Marketing Summary Document PDF

MARKETING PRINCIPLES & PRACTICE =============================== 1. WHAT IS MARKETING? ------------------ - 2 parties - Something of value to offer - Want to deal with each other - Benefits? - Costs? - Perceived value? ### Applications marketing: - Physical products - S...

MARKETING PRINCIPLES & PRACTICE =============================== 1. WHAT IS MARKETING? ------------------ - 2 parties - Something of value to offer - Want to deal with each other - Benefits? - Costs? - Perceived value? ### Applications marketing: - Physical products - Services - Retail - Experiences - Events - Film, music, theatre - Places - Ideas - Charities & non-profits - People WHAT IS THE DIFFERENCE BETWEEN CUSTOMERS AND CONSUMERS? ------------------------------------------------------- ### Consumers' buying roles - Initiator: initiates idea - Influencer: influences - Decider: ultimate buying decision - Buyer: actual purchase - Payer: pays - User: consumes - Gatekeeper: controls access MARKET ORIENTATION ------------------ - ### Customer orientation - ### Competitor orientation - ### Interfunctional coordination ### Customer centricity 4. MARKETING'S INTELLECTUAL ROOTS ------------------------------ - ### Industrial economics influences - ### Psychological influences - ### Sociological influences - ### Anthropological influences - ### Computer science influences DIFFERENCES BETWEEN SALES AND MARKETING --------------------------------------- ------------------------------------------------ -- long-term satisfaction greater input into customer design of offering high focus on stimulation of demand ------------------------------------------------ -- WHAT DO MARKETERS DO? --------------------- ### Marketing competencies: - Enhancing a firm's relationships with its customers - Marketers do not control all the marketing mix elements - Marketing is present in all aspects of an organization, since all departments play a role in creating, delivering, and satisfying customers MARKETING AS EXCHANGE ---------------------  THE MARKETING MIX AND THE 4P'S (P. 23) -------------------------------------- THE EXTENDED MARKETING MIX -------------------------- RELATIONSHIP MARKETING, SERVICE-DOMINANT LOGIC AND CO-CREATION -------------------------------------------------------------- ² -------------------------------------- ------------------------------- Segment prospects Track interactions Build campaigns Monitor contact history Monitor and measure campaigns Sales task list Offer relevant content at right time Forecast revenue expectations Track and report goods and bads Create proposals Communicate with early stage leads Increase sales efficiency Create sales alerts Keep leads fresh in mind Manage task for sales -------------------------------------- ------------------------------- MARKETING'S IMPACT IN SOCIETY ----------------------------- THE MARKETING ENVIRONMENT ========================= DESTEP UNDERSTANDING THE EXTERNAL ENVIRONMENT -------------------------------------- - Disposable6 income - Gross Domestic Product7 (=GDP) - Income distribution - Wage8 & Price inflation - Export quota & duties - Consumer saving & confidence - Debt -... - Communities & sharing - One-stop shopping - Increased concern with health and fitness - Know-how - Existing production technology & innovations - Adaption rate of technology - Information acces - Technical issues ### Crowdsourcing ### Trends: - shortage of raw materials ↗ - cost of energy ↗ - pollution and climate change ↗ - government intervention ↗ - increased concern for "organic" food etc. ### The four green marketing strategies 1. Eco-efficiency 2. Beyond compliance leadership 3. Eco-branding 4. Environmental cost leadership ### Trends: - Increasing regulation for companies - Stronger emphasis on ethics and social responsibility - Growth of societal pressure groups 13. ENVIRONMENTAL SCANNING ---------------------- UNDERSTANDING THE PERFORMANCE ENVIRONMENT ----------------------------------------- ### Intermediaries - Resellers: - Logistics service providers - Marketing services - Financial intermediaries ### Stakeholders - Financial audience - Media - Governments - Interest groups - Local audience - Internal audience - General public ### Partnership ### Porter's 5 forces model: - Who? - Their strengths/weaknesses? - Their strategic goals? - Which strategies are they following? - How are they likely to respond? UNDERSTANDING THE INTERNAL ENVIRONMENT -------------------------------------- ### Strategic Business Units (= SBU) ### The Boston Box - How fast will the market grow? - What will be our market share? - What investment will be required? - How can a balanced portfolio be created from this point? ### Marketing audit - Environmental audit - Marketing strategy audit - Marketing organization audit - Marketing system audit - Marketing function audit ### Marketing performance metrics 3. CONSUMER BUYING BEHAVIOUR ========================= 16. CONSUMER BEHAVIOUR: BETWEEN RATIONALITY, IRRATIONALTY AND HEDONISM ------------------------------------------------------------------ +-----------------------------------+-----------------------------------+ | *error prone* | | +-----------------------------------+-----------------------------------+ ### Confirmation bias: - Easier to recall - Vivid10, well-publicized or recent - More salient11 - Available ### Likeability heuristic - who are similar to us - who we recognize - who pay us compliments - attractive people (= halo-effect) ### Endowment effect ### Present bias ### Sunk cost fallacy  ### Blind spot bias / bias bias PROPOSITION ACQUISITION -----------------------  ### Motive development: ### Information search ### Proposition evaluation - Technical - Economic - Social - Personal ### Proposition selection ### Purchase ### Re-evaluation - Drawbacks of chosen brand - Losing benefits of brand not purchased - Even after the customer makes the decision to buy, - Developed by McKinsey & Company Influencers - ### Key influencers ### - ### Social influencers - ### Known peer influencers PERCEPTION, LEARNING AND MEMORY ------------------------------- ### Selective exposure ### Involvement - High-involvement/thinking → more informative advertising/promotion - High-involvement/feeling → emotional advertising - Low-involvement/thinking → advertising/promotion to create and reinforce habitual buying - Low-involvement/feeling → should be promoted on the basis of personal satisfaction - ### Classical conditioning - ### Operant conditioning - ### Social learning PERSONALITY ----------- - Dominant - submissive - Masculine - feminine - Sociable - timed -... ### Big Five - **O**penness - **C**onscientiousness - **E**xtraversion - **A**greeableness - **N**euroticism **Brand personality** - Actual self - Ideal self - Social self MOTIVATION ---------- ### Intrinsic motivation: ### Extrinsic motivation: - ### Economic: - ### Technical: - ### Social: - ### Legalistic: - ### Adaptive: 1. People need to **first** develop an **intention**. This intention is affected by: a. Attitude: b. the subjective norm c. perceived behavioural control THE IMPORTANCE OF SOCIAL CONTEXTS --------------------------------- - **Opinions**: quick responses given to opinion poll questions about current issues or instant responses to questions from friends. They are held with limited conviction because we have often not yet formed or fully developed an underlying attitude on an issue. - **Attitudes:** a greater degree of conviction, more likely to influence behaviour - **Values**: held even more strongly than attitudes, underpinning our attitudinal and behavioural systems. - **Reference groups:** groups that have a direct (face-to-face) or indirect influence on a - **Associative groups:** groups an individual belongs to or would want to belong to - **Brand communities:** people form communities based on attachment to a brand - **Disscociation groups:** groups an individual wants to dissociate from. 1. Identify opinion leaders 2. monitor their style & behaviour 3. try to influence opinion leaders +-----------------------+-----------------------+-----------------------+ | **Social** | | | | | | | | **grade** | | | +=======================+=======================+=======================+ | | | | +-----------------------+-----------------------+-----------------------+ | | | | +-----------------------+-----------------------+-----------------------+ | | | | +-----------------------+-----------------------+-----------------------+ | | | | +-----------------------+-----------------------+-----------------------+ | | | | +-----------------------+-----------------------+-----------------------+ | | | | +-----------------------+-----------------------+-----------------------+ ### Life stage concept: +-------+-------+-------+-------+-------+-------+-------+-------+-------+ | **Bac | | | | | | | | | | helor | | | | | | | | | | stage | | | | | | | | | | : | | | | | | | | | | young | | | | | | | | | | singl | | | | | | | | | | e | | | | | | | | | | peopl | | | | | | | | | | e | | | | | | | | | | not | | | | | | | | | | livin | | | | | | | | | | g | | | | | | | | | | with | | | | | | | | | | paren | | | | | | | | | | ts/gu | | | | | | | | | | ardia | | | | | | | | | | ns** | | | | | | | | | +=======+=======+=======+=======+=======+=======+=======+=======+=======+ | Few | | | | | | | | | | finan | | | | | | | | | | cial | | | | | | | | | | burde | | | | | | | | | | ns | | | | | | | | | | | | | | | | | | | | Fashi | | | | | | | | | | on | | | | | | | | | | opini | | | | | | | | | | on | | | | | | | | | | leade | | | | | | | | | | rs | | | | | | | | | | | | | | | | | | | | Recre | | | | | | | | | | ation | | | | | | | | | | orien | | | | | | | | | | ted | | | | | | | | | +-------+-------+-------+-------+-------+-------+-------+-------+-------+ | **Buy | | | | | | | | | | :** | | | | | | | | | | basic | | | | | | | | | | kitch | | | | | | | | | | en | | | | | | | | | | equip | | | | | | | | | | ment, | | | | | | | | | | basic | | | | | | | | | | furni | | | | | | | | | | ture, | | | | | | | | | | cars, | | | | | | | | | | packa | | | | | | | | | | ge | | | | | | | | | | and | | | | | | | | | | long- | | | | | | | | | | haul | | | | | | | | | | holid | | | | | | | | | | ays, | | | | | | | | | | educa | | | | | | | | | | tion | | | | | | | | | +-------+-------+-------+-------+-------+-------+-------+-------+-------+ 4. BUSINESS-TO-BUSINESS MARKETING ============================== 22. WHAT IS BUSINESS-TO-BUSINESS MARKETING? --------------------------------------- *e.g. Ikea is a hybrid organization: B2B & B2C* THE CHARACTERISTICS OF BUSINESS MARKETS --------------------------------------- ### - Nature of demand ###. Volatility of demand - ### Buying processes - ### Internationalism - ### Buyer-seller relationships ### Building professional relations - Technical support *e.g. joint R&D, after sales service, training* - Expertise - Financial support - Service levels - Risk reduction TYPES OF B2B CUSTOMERS, GOODS, AND SERVICES ------------------------------------------- - ### Commercial - ### Government: - ### Institutions: - **Input goods** = raw materials, semi-manufactured parts and finished goods - **Equipment goods** = capital or investment goods (buildings, land , machines) - **Supply goods** = maintenance, repair and operating materials (paper, machine oil...) ORGANIZATIONAL BUYING BEHAVIOUR ------------------------------- ### The characteristic of decision-making units - Initiators - Users - Influencers - Deciders - Buyers - Gatekeepers ### New task ### Modified rebuy ### Straight rebuy ### Value analysis: - detailed technical specification - consider needs and requirements ### Decision criteria: - price - quality - lifecycle costs (productivity, maintenance residual value,...) - innovation (product improvements, process improvements and simplification) - continuity - flexibility - reduce assortment and stock - "experience" ### B2B marketing strategies prefferd by companies: - Blogging - E-mail newsletter - Social media content ### Selling points needed to stand out in the B2B industry - Vendor reputation - Price - Customer loyalty - Ease of purchase ### Reasons why B2B buying process takes longer - Disagreement price - Misunderstanding info - Disagreement over product capabilities - Disagreement over ROI - Unknowledgeable sales representative -- -- -- -- -- -- -- -- ### E-Procurement ### Strategic procurement: - Purchasing = an integral and strategic part of an organization's operations - smaller number of suppliers + focus on long-term relationships DEVELOPING A CUSTOMER PORTFOLIO MATRIX -------------------------------------- ### Pareto analysis: - 80% of revenue comes from 20% of customers - some customers are more important than others ### Customer (or account) portfolio matrix: KEY ACCOUNT MANAGEMENT (KAM) ---------------------------- - **Key accounts:** customers considered to be strategically important - The underlying principle of relationship marketing in business markets requires that the focus should shifts from short-term transactional exchanges to longer-term and collaborative relationships. - **fundamental purpose of KAM:** create **strategic** **alliances** with key accounts through the development of long-term relationships - Increasingly complex and competitive environment - Shorter product life cycles - Differentiation is difficult to sustain - ### Industry consolidation - **Centralized purchasing** → improving profits. CORPORATE SOCIAL RESPONSIBILITY ------------------------------- - People, planet & profit - Economic globalisation and yet also societal, ecological concerns and integrity 5. SERVICES AND RELATIONSHIP MARKETING =================================== 29. THE UNIQUE CHARACTERISTICS OF SERVICES -------------------------------------- ### Service ### Intangibility21 2. **Perishability** - Time of purchase - Demand levels - Customer segments 3. **Variability** ### Inseparability ### Lack of ownership - Difficult to protect *(e.g. yoga everywhere)* - All employees involved *(e.g. sales & administration)* - Physical surroundings matter *(e.g. hotel atmosphere)* - Often trust relationship *(e.g. doctor)* - Importance of word-of-mouth (*e.g. dentist)* SERVICE PROCESSES ----------------- KEY DIMENSIONS OF SERVICES MARKETING ------------------------------------ ### How different types of products are evaluated by consumers: - Tangible products: search properties (color, size, style...) - Intangible products, the services: experience properties - Services provided by specialized professionals: credence properties23  ### Internal marketing: ### interactive marketing: ### 7P's of services marketing: 1. Product 2. Price 3. Place 4. Promotion 5. People 6. Process 7. Physical evidence *Look back at p. 4: for the 4C's* 5.4 MEASURING SERVICE QUALITY AND PERFORMANCE(P.318-319) -------------------------------------------------------- ### SERVQUAL   The five dimensions of service quality 1. **Compensation** --- Monetary or psychological reimbursement (apology) 2. **Favorable employee behaviour** --- positive interpersonal exchanges (e.g., remorse, listen attentively, provide explanation) 3. **Organizational procedures** --- set in place policies, procedures, and practices to recover 5.5 THE PRINCIPLES OF RELATIONSHIP MARKETING -------------------------------------------- - Long term, envisaging loyalty - Collaborative exchange → focus on long term relationships and profitability (higher margins) Characteristics of market and collaborative exchange ### acquisition: \- getting more familiar w each other ### Development: ### Retention: ### Decline: 5.6 LOYALTY AND RETENTION ------------------------- !! It is essentially about PERSONALIZED relationships - Satisfaction is defined as meeting customer expectations - Reduced perceived risk - Continuity: Long-term relationships. - **Sensory: It** makes impressions on consumers senses. - **Affective:** how strongly a brand suggests consumer feelings and emotions. - **Intellectual (cognitive):** how much a brand stimulates a consumer's curiosity, thinking and - **Behavioural (physical):** how strongly a brand engages consumers in physical activities. - **Relational:** how well an experience creates value for customers 6. MARKETING STRATEGY ================== 31. THE STRATEGIC CONTEXT --------------------- STRATEGIC MARKETING PLANNING ---------------------------- - What business are we in? - Who are our customers? - What are we in business for? - What sort of business are we? ### Good mission statements: - Realistic - Specific - Distinctive competence - Motivating *They provide the freedom to move, to heat and to see."* **Importance of the mission:** *"People don't buy what you do, they buy why you do it."* - Acceptable interpersonal and operating standards of behaviour. - Govern and guide the behaviour of individuals within the organization.  PROCESS AND ACTIVITIES ---------------------- ### The three phases in the strategic marketing planning process - Hold - Harvest - Niche - Divest - Growth -- -- -- -- -- --  STRATEGIC MARKET ACTION ----------------------- - Generic strategies - Competitive advantage - Marketing plans - Competitive positioning -- -- -- -- -- -- - ### Cost Leader - ### Differentiation - ### Focus *Lees dia 40 voor goede uitleg in NL* ----------------- -- -- -- ***Airlines*** ***Groceries*** ***Cars*** ***Computers*** ----------------- -- -- -- - ### Market leader (40%) - ### Market challenger (30%) - ### Market follower (20%) - ### Market nicher (10%) STRATEGIC MARKETING IMPLEMENTATION ---------------------------------- - ### organizational culture - **structure and type of the organization** - **available financial resources** - **marketing metrics** ###. Key marketing performance metrics: - Profit - Sales (value / volume) - Return on sales - Awareness - Market share - No. of new products - Relative price - Customer satisfaction - Distribution / availability - Customer advocacy 36. WRITING THE MARKETING PLAN --------------------------  7. MARKETING RESEARCH AND ANALYTICS ================================ 37. DEFINITIONS OF MARKETING RESEARCH, ANALYTICS, AND CUSTOMER INSIGHT ------------------------------------------------------------------ ### Systematic: - Identify and define marketing opportunities and problems - Generate, refine and evaluate marketing actions - Monitor marketing performance - Improve understanding of marketing as a process ### - Internal sources ### - External Resources BIG DATA AND MARKETING ANALYTICS -------------------------------- THE MARKETING RESEARCH PROCESS ------------------------------  ### Management problem: ### Marketing research question ### Type of marketing research : - **Structured**: Sales reports, marketing plans, prior research reports, transactions, financial statements, production schedules, shipments, inventory, invoices, et. - **Unstructured:** Complaints, requests for information, announcements, etc. ### - Methodology: (p.111-112) \- **Nielsen**: ### Panel research ### CIM ### Consumer panel - market size, brand sales, market share, penetration - Prices and promotions - Purchasing frequency - Heavy, medium and light users - Consumer socio-demografic profiles, lifestyle - Regional differences - Brand (dis)loyalty and store (dis)loyalty - Purchases per distribution channel - Trends in sales volume and turnover to consumers - Product movement - Distribution purchasing - Store inventory and inventory breaks - Growth opportunities ***Characteristics*** ----------------------- ------------------------------------------------------ -------------------------------------------------------------- *Purpose* Oriented towards discovery and exploration Oriented towards cause and effect *Procedure* Emerging design; merges data collection and analysis Predetermined design; separates data collection and analysis *Emphasis* Meaning and interpretation What can be measured *Role of researcher* Involved; uses a 'research instrument' Detached; uses standardized research instruments *Unit of analysis* A holistic system Specific variables *Size of sample* Involves a small number of respondents (\30) *Sampling approach* Uses purposively selected samples Uses probability sampling techniques ### Top 5 qualitative and quantitative data collection methods (2017) *Rank* -------- -- -- *1* *2* *3* *4* *5* - Word association - Image association / Rorschach29 - Completing sentences - Story-telling - Thematic apperception test - Third-person technique - Detect underlying feelings and motives of consumers - Keep asking questions - Topic guide: Non-structured questionnaire30 - Often uses hidden, indirect questioning ### Focus group ---------------------------------- -------------------------------------- Depth of insight Needs trained interviewers Attribute answers to respondents Difficult to analyse/ interpret data Reduce 'desirability' of answers High costs Insight in complicated behaviour Few respondents ---------------------------------- --------------------------------------  ### Reliability ### Validity - Respondent involvement with subject - Quality and length of the survey - Personalise the survey or invitation - Guarantee anonimity - Mention closing date - Follow-up: Send reminders - Promise cash, vouchers or non-monetary incentives - Start with an easy and interesting first question - **Qualitative research** : \< 30 respondents - ### Quantitative research: - **Experiments** : minimum 25 respondents per condition Sampling method31 - calls for perfectly defined population and sampling frame - often not cost-efficient - non-response can lead to non-representativeness - increases chance of finding sampling units - lower cost - Envision analyses when drafting questions - Will the selected measures allow you to answer the research question? - Does every question correspond to a specific research question? - Ensure questions are free of bias - Avoid too many open questions - Think carefully about response options of closed questions - Pilot testing ### Implicit association test ### Analyzing qualitative data: - Iterative process33 - Coding - Interpretation ### Analysing quantitative data: - frequencies - means, median, minimum, maximum, etc. - factor analysis - Cronbach's alpha - analysis of crosstabs - t-tests - ANOVA - linear regression - conjoint analysis ### Technical report: - research question & objectives - used measures (+ Cronbach's alpha) - sample description - executed analyses and tests - main findings - observed values - direction of effects - significance & strength of effects - interpretation - discussion, conclusion, recommendations - limitations ### Interpretation of results: - stick to data - careful with nonsignificant results - can results be generalised? - if hypotheses are not supported MARKETING RESEARCH AND ETHICS ----------------------------- - participation based on voluntary informed consent - straightforward and honest - transparent to the subject and purpose of data collection - respect the confidentiality of information - respect rights and well-being of individuals - ensure that participants aren't harmed or adversely affected - balance needs of individuals, clients, and professional activities - independent professional judgement - appropriate training, qualifications and experience of researchers - protect the reputation and integrity of the profession - Aims to protect consumers from breaches of their privacy by giving them control over their personal data. - Applies to all companies processing the personal data of data subjects residing within the European Union. - 'Personal data' = information relating to an identified or identifiable natural person 8. MARKET SEGMENTATION AND POSITIONING =================================== 41. THE STP PROCESS ---------------  THE CONCEPT OF MARKET SEGMENTATION ---------------------------------- - Allows organizations to focus on specific customers needs, in most efficient and effective way - Often leads to increased costs in the short run, but increased profitability in the long run THE PROCESS OF MARKET SEGMENTATION ---------------------------------- ### Two main approaches to market segmentation:  MARKET SEGMENTATION IN CONSUMER MARKETS --------------------------------------- 1. *Geo-demographic:* Continent, country, region, state, province, city, neighborhood ----------- ----------------------------------------------------------------- Area size Mega, large, medium, small City size \ - Market growth - Segment profitability - Segment size - Brand loyalty of customers in segment - Structural attractiveness - Cyclical nature of the industry - Potential sales - Expected profit margin ### How does segment fit with mission, resources, capabilities of organization? - Can the company offer superior value to customers within the segment? - Impact of choosing segment on organization image? - Access to channels? - Does the company have the resources to serve the segment? Targeting approaches - ### Undifferentiated marketing - ### Differentiated marketing - ### Concentrated / Niche marketing strategy - ### Customized targeting strategy  - Constructed to be representative of specific segments - Personas are useful in considering the goals, desires, and limitations of consumers in order to help guide decisions - Visualise from user's perspective (not from the company) - Don't use emotion-layer - User questions, concerns and actions are important ### Creating a journey 1. Segmentation 2. Variation selection (segment persona) 3. Empathy map 4. Phases 5. Actions, questions (what they do in each phase, different from other segments) 6. Extra: solutions (communication) ### Why journerys? POSITIONING ----------- - The close together → higher competition - Farther apart → entry opportunity new brands - ### Centrality: - ### Distinctiveness:  - **Gain creators:** how your products & services create customer gains - **Products & Services:** a list of all products & services a value proposition Is built around - **Pains relievers:** how your products and services alleviate customer pains - **Gains:** outcomes customers want to achieve / benefits they are seeking - **Pains:** bad outcomes, risks and obstacles related to customer jobs - **Customer Jobs:** what customers are trying to get done in their work and in their lives expressed in their own words ### Risks: - Disbelief - Brand Dilution - Functional - Benefits - Values - Personality - Heritage 9. INTERNATIONAL MARKET DEVELOPMENT ================================ 48. THE DRIVERS OF INTERNATIONAL MARKET DEVELOPMENT ----------------------------------------------- - Limited growth in domestic markets - Comparative advantage - Economies of scale - Customer relationships 49. THE INTERNATIONAL MARKETING ENVIRONMENT --------------------------------------- - ### Social factors: - ### Cultural factors: - ### Technological factors - ### Economic factors - ### Political and legal factors - ### Consumption attitude Consumers and International Marketing ### Country-of-origin effect: - bias / influence on a consumer perception caused by the perception of the country of manufacture or assembly of a product. - Sources: history, culture, general perception of a country - Negative bias: the remnants of antipathy and dislike towards a country bcs of past political/military crises - ### Glalienation: - ### Glocalization: - ### Localization: - ### Globalization: INTERNATIONAL MARKET SELECTION ------------------------------ - ### Speed and timing: - ### Costs: - ### Flexibility: - Level of flexibility over their activities in a new market - ### Risk and uncertainty: - ### Return On Investment (ROI)35: - ### Long-term objectives: *Read Table 9.2 on P. 361* - several approaches that organization can adopt when entering international markets. - The higher the risk, the higher the possible rate of return **.** **.** **.** **.** **.** - ### Ethnocentric approach - ### Polycentric approach - ### Regional approach - ### Geocentric approach INTERNATIONAL COMPETITIVE STRATEGY ---------------------------------- BRANDING DECISIONS ================== ### Brand performance ### Brand promise WHAT IS A BRAND --------------- - Top-of-mind awareness - Spontaneous or unaided awareness - Aided awareness, recognition - Strong - Favourable - Unique ### Intrinsic attributes ### Extrinsic attributes TYPES OF BRANDS --------------- - ### Idea brands - ### Person brands ### - Place brands WHY BRAND? ---------- ### Consumers like brands because: - Helps people to identify their preferred products. - Reduce levels of perceived risk + improve the quality of the shopping experience. - Helps people to gauge the level of product quality. - Reduces the amount of time spent making product-based decisions and in turn decrease the time spent shopping. - Provides psychological reassurance or reward, especially for products bought on an occasional basis. - Informs consumers about the source of a product (country or company). - who they **want** to be - who they **strive** to be - who they **think** they should be - Enable premium pricing - Help differentiate a product from competitive offerings - Encourages cross-selling of other brands owned by the manufacturer - Develop customer loyalty/retention and repeat-purchase buyer behaviour - Assist the development and use of integrated marketing communications - Contribute to corporate identity programmes - Provide some legal protection 55. HOW TO BUILD BRANDS -------------------  1. Enable customer to identify with the brand + make associations with product class/customer need 2. Establish what the brand means → linking 3. Encourage responses based around brand-related judgement/feelings 4. Take care of relationship btwn customer & brand BRAND NAMES ----------- - Easily recalled, spelled, and spoken - Strategically consistent with the organization's branding policies - Indicative of the offering's major benefits and characteristics - Distinctive - Meaningful to the customer - Capable of registration and protection - Envision long-term strategy - Relevant to consumers - Distinctive - Usable across circumstances and instruments - Timeless, but adaptable 57. BRAND MEANING ------------- BRAND STRATEGIES ----------------  - Brand dilution = loss of clear positioning and meaning - Risk of cannibalisation - Needs reasonable degree of "fit" with parent brand - Unsuccessful extension can hurt mother brand - More than half of brand extensions fail! 59. CONTEMPORARY BRAND BUILDING --------------------------- - related symbols - colours - language ### Consumer brand equity ### Financial brand equity ### Marketing investments ### Customer mindset ### Market performance ### Financial performance 11. NEW PROPOSITION DEVELOPMENT AND INNOVATION ========================================== 60. INTRODUCTION ------------ THE (NON-)PHYSICAL NATURE OF PROPOSITIONS -----------------------------------------  THE THREE LEVELS OF A PROPOSITION --------------------------------- - ### Core proposition: - ### Embodied proposition - ***Augmented proposition*** - *core proposition:* - *embodied proposition:* - *augmented proposition:* CLASSIFYING PHYSICAL PROPOSITIONS --------------------------------- - ### Durable good - ### Non-durable goods - ### Services - ### Convenience products - ### Shopping products - ### Specialty products - ### Unsought products - **Equipment Goods**: used in regular operations of the organization - **Raw Materials:** the basic materials → produce finished goods - **Semi-Finished Goods:** temporary state of raw materials - **Maintenance, Repair and Operating (MRO):** ensure that the organization is able to continue functioning - ### Component Parts: - **Business Services:** enhance the operational aspects PRODUCT RANGE, LINE, AND MIX ----------------------------  PRODUCT LIFE CYCLES ------------------- - Low sales - Few competitors - High production and marketing costs - Few or negative profits - Selective distribution - Persuading innovators + early adopters into trying - Offer basic product - *Cost-plus pricing* - High advertising effort: Product awareness & interest among early adopters + dealers - Heavy sales promotion (samples, coupons) - Rapidly rising sales - Growing number of competitors - Average cost per customer - High prices, growing demand: Peak profits - Intensive distribution ### ⇒ Market penetration - Persuade mass market to prefer brand + maximize market share - High price to take advantage of high demand - Intensive distribution, small trade discounts - Moderate advertising effort - Rapidly rising sales - Growing number of competitors - Average cost per customer - High prices, growing demand: Peak profits - Intensive distribution ### ⇒ Defense of brand position - Maximise profit while defending market share - Diversify brands and models - Price to match or beat competitors (Avoid price wars) - Build more intensive distribution, high trade discounts - Stress brand differences - Moderate advertising, most buyers are aware of characteristics - Increase sales promotion to encourage brand switching - Declining sales - Declining number of competitors - Declining volume, profits eliminated - Selective distribution ### ⇒ Preparations for removal: - Reduce expenditure & milk brand - Phase out unprofitable items - Cut price to liquidate inventory - Emphasize low price to reduce stock - Reduce advertising spending to minimum level needed to retain loyalists o Minimal promotions  - Products alone are not capable of meeting all of a customer's needs - Service = fundamental basis of exchange - Goods = distribution mechanisms for service provision - Organizations cannot DELIVER value, but can participate in the creation and offering of value propositions. DEVELOPING NEW PROPOSITIONS --------------------------- ### Three ways to develop new propositions: 1. Buy finished products 2. Develop products through collaboration with suppliers or competitors 3. Develop new products internally through R&D departments or by adapting current products with minor design and engineering changes ### Why do 95% of new products fail? - No market exists for the product - There is a market need, but the product fails to meet customer requirements - The product's ability to meet the market need, although satisfactory, is not adequately ### Test marketing: - Customer acceptance measures - Customer acceptance - Customer satisfaction - Market share - Net revenue (sales) - Net unit sales - Financial performance measures - Break-even period - Margin goals - Profitability goals - Internal rate of return (IRR) or return on investment (ROI) - Product-level measures - Development cost - Product performance level - Speed to market - Launched on time - Net quality guidelines - Established services within competitive markets - Incremental service innovation to - Radical service innovation = completely novel offerings Enhancing physical propositions through service development ### "Servitization" THE PROCESS OF ADOPTION ----------------------- - **Relative advantage:** superiority to existing products - **Compatibility:** fits with values and experiences of potential clients - **Complexity:** easy to use or understand - **Triability:** can be tried on limited basis - **Observability:** results of using innovation can be observed or communicated DIFFUSION THEORY ---------------- ### Innovators - Like new ideas - well educated - financially strong ### Early adopters - Opinion leaders - Let innovators take the risk - Reads publications ### Early majority - Require reassurance that the product works - Wait for price reductions - Prefer informal sources of information ### Late majority - Sceptical of new ideas - Adopt because of social or economic factors - Below average in education, social status, income ### Laggards - Suspicious of all new ideas - Opinions are resistant to change PLACE: CHANNELS, SUPPLY CHAINS, AND RETAILING ============================================= INTRODUCTION ------------  - Distribution channel - "Downstream" part of supply chain - Chains of organizations that are concerned with the management of the processes and activities involved in creating and moving products from manufacturers to end users. - All organizations through which product must pass between point of production and final CHANNEL MANAGEMENT ------------------ - Interdependence37 - Share or reduce uncertainty - Focus on value delivery upstream and downstream (win-win) - ### Reduced complexity: - Fewer channel transactions - Costs reduced - Producers are better placed to redirect their attention towards the needs of intermediaries. This allows them to focus on their core activities---that is, production or manufacturing. - End users receive improved individual support from channel intermediaries in comparison with that which they would be likely to get from a producer.  - ### Increasing Value and Competitive Advantage - Reduce purchase risk (uncertainty that customers might reject the offering) - Intermediaries have the skills and core competencies necessary to meet end users' requirements. By improving the overall value that customers perceive in an offering relative to competing products, it is possible to develop competitive advantage. - ### Routinization - Improving transaction efficiency. Allows distribution costs to be reduced. - ### Specialization - Producers prefer to produce large quantities of a small range of goods vs. end users want only a limited quantity of a wide variety of goods. - Sorting and smoothing - (Risk of) lack of product control - Sometimes unable to influence intermediaries in terms of in-store merchandising, placement, and pricing. - Intermediaries might be susceptible to competitor inducements, such as trade promotions. - For many manufacturers and producers, intermediaries often become a market in their own right, and developing and sustaining a relationship with them can require considerable time, money, and personnel TYPES OF INTERMEDIARY --------------------- MANAGING MARKETING CHANNELS --------------------------- A. Channel design - What is the most effective and efficient way of getting the offering to the customer? - Varies according to context ### Three key decisions: - The distribution intensity decision - The channel configuration decision - The multichannel decision ### Key consideration: - Economic - Coverage - Control ### Customer needs: - Purchase quantity - Convenience, location - Ordering options - Waiting time, delivery time - Product variety, choice - Support services (delivery, credit, installation, repair, store atmosphere, etc.) Weighing needs against feasibility38 and price ### Distribution channel strategy B. Channel structure ### Hybrid marketing system (= multichanneling) - *Benefits:* - Increased reach - Producer control - Greater compliance - Optimized margins - Improved market insight ### Flex shopper ### Omnichannel marketing 69. CHANNEL INTENISTY ----------------- - ### Intensive - ### Selective - ### Exclusive ### Disintermediation ### ### Re-intermediation MANAGING RELATIONSHIPS IN THE CHANNELS -------------------------------------- - Each channel member: - is dependent on others - has specialized role - takes on duties that he can perform "best" - All channel members should work together and coordinate ### Horizontal conflict ### Vertical conflict SUPPLY CHAIN MANAGEMENT -----------------------  RETAILING --------- - ### Access convenience: - The speed and ease which consumer can reach or engage with a retailer - Influenced by factors such as location, availability, hours of operation, parking and proximity to the other outlets, as well as telephone, mail and the internet - Convenience does not exist without access - ### Search convenience: - The speed and easy with which consumers identify and select they wish to buy - Influenced by factors such as product focus, intelligent outlet design and layout, knowledge staff, interactive systems, product displays, etc. - Convenience in search means efficiently moving trough the shopping experience - ### Possession convenience: - The spend and ease with which consumer obtain desired products - Influenced by having merchandise in stock and available on timely basis - Obtaining the product is the final objective when shippen, which makes possession convenience critical - ### Transaction convenience: - The spend and ease which consumers can affect and amend transactions before and after the purchase - Influenced by factors before and after the actual purchase, such as trying on, waiting lines and returns - Transaction convenience is a significant issue on the internet, with pure internet retailers having problems with returns and customers not prepared to pay for shipping and handling costs - ### Convenience! - User-friendly interface - Sorting & filtering products - Search function - Delivery options - ### Trust! - Safe payment - Free delivery - Free returns - **Experience** - **Service & advice** - **Time utility** - ### Department store: - Broad and deep with layout and presentation of products critical - Minimize price competition - Wide array and good quality - ### Discount store - Broad and shallow - Low price positioning - Few customer service options - ### Convenience - Narrow and shallow assortment - High prices - Avoid price competition - Standard - ### Limited line - Narrow and deep assortment - Traditional: avoids price competition, New kinds: low prices - Vary by type - ### Speciality - Very narrow and deep assortment - Avoids price competition - Standard - ### Category killer - Narrow and very deep assortment - Low prices - Few to moderate - ### Supermarket - Broad and deep assortment - Some are low price, others avoid price disadvantages - Few and self-service - ### Superstore - Very broad and very deep assortment - Low prices - Few and self-service CHANNEL TRENDS -------------- - ### In Belgium: - ### Globally: - Scaling up: Power - More professionalism - Global expansion - technology has become indispensable40 ### Loyalty 13. PRICE 74. THE PRICE ELASTICITY OF DEMAND ------------------------------ 75. THE CONCEPT OF PRICING AND COST - **Price** = amount of money expected, required, or given in payment for something - **"Right" price is determined by customers** THE RELATIONSHIP BETWEEN PRICING AND COSTS ------------------------------------------ - increases in price have a disproportionately41 positive effect on profits - decreases in price have a disproportionately41 negative effect on profits CUSTOMER PERCEPTIONS OF PRICE, QUALITY, AND VALUE -------------------------------------------------  INFLUENCES ON CUSTOMER PRICE PERCEPTIONS ----------------------------------------  - "sale" next to the price - "lucky" prices - Odd-number pricing - Even price PRICING APPROACHES ------------------  +-----------------------------------+-----------------------------------+ | - - - Does not require | - Doesn't take demand & | | adjustment with demand change | perceived value into account | | | | | - - | - Doesn't take competition into | | | account | | | | | | - Only works if set price also | | | enables expected sales | +-----------------------------------+-----------------------------------+ ### Break-even pricing - Price *before* marketing programme is set - Price is crucial positioning factor - Value of different competitive offers? - Different pricing strategies for different segments ### (Good-)Value pricing - Everyday low pricing - High-low pricing ### Value-added pricing - Attach value-added services - "Pricing power": escape price competition - "Market plus pricing": based on perceptual value, high above standard 80. PRICING STRATEGIES AND OBJECTIVES --------------------------------- - **Premium pricing:** pricing an offering to indicate its distinctiveness in the marketplace - **Economy pricing:** setting prices at bare minimum to attract price sensitive customers - **Penetration pricing:** low price to attract large target audience (gain market share) - **Price skimming:** highest initial price that customers will pay and then lowers it over time.  - ### Target costing 81. PRICING MANAGEMENTLIST PRICING ------------------------------ - **List pricing:** single price set for an offering - **Promotional pricing:** reducing the price of a product with the goal to attract more customers. - **Segmented pricing:** setting prices for different groups of customers (price discrimination) - **Pay-what-you-want pricing:** customers decide themselves how much they want to pay - **Dynamic pricing:** different prices depending on individual customers and situations BUSINESS-TO-BUSINESS PRICING ---------------------------- - Understanding customers' needs to generate long term relationship - Offering incentives to customers for being loyal - Better deal for "better" customer - Building loyalty - Stimulating repeat buying - Dropping price too quickly - Focusing too much on cost, rather than value - Neglecting to change price based on market changes - Setting price independent of rest of marketing mix - Not sufficiently applying differentiated pricing 14. PROMOTIONS I: PRINCIPLES OF MARKETING COMMUNICATIONS ==================================================== 83. DEFINING MARKETING COMMUNICATIONS --------------------------------- - ### Engagement - What are the audiences' communications needs? - Is it possible to engage with them on their terms using one-way, two-way or dialogic communications? - ### Audiences - Which specific audience(s) do we need to communicate with? - What are their various behavior and information processing needs? - ### Responses - What are the desired outcomes of the communication process? - Are they based on changes in perception, values and beliefs or are changes in behavior required? 84. THE SCOPE OF MARKETING COMMUNICATIONS ------------------------------------- - ### Planned - ### Service-based - ### Product-based - ### Unplanned HOW MARKETING COMMUNICATIONS WORK --------------------------------- - ### Encoding - *a very creative process with many possibilities* - *an automatic vs. deliberate process* - ### Decoding - *Perception = reality* - *colored by our own **model of the world***  - Company not involved - Opinions of others (that don't want to sell you the product) seem more reliable MARKETING COMMUNICATIONS THEORY ------------------------------- - **Attention:** What is it? - **Interest:** I like it. - **Desire:** I want it. - **Action:** I'm getting it. - ### Awareness - ### Knowledge - ### Liking - ### Preference - ### Conviction - ### Purchase ### The strong theory of advertising - Persuasion occurs by moving passive buyers toward to a purchase by easing them through a series of steps, prompted by timely and suitable promotional messages. - Advertising is believed to be capable of increasing sales for a brand and for the product ### The Weak Theory of Advertising - A consumer's brand choices are driven by purchasing habit rather than by exposure to - Advertising is used to: - maintain awareness and provide reassurance. This helps customers repeat their pattern of thinking and behavior. - reinforces existing attitudes and does not necessarily change them.  - ### Knowledge: - ### Feelings: THE ROLE OF MARKETING COMMUNICATIONS IN MARKETING ------------------------------------------------- - Customers - Channel members - General stakeholders - ### Differentiate: - ### Reinforce: - ### Inform: - ### Persuade: - Wanting to be what people are interested in, starting from a story and creating a connecting and stimulating others to tell the story - Not putting main focus on selling ### Flaws: - only holds attention for a short time - interrupts instead of offering something valuable - expensive especially if the campaign is not successful ### The story is king: - storydoing: - Companies will lose credibility if they don't act on the story they are promoting - They should be authentic and have a clear purpose and well-considered values, carried out by all employees through customer service, product design, etc. ### 3 golden rules of storytelling: 1. Authenticity rules: - Brand as human 2. It's not about you - Real people in real word situations 3. Show don't tell  - Who should receive the messages? - What should the messages say? - What image of the organization or brand are receivers expected to retain? - How much is to be spent? - How are the messages to be delivered? - What actions should the receiver take? - How do we control the whole - What was achieved? 88. THE ELEMENTS OF THE MARKETING COMMUNICATIONS PLANNING FRAMEWORK --------------------------------------------------------------- - Customer context - Internal context - External context - Category need - stimulating sales of the entire product class - Brand awareness - Brand attitude - the customer opinion towards a product or a service - Communication behaviour - Purchase (intention) - Satisfaction and loyalty ### Push strategy ### Pull strategy ### When measuring feedback you should keep the meaning of outcome in mind  CULTURAL ASPECTS OF MARKETING COMMUNICATIONS -------------------------------------------- - culture has a big impact on the behaviour of individual consumers: - ### National culture: - ### Business/Industry culture: - ### Organizational culture 15. PROMOTION II: CONFIGURING THE MARKETING COMMUNICATIONS MIX ========================================================== 90. THE ROLE OF THE MARKETING COMMUNICATIONS MIX --------------------------------------------  SELECTING THE RIGHT TOOLS ------------------------- ### "Creative" forms of advertising: - Advertorials - Infomercials - Non-spot advertising - Stealth advertising *(e.g., Product Placement)* - Branded entertainment - Free products in exchange for commercials - Advergames +-----------------------------------+-----------------------------------+ | - Efficient means for reaching | - Difficult to receive good | | large audience | feedback | | | | | - | - Often placed in a cluttered | | | context + overall little | | | attention | | | | | - Potential to both inform, | - High absolute costs | | remind, move and persuade | | | | | | - - Easily linked to other | | | communication formats (e.g., | | | web site) | | +-----------------------------------+-----------------------------------+ +-----------------------------------+-----------------------------------+ | - - - - - - - | - Time intensive | | | | | | - High cost/customer | | | | | | - dependent on seller | +-----------------------------------+-----------------------------------+ -- -- -- -- +-----------------------------------+-----------------------------------+ | - - reaching pot. Clients who | - Difficult to get media | | avoid advertising / | cooperation | | salespeople | | | | - Little control over content | | - | | | | - Impact difficult to quantify | +-----------------------------------+-----------------------------------+ ### Content marketing +-----------------------------------+-----------------------------------+ | - - - - | - short term impact on sales | | | | | | - Can damage brand image & | | | sales on LT | | | | | | - Impersonal | | | | | | - Attractive to customer? | | | | | | - Easily duplicated | | | | | | - Can lead to promotion wars | | | and pressure on margins over | | | time | +-----------------------------------+-----------------------------------+ +-----------------------------------+-----------------------------------+ | - | - Sometimes exploiting "weaker" | | | customers | | | | | | - Often deceiving, can irritate | | - adapted message, offering to | consumer, growing privacy | | individual clients | issues and declining response | | | | | - - | - Requires qualitative | | | databases ⟹ costly | +-----------------------------------+-----------------------------------+ MARKETING COMMUNICATIONS MESSAGES --------------------------------- ### Informal messages - Demonstration - Slice-of-life - Testimonial - Problem solving - Dramatization - Comparative advertising - Pros: attention, brand awareness, positive brand attitude, higher purchase intent - Cons: less credible, confusion, risk of lawsuits, people don't like it, ### Emotional or transformational appeals - Humour - Warmth - Eroticism - Fear - \... ### User-generated content ### Branded content - Can enable conservations that serve to raise a brand's profile and credibility MARKETING COMMUNICATIONS MEDIA ------------------------------ - Print Media *(e.g., newspapers and magazines)* - Broadcast *(e.g., television and radio)* - Out-of-Home *(e.g., street furniture (such as bus shelters), billboards and transit (buses, taxis, metro))* - In-Store *(e.g., point-of-purchase displays and packaging)* - Digital *(e.g., Internet and online marketing, wireless, mobile and interactive tv)* - Other *(e.g., cinema and ambient)* THE CHANGING MARKETING COMMUNICATIONS LANDSCAPE ----------------------------------------------------------------------- - **Automation**: of media planning, buying and selling ("programmatic") - **Convergence**: the "bringing together" of different media and technologies - **Ad avoidance**: consumers use various tools to avoid advertising INTEGRATED MARKETING COMMUNICATIONS ----------------------------------- ### Integrated Marketing Communications 16. DIGITAL AND SOCIAL MEDIA MARKETING ================================== 96. DIGITAL MARKETING ----------------- - Simple + cheap - Permission-based - A/B testing - Only pay for ads delivered to the right people at the right time - More costly + more impactful - Artificial intelligence 97. SOCIAL MEDIA MARKETING ---------------------- ### Social media marketing: HOW DIGITALIZATION IS TRANSFORMING MARKETING -------------------------------------------- ### Digital is not an add-on - Keep objectives in mind - Find out what your audience is interested in - Select the right channels → use full potential - Part of integrated campaign - Digital ≠ a goal itself - Failing a lot to succeed ⟹ learning from mistakes THE IMPACT OF SOCIAL MEDIA ON MARKETING --------------------------------------- ### User-generated content (UGC) - difficult - Start from objectives, define KPIs - Requires systematic approach CONSUMER CO-CREATION -------------------- 17. NOT-FOR-PROFIT AND SOCIAL MARKETING =================================== 101. INTRODUCTION ------------ - tangible, physical products - services - practices - intangible ideas - ### Proposition - ### Price - ### Involvement - ### Segmentation - ### Another key difference THE KEY CHARACTERISTICS OF NOT-FOR-PROFIT ORGANIZATIONS ------------------------------------------------------- 1. ### Multiple stakeholders - They have to serve multiple stakeholders 2. Multiple objectives - Performance measurement is challenging, because a wider set of objectives are used 3. ### Orientation - Developing a market orientation is important, because the stronger the market orientation, 4. ### Customers perceptions - In many cases, there is no choice or alternative supplier - Often little customer-centric TYPES OF NOT-FOR-PROFIT ORGANIZATION ------------------------------------ 1. Charities - Increased competition - Increased need for charitable support - A fundraising campaign - Greater collaboration with private sector - ### Cause marketing - Sponsor making a donation to the cause with purchase of product/service - Expected to show a return on investment (=ROI) - ### Public-private partnerships 2. Social enterprises 3. The public sector ### − Public service announcement 4. Political Parties and Campaigning Organizations