Introduction to Marketing PDF

1. INTRODUCTION TO MARKETING 4 1.1. Origin and evolution of marketing................................................................. 4 1.2. The marketing concept................................................................................ 4 1.3. Basic concepts of marketing: Products (goods and services), Exchange, Transactions and Relationships.................................................................................................. 5 1.4. Basic concepts of marketing: Need, Want and Demand................................. 6 1.5. Marketing orientations................................................................................ 7 1.6. The role of marketing in the economy........................................................... 9 1.7. Marketing in business management: the commercial system....................... 10 1.8. Strategic Marketing and Operational Marketing........................................... 11 2. ANALYSIS OF THE BUSINESS ENVIRONMENT AND COMPETITION........................ 12 2.1. Concept and nature of the Environment...................................................... 12 2.2. The Microenvironment: providers / suppliers, customers, intermediaries, interest groups and competition....................................................................................... 13 2.3. The Macro-environment: demographic, economic, technological, socio-cultural, political legal and ecological (environmental)......................................................... 15 2.4. The Environment Management................................................................... 16 2.5. Analysis of Competition: the model of the five competitive forces................. 17 3. CONSUMER BEHAVIOUR.................................................................................. 20 3.1. INTRODUCTION: CONSUMER BEHAVIOR AND ITS IMPORTANCE FORMARKETING 6 3.2. CONCEPT: STUDY OF CONSUMER BEHAVIOR............................................ 20 3.3. APPROACHES / THEORIES OF CONSUMER BEHAVIOR................................ 22 3.4. CONSUMER BEHAVIOR DETERMINANTS.................................................... 26 3.4.1. INTERNAL DETERMINANTS.................................................................... 26 3.4.2. EXTERNAL DETERMINANTS.................................................................... 29 3.5. THE PURCHASING DECISION PROCESS..................................................... 31 3.6. BIBLIOGRAPHY.......................................................................................... 6 4. MARKET SEGMENTATION AND POSITIONING..................................................... 33 4.1. INTRODUCTION: THE MARKET AND DEMAND............................................. 33 4.2. SEGMENTATION: CONCEPT, OBJECTIVES, BENEFITS, PROCESS and LEVELS 33 4.3. SEGMENTATION AND DIFFERENTIATION.................................................... 34 4.4. BASES OF SEGMENTATION....................................................................... 34 4.5. SEGMENTATION CRITERIA........................................................................ 35 4.6. STRATEGIES............................................................................................. 37 4.7. POSITIONING: CONCEPT AND BASIS......................................................... 38 4.8. THE POSITIONING MAP............................................................................. 39 5. MARKET RESEARCH......................................................................................... 41 5.1. The Marketing Information System (S.I.M): Concept and components........... 41 5.2. Business / Market Research Concept......................................................... 42 5.3. Commercial / Market Research Process....................................................... 8 5.4. Information sources: concept, characteristics and typology......................... 44 6. THE ROLE OF THE MARKETING STRATEGY.......................................................... 49 6.1. CONCEPTUALIZATION OF STRATEGY......................................................... 49 6.1.1. Elements of the Strategy........................................................................ 49 6.1.2. The Competitive Advantage. Elements.................................................... 49 6.2. TYPES OF STRATEGIES.............................................................................. 50 6.2.1. GROWTH STRATEGIES: Typologies......................................................... 50 6.2.1.1. Intensive growth strategies................................................................. 51 6.2.1.2. Diversified growth strategies.............................................................. 51 6.2.1.3. Integrated growth strategies............................................................... 52 6.2.2. COMPETITIVE STRATEGIES.................................................................... 52 6.2.2.1. Leader strategies.............................................................................. 52 6.2.2.1.1. Primary demand development strategy............................................... 52 6.2.2.1.2. Market participation protection strategy.............................................. 52 6.2.2.1.3. Strategy to increase market share....................................................... 52 6.2.2.2. Challenger strategies......................................................................... 53 6.2.2.3. Follower strategies............................................................................ 53 6.2.2.4. Specialist strategies.......................................................................... 53 7. THE PRODUCT AND THE BRAND....................................................................... 56 7.1. Product concept....................................................................................... 56 7.2. Product dimensions.................................................................................. 56 7.3. Product mix decisions (Portfolio)................................................................ 57 7.4. Classification of products......................................................................... 59 7.5. Decisions about product attributes: brand, packaging and label................... 59 7.6. The product life-cycle management........................................................... 63 7.7. New product development process............................................................ 64 8. THE PRICE....................................................................................................... 65 8.1. Conceptualization, importance and price objectives................................... 65 8.2. Factors influencing price determination...................................................... 66 8.3. Pricing methods....................................................................................... 69 8.4. Pricing strategies...................................................................................... 11 8.5. Incidents of price changes......................................................................... 11 9. DISTRIBUTION................................................................................................. 72 9.1. Concept and importance of distribution..................................................... 72 9.2. Distribution functions............................................................................... 73 9.3. Distribution channels and types................................................................. 74 9.4. Decisions on the design of the distribution channel..................................... 77 9.5. Relations between the members of the distribution channel: Cooperation, Conflicts and Power........................................................................................................... 77 9.6. Physical distribution................................................................................. 78 10. THE COMMUNICATION POLICY..................................................................... 78 10.1. Communication in Marketing................................................................. 78 10.2. Advertising........................................................................................... 80 10.3. Sale promotion..................................................................................... 81 10.4. Direct marketing................................................................................... 83 10.5. Sales force........................................................................................... 83 10.6. Communication for Action..................................................................... 84 INTRODUCTION TO MARKETING 1.1. Origin and evolution of marketing Plato in the work The Republic, already raised aspects related to marketing: needs, satisfaction, exchanges and intermediaries. In the middle age St. Thomas de Aquino, established that the value of a product depends on utility. American Marketing Association (AMA): one of the largest professional associations for marketers, with 38000 members worldwide in every area of marketing. For more than 7 decades (foundation in 1937), the AMA has been an essential resource, providing relevant marketing info that experienced marketers turn to every day. Historical evolution of the marketing concept Until 1969 1969-1990 Since 1990 Only enterprises Organizations (+) Society (business) Deliver value (value Deliver value (value Goods/services entities) entities) Distribution Satisfaction Satisfaction Transaction Exchange Exchange Market- Product- Short term 1st phase: Marketing was born as a discipline and at the beginning it was just carried out by private companies and limited to business transactions. 2nd phase: it can be carried out by any organization (private company, NGO, public organization…). 2nd and 3rd phase: It is responsible for the exchange between the 2 parties, that is, it is no longer limited exclusively to the exchange of goods and services, also any idea/feeling/even a person. Marketing of the XXI century “It is not a synonymous of sale” “It is not a modern form of advertising.” 1.2. The marketing concept Marketing: function of organizations and a set of processes to create, communicate and deliver value to customer and to manage customer relationships through procedures that benefit the organization and stakeholders (3rd parties). It 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. It is a way of conceiving and executing the exchange relationship, with the PURPOSE that it be satisfactory to the parties involved and to society, through the development, valuation, distribution and promotion, by one of the parties, of the goods, services/ideas that the other party needs. Marketing, more than any other business function, is about customers. The simplest definition of current marketing would be: built customers loyalty and manage a profitable relationship with them. Examples of companies: Amazon: Dominate the online marketplace. 40 categories, a lot of products. Tik Tok: it is configured as the social network for the future of digital. 1.3. Basic concepts of marketing: Products (goods and services), Exchange, Transactions and Relationships Market: potential customers who share a need/desire and who could be willing to satisfy it through the exchange of other elements of value. Products (goods and services): everything that can be offered to the market to satisfy a need/desire. Be it tangible/intangible. Services (4 properties): Intangibility: they cannot be seen, tasted, felt, heard/smelled prior to purchase. Ex: A dinner in a restaurant, a cruise trip. Inseparable character: they cannot be separated from their supplier. Perishable character: they cannot be stored for future sale/use. Variability: the quality of services depends on who provides them and in when, where and how. EXCHANGE, TRANSACTION, RELATIONSHIP Exchange: act of communicating with another to obtain something from him, which has a value and is useful, offering something in exchange that is also valuable/useful. The core part of marketing is located in EXCHANGE. Necessary conditions for the exchange: There must be at least two parts. Each part has to have something of value for the other. Each party must have the ability to communicate with the other. Each part must have delivery capacity. Each party must be free to accept/reject. Each party must believe it is appropriate and desirable to deal with the other. Transaction: result of an agreement between the parties to an exchange relationship. It involves an exchange of values between the parties. Relationship (relationship marketing): building long-term relationships with customers, suppliers, wholesalers and businesses. VALUE, SATISFACTION Value: a customer’s perceived assessment of the tangible and the intangible benefits that receive in relation to the price they pay and the efforts/discomforts they endure. The perceived value is the key element to understand the marketing performance of the different agents. It is therefore the difference between the positive and negative values provided by the product/service. Utility: the measure of satisfaction generated by the exchange. It is what makes an object valuable to the recipient, it is related to satisfaction (result of comparing the perception of the benefit received with expectations). Types: Form: it creates an assortment adjust to consumers. When the firm provides the goods to the customer in a form that is more useful. Ex: buying a ready-made pizza is much more convenient than buying the ingredients and making it oneself. Place: it overcomes the special gap between the place of production and consumption. When the firm brings the product closer to the consumer. Ex: having shops of all kinds close to us (bakeries, butchers, clothe shops, grocery shops…). Time: it overcomes the temporal mismatch between production and consumption. The company provides the product at the time of need. Ex: this explains why so many cold drinks are sold at the beach, as they are offered to us just when we are thirsty. Possession: it puts supply and demand in contact and promotes the transfer of property. The ease with which we can transfer ownership of a product to a customer. Ex: real state agencies make large profits because they facilitate the sale or rental of houses, travel agency… Information: it collects information of the market and communicate the product and the run. 1.4. Basic concepts of marketing: Need, Want and Demand Need: inherent to the human being itself and represent the absence of a good/service in a generic way. States of perceived deprivation. Common to all individuals. Ex: lack of a basic good (food)/ more complex needs (belonging to a group). Wish: concretion of the needs in something specific. Demand: express formulation of a wish about a specific product/service, conditioned by the purchasing power of the buyer. Marketing identifies needs that depend on cultural/social factors and personal characteristics. This leads to directing/channeling specific desires by marketing and marketing also stimulates demand which will depend on economic factors and available resources. Marketing channels and directs desires, identifying them with needs and thus stimulating demand. Marketing aims to organize the exchange and communication between producers and buyers so that there is an efficient match between supply and demand. 1.5. Marketing orientations Production orientation/approach (diap 20) Competition null/minimal This approach holds that consumers will be + attracted to products that are available and low-cost. This approach focuses on achieve maximum production at minimum cost and wide distribution. Ex: Any customer can have the car of the color they want as long as it is black. Industrial revolution, products that are not differentiated. Product orientation/approach (diap 22) Competition increasing. This approach holds that consumers will show a + favorable predisposition towards those products that offer better quality/results. This approach focuses on make good products and improve them technically over time. The problem is that products are not sold for the good in itself but for the function they serve and the need they meet. Product approach marketing myopia (consumer needs are not analyzed. We don’t think in the consumer and its satisfaction, the only thing is to sell a product. Ex: Bimbo and Kodak focused on quality and forgot about consumer needs. Photo roll as a way to capture memories: Kodak, Fujilm, Hp, Sony, Nikon… Sales orientation/approach (diap 24) Competition high This approach holds that if consumers are not pushed, they will not buy enough of the company’s products. This approach focuses on sell what the company produces, using aggressive sales and communication policies. (an unsatisfied consumer = an unloyal consumer). Ex: Avon, McDonalds, Marlboro. Würth is a seller company and where a seller has not arrived, neither will the postman. Daily contact through our sales network of more than 300 branch offices in Germany and more than 28000 sales representatives worldwide guarantees that we remain close to our customers and can thus provide competent advice and fast delivery. In order to be the right contact for our various customers, our sales force is organized in different divisions to suit the demands of the automotive, wood- and metal-working trade as well as construction and industry. Burger King “If the customer is the king, the seller is the prince”. Marketing orientation/approach (diap 26,27) Competition High This approach holds that the key to achieving the organization’s objectives is to identify the needs and desires of the target audience and deliver the desired products in a + effective and efficient way than the competition. This approach focuses on identify consumer needs and try to satisfy them while making a profit. Produce what is demanded. Ex: Ikea, Zara, Aquarius, Coca-Cola (it creates a myth within the largest beverage company in the world, since this is a product that is born directly in demand by Spanish consumers). Social marketing orientation/approach (diap 29,30) Competition high This approach holds that the task of organizations is to identify the needs, desires and interests of their target audience to supply it + effectively than the competition and in a way that improves/preserves the long-term well-being of consumers and society. This approach focuses on identify consumer needs and try to satisfy them obtaining a benefit, also considering the social responsibility of the organization. Ex: Ikea, Fontvella, Pepsi, Mercadona (gives some products to Caritas/Cruz Roja), Carrefour (Carrefour’s commitment to consumers, the environment, suppliers and society), Ariel (Ariel’s motivation to save water and donation to WWF/Adena). Customer orientation (digital marketing) Is based on detailed knowledge of customer behavior to achieve complete satisfaction of their needs and desires. The customer is the center of the business strategy Omnichannel is a communication model used by companies to improve the experience of their customers, allowing them to be in contact with the company through multiple channels at the = time. Integration of all existing customer service channels mail, RRSS). Ex: Netflix, Amazon. Sales orientation Marketing orientation From transactions marketing to relationship marketing Starting Key Media Purposes Starting Key media purposes point elements point elements enterprise products Promotion Profits and sales through sales 1.6. The role of marketing in the economy Organize the exchange and communication between producers and buyers so that an efficient encounter between supply and demand occurs. Marketing aims to study this exchange relationship (how it begins, how it develops and how it ends). There are 2 types of relations between producers and buyers (S and D): Material (physical) flow of goods and services →distribution: Direct channel: form of distribution where there are no intermediaries between producers and consumers. Indirect channel: there is one/+ intermediaries. Communication →communication flow: (bidirectional flow) From the company to the consumer: Informs the consumer of the goods available in the market and their characteristics. Advertising Promotion From the consumer (market) to the company: Provides information to the company on the needs of consumers. market research. 1.7. Marketing in business management: the commercial system Commercial function marketing can be considered the area that increment the commercial function. Commercial system set of variables and related elements that develops the commercial function. Commercial management it efficiently implements the marketing plan. Elements/actors: Company/competition Suppliers Intermediaries Market Environment Variables: Controllable 4Ps Product (product development and marketing in different galaxies) Price (price competitor, e-commerce) Distribution/Placement (e-commerce, Amazon) Communication (constant and instant access to info. Intoxication overload info, cookies). Not controlables Market Competition Environment Goal Objectives Marketing-mix variables: 4P Product (marketing) Price (business) Place (distribution) Promotion Consumer: 4P 4C (strategies focused on the consumer, his desires and his needs) Value for the customer. Cost (the cost people are going to pay for a product). Convenience, comfort (the things that make the life easy and simplest to customers. Products must be easy to find and easy to pay). Communication (in order to communicate with clients and with intermediaries. Ex: messenger, WhatsApp). Marketing service: adds 3P = 8P People Processes (we go to a restaurant and food is one hour late; the process is not right) Physical evidence Product/service Price Place Promotion productivity digital marketing in the business management (new 4P) Traditional marketing Product Price Point of sale Promotion Consumer Cost Convenience Communication + (Prosumers producers + customers. They want to create and give value to the product) Digital marketing Personalization Participation Prescription Prediction personalization not wars marketing. Amazon. Participation RRSS, Harley Davidson. Prescription from peer to peer. Spotify. Means that consumers are also prescribers. It tries to be a community brand. Predictive modeling Big Data, AI. 1.8. Strategic Marketing and Operational Marketing Marketing management: Analyisis dimension = strategic marketing study of market needs (consumer needs) and their evolution over time to guide the company in its marketing decisions. Long-term management. It consists of: Understanding the environment. Competition analysis. Market research Market segmentation Knowledge of the consumer and their needs. Action dimension = operational marketing conquest of markets through concrete actions on marketing variables (product, price, distribution and communication). Short- term management. It consists of: Design of the marketing-mix plan and policies (product, price, distribution, communication) Coordination between marketing-mix activities. Execution and control. Marketing trends: changing marketing landscape Digital era online marketing, on mobile phones (mobile marketing) and on social networks (collaborative economy) Variable economic environment (great recession, Covid, wars) Marketing growth in nonprofit institutions (universities, hospitals, museums, foundations) Growing globalization Need to implement sustainable marketing (more corporate ethics and social responsibility). 2. ANALYSIS OF THE BUSINESS ENVIRONMENT AND COMPETITION 2.1. Concept and nature of the Environment The environment Environment everything that is alien to the company, that is, it is given by the set of forces and factors that are beyond the control of the firm and that can have an impact on it. It is the set of external actors and forces (to the head of marketing) that, being partially/totally uncontrolled, are likely to affect the exchange process with the target markets. Ex: ABC/EL PAIS, nowadays less use of newspapers. This shows the imp and influence of the environment. 2.2. The Microenvironment: providers / suppliers, customers, intermediaries, interest groups and competition Microenvironment actors, factors/elements that act in the most immediate environment of the company and that affect/may affect, in a + direct and specific way, its exchange relationship with the market. It is made up of variables that have a direct impact on the commercial act of the company. Suppliers Suppliers the quality of the offer depends to a large extent on the quality of the suppliers’ inputs. Imp good selection of the supplier and create, develop and maintain good stable and mutually satisfactory relations for both parties, within the framework of cooperation programs and creating relationships of trust. input quality adequate supply purchase management good selection long lasting relationships bargaining power price, quality and services intermediaries intermediaries person/organization that facilitates the promotion, sale and distribution of products/services. TYPES OF DISTRIBUTION CHANNELS They can be wholesalers/retailers. One can speak of direct/indirect distribution. The primary difference between wholesale and retail is that the former is a business-to- business model and the latter a business-to-consumer model. In a wholesale model, you don't sell products directly to consumers. In a retailing model, you sell products directly to consumers. Competition: current and potential Basic principles on competition: every competitor who persists and survives has a unique advantage over the others. Otherwise, it would be eliminated. The + similar the competitors are to each other, the stronger the competition. If the competitors are different and coexist, then each must have a distinct advantage over the other. The coexisting competitors must be in balance. Important to identify and analyze: Degree of intensity of competition in the market. Direct/indirect competitors Benchmarking studies Strengths and weaknesses Goals Strategies Competitor reactions Ex: Redbull strength: presence in the market. Interest groups/stakeholders Interest groups institutions/ groups, which in one way/another may have an impact/ a current/potential interest on the company, objectives and actions. You have no influence on them. Consumers can go to them in case of disagreements between the buyer and the seller/a claim. Local community Company shareholders Financial community Mass media Public/ private organizations DAFO/ SWOT analysis 2.3. The Macro-environment: demographic, economic, technological, socio- cultural, political legal and ecological (environmental) Macro environment more general actors, factors/elements that affect all companies =. They do not have a direct impact on the commercial act of the company, but they can influence it, and they exist regardless of whether it is developed/not. Demographic environment factors related to the population: sex, age, birth and mortality rates, the population pyramid, the level of studies, migratory movements… Ex: If there are not enough people, there won’t be a lot of people to buy our product. If we have + elderly people we have to adapt, products such as medicines, nutritional supplements, diapers for adults should be offered; we will act + in this group because they will demand +. Netflix Kids for generation Z. Economic environment they affect purchasing power and consumption patterns: interest rates, income, exchange rates, evolution of employment/unemployment… Ex: if people have to pay a mortgage, they will have - money to pay for another products. If people pay a lot of taxes, their consumption may decrease. Inditex + expensive products depending on the countries. Sociocultural environment norms, beliefs, customs and habits: change in sociological/cultural behaviors, lifestyles, perceptions… Ex: Concern for healthy living. Nowadays dietetic products are very popular. Cosmetic for men. A lot of people in gyms. 35/40 years is the average age of playing videogames. Political-legal environment laws, norms, rules that influence companies. Ex: China banned Pokemon Go, restrictions to Huawei. This can condition our act. Technological environment innovations, advances, progress: level of technology and evolution of a country. Ex: the imminent future of the tourism industry will be, thanks to AI, facial recognition to automate check-ins. Now many stores, like Carrefour, have to adapt and currently sell their products online. Ecological (physical and natural) environment natural resources and bioclimatic factors. Ex: The ecological element affects consumption, production, distribution and packaging. Sustainability, green products, secondhand clothes… Patagonia clothing: reduce, repair, reuse, recycle. Adidas uses recycled products for the sole of its shoes to create a better image of sustainability. Pestel analysis P Political // E Economical // S Sociological // T Technology // E Environmental // L Legal. 2.4. The Environment Management Environmental management set of activities carried out by companies to try to anticipate changes in variables not controllables by the company and measure the possible effect on its objectives, in order to carry out the necessary corrective actions. The exchange relationship of the company with the market takes place within an environment that the company cannot control. An environment full of OPPORTUNITIES and THREATS and with very marked characteristics: - complex (requires a lot of knowledge) - dynamic (speed, immediacy, changes) - diversified - hostile. Marketing today is considered as an instrument capable of influencing the environment in a limited way. From a reactive posture/adaptation to the environment, it has moved to a proactive one in which it is a matter of following and directing the environment to anticipate changes. Marketing instrument in the organization that can create changes/influence the environment. Permanent observation of the environment Competitive advantage is one that the company has over the others, which makes it different and allows it to attract + consumers. To achieve these advantages, the company must start with an assessment of the impact and implications of threats and opportunities, for which SWOT is used. Not all the companies can influence the environment, but some of them are capable of influencing it in order to earn +: Netflix (sociological), Amazon (sociological), Nike (Political- legal). 2.5. Analysis of Competition: the model of the five competitive forces Porter´s 5 force model → essential for analyzing the industrial structure and the level of rivalry on our sector. There are 5 forces that, all together determine the potential profit in the industry/sector. If they are intense, the companies will have - opportunities to obtain returns. Competitors in the sector. Rivalry among existing competitors. INTENSITY OF COMPETITION (RIVALNESS) Depending on the strategies may increase the level of rivalty: Number of companies Degree of concentration Slow market growth High level of fixed costs and storage costs Degree of product differentiation Excess in the level of installed capacity Strategies adopted by companies Existence of exit barriers EXIT BARRIERS - Specialized assets (low sales value/high transformation cost) - High cost of exit (labor agreements, cost of new installation, maintenance of customer service) - Strategic interrelationships (with other business units, image). Ex: Rolls-Royce (manufacture cars and airplane turbines) - Emotional barriers (identification, employee loyalty, pride) - Government restrictions Potential competitors THREAT OF ENTRY OF NEW COMPETITORS conditioned by: The existence of entry barriers The attractiveness of the sector ENTER BARRIERS - Scale economics - Product differentiation - Need for financial resources - Cost of change - Access to distribution channels (Estrella Galicia enter the Brazilian country and signed a contract with Coca Cola for the distribution) - Access to the most advanced technology - Regulation - Effects on the learning and experience curve Suppliers BARGAINING POWER OF SUPPLIERS Few providers (= few bargaining power. Microsoft is a strong supplier, as it practically dominates the market for personal computer operating systems) Few substitute products The buyer is not an imp customer The product is essential for the buyer’s business High supplier product differentiation High cost of switching providers Possibility of vertical integration The provider has high info (= high bargaining power) Customers BARGAINING POWER OF CUSTOMERS If you buy a high percentage of the seller’s income (I’m Carrefour and I buy 80% of your production = high bargaining power) If the purchase represents a high percentage of your costs If the products you buy have no differentiation (if you are not popular and don’t have imp → + bargaining power of customers) Low cost of supplier change Low profit Possibility of vertical integration The client has high info Substitute products SUBSTITUTE PRODUCT THREAT High availability of substitute products The price of substitute product/service is attractive The quality of the substitute product/service is higher The cost of switching to a substitute product/service is low The benefit and aggressiveness of substitute products are high Main conclusion From the analysis, the company → can determine its current position to select the strategies to follow. According to this approach, it would be ideal to compete in a - Attractive market - With high entry barriers - Weak providers - Atomized customers - Few competitors and no significant substitute inputs It is highly necessary to understand the functioning of the environment, as well as the extent to which its forces relate to organizations and affect their ways of operating. Competitive structure of the sector Oligopoly Perfect Imperfect Monopoly competition competition Few sellers and many buyers Many sellers and Many sellers and 1 seller and sensitive to pricing strategies buyers buyers many buyers Differentiated/undifferentiated Homogeneous Differentiated Set the price they products product want product (brand, quality…) Barriers to entry Perfect info for No entry barriers Barriers to entry everyone Ability to affect price Price and quantity Different prices Ex: Renfe, determined by based on Emalcsa (water A the market differentiation Coruña, regulated monopoly), Telefonica (monopoly until 1998) Ex: Movistar, Vodafone, No entry barriers Orange (control almost 80% in Spain). Endesa, Iberdrola, Naturgy, IOS, Android, VISA, Mastercard, American Express Ex : water bottles 3. CONSUMER BEHAVIOUR 3.1. CONCEPT: STUDY OF CONSUMER BEHAVIOR Introduction Analyze the way in which people make decisions to apply their scarce resources (money, time and effort) in the purchase of goods and services, that allow them to satisfy their needs and desires → essential for Marketing Planning, as it is part of the 1st phase of the development of the marketing strategy (analysis of the situation). Study of consumer behavior → actions/acts (cognitive, emotional and physical) carried out by a person/entity from the moment a need is evident, it becomes a desire, the purchase decision is made and subsequently uses/consumes the product/service, so that you can experience a certain sensation (satisfaction/not satisfaction). Final/organizational consumer behavior (detergent, food…) CONSUMER BEHAVIOR Before purchase During purchase After purchase (knows the experience they had). Concept Knowing the reasons why the consumer behaves in a certain way gives rise to the following benefits: For the consumer → by allowing greater efficiency when evaluating how to satisfy their needs transformed into desires. By optimizing his role and performance in the market, fundamentally in its relationship with the rest of agents that operate in it. For the company → by + effectively identifying how to meet current and future needs. By influencing the improvement of relationships with customers. By orientating customers towards their loyalty. By facilitating the planning of act and commercial actions. Degree of complexity High complexity/ Durable goods Low complexity/ frequently used goods (laborious/ long process) (routine, habit, inertia) First buy Repeat purchase Sporadic purchase Frequent shopping Reasoned purchase Buy on impulse High involvement purchase Low involvement purchase High price product Low price product Characteristics Dimensions 7O 7W 1. OBJECTS 1. What does the market buy? 2. OCCUPANTS 2. Who constitutes the market? 3. OBJECTIVES 3. Why does the market buy? 4. ORGANIZATIONS 4. Who participates in the purchase? 5. When/how much does the market buy? 5. OCASSIONS 6. Where the market buys? 6. OUTLETS 7. How does the market buy? 7. OPERATIONS Role/roles in the process of purchase decision Initiator → 1st person who detects the need/raises the desire to acquire a product. It can be the person himself, who proposes to buy a piece of clothing/a book for his own enjoyment. Influencer → the one who gives us his opinion regarding the product that we have in mind to buy and prescribes/advises us, a specific model/brand. It is the person whose point of view/advice represents a necessary impulse in decision-making, through an orientation/comment made by an experience/recommendation. Payer →person who finally makes the purchase. They can decide where, when and how to buy it (make the purchase in cash, with deferred payment, in physical store, online store/any other). Buyer → person who makes the decision/rather, the "final decisions”, since it usually decides whether/not the purchase of the product is finally carried out. User → person who, in fact, consumes the product and who also has a vital imp in the process, because the consumer is, in turn, the evaluator. 3.2. APPROACHES / THEORIES OF CONSUMER BEHAVIOR The study of consumer behavior has been approached with different approaches: economic, psychosociological and motivational, from which marketing has benefited, trying to explain the motivational processes that occur in the individual when buying. Economic approach: Marshall’s economic theory (main model) Marshall’s economic theory has as its basic concept the ECONOMIC AND RATIONAL MAN → orients his behavior towards the max of his utility in consumption. The consumer will only make the purchase decision in the event that the marginal utility reported by the acquisition of the product is greater than/= to the marginal expense incurred → RATIONAL CHOICE LIMITED APPROACH → establishes a theory of how the consumer should behave, but NOT of how they actually behave, /of what factors determine and explain purchasing behavior. PRINCIPLES Satisfaction → The needs and wants of consumers are unlimited and therefore cannot be fully satisfied. Consequently, they will tend to choose the alternative (good/service) that max their satisfaction. Utility → The usefulness of a product consists of the satisfaction generated to the consumer. As + units of a product are purchased, the total profit (utility) decreases. Present in mainy business strategies. Rationality → Consumers are perfectly rational when making a purchase decision, which means that their decisions are made independently (without influence from others) and that their preferences are constant over time. Ex: someone buying in a supermarket buys the most suitable combinations of all the products H. It maintains that consumers are rational when making the purchase decision. Psychosociological approach Consumer behavior (C) is determined by economic variables but also by psychological/ internal variables (I) of the individual and social/external variables of the environment (E). Psychological/internal variables (I) → collect the internal and subjective characteristics of the individual, their needs and desires. External variables (E) → express the influence exerted by the environment on purchasing behavior. PAVLOV: Theory of behaviour or behaviorist (Theory of classical conditioning) It arises from Pavlov’s experiment and distinguishes between a primary/unconditioned stimulus and a stimulus secondary/conditional → certain reflexes are conditioned by learning (stimulus- response model). Learning process Ex: stimulus 1 → food (unconditioned one); stimulus 2 → bell (conditioned); stimulus 3 → going to eat. If this theory is adapted to explain the purchasing behavior of consumers, it provides a STIMULUS-RESPONSE MODEL → certain external stimuli (advertising, promotions) provoke the = behavior in the consumer when He has learned in the past that said behavior was rewarded. LIMITATIONS It does not explain by itself the behavior of consumers on all occasions. Neither why they buy new products/ why they stop buying satisfactory products/change brands. VEBLEN: Social Influence Theory (social animal man) → Platon. The social animal influence us and we influence the social element. It considers the influence that the social environment has on the individual and their behavior: many purchases are motivated by the search for social prestige and NOT by intrinsic needs. Influence and imp of the social factor. Ex: we would go to a restaurant although it is expensive just for the social element. If someone recommends it to us. Motivational approach It is based on the analysis of the motives/causes that explain consumer behavior. It considers that motivation is the force that pushes individuals to action and that it is caused by a state of tension caused by an unmet need. MASLOW: Hierarchy of needs (behavior is driven by the most important need) When one level is satisfied, we go to another. While these needs DO NOT can be modified by the marketing, you can find out and analyze what are the needs of consumers to adapt the products/services of way that they are better satisfied. FREUD: Psychoanalysis Theory Freud affirms that the personality is shaped throughout the life of the individual, and that this personality consists of 3 areas: Id/Subconscious → where the most imp impulses and motivations are generated. Ego/Conscious → What I do in reality (rational), where thoughts and perceptions are understood and perceived. Super-ego → orients the impulses of the subconscious to socially admitted behaviors (Morality). SIMBOLOGY OF PRODUCTS AND BRANDS Consumers are NOT ONLY influenced by economic factors, but also by the SYMBOLIC ASPECTS of the products → certain products are NOT bought for economic/functional reasons, but merely for the symbolic values they contain. This theory explains the great imp of design/brand, as well as all the symbols of the product that influence consumer behavior. Ex: Retro/vintage marketing → a reason of demanding retro products is nostalgia. FIAT 500 (Fiat most sold in the market, it is retro), Casio, sport shoes… Buying behavior models (purchase decision as a dynamic process: purchase process models) Model → simplified representation of all/some of the aspects of reality, which helps to describe, predict/solve a phenomenon of reality: Phenomenological models → it reproduces all the mental and emotional stages that the buyer goes through when making decisions. Logic models → describe what should actually happen in a logical order. Theoretical models → they collect verbally and graphically the most imp variables that influence the purchase; they consider the consumer as a problem solver and an info processor (Howard and Seth model): Decision and info process Received stimuli Exogenous variables Post-purchase results and post-purchase reactions Disadvantages of the models: They only identify the most common elements of the decision process. The elements that make up a model may not have the = imp in all product classes. The imp of the elements of the model may be different depending on the situations of use of the product. Models are not = suited to all individuals in the = market. Not all purchasing decisions are = complex. The model cannot be the = for a complex purchase decision as for one made out of habit. 3.3. CONSUMER BEHAVIOR DETERMINANTS 3.3.1. INTERNAL DETERMINANTS MOTIVATION The purchase process begins with the recognition of a need (a feeling of physiological/psychological lack) by the individual, which may be stimulated by an internal/external factor. In order for the need to be recognized and evaluated by the buyer, MOTIVATION is necessary. Motivation → General predisposition that directs behavior towards obtaining what is needed/desired Ex: motivation to drink something and interact with people – Coca-Cola strategy (in their adds you see people drinking and socializing). Our response is to buy something and stop feeling anxious of having that need. Reasons/needs can be classified according to the following criteria: Physiological → oriented to satisfy biological/corporal needs (thirst) Psychological → emotional (friendship, affection, esteem) Primary → direct behavior towards generic products Selectives → brands, models, establishments… Rational → associated with objective characteristics (size, price) Emotional → subjective characteristics/sensations (comfort, prestige) Aware → perceives and is aware of their influence (BMW: for safety) Unconscious → unaware of their influence (BMW: status) Positive → lead to achieving desired goals Negative → separate from unintended consequences (alarms, life insurance) PERCEPTION The personal and subjective way of interpreting and making sense of the stimuli to which the individual is exposed → coding of the stimuli received through the senses. It is a process of: selection, organization and integration of sensory stimuli in a coherent and meaningful image. Ex: 95 % of pink products = women products TYPES: Selective attention → process of directing our awareness to relevant stimuli while ignoring irrelevant stimuli in the environment. Selective retention → process whereby people + accurately remember messages that are closer to their interests, values and beliefs, than those that are in contrast with their values and beliefs, selecting what to keep in the memory, narrowing the info flow. Selective distortion → is where consumers distort/misinterpret the promotional message in a manner different to what was intended by the brand/marketer. Subliminal perception → concept where the action, thoughts, feelings and the whole perception of an individual is influenced by an stimuli without any knowledge. Ex: Amazon, the arrow; subliminal element. The = product can be perceived differently by different consumers depending on the attributes/characteristics of the = that are of their greatest interest → Perception threshold Weber’s Law (The threshold of perception of the stimulus rises with the magnitude of the stimulus). EXPERIENCE AND LEARNING Learning → behavioral change that is a consequence and is reinforced by previous experience. Learning a buying behavior can lead to habit and brand loyalty, if it has been satisfactory (Skinner’s Instrumental Conditioning Theory). Ex: loyalty programs and affinity/discount cards, they are trying to increase our satisfaction with a product/service. PERSONAL CHARACTERISTICS Demographic (objective, easy to measure and quantify) Biological attributes: age, sex. Family situation and geographic location: number of members, habit of residence. Socio-economic (objective, easy to measure and quantify) Situations/states reached: occupation, income. Level of studies achieved: knowledge acquired. Psychographic (subjective and specific to each individual, difficult to measure and quantify) Personality: traits that indicate general predispositions of response. Social Theory indicates that social variables are the ones that most influence personality. Lifestyle: acts, centers of interest, opinions. ATTITUDE Attitude → predisposition learned over time to consistently respond favorably/unfavorably to an object/situation. It is influenced by: family environment, social groups, info received, experience and personality. It has a multidimensional character made up of 3 components: Cognitive component (beliefs): ideas, pensamientos, creencias. // Affective component (feelings): emociones, estados de ánimo, sentimientos, respuestas del sist. Nervioso. // Behavioral component (tendency to response): intención de conducta. 3.3.2. EXTERNAL DETERMINANTS CULTURE/ SUBCULTURE Culture/subculture set of norms, beliefs and customs that are learned by society and that lead to common behavior patterns. Cultural values are learned, permanent and socially shared. Ex: Lays adapted the savor of potatoes in different markets, KFC has in Ecuador a menu of rice and yuca. Each culture is made up of subcultures/smaller and + identified groups that share common values defined by: Nationalities Religions Social groups Geographic regions (ex: the tapas of Galicia and Andalusia are different) Special interests (ex: people that like manga, surf…) SOCIAL CLASS Social class position that an individual/family occupies on the social scale. It is determined by socioeconomic factors (occupation is the best indicator, income level, education). It gives rise to different buying behaviors (different product category, purchase method and place of purchase). The members of a social class share a set of values, attitudes and behaviors. SOCIAL GROUP/ REFERENCE GROUPS Social groups those reference groups with which the individual identifies and influences the formation of their beliefs, attitudes and behaviors. Characteristics: Norms rules to accept. Roles functions assumed/assigned by the group. Status position within the group (power). Socialization learning norms and roles. Power influence of group on the individual. (Ex: in some journals it is said that it is bad if your child doesn’t play Fortnite, because he won’t belong to that group) types: Groups to which you belong (primary and secondary) Groups to which you aspire to belong (direct contact, no direct contact) types of influence: Informative: people’s testimonial. Individuo acepta el juicio del grupo como más válido que el suyo. Normative: large ampliance, with standards. El objetivo es evitar el rechazo y contentar al grupo, el individuo solo modificará su conducta visible pero su pensamiento interno seguirá siendo el mismo. Comparative (evaluation): criteria for evaluating. FAMILY Family primary social group, with a huge influence on the personality, attitudes and motivations of the individual. It influences joint purchases and individual purchases. Ex: When buying a car family thinks of the kids. INFLUENCES OF PEOPLE Influences of people have greater credibility for the individual than other sources of info (what a friend/family member thinks). Opinion leaders (prescribers) have the greatest influence on buying behavior. They are those agents whose opinion, advice/example is followed by many other people. Must be: Publicly know. Close to the product category. George Clooney Nespresso. // Rafa Nadal Kia. PURCHASE/CONSUMPTION SITUATIONS The decision to buy a product/service depends on how, when, where and for what reason it is to be consumed and used. Purchase situation the decision on the product category, brand, size… It depends on whether: The product is purchased for yourself/as a gift. It is purchased under normal conditions/it is a special offer/sales. Consumption situation the purchase decision varies depending on: The use of the product (for ex, wine for cooking/drinking) The people who are going to consume it (family/guests, consumption at home/during a trip…). The occasion/moment when it is to be consumed (ex: in summer/winter, on a normal occasion/at a party). INFORMATION The purchase decision is influenced by the info that potential consumer gather about products and brands available in the market. Commercial info that comes from advertising. // social info comes from family, friends and other social groups (more credibility). If we launch good advertising people comment it it becomes widespread 3.4. THE PURCHASING DECISION PROCESS The purchase decision process is made up of a series of phases/sequential stages whose imp, intensity and duration depend on the type of purchase that is made. Buying behavior will also vary depending on the association/dissociation between the role of buyer, consumer and payer. Recognition of the problem consumer feels that there is a need and then motivation appears. Information search customers can be passive/active looking for info, 1st pay attention to the info they receive but they don’t care. Evaluation of purchase alternatives evaluates different options in the market, by considering attributes like the price. Purchasing decision/decision making can be a final/temporary decision. When this is a temporary decision consumer may wait to have + money. Post-purchase behavior/evaluation (reviews) companies distinguished between disappointed customers when the product doesn’t perform well; satisfied customers are loyal in the future; delighted consumers are fans of the product and are strongly loyal. SATISFACTION NOT = Key Success Factor SATISFACTION = Key Non-Failure Factor Satisfaction is not enough, we need to innovate, to give experience to the customers. Post-purchase attitudes Situations: State of clear satisfaction their expectations have been met and exceed (loyalty). State of frank dissatisfaction the opposite has happened. State of relative doubt the result of a certain dissatisfaction and that is what leads to dissonance. LOYALTY = SATISFACTION + RELATIONSHIP + EMOTION LOYALTY If the dissonance does not disappear, the probability of repeating the choice will be low. If the experience has been highly satisfactory, the probability of repeat purchases will be high. Consumer satisfaction can lead to brand loyalty. DISSONANCE Dissonance mental state related to the doubt about having been successful/not with the purchase. Factors that affect: Price Psychological imp of the product-service Number of alternatives Credibility of the info source Communication actions of other offerers Color impact on consumer behavior Yellow optimistic and youthful. Often used to grab attention of window shoppers. Ex: McDonald’s. Red energy. Increases heart rate, creates urgency. often seen in clearance sales. Ex: Vodafone, Santander, foods and beverages. Blue creates the sensational of trust and security. Often seen with banks and businesses. Ex: Sabadell, Abanca, BBVA, Allianz. Green associated with wealthy. The easiest color for the eyes to process. Used to relax in stores. Sustainable products. Ex: Starbucks, Spotify. Orange aggressive. Creates a call to action: subscribe, buy/sell. Emotion and enthusiasm. Ex: Orange. Pink romantic and feminine. Used to market products to woman and young girls. Ex: Barbie, Cosmopolitan. Black powerful and sleek. Used to market luxury products. Ex: Montblanc. Purple used to soothe and calm. Often seen in beauty/anti-aging products. Ex: Yahoo. Golden luxury. Ex: Suchard Trends in consumption People look for: Efficiency Open to influences Sustainability Social contact Personalization 4. MARKET SEGMENTATION AND POSITIONING 4.1. INTRODUCTION: THE MARKET AND DEMAND Consumers have diverse characteristics and attributes, many kinds of different needs, they do not seek the = benefits, the market cannot be considered as a unit offering different products/services, especially when there is a great competition and a great variety of products. Alternatives: 1. The market has similar needs that can be grouped into various categories and that are all very similar will manufacture a uniform product, which will be distributed in a single way and at a single price, carrying out a communication plan aimed at the mass of consumers. Ex: Coca-Cola, it entry with a uniform product and now there is a big variety. 2. Each of the people who make up the market has special needs that are different from those of the others, understanding that the needs of each individual are unique and highly personal handcrafted company. Ex: wedding dress, it is the opposite of a uniform product. 3. Adopt an intermediate position between undifferentiated treatment and differentiated treatment of its clients = carry out MARKET SEGMENTATION. Ex: Decathlon has multitude of brands (Quechua…). 4.2. SEGMENTATION: CONCEPT, OBJECTIVES, BENEFITS, PROCESS and LEVELS Concept Segmentation process of dividing the market into homogeneous groups of consumers, in order to carry out a differentiated commercial strategy for each of them, which allows to + effectively satisfy their needs and achieve the commercial objectives of the company. Objectives Higher profitability of your marketing plan Better info about the market Decide the marketing strategy to follow (differentiated, concentrated, undifferentiated) Benefits - + efficient use of resources and efforts Improve the suitability of the product to the market Facilitate specialization Improve profitability Allow to stay ahead of the competition Identify market opportunities Generate entry barriers Be able to differentiate Have competitive advantages (28-50 range of people who buy more online) Process Identify and analyze the needs of the different groups of consumers to whom the company’s products/services can be directed (segmentation opportunities). Asses 1/+ segments that you are interested in targeting (definition of the target audience). Establish and communicate the particular advantages of the product in the given market (positioning). Examples 4.3. SEGMENTATION AND DIFFERENTIATION Segmentation based on the diversity of demand. Consumer needs are analyzed to offer different products that meet them. Differentiation based on the diversity of the offer (focusing on the brand, on the company, on the offer). The company produces different goods with formats, styles, sizes/designs, offering a greater variety to the market. 4.4. BASES OF SEGMENTATION Identifiable for the company in a simple and accessible way through communication. Substantial they must cover a sufficient number of people to be profitable. Different heterogeneous with each other, whose consumers have different needs. Accessible (in terms of costs) = accessible info of the target consumer. Segmentation levels Mass marketing mass production, distribution and communication of a single product for all buyers. Ex: Coca-Cola. Segmented/differentiated marketing adaption of the company’s offer to the needs and wishes of the defined and identified segments. Ex: Coca-Cola zero. Niche/concentrated marketing directing the offer to subgroups that make up the segments, as it is expected that there are fewer competitors in the subgroups. Ex: pet friendly hotels, wedding cars. Local marketing development of brands and special promotions according to the needs of different local groups (cities, districts, specific points of sale). Ex: Sephora, product suggestions according to your location. Individual/personal marketing consists of adjusting the product and marketing programs to the need and preferences of individual consumers. Also presented in B2B, we as a company may need a specific software. PERSONALIZED MARKETING: Coca-Cola writing names in their cans. 4.5. SEGMENTATION CRITERIA Segmentation criteria variables used in the definition of consumer groups, with different needs from each other and with a very similar reaction to marketing act. General objective (ex: diap from 38 to 41) DEMOGRAPHICS the market is divided by any of the demographic variables of the consumers such as age, gender, marital status/type of household. Ex: an example of age would be toys for children. GEOGRAPHIC divide the market into units: nation, region of residence, habit/even the climate. Ex: they don’t sell the same thing in China/USA. SOCIOECONOMIC they divide consumers according to their education, occupation, income level and social class. General subjective PERSONALITY according to the personality of the consumers (extrovert/introvert, confident/undecided, innovative/traditional…). LIFESTYLE it describes the behavior of consumers, using 3 indicators: Activities (use of the time and money). Interests (to which they give greater imp in their environment). Opinions (vision and general opinion of the world and of themselves). Ex: Decathlon segments using the lifestyle. Specific objective (MORE DESCRIPTIVE CRITERIA) Use of the product it takes into account the type of use made of the product and the amount purchased. Ex: olives for bars and restaurants. Consumption situation product benefits sought, situation of use and consumption. Ex: Take-away coffee, we need cups to satisfy consumers. Cola Cao expands its uses to another situations, being initially aimed at children breakfast: snack and dinner for adults. User category potential users, new consumers… Ex: 10% discount 1st purchases on the web. Place of purchase usual place of purchase of the product. Ex: buy in supermarket, neighborhood stores, convenience stores… Degree of loyalty loyal, weakly loyal customers, unloyal customers… Ex: accrual discounts. Specific subjective (MORE FUNCTIONAL CRITERIA) Benefits/advantages sought they identify the reasons for purchase and the products/brands that provide those benefits. Attitudes, preferences, perceptions internal variables of the consumer, of a subjective nature. They make it possible to identify those dissatisfied consumers. 4.6. STRATEGIES Undifferentiated It ignores the existence of the different market segments. The company addresses all segments with the = strategy, satisfies the needs and demands with a single commercial offer. Advantage: cost savings (economies of scale). Disadvantage: difficult to adequately satisfy needs and wants. Ex: Bic, McDonalds. Differentiated The company offers products adapted to the needs of each of the target segments, using different commercial instruments. Advantage: allows to better satisfy the needs and demands of the different segments, increasing the total market demand. Disadvantage: high costs. Ex: Inditex try to address different segments with different types of brands. Concentrated Instead of serving all segments, the company focuses on 1/a few segments, in which it can have competitive advantages (quality, price, distribution…). Advantage: the company can obtain a greater market share in the segments in which it concentrates. Disadvantage: non-diversified offer (risks). Ex: Rolex, Pronovias. A segmentation strategy can, however, lead to 2 extreme strategies: Hypersegmentation products tailored to each consumer. Counter segmentation offer products without variants. Ex: shampoo Jhonson&Jhonson, for everyone adults and children. Every company faces the question of how to organize itself to face the market and global competition and create a defensible competitive advantage. There are then 2 approaches: Standardization adapting the = strategy due to the similarity between consumers, needs and behaviors (Apple, Samsung). Adaptation adapting the products and marketing actions to the different consumers (tailoring/opticians). 4.7. POSITIONING: CONCEPT AND BASIS The problem for companies is not to be better, the problem is to distinguish themselves from others. The problem is to stand out clearly and preferentially from the mass of offers. It is essential to create a specific and differential position in the minds of customers. Marketing is not a war of products; it is a war of perceptions. Concept Ex: Coca-Cola perceived as a refreshed drink for everyone. Foundation The company must decide the position it wants to occupy in its target market. Foundation consumers have a perception of different products and brands. These perceptions crystallize in their minds in a classification that establishes a ‘preferential order’ of the different offers. Your purchase decision falls on the brands and products positioned in the 1st places. Ex: Bic (good, durable, cheap). Types The brand replaces the noun. Ex: papel albal, clinex, chupa-chups. Link the brand with an attribute. Ex: Volvo-security, Sanex-healthy skin. Link to a service, a market segment, a novelty. Ex: Tele Pizza, Pepsi Cola, Swatch. Link it to the “Made in”. Ex: Japan-electronic, Italy-design, France-wines. For the characteristics of the product. Ex: the price, the duration… there are characteristics that can be highlighted to position a product/brand. For the benefits/the problem they solve. Ex: toothpastes highlight the benefits they bring. By use/occasions of use. Ex: soluble coffees/soft drinks are seen being taken at a meeting of friends. By user class highlight the kind of people who use the product. Ex: Rolex and famous people. In relation to other product it involves the realization of comparative advertising. By dissociation of the product class it is intended to distinguish the product from competitors. 4.8. THE POSITIONING MAP Positioning map → analysis tool that collects info to know what position a product/brand occupies in relation to competitors. It take the product attributes as a reference , collects the way in which the product is perceived by the consumer and informs of the needs that are not covered by no product on the market. 4.9. SEGMENTATION BY GENERATIONS Silent generation - 76-93 years. They are characterized by the desire to have property, home ownership and survival behavior. The values that describe them are varied, including respect, authority and discipline. It is a consumer who prefers to talk in person, technology is distant in most of them (although each time the gap decreases) and their attitude towards life goes through work and the distinction between personal and work life. They are reached through traditional brands with reputation and through a formal language. Baby boomers Ages of 57 to 75. Its greatest exponent has been to fight for a job that will provide them with security and with personal freedom. This has greatly marked its character and its values are aligned with optimism and participation. Studies and careers mark the attitude towards life. Keeping a job is vital for them. A very imp generation for its impact on consumption, they were the 1st to adopt info technologies, although now we only identified them with the social network Facebook. The estimate of purchase on the Internet is around 37% and in order to impact them, direct messages prevail, without entanglements and brands that have credibility and handle real info. This type of audience continues to consume advertising through tv, newspaper/magazines, so it is + difficult to reach them through social networks and the internet, although email can be effective. It is a generation that tends to be loyal to a brand if it gives good results. Generation X Between 41 and 56 years old. They fear not being able to enjoy life and value informality and being fun very much. As for work, the profession and the existence of professional leaders are valued. Use Facebook and also Linkedin. They have an estimate of around 51% of digital purchases and can be attracted to attention through loyalty programs, discount coupons, quality demonstrations… They are + pragmatic than others. This generation has + interests in new technologies and uses social networks + frequently. It is the generation that saw the transition between written and digital, as well as the 1st that grew up with computers. Millennials Between 26 and 40 years old. Entrepreneurship and flexibility prevail in his character, but above all, the feeling of freedom marks his personality. The millennials audience is realistic, social, fun and confident. There is a crucial aspect that also marks their consumption: they work with companies, but not for the company. Digital platforms are a constant in their day to day, especially Facebook, Instagram, Twitter, Youtube and Linkedin. They are afraid of not achieving their goals and that time will pass without doing what they want. Personal life is + imp than work and they align with brands that have certain values. They prioritize the experience of the product/service before buying. Generation Z Between 12 and 25 years old. They are the last to reach the determining stages of consumption and, therefore, the generation about which brands are trying to learn, know, travel… But stability and security are also aspirations to be found among this generation. This profile is social, open and fun. They are totally addicted to technology, which they handle differently from their predecessors. Instagram, TikTok, Reddit, Twitch/Snapchat are the platforms with which they spend the most time. In their philosophy is the taste for entrepreneurship, but through new professions. Just as millennials are multitasking, creative and innovative, for that reason the messages must go under creative approaches and through audiovisual content. They frequently use social networks and are characterized by being very dependent on technology, since they make use of them for everything. This type of audience interacts with friends and family through the smartphone and, preferably, through written messaging. Generation Alpha They don’t have 100% defined aspirations, but his immersion in technology and Artificial Intelligence is total. Perhaps they will be the consumer leaders within the new digital scenarios such as the metaverse. They fear living life without Internet/social networks, with TikTok being the leader in the use of the latter. They are very diverse in the use of technology, but surely what is to come will mark their future as consumers. 5. MARKET RESEARCH 5.1. The Marketing Information System (S.I.M): Concept and components To design marketing strategies, it is necessary to know and understand the market. If you want to stimulate and capture demand, you need to know what the potential market is, which segments of it you need to target, what products these target market need and want, why they buy them and how, when and where they buy them. Knowing these aspects of the consumers means obtaining data about them. Marketing Information System (MIS) concept Components Marketing Internal Information System systematically colects the info generated within the company (sales, costs, cash flows, quantities produced, orders, inventories). That is, the info flows of organizations with their micro-environment. Marketing Intelligence System collects info from the company’s environment, so that it provides info on the most relevant events that occur in the company’s marketing environment/macro environment. Market Research System is in charge of carrying out studies related to the problem/opportunity in question. It is based on conducting market studies, which can be carried out directly by the company itself/through specialized external companies. It uses scientific methodology to generate objective and reliable info on the markets. We ask ourselves questions about problems/opportunities. We issue hypotheses. We experience. We analyze the results. Response System to consumer needs/support for marketing decisions the set of statistical models and techniques that make up the software available to the company to analyze data in order to support marketing decisions and thus respond to the needs of managers. RESULT these 4 marketing info system components will help you understand the actual situation in the market and inside your company and improve your strategies accordingly. Ex: many retail stores provide their clients with loyalty cards, and many brands offer customers the opportunity to create their profiles in their online store. Both loyalty cards and profiles help businesses collect data about clients. 5.2. Business / Market Research Concept Concept Market/commercial research involves the diagnosis of info needs and their systematic and objective search through the design and use of methods for obtaining, analyzing and interpreting them to identify and solve any marketing problem/opportunity and its distribution among users who make decisions. It can be defined as a process of identification, valuation, selection and info treatment to: understand the environment, make decisions/evaluate results. process PHASE 1: DETERMINATION OF INFO NEEDS Definition of the problem/decision opportunity. Establishment of the research objectives specific research questions, development of answer hypotheses to questions and identify relationships between variables. PHASE 2: DESIGN OF THE MARKET RESEARCH Choosing the type of investigation. Decision of the type of research. Possible research methods: Exploratory research It is designed to generate ideas + precisely and become familiar with problems, formulate hypotheses, identify relevant info = detail objectives. They are preliminary, flexible, common sense and the researcher’s intuition (qualitative techniques) Conclusive research: developed to describe situations. 2 types: - Descriptive research describe the characteristics (demographic, socioeconomic…) of a problem, quantify behaviors, explain attitudes. (quantitative techniques: surveys, panels). - Casual research establish cause-effect relationships (best method used: commercial experimentation). Sampling planning, design of the sampling plan (population, sample, type of sampling). Population universe object of study from where they are extracted the sampling units (N). Sampling set of representative population units. Calculation of the sample size (n); sampling error (e) and confidence level (k). Selection method: probabilistic (simple, systematic, stratified, clustered random sampling…) and non-probabilistic (inconvenience sampling, discretionary, quota sampling….. Establishment of info support and measurement scales (collected format). The measurement scales can be divided into: ordinary (liker scale: 5-high satisfaction/1-low satisfaction) and nominal. PHASE 3: EXECUTION OF THE MARKET RESEARCH Data collection – field work. Analysis of the info. Coding. Tabulation. Data analysis: analysis using statistical techniques. Univariate analysis techniques study the individual behavior of the variables. Bivariate analysis techniques study the relationship of association/dependance between 2 variables. Multivariate analysis techniques study the relationship/interdependence between + than 2 variables. Ex: t de student, chicuadrado… Obtaining results. PHASE 4: COMMUNICATION OF RESULTS Design and preparation of the results report. Presentation of the results, conclusions and recommendations. Ex: Coca-Cola, consumer personalization, offer cans with names and surnames. Uber, consumer daily need (daily trip), made possible for consumers to demand the service from their mobile phones. Starbucks, need to buy coffee, it created an extraordinary experience. Airbnb, consumers search for flexibility, allow people to rent their apartment. 5.3. Information sources: concept, characteristics and typology Info set of sources of knowledge necessary to understand situations, make decisions/evaluate others already taken. It is essential to know what each of the info sources consists of, since their usefulness and application is not the = in research. Typology Bibliographic sources and the Internet (Yearbooks, official statistics, economic reports from financial institutions). Observation (non-voluntary info, toys for children, behavior in supermarket) Pseudo-purchase (acting as a customer, observation of seller behavior, food guides) Creativity techniques (group meetings//brainstorming, spontaneity in search of new products, search for causes and solutions to problems) Group dynamics (discussion groups, moderator, debate and opinion on predetermined topics) In-depth Interviews (personalized interview, specific topics, subject matter experts) Projective techniques (unconscious aspects, word associations, possible explanations of behaviors/events) Databases (imp volume of info; data mining/big data; customer databases, business directories…) Panels (stable samples; periodic info; acts of consumption, buying habits, exposure to the media…) Surveys (question set, different ways of obtaining, quantitative imp) Information sources according to their availability Secondary info nalready exists and is available at the time the need for research arises. Primary info must be created to develop an investigation, the researcher creates it expressly for a specific study. ¿WHICH IS PREFERRED…? Secondary info is very attractive because: It is now available It saves a lot of time and effort Obtaining it requires a lower cost Sometimes it’s the only one available CHARACTERISTICS PRIMARY SECONDARY Cost Moderate/high Low Adaptability to High Low objectives Results exclusivity Total Null Availability periods Depending on Depending on the objectives owner of the information Timeliness of Total Medium-low information Guarantees Total methodological Subject to the control prestige of the publisher Information according to their dynamism Static sources provide info at a point in time (snapshot: voting intention). Dynamic sources provide info over time (evolution of market share of new beverage that has just been released). Information sources according to the degree of contact Personal sources you come into contact with people. Impersonal sources you do not come into contact with people. Information sources according to the degree of collaboration Direct sources people are aware of their collaboration (poll on voting intention). Indirect sources people do not know that they collaborate/do not know what the info they provide will be for (relates brands to animals). Information according to their possibility of treatment Qualitative sources they do not usually support data analysis. Internal aspects of the individual (motivations, attitudes, beliefs, opinions). Quantitative sources provide data that require mathematical analysis (techniques statistics/math). Numerical aspects of the info. Qualitative research techniques + bibliographic sources and the Internet (Yearbooks, Official statistics, economic reports from financial institutions) OBSERVATION attention, examination and interpretation of behaviors without the researcher intervening in their development in order to modify the natural course of their development. Primary, mixed (qualitative/quantitative), static, impersonal and indirect technique. It applies to exploratory research. Ex: behavior in a supermarket. PSEUDO-PURCHASE visits made by researchers to retailers/other points of sale, pretending that they are normal customers who want to buy a product/service, /seek advice. The interviewer/researcher introduces himself as a potential client in order to not alter the behavior of those investigated. Primary, qualitative, static, personal and indirect technique. It applies to exploratory research. Ex: food guides. CREATIVITY TECHNIQUE consists of a group of people providing ideas oriented, very frequently, to the creation of new products/to the solution of problems of various kinds that may appear in organizations. Spontaneity: Brainstorming/idea generation; Forced relationships (random word); SCAMPER (“what can we do?”: Substitute/Combine/Adapt/Modify/Put to another use/Eliminate/Reuse). Ex: Lego. Primary, qualitative, static, personal and direct technique. Usually applied in exploratory research. GROUP DYNAMICS formalized process consisting of gathering a small group of people for a free and spontaneous discussion on a topic of interest. Focus group consists of 7-15 participants moderated by 1/+ professional researchers in an unstructured discussion that lasts between 1 and 3 hours. Collects primary, qualitative, static, personal and direct info that is usually applied in exploratory research. Ex: Pablo Casado (PP), they carried out a focus group in order to improve its image. IN-DEPTH INTERVIEW dynamic interaction of communication between 2 people face to face (interviewer and interviewee) to exchange info, ideas, opinions/feelings, under the control of the 1st. Primary, qualitative, static, personal and direct technique usually applied in exploratory research. PROJECTIVE TECHNIQUES instrument that allows knowing unconscious aspects of perceptions, motivations, attitudes and behaviors. Created by psychologists, that began to use it in marketing in the 50s, since many aspects of consumer behavior are not conscious. Primary, qualitative, static, personal and indirect technique. Very useful in exploratory investigations. They are used when it is believed that respondents cannot/will not respond to direct questions about: the reason for certain behaviors/attitudes; what the act of buying, owning a product/service means to them. Types/categories: Word association: the interviewee is asked to say the 1st word/phrase that comes to mind after the researcher indicates a word/phrase. It has been particularly helpful in obtaining responses to potential brand names and advertising slogans. Incomplete Phrase Tests: consists of giving the interviewee an ambiguous and incomplete sentence, which is asked to complete with a sentence. Again you are encouraged to respond with the 1st thought that comes to mind. DELPHI TECHNIQUE questionnaire technique used to develop a consensus opinion of a group of people (EXPERTS), guided by a person who coordinates the process (MODERATOR/FACILITATOR) in a setting where the participants do not interact personally. It attempts to achieve a consensual assessment regarding a specific issue based on the opinions of a group of independent experts, with the guarantee that their participation will be understood as anonymous and confidential. Primary, qualitative/quantitative, static/dynamic, impersonal and direct (because they are aware of collaborating in the research). Quantitative research techniques 3 types: databases, surveys and panels Surveys primary, quantitative, static/dynamic, personal/impersonal and direct. Identification ‘a priori’ of the questions Specification of alternative answers Open/closed questions Likert scales (degree of agreement/disagreement) Dichotomous variables Determination of the sampling procedure. Sampling method Sample size Imp of the order of the questions Types of survey: Personal Mail Telephone Internet Steps to follow when designing a questionnaire: Initial approach Objectives Characteristics of the group Procedure for obtaining info Info analysis techniques (types of measurement scales) Initial script of the questionnaire Formulation of questions: types of questions Regarding the response format Open questions Closed questions Mixed questions Regarding the info provided Introductory questions Filter questions do you like it? No stop questionnaire Control questions Main questions Ranking questions Structure and sequence of the questionnaire Pretest to see if it functions properly. Panels (high cost) Primary, quantitative, dynamic, personal/impersonal and direct techniques. Continuous methodology: Provides a dynamic view of the market through the monitoring and periodic studies of a representative sample of the target group in order to obtain info on some of its characteristics and behaviors to study the evolution of certain magnitudes. Descriptive research. Systematic and repetitive registration during a period of time of info of interest. Audiences, purchase/sale of products. Types of panels: Demand panels Consumer panels (NIELSEN…) Audience panels (consumers). Ex: IBOPE (Latin America), Nielsen (United States), TNS and SOFRES (Europe). Supply panels Retail panels. Ex: in Spain, Mercadona and Carrefour are retail panels. 6. THE ROLE OF THE MARKETING STRATEGY “When the winds of change blow, some seek refuge and find safety and others build mills and become rich” (Claus Möller) “Long-term planning is not thinking about future decisions, but about the future of present decisions” (Peter Drucker) “Today you have to run faster to stay in the = place” (Philip Kotler) 6.1. CONCEPTUALIZATION OF STRATEGY 6.1.1. Elements of the Strategy Strategy conceptualization set of actions aimed at achieving a competitive advantage that is sustainable over time and defensible against competition, by matching the resources and capabilities of the company and the environment in which it operates, in order to meet the objectives of the multiple groups participating in it. Strategy creation of a UNIQUE and VALUABLE POSITION that implies a set of diverse act. The company carries out different act than the competition/the = act but in a different way. 6.1.2. The Competitive Advantage. Elements Competences distinctive distinctive capabilities (own skills: organizational, directives, know to do) and resources (material, economical, technological, humans) as the basis for competitiveness. Competitive advantages result of exploiting distinctive competencies. Positive synergies due to the correct balance between all the elements. Delimit the scope/field of act. To develop an act/business it is necessary to develop distinctive competencies that give rise to competitive advantages. These advantages will influence the selection of the business portfolio by the company. The strategies are directly related to competitiveness. Competitive advantage Ex of leaders in low costs: Ryanair, Primark, Lenovo, Walmart. ELEMENTS OF COMPETITIVE ADVANTAGE Sources of advantage Superior skills Superior resources Advantages positions Superior value for the consumer Low relative cost Results Satisfaction Loyalty Market share profitability Investment of profits in maintenance and development of the competitive advantage 6.2. TYPES OF STRATEGIES 6.2.1. GROWTH STRATEGIES: Typologies Reasons to grow: 1. Recognition of the internal customer, distributors and suppliers 2. Better positioning 3. Increase of economies of scale 4. Attraction, product acceptance and great demand Typologies: 6.2.1.1. Intensive growth strategies Penetration attraction of current users and the competition. Convince those who do not use your products (potential customers). Market development identify new potential market segments in the area where you already sell. Geographic expansion. New distribution channels. Ex: jam in an expenditure machine in Barcelona airport. New distribution channels. Product development incorporation of new functions and product development possibilities. Improvement of the quality and performance of the product. Investigate alternative technologies in the manufacture of products. Expansion/rejuvenation of the product line. Ex: performance of the product = titanium material. 6.2.1.2. Diversified growth strategies Grow by selling new products in new markets. It makes sense when good opportunities can be found outside of the company’s current business. Why diversify? Saturation of the traditional market and exhaustion of expansion possibilities. Global reduction risk. Be present in act in which technological changes are made. Strengthening the competitive position. Existence of an accumulation of underused critical resources and knowledge. Investment opportunity of financial surpluses. Types: Concentric/related when the company can look for new products that have technological/marketing synergies with current product lines, even if these are directed to a new class of consumers. Ex: Coca-Cola offering mineral water ‘Aquarela’. Pure/unrelated/horizontal research new products that interest your current consumers through a technology that is not related to your current product line. Ex: Montblanc, Tous started selling jewelry and then started to sell perfume and leather accessories. In conglomerate the company could seek new business that is not related to production technology/current products and markets. 6.2.1.3. Integrated growth strategies grow expanding the act that are framed in the complete production cycle of your products. vertical the company could acquire 1/+ of its suppliers for + profit and control (integrated backward growth strategy). You could also buy a wholesale/retailer company (integrated forward growth). Ex: business that acquires the transport company/the primary raw company. Horizontal 2/+ companies of the = level collaborate pursuing the = opportunity. The company could acquire 1/+ of its competing companies. They could also make mergers/alliances between groups to strengthen competitive position. Ex: Iberia bought Vueling. 6.2.2. COMPETITIVE STRATEGIES Competitive strategies are based on the MARKET SHARE and on the ACTIONS they develop in relation to the competition = ROLE that they develop in the market against the competition. 40% of the market = leader 30% of the market= challengers (they fight tenaciously to increase their quota) 20% of the market = followers 10% of the market = niche specialists 6.2.2.1. Leader strategies 6.2.2.1.1. Primary demand development strategy 6.2.2.1.2. Market participation protection strategy 6.2.2.1.3. Strategy to increase market share Development of primary demand (Generic demand that comes from final consumers (Kellogs- product innovation): Attract new users (in current markets (Avon Moisturizer); in new demographic segments (Man Moisturizer;/ geographic (in other countries). Promote new uses/ devise new applications for the product (Microsoft: new applications for computers that require microprocessors). Encourage greater use/frequency of its products (when in general + chocolate is demanded, Nestlé earns + because it is the 1 that sells the most by promoting greater consumption, promotions, production tests…). Protection of your market share against competition (Bayer-aspirin): Defensive strategy (constantly strengthen the leader’s position). Ex: Netflix in order to fight against Amazon developed a new plan of 5’45 euros with adds. Flanking strategy (defend against attack to weak points, can develop a 2nd market). Ex: 2nd brand. Confrontation strategy (if leader position strong, wait for competitors to fail; if not strong, cope by launching improved products, new products, better service) Market expansion strategy (leader defends by expanding to a greater number of segments). Ex: Decathlon. Contraction strategy (abandon some segments and focus efforts on others + profitable). Expansion of market share (grow by further increasing its market share; ex: Santander- OpenBank): In many markets, a small increase in participation implies a large increase in sales. Companies should not think gaining greater market share will automatically improve profitability. 6.2.2.2. Challenger strategies Full frontal attack (match product, advertising, price and distribution, attack leader strengths) the challenger is behaving in a very aggressive way and tries to offer the = product with the = price as the leader does, they also try to increase market share. Indirect attack (attacking the leader’s weaknesses/gaps in the competitor’s market coverage) challengers do not behave so aggressively and they try to avoid the leader and maintain their market share. 6.2.2.3. Follower strategies (follow closely to win customers, stay long enough to avoid retaliation) Imitation (copy some aspects of the product, lower prices: private brands) Counterfeiting (reproduce the product with minor modifications to the logo, packaging: black market) Cloning (reproduce some component of the product/the entire product). Ex: marcas blancas. Adaptation (copying/surpassing the leader thanks to the application of technological advances). The follower is often a major target of attack by challengers = must keep its production costs low and its product and service quality high. Ex: mercadona face- creams. 6.2.2.4. Specialist strategies The objective is to serve small market segments not served by large companies (look for market niches) Criteria to specialize: End user Customer groups with specific characteristics (focusing on 1 specific customer) Geographic market (focusing on 1 market) Price quality (offering a product with a good balance between quality and price) Service (offering services that no other company offers) Attribute Generic porter competitive strategies When facing the 5 competitive forces, there are 3 strategies for potential success: Overall/total cost leadership Differentiation Focus/high segmentation GENERAL LEADERSHIP IN COSTS It requires: The construction of large facilities capable of producing significant q of products/services efficiently. Commitment to reducing costs based on experience. Rigid controls of costs and indirect expenses. Avoid fringe accounts. Minimization of costs in areas such as R&D&i, service, sales force, advertising… Low costs in relation to competitors is the axis of this type of strategy; although, quality and service cannot be ignored. DIFFERENTIATION Differentiation its essential objective is that the product/service is perceived in the market as something unique. It provides some insulation against competitive rivalry, due to customer loyalty to the brand and the resulting lower price sensitivity (elasticity very imp, how q demanded change when p changes) and creates barriers to entry. The methods to achieve differentiation can be, among others: Design/brand image. Technology. Own characteristics. Distribution chain/technical service Customer service FOCUS/HIGH SEGMENTATION Focus/high segmentation consists of focusing on a group of buyers in particular, in a specific segment of the market (market niche). It is based on

Introduction to Marketing PDF

Document Details

Tags

Related

Summary

Full Transcript

Upgrade to continue