in a written proposal that: - Addresses the management problems. - States the research objectives and the specific information needed. - Explains how the research findings will help in decision-making. - Outlines the budget for conducting the research. Example of a Comprehensive Research Plan in Step 2: - A company launching a new product might start with exploratory research to understand consumer needs and generate ideas about potential features or pricing strategies. - Then, it would conduct descriptive research to assess the market size, segment demographics, and consumer attitudes toward the new product. - Finally, it would perform causal research to test the impact of different marketing tactics (e.g., price changes or promotional campaigns) on actual sales outcomes. Step 3 : Collect and Analyze the Data - Collecting Data: - Primary Data: New data collected directly for the research purpose (e.g., surveys, experiments,observations). - How’s it collected? - Research Methods→Contact Methods→Sampling Plan→ Research Instruments Research Method: 1. Qualitative Research Methods: - Observational Research a. Observing relevant people, actions, and situations i. Pros: Can obtain information that people are unwilling or unable to provide through questioning 21  - Ethnographic Research a. Involves sending trained observers to watch and interact with consumers in their “natural habitat” i. Pros: yields the kinds of details that don’t emerge from traditional research questionnaires or focus groups ii. Cons: Some things cannot be observed, Long term or infrequent behavior is also difficult to observe, Observations can be very difficult to interpret - Focus Groups - In-depth Interviews 2. Quantitative Research Methods: - Survey Research [Mostly used] a. best suited for gathering descriptive information i. Pros: Flexibility ii. Cons: Sometimes people are unable to answer survey questions, People may be unwilling to respond to unknown interviewers or about things they consider private, Respondents may answer survey questions even when they do not know the answer, Busy people may not take the time, or they might resent the intrusion into their privacy -Experimental Research a. by selecting matched groups of subjects, giving them different treatments, controlling related factors, and checking for differences in group responses b. Best suited for gathering causal information c. Tries to explain cause-and-effect relationships Contact Methods: 1. Mail Questionnaire - Pros: Can be used to collect large amounts of information at a low cost per respondent, Respondents give more honest answers to personal questions, No interviewer is involved to bias the respondent’s answers - Cons: Not very flexible, Take longer to complete, Very low response rate 2. Telephone Interview - Pros: gather information quickly and it provides greater flexibility than mail questionnaires,Interviewers can explain difficult questions, Response rates are higher than with mail questionnaires - Cons:Cost per respondent is higher than with mail questionnaires, People may not want to discuss personal questions with an interviewer, Introduces interviewer bias, Increasingly high rates of hang-ups 3. Personal Interviewing - Individual interviewing involves talking with people one-on-one - Group interviewing consists of inviting six to ten people to meet with a trained moderator to discuss a product, service, or organization - Cons: More costly than telephone interview, in grp interview some may not be open and honest in front of others 4. Online Marketing Research - Examples include internet and mobile surveys, online focus groups, consumer tracking, experiments, and online panels and brand communities - Pros: Advantages over mail, phone, or personal interviews include speed, low costs and larger sample size. Can be used to conduct both qualitative and quantitative. - Cons: Lack of control of who is in the online sample, Consumer privacy is a major ethical concern 5. Online Behavioral and Social Tracking and Targeting - This approach involves using data and insights from consumers' online activities to create targeted marketing strategies. - The main idea is to listen to and observe consumers' behaviors and interactions online to deliver more personalized and relevant marketing efforts. - It consists of two primary methods: behavioral targeting and social targeting. 22  - Behavioral Targeting: - Involves collecting data on consumers' online behaviors—such as the websites they visit, the products they view, the content they engage with, and their browsing patterns. - Purpose: understand consumer preferences and habits - Example: If a user frequently visits websites related to outdoor activities and camping gear, they might receive targeted ads for hiking boots, camping tents, or outdoor clothing. - Social Targeting: - Focuses on analyzing data from consumers' social media activities, such as their posts, likes, shares, comments, and interactions with brands and content. - Purpose: understand the consumer’s interests, social connections, and influence on others. - Pros: Unsolicited, Real-Time Insights, Rich, Unstructured Data: Sampling Plan: 23 Research Instruments: - Questionnaire [most common], Mechanical instruments [e.g.,Checkout scanners, GPS technologies, Eye Tracking Devices] - Secondary Data: Existing data that was collected for other purposes (e.g., company reports, sales data, published studies,publicly available data). Primary Data Secondary Data More Relevant [ Unit of analyses,Coverage, Deeper insights, Lower Investment/Cost [Save time & $] Up-to-date Greater Control Readily Available Reliable [Larger sample, Proven data collection method and quality if from reliable sources - Analyzing Data: - Prepare Data: Data preparation involves cleaning (removing errors or irrelevant information), merging (combining data from multiple sources), and enriching (adding additional relevant information). - Preliminary Analysis: Conduct initial analysis to summarize the data, often using descriptive statistics (mean, median, mode) and graphical illustrations (charts, graphs) to understand data patterns and trends. - Estimate Model: Choose an empirical methodology, such as regression analysis, to test hypotheses and analyze relationships between variables. - Interpret Results: Interpret the results of the analysis to draw meaningful conclusions. - Use Model for Forecasting: Use the results from the model to make predictions (e.g., estimating future sales based on different price and advertising levels). Step 4 : Propose Actionable Recommendations - Purpose: Based on the research findings, propose specific actions that the company can take to improve its marketing strategy and overall performance. - Examples of Actionable Recommendations: - If the product is well-liked but the brand has low awareness or lacks distinctiveness, consider increasing brand visibility through marketing campaigns. 24  - If the brand is perceived poorly on specific attributes (e.g., too expensive, not fashionable), the company might consider repositioning the brand, adjusting pricing, or enhancing product features. - If the brand has an image problem (e.g., old-fashioned, not innovative), a rebranding or image makeover may be necessary. - If the brand is good on attributes that are not important to consumers (e.g., bubble tea instant noodles), refocus on promoting attributes that resonate more with consumers. - If consumers are not aware of the brand's special qualities, a targeted awareness campaign can highlight these unique features. Analyzing and Utilizing Marketing Information Marketing Information Management involves using data and technology to understand and engage with customers - Purpose: Focuses on collecting, analyzing, and utilizing data to improve customer relationships and marketing effectiveness. - This is different from the marketing process where it encompasses the broader steps and strategies for creating, delivering, and communicating value to customers. 1. Customer Relationship Management (CRM) a. Purpose: Manages detailed information about individual customers to maximize/enhance loyalty and engagement. b. Activities: Captures data, personalized offers, and cross-sells based on customer insights. 2. Big Data and Marketing Analytics: a. Purpose: Analyze large volumes of data to uncover meaningful patterns and insights about customer behavior and marketing performance. b. Activities: Uses analytics tools and AI to gain insights and make data-driven decisions. c. Note: Avoid letting technology make decisions without considering the broader context and human oversight. Distributing and Using Marketing Information - Purpose: Ensure that marketing information is accessible to managers and decision-makers. - Methods: - Intranet: Use company intranets to provide access to data, reports, and other resources. - Extranets: Allow key customers and partners to access relevant information through extranets. Public Policy and Ethics in Marketing Research Intrusions on Consumer Privacy - Consumer Mistrust: Many consumers are wary of marketing research, leading to lower response rates. - Best Practices: - Minimize Information Requests: Only collect necessary information. - Use Responsibly: Handle data with care and ensure it benefits customers. - Respect Privacy: Avoid sharing information without permission. - Chief Privacy Officer (CPO): Many major companies now have a CPO to oversee privacy practices. 25 Sophisticated Marketing vs. Online Snooping [refer to different approaches in how data is used for targeting consumers] Sophisticated Marketing: Uses advanced data analytics and targeting technologies to deliver highly relevant ads and offers to consumers based on their behaviors, preferences, and interactions. - Benefits: Behavioral and social targeting can deliver more relevant ads and products - Risks: Overuse or poor implementation can feel invasive to consumers. - Behavioral Targeting: Tracks movements across websites. - Social Targeting: Analyzes social media activity. - Data Sharing: Ad networks use data like browsing histories and shopping carts to target ads effectively. - Analytics: High-powered analytics merge data from different sources to refine ad targeting. - Regulatory Actions - US FTC: Proposes a “Do Not Track” system to allow users to opt-out of online tracking. - EU GDPR: Enforces strict data protection standards for EU citizens, with heavy fines for non-compliance. - Singapore PDPA: Regulates data protection in Singapore Online Snooping: Involves extensive data collection that can be perceived as intrusive, raising concerns about consumer privacy and consent. Consumer Data Security and Protection - Data Security Challenges: Large databases are vulnerable to breaches. - Consequences of Failures: - Costs: Recovery expenses, lawsuits, and fines. - Reputation Damage: Erosion of consumer trust and potential government intervention. Lesson 5 : Segmentation, Targeting and Positioning The Big Picture Understanding Customer Heterogeneity (diverseness) :variations between different customers and changes within the same customer over time can lead to varying needs and preferences (i.e., both real and perceived). 2 Types of Heterogeneity: 26 Cross-Sectional Heterogeneity: The term "cross-sectional" refers to data or analysis taken at one specific point in time. When used in marketing or customer analysis, it involves examining and understanding the differences among various customers or customer groups at a given moment. Heterogeneity means diversity or variation. In this context, it implies that customers are not homogeneous (i.e., they are not all the same); they differ in terms of what they need, what they desire, and how they behave. Static Variation: ○ Static variation refers to the differences that are considered fixed or not changing over time within a specific timeframe. It suggests that at a given point in time, different customers exhibit different needs, desires, and behaviors, and these differences are considered constant for that period. ○ This Differences can be due to Latent or Hidden Preferences: Latent preferences are those that are not immediately apparent or expressed by customers. These preferences may not be obvious to both the customers themselves and to firms because they haven't been met or considered. [hv not manifested in customers] ○ Can be due to: Legal Constraints, Economic Constraints, Technological Constraints,Innovative Constraints. Hidden Preferences: Customers might have varying underlying preferences (e.g., desires for specific product features, quality levels, or unique services) that are not currently being catered to by any existing offerings in the market. ○ For example, a customer might prefer a sustainable product that is also technologically advanced. If no company provides this combination, that preference remains latent and is not visible in the market. Unawareness Among Customers: Customers might not even know they have certain diverse preferences if they have never been exposed to options that could meet those needs. Without having the ability to evaluate different choices, customers remain unaware of what they could want or prefer. ○ OR due to other Possible Sources: Individual preferences, Life experiences, Functional Needs [how the products align to how the customers think it should ideally work], Seeking for Self-identity/image, Marketing activities [that could potentially influence customers preferences] Longitudinal Heterogeneity: Customer dynamics are changes in customer preferences that occur over time and may be due to specific events Possible Sources of ⃤ Needs and preferences: ○ Discrete life event [rapid ⃤ ] , Typical life cycle maturation[slow], Product learning effect [medium], Product Lifecycle [medium] (eg may pay more initially and later become more price sensitive), Changes in Economy/govt/industry/culture [varying lvl depending on situation] (eg the nurtigrade) Eg: General Motors (Buick) car for grandparents, Honda started off selling to young customers who value it as a cheap and reliable car but wanted to expand to a larger crowd which they introduced to Acura to target existing owners who had grown older and have greater purchasing power. 27 Static Segmentation: Static (unchanged) segmentation refers to a traditional method of dividing all customers into segments based on certain fixed characteristics, such as demographics (age, gender, income), geographic location, or generic needs (e.g., low price, high quality). This approach does not change frequently and assumes that customers in each segment have similar needs that remain consistent over time. Dynamic Segmentation Based on Time-Dependent Needs: Suggests that instead of relying on static segmentation, marketers should focus on dynamic segmentation—which involves constantly updating and refining customer segments based on their changing needs, behaviors, and preferences over time. Time-dependent needs refer to the fact that a customer's needs can change due to various factors such as life events, seasonal preferences, technological advancements, or changes in economic conditions. Marketers are encouraged to focus on existing customers and adapt their strategies to cater to these evolving needs rather than treating all customers in a segment the same way indefinitely. Possible Solutions: Intro to Segmentation Targeting and Positioning (STP) 28  Applying STP in Marketing ○ When you need to: Identify New Product Opportunities identify competitive sets that exists within a market Some segments might only have few and perhaps weak actors (i.e., firms), hence potentially offering opportunities Identify New markets for entry Understanding how certain customers segments differ from one another The Diff Components (Segmentation, Targeting and Positioning) Market Segmentation: ○ involves viewing a heterogeneous market as several smaller homogeneous markets, in response to differences between customers, and acting upon these differences between subgroups. dividing a broad, diverse market into smaller, more specific groups of customers who have similar characteristics or needs. [into a more homogeneous segment] Has to be homogeneous WITHIN segments and heterogeneous BETWEEN segments ○ To be effective, segmentation should result in a practical number of segments that the company can focus on. Typically, having between three and eight segments is recommended. Why?: because Companies often have limited resources (like time, money, and staff), so they need to choose a few segments to target effectively. Focusing on a select number of segments allows companies to tailor their marketing strategies to the specific needs and preferences of those segments, leading to more efficient and effective marketing. ○ How should you segment them? 29 ○ Criteria for Effective Segmentation 30  ○ Common Approaches/Strategies A-priori (“Naïve”) approach Where you rely on intuitive and easy-to-spot patterns that exist in data [don't use analytical techniques] Segments are usually determined by researcher Pros: Easy to conduct and often requires little effort Cons: Insights obtained are often subjective (rather than data-driven) which are potentially less accurate and meaningful Post-hoc Based on analyses ○ Hard clustering, e.g., cluster analysis ○ Soft clustering, e.g., latent class analysis Targeting ○ Evaluating Market Segments marketer needs to select segments to target based on attractiveness and strength Market attractiveness [choosing which segments to target] depends on Current attractiveness: Size,Growth,Price Sensitivity + other factors that make the segment especially appealing,strategically and financially 31  Long-term attractiveness: already has many strong and aggressive competitors or easy for new customers to come into the segments? Possible for many actual or potential substitute products that could limit sales and eventually profit? What’s buyer buying power and bargaining power like? Does it involve powerful suppliers that could control prices/reduce the quality/quantity of G&S? Competitive strength (or fit) [choosing which segments to target also depends on] Refers to the firm itself and its ability to attract, secure, and maintain market share with the targeted segment Can often reveal a trade-off between segment desirability and the firm’s capacity to serve it ○ Market Targeting Strategies: Micromarketing: Local Marketing Involves tailoring brands and promotion to the needs and wants of local customer segments ○ Cities, Neighborhoods, Stores ○ Geolocation marketing and/ location-based mobile coupons (promotion) are eg of local marketing Cons: Increase manufacturing and marketing costs, create logistic problems as companies vary the requirements of different regional and local markets, Brands image may be diluted if the product and message varies on different locations. Micromarketing: Individual Marketing Tailoring of products and marketing programs to the needs and preferences of individual customers ○ one-to-one marketing, mass customization, markets-of-one marketing ○ Uses recommendation algorithms (collaborative filtering) that utilizes automatic prediction (filtering) about the interests of customers by collecting preference information ○ Choosing Which Strategy to use: [dependent on] 32  Differentiation and Positioning ○ Differentiating V.S. Positioning Differentiating FOR FIRMS: how they want their product/services/brand to stand out as compared to other competitors. Goal is to make theirs the more attractive ones to the target customer segments Ask yourself: What dimension(s) do consumers consider as key as they compare and evaluate products and brands? Positioning FOR CUSTOMERS: how firms want to make their product and brand to be perceived in the minds of the target consumers segment. ○ Usually centers around a/more value proposition that makes it attractive and captures the attention of the target customers. Many successful positionings represent 3 or fewer value propositions. Don't value too much as it may cause confusion to the customers. Ask yourself: What is it that is unique about the products and brands? How are they different? What makes them stand out? Why should target customers purchase the focal company’s products and brands and not those of competitors? 33  How can you better position yourself? [Strategies]: ○ Thru each of the 4Ps Product: E.g., Apple or Bose work hard to establish high-performance, trendy and cool images Place (Channel): E.g., Samsung stopped retailing its products via discount stores to also maintain the sophisticated, high-tech positioning Price: E.g., Luxury brands tend to avoid discounts as they may undermine their exclusive positioning among consumers Promotion: Can revise the position of product attributes, features and offerings in customers’ minds ○ Steps: 1. Identifying a set of possible competitive advantages upon which to build a position Identifying Competitive Advantages: - Product Differentiation E.g., Features, performance, or style and design - Services Differentiation E.g., Speedy, convenient, or careful delivery - Channel Differentiation E.g., Design of channel’s coverage, expertise and performance - People Differentiation E.g., Hiring and training better people than their competitors do - Company or Brand Image Differentiation E.g., Communicate image elements via promotional efforts that convey the company’s or brand’s personality 2. Choosing the right competitive advantages Criteria for choosing the Right Competitive Advantage: - Important Difference delivers highly valued benefits to target buyers - Distinctive Difference not offered by competitors, or the company can offer it in a more distinctive way - Superior Difference is superior to other ways that customers might obtain the same benefit - Affordable Difference is affordable to buyers - Preemptive Difference cannot be easily copied by competitor - Profitable Difference can be introduced profitably by the company - Communicable Difference is communicable and visible to buyers 3. Selecting an overall positioning strategy 34  Understanding the Customers better to better serve them: ○ Perform Perceptual and Preference Mapping Help firms to to understand how consumers view their products compared to their competitors Products and brands that are more similar should show up on the map closer to each other relative to products and brands that are more dissimilar in the minds of consumers Perceptual Mapping: Definition: Perceptual maps are visual tools that show how consumers perceive different products or brands in relation to each other based on various attributes or dimensions. The key difference here is that these maps reflect perceptions, not necessarily actual preferences or choices. Based on: Similarity or perception ratings. Consumers are asked to rate how similar or different they perceive certain products or brands to be, based on key attributes like price, quality, design, features, etc. Preference Mapping Definition: Preference maps are also visual tools, but they are based on consumers' actual choices or stated preferences. Instead of just asking how consumers perceive products, these maps show which products or brands consumers actually prefer or choose in real-world situations. Based on: Preference ratings only. These ratings reflect consumers’ actual or stated preferences, often gathered through surveys or by tracking purchasing behavior. This is more about what consumers choose or want, not just how they perceive similarities. The Ethical Dilemmas in Segmentation and Targeting - Can create controversy and concern - Issue arise when targeting the vulnerable or disadvantaged consumers with controversial or potentially harmful products - EG children - Problem is exacerbated with the use of internet - The issue is not so much who is targeted, but how and for what Lesson 6 : Introduction to ‘Product’ and ‘Service What is a Product? Anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want Could also Include: - Provision of Services, Persons, Locations, Organizations, Ideas, or a mixture of all KEY ELEMENT in market offering often includes both tangible goods and services 35  - Can be the provision of both or either one Products and Services are becoming more commoditized due to digitalization How is the Product Built? Identify the core customer value that consumers seek from the product Design the actual product Find ways to augment it to create the identified customer value and the most satisfying customer experience. [Augmented Product; improved products based on customer value] Types of Products: Consumer products: products and services bought by final consumers for personal consumption Industrial products are those purchased for further processing or for use in conducting a business The main diff is btw the purpose of the products For diff types of Consumer products, we have to consider these points: 36 Diff Types of Industrial products: Materials and part ○ Raw materials as well as manufactured materials and parts Capital Item ○ Industrial products that aid in the buyer’s production or operations, including installations and accessory equipment Eg: Factory machines, Hand tools, Office equipment Supplies and Services ○ Supplies, e.g., operating supplies and repair and maintenance items ○ Services, e.g., maintenance and repair services and business advisory services How can they market themselves? [strategies] Organization Marketing: They create, maintain, or change the attitudes and behavior of target consumers toward an organization Person Marketing: create, maintain, or change the attitudes and behavior toward particular people/ marketable brand ○ Eg: Celebrity Endorsement Place Marketing: create, maintain, or change the attitudes and behavior toward particular places. ○ Attracting tourist Social Marketing: create, maintain, or change the attitudes and behavior that will create individual and societal well-being ○ Companies engage in this marketing to support ideas they believe in Things to take note when making decisions on the products and services: Factors: 1. Individual Product and Service Decisions [focuses on creating core customer value] a. Product Attributes i. Product Qualities : ability to perform its function with quality and consistency [free from defects and ability to perform up to expectations] ii. Product Features : [shld stand out as compared to competitors and should add on features that customer value] 37  iii. Product Style and Design [aim for eye-catching design that can grab attention] b. Branding i. Provides identification and quality assurance to the buyer ii. Provides a platform for sellers to tell stories, claim legal protection, and helps them to segment the market. iii. Branding encompasses the overall strategy and process of creating a unique identity for a product or company. It includes the logo but also involves the messaging, voice, design, values, and customer experience associated with the brand. c. Packaging i. Innovative and distinctive packaging will become a brand’s identity and attract customers. Not forgetting to protect the environment. d. Labeling and Logos i. Helps differentiate themselves, remind ppl of their story/history ii. A logo is a graphical representation or symbol that identifies a company or brand. It can include text, images, or a combination of both. iii. Purpose: The primary purpose of a logo is to create a recognizable visual mark that differentiates a brand from its competitors. e. Product Support Services i. Good support service can help keep customers happy after the sale and is the key to building lasting relationships 2. Product Line Decisions a. is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges b. Longer the line the greater the profit, should also take note that new products should be differentiated from the old ones. c. 2 main ways to increase product line: i. Line Filling: 1. Definition: This involves adding more items within the existing range of products. 2. Rationale: a. Extra Profits: More products can lead to increased sales. b. Dealer Satisfaction: Offering a broader range can meet dealer and retailer demands. c. Utilizing Capacity: It helps use excess production capacity efficiently. d. Market Leadership: Being a leading company in the industry can help fend off competitors. 3. Risks: a. Cannibalization: New products may take sales away from the company’s existing products. b. Customer Confusion: Too many similar products can confuse consumers about their choices. ii. Line Stretching: 1. Definition: This strategy involves lengthening the product line beyond its current range. 2. Types: 38  a. Downward Stretching: A company adds lower-end products to attract new market segments or respond to competitors. b. Upward Stretching: A company introduces higher-end products to enhance its prestige or capture higher profit margins. c. Two-Way Stretching: Companies can stretch both upward and downward simultaneously to cover more market segments. 3. Benefits of Line Stretching: a. Prestige: Adding upper-end products can elevate the brand image. b. Market Coverage: Stretching downward can fill gaps in the market and reach new customers. 3. Product Mix Decisions a. Definition: The product mix refers to the complete set of product lines and individual items that a seller offers for sale. It encompasses everything the company markets to its customers. b. Four Dimensions of Product Mix: i. Width: 1. Definition: This is the number of different product lines a company carries. 2. Example: If a company sells beverages, its width might include soft drinks, juices, and bottled water. ii. Length: 1. Definition: This refers to the total number of items within all the product lines. 2. Example: If the beverage company offers 10 different soft drinks, 5 types of juice, and 3 types of bottled water, the length would be 18 items. iii. Depth: 1. Definition: This is the number of versions or variations offered for each product in a line. 2. Example: If one of the soft drink lines has different flavors (like cola, cherry, and diet), the depth increases with each flavor. iv. Consistency: 1. Definition: This measures how closely related the various product lines are in terms of end use, production processes, or distribution channels. 2. Example: If a company sells both beverages and snack foods, there may be less consistency compared to a company that only sells different types of beverages. c. Importance of Product Mix Dimensions: i. These dimensions help define the company’s product strategy by determining how it positions its products in the market, which segments to target, and how to optimize its offerings for better customer satisfaction. d. Ways to Increase Business: 4 strategies: i. Add New Product Lines: 1. Strategy: Introduce new product lines that complement existing ones, leveraging the company's reputation. 2. Example: A sportswear brand might add a line of sports accessories. ii. Lengthen Existing Product Lines: 1. Strategy: Add more items to existing product lines to create a fuller range. 2. Example: A shoe company could introduce additional styles or colors within its athletic shoe line. iii. Deepen the Product Mix: 39  1. Strategy: Increase the number of variations for each product to enhance depth. 2. Example: A smartphone manufacturer could introduce different models with varied features. iv. Adjust Product Line Consistency: 1. Strategy: Decide whether to have more or less consistency across product lines, depending on whether the goal is to have a strong reputation in a specific market or diversify across several. 2. Example: A company focusing on premium skincare might choose to stay within that field for brand strength rather than branching into unrelated markets. What is a Service? The key differences between products and services: 1. Tangibility a. Products: These are physical objects that can be seen, touched, and owned. They are tangible, meaning they have a physical presence. i. Example: A smartphone, a car, or a pair of shoes. b. Services: Intangible in nature, services cannot be touched or owned. They are experiential and are consumed at the point of delivery. i. Example: Consulting, healthcare, or a haircut. 2. Production and Consumption a. Products: There is often a time lag between the production and consumption of products. Products can be mass-produced, stored, and sold at a later time. i. Example: A laptop is manufactured, stored in a warehouse, and sold when needed. b. Services: Production and consumption happen simultaneously. Services cannot be stored or separated from their provider. i. Example: A live concert or a taxi ride must be consumed as it’s being performed or delivered. 3. Perishability a. Products: Most products are non-perishable in the short term and can be stored for future use. i. Example: A book can be stored on a shelf for years before being read. b. Services: Services are perishable because they cannot be stored or reused once delivered. If a service is not used when offered, it’s lost. i. Example: An empty airline seat on a flight cannot be recovered once the plane has taken off. 4. Ownership a. Products: Ownership of products is transferred from the seller to the buyer upon purchase. The buyer has complete control over the product after purchase. i. Example: When you buy a TV, you own it and can use or sell it as you wish. b. Services: There is no transfer of ownership in services. The buyer pays for access or usage for a certain time or experience. i. Example: When you hire a lawyer, you pay for their expertise, but you don’t "own" the lawyer or the advice. 5. Quality Measurement a. Products: Quality can be objectively measured based on specifications, functionality, or design. Defective products can be returned or replaced. 40  i. Example: If a microwave doesn’t work as expected, you can return it for repair or replacement. b. Services: Quality is more subjective and varies depending on the customer’s perception and experience. Consistency is harder to maintain. i. Example: The quality of a hotel stay might vary based on personal experiences, even if the facilities are consistent. 6. Customer Involvement a. Products: Customers usually have little involvement in the production process. They simply choose and buy the finished product. i. Example: You buy a pre-manufactured car from a dealership without influencing the production process. b. Services: The customer is often actively involved in the delivery of services. Their interaction with the service provider can influence the outcome. i. Example: In personal training, the trainer tailors exercises based on the client’s feedback and participation. The Service Profit Chain [Cycle] 1. Internal Service Quality This refers to how well a company supports its employees through superior employee selection, training, and creating a quality work environment. The goal is to empower employees who deal directly with customers, ensuring they have the tools and environment needed to succeed. ○ Meaning: If employees feel supported and well-equipped, they are more likely to provide good service to customers. 2. Satisfied and Productive Service Employees Employees who are well-trained and work in a supportive environment tend to be more satisfied and loyal to the company. They also tend to be more productive and dedicated to their work. ○ Meaning: Happy and motivated employees are the foundation of a successful service-oriented business. 3. Greater Service Value Satisfied employees are able to deliver better, more efficient service, which creates higher value for customers. They are more engaged and effective in meeting customer needs. ○ Meaning: High-quality service is the result of engaged employees, which leads to customers perceiving greater value from their interactions with the company. 4. Satisfied and Loyal Customers When customers receive high-value service, they are more likely to be satisfied and remain loyal to the company. They will return for repeat purchases and even refer others to the company, becoming advocates for the brand. ○ Meaning: Customer satisfaction leads to loyalty, which is crucial for long-term success. 5. Healthy Service Profits and Growth Satisfied, loyal customers lead to increased profits and sustainable growth for the company. Loyal customers not only spend more over time but also help reduce marketing costs (through word-of-mouth) and lower customer acquisition costs. ○ Meaning: The ultimate goal is improved financial performance, driven by loyal customers and efficient service delivery. Summary: The flow shows how internal service quality (such as employee support, training, and work environment) drives employee satisfaction, which leads to better service delivery. This results in customer satisfaction and loyalty, which ultimately translates into higher profits and business growth. 41 The core message: Investing in employees is key to delivering excellent service and achieving long-term business success. 3 Types of Service Marketing 1. Internal Marketing [btw employees and company] a. On investing in employees to delight customers 2. External Marketing [btw customers and company] 3. Interactive Marketing [btw customers and employees] a. Services firms must help employees master the art of interacting with customers Marketing Strategies for Service Firms 1. Service Differentiation a. How can they do so? i. Have more customer-contact employees that are reliable and more capable ii. Create a superior physical environment for the service to be delivered iii. Designa superior delivery process iv. Differentiating their image thru symbols and branding 2. Service Quality a. Harder to define compared to product quality b. Customer retention is the best way to assess service quality c. Always varies depending on which employees if communication to which customers i. Good service can potentially make angry customers into a loyal ones 3. Service Productivity a. Is always what they aim to achieve b. Can be done so thru training or employees to become more skillful and efficient, harness the power of technology or providing more quantity of service to compensate for the lacking of quality [this pose lots of problem although it solves the short-run efficiency however in the long-run may cause firms to not be able to respond to consumers needs and desires] i. It really depends which firms want to pursue , quality or quantity 1. With higher quality firms have more to say and will allow them to maintain a higher prices and profit margins Branding Strategies Branding is considered one of the major enduring asset in a company Brand Equity and Brand Value Brand equity refers to the value a brand adds to a product or service based on consumers’ perceptions and experiences. It reflects how knowing a brand name influences customer responses. This means that a brand name can affect how customers feel about a product compared to an unbranded or generic version. If customers prefer a branded product over a generic one, it indicates positive brand equity. And vice versa This also measures the brand's ability to capture consumer preference and loyalty A powerful brand which has high brand equity aim to not only deliver unique benefits or reliable service to consumers but also aim to forge a deep connections with customers Benefits of high brand equity: ○ High level of consumer brand awareness and loyalty ○ More leverage in bargaining with resellers ○ Easier process of launching line and brand extension 42  ○ Defense against fierce price competition ○ The basis for building strong and profitable customer relationships Main Goals: Increase the value of customer relationship that the brand creates Brand Strength refers to the overall power and influence a brand has in the market. It encompasses factors like brand loyalty, market share, reputation, and the ability to differentiate from competitors. Factors: ○ Differentiation [what makes the brand stand out] ○ Relevance [how consumers feel it meets their needs] ○ Knowledge [how much consumers know about the brand] ○ Esteem [how highly consumers regard and respect the brand] Brand Value Brand value is a more quantifiable measure of the financial worth of a brand. It often reflects the monetary value associated with the brand, which can include its contribution to sales, market share, and profitability. How to Build Strong Brand Brand Position Must be positioned clearly on the target consumers mind and can be done in any 3 levels: 1. Lowest Level: a. Based on products/services attributes b. Least desirable level since easier copied by competitors 2. Second Level: a. With desirable benefits [what are the other benefits involved?] 3. Highest Level: a. Based on beliefs, values and feelings [engage consumers on a deep emotional lvl] b. Can connect consumers on a more emotional level and can invoke loyalty Must establish a mission for the brand and a vision of what the brand must be and do [the WHY?] A brand is the company’s promise to deliver a specific set of features, benefits, services, and experiences consistently to buyers ○ The brand promise must be clear, simple, and honest Brand Name Selection Desirable Qualities [good brand shld possess some or all of it] ○ Suggest something abt the product’s benefits and qualities ○ Easy to read/pronounce/recognize and remember ○ Distinctive ○ Extendable 43  ○ Translate easily to other languages ○ Capable of registration and legal protection Brand Sponsorship Has 4 Sponsorship Options: ○ National Brand Brands that are owned by manufacturers and sold across various retail channels. Example: Kleenex® Facial Tissues. ○ Store Brand (Private Brands/Labels) Definition: Brands created by retailers that are sold exclusively in their stores. Example: FairPrice Facial Tissues. Store brands have gained popularity and quality, often competing directly with national brands. Due to lower price compared to national brand and increasingly greater selection Although store brands can be hard to establish and costly to stock and promote, they also yield higher profit margins for retailers Store brands provide retailers exclusive products that cannot be bought from competitors, resulting in greater store traffic and loyalty ○ Licensed Brand Definition: Brands that allow other companies to produce and sell products under their name or trademark for a fee. Example: Luxottica making eyewear for Prada. Prada gains from Luxottica’s expertise and production capabilities, while Luxottica benefits from the established brand equity and prestige of Prada. So, Luxottica pay Prada to use their name. allows companies to leverage established names or characters to create instant brand recognition. ○ Co-Branding Definition: When two established brands collaborate to create a single product that features both names. Example: Versace x H&M or the American Express® Singapore Airlines KrisFlyer Credit Card. can create new market opportunities and combine strengths, but also involves complexities in collaboration. Can backfire when one reputation is damages it will affect the other Brand Development Line extension 44  ○ work best when it can take sales away from competing brands and not compete within the company's products!! ○ Company extends existing brand names to new forms, colors, sizes, ingredients, ○ or flavors of an existing product category The iPhone product line has been extended into various models to cater to different customer segments, such as the iPhone SE (more affordable, compact model) and the iPhone Pro series (high-end, feature-rich models). These variations still belong to the smartphone category but offer customers different options based on price, functionality, and performance. ○ Reason for Implementation includes: Low-cost, low-risk way to introduce new products Meet consumer desires for variety Use excess capacity Command more shelf space from resellers ○ Possible Risks: An overextended brand name might cause consumer confusion or lose some of its specific meaning At some point, additional extensions might add little value to a line Brand extension ○ a good extension is when it fits into the parent brand and parent brand can help give competitive advantage to the new extension ○ Company extends a current brand name to new or modified products in a new ○ category eg Apple started of as a computer company but later extended to also produce iphone apples watch and airpods ○ Compared with building new brands, extensions can create immediate new- product familiarity and acceptance at lower development costs ○ Possible Risks: Extension may confuse the image of the main brand A brand name may not be appropriate to a particular new product, even if it is well made and satisfying If a brand extension fails, it may harm consumer attitudes toward other products carrying the same brand name Multigrain ○ Company introduces additional brands in the same product category ○ Multi-branding occurs when a company creates and markets multiple brands within the same product category. Each brand has its own distinct identity and targets a different customer segment. Example (Procter & Gamble): In the shampoo category, Procter & Gamble offers several brands like Pantene, Head & Shoulders, and Herbal Essences. Even though they all sell shampoos, each brand has its own identity, positioning, and target audience.. ○ Reason for Implementation: Offers a way to establish different features that appeal to different customer segments Lock up more retailer shelf space Capture a larger market share ○ Possible Risks: 45  Each brand might obtain only a small market share, and none may be very profitable A company may end up spreading its resources over many brands instead of building a few brands to a highly profitable level New brand ○ Company creates a new brand because: it believes the power of its existing brand name is waning, and/or it is entering a new product category for which none of its current brand names is appropriate A new brand is often necessary to differentiate products that appeal to completely different market segments, even within the same category. e.g. By launching Lexus, Toyota (which both is in the automobile industry) avoided diluting its mainstream brand and effectively communicated luxury and prestige, which would have been difficult under the Toyota name. ○ Possible Risks: Offering too many new brands can result in a company spreading its resources too thin in some industries, such as consumer packaged goods, consumers and retailers have become concerned that there are already too many brands with too few differences between them Lesson 7 : Product II Manifest Branding Strategy A manifest branding strategy refers to how a brand’s identity and perception naturally develop based on a company’s actions, behaviors, and decisions rather than through intentional or carefully crafted branding efforts. It’s about how the brand manifests or becomes evident to the public as a result of everything the company does, including product offerings, business decisions, customer service, corporate culture, and other factors. The way a brand’s identity or image evolves (its manifest strategy) is not always the result of conscious branding decisions. Instead, it can be shaped by other decisions the company makes, such as: 1. Product or service decisions: The types of products a company offers, their quality, and how they perform in the market can shape how the brand is perceived, even if those decisions weren’t made with branding in mind. a. Example: A company may focus on developing high-quality, reliable products without explicitly trying to build a “premium” brand, but over time, its reputation for reliability leads to a premium brand perception. 2. Corporate behavior: A company’s policies, ethical stances, and how it responds to social issues may create a brand image, even if these actions weren’t initially part of a deliberate branding plan. a. Example: A firm that adopts sustainable business practices might become known as an eco-friendly brand, even if their primary focus was cost reduction or regulatory compliance. 3. Customer experience: How customers experience the product or service—through customer service, distribution, or interactions—can shape brand identity without intentional branding efforts. a. Example: If a company consistently provides exceptional customer service, it might gain a reputation as a customer-centric brand, even if this wasn’t a focus of their formal branding strategy 46  Since Manifest branding strategy refers to what can be observed or inferred from the brand names and brand structures that have developed, and this may happen as a byproduct of a company’s overall decisions, not necessarily from deliberate branding efforts. The branding structures like corporate, house, or mixed branding that we can see are part of that broader manifestation of a company’s branding approach. ○ It is telling you that manifest branding strategy is to indicate how a company’s actual branding approach can be inferred through observation of its brand names and portfolio, whether or not this was a deliberate choice. In general, the type of branding strategy can be inferred from examination of all the brand names of a firm’s products (basically determine the actual branding strategy thru observing which we can call this manifest strategy) ○ In summary, branding strategies (corporate, house, mixed) are intentional, while manifest branding strategy is how the brand identity develops based on a variety of decisions, some of which may not be aimed directly at branding. E.g., Firm’s website, analysis of firm’s structure, competitive media reporting, annual reports, etc. ○ Mainly 3 types 1. Corporate branding a. The company uses a single brand name across all products and services. i. Example: Apple uses the Apple brand name for all its products (iPhone, iPad, Mac). 2. House of Brand a. The company creates separate brands for different products, each with its own