Marketing Exam Prep PDF

1. INTRODUCTION 1️ Core Marketing Concepts Marketing Definition "Marketing is a process by which companies create value for customers and build strong relationships in order to capture value from customers in return." Twofold Goal: 1. Attract new customers by promising superior value...

1. INTRODUCTION 1️ Core Marketing Concepts Marketing Definition "Marketing is a process by which companies create value for customers and build strong relationships in order to capture value from customers in return." Twofold Goal: 1. Attract new customers by promising superior value 2. Keep and grow customers by delivering satisfaction Customer Needs, Wants & Demands Needs: Basic necessities (food, warmth) Wants: Shaped by culture & personality (luxury brands, fast food) Demands: Wants backed by buying power Customer Value Formula Customer Value = (Perceived) Benefit – Cost 2️ Selling Concept vs. Marketing Concept Selling Concept Marketing Concept Start: Factory Start: Market (Customer Needs) Focus: Existing Products Focus: Customer Satisfaction Means: Selling & Promoting Means: Integrated Marketing Ends: Profits through Sales Volume Ends: Profits through Customer Satisfaction 3️ Analysis of the Company & Competitive Landscape Resource Analysis – Assesses a company’s internal resources: ✔ Finance ✔ Know-How ✔ Physical Assets ✔ Human Resources ✔ Reputation ABC-Analysis – Categorizing items (products, customers) based on importance: A-items → High value, low quantity B-items → Moderate value & quantity C-items → Low value, high quantity Life-Cycle Analysis – Examines a product’s journey: 1. Introduction 2. Growth 3. Maturity  4. Saturation Portfolio Analysis – Evaluates a company’s product or business portfolio to optimize investments. BCG Matrix (used in Portfolio Analysis): Stars → High growth, high market share Cash Cows → Low growth, high market share Question Marks → High growth, low market share Dogs → Low growth, low market share Strategic Business Unit (SBU) ✔ A division in a company with its own competitors, strategies, and profit goals. ✔ Each SBU is analyzed using the BCG Matrix. ✔ Example: A large company like Nestlé has SBUs for beverages, snacks, and dairy products, each managed separately. 4️ Analysis of Competition Benchmarking – Comparing products, services, or processes with competitors to set a performance standard. SWOT Analysis – Strategic tool to evaluate competition: Strengths – Internal advantages (strong brand, loyal customers) Weaknesses – Internal limitations (high costs, weak marketing) Opportunities – External favorable trends (new tech, market gaps) Threats – External risks (competition, regulation changes) Goal of SWOT: Match strengths with opportunities, minimize weaknesses, and neutralize threats. 5️ Environmental Analysis Macro Environment (DESTEP Analysis) D – Demographic (population trends) E – Economic (inflation, cost of living) S – Socio-cultural (trends, culture) T – Technological (new innovations) E – Ecological (sustainability, environment) P – Political (laws, regulations) Micro Environment – Actors close to the company: ✔ The Company (internal departments) ✔ Suppliers ✔ Marketing Intermediaries ✔ Customer Markets ✔ Competitors ✔ Publics Modern Marketing System Suppliers → Company → Competitors → Marketing Intermediaries (e.g., Edeka) → Final Consumers 2️. OBJECTIVES AND STRATEGIES Marketing Management Process Steps: Analysis → Objectives → Strategies → Marketing-Mix → Control. These steps outline the systematic approach to managing marketing activities, from understanding the market to evaluating the results of marketing efforts. Strategic Analysis: Market, competition, resources, and customer analysis. Analyzing external and internal factors helps in identifying opportunities, threats, strengths, and weaknesses. Strategy Implementation: Product, pricing, distribution, communication, and process policies. Translating strategies into actionable plans involves setting prices, selecting distribution channels, and deciding on promotional activities. Marketing Goals & Objectives Economic Goals: Sales, revenue, market share, profitability. These are quantifiable targets that directly impact the company’s financial performance. Pre-Economic Goals: Brand awareness, brand image, customer satisfaction, loyalty. These are qualitative targets that influence customer perceptions and future buying behavior. Hierarchy of Goals: Vision & Mission → Company Objectives → Division Goals → Marketing Targets. Goals are structured from broad, long-term visions to specific, actionable marketing targets. Vision & Mission Statements Vision: Long-term, aspirational goal (e.g., Tesla’s vision of sustainable transport). Defines what the company ultimately wants to achieve, providing a long-term direction. Mission: How a company achieves its vision (e.g., Nike expanding human potential). Describes the day-to-day activities that help fulfill the vision, guiding operational decisions. Examples: o IKEA’s Vision: "To create a better everyday life for the many people." Focuses on improving customer lives through affordable, well-designed products. o Google’s Mission: "To organize the world's information and make it universally accessible and useful." Emphasizes information accessibility as a core purpose. Strategic Target Setting  Business Objectives: Profitability, research investments. Broad goals aimed at financial growth and innovation. Marketing Objectives: Brand awareness, market share growth, customer engagement. Specific targets aimed at enhancing market presence and customer relations. Satisfaction-Profit Chain: Customer satisfaction → Retention → Profitability. Satisfied customers are more likely to remain loyal, leading to increased profitability. Target Groups & Market Segmentation Criteria for Target Groups: Age, gender, income, lifestyle, hobbies, etc. Allows companies to tailor marketing messages to specific audience characteristics. Segmentation Types: o Geographic: Country, city, neighborhood. Targets based on location, useful for region-specific marketing. o Demographic: Age, gender, income, education. Focuses on measurable characteristics of populations. o Psychographic: Lifestyle, values, interests. Explores consumer attitudes, aspirations, and other psychological criteria. o Behavioral: Usage patterns, brand loyalty, purchase frequency. Analyzes consumer behaviors to tailor marketing efforts. Personas & Examples: Personas are fictional profiles representing ideal customers, helping in crafting targeted marketing strategies. o Example: “Modern Mainstreamers” for Zalando, targeting trendy yet budget- conscious shoppers. Marketing Strategies (Porter’s Competitive Strategies) 1. Cost Leadership (“No Frills”) o Goal: Achieve the lowest cost structure. Focuses on minimizing costs to offer lower prices than competitors. o Examples: Ryanair (low-cost airline). Provides essential services without frills, allowing for cheaper fares. o Strategy: Simple product, low-cost marketing, optimized processes. Streamlining operations to maintain profitability while keeping prices low. 2. Differentiation (“Unique Value”) o Goal: Stand out through quality, innovation, or branding. Creating unique products or services that justify a premium price. o Examples: Tesla (technology leadership), Gucci (luxury branding). Tesla’s innovation in electric vehicles; Gucci’s emphasis on luxury fashion. o Strategy: Strong brand image, innovation, high-quality services. Building customer loyalty through exceptional value and experiences. 3. Focus (“Niche Market”) o Goal: Specialize in a specific audience or market segment. Tailors products or services to a well-defined group of customers.  o Examples: Rolex (luxury watches), small craft breweries. Rolex caters to affluent customers seeking exclusivity; craft breweries serve niche beer enthusiasts. o Strategy: Deep understanding of niche customer needs, exclusivity. Focusing on specialized offerings that meet unique demands. Customer-Oriented Strategies Mass Marketing: Broad audience, undifferentiated message (e.g., Coca-Cola). Aims for widespread appeal by using a single marketing strategy for all customers. Segment Marketing: Targeting specific groups (e.g., Nike for athletes). Develops tailored messages for distinct market segments. Niche Marketing: High specialization (e.g., Rolex luxury watches). Focuses on a narrowly defined customer group, often commanding higher prices. Individual Marketing: Personalized marketing (e.g., AI-driven recommendations). Utilizes data to offer highly customized products or services to individual customers. 3️. PRICE Marketing Mix: Price Definition: Price is the monetary amount a customer must pay for a product or service. Key Quotes: o “Price is what you pay. Value is what you get.” – Warren Buffet o “Like everything else in marketing, good pricing starts with customers and their perceptions of value.” – Kotler & Armstrong o Takeaway: Pricing should align with customer value perception rather than just cost. Specific Pricing Approaches 1. Penetration Pricing o Definition: Setting a low initial price to attract customers and gain market share. o Example: Amazon Prime Video launched at a lower price to compete with Netflix. o Goal: Establish a strong customer base and then adjust prices later. 2. Price Skimming o Definition: Setting a high initial price and gradually lowering it. o Example: Apple releases new iPhones at high prices, later reducing them. o Conditions: Product must have a strong brand image, and competitors should not easily enter the market. 3. Competition-Oriented Pricing  o Definition: Setting prices based on competitors’ pricing rather than costs or value. o Example: Gas stations often adjust prices based on nearby competitors. o Risk: Competitor reactions can trigger a price war, reducing profitability. 4. Cost-Oriented Pricing o Definition: Pricing based on expenses of raw materials + labour + profit. o Disadvantages: ▪ Costs do not always reflect customer value perception. ▪ High fixed costs can lead to inaccurate pricing decisions. ▪ Risk of circular reasoning – volume depends on price, but price depends on volume. ▪ Does not consider competitor prices or customer willingness to pay. ▪ Difficult to apply to services where costs vary significantly (e.g., airlines, call centers). 5. Demand-Oriented Pricing o Definition: Setting prices based on anticipated customer willingness to pay. o Problems: ▪ Willingness to pay varies significantly among different consumer segments. ▪ Setting a single average price may lead to underpricing or overpricing. ▪ Non-monetary factors (such as brand trust) can be hard to measure accurately. Factors Influencing Price Leeway Upper Limit: Customer’s willingness to pay (value perception). Lower Limit: Cost of production (ensuring profitability). Competitor Prices: Used as a reference but not necessarily followed. Corporate Objectives: Profit maximization, brand positioning, or market share goals. Legal Restrictions: Price regulations and anti-competitive laws. Takeaway: Companies must set prices within a range that balances profitability, competitiveness, and customer acceptance. Price as a Quality Indicator Concept: Higher prices are often perceived as indicators of better quality. When this happens: o When brand names are unknown. o When customers lack prior experience with a product.  o When objective quality is difficult to assess (e.g., perfumes, wines). o When there is low price transparency. o When cognitive dissonance needs to be avoided ("I paid more, so it must be better"). Takeaway: Price influences perception—higher prices can signal premium quality, even if the actual product difference is minimal. Price Anchor Effect Definition: The first price a customer sees influences their perception of all future prices. Example: A product originally marked at $100 but discounted to $60 seems like a great deal—even if $60 is its actual market value. Application: Retailers use this effect through "was vs. now" pricing and premium options to make middle-priced products more attractive. Takeaway: Customers compare prices to previous references rather than evaluating absolute value. Goals of Price Differentiation (Strategic Triangle) Definition: Charging different prices for the same product based on customer characteristics, purchase conditions, or timing. Strategic Triangle: Three key goals of price differentiation: 1. Customer Goals: ▪ Provide better value perception. ▪ Offer pricing structures that fit different customer needs. ▪ Encourage long-term customer retention. 2. Company Goals: ▪ Maximize profits by extracting the highest willingness to pay. ▪ Increase revenue by expanding customer segments. ▪ Reduce transaction costs and achieve economies of scale. 3. Competitive Goals: ▪ Adjust price structures to match or outperform competitors. ▪ Erect barriers to entry and increase switching costs. ▪ Maintain differentiation and avoid price wars. Takeaway: Price differentiation allows businesses to capture more consumer surplus and adapt pricing to various market conditions. Price Elasticity and Price Differentiation  Concept: When price elasticity assumes one fixed price, companies lose out on potential revenue from different customer segments. Why companies differentiate prices: o Some customers are willing to pay more → Opportunity to charge premium prices. o Some customers need lower prices to buy → Offering discounts to capture them. o Examples include student discounts, peak vs. off-peak pricing, and premium service tiers. Takeaway: Instead of one fixed price, companies use differentiated pricing to maximize profits and serve different customer groups effectively. Yield Management (Definition from Slide) Definition: Yield management is a variable pricing strategy derived from understanding, anticipating, and influencing consumer behavior to increase revenue and profits. Example: Airlines adjust ticket prices based on booking time, demand levels, and seat availability. Dynamic Pricing Definition: Denotes a flexible price-setting process with respect to market dynamics. How it works: o Prices fluctuate based on demand, competition, and market conditions. o Technology enables real-time adjustments (e.g., surge pricing on Uber). Example: Amazon changes product prices based on user behavior, competitor prices, and demand patterns. Takeaway: Dynamic pricing maximizes revenue by continuously adapting to real-time market conditions. Final Thoughts Pricing is not just about covering costs—it is a strategic tool that influences customer perception, demand, and competitive positioning. Companies use price elasticity, differentiation, and strategic pricing models to optimize revenue. Psychological factors, such as price anchoring and perceived quality, significantly impact purchasing decisions. Yield management and dynamic pricing allow businesses to remain flexible and adapt to changing market conditions. 4️. PLACE 1️. Channel as a Route to Consumers Definition: Sales channels are the route to market, serving as a prerequisite/requirement for sales activities. Sales Function: Focuses on promoting consumer purchasing by ensuring products are accessible to customers. How Channel Members Add Value: o Transform product assortments into what consumers want. o Bridge time, place, and possession gaps (e.g., ensuring seasonal products are available when needed). Takeaway: Distribution channels enable efficient delivery of products to consumers, making purchasing easier. 2️. Tasks Covered in Sales Key Question: Who will perform these tasks? Tasks Include: o Space-Bridging (moving products from production to consumption areas). o Qualitative Assortment (grouping related products). o Advisory Function (providing product recommendations). o Advertising Function (promoting products to increase demand). o Time-Bridging (ensuring products are available when needed). o Quantitative Assortment (providing the right quantity of goods). o Credit Function (offering financing options). o Market Influencing Function (shaping consumer demand). Takeaway: These functions must be performed, but the company must assign them to the channel members who add the most value for the cost. 3️. Design & Structure of Sales Channels Direct Sales (D2️C - Direct-to-Consumer): The manufacturer sells directly to the consumer without intermediaries. o Example: Brands like Dollar Shave Club sell online without retail stores. o Benefits: Higher profit margins, direct customer relationships, better brand control. Indirect Sales: Includes retailers, wholesalers, or agents as intermediaries. o Example: Electronics brands selling through retailers like Best Buy. o Advantages: Greater market access, established distribution networks. o Disadvantages: Less control over pricing and branding, reduced margins.  Takeaway: Companies choose between direct and indirect sales based on control, cost, and reach. 4️. Direct Sales (D2️C - Direct-to-Consumer) Definition: The manufacturer sells directly to the end consumer, eliminating intermediaries. Advantages: o Builds direct customer relationships. o Avoids retail markups, leading to better profit margins. o Provides better control over pricing and branding. Takeaway: D2C is profitable but requires strong marketing and logistics. 5️. Indirect Sales Definition: Products are sold through retailers, wholesalers, or agents. Advantages: o Lower operational costs for manufacturers. o Easier market access (more retail locations). Disadvantages: o Less control over branding, pricing, and customer experience. o Retailers take a cut, reducing profit margins. Takeaway: Indirect sales expand reach but limit control and profitability. 6. Role of Channel Intermediaries Purpose: o Help products reach more customers at a lower cost than direct sales. o Distribute products efficiently by leveraging market knowledge. Challenges: o Loss of control over pricing and branding. o Margin reduction due to commissions. Takeaway: Intermediaries provide cost-effective market coverage but reduce manufacturer control. 7. Width of Sales Channels Definition: The number of sales channels a company uses at the same time. Types:  o Exclusive Distribution: Limited, high-end retailers (e.g., Rolex). o Selective Distribution: Carefully chosen retailers (e.g., Apple). o Intensive Distribution: Available in as many locations as possible (e.g., Coca-Cola). Takeaway: Companies balance availability vs. control when selecting distribution width. 8. E-Commerce & Online Retailing Definition: Business transactions conducted electronically instead of physical stores. Types of E-Commerce: o B2️B (Business-to-Business): Transactions between companies (e.g., Alibaba). o B2️C (Business-to-Consumer): Online retailing (e.g., Amazon). o B2️G (Business-to-Government): Companies providing services to governments. o C2️C (Consumer-to-Consumer): Peer-to-peer transactions (e.g., eBay, Vinted). Takeaway: E-commerce reduces costs and increases convenience for consumers. 9. Purchase Process Evolution (Traditional vs. Online) Old Process: o Supplier Selection → Product Selection → Product Purchasing. o Customers visit stores, browse, and buy products. New Process (Online): o Product Selection ↔ Supplier Selection → Product Purchasing. o Customers search online, compare options, then buy from the best supplier. Takeaway: The customer journey has changed, with online searches shaping buying decisions. 1️0. Conversion Funnel Definition: Describes certain paths customers should go through and preferably not leave until completing a purchase. Stages: o Internet/Search Engine: Customer begins searching for a product. o Landing Page: Customer arrives at an online store. o Product Detail Page: Customer views a specific item. o Shopping Basket: Customer adds the product to their cart. o Checkout: Customer completes the purchase.  Conversion Optimization: o Increasing the conversion rate (the percentage of visitors who complete a purchase). Takeaway: Not every visitor buys—optimizing the funnel increases conversions. 1️1️. Channel Development Definition: The evolution of sales channels based on technological and consumer behavior changes. Types of Channel Strategies: 1. Single Channel: Selling through only one channel (e.g., physical store only). 2. Multi-Channel: Using multiple channels, but they operate separately (e.g., separate in-store and online sales). 3. Cross-Channel: Channels are connected, allowing actions across them (e.g., buying online, picking up in-store). 4. Omni-Channel: Full integration of all channels for a seamless experience. Takeaway: Businesses are moving towards integrated, seamless shopping experiences. Final Thoughts Sales channels are essential for getting products to customers efficiently. Tasks in sales must be assigned strategically to maximize cost-effectiveness. Companies choose between direct and indirect sales based on control, cost, and reach. The digital shift has changed purchase behavior, requiring brands to optimize online sales channels. The conversion funnel helps businesses track and improve customer journeys. Channel development is ongoing, with more companies integrating online and offline experiences. 5️. PRODUCT 1️. Three Levels of a Product 1. Core Customer Value: o What is the buyer really buying? o Example: A smartphone’s core value is communication and connectivity. 2. Actual Product: o Includes features, design, quality, brand name, and packaging. o Example: The Apple iPhone’s design, brand, and user interface.  3. Augmented Product: o Built around the actual product by offering additional consumer services and benefits. o Examples: ▪ AppleCare for iPhones (extended warranty). ▪ Free installation service for furniture. Takeaway: Each level adds more value, making the product more appealing to consumers. 2️. Market Offering Classifications A. Durability & Tangibility Products can be categorized based on how long they last and whether they are tangible (physical) or intangible (services). 1. Non-Durable Goods (FMCGs - Fast Moving Consumer Goods): o Consumed quickly, frequently repurchased. o Examples: Soft drinks, groceries, toothpaste. 2. Durable Goods: o Used over time, require more consumer involvement in purchase decisions. o Examples: Cars, washing machines, furniture. 3. Services: o Intangible, perishable, and require customer interaction. o Examples: Banking, education, healthcare. B. Consumer Goods (For Individual Use) 1. Convenience Goods: o Frequently purchased, require little effort. o Examples: Milk, chewing gum, newspapers. 2. Shopping Goods: o Purchased less frequently, compared on price, quality, and style. o Examples: Clothes, electronics, furniture. 3. Specialty Goods: o High-end, unique products; consumers make special efforts to buy. o Examples: Luxury watches, sports cars, designer fashion. 4. Unsought Goods: o Not actively sought by consumers; require active selling. o Examples: Life insurance, funeral services, blood donation. C. Industrial Goods (For Business Use) 1. Materials & Parts: o Raw materials and manufactured components. o Examples: Steel, glass, computer chips. 2. Capital Items: o Long-lasting goods used in production. o Examples: Machinery, factory equipment. 3. Supplies & Business Services: o Maintenance, repair, and operational services. o Examples: Cleaning services, consulting firms. Takeaway: The same product can be consumer or industrial, depending on its intended use. 3️. Branding & Brand Value Definition: A brand is a name, term, symbol, or design that identifies a seller’s product and differentiates it from competitors. Brand Value: The total financial worth of a brand (often exceeds physical assets). Why Branding is Important: o Ensures consistent quality for customers. o Creates an emotional connection (loyalty, trust). o Adds financial value to a company (brand equity). Example – McDonald's Brand Value: o “If every building and asset were destroyed, we could rebuild quickly due to the value of our brand.” o This highlights how branding can be more valuable than physical assets. Takeaway: A strong brand is a long-term business asset that influences customer perception and business success. 4️. Value-Added Services (VAS) Definition: Additional services beyond the core product that increase customer satisfaction and differentiate a brand. Examples of VAS: o For transportation companies: Customs/tax services, tracking. o For electronics: Extended warranties, customer support. o For retail: Gift wrapping, personal shopping assistance.  Takeaway: VAS helps companies stand out and increase customer loyalty by enhancing the overall product experience. Final Thoughts Understanding product levels (core, actual, augmented) helps businesses create value. Durability and tangibility influence product classification and how they are marketed. Branding is crucial for differentiation, recognition, and trust. Value-added services give companies a competitive edge by enhancing customer experience. 6. PROMOTION 1️. Promotion Mix & Communication Policy Definition: The promotion mix is the specific blend of promotion tools a company uses to persuasively communicate customer value and build relationships. Communication Policy: Involves marketing instruments that serve as carriers of company information targeted at the sales market. Elements of Communication Links in Value Creation: 1. Creating Value Propositions: Designing products and services, setting a price. 2. Communicating Potential Value: Managing customer communication. 3. Delivering Value: Through sales, service environments, and logistics. Takeaway: Promotion ensures that customers perceive and understand product value effectively. 2️. Communication Models A. One-Step Communication Model Direct transmission of information from a sender to a receiver. Example: A salesperson explaining a product to a customer. Key Insight: The sender must ensure the message is clearly decoded by the receiver. B. Two-Step Flow Model Information is first received by opinion leaders, who then influence others. Example: A YouTuber reviews a running shoe → Their followers decide to buy it. Key Insight: Opinion leaders mediate between mass communication and the target audience. Takeaway: Marketing messages can be direct or spread through influential individuals. 3️. Goals of Communication Policy Functions: 1. Coordination (ensuring marketing aligns with company goals). 2. Motivation (engaging customers and employees). 3. Steering (guiding consumer behavior). 4. Control (measuring effectiveness). Two Categories of Communication Goals: 1. Economic Goals: Sales, revenue, profit growth. 2. Psychographic Goals: Brand awareness, image, loyalty, customer engagement. Takeaway: Effective communication drives sales and brand reputation. 4️. Psychographic Goals of Communication Policy Key Aspects: 1. Awareness: Consumers must know a product exists. 2. Attitude: Consumers develop a positive or negative opinion. 3. Differentiation: Helps brands stand out in competitive markets. 4. (Re-)Purchase Intention: Happy customers return and recommend. Takeaway: Communication shapes customer perception and loyalty. 5️. Integration in Communication Policy Definition: Ensuring all communication tools work together to create a consistent message. Types of Integration: 1. Temporal Integration: Marketing messages support each other over time. 2. Formal Integration: Consistent design and branding improve recognition. 3. Content Integration: Ensuring all marketing messages are aligned in meaning. Example: Apple maintains a consistent design and branding across all its products and ads. Takeaway: Integrated communication builds brand familiarity and trust. 6. Integrated Marketing Communications (IMC) Definition: The process of carefully coordinating all communication channels to deliver a clear, consistent, and compelling message about the company and its products.  Why It Matters: o Ensures all messages align across different marketing tools. o Avoids confusion caused by mixed messages in different platforms. o Strengthens brand identity and increases effectiveness. Takeaway: IMC blends various promotion strategies into a unified brand message. 7. Communication Strategies: Push vs. Pull Push Strategy: o The company pushes its products through intermediaries (e.g., wholesalers, retailers). o Example: Personal selling and trade promotions encourage retailers to stock products. Pull Strategy: o The company directly promotes to consumers, creating demand that “pulls” products through retailers. o Example: Strong advertising campaigns create consumer demand for a product (e.g., PlayStation pre-orders). Takeaway: Many companies combine both strategies for maximum success. 8. Communication Instruments (Marketing Tools) Above-the-Line (ATL) Marketing: Classic marketing, recognized by everybody (TV, radio, billboards, print). Below-the-Line (BTL) Marketing: Alternative marketing, mainly visible only to the intended target groups (events, sponsorships, product placement). Takeaway: Companies use a mix of marketing tools to reach different audiences. 9. Main Instruments (Mass Communication Predominantly) A. Advertising Paid media to promote ideas, goods, or services. Examples: Print ads, TV commercials, online display ads. B. Sales Promotion Short-term incentives to boost sales. Examples: Coupons, discounts, contests. C. Events and Experiences Company-sponsored activities to create brand engagement. Examples: Festivals, trade fairs, sports sponsorships. D. Public Relations and Publicity  Managing a company’s public image. Examples: Press releases, speeches, lobbying. Takeaway: Advertising builds brand awareness, while sales promotions trigger immediate purchases. 1️0. Main Instruments (Online Communication Predominantly) A. Word-of-Mouth Marketing Personal recommendations are more credible than traditional ads. Example: Referral programs, product reviews, influencer marketing. B. Online & Social Media Marketing Engaging customers through online platforms in order to raise awareness, improve image. Example: Social media campaigns, blog content, search engine marketing. Takeaway: Digital marketing drives online visibility and engagement. 1️1️. Main Instruments (Personal 1️-to-1️ Communication Predominantly) C. Direct Marketing Communicating directly with customers via email, messages, or mail. Example: Email campaigns, newsletters, targeted promotions. D. Personal Selling Face-to-face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions, and procuring orders. Today’s focus is often more on customer service rather than personal selling. Example: Sales representatives in stores, trade shows, corporate sales meetings. Takeaway: Personal selling builds trust and long-term relationships. 1️2️. Paid & Organic Content in Social Media Paid Content: o Reaches a larger audience. o More targeting options. o Plannable and measurable. Organic Content: o Based on relationship building, quality content, and customer service. o Algorithm changes have made it highly competitive. Takeaway: Paid content amplifies reach, while organic content fosters authenticity. 1️3️. 4️ + 3️ P – Additional Instruments in Service Marketing A. Process Smooth, efficient, and customer-friendly journey. Involved in delivering products and services. Standards exist to deliver excellent customer experience. Example: When choosing a hotel, you evaluate the hotel’s appearance, staff behavior, and reviews before booking. B. People Employees are critical in service industries. Example: Customer service in airlines or hospitality industries influences satisfaction. C. Physical Evidence Tangible cues help customers evaluate services. Example: A well-maintained office or stylish restaurant decor reassures quality. 1️4️. Physical Evidence in Services Marketing We don’t know how good a service is until we experience it. Physical evidence helps reduce uncertainty. Example: A luxury spa’s ambiance reassures customers of its high-quality service. Takeaway: Tangible aspects help customers trust service quality before purchase. Final Thoughts Promotion plays a crucial role in the marketing mix by ensuring customers perceive and understand product value effectively. Companies use multiple communication strategies (push & pull) and integrate traditional and digital marketing to maximize impact. Personal communication (word-of-mouth, influencers, direct selling) builds trust, while mass communication (advertising, PR, social media) increases reach. Paid content ensures wider reach and precise targeting, while organic content builds long-term customer relationships and trust. In service marketing, process, people, and physical evidence are essential in shaping the customer experience and reducing uncertainty. Integrated marketing communications (IMC) ensure all promotional efforts are aligned, creating a consistent and recognizable brand image. Takeaway: A well-planned promotion strategy combines various communication tools, ensuring that messages are delivered effectively to the right audience while fostering brand awareness, customer engagement, and loyalty. 7 CONTROL 1️. Four Functions of Marketing Controlling Definition: Marketing control ensures the effectiveness and efficiency of marketing activities. Key Functions: 1. Planning Function – Supports strategic and operational marketing planning. 2. Information Function – Supplies focused marketing data for decision- making. 3. Coordination Function – Manages interfaces between different departments. 4. Control Function – Evaluates all marketing activities to ensure success. Takeaway: Marketing control aligns marketing strategies with business goals to maximize efficiency and impact. 2️. Marketing Metrics & Usage Definition: A marketing metric is a measuring system that quantifies trends, dynamics, or characteristics of marketing performance. Purpose: o Supports decision-making in marketing. o Demonstrates marketing's value and holds managers accountable. o Optimizes strengths and weaknesses in marketing efforts. Usage: o Helps businesses track performance over time. o Guides budget allocation and marketing strategy adjustments. o Ensures ROI measurement for different campaigns. Example Metrics: o Market Share: Evaluates brand position relative to competitors. o Customer Lifetime Value (CLV): Measures long-term profitability of customers. o Brand Equity: Determines brand strength in the market. Takeaway: Using a mix of metrics provides a comprehensive view of marketing performance. 3️. Satisfaction-Profit Chain as a Basis for Control Concept: There is a direct link between customer satisfaction and profitability. How It Works: o Satisfied customers → Higher retention → Increased profitability. o Dissatisfied customers → Lower retention → Revenue loss. Control Approach:  o 1️) Pre-Economic Control: Focuses on non-financial goals, such as customer perception and satisfaction. o 2️) Economic Control: Evaluates financial outcomes, including revenue, profits, and cost efficiency. o → Integrated Control: Combines both psychological (customer-based) and economic (financial-based) metrics. Supporting Tools: o Scoring Models: Assess customer value based on defined criteria. o Portfolio Analysis: Categorizes customers based on profitability and strategic importance. Takeaway: Marketing control should balance psychological and economic factors to drive long-term success. 4️. The Kano Model for Customer Satisfaction Definition: A framework to understand how different product attributes influence customer satisfaction. Three Types of Product Attributes: 1. Basic Factors: Essential but expected (e.g., a clean hotel room). 2. Performance Factors: Directly influence satisfaction and comparison (e.g., Wi-Fi speed in a hotel). 3. Delight Factors: Unexpected features that create excitement (e.g., free champagne in a hotel room). Takeaway: The Kano model helps businesses prioritize customer expectations to improve satisfaction. 5️. Net Promoter Score (NPS) Definition: A customer loyalty metric based on how likely customers are to recommend a company. Measurement: Customers rate their likelihood to recommend on a scale of 0-1️0. o Promoters (9-1️0): Highly satisfied, likely to recommend. o Passives (7-8): Satisfied but not enthusiastic. o Detractors (0-6): Unhappy customers who may damage brand reputation. Formula: NPS=%Promoters−%DetractorsNPS = \% \text{Promoters} - \% \text{Detractors}NPS=%Promoters−%Detractors Takeaway: NPS is a quick and easy way to measure customer loyalty. 6. Strengths & Problems of NPS Strengths:  Easy to collect – Requires only one question. Provides a simple, clear metric for customer satisfaction. Correlates with business growth and loyalty. Problems: Doesn’t provide deep insights into why customers give certain scores. Similar scores can have different meanings (e.g., different distributions of promoters/detractors). Cultural and personality differences can affect results (e.g., some cultures give lower ratings overall). Takeaway: While NPS is useful, it should be supplemented with other metrics for a complete picture. 7. ABC Analysis Definition: A method to classify customers or products based on their revenue or contribution margin. Categories: o A Customers: High-value, frequent buyers. o B Customers: Medium-value, occasional buyers. o C Customers: Low-value, infrequent buyers. Purpose: o Focus marketing efforts on high-value customers. o Adjust pricing and promotions for different customer groups. Takeaway: Not all customers are equally profitable—ABC analysis helps prioritize resources. 8. Customer Contribution Margin Analysis Definition: Evaluates how much profit each customer or customer group generates. Formula: Contribution Margin=Price−Variable Costs\text{Contribution Margin} = \text{Price} - \text{Variable Costs}Contribution Margin=Price−Variable Costs Purpose: o Identifies which customers are most profitable. o Helps businesses allocate resources efficiently. o Guides pricing and discount strategies. Takeaway: Understanding customer profitability ensures efficient resource allocation. 9. Common Marketing KPIs – Customer Lifetime Value (CLV) Definition: The total predicted revenue a customer generates throughout their relationship with a business. Formula: Simple CLV=Average Transaction Size×Number of Transactions×Retention Period\te xt{Simple CLV} = \text{Average Transaction Size} \times \text{Number of Transactions} \times \text{Retention Period}Simple CLV=Average Transaction Size×Number of Transactions×Retention P eriod Example: A coffee shop customer buys 1️00 coffees per year at €4️ each for 5️ years → CLV = €2️,000. Importance: o Helps determine how much a company should invest in customer retention. o Shifts focus from short-term profits to long-term value. Takeaway: CLV guides customer acquisition and retention strategies. 1️0. Integrated Control System Definition: A comprehensive framework linking pre-economic (psychological) and economic levels of control. Necessity of Interdependency Analysis: o Customer perception (pre-economic level) directly impacts financial performance (economic level). o One-dimensional control – Uses scoring models to evaluate customer satisfaction based on single measures. o Two-dimensional control – Uses customer portfolio analysis, considering both satisfaction and profitability. Why It’s Needed: o Single metrics don’t provide a complete picture of marketing effectiveness. o Customer satisfaction, retention, and profitability must be analyzed together. Takeaway: An integrated control system connects customer experience with business outcomes, ensuring a well-rounded marketing strategy. Final Thoughts Marketing control ensures that marketing strategies are effective and aligned with business objectives. Customer satisfaction directly impacts profitability, making measurement tools like the Satisfaction-Profit Chain and Kano Model essential.  KPIs like NPS, CLV, and ABC Analysis help businesses understand customer value and loyalty. Integrated control systems link customer experience with financial success, ensuring a well-rounded marketing strategy. Takeaway: Marketing control helps businesses optimize performance, prioritize resources, and drive long-term success. 8. B2️B Marketing 1️. Basic Types of Purchasing Decisions Consumer Markets: o Individual Purchasing: Consumer decisions (e.g., personal shopping). o Collective Purchasing: Family decisions, such as in private households. Organizational Markets: o Individual Purchasing: Buyer’s decision – Individual purchasing decisions in organizations. o Collective Purchasing: Committee decisions – Collective purchasing decisions in organizations. Takeaway: In B2B, purchasing decisions are often collective, involving multiple stakeholders. 2️. Consumer Markets & Buyer Behavior Business Buyer Behavior: Refers to how organizations buy goods and services for use in production or resale. Business Buying Process: 1. Recognizing needs for products or services. 2. Researching suppliers and evaluating alternatives. 3. Making purchasing decisions based on evaluation criteria. Takeaway: The B2B buying process is more complex than consumer purchases, involving multiple steps and decision-makers. 3️. Consumer vs. Organizational Buying Behavior Private Buying Behavior (B2️C) Anonymity of the market – Buyers often do not have relationships with sellers. Short-term relationships – Transactions are usually one-time or infrequent. Lower process orientation – Purchases are made quickly and informally. Low automation & formalization – Decisions are not structured. Usually individual decisions. Organizational Buying Behavior (B2️B) Transparent markets – More visibility of suppliers and competitors. Long-term relationships – Businesses prefer stable supplier relationships. Process-oriented – Procurement follows structured steps. High formalization & automation – Decisions are documented and supported by technology. Multiperson decisions (Buying Center). Takeaway: B2️B transactions are structured, involve multiple decision-makers, and prioritize long-term relationships. 4️. Market Structure & Demand in Business Markets Fewer but larger buyers – Unlike B2C, where there are millions of customers, B2B has fewer buyers, but they purchase in large quantities. Derived Demand: Demand for business goods depends on the demand for the final consumer product. o Example: If demand for laptops increases, the demand for Intel processors also rises. Inelastic Demand: The demand for many B2B products is not affected much by price changes in the short run. Fluctuating Demand: B2B demand varies more than B2️C because companies adjust production based on market trends. Takeaway: B2B markets are more concentrated and their demand patterns are dependent on consumer market trends. 5️. Industrial Goods Marketing in B2️B Definition: Industrial goods are products/services purchased by organizations to create other products or services. The Constitutive Core of Industrial Goods Marketing: o Customers are not private end customers but organizations. Example: A company buying steel to manufacture cars. Takeaway: B2B marketing focuses on products used in production processes rather than for direct consumption. 6. Model of Business Buyer Behavior Flow of Business Buying Behavior: o Environment: Market stimuli (e.g., price, marketing mix) and other external factors (e.g., economic, technological, political). o The Buying Organization:  ▪ Buying Center: Group of individuals involved in the purchasing process. ▪ Buying Decision Process: Steps leading to the final purchase. o Buyer Responses: ▪ Product/service choice, supplier selection, order quantity, delivery terms, payment conditions. Key Characteristics of Business Buyer Behavior: o The nature of the buying unit – More decision-makers involved. o Types of decisions – More complex than B2C purchases. o Decision process – Requires detailed evaluation and formal approval. o Marketing stimuli are adapted to fit B2B needs. Takeaway: Business buying behavior is structured, influenced by multiple factors, and involves different participants in decision-making. 7. Buying Center: Decision-Making Roles in B2️B The Buying Center includes all individuals involved in the purchasing decision: 1. Initiators – Recognize a need that requires a purchase. 2. Users – Use the product and define requirements. 3. Influencers – Provide information, set selection criteria. 4. Deciders – Approve the purchase and select suppliers. 5. Buyers – Handle negotiations and finalize contracts. 6. Gatekeepers – Control access to decision-makers (e.g., assistants, procurement officers). Takeaway: The Buying Center makes B2️B decisions complex, requiring marketers to target multiple stakeholders. 8. Institutional & Government Markets Institutional Markets Definition: Institutions such as schools, hospitals, nursing homes, and prisons that purchase goods and services to operate. Takeaway: Institutional buyers have specific needs, budget constraints, and long-term procurement contracts. Governmental Markets Key Characteristics: o Tend to favor domestic suppliers.  o Similar to consumer and business buyers – Influenced by environmental, organizational, interpersonal, and individual factors. o Highly regulated – Purchases are carefully monitored by external parties such as stakeholders, policymakers, and auditors. o Use a formal bidding process – Suppliers compete by submitting bids, and the lowest qualifying bid often wins. Takeaway: Government purchasing is highly structured, subject to scrutiny, and follows strict procurement processes. Final Thoughts B2️B marketing focuses on organizational buyers rather than individual consumers. Purchasing decisions involve multiple stakeholders, requiring marketers to navigate complex decision-making processes. Demand is derived from consumer markets, meaning businesses must anticipate market trends. B2️B buyers focus on efficiency, quality, and long-term supplier relationships rather than emotional purchasing. Institutional and government markets present unique challenges, including budget constraints and formal procurement processes. Takeaway: Successful B2B marketing requires a deep understanding of the decision- making process, strong relationship management, and tailored marketing strategies for different buyer types. 9. CONSUMER BEHAVIOR 1️. Consumer Behavior & Its Actors Definition: Consumer behavior is the study of how individuals and groups select, purchase, use, and dispose of goods and services to fulfill needs and desires. Key Actors in Consumer Behavior: o Consumer: The person who benefits from the product. o Purchaser: The person who actually buys the product (might not be the same as the consumer). o User: The person who uses the product (can be different from the consumer and purchaser). o Influencer: Someone who impacts the decision-making process (e.g., a social media influencer recommending a product). o Organizations or Groups: Businesses, families, or social groups that make purchasing decisions collectively. Takeaway: The purchaser, consumer, and user can be different people, making it crucial to understand all roles in marketing. 2️. Basic Types of Purchasing Decisions A. Individual Purchasing Decisions Consumer Markets: Individual consumers make personal decisions (e.g., buying a phone for personal use). Organizational Markets: Individual buyers in organizations make work-related decisions (e.g., an office manager buying printers). B. Collective Purchasing Decisions Consumer Markets: Families or households making joint purchasing decisions (e.g., choosing a vacation destination). Organizational Markets: Committee-based purchasing where multiple stakeholders decide (e.g., a procurement department selecting an IT supplier). Takeaway: Organizational purchasing is more structured and involves multiple decision-makers. 3️. The Stimulus-Response (SOR) Model How It Works: o Stimulus (S): External factors influencing the consumer (e.g., advertisements, promotions, cultural factors). o Organism (O): Internal processing of the stimulus (e.g., emotions, memory, perception). o Response (R): The consumer’s buying behavior (e.g., purchase decision, product preference). Takeaway: The SOR model helps explain how marketing stimuli influence consumer decisions. 4️. Activation Definition: Activation refers to the level of psychological and physiological alertness that influences consumer behavior. How It Works: o A certain level of activation improves attention, learning, and decision- making. o Too much activation can cause stress and reduce decision-making efficiency. Marketing Applications: o Advertisements with bright colors and loud sounds can increase activation. o Calm and soft visuals can reduce activation, making consumers feel relaxed (e.g., spa ads). Takeaway: Marketing strategies use activation to capture attention and guide decision-making. 5️. Emotion & Consumer Behavior  Definition: Emotions influence how consumers perceive, evaluate, and remember brands and products. Types of Emotional Influences: o Positive Emotions: Increase brand loyalty and willingness to pay. o Negative Emotions: Can create avoidance behavior or, in some cases, encourage purchases (e.g., fear-based insurance ads). Example: o Coca-Cola uses happiness and nostalgia in its branding to create emotional connections with consumers. Takeaway: Emotionally appealing marketing strategies can increase brand loyalty and influence purchasing decisions. 6. Learning & Memory in Consumer Behavior How Consumers Learn: o Classical Conditioning: Associating brands with emotions (e.g., Coca-Cola and happiness). o Operant Conditioning: Learning through rewards and punishments (e.g., loyalty programs). o Observational Learning: Learning by imitating others (e.g., influencer marketing). o Incidental Learning: Unintentional learning through repeated exposure (e.g., brand logos seen frequently in daily life). Memory’s Role: o Affects brand recall and recognition. o Shapes consumer preferences over time. Takeaway: Effective branding and advertising reinforce consumer learning and memory. 7. Culture & Subculture in Consumer Behavior Culture: The shared values, beliefs, and customs of a society that shape consumer behavior. Subculture: A smaller cultural group within a society that has distinct consumer preferences (e.g., youth culture, environmentalists). Example: In some cultures, status symbols like luxury cars are highly valued, while in others, minimalism and sustainability are preferred. Takeaway: Culture deeply influences purchasing habits, and marketers must adapt strategies accordingly. 8. Culture – Importance for International Marketing  Why Culture Matters in Global Marketing: o Consumers in different cultures have different expectations and preferences. o Advertising messages need to be culturally appropriate (e.g., colors and symbols can have different meanings). o Localization is essential – A marketing campaign that works in the U.S. might not work in Japan. Example: McDonald's adapts its menu to local tastes (e.g., McSpaghetti in the Philippines, McPaneer in India). Takeaway: Businesses must consider cultural differences when expanding globally. 9. Social Groups & Their Influence on Buying Behavior Norms: Accepted rules of behavior in a group. Roles: Expected behaviors associated with a social position (e.g., parents buying healthy food for their children). Cohesion: The strength of the connection within a group influences purchase decisions (e.g., peer pressure in teenagers). Status: Higher status groups influence buying behavior (e.g., people buying luxury brands to signal wealth). Takeaway: Social groups shape consumer preferences and purchasing decisions. 1️0. Social Class Structure & Buying Behavior Definition: A hierarchical division of society based on income, education, and occupation. How It Affects Buying Behavior: o Individuals want to express their social class through consumption. o Some people buy products that reflect the class they aspire to rather than their current status (e.g., luxury goods). o Social class influences where people shop, what brands they trust, and how they view money. Takeaway: Consumers buy products to reflect or enhance their social status. 1️1️. Personal Individual Consumer – Factors Influencing Buying Behavior Personal factors affecting purchases: o Age & Life Stage – Needs change over time. o Lifestyle & Personality – Extroverts and introverts buy different products. o Economic Status – Income levels dictate spending habits.  Takeaway: Personal characteristics directly shape buying behavior and product preferences. 1️2️. Buying Decision Behavior Types of Buying Behavior: o Complex Buying Behavior – High involvement, significant differences between brands (e.g., buying a car). o Dissonance-Reducing Buying Behavior – High involvement, few brand differences (e.g., flooring material). o Habitual Buying Behavior – Low involvement, little brand differentiation (e.g., groceries). o Variety-Seeking Buying Behavior – Low involvement, high brand differentiation (e.g., snacks). Takeaway: The buying decision process varies based on the complexity and importance of the purchase. 1️3️. Motivation & Consumer Involvement High-Involvement Decisions: Consumers research extensively and evaluate multiple options (e.g., buying a house). Low-Involvement Decisions: Consumers make quick decisions with minimal effort (e.g., buying gum). Takeaway: The level of involvement affects decision-making and marketing strategies. 1️4️. Buying Decision Process (One Sentence per Step) 1. Need Recognition: The consumer realizes they have a problem or need. 2. Information Search: The consumer looks for information about possible solutions. 3. Evaluation of Alternatives: The consumer compares different products and brands. 4. Purchase Decision: The consumer selects a product and makes a purchase. 5. Post-Purchase Behavior: The consumer assesses satisfaction, which influences future buying decisions. Takeaway: The buying decision process is structured, with each stage offering opportunities for marketing influence. Final Thoughts Consumer behavior is influenced by cultural, social, personal, and psychological factors. Consumers go through a structured decision-making process, which businesses can guide through marketing strategies.  Social groups, cultural norms, and economic status all shape purchasing behavior. Understanding consumer behavior helps marketers create better products, services, and advertising strategies. Takeaway: Businesses that understand consumer behavior can better predict trends, engage customers, and drive sales.