MKTG 317 Final Review PDF

MKTG 317 FINAL REVIEW Dictionary definition: -​ The act or process of selling or purchasing -​ The process or technique of promoting and selling a product or service -​ An aggregate of functions involved in moving goods from producer to consumer Layperson definition: -​ Selling a...

MKTG 317 FINAL REVIEW Dictionary definition: -​ The act or process of selling or purchasing -​ The process or technique of promoting and selling a product or service -​ An aggregate of functions involved in moving goods from producer to consumer Layperson definition: -​ Selling and advertising -​ Pressure and coercion 1935: -​ Marketing is the performance of business activities that direct the goods and services from producers to consumers. 1985: -​ Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives. 2004: -​ Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. 2007: -​ Marketing is 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. Academic literature: -​ McCarthy (1983) -​ Micro –performance of activities which seek to accomplish organizational objectives -​ Macro – a social process which directs an economy's flow of goods and services from producers to consumers in a way which effectively matches supply and demand and accomplishes the objectives of society. -​ Kotler (2001) -​ The science and art of exploring, creating and delivering value to satisfy needs of a target market at a profit. -​ Winer and Dhar (2011) -​ The set of activities designed to influence choice whenever an individual or an organization has a choice to make. Exchange relationships: -​ Relational continuum -​ Transactional: -​ Separation of the transaction from all else between the participants before, after, and during exchange -​ Value-added -​ Maintaining exchange with existing buyers/suppliers  -​ Collaborative -​ Close information, social, and operational linkages as well as mutual commitment made in expectation of long-run benefits Customer vs. organizational value: -​ Common criticism of marketing -​ “Marketing creates unnecessary demand for products people don’t really need.” -​ Infomercials: “Call now, operators are standing by...” -​ Kidvertising: “Collect all 6 action figures today...” -​ Brand buzz:“iPhone 12 Pro Max is coming...” Needs, wants & demands: -​ Need – state of felt deprivation -​ Innate -​ Basic part of human nature -​ Want(specific solution to satisfy a need.) -​ Learned through culture, socialization -​ Demand(wants backed up by buying power) The marketing concept: -​ Achieving organizational goals by knowing the needs and wants of the target market and delivering value better than any competitor Business orientation – inward focus: -​ Production/product/technology oriented -​ Focus on mass production, distribution -​ Low labour costs, production efficiencies -​ Less concerned with quality, variety, competition -​ Sales oriented -​ Increased competition; increased choice alternatives -​ Sales as a competitive advantage -​ Limited by product/brand lifecycles -​ Required for unsought, shopping, complex and unknown goods Business orientation – outward focus: -​ Marketing oriented -​ The organizational function -​ The process of planning and executing the four Ps -​ Focus on overt needs -​ McCarthy’s micro definition (1983) -​ Use of marketing methodologies -​ Customer research, test markets -​ “Customer led” -​ Comments/feedback of current customers -​ Market oriented: -​ Focus on wants/needs of the target market -​ Customer focused -​ Understand that customers buy benefits not products -​ Interdepartmental cooperation -​ Customer satisfaction is the responsibility of all departments -​ Sustainability  -​ Satisfy customers’ needs better than competitors to make a profit -​ Subject to the long-term benefits of society (societal orientation) -​ Economic/social well-being -​ McCarthy’s macro definition (1983) Managing the exchange relationship: Marketing Management: The process of developing and maintaining a viable fit between the organization’s strengths and the market’s changing opportunities. Mission Statement: -​ What is a mission statement? -​ Answers “what business are we in?” -​ Provides the boundaries for the type of business and how the business is run -​ Market-oriented mission statement defines the business in terms of satisfying basic customer needs -​ Marketing Myopia (Levitt, 1960) -​ Many industries fail because they focus on a product and technology and not the market need -​ Railroads – railroads vs. transportation -​ Hollywood – film vs. entertainment Marketing objectives: -​ Corporate -​ Return on investment, earnings, stock price -​ Marketing -​ Product category -​ Sales, market share, product quality, penetration -​ Brand -​ Awareness, satisfaction, loyalty Environmental Assessment: -​ Microenvironment -​ 3Cs – company, customer, competitor -​ Cooperative – suppliers, distributors, partners -​ Macroenvironment -​ Political/legal, technological, economic socio/demographic, environmental/natural -​ Societal – public interest, social responsibility -​ Competitive forces -​ Supply-based competition -​ NAICS categories -​ Limited service restaurants -​ Trade/professional association categories -​ Restaurants Canada -​ Coffee Association of Canada -​ Demand-based competition -​ Brand competition -​ Competing products with similar features and benefits -​ Product competition -​ Competing products in the same product class, but different features and benefits -​ Total budget competition -​ Competing for income across different product classes -​ Economic forces -​ Indicators of market buying power -​ Standard indicators -​ GDP -​ Foreign exchange rates  -​ Business cycle -​ Recession -​ Map -​ Consumer confidence -​ Index -​ Political / legal forces -​ Environmental regulation -​ Environmental Protection Act -​ Federal Sustainable Development Act -​ Economic regulation -​ Tax and tariffs (e.g., carbon levy, import duties) -​ Bank of Canada prime rate -​ Canada mortgage rules -​ Self Regulation -​ Standards and Ethics Guides -​ Canadian Marketing Association -​ Social/Cultural -​ Demographics -​ Changing groups, changing needs -​ Birth rates -​ Social Issues -​ Values and beliefs -​ Gender, ethnicity -​ Technological -​ Access to information -​ Research -​ Privacy Value Proposition: -​ A concise statement summarizing the target market, the product/brand, competitors and the competitive difference. -​ E.g., DeWALT Tools -​ For the tradesman who uses power tools to earn a living, DeWALT professional power tools are engineered to be more dependable than Milwaukee, Ridgid or Makita and backed by a repair or replacement guarantee. Product/Market Assessment: -​ A formal framework for identifying and framing organizational growth opportunities -​ Market penetration -​ Current product/service portfolio and current buyers (own & competitors) -​ Product/market development -​ New product/service portfolio and/or new market segment Market penetration: -​ Increasing market share in an existing market -​ Increase present buyers’ consumption rates -​ Stimulate product adoption among potential customers -​ Strategies -​ Lower price of product offering -​ Expand distribution to provide wider coverage of the existing market -​ Improve quality -​ Head-to-head promotion -​ Potential usage/benefits of current product -​ Comparison to competitor products Market development: -​ Introducing an existing product to a currently unserved market -​ Different geographic region -​ Alternate demographic profile -​ Strategies -​ Minor modification of existing product offering -​ Alternate distribution outlets -​ Unique communication campaigns -​ Switching promotions Product development: -​ Creating a new offering in an existing market -​ Product innovation -​ Alternate product class/product line -​ Brand extension -​ Strategies -​ Develop significant point of difference -​ Leverage brand equity -​ Look for line or brand extensions Diversification: -​ Develop new product offerings in markets not currently being served by the organization -​ Product innovation/augmentation -​ Unique geographic/demographic profile -​ Strategies -​ Line or brand extensions -​ Market-bearing price -​ Alternative distribution channels Strategic marketing: -​ Developing and maintaining a viable fit between the organization (strengths/weaknesses) and the external environment (opportunities/threats) -​ Inbound communication Marketing research: -​ … information to reduce uncertainty in market decision making -​ Manages inbound information -​ Customers (market analysis) -​ Competitors (competitive analysis) -​ Environment (trends analysis) Inbound communication: -​ Problem -​ Is rarely passive -​ Active search without structure may not be accurate or generalizability -​ A scientific process -​ Define the research problem -​ Identification (problems not symptoms) -​ Develop the research design -​ Operationalization (information definition) -​ Execute the research design -​ Data collection (controls) -​ Data analysis (transformation and summarization) -​ Conclusion -​ Application (marketing strategy) Marketing problem: -​ Strategy based–what could you do -​ Change the target market (1P–people) -​ Alter the marketing mix (4Ps–product, price, place, promotion) Research problem: -​ Information based–should you do it -​ Information to reduce decision uncertainty Develop research design: Existing–literature: -​ Literature search -​ To learn from others, to demonstrate familiarity with a body of knowledge and establish credibility -​ Academic (peer reviewed) -​ Review theory and measurement of constructs of interest -​ Journals (e.g., Journal of Consumer Research) -​ Conference proceedings (e.g., Academy of Marketing Science) -​ Trade association press -​ Industry analysis, environmental trends, current research -​ E.g., Canadian Restaurant and FoodService Association -​ Other business sources -​ Newspapers, periodicals, magazines -​ E.g., Harvard Business Review Existing–data: -​ Secondary data -​ Existing prior to formulating the current research objective -​ Data sources -​ Internal-Customer records; warranty cards; expense reports -​ External -​ Published-Financial records; Government statistics -​ Commercial-Scanner panel data; Click stream data -​ Data sufficiency -​ Availability -​ Data available on almost any topic of interest to a researcher -​ Data integrity -​ Relevant–to the problem/opportunity -​ Accurate–reliability, validity -​ Timely–too early vs. too late -​ Efficient–cost vs. risk Observation: -​ Purpose -​ To observe people in natural settings or in naturally occurring situations -​ Pros-objective, current behavior -​ Cons–no control over data gathering, no understanding of motive -​ Methodology -​ Overt -​ An investigation of behavior where the respondents are aware of the task and the researcher is known -​ E.g., think aloud protocols -​ Covert -​ A study where the participants are unaware that their behavior is being observed and / or recorded -​ E.g., behind the glass  -​ Participative -​ A study where the researcher interacts with the respondents and manipulates the environment as the study progresses -​ E.g., ethnography, netnography Exploratory research: -​ To provide preliminary insights and clarity to the problem -​ E.g., Depth interview Descriptive research: -​ To provide explanation at a given point in time -​ E.g., Survey panel Causal research: -​ To test hypotheses regarding strength and direction -​ E.g., Controlled experiment Exploratory research: -​ Purpose -​ To clarify the business/research problem -​ To provide preliminary insights into the motivational, emotional, attitudinal and personal factors affecting behavior -​ To determine the feasibility of conducting additional research -​ Methodology -​ Depth interview -​ One-on-one, probing between a trained interviewer and a respondent -​ Elaboration on attitudes and behaviors -​ Projective interview -​ Presentation of non-structured, ambiguous stimuli to indirectly reveal inner feelings -​ Repressions, motivations -​ Group interview -​ Small group discussion; led by a trained moderator -​ Rationalization of attitudes and behaviors Conclusive research: -​ Purpose -​ To interact directly or indirectly with respondents for the purpose of recording/predicting attitudes and behaviors -​ Pros-versatile, ability to record attitudes and motivations -​ Cons–subjective, random error -​ Methodology -​ Descriptive -​ To describe the characteristics of a population or phenomenon -​ To answer who, what, where, when and how -​ To generate empirical assessments for forecasting and prediction -​ E.g., surveys -​ Causal -​ To make cause-effect inferences about relationships among variables -​ Manipulation and control of explanatory variables  -​ E.g., experiments Sample characteristics: -​ Target population–a complete group with specific characteristics of interest to the study -​ E.g., City of Calgary residents -​ Representative sample frame–a list of population elements from which the sample may be drawn -​ E.g., voter's list; community association list -​ Sample unit–a single element subject to selection -​ E.g., household or individual Sampling plans: -​ Probability -​ A sample plan where the probability of any single element being chosen is known and is not zero -​ Allows calculation of sample error -​ Example–simple random sampling -​ Non-probability -​ A sample plan where the probability of any single element being chosen is not known -​ Sample error unknown -​ Example–convenience sampling Survey design: -​ A standardized questionnaire to capture attitudinal, behavioral and demographic data from a predetermined population -​ More art than science -​ Necessary questionnaire conditions -​ Address the business/research problem -​ Unbiased, clear and understandable -​ Appropriate to respondent’s level of knowledge and willingness/ability to respond -​ Appropriate for required level of analysis -​ Adhere to respondent rights Response formats: -​ Open-ended -​ An unstructured response, participants own words -​ Closed-ended -​ A structured response with a finite set of allowable alternatives -​ Categorical response -​ Nominal scale -​ Categorical response -​ Ordinal scale -​ Continuous response -​ Equal interval scale Qualitative data: -​ Content analysis -​ Coding and categorizing–line-by-line analysis to identify and label recurrent words and phrases -​ Thematic analysis–developing overall meaning by reflecting on the larger themes that emerge form the data Quantitative data–categorical: -​ Univariate analysis -​ Distribution -​ Frequency, cumulative (ordinal) -​ Central tendency -​ Mode (nominal), median (ordinal) -​ Dispersion -​ Range (ordinal) -​ Bivariate analysis -​ Test of differences -​ Joint frequency distribution, chi-square tes Quantitative data–scale/continuous: -​ Univariate analysis -​ Central tendency -​ Mean -​ Dispersion -​ Variance, standard deviation -​ E.g., mean/stddev on product satisfaction question -​ Bivariate analysis -​ Test of differences -​ t-test ( exactly 2 category levels); ANOVA (more than 2 category levels) -​ E.g., mean/stddev for currently married vs. not married on product satisfaction question Multivariate analysis: -​ Test of association -​ Regression -​ E.g., relationship between product satisfaction (dependent variable) and multiple explanatory/predictor variables No matter: -​ how appropriate the research design, -​ how carefully developed the measurement instrument, -​ how representative the sample, -​ how stringent the quality control checks for field collection of data, -​ how rigorous the statistical analysis, -​ how well matched the research was to the original research objectives, -​ everything will be for not if the researcher cannot communicate the results to decision makers Summary document / presentation: -​ Purpose of the research -​ Business / research problem -​ Method -​ Research design / execution -​ Data analysis -​ Conclusion and recommendations -​ Current research -​ Critical findings -​ Limitations -​ Future research -​ Adaptation of current study -​ Recommendation for additional studies Understanding the customer: -​ Watch them -​ ‘Talk aloud’ protocols -​ Altered behaviour when observed -​ ‘Behind the glass’ observation -​ Unable to infer motivation -​ Talk to them -​ The thought process may not be available to understand why -​ Reports may not be accurate and complete -​ Model them -​ Economic model -​ The rational individual -​ Psychology model -​ Stimulus – response The rational individual: -​ Logical and prudent decisions based on choices that result in the most optimal level of benefit or utility -​ Assumptions -​ Utility maximization -​ Budget constraint -​ Ability to compare bundles -​ Perfect information -​ All assumptions rarely established Psychology model: Commercial environment: -​ Significative stimuli -​ Physical brands (price, quality, service) -​ Symbolic stimuli -​ Media representation of the brands (linguistic and pictorial symbols) Non-commercial environment: -​ Social influences -​ Reference groups -​ Situational influences -​ Time, finances Demographics: -​ States of being Psychographics: -​ Patterns of living -​ Activities and interests -​ Personality and self-concept -​ Identity 5 stage decision process: The difference between an actual state and a desired state: -​ Triggered by internal/external stimulus -​ Need recognition -​ Decrease in actual state -​ Opportunity recognition -​ Increase in desired state Involvement: -​ Personal importance/interest in acquiring a solution -​ Extensive problem solving – extensive search, comparison of numerous attributes and brand alternatives -​ Limited problem solving – limited search and search criteria -​ Routinized response behavior – internal search, habitual Experiential: -​ Generalized from past behavior Social: -​ Family & friends -​ Peers Commercial: -​ Active or passive -​ Subject to perceptual processes -​ Selective exposure / attention  -​ Selective comprehension /distortion -​ Selective retention / recall Evoked set: -​ Total set -​ All brands in the product category -​ Awareness set -​ Awareness of potential sufficing products/ brands -​ Consideration set -​ Set of brands considered as possible solutions to existing problem -​ Choice set -​ Set of competing brands with significant overlap in salient attributes -​ Decision -​ Brand selected to address the problem Alternative evaluation: -​ Consumers combine information about attributes, products and benefits to form an overall evaluation Weighted assessments: -​ Compensatory -​ Weighted average of all attributes -​ Lexicographic -​ Choose alternative that is best on most important attribute Unweighted assessments: -​ Conjunctive -​ Choose alternatives that meet the criteria on all attributes -​ Disjunctive -​ Choose alternatives that meet the criteria on at least one attribute Inferential assessments: -​ Heuristics / short cuts -​ High price = high quality -​ Better store = better quality -​ Examples -​ Availability – ease of recall -​ What we always buy -​ What my parents buy -​ Representativeness – comparing information to mental prototypes -​ Representative of similar object Benefit evaluation: -​ The personal value consumers attach to the product attributes, what consumers think the product can do for them. -​ Functional Benefits -​ Intrinsic, related to product benefits -​ Experiential Benefits -​ What it feels like to use the product, sensory -​ Symbolic Benefits -​ Extrinsic advantages, social approval, self esteem Purchase decision: Body-environment interaction: -​ Reaction to in-store marketing and branding -​ Atmospherics influence -​ Arousal (dull or exciting) and pleasure (satisfying or dissatisfying) Time poverty: -​ Pressure to complete shopping, purchase transaction -​ More responsive to convenience and innovation Task importance: -​ Necessity of information search -​ Intent or requirement to purchase Monetary mood: -​ Willingness to spend, credit prone Personality and image: -​ Individual -​ Characteristics and qualities that form a distinctive character -​ Real self-image and the ideal self-image -​ Brand -​ Human characteristics that are attributed to a brand -​ Sincerity, excitement, competence, sophistication, ruggedness Post-purchase analysis: -​ Satisfaction -​ Feelings of pleasure resulting from comparing perceived outcomes in relation to expectations -​ Buyers' remorse -​ Loyalty -​ Functional loyalty – repeat purchase behavior based on functional factors (familiarity, accessibility, availability) -​ Emotional loyalty – the degree to which a customer holds an affective attitude (satisfaction, appeal) and a conative attitude (commitment, recommendation) toward a product Business markets: -​ All organizations that purchase goods and services to use in the creation of their own goods and services. Business marketing: -​ The process of matching and combining the capabilities of the supplier with the desired outcomes of the customer -​ To create value for the “customer’s customer.  -​ Non-consumer -​ Fewer customers -​ Relationship focus -​ Demand differences -​ Purchasing Business customers: Business-to-business marketing (B2B): -​ Active connection between businesses to ensure needs are met -​ Trust -​ Mutual respect -​ Achievement of one’s own company goals through cooperation -​ Relationships are critical because there are so few -​ Relationships and communication B2B Relationships: -​ Companies are the centre of their network -​ A series of relationships with other organizations. -​ Look for ways to engage with other firms -​ Interaction -​ vs. Transaction Demand Difference: -​ Derived demand: -​ Caused by demand for consumer goods or services. -​ Inelastic -​ Joint -​ Fluctuating Buying situations:  -​ Straight Rebuy -​ Recurring purchase, customer re-orders a product that satisfies a need -​ Marketers strive for this relationship -​ Modified Rebuy -​ Purchaser looking to re-evaluate situation -​ Often will look externally for solutions -​ Often due to an issue with current supplier -​ New Task Buy -​ First time/unique purchase that requires effort -​ Must consider many alternatives and vendors Purchase-type comparison: -​ Consumer -​ High Involvement -​ Significant difference -​ Complex -​ Limited difference -​ Dissonance reducing -​ Low Involvement -​ Significant difference -​ Variety seeking -​ Limited difference -​ Habitual -​ Business -​ High involvement -​ New task buying -​ Unusual or infrequent purchases -​ Modified rebuy -​ Routine purchase with minor modifications or alternate supplier -​ Low involvement -​ Straight rebuy -​ Routinized reordering Organizational buying process: Buying process comparison: -​ Consumer -​ Need recognition -​ Information search -​ Alternative evaluation -​ Purchase decision -​ Post-purchase behaviour  -​ Business -​ Organizational need 1.​ Problem recognition 2.​ Need description 3.​ Product specification -​ Vendor analysis 4.​ Supplier search 5.​ Proposal solicitation 6.​ Supplier selection -​ Purchase activity 7.​ Order specification -​ Post-purchase evaluation 8.​ Product/vendor performance review Buying centre: B2B - Segmentation: -​ Focus on: -​ Businesses -​ Industries -​ Employees -​ Needs and wants that relate to: -​ Operating the business -​ NOT to individual needs -​ Does not include: -​ Re-selling the product -​ Place -​ Geographic -​ Location of businesses -​ Demographics -​ Industry, type of business -​ Size: # of employees, revenue -​ Psychographics -​ Industrial: values, orientation of the firm -​ What is the motivation to buy? -​ Behavioural -​ Benefits derived from the offering -​ Profit, Quality, Relationships -​ Buying Centre  -​ Usage -​ New Task, Modified, Straight Rebuy Market Segmentation: -​ Definition -​ Aggregating prospective buyers into distinct groups that: -​ Have similar wants/needs -​ Will respond similarly to marketing action -​ Need for segmentation -​ Identify homogeneous groups in a heterogeneous market -​ Align the marketing mix with consumer demands -​ Efficiently allocate resources Segmentation Bases: -​ The set of variables or characteristics used to assign potential customers to homogenous groups -​ Geographic -​ Where are they -​ Demographic -​ Who are they -​ Psychographic -​ What are they like -​ Behavioural -​ How do they respond Geographic Segmentation: -​ Grouping buyers based on physical location -​ Country -​ Region (Northern, prairie, coastal) -​ Climate (tropical, temperate, arctic) -​ Population size -​ Community (city, town, village) -​ Population centre (urban, suburban, rural) Demographic Segmentation: -​ Segmenting consumers based on states of being -​ Age -​ Decade -​ Gender -​ Education -​ Occupation -​ Income  -​ Marital status -​ Family life cycle Psychographic Segmentation: -​ Dividing a market based on social class, lifestyle and personality traits -​ Lifestyle -​ Interests -​ Passions, hobbies, affiliations and pastimes -​ Activities -​ Daily routines and behaviors; social and leisure choices -​ Opinions -​ A view or judgment about a particular topic -​ Personality -​ Characteristics that form an individual’s distinctive behaviour -​ Innovative, outgoing, adventurous, creative, quiet, ambitious, solitary, etc. Multi-Base Segmentation: -​ Segmentation at household level -​ Geographic/demographic/psychographic -​ Environics PRIZM -​ 67 Unique lifestyle segments -​ 54 urban, 13 rural/town -​ Examples: -​ Latte Life – young urban renters -​ Boomer Bliss – multi-ethnic middle-aged suburbanites Behavioural Segmentation: -​ Grouping buyers based on attitudes toward use of, or response to, a product class -​ Usage-based (nonuser, infrequent, regular) -​ Occasion-based(social setting, personal) -​ Loyalty status (none, hardcore, split) -​ Benefits sought (physical, emotional, mental) Segment Requirements: -​ Measurable -​ Quantifiable/Identifiable -​ Standard marketing metrics -​ Meaningful -​ Accessible -​ Can be effectively reached and served -​ Substantial -​ Profitable and sustainable -​ Differentiable -​ Homogeneous within a segment; Heterogeneous between segments -​ Marketable -​ Actionable/Responsive -​ Unique response to product offerings Targeting Strategy: -​ Mass market -​ Undifferentiated market -​ Common product for total market  -​ Typically commodity products -​ Differentiated market -​ Segmented market -​ Unique product offering for each of several segments -​ Concentrated market -​ Niche market -​ Focusing the firm’s effort on one unique segment -​ Micro market -​ Individual / local marketing -​ Mass customization Choosing a Targeting Strategy: -​ External evaluation -​ Market variability, competitor’s strategies -​ Internal evaluation -​ Product variability, resource limitations -​ Social responsibility -​ Vulnerable or disadvantaged consumers -​ Teen susceptible to junk food advertising (ABC News, 2020) -​ Facebook targeting teens and younger children (Washington Post, 2021) Product Positioning: -​ The place an offering occupies in consumers’ minds on important attributes relative to competitive offerings. -​ Approaches to product positioning: -​ Head-to-head positioning: competing directly with others on similar attributes for the same target market. -​ Differentiation positioning: seeking a less competitive market in which to locate a brand. Positioning Strategies: -​ Overall cost leadership -​ Standard product at the lowest price -​ The experience curve -​ Cost/unit decreases with experience -​ Differentiation from competitors -​ Unique selling proposition (USP) -​ Product/services attributes -​ Availability, convenience -​ Status and image Cost/Price-Based Positioning: -​ Positioning on price relative to a competing product -​ Requires knowledge of competitors’ cost structure -​ Can only be one cost leader -​ Attaining the low-cost position -​ Economies of scale -​ The ability to allocate fixed costs over larger sales -​ Experience curve -​ Improvements in efficiency over time Attribute-Based Positioning: -​ Positioning on unique or superior attributes relative to a competing product -​ Generates customer value on critical product attributes -​ Reliability, quality, affordability, design, ease, durability -​ Difficulty to imitate Augmented-Based Positioning: -​ An observable point of difference that customers value and for which they will be willing to pay more -​ Points of difference -​ Warranty -​ Customer service -​ Outbound logistics (on-time delivery) -​ Reputation -​ Financing -​ Avoid the commodity mentality Perception-Based Positioning: -​ Perceptual differences are created when actual differences are small, hard to achieve, difficult to sustain, or difficulty to verify -​ “The perception is the reality” -​ High price – high quality -​ “Products are created in the factory; brands are created in the mind” Value-Based Positioning: -​ The full mix of benefits upon which the product/brand is differentiated and positioned -​ Product = a bundle of benefits -​ Value = benefits at a given price Value-based positioning: -​ More for more $$$ -​ Providing upscale products/services but charging a higher price to cover costs -​ Status and lifestyle -​ More for the same/less $$$ -​ Attacking a competitors more for more strategy by offering upscale products at a lower price Value-Based Positioning: -​ Same for less $$$ -​ Category killers -​ Offering same brands as department/specialty stores for much less -​ Less for much less $$$ -​ Meeting consumer’s lower performance or quality requirements at a much lower $$$ Economics: -​ A bundle of utilities of which physical characteristics, labeling, and packaging are an integral part Marketing: -​ The sum of the physical, psychological, physiological, and sociological characteristics that can be offered to create value -​ Physical good  -​ Service -​ Idea -​ Person -​ Place Product layers / levels: -​ A product is a bundle of attributes purchased based on… -​ Core product -​ Benefits -​ Tangible product -​ Brand -​ Features -​ Design -​ Package -​ Quality -​ Augmented product -​ Warranty -​ Financing / Credit -​ After-sale services -​ Delivery -​ Product support Convenience: -​ Frequent purchase, little comparison or shopping effort -​ Wide distribution, low price, mass promotion Specialty: -​ Brand preference and loyalty, little comparison, special purchase effort, low price sensitivity -​ Exclusive distribution, high price, targeted promotion Shopping: -​ Less frequent purchase, high shopping effort -​ Selective distribution & communication, higher price Unsought: -​ Purchased when necessary, little product awareness or knowledge -​ Aggressive selling, distribution and communication varies The product mix/portfolio: -​ All the product items an organization sells Product line: -​ A group of closely related product items based on marketing, technical or end-use -​ Product line length -​ Number of product items within the product lines -​ Product line depth -​ Number of different versions offered for each product in a product line -​ Form, scent, size Product mix width: -​ The number of product lines a company offers -​ Product mix consistency -​ Similarity in end use, distribution channels, target market, etc. Services are: -​ All economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value in forms that are essentially intangible concerns. -​ Services -​ Activities by sellers and others that accompany the sale of a product and that aid in its exchange or its utilization -​ Service products -​ Such as a bank loan or home security, they are primarily intangible Attributes of services: -​ Intangibility: services cannot be held, touched, or seen before the purchase decision -​ Inseparability: the consumer cannot separate the deliverer of the service from the service itself -​ Inventory (perishability): the inventory cost of a service is the cost of paying a person to provide the service along with the cost of any needed equipment -​ Inconsistency (variability): service quality varies with the capabilities of the people who provide the service Service delivery dimensions (Parasuraman, Zeithaml & Berry, 1985): -​ Tangibles -​ Appearance of physical facilities, equipment, personnel, and communication materials -​ Reliability -​ Ability to perform the promised service dependably and accurately -​ Responsiveness -​ Willingness to help customers and provide prompt service -​ Assurance -​ Certainty in capability; ability to convey trust and confidence -​ Empathy -​ The provision of caring, individualized attention Evaluation of quality: -​ Product -​ Performance quality -​ Ability to deliver on measureable attributes -​ Conformity to specifications  -​ Conformance quality -​ Ability to meet established standards -​ Free from defects / low rate of return -​ Delivery within set tolerances -​ Service -​ Measurement against performance -​ Evaluation of alternatives and particular needs -​ Conforming to expectations Expectancy disconfirmation: -​ A cognitive theory to explain post-purchase behavior (cognitive dissonance). -​ “A failed prophesy” -​ Performance expectations are compared to actual experience: -​ Expected service is a function of -​ Personal needs -​ Experience -​ Word of mouth communication -​ Perceived service is an evaluation of the determinants of service quality -​ Tangibles – physical environment -​ Reliability – performed as promised -​ Assurance – convey trust and confidence -​ Empathy – provision of caring -​ Responsiveness – prompt and helpful Expectancy disconfirmation: Product life-cycle: E.g., Playback technology: -​ Dominant technology -​ Mechanical -​ 100 years -​ Magnetic tape -​ 40 years -​ Digital (CD) -​ 20 years -​ Lifespan -​ Shortening time frames -​ Maturity or death -​ Marketing myopia -​ Ted Levitt,1960 -​ Focusing on products and technology and not the market The need for new products: -​ Vulnerability of existing products -​ Changing consumer wants, preferences -​ New technologies -​ Shorter PLCs -​ Increased global competition -​ Advantages to new product introduction -​ Products introduced in last 10 years account for >50% of sales revenue -​ Sales growth rate for new products exceeds growth rate of existing products -​ Reposition the company New product failure: -​ Depending on the industry, 33% - 90% of new products fail -​ No sustainable market -​ Over estimated demand -​ Poor quality/design -​ Incorrect positioning -​ Late market entry -​ No competitive point of difference -​ Didn’t cross the ‘chasm’ Diffusion of innovation: Branding: -​ Basic definition -​ A name, term, sign, symbol or design or a combination that identifies the maker or marketer of a product -​ A brand is not just… -​ A logo, a corporate identity system, or a product -​ A brand is -​ A layer of meaning that surrounds the product -​ A concept with an existence and a personality -​ A revenue generating idea, metaphor, analogy Buyer’s: -​ Gives personality -​ Helps find products with desired benefits -​ Reduces information search costs -​ Suggests quality -​ Reduces risk Seller’s: -​ Basis of product story -​ Gives legal protection -​ Helps in segmenting markets -​ Symbol of ongoing promise Brand Name: -​ Suggest product benefits -​ Easy Off, Mr. Clean -​ Distinctive and positive -​ Apple/Blackberry, Galaxy/Bel Air -​ Fit the company and product image -​ Eveready, Duracell, DieHard -​ Be simple yet creative -​ Kijiji, 7UP -​ Easy to -​ Pronounce -​ Recognize -​ Remember -​ Translate Brand Characteristics: -​ Personality -​ A sum of all the attributes of a brand and the emotions it inspires in the minds of consumers -​ Coca-Cola – traditional; Pepsi – youthful -​ IBM – conservative; Apple – hip -​ BMW – sporty; Volvo – safe Brand Representation: -​ Registered trademarks -​ A word, phrase, symbol or design that identifies and distinguishes the source of a good -​ Kleenex; Coca-Cola bottle -​ Logo -​ A symbol or design adopted to represent a brand -​ Nike  -​ Icons/mascots -​ Objects with unique shapes, colors and patterns associated with the brand -​ M&M’s, Kellogg’s Brand Positioning: -​ Positioning brands in the mind of the target market based on attributes, benefits or beliefs and values -​ Attribute -​ Old Spice – “... the man your man could smell like” -​ Value -​ Schneider's – “... you can taste the difference quality makes” -​ Application -​ Arm & Hammer – “... freshen the fridge, freshen the freezer” -​ User class -​ Johnson & Johnson – “... not just for babies anymore” -​ Competitor -​ Audi – “... everything you can fit into a Lincoln” Displaying the Brand: -​ Packaging as a container -​ Physical -​ Convenience; protection; storage -​ Disclosure -​ Directions; warnings; composition; product application; price -​ Packaging as brand strategy -​ Brand exposure -​ Attention and awareness -​ First impressions formed in less than 7 seconds -​ One-third of brand purchase based on packaging -​ Packaging as brand strategy (Con’t) -​ Brand position -​ Communicates status, quality, personality -​ Attitude toward the package influences attitude toward brand -​ Fifty-two percent of shoppers likely to repurchase brands based on packaging -​ Sustainable packaging -​ Marketing requirements vs. societal expectations -​ Ninety percent of shoppers reuse packaging after purchase Brand Sponsorship: -​ National (manufacturer’s) brand -​ Extensive recognition -​ Broad distribution and promotion -​ Created and owned by resellers -​ aka – house brand, private brand -​ Increased store brand exposure -​ Higher profit margins -​ Cobrand -​ applying established brand names to a single product -​ Extended reach -​ Shared marketing budget -​ Enhanced credibility Brand Development: -​ Line Extensions -​ New forms, colors, flavors, etc. within the existing product line -​ Brand Extensions -​ Leveraging the brand through new products in a new product line Brand Equity: -​ A set of assets (and liabilities) linked to a brands name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm or a firm’s customers -​ Higher brand equity is associated with: -​ Brand awareness -​ Brand association -​ Brand loyalty Dimensions of Brand Equity: -​ Brand Awareness - the likelihood that a brand will be recognized by potential customers and correctly associated with a particular product -​ Most basic element in the choice set -​ A necessary but not sufficient condition for brand equity -​ Brand Association – subjective thoughts and images of a brand that suggest situations for which a brand is (or is not) suitable -​ Conceptualization -​ Attributes/benefits -​ Favourability -​ Uniqueness -​ Strength -​ Brand Loyalty - the degree to which a customer holds a positive attitude towards a brand, has a commitment to it, and intends to continue purchasing it in the future -​ Contributors to brand loyalty -​ Habit and history -​ Identification with the brand -​ Emotional relationship -​ Detractors from brand loyalty -​ Brand parity -​ Competitive promotional activity -​ Customer factors Getting the Brand to Market: -​ Distribution channel -​ The process that makes products available to consumers and business customers and places them where they can be purchased -​ Intermediaries -​ A collection of companies responsible for getting products from producers to customers -​ Includes: -​ Manufacturers, brokers, wholesalers, retailers, etc. Required Channel Functions: -​ Transactional -​ Contacting, promoting, soliciting orders -​ Negotiating terms for sale, distribution and payment -​ Risk taking  -​ Logistics -​ Physical distribution -​ Warehousing and storage -​ Bulk breaking into smaller allotments -​ Assorting into buyer specific collections -​ Facilitating -​ Researching -​ Financing Marketing Intermediaries: -​ In a competitive economic system marketing intermediaries, through contacts, scale of operation, and specialization, offer the producer more than it can achieve on its own. -​ Delivering utility -​ Manufacturing - form -​ Intermediaries – time, place, possession Types of Channels: -​ Direct -​ No intermediaries between producer and end consumer -​ Indirect -​ One or more intermediaries performing unique channel functions -​ Conventional -​ Separate businesses, each seeking to maximize own profit -​ Administered -​ Independent channel members cooperating because of the power of a single channel member -​ Contractual -​ Tightly coordinated by formal procedures -​ Corporate -​ High degree of vertical integration in the sales and distribution functions Channel Length: Channel intensity: -​ Exclusive -​ Limited number of dealers with exclusive rights to represent the brand -​ Major shopping goods, specialty goods, luxury items  -​ Pro – maximum control over market; aggressive intermediaries; high brand loyalty -​ Con – “eggs in one basket’; limited to high price/low volume products -​ Selective -​ Inclusion of select intermediaries, but fewer than all dealers who may be willing to represent the brand -​ Higher involvement shopping goods -​ Pro – increased market coverage; high degree of control -​ Con – Outsource service component to intermediaries -​ Intensive -​ Mass distribution via multiple entities -​ Convenience and low involvement shopping goods -​ Pro – Increased sales; wider recognition; captures impulse buyers -​ Con – Typically low price/low margin/high turns; limited control Revenue generation: -​ That which is given up in exchange to acquire a good or a service -​ Compare with product, communication & distribution are marketing costs A component of value: -​...exchanges that satisfy individual and organizational objectives (AMA, 1985) -​...exchanging offerings that have value (AMA, 2007) An element of the marketing mix: -​ One of the 4 Ps -​ Easiest to adapt to changing environment -​ An attribute of product -​ A proxy for missing information Cost, price & value: -​ Breakeven / floor price -​ The minimum price a company is willing to sell a product -​ The price at which a company will earn zero profits -​ Reservation / ceiling price -​ The maximum price a customer is willing to pay for a product -​ The price at which a product is removed from the consideration set Cost-based pricing: -​ Setting price based on the costs of producing, distributing and selling a product plus a fair rate of return -​ Cost-plus pricing -​ Adding a standard markup to the cost of the product  -​ Margin pricing -​ Setting price to make a specified return -​ Issues with cost-based pricing -​ Identifies the floor price -​ Ignores consumer perception of value -​ Ignores the effect of competition -​ Sellers more certain about costs than demand -​ Consumers believe it is fair Value-based pricing: -​ Price based on a customer's perception of value rather than the seller’s costs -​ Value = f (price, attributes, benefits, alternatives) -​ High value is not necessarily low price -​ A high-quality product at a high price could be perceived as good value -​ Exchange requirement -​ Value > Price > Cost Value-based pricing approaches: -​ Price Sensitivity Analysis (van Westendorp) -​ To determine the range of acceptable prices -​ At what price would you consider the product/service to be priced so low that you feel that the quality can’t be very good? -​ At what price would you consider this product/service to be a bargain—a great buy for the money? -​ At what price would you say this product/service is starting to get expensive—it’s not out of the question, but you’d have to give some thought to buying it? -​ At what price would you consider the product/service to be so expensive that you would not consider buying it? Value based pricing approaches: -​ Conjoint analysis -​ A simultaneous evaluation of attributes and attribute levels -​ Calculate part-worth utilities to estimate how much of one attribute a consumer will give up for more of another Competition-based pricing: -​ Pricing based on factors in the external environment -​ Consumer demand, competition’s strategy, market share, product life cycle, diffusion rate -​ Not reflective of cost or value -​ Competitive strategies -​ Penetration – price lower than competition -​ Competitor has little market power -​ Boost sales, increase market share, limit competition -​ Parity / status quo – price about the same as competition -​ Survival for small firms, competing with brands -​ Skimming – price higher than competition -​ Unique selling proposition, differentiation -​ Recover costs -​ Project image (luxury goods, prestige products) Psychology of price: -​ Price / quality relationship -​ Price as a proxy for quality -​ Asymmetric information can lead to higher demand -​ Price signaling -​ Price as a signal of status, prominence -​ Even / odd presentation of price -​ Odd-numbered prices connote a bargain -​ Even-numbered prices connote quality Reference price: -​ A standard against which a purchase price is compared -​ Influenced by advertising, competitors' price (external), experience (internal) -​ “Sticker shock” -​ Reference shift -​ Expectations of lower prices in volatile markets or due to constant promotion -​ Bundling/unbundling -​ Bundling – a package of products usually priced lower than the sum of the individual products -​ Unbundling – pricing individual components that were previously part of a bundle Differential pricing: -​ Price discrimination -​ Setting price based on price elasticity of the market segment -​ Senior's discounts -​ Automobile insurance based on age, gender, driving record -​ Geographic location -​ Periodic discounting -​ Varying the price over time to account for a customer's willingness to pay -​ Peak period utility rates -​ End of season clothing mark-downs -​ Weekend theater tickets Product line pricing: -​ Offering multiple products at different price points (premium – economy) within a product line -​ Proctor and Gamble HE laundry detergent (4.43 liter) -​ Tide - $0.44 / 100 ml -​ Gain - $0.38/ 100 ml -​ Cheer - $0.36 /100 ml -​ Captive product pricing -​ Product line pricing that applies to products that are used together when one product is consumable -​ Printers (low margin); toner cartridges (high margin) Promotions - short term incentive to encourage purchase: -​ Coupons -​ A price-oriented promotion that offers a discount off of the price of the product -​ Growing in e-commerce markets -​ Rebates -​ Cash refunds given for the purchase of a product during a specific period -​ Requires consumer response – mail-in, proof of purchase, personal information disclosure -​ “Instant rebate” -​ Premiums -​ An extra item offered to the consumer usually in exchange for proof of purchase of the promoted product -​ BOGO free -​ Short term size increase Pricing and PLC: Communication: -​ A systematic process by which individuals interact through symbols to create and interpret meaning -​ Verbal, text, gestures/body movement, pictures, touch, manipulation of the environment Marketing communications: -​ The process of interacting in the market to engage customers and communicate customer value  -​ Information for inclusion in the awareness set -​ Persuasion to advance to the consideration / decision / choice sets -​ Reminder to reinforce position in the decision/choice set The Transmission Model (Shannon & Weaver, 1949): -​ Depicts the relationships among the various factors that influence the effectiveness and impact of communication. -​ Sender / Receiver of the message -​ Encoding / Decoding the message -​ Message / Media used to transmit the message -​ Response by the receiver / Feedback to the sender -​ Noise that inhibits encoding, transmission, decoding Transmission Model: Common frame of reference: Communications Plan: -​ A communications plan is a framework for developing, implementing, and controlling the firm’s communication activities. -​ Process -​ Market – target audience -​ Mission – communication objectives -​ Message – strategy and execution -​ Media – type and impact Content Marketing: -​ Market - identify the intended audience -​ Target market -​ Buyers, users, influencers -​ Non-target audience -​ Investors, regulators, channel members, employees -​ Mission – establish communication goals -​ Buyer response levels  -​ Cognitive – thinking about the product/decision -​ Affective – development of attitudes and preferences -​ Conative – intended behaviors toward acquisition and consumption Customer response model: Communications Objectives: -​ Aware -​ Garner attention of consumer through a memorable message or approach -​ Inform -​ Increase the consumer’s desire to learn more about the product/brand -​ Trial -​ Encourage the consumer to purchase the product through incentives or testimonials -​ Loyalty -​ Reinforce the relationship with the customer to continue buying in the future Message Strategies: -​ Symmetry -​ Asymmetrical -​ Influence and persuade based on only positive aspects -​ Symmetrical -​ Provide a balanced view of product/service -​ Directionality -​ One-way vs. two-way -​ Synchronous vs asynchronous -​ Promotion -​ Push -​ Relies on marketing channels to push products to consumer -​ Pull -​ Relies on direct communication with consumer to pull product through distribution channel Push VS pull: Message Format: -​ Delivery elements -​ Informational vs experiential -​ Contribution of attributes and benefits to overall utility -​ Contribution of attitude/feelings resulting from use of the product -​ Tonality -​ Humour -​ Dramatic -​ Romantic -​ Apprehension / fear -​ Creativity -​ Animation and art -​ Experts and celebrities -​ Music, jingles and slogans Medium: -​ Impact -​ Frequency -​ The number of times the average person in the target market will be exposed to the communication -​ Reach -​ The percentage of people in the target market who are exposed to the message -​ Engagement -​ Consumer impressions – ratings, readership, click-through rates -​ Consumer expressions – “Liking”, sharing, creating/posting content Media Types: -​ Traditional -​ Broadcast -​ Mass market coverage; low cost per exposure; one-way communication -​ Print -​ Flexibility; timeliness; strong local market coverage; broad acceptability; high believability -​ Direct contact -​ High audience selectivity; allows personalization -​ Emerging -​ Digital, mobile, social -​ High selectivity; immediacy; engagement capabilities Communication Evaluation: -​ Target market -​ Objective -​ Awareness -​ Inform -​ Trial -​ Loyalty -​ Strategy -​ Symmetry -​ Directionality -​ Push vs. pull  -​ Delivery -​ Rational vs emotional -​ Tonality -​ Humour -​ Dramatic -​ Romantic -​ Fear IMC: -​ Integrated Marketing Communications (IMC) -​ Coordinating the communications mix to assure the consistency of messages at every company-customer contact point. Communications Mix: -​ Advertising -​ Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor (E.g., Broadcast, Print, Internet & Outdoor) -​ Sales Promotion -​ Short-term incentives to encourage the purchase or sale of a product or service (E.g., Discounts, Coupons, Displays, Demonstrations) -​ Public Relations -​ Professional maintenance of a favorable company image with various publics and stakeholders. (E.g., Press releases, Sponsorships, Special events) Communications Mix: -​ Personal selling -​ Directed communication by a sales force for the purpose of making sales and building customer relationships (E.g. Sales presentations, Trade shows & Incentive programs) -​ Direct marketing -​ Direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate long term relationships (E.g. Telemarketing, Email / direct internet channels) -​ Social Media -​ A collection of online communication tools that facilitate interaction between organizations and consumers by providing direct engagement and opportunities for consumer empowerment. Other Communications Activities: -​ Sponsored events -​ Financial or in-kind support for an activity designed to reach a unique target market -​ Brand placement -​ The subtle promotion of products through non-traditional media -​ Viral marketing -​ An attempt to create a marketing message (email, video) that spreads exponentially among consumers (likes & shares) -​ Buzz marketing -​ A managed viral marketing event (content) that generates publicity and excitement for a short period of time