Marketing Principles PDF

Marketing principles session 1 : Introduction to the course and marketing marketing: the activity, set of institutions, and processes for creating, capturing, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large. ​ ​ →...

Marketing principles session 1 : Introduction to the course and marketing marketing: the activity, set of institutions, and processes for creating, capturing, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large. ​ ​ → not only about reputation ​ ​ → legitimize Value proposition: set of benefits offered by a company to its (potential) customers e.g. but how do companies figure out or design what benefits they should be offering ? What is a need ? EVOLUTION OF MARKETING OVER TIME Production era (Mid 1800s-1920s) The industrial Revolution Focused on: ​ Mass production ○​ large factories ○​ Machinery ○​ Assembly lines ​ Efficiency - produce more, reduce costs, sell more ​ Not so much on consumer needs, or how well the products were meeting them ​ informing that a product is existing ​ make people know that they can fulfill their needs Sales oriented era (1920-1940s) WWI, Great Depression = people were consuming less At the same time, manufacturing capacities were well-developed, and production was (too) high. Markets have also become intensified. Focused on: -​ Personal selling - sales people, door to door = persuasion -​ Advertising - television, radio Market-oriented era (1940-1990s) Post WWII Growing popularity of marketing departments, combining efforts of sales and advertising Focused on: -​ Improving offerings to consumer: product attributes, quality, convenience, price -​ Expanding ways of communicating to consumers: ads, TV,... Value- based era (1990-2010s): 21st century growth of internet, globalization Marketing is not just about discovering and meeting consumer needs. Consumers are also becoming increasingly tech savvy and have a lot of information at their disposal. How do we retain them? “Relational era” Focused on: -​ Competitive value offering - us vs competitors; what would make consumers choose us? -​ Long lasting relationships with consumers ex: customers can customize their own nike, Uniqlo capsule collection (adjust quickly to trends) MARKETING MIX The controllable set of decisions or activities that firms use to respond to and try to satisfy the needs of their target markets PRODUCT: CREATING VALUE ​ ​ ​ ​ ​ ​ ↓ ​ ​ ​ ​ ultimate value will depend on : ​ ​ ​ ​ ​ What they provide ​ ​ ​ ​ ​ How they are marketed ex: Stanley cup drinking water = satisfy basic need of thirst reusable bottles = vessel for bringing/ storing water on the go → reusable (more sustainable), unique product attributes (keep water cold or hot), plastic free (satisfy health concerns), durable (no need to buy multiple bottles over time)... PRICE: CAPTURING VALUE ​ what the buyer gives up in exchange for the product from the company → money, time, energy Pricing decisions must take into consideration: - buyer’s belief about the product’s value - price sensitivity of buyers - costs incurred by the company or producer PROMOTION: COMMUNICATING VALUE key purposes of promotion: Communicating a product’s benefits Educating customers about the product or its benefits Persuading or influencing customers to try a product Reminding customers about the product’s existence or its benefits Informing customers about new or alternative ways of using a product Nudging towards a purchase decision (stimulating action) Keep a durable relationship: nurturing customer loyalty e.g. outdoor ads → grab attention + reach the biggest audience possible + launch a new product reputation ; influencers → associate a brand to a person can be risky PLACE: DELIVERING VALUE revoir cours intro to business e.g. amazon biggest value is that products can be delivered in 24h MARKETING TODAY: THE 4 Ps IN 2024 HOMEWORK: a. Can you think of any businesses you’ve interacted with that (in your opinion) is approaching the topics of sustainability and social responsibility in a good way? What could other businesses learn from them? Recently, I have interacted with Ecoalf, a brand that is approaching sustainability and social responsibility in the best possible way. For Ecoalf, these principles are not just values but they are the core values of the brand. It is the identity of Ecoalf. This is obvious in their logo, slogan “there is no planet B” and actions. They produce clothes in a responsible way, by reusing plastic bottles and focusing on a circular economy model, which minimizes waste and promotes the use of recycled materials. Other businesses could learn from Ecoalf’s approach by making sustainability not just a part of their business, but a major segment of their brand’s identity. By clearly aligning values with actions, and measuring their impact, companies can turn sustainability into a true asset. Once you believe in it, you can turn it into a real impactful project. b. What about in a bad way? Why do you think it is bad? Conversely, Starbucks, despite their initiatives, is not fully addressing the environmental impact of their brand. Some improvements have been made in the past years such as ethical sourcing and greener stores but sustainability is still in competition with profits. For instance, while they promote the use of reusable cups and offer discounts for customers who bring their own, disposable cups remain the norm for the majority of their transactions. The company’s efforts to reduce plastic waste have been inconsistent, with many locations still relying on single-use plastic straws and lids. Additionally, Starbucks' approach to packaging and waste management often feels more like a promotion strategy than a concrete shift towards long-term sustainability. session 2: marketing with purpose → we focus on growing concerns about ethics and the environment most important environmental issues : climate change, air pollution, waste Are Europeans ready for fundamental changes in society in order to tackle environmental problems ? 80% feel big companies and the industries are not doing enough 67% feel citizens themselves are not doing enough most mentioned solutions: -​ changing the way we consume (33%) -​ changing the way we produce and trade (31%) CSR DEFINITIONS Corporate social responsibility is the responsibility of enterprises for their impacts on society. Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility. Entreprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders with the aim of : -​ maximising the creation of shared value for their owners/ shareholders -​ identifying, preventing and mitigating their possible adverse impacts -​ following the laws Why do we need to look at sustainability from a marketing POV ? -​ marketing is about value - we create value through marketing (products, services), we communicate value through marketing (ads, branding)... -​ marketing is about fulfilling customers demands and expectations: sustainable consumers trends -​ marketing is often the medium in which companies “craft” the image of themselves to the rest of the market (consumers, competitors…) and its reputation (media exposure and risk management…) -​ marketing is directly consumer facing Drivers that push brands to be purposeful and sustainable: How to “do” conscious and sustainable marketing → How can we incorporate conscious marketing within the company culture and business activities ? example: COTOPAXI consideration of all stakeholders stakeholders: various groups of people who might be affected or affect by a firm’s actions → different stakeholders = different characteristics = different priorities ​ ​ ​ ​ conscious leadership and culture The leaders of the firm must be dedicated to the vision of being socially conscious, responsible and foster this culture within the whole company. ethical decision making Make (corporate and strategic) decisions that are based on ethics and “morality” (a sense of “right” or “wrong”) … but not just within your cultural background: inclusivity, respect and diversity have to be a MUST! Contribute and help address societal, global, or individual consumer issues measuring positive, negative and neutral impacts of your decisions. greenwashing: the creation or propagation of an unfounded or misleading environmental image → deliberate corporate action with the presence of misleading elements, focused on the deception of stakeholders → when a company or organisation spends more time and money on marketing themselves as being sustainable than on actually minimising their environmental impact session 3: The marketing environment The marketing environment framework  -​ People whose needs are trying to be meet and satisfy -​ Past, current and potential Why do consumers matter ? They are who we are exchanging value with, as a company. Ultimately, their attitudes and decisions influence AND can be influenced by the actions of all different parts of the environment: our company, competitors, the economy, the environment… The immediate environment Factors that could potentially affect the immediate environment of a consumer (also affects the firm) 1.​ company capabilities 2.​ corporate partners 3.​ physical environment 4.​ competitors COMPANY CAPABILITIES -​ Company should strive to satisfy consumer needs in a way that is aligned with their own core competencies and capabilities -​ often examined in the form of a SWOT analysis the way a company delivers statues (i.e. their value proposition) should ideally align with their core competencies. CORPORATE PARTNERS Corporate partners are firms that work together with the focal firm. why do they matter? Firms cannot do everything on their own – they need to collaborate with other parties in order to perform and optimize their operational activities: products? -​ Producers of raw materials or ingredients (e;g. farmers) -​ manufacturers or factories – where production happens -​ suppliers of other materials needed for product (e.g. packaging) place? -​ Distributors, wholesalers, retailers, resellers—help bring the product to consumers -​ Warehousing and logistics service—storing products and increasing accessibility to consumers -​ Delivery services Promotion? -​ Advertising, PR, or communication agencies -​ Brand ambassadors, social media collaborators, influencers Price? -​ Financial intermediaries and provider of financial services -​ payment systems (paypal, Stripe, Klarna) In marketing we can’t create needs but we can push people to do/ need something PHYSICAL ENVIRONMENT -​ The geographical, natural space that we operate in: land, air, and living organisms  -​ - focus on the interaction between environment and consumption why does it matter ? Consumption of products is influenced by how the physical environment is. Products are also influenced by how they are used in the physical environment + products can also influence the physical environment. COMPETITION Other firms operating in a similar field/scope, who offer (similar) benefits for satisfying consumer needs Why do they matter? -​ “Either they buy from us, or they buy from someone else” -​ Competitors are basically our “substitutes” -​ Competitors can set the bar or change the rules of the game -​ Competitors can influence our 4 Ps -​ Competitors can influence consumers’ perceptions or expectations competitor: any organisation fulfilling the same need as we do and to the same target customers. market: the set of all actual and potential customers with a given need The Macroenvironmental environment macroenvironmental factors: aspects of the external environment that affect a company’s business such as economic situation, social trends, technology… political and legal factors Influence exerted by the central government, governmental organizations, political entities, etc. Significant overlap with legal issues and regulations Any legislations or laws that companies must fully understand and comply with Fair competition Consumer protection Industry-specific regulations why does it matter? -​ political factors can limit the scope (=portée) of activities a company can do -​ legislations can affect pricing schemes (or other aspects of the 4P) economic factors Macroeconomic factors that affect the way consumers buy, or how they spend their money: Inflation Fluctuation in foreign currency exchange rates Interest rates why does it matter?? Bottom line, macroeconomic factors affect how much money people have to spend, or even their willingness to spend that money e.g. the lipstick effect socio-cultural factors Factors within cultures and societies that affect people’s thoughts, feelings, behaviors, and preferences: Culture Demographics Social trends Why do they matter? They shape and influence what, why, how, where, and when we buy -​ Demographics: People consume differently based on their demographics (kids vs. adults, …) -​ Income: Generally would translate to different purchasing powers or preferences for type of products to consume ​ CULTURE Shared meanings, beliefs, morals, values, and customs of a group of people—typically passed down from generation to generation, and is learned over time. Companies must find a balance between creating universal appeal (across cultures), while also potentially catering to the needs of specific cultures (within cultures) Culture can be found in many different societal groups: Country Regional School, other types of community… ​ DEMOGRAPHICS Information about the characteristics of the human population or segments (groups). Typical demographic variables: Age, or Generational cohorts Gender Ethnicity Education Income Why do they matter? Demographic variables are often used to identify different consumer groups or segments ​ SOCIAL TRENDS Ideas or activities that the current society perceives to be important or valuable why does it matter? They represent what consumers today value, which would then affect how they would consume 2020s: -​ Social media -​ “Instant” everything -​ greater focus on health and sustainability Technological and environmental infrastructure Developments in terms of technology or infrastructure within a market. Why do they matter? Both technology and infrastructure would affect how a firm can innovate or deliver value: Product? In terms of what you can offer Promotion In terms of how advertising is done Price In terms of how dynamic prices have become now In terms of how consumers now have more access to historical price information Place In terms of how goods and services are delivered or made available Faster deliveries, greater accessibility Growth of omnichannel retail Usage of alternative channels session 4: consumer behavior we will study the center of the marketing environment framework → consumers buying something → messy process consumer decision process model Represents the steps that consumers go through before, during and after making purchases Need Recognition What is a need ? There are different types of needs: -​ innate (physical) needs → basic food, clothes… -​ completely new consumption experience/ need -​ existence of new products -​ related product purchase → airpods, ipads; apple environment -​ market-induced needs -​ dissatisfaction with current product or situation → battery iphone Maslow’s hierarchy of needs why is it represented as a pyramid? Certain basic needs must be met before individuals can progress up the hierarchy to more complex needs information search Evaluate alternatives How do consumers organize or categorize alternatives in their minds ? factors affecting information search & evaluation phases example tesla PERCEIVED BENEFIT vs. COST of search Is it worth the time and effort to engage in extensive information search/thinking? RISK (both actual and perceived) PERFORMANCE RISK → Hours running on battery, durability, comfort - perceived danger related to functionality of attributes FINANCIAL RISK → Car price, cost of maintenance - initial cost associated with the purchase, or any other associated costs PHYSIOLOGICAL OR SAFETY RISK → Battery malfunctioning - fear of actual harm, in case the product does not perform properly PSYCHOLOGICAL RISK → “I care about the environment, not using gas” - risk associated with how we feel given images conveyed by the purchase SOCIAL RISK → Seen as bougie, +/- - risk associated with how we think of other people’s opinion about our purchase Purchase & consumption ​ consideration 1: not all intentions (needs) materialize into actual purchase to maximize chances of purchase: -​ ensuring availability of the product -​ providing extensive delivery options -​ providing reminders (or discounts) for things that are left in the cart ​ consideration 2: most of the influence that a marketer can exert on a consumer will actually happen before we get to the purchase stage -​ need recognition : foster need – remind product exists, launch new variations/ flavors, new usage (e.g. starbucks)  -​ information search: provide extensive information (scientific evidence, tutorials, testimonials) to make consumers more convinced Evaluation of alternatives: Build brand awareness → become “top of mind” (e.g. in a restaurant we ask for a vichy catalan instead of a sparkling water) -​ becomes strongly associated with the product -​ especially important for lesser-known brands Post-consumption behavior If the purchase is already done, why do marketers care about post-consumption/ purchase behavior ?? Post-purchase behavior have possible consequences for the firm: ​ (Dis)satisfaction Actual experience during consumption vs. Expectations before consumption Negative consequences: bad reviews, negative word of mouth ​ Repeat purchase and loyalty Allows firm to capitalize on actual/current customers (vs. focusing on new ones) Only happens if the consumer is satisfied Loyalty = you may always be in their evoked set (always considered) ​ Cognitive dissonance Internal mental conflict that happens when our beliefs don’t align with what’s actually happening. What can firms do to try to increase likelihood of positive post-purchase behaviors? -​ setting realistic expectations -​ standing behind the product (e.g Le Creuset et leur garantie à vie) -​ provide information for proper usage of the product (incorrect use of a product can lead to dissatisfaction) What can firms do to try to increase likelihood of positive post-purchase behaviors ? -​ Encourage customers to give feedback, and listen to them (and actually do something about it!!) -​ help consumers resolve cognitive dissonance allow “canceling” of the purchase FACTORS AFFECTING THE CONSUMER DECISION PROCESS Different factors can play a role and ultimately influence the consumer decision process steps Psychological factors Attitude and perception Someone’s evaluation of his/her feelings and behavioral tendencies to an idea. Related to how we assign meaning to things like colors, symbols, packaging. etc ? “How do you feel about Apple ?” “How do you feel about climate change?” → influenced by learning or memory Typically a result of past information or experiences Lifestyle The way a consumer lives and spends their money (actual vs perceived) Social factors People who exist in our external environment, whose decisions and behaviors affect what we do and choose to consume. Reference groups People that we use as a basis of comparison or reference regarding our feelings, beliefs, and behaviors. Situational factors Factors that are specific to the context, that might actually override or influence the other factors (psychological and social). Generally, they are temporary in nature. Temporal states Our state of mind at a particular point in time sensory situations related to how the 5 senses are activated or influenced: visual, auditory, olfactory, tactile and taste purchase situations Special occasions might make people consume differently → ex: je vais pas acheter une porsche si j’ai 3 enfants article : “How people decide what to buy lies in the messy middle of the purchase journey” we found that people deal with scale and complexity by using cognitive biases encoded deep in their psychology Heuristics and biases Mental shortcuts used to make quick judgements or decisions → ultimately to reduce our cognitive load (how much effort/thinking/time) ​ rule of thumb ​ generalizations ​ beliefs based on past experiences, or information cf slides for examples session 5: Market research study case: General Mills marketing research: set of techniques and principles for systematically collecting, recording, analyzing and interpreting data that can aid decision makers who are involved in marketing goods, services or ideas. why do firms do marketing research ? It helps them understand:  ​ The environment: market/region, size, performance, potential… ​ Their competition: who they are, what they do, how to anticipate/respond? ​ Their consumer: their attitudes, current opinions and behavior ​ ​ ​ development of their strategy : data driven, reduced uncertainty or risk types of data: How can we get primary data ? ​ Observation and ethnographic research observation: collecting data by simply observing relevant people in specific situations (without questioning) → it allows the researcher to see what their subjects really do when confronted with choices or situations without any interference → no interaction= what you see is what you get ethnographic research: observational technique where trained researchers watch and interact with consumers in their “natural” environments → allows for direct interaction and further probing/questioning for our study case: observation and ethnographic research “Natural habitat” - where would we find Gen Zs? → high schools, universities, shopping malls, cinemas → go to school cafeterias and simply observe what type of snacks student normally buy at the vending machines → collaborate with the school to offer some samples of the developed product and ask gen z students directly about their experience with the product (during lecture breaks…) → follow group of Gen Z over time Benefits of observation and ethno. research -​ Can see how consumers naturally behave or react with a specific product or in a specific situation (with as minimal interference as possible) -​ “Action often speaks louder than words” -​ Not relying so much on recall or self-report – we focus more on behavior Disadvantages or challenges? -​ If we are only observing a “what” and not so much the “how” or “why” -​ Findings would never be very detailed, unless combined with follow-up Q&A -​ Requires collaboration with certain parties (e.g. school) -​ For proper ethnographic research with samples and Q&A, we need the product to be developed already  ​ focus groups Planned, focused discussion involving similar people designed to obtain qualitative data regarding the perceptions and feelings about products, services, and organizations -​ Typically 8-12 carefully screened participants, compensated with an incentive -​ Crucial role of moderator: asking questions, facilitating, maintaining a relaxed and open atmosphere, and probing when necessary + must maintain a neutral attitude and not nudge/lead participants! -​ Recorded, and responses are further transcribed and analyzed -​ Preparation is key: questions can make or break the session ​ In-depth interviews Similar to focus groups, but conducted one-to-one Often more costly vs. focus group in terms of time, but has major advantages: Allows for more detailed probing and follow-ups Avoid influence of peer-pressure in a social setting Could also be done with experts (not just consumers) for our case: How can we get primary data? ​ Survey Obtain information based on questioning respondents in a structured, standardized manner (e.g., using a written form, online form, telephone questioning) → Inquire about consumer’s opinion, attitude, preference, behavior, etc. cf slides for do’s and don’t for survey questions Panel based primary research: Companies often invite consumers to be part of their panel of testers Normally done for product testing Invited consumers try out prototypes of new products They then provide information about their experience, which are then used for improving the product prior to launch Can use surveys for data collection  ​ Experiments Systematically manipulating one or more variables to determine which variable have a causal effect on other variables Also known as : -​ A/B testing -​ Brand lift studies -​ Randomized control trials session 6: Strategic planning SAMPLING sample: segment of the population selected for marketing research to represent the population as a whole Decision on sampling has to be made for ALL types research methods How to select a sample ? Non-probability samples Samples are not randomly selected from the population, but more based on practicality or simplicity  Convenience sampling: recruiting participants based on availability or accessibility Purposive sampling: choosing participants consciously depending on the specific purpose of the research Snowball or referral sampling: already recruited participants are asked to refer others to partake in the study too The 5 V's of big data -- velocity, volume, value, variety and veracity -- are the five main and innate characteristics of big data. Volume: the sheer amount of data that is being collected This is the most valuable, but also difficult feature of big data. Because the amount data is so large—the question then becomes more about how to store, process, analyze, and make sense of such large amounts of data Variety: the different types of data that has been collected Big data would then require processing and combining all of these different data types, and extracting meaning from them Velocity: the speed at which the data can be gathered Big data is collected continuously, meaning that data comes in at high frequency. Marketers need to promptly respond to this data. Veracity: the variety inherent in the data, in terms of quality, trustworthiness, and timeliness Not all data collected will bring the same level of insights, and it is then the job of the marketer and analytical team to try to discern its accuracy, authenticity, quality, and so on before deriving insights from them. Value: the degree to which they bring insights that are critical for marketers.  Big data, while nice to have, can be extremely complicated and costly to collect and analyze, so marketers must know what they want to do with the data to ensure the value to be derived from it. Marketing plan: comprehensive plan outlining an analysis of the firm’s current marketing situation, opportunities and threats, marketing objectives and strategy specified in terms of the 4 Ps, and projected income/financial statements step 1: business strategy, mission, vision and values corporate strategy : e.g. Nike’s mission → to bring inspiration and innovation to every athlete* (* if you have a body, you are an athlete) , Amazon (ballerina) → company’s vision statement is to be earth’s most customer centric company The mission is how a company puts its purpose and vision into action.Company values define how your company does business. step 2: situational analysis SWOT ANALYSIS step 3: Identify and evaluate opportunities STP (SEGMENTATION, TARGETING, and POSITIONING) Model How can companies optimize their efforts and maximize the way in which they deliver value to consumers ? step 4: Implement marketing mix and allocate resources At this point, a firm must already understand its internal capabilities/strengths (SW), how it fares or can be affected by external factors (PESTLE/OT), and it has identified specific opportunities by focusing on specific segments within the market. Then, the real action begins: ​ Must develop and eventually implement the marketing mix (product, price, place, promotion) for their offerings, on the basis of what they believe the target markets will value. ​ Must also make decisions about allocation of the scarce resources that they have to their various offerings. step 5: evaluate performance using marketing metrics Evaluate the results of the strategy and implementation program using a variety of marketing or financial performance metrics ​ Revenue or profit ​ Volume of sales ​ Reach,...